Expeditors International of Washington, Inc. (EXPD) Earnings Call Transcript & Summary

Okay. Good morning, everyone. Why don't we go ahead and get started to go to the next slide, we can kick off our webinar. All right. So thank you for joining us. My name is [ Amaodi Haritaner ], District Sales Manager based in Miami, Florida. And this is our Southeast market update, Air, Ocean and Domestic. So once again, I know people are still joining for those of you that came early or precisely on time. We appreciate it. We want to be respectful of everyone's time, so we will get started. [Operator Instructions] So with that, let me introduce your speakers. Look at this cast, wow. [Indiscernible]. So we'll start with Alejandro Perrera [Indiscernible]. So Alejandro. So Alejandro is based in our Miami office. He is certainly our export manager and also oversees our order management process. He's been with the company for 11 years and has held multiple leadership positions throughout his illustrious career. So thank you, Alejandro. Secondly, we have Johnny Garcia. So Johnny is based in Savannah, Georgia. He's an Air and export manager -- Air and Ocean export manager. Johnny also has had a long career with Expeditors spanning across 10 years in multiple roles in different branches, Huston, corporate and now with us in the Southeast. And then closing out the introductions of our panel is Brendan Behan. Brendan is a Transcon manager, based here in Miami. He's been with us for over 5 years. Many, many years in the industry, great background in domestic, in distribution, sales and business development. So once again, Brendan is based here in Miami. So with that, gentlemen, I will turn it over to Mr. Brendan Behan.

Hi, good morning, everybody. Thank you for this opportunity to share with you market updates for Transcon. Carla, if you could hit the next slide so that we could get talking about the Transcon and domestic market updates. One more slide, please. There we go. Thank you very much. So we pull information from multiple data sources. Fred is the federal reserve of economic data, then we also use cash freight indexes to kind of pull our data together and to put some analysis for it to our customers. So just to kick it off. Consumer spending, we've seen an increase slightly in the beginning of the year after we saw decreases of 2 straight months spending. We did see retail and services jump up about 3% in January. And then we also saw good consumptions take an increase mainly driven by the automotive industry. What we also noticed was that through the pandemic, normally, you see services over goods. We saw the complete opposite goods over service. And ever since we've come out of the pandemic and things are starting to stabilize. We now see services, again, to take over the goods when it comes to the economy and the way that we're seeing things trend -- we're seeing everything trend, as it moves into the less than truckload or LTL market versus the full truckload. In the less than truckload market, we've seen a decline year-over-year, which was expected. If you see the tiny little graph there on the upper right, we saw a significant decrease during the pandemic in 2020. Very little freight was moving, not much activity due to the shutdown. However, when things reopened in 2021, we saw the market spike. We saw the tonnage increase or the LTL market increased by 35%. And ever since -- and since 2021, we've seen slight decreases to where now we're starting to see the LTL market start to stabilize, as you can see there as we enter 2023. What we did notice though also is that the rate increase. We've seen rate increases about 7% across the board from all the common LTL carriers. A couple of things drive -- have been driving that. One, the LTL carriers are investing in their own networks. There's been a payroll increase due to getting people back into the marketplace, which was coupled by recent talks of inflation, which everybody has been impacted by. And then also the e-commerce world and the LTL market -- the LTL common carriers, they want a certain type of freight to move through their network. It's fast, it's dock-to-dock deliveries. But the e-commerce market has kind of slowed that down with time-specific or appointment type of freight oversized freight that just doesn't really fit into that market to what they've done is we've seen an increase in their [Indiscernible] charges passed on to the customer. And that's why we've seen a 7% year-over-year rate increase. We -- the one thing that we've been able to do with our own network as our GNS is, we've been able to mitigate a lot of those rate increases because prior to the pandemic over the years, we have positioned ourselves to where we've got contract rates, great service providers that we've been able to not have to pass on those charges because we were already in that market. We know how to handle those types of time-definite shipments. We know how to handle oversized shipments. We don't have linear foot increases like some of the common LTL carriers do. So that's kind of what's allowed us to not pass those increases on to the customer. And then on to the full truckload market as we've seen the utilization fall about 87% in January due to decreasing demand in the marketplace, which kind of makes sense with what we saw over the past 2 years. At one point in time, in 2021, we saw a truckload ratio of every 10 to 12 loads, there was maybe one truck available to move that cargo through the network. And then what that did was that also took on the spot rate versus the contracts, pretty much about 25% of the tenders were rejected because carriers knew that they could get away from the contract rate and then get a spot rate that could be sometimes double or triple what the contract rate was. So we've seen a decrease in that, which just tell us that LTL market has been stabilizing because today, we're seeing a pre-pandemic truck load ratio for every 2.5 loads, there is 1 truck out there. So that's declined by 16% in February, which gets us back to a more stabilized market or pre-pandemic. So -- and with that, both contract and spot market forecast saw a very little change. Because customers are now back to the contract rates versus the spot rate. And then rate forecast for 2023 are expected to decline about 10% this year. And then when it comes to the air cargo commercial aircraft or cargo, we've seen capacity remain the same and rates are stable. We've seen no significant changes in the air cargo industry when it comes to -- for Expeditors and moving the cargo. And that kind of is it for the domestic or Transcon environment. I'll -- from this point forward, I'll pass it over to Alejandro so that he can take over from here.

Thank you, Brendan. Good morning, everybody. Thank you very much for joining our webinar today. It's our pleasure and privilege to share with you some of the information. I have the opportunity to talk to you about the air imports and exports, primarily focused on the export side. and primarily focused on the Southeastern. However, we'll talk a little bit about the overall air market into the U.S. and outside into the U.S. And please, if you have any questions, we'll have the opportunity, [Indiscernible] has mentioned in the beginning to take some of your questions and provide a little more to that details after that. If you can please go to the next slide. So we'll start with the general markets update for the Americas in general for the air cargo. And overall, if you can see, and it is just pretty interesting because we kind of came around completely -- almost completely to the situation that was prior to the pandemic. We're still not there yet, but it is just amazing to see how we've moved through 3 years of the pandemic, and now we're kind of more back to the normal situation. So if you can see it's almost all green all of the markets are moving pretty with a good flow. There is not a lot of congestion. The volumes to the Latin American market, it's what we do a lot here in Southeast has been pretty stable, has normalized. There is a lot of capacity in the market. Americas to Europe, especially thanks to the reintroduction back of the passenger capacity has been also pretty stable. The capacity has increased and it's available through all the main gateways, JFK, Miami and Chicago and Atlanta. Middle East and the Indian subregion has been still a little bit impacted. There is a significant demand to go to India specifically, and the overall capacity has been constrained. This is one of the markets that we still a lot of -- still see a lot of the challenges. However, space is becoming available albeit at higher pricing. Now Americas to North Asia, cargo moving from all the gateways in the United States and the demand is pretty stable. It is relatively high to Hong Kong and into an airport. However, it's been generally supported by the airlines and some of the prices are still at a higher level. However, you can find decent pricing at standard services. In Americas to South Asia is the one that has been a little bit still congested. Capacity is becoming more available, especially to Australia and New Zealand. However, if you want to move Express, it will require the higher price [ Tier ] 1 pricing with -- since there is not a lot of carriers who go to that region. So we'll move to the next slide, please. And here's where we're going to start seeing a little bit more where things are going right now in the air market. So this is our global air capacity. If you look at the top portion of the slide, you will see that the site is dominated by green dots, right? And a lot of them in the double digits. So that represents the capacity that the airlines, especially the freighter airlines, right, but also the passenger airlines are -- have been added or have been adding to the market across the board and especially towards the larger markets from Asia, China and Southeast Asia to the United States. Capacity has increased over 8% and 10% versus 2019. What's important is this comparison, it's important to do it against 2019 because this is the last year, as we all know, before the pandemic, where the market was what we call normal, right? So we now actually have more capacity in the same period of March of 2023 versus what we had in the same period of 2019. This is very significant as we continue looking in the subsequent slides, why is this very important? You can see also from United States to in North America to Latin America, the capacity is in over 20%. This is largely driven with -- because of the Northbound cargo coming from Latin America. Latin America is a big manufacturer and a big producer of all the agriculture goods. So there's a lot of volume that comes from Latin America, the [indiscernible], the fruits, et cetera, into United States and Canada. And this also [Indiscernible] the need to have additional aircraft on that route, which on the south bound opens at capacity as well. And if you look at the bottom slide, where you will look at the intersection between the total capacity of air freight of cargo freighters versus passenger belly capacity. For the first time since 2019, if you look towards the end of Q4 and Q1 -- Q4 of 2022 and Q1 of 2023, it's the first time in 3 years that those capacity have merged. So that means that we are finally reaching the pre-pandemic normal, where 50% of the cargo would be moving on passenger bellies and about 50% of the airfreight will be moving on cargo aircraft. We're now finally getting back there. It still fluctuates. If you will see as of late Q1, freighter still represented higher capacity, but airlines -- passenger airlines are catching up. Something important to note is, as you see on the slide, that passenger belly capacity is still down 21% compared to 2019. However, this is primarily driven by the China market. So intra-China or intra-Asia. In the rest of the world, the passenger capacity has actually almost rebounded back to the 2019. And you can probably see that in your personal life, if you have tried to purchase it ticket lately, the passenger flights are very expensive. They are very busy people are traveling. So if we take away the China market, it's actually almost back to 100% in the most 2019, which is very important for our analysis of the market. Carla, if you can please move to the next slide. Another component which is important to account for as we look at the air freight market, is that because of the additional capacity, and we'll talk a little bit later about the demand and the reduction of the demand and additional contributing factors such as environmental and cost of fuel. It has been more expensive for the airlines to operate larger and more older planes such as the 747. In addition, you might have heard in the news that Boeing has produced the last 747 late this last year and earlier this year. So airlines are moving away from the larger, older planes, and they are moving towards more environmentally friendly, fuel-efficient planes such as the 777 and 767 that also represents the fact that at some point, that capacity will balance itself out because the larger planes such as 747 provided an additional capacity, especially for larger out-of-gauge cargo that some of these other planes cannot move. But it is interesting because overall, the capacity is increasing, but it's increasing towards more of standard wide-bodies instead of the larger 4-engine planes. Please, Carla, if you can move to the next slide. And now we'll talk a little bit about demand. If you remember from the previous slide, it was almost all across the board, green. In terms of the demand, it's across the board, mostly red. So you've seen probably a ton of news about the economy, what is happening, especially in the United States, but this has been across the board. The overall demand for air cargo has been decreasing compared to year-over-year and across the markets. This is driven by a number of things. There is a significant capacity of inventory across developed economies such as United States and Europe. That means that the manufacturers are placing less POs to the manufacturing centers just as China and Southeast Asia, which in terms does not require those companies to utilize airfreight for urgent shipments going to those final markets, right? In addition, you -- and Johnny probably will talk about that, the ocean market has softened and there is additional capacity in the ocean market. A large component of growth during the pandemic for the air freight was the fact that there was no capacity on the vessels. So a lot of companies had to make a last-minute decision to move cargo in their inventory on the air cargo so they can meet the customer needs. As now there is more availability and quite significant availability in the ocean market, a lot of those companies are reverting back to using ocean freight versus airfreight. So that also reduces the capacity -- reduces the demand for air freight across the board. And you can see not a single market with the exception of maybe northbound from Latin America and some of the Europe to Latin America. Across the board, almost all the markets are experiencing a reduction in demand. You can read a little more on the slides, but those numbers represent anywhere from 10% to 21%. And China is the one that has seen the largest impact. 39% we have seen in the last couple of months reduction compared to year-over-year and also the previous years in demand for air cargo from those markets. Carla, if you can please move forward. As we move a little bit more towards the Americas specific, and we'll talk about the Southeast region and specifically what we do, a lot of it here going to Latin America. Overall, the market has stabilized. Capacity is definitely out there. There is a lot of capacity and the spot market is very active. Right now, the airlines are trying to fill their planes. They are being very aggressive with the rates. They are looking for cargo, especially going, let's say, southbound to Latin America. And it is definitely a buyer's market now. In comparison to the even a year ago, where the rates were almost sky high, let's call it this way, and it was a seller's market, there was not enough capacity on the airplanes right now, we're in completely reverse. Right now, buyers have the upper hand in the market. And we've been ourselves very actively working with a lot of our customers renegotiating rates with the airlines and trying to find savings across the board. And if you are actively utilizing air freight right now and have not done that, we definitely urge you to review that because right now, the market is in a position where there's a lot of capacity, and we can negotiate those rates. Overall, going to Latin America, everything northbound from United States and especially Southeast region. Miami, in particular, is the hub for air cargo to Latin America. All the lines are moving in a good flow. There is no delays and no backlogs. Currently, the fuel surcharge is trending downwards. However, we do -- and don't quote me [indiscernible] 2 months from now, but we do believe the fuel surcharge will level itself up and maybe go slightly higher in the next couple of months. And overall, and this is for a lot of the shippers and for a lot of the companies, this is definitely a good thing, maybe not the best thing for the airlines, but it's a good thing for the shippers. The pricing is back to pre-pandemic levels. There are certain lanes and areas were, they will not necessarily go fully back to the pre-pandemic levels just because the operating cost has increased significantly for the airlines over the last 3 years. But it is stabilizing more and more towards what we used to see before. Carla, if you can please move forward. Carla, please the next slide, yes. Thank you. Specifically for Miami as I'm based here in Miami, the Miami operation is running with a consistent volume. There is no major challenges at the airport with the ground handlers. There is no issues with the airlines, except in the cargo generally, once the cargo is at the airline, in terms [Indiscernible] in about 24 hours to go to the final destination. Carla, if you can move to the next slide, please. Right. And I want to talk a little bit more time about this slide. It's -- obviously, you want to have a perspective, what's going to happen in the market. And again, as a participant, as a freight forwarder, as a supply chain company in the market, we do not have the crystal ball, but we do have an analysis that we get from our partners from what we see on a day-to-day basis. And these are some of the things that we believe will impact as we go further into 2023. So one of the things that I mentioned a little bit earlier, airlines are facing some -- quite significant challenges with their personnel and labor, right? You might have heard this on the news, but there is a concern about the availability of pilots and crews to operate the airplanes. And we have seen during the pandemic, something that was not maybe seen a time before is the importance and the role that the ground handlers play in the whole supply chain with the airlines. So there's still concerns about the availability and the capacity of ground handlers to operate. However, as the demand reduces, we do believe that we'll have the time to adjust that, right? But it is a concern as we go into further into 2023, we do not believe it's going to have a major impact this year, but there is a need for a new input of younger personnel younger pilots into the mix. So there is a continuity in the service right now. You might have seen this on the passenger side. We've seen a ton of disruption happening lately, and this will also have repercussions on the cargo side. On the positive side, we have seen easing of the restrictions across the board, especially in Asia. Until very recently, you know that China has implemented significant lack downs China has reverted most of those lockdowns and many other countries in Asia, which will allow to open more passenger capacity in -- subsequently, it will also allow additional belly capacity into those markets, which is a positive thing. One of the things that I mentioned a little bit earlier is that there is a limited need to move cargo from ocean freight to air freight. Now most of the shippers there are in need to move -- ocean freight from Asia are finding the capacity. So a lot of that extra 2%, 3% of global trade that moved to air freight during the pandemic is coming back to Ocean, which is also impacting the market. And we believe this trend will continue into 2023. What I mentioned a little bit earlier is the recovery in utilization of the wide-body passenger airplanes. Historically, before the pandemic passenger airplanes represented about 45% to 50% of all the cargo -- commercial cargo most international, right? As we are coming back to that, we'll see back an adjustment where freighters have less role to play in the international air cargo and passenger flights will observe more and more. And this will also put additional pressure into the market. Currently, there's a couple of other geopolitical things. The Russia-Ukraine war is impacting, especially in terms of some of the planes that got grounded and additional routing that the airlines had to change, for example, some of the Northern European airlines are no longer allowed to use some of the airspace around Russia. So they have changed or removed some of their trade lanes. But overall, this is a significant geopolitical impact. We're also talking and looking into the impact of changes with the manufacturing sites in -- from China to other the repositioning of the manufacturing to other countries, and we'll see how that will impact further into 2023 and 2024, the airfreight from that area. And from an economics perspective, one of the biggest impacts that we're seeing for airfreight is that, that uncertainty that we see into 2023 about what's going to happen with the economy. The federal reserve continues to keep high rates there is significant inventory in -- already in the United States that -- and there is a relatively modest demand for retail goods and other physical goods, as Brendan has mentioned now this year. So it will all impact how companies such as yourselves, shippers, manufacturers, retailers, wholesalers will place orders we indeed see a slight increase through our order management customers of resurging POs towards the Chinese manufacturers, which will mean in about 3 to 6 months from now, there might be some uptick in cargo coming from there. But right now, it's still year-over-year is relatively low and significantly lower in percentage perspective than it was, let's say, in 2021 in early 2022. So that is something to keep in mind, however, we do believe the market overall, especially going to Latin America, our main market and to Europe will stay relatively soft. There still will be significant capacity through 2023. However, there could be a few things that might impact that removal of some of the planes from the market and potential fuel increase that might impact that. So with that, I thank you very much for your time. I hope this was useful for you, and I will be passing the -- my next colleague to Johnny talk a little bit about ocean. Thank you very much, and hope you have a great day.

Good morning, everyone. Thank you for joining us. As [Indiscernible] mentioned, my name is Johnny Garcia, I'm the export manager in Savannah. And I'm going to talk today a little bit about ocean import, export. And before I start it off with the slides kind of want to do a recap of the past couple of years. It's been a little crazy in chaotic. So just kind of a quick reminder of where we've come from and we're going to look at kind of where we anticipate things going. So if you kind of remember back to 2018, we had -- 2017, 2018, we had the kind of the [indiscernible] going. So ocean freight started moving pretty quickly and there was a high demand. And then right at the beginning of 2020, little thing called COVID hit and demand fell off [indiscernible] of the face of the map for ocean at least. Nothing was moving. There was capacity all over the place and rates were bare bottom, where you kind of -- fast forward a couple of months into 2020, we get moving and then the rates skyrocketed -- sorry moving again our demand, by far exceeded capacity, and we started to see rates that we've never seen in the market before. For those of you that import some of you guys from China to the U.S. East Coast, West Coast, you are seeing rates in excess of $10,000 where typically we're seeing that $2,500 mark, somewhere around there, give or take. So that's kind of where we were. And then as the pandemic went on, everybody bought, we resupplied the markets. And now we're at a point where, once again, demand is reduced and supply is starting to exceed the demand, and we're seeing that in our rates. So I'll start moving into our slides here. In the ocean world, and we've always found that there are certain market levers that really kind of control the market. I mean they year-over-year, decade over decade, they always kind of come back and really affect how the market works. One is capacity. So obviously, if you have more capacity than demand, your rates are going to be lower and it's going to be a shipper's market. When the demand exceeds capacity, that's when it becomes kind of an ocean carrier market. They have the controllable rates start going up. It's harder to find based on vessels. So capacity demand, operating expenses, fuel, things like that, back in mid-2015 to 2017, we started talking about the environmental or SOFR, things like that. So operating expenses for the carriers started going up, there were requirements for certain fuels, started scrapping vessels to create more energy-efficient vessels. So things like that can have a huge impact on the prices and the capacity because of spending on what vessels are able to use. And then financial performance is always a key indicator. Traditionally, ocean carriers run on very lean margins. Year-over-year, sometimes they will be in the red. They may make a decent amount the next year. But overall, it's kind of come and go, and then you get into the last couple of years where in 2021 and 2022, the carriers each year combined made over $200 billion. So the kind of the market slip there as well. And then obviously, you have outside factors with these levers, which in our case recently has been the pandemic. We had the market downturn in 2009, and then we had a strike -- I'm sorry, we had the strike back in 2015. All those things, [indiscernible] by this industry for 10-plus years, you've see now impacts, our capacity, our pricing, things like that. So Carla, if you can go to the next slide. And this is just another representation of kind of that supply and demand cycle. So right now, we are right here in that capacity surplus, rates fall piece. We were living in the capacity shortage and the rate increase for the last couple of years. So fortunately, we're starting to ship over here. Over the last few months, we've seen rates just plummet. So we're back to pre-pandemic levels as far as the Asia to U.S. rates go. U.S. exports are still a little bit elevated, but they're coming back down to pre-pandemic levels. The only kind of [indiscernible] out there is the European market, Europe to U.S. and U.S. to Europe are still high demand. So we haven't seen a lot of movement there. And Carla, if you can move to the next one. And then this is just kind of a little bit more as far as the supply and demand, how it affects our markets. So we talked about how we were in a carrier market, now we're back into the shippers market. So looking at this demand is only projected to be about 1.4% in 2023. And the capacity growth is almost 9%. This includes with all the money to the carriers, they've been making, they've ordered a lot of new ships. They have a lot of orders on the books. And then we already had a pretty high capacity as far as ocean vessels go prior to the spikes in demand. So with those 2 things combined, we're looking at increase overall. So it's going to by far outpace the demand over the next several months into maybe a year or 2. Next slide, please. And then this is just kind of another representation. We talked about the market levers, things like that since capacity is up, demand is down. There's artificial needs that the carriers used to try to control that. So right now, the doing what we call blank sailings, things of that nature, where they artificially take capacity out of the market. So they may move from certain lanes, especially the age of the U.S. right now where the rates are the weakest. They're pulling several vessels a week, sometimes 10, 15 or more, and so this kind of shows you 3.1% of the entire capacity has been [indiscernible] currently. So they're trying to really work those rates and at least get them back up to where they're sustainable for the carriers from a profitability level. Move to the next slide, please. And then this is just kind of another representation of that. And then also just kind of what they've been -- container or containership fleet deletions, scrapping, just removing capacity from the market older ships that are aging out. You can kind of see the average age here in the red. So typically around that 25- to 30-year mark, they removed those ships. If you look at 2016, 2017, we had a large number of ships being scrapped due to the move towards cleaner vessels, cleaner [Indiscernible]. And then if you look '21, '22, '23, demand was so high, even the older vessels, they were keeping in service. They were trying to scrap anything. And then we have a bunch of new capacity coming in. So there's more new ships being built and there are ships being deleted. Next slide, please. And then just kind of another representation by carrier, MSC and Maersk has kind of been the big news over the last few months. They are going to dissolve their 2M agreement and both kind of go out on their own. So as you can see, they have a lot of ships coming in, and that is so that they don't have to rely on the vessel share agreements. They're going to be able to service the whole world on their own. Next slide, please. And then just kind of capacity globally. This also shows -- so the red are the blank sailings. This is one month time period starting week 12, so you can kind of see Asia to the East Coast, quite a few blank sailings. So you have 16 blank sailings. I'm sorry to the West Coast and then 11 to the East Coast. So that's where the bulk of these blank sailings are because they're really trying to put those rates back up. And next slide, please. And then there's just another kind of a look at the blank sailings, total capacity that [Indiscernible]. We do anticipate that blank sailings will continue. As I said, the areas are going to continue to try and keep -- artificially kind of reduce that capacity to level up the rates. Next slide, please. And then this is kind of a one bright spot in what we've seen. The rates are down, which is great from a shipper perspective, and then also, we're seeing finally [indiscernible] go down back in the height of the pandemic, we had 30 west vessels sitting off the coast of Oakland, L.A., Savannah, and well times there could be anywhere from a couple of weeks to 6 to 8 -- I'm sorry, a couple of weeks to 6 to 8 weeks. So quite a change now, now we're looking at -- there's 0 vessels outside of Oakland and then just a handful of them outside of each port on the East Coast. And if you go to the next slide, please. And then really just kind of looking ahead, what we are anticipating, obviously, we don't have a crystal ball, but based on all the information that we have kind of our historical data, things like that, we are expecting the artificial capacity management by ocean carriers to continue. They're really, really pushing right now, the rates are at or below pre-pandemic levels, and they're about to sign a lot of the BCO long-term contracts. So the carriers are implementing GRIs, trying to get those rates up and also blank sailing like we spoke of to start officially decrease the capacity and hopefully sign some rates that will allow them to at least be slightly profitable throughout the rest of the year. We do expect great volatility that everybody over the last couple of years, I think, has found kind of a sweet spot using the spot market. The long-term fixed rates can be incremental sometimes. If the rates market moves down and you're talking the long-term high rate than the [Indiscernible] if you sign a very low rate, sometimes the carriers will not honor that and it's kind of a moot point. So what we've seen over the last couple of years is that the stock market seems to get your freight moving most consistently and at the fairest rate. And then kind of things to consider just to kind of improve your prospects, your supply chain, volume forecasts are key. It allows your order, your carrier, whoever you're working with to kind of get ahead of the game and work upstream and more on capacity and just ensure that you're protected and able to move smoothly without any type of disruptions definitely need to adjust lead times. But even though our well times have gone down quite a bit, on-time performance for the carriers is still very low. It's sub-30%. And that's a lot of the blank sailings that definitely affects that as it affects their whole rotation. And they're not adding vessels to make up for those blanks, and they're not increasing the speed to make up for the timing. So you definitely need to be a little bit more flexible on your lead times. And then just, once again, just forecast our key, definitely want to share your forecast as far in advance as possible and then always budget contingencies. Air freight as Alejandro mentioned, especially during the pandemic, there was a lot of residual freight that moved from ocean to air, and although we're seeing less of that, it's still always a good option to have in your back pocketing pace, something happens with production or there is another issue with ocean freight where you can keep things moving. And just some of the things that we are looking at right now, definitely want to diversify. That's one thing that, as expediters, we have done well over the life of our company is we have a multi-carrier footprint. We have relationships with all of our carriers so that when things get tight, we're able to leverage those relationships and partnerships and keep rate moving where in a lot of cases, if you're a pigeon-whole into 1 or 2 areas you may not have that luxury. So we always definitely suggest that you try to diversify your footprint, get your options open. And we're anticipating -- actually in all honesty, we're not sure how the market is going to go over the next few months, but we are hoping for an increase or a turnaround towards the end of the year. And as always, we're here to service our customers, answer any questions you have, and we're here for you if you need us.

All right. Thanks, Johnny. Thank you to all our local experts. Appreciate the insights. So I haven't seen any questions in the chat box. So Rave, maybe we can take everyone off mute, and people can jump in if they do have a question. Anyone? I mean, you guys did a really good job of covering the topics in detail. Okay. Well, let's go to the next slide. Okay. So first and foremost, I want to thank everyone to join us. I know everyone is super busy everyone gets invited to a ton of webinars. So we definitely appreciate you taking some time out of your busy days to join us. Thank you again to our speakers for a wealth of information. So here, we have a couple of your codes. The one on the left is for upcoming events, so future webinar seminars, and one on the right to subscribe to some of our communication channels, where we share market updates, changes in the industry, so on and so forth. So we'll give you a second to take a picture of these. And if anyone is interested in a copy of the presentation, there will be a survey that will be sent out a handful of questions. Once that is filled out, you will automatically receive a copy of the presentation Okay. If there are no further questions, then we will give you a few minutes back in your day, and we thank you once again for everyone to Expeditors. Have a great week.

Thanks, everyone.

Thank you, everybody.

Thank you, everybody. Good day.