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

Good morning, everyone, and thank you for joining us today. It is right at 11:00 here on the East Coast. So I appreciate those of you who are joining, especially those that are joining a little bit earlier, if you're on the West Coast for us today. So we are going to get started here in just a moment, starting to see the numbers climb in the participation box down here. Just a couple of quick housekeeping items before we get into the content today. So to start off, my name is Samantha Hurst, one of our managers for Marketing and Bids for the Americas region with Expeditors. And I will be supporting in the background if you have any questions, especially any technical difficulties that I might can support. So to go on to the next slide, let me just introduce the topic, go over a couple of housekeeping items, and then we'll introduce our speakers. So today, we are talking about transporting high-value goods, especially in today's complex market. So there are lots of factors that are going into making this certainly a more complex move if you are moving high-value goods. And so we are going to go into that. Part of a housekeeping today, if you have not joined us previously, you are on mute and your video is turned off, you should see a Q&A box. So we do encourage you as you go through the content today, as our speakers go through the content, that you drop any questions into the Q&A box, and we will be sure to address those. If any of it seems particularly specific to your business, our speakers may reach out to you separately, but we're going to do our best to make sure all questions do get answered. And if we go to the next slide, just a few things to 45 minutes of content, and we will have the Q&A to follow at the end. And we do have a lot of people ask about how do I get the resources and additional content. There will be a landing page that you will be directed to after you complete a short feedback survey. And typically, you'll get that survey from myself via e-mail within about an hour after the webinar wraps up today. And then finally, how do I get information on future webinars, we do encourage you, if you're not already, to subscribe to our webinar invites. You can also get local and global market updates through that subscription, and you can scan the QR code that's right here at the bottom right of your screen to get subscribed. So now we'll go on to introduce our speakers. So we have with us today, Kanny Satar. He's our Senior Vice President of Global Transcon. Kanny has been with Expeditors for over 20 years, and he served in a variety of capacities, including starting out as an EDI analyst before working in distribution, sales and now Transcon. Also with us is Alex Carlson. Alex is our Director of Global Transcon. He started with Expeditors in 2011 and early in his career worked in Ocean and Air and then has spent the majority of his time with Expeditors in our -- in various Transcon roles. So now I'm going to turn it over to Kanny to get started with our content.

Thanks, Samantha. And thanks, everyone, for joining. I appreciate your time and how busy everybody is. I also appreciate Samantha putting a picture of me when I was younger and Alex is when he was younger. We don't actively look like that today with the gray hair. So also about 20 pounds ago for me personally. But anyways, we'll get into the content. So today, we're going to talk a little bit about high risk, high value, okay? A lot of shifts going on over the last 10 years in the type of product we move across the road. And most specifically right now around the U.S., but globally, it's shifted significantly. All industries, high tech, health care, aviation, retail, high fashion, right? All these things are creating elements of risk for our customers as well as for us and our service providers. So we're going to touch on a few different areas and kind of what's the profiles and what's happening. We're going to talk about some solutions around that, and what are the market offerings in that space, which Alex will take you through. And I think ideally, if you go to the next slide, it's going to -- we're going to touch on these 5 areas really. Government regulations are changing with AI and 400G and all the new GPUs and the servers in the high-tech space, high fashion, the tariffs, et cetera, health care, cold chain, device side, pharma, a lot is happening, a lot is increasing values, a lot is changing. Speed to market, total customer experience is #1 for a lot of what we hear in our customers. We have to service your customers better than anybody, and that comes with a lot of risk and time across the road. And that effort and energy around that space is what we want to make sure we create any protection around. Value of cargo. You guys have seen the GPUs. You've seen the different values increase. If you go to a Nordstrom and you buy a bag, that bag 10 years ago was probably 1/3 of the price. You go to the market and you look at the different types of servers and server space and computers, 3x. So values are increasing. As values increase, risk increases, theft. The thieves are becoming way more organized, way more structured. They're going at different levels of where to attack at the origin port, at the origin point at the distribution. They're looking at the road, when the truckers are stopping, they're timing everything. They're looking at the destination side, the delivery of the customers, the yards. It's a lot more organized than it was in the past, and we have to protect against that. And then the fragmented truckload market, I think you have smaller fleet management. There's bid brokers, there's brokerage loads, there are double brokering loads. These are all things that we want to avoid as much as possible when it comes to a high-value load. It's significant risk. We don't want to keep moving this down several layers. And that's where we're going to talk about a little bit about the direct asset capacity. So the next slide, we're going to talk about what the enhanced high-value solution is, and how it can benefit our customers. The 5 bullets you guys see at the top there, dedicated secured rep, experienced drivers, high-value protocols. We'll dig into that, Alex will. Dedicated assets. This is an important one. You want anything that's high value moving on a direct asset. You want to know if it's the same trailer, same driver. You want to know if it's a closed-loop network. You want to know if it's a scheduled and dedicated network. These are very important things to look at when you're moving to high value. You can book a truck normally. And sometimes if you don't ask the questions if it's moving on an asset or a direct asset or it's a team drive, et cetera, those certain scenarios can be brokered and then double brokered in some instances. We want to make sure you avoid that, specifically with high value. Layered security, 24/7 management. There'll be 3 levels of security in this particular discussion that we're going to have today. You have asset. You have the carrier security, you have the logistics provider security, 3PLS and then you'll have an enhanced like device level security, too. So 3 levels of monitoring. And this is really important because you want to get as much monitoring as possible. None of this is going to stop the armed hijacking, the attacks, all that stuff. It's -- that's out of control. But what you can do is put into position a solution that's going to help control those risks that you can put some sort of mitigating factors around, okay? The next slide, we'll talk about today is standard, secure and enhanced. What are the 3 different levels in our mind on moving cargo over the road. Standard, you guys know it. Solo team options, variable transit times, unscheduled, it's ad hoc capacity, you need a truck, it could be brokered. Secure, EUVs, you have solo and team, you have a little more prediction -- predictability on your transit time because you're booking a specific secure truck, direct asset capacity, so you'll have an asset, you'll put the signals on it, the cargo signal, the asset, the device management and then maybe escorts as well. That's where usually everyone kind of sits in the market. And that protection element around that is limited to what you see there. This enhanced high value is something that we're introducing into the market. It requires a lot more management planning. It's going to provide dedicated assets and dedicated team drivers and dedicated closed-loop network for customer-specific. You're going to have 3 levels of monitoring, like I mentioned, the high-value protocols, the carrier, the device manager and then Expeditors as well or the 3PL. Dedicated security teams, so individuals kind of monitoring every element of transportation. There's other things that we're going to share today, too called security bulkheads, multilayer locking, all this stuff. This is more in place for that smashing graph. So again, like I said, armed hijacking, they're going to take the whole truck, nothing you could do. But smash and grab, maybe a truck stops, the driver goes to the restroom, comes back. There's things that we can put in play that can help stop that, and we'll share some of those. And then I think one of the most important pieces of this whole thing is that it's set up in a way where you're going to have control management and visibility and knowing what the trailer looks like and knowing what the drivers are and knowing the routes, knowing the schedule and knowing the capacity, okay? So Alex will take you through how that looks operationally, both from a capacity management perspective, a security perspective and an operations perspective. And then we'll share how that affects the industry a little bit, okay? All right, Alex, I'm going to transfer it over to you.

Thanks, Kanny. Yes. I think the foundation of the approach that we're taking here, and the way that we view mitigating risk is really in applying a multiple layered approach to addressing each of those factors that are, like Kanny mentioned, within our control. We know the high-risk areas. We know that the majority of theft and crime happens when assets are at rest. Cargo at rest is at risk. So we want to make sure that there's seamless transportation. We want to make sure that we know exactly who is and how the cargo is moving from a capacity standpoint. We want to make sure that we have all of our processes that are specific to transporting high value in place. And then we want to layer on levels of security on top of that. And so we'll go into each one of these areas. But really, the way that we see managing risk is by adding as many layers as possible to really pull down the risk to an acceptable level. When we talk about the values increasing significantly across all commodities, that becomes a challenge for insurance coverage because these values are far exceeding the limits of liability of any carrier in the market. A several thousand dollar truckload that's moving is carrying potentially millions of dollars' worth of cargo. And that really puts focus, like we mentioned before, from the criminal organizations, they know the types of commodities that are moving. They know where they're moving from. They know where they're moving to, and they can be a lot more strategic with how they're approaching which loads to target. And so our approach is trying to head those off at every point in the process to make sure that from start to finish, the goods get where they're going, when they need to be there and intact, delivered in full. So if we hit on the first aspect of the -- from a capacity standpoint and how we manage that capacity. We're procuring dedicated, scheduled, direct asset capacity for any of these high-value loads. And what that means is we know exactly the driver and the asset and the trailer, the tractor and the trailer that is going to be placed on any given high-value load. With that, we can coordinate and make sure that the equipment specs are top of the line. We have -- we're placing only late model equipment that's equipped with all of the in-cab and in-trailer security and communications equipment. And we're planning out these routes well in advance of them moving. A successful move for a high-value protocol starts well upstream to plan out the entire route that the driver is going to take from start to finish. That includes when it needs to load so that it can move in transit seamlessly and arrive at the recipient facility when they're open and ready to accept the cargo. We don't -- what we don't want is, at any point, the driver having to stop and wait for the next step to happen. And that could be -- we don't want any unnecessary dwell at the origin facility. We also don't want the driver arriving before the recipient can take it because we can do everything all the way up until the very end. But then if the driver needs to stop and wait in the parking lot or at a rest stop because the facility doesn't open for another 2 hours, then we've now introduced additional risk all the way at the end, right at the finish line. And so we're taking the approach of planning out the entire route, including any rest stops, any fuel stops along the way and also layering on additional secure yard facilities if there is, say, a mechanical issue. Anything that might happen within the transportation from start to finish, we're making sure that we have contingency plans along the way so that we know exactly where the drivers can go to, who will be there. And then all of that is geo-fenced upstream. So we build in that route plan and then any deviations along the way, if the driver turns left and they should have turned right, we're able to quickly act on that via those 3 levels of security monitoring and directly intervene with the driver, get them on their cellphone and understand what's going on, what are you seeing? What's happening? Why did you turn left when you should have turned right? And then that communication can escalate according to how we establish that with you. And that visibility is also available to anyone within your organization that you grant that access to because we know that in these high-value situations, there's a lot of eyes on the success of that transportation from your end. It could be buyers. It could be engineers. It could be technicians waiting to install this equipment. We know that just arriving at delivery is not the end of that product's life cycle. There's other things that are going to need to happen in the value chain, and there's people waiting on these goods to arrive and have a vested interest in making sure that, that happens seamlessly. So from the origin side, we're designing the routes. We're scheduling that transit time in conjunction with you in building out -- how is this going to move? Who are all the players involved? What are their capabilities? When can they receive this? When can they ship it? All of that. And then we're also coordinating, like Kanny mentioned, if there are multiple loads going at the same time, making sure that those drivers are driving in convoy that they're escorted and that, again, everyone is on the same page with how this move is going to go. The other element of risk from the origin side is by procuring and placing those dedicated assets on these high-value loads. That means that not only is the load secure, but the information about the load is also secure. So when a load, if it goes into a broker environment, and potentially goes on to a load board for owner-operators to bid on and source that capacity for the broker, while there's hundreds, if not millions of very strong drivers that would do a great job on moving that cargo, it's not guaranteed. We don't know who that could be, and you don't know who that could be more importantly. But not only who is moving the load, but who knows that the load is moving is important because a lot of these criminal organizations have found out that if I know the commodity that I'm targeting, I can quickly understand where it's being produced, and I can subscribe for a very low cost to any of these public information load boards, I can pose as a carrier. And even if I'm not going to put a driver on to fish and put a driver there that can intercept this load, I know when the load is moving, and I know where it's going, and I know when it's going to be there. And somewhere along the way, I could intercept that load because that information is now out in the -- not public domain but relatively easy access domain to really understand and target and pinpoint those loads. So while the vehicle is in motion, right, it's within the direct asset and it's not getting touched from the time that it leaves to the time that it arrives. And along the way, we have the cargo signal device monitoring, and again, that's active management. So it's not just visibility to adopt a dot on the map and the dot veers off and you're kind of so helpless. We're directly intervening if anything is going even slightly not according to plan. We've been involving law enforcement, if necessary. But first of all is obviously to the driver to understand what they're seeing in the cap. And then like Kenny mentioned also, we'll get into it down the line is to protect against those kind of smash and grab situations layering on our security bulkhead program to really seal off the cargo in the trailer, so that even if someone gained access into the trailer, which we'll talk about protocols for how we avoid that. There's still another barrier that they're going to have to deal with in order to even get access into the product. And then again, with the direct asset capacity, we're able to ensure that all of those assets are equipped with GPS and in-cab communication systems. So if the driver is seeing something while along the way, we have cell phone numbers, we have in-cab communications devices and we have the GPS. So really at every level, we're trying to build in fail-over procedures so that if we're out of cell phone coverage, we have GPS, and we have the in-cab. If the in-cab is not connecting, we have GPS and cellphone. So we have multiple ways to monitor and communicate with the driver as they're moving along the way. And then once the load out arrives at destination, we're able to again, geofence that facility, so we know exactly when the driver arrives. The route has been preplanned so that when they arrive, they're backing into a door and immediately getting unloaded, and we're managing, again, that security bulkhead protocol so that once the doors are opened, the security bulkhead can be removed by the recipient facility, and we'll take care of all of the coordination of getting that out of the customer's facility. So really, there's no impact to them other than their product arrived, intact and in full. The other layer to this is in the case of a shipment moving cross borders, there's the additional wrinkle of the customers' procedures at the border. So at the beginning of the process, obviously, everything follows the same flow, but the additional variable is we need to plan for time with customs at the border. And we want to ensure that, that variable we need to make sure that along the route, we planned so that the driver arrives at the border at the appropriate time so that wait times or as little as possible. Customs obviously, is open and ready to receive these goods. And through our customs brokerage team, we've already coordinated that customs clearance activity, either the export or the import so that as soon as the driver arrives, everyone has all the information that they need so that customs can do their portion of the process, process the export, process the entry and the driver is back on the move. In the case of multiple countries, again, if there's a regulatory requirement where we need to use drivers from those countries. So if we're moving a load, say, from Mexico into the U.S., we may have a dedicated team driver from the Mexico side, taking it all the way to the border. But part of our protocol is making sure that the trailer stays intact. Nothing is touched there from the seal of the bulkhead or anything like that and that we have a secure yard on the other side of the border, so that the drivers can swap tractors and then the load can continue on its journey. Again, that's all planned through upstream understanding when that drive -- those teams need to be at the yard on the U.S. side, so that the truck is going to arrive. The next team is waiting to hook up to that trailer and continue on in the convoy to the final destination. The other important piece to the integrated customs brokerage within our team is, again, we're eliminating touch points. And we're eliminating additional information about that load getting into more hands. So because all of that information is insulated to just those within our organization that are in a need-to-know basis. We're not trying to coordinate with additional outside parties. Although we do, if we happen to not be the customs broker, we can facilitate that, but really the most seamless way for this to provide visibility and to move through the border is we can keep all that information in-house, process the customs documentation and continue on. The second level to the protocol is really the process that we follow and that our drivers follow while the shipment is underway. So again, it starts with the asset sourcing. So through our ground network that we've built up over the past decade, we have some very deep relationships with the largest asset-owning fleets in each of the geographies. And so through that, we've been able to procure again, direct dedicated round trip drivers to serve on these high-value loads. And with that, we've also been able to put in play qualifications for which drivers are allowed to fall into this protocol. So really, we can handpick those teams to make sure that they have all the appropriate training that they have the appropriate tenure with the organization. They have the appropriate accident-free mileage record so that really we can put the top-tier most qualified people on these loads as they're moving through the country. We talked a lot about the equipment requirements. So again, making sure that through that direct asset capacity, we can be prescriptive on the type of equipment that's being used, both from a tractor and a trailer standpoint, the communication that's available with the driver and again, with the equipment. And we can be prescriptive on the seals and padlocks and all of that trailer securement technology that is available out there to ensure that the doors are only opening at the shipper to load it and then they're not touched again until they're received at the proper location. From a dispatch standpoint, we're looking at drivers with around 12 months of seniority within the organization. We have some strict training protocols that they go through. And then through that dispatch and planning, we're able to coordinate that convoy process with the escorts to really make sure that everyone is on the same page with what the game plan is for how this is moving. And there's really a lot of moving parts that are happening. There's drivers, there's escorts, there's GPS, there's shipper, there's [ cons ]. There's a lot of people involved in a lot of moving pieces as just to move a single shipment. And so in some aspects, you could go out and potentially procure all of these things individually, but really the value comes in when I have all of the layers, one coordinated plan for how to execute this program. That's really how it moves the most seamlessly and really helps manage and mitigate the risk most effectively. From a driver standpoint, again, because we're able to be pretty prescriptive on which drivers are assigned to these loads. We don't take anything for granted though. We walk through with each of these drivers, the specific protocols that they're expected to follow from start to finish. And just a few highlights from that are making sure that the drivers are arriving, fully fueled, full hours of service so that there isn't a need to stop and they're not allowed to stop within the first 300 miles of pickup. So they've already had food. They've had their break, they're fueled up and they're ready to go and hit the road to get further down the line. And really, the point of that is making sure that we try and head off any intercepts of that load at the origin point. So the cargo is moving. The drivers are down the road before they have to take their first fuel stop. And with the team drivers, really the only stops should be for fuel, food or bathroom breaks. But when those occur, part of the protocol is one of those team drivers is with the load at the back door at all times. So having 2 drivers makes that process pretty easy. But it ensures that someone has eyes on the door of the trailer at all times if the trailer is not moving and really those stop points are extremely limited, and they've been preplanned out to make sure that through some of the data that we have out there, we know the rest stops that are highly targeted. We know the locations and areas and cities that are highly targeted and have the highest -- posed the highest risk. So those routes are developed to ensure that we're not even coming near those spots. And at all points possible, we have secure yards in place so that if the trailer does need to stop the driver does need to stop to fuel or something like that. We've already established the qualifications of those facilities so we know that the load is going to be secure. Through the GPS, we can also monitor things like speed, driver safety, so making sure that we're -- the drivers are driving safe and responsibly and that they're keeping pace with what's expected along the way. And again, any deviations from that, we're able to understand, get in touch with the driver, understand what's going on and take action from there. The last element that we'll talk about today is from a security standpoint, we mentioned a few times our bulkhead protocols. So really the last area of security is the trailer itself, making sure that once the doors close that they're not being touched again. So ensuring that we have multilayer locking mechanisms on the doors themselves. So padlocks, bolt seals as well as some other options there. But then within the trailer itself, where it makes sense, we've been applying what we refer to as our security bulkhead. So these are customized pieces of equipment. They're extremely heavy, as you'd expect. And if someone did gain access to the trailer, as you can see from the picture, they can't really do anything. The bulkhead seals off from door to ceiling, wall to wall. And unless there's a forklift present, it's going to be very extremely, if not impossible, to remove that device and be able to gain access to the cargo. So we've been applying those to the end of the trailer to really just ensure again, the levels of security. No one should be able to gain access to the trailer. If they do, we have multiple layers to ensure they can't get inside the trailer. And if they do, we have another layer within the trailer to insulate the cargo. And then, again, along the way, making sure that we have those 3 levels of monitoring. So with our cargo signal team and the GPS through the carriers high-value protocol, which includes their 24/7 security management of their asset. And then through our Expeditors representatives, making sure that they also have eyes on from the carrier side, from the cargo signal side, the data that we know about that load while it's in transit. So for the bulkhead, if it seems simple, it is pretty simple, but it's very effective, so coordinating at the time of shipping, making sure that we arrive with that bulk head. The process is very simple for the loader. We have -- it's forkliftable out, but those forklift holes are also secured with padlocks on there. So we'll release the pad lock. We'll open up the forklift holes. The shipper can pull off the bulkhead, load the cargo, place the bulkhead back in there, reseal it, and then, again, not getting touched until it is received. And when it's received, same process. We'll release the pad lock on the bulkhead, the recipient can pull it off, take off the cargo, put the bulkhead back in the trailer. And really, there's no additional impact to your customer or to your team other than unloading one additional pallet and then putting it back on the trailer. So there's no need to store these at your facility, that could take up a lot of room. We'll take care of all the coordination to make sure that they're in place where they need to be and then they're being quickly taken away. So it's not to impact any operations on the dock.

Thanks, Alex. So just a quick overview, I think what Alex shared and I had some questions I want to answer. The one question came was what is high value. And quite honestly, that's been asked a couple of times. So high value is really determined by you. If it's high value to you, and you want that enhanced level of security and coverage and that particular program offering, we would put that in place for you. It's really specific to the product and the value to the customer. So to be frank, the way this was really generated was through that high-tech space. It's hyperscalers moving. They're growing. It's 500-or-so big data centers globally. They're going to 700, both in the owned space and the lease space. As you can see, the ground network across the globe, the areas that are happening in that is usually in remote locations. We're growing in that space significantly, and that security risk is growing in creating these particular opportunities. The other thing I would say is cost. It's not cheaper. It's another question that came in. This is not a cost play. This is more of a risk play. If it's a high-value good, you really need this thing delivered. There is consequential costs as well. These are things that your customer experience, the value to your customer, what they do, what they use it for. These are all the things that you'd want to use this particular solution. And then I would also say a little bit about the bulkhead. The bulkhead itself, we worked in conjunction with a customer of ours. Unfortunately, I can't say their name, but we worked in conjunction with them to create this to minimize their risk. And so far, it's been very successful. And we've implemented this with other customers across the board. And so far, this is happening really, really successfully in that space. It's 1,300 pounds. It's a smashing ground. That's usually the theft. And that it's impossible to pull out, you have to have a forklift. There's not enough time. So it's a very, very specific, but very, very good deterrent. And a little bit on the ground network, I think, it's a dedicated network. We call it a ground network service. We're moving 2 billion pounds on this network. It's our asset and driver program. We have it scheduled. And then when we talk about these particular programs, we can create smaller closed-loop networks for customers. So if you're interested, as a specific land that you're looking at, we put in these programs in place with dedicated teams, dedicated assets, and we call it a closed loop network for it. It's very specific. So as you can see where the network is and how it's grown over the years, it's a very specific product offering. We are an advantage because we do have the assets that we work with. And I think that's the most important piece. It's not going to be broker, not going to be double broker. You have better risk management. And consistency across the world. I think with the other product offerings that you're probably doing, you're bringing air freight in, you bring an ocean LCL in, you want to leverage your ground network. This is very important. You wanted moving on direct assets in our ground network. It happens. LTL, easy, just moves in our network. But if you want a specific full truck offering for something that's high value, this is what we wanted to present to you guys today. This is going to continually increase. Risk is going to go up, values are going to go up, and we need to keep coming with solutions in this particular space. Our responsibility is the domestic market and the protection of our customers. At some point, we're going to get to a place as you guys have seen the trucks or the Wells cargo trucks that are moving money. There is value in trucks today that is as much as those folks moving those trucks, if not more. And we need to keep being creative and come up with solutions to a point where we're going to have to have that kind of an offering at some point. But today, we wanted to share with you this enhanced high value, a clear overview and structure on how it works operationally, both across Mexico and borders, Canada, maybe even in Europe and then how it works in country. So that's our presentation today. We appreciate the time. We can take some questions on the side. I see there's some coming in, and we'll try to answer those for you as we go. Samantha, what do we do here?

Yes, perfect. So I can just start tossing out questions to you all that you haven't answered. So you're right, we did get several questions about where -- what is the threshold for high value. So thanks for answering that piece. Of course, it's going to be different per customer in your business. Another question that we got in the Q&A box, someone was asking what types of accreditations do we use, or do we recommend to vet drivers or companies, their suggestions such as CTPAT? Are there others that you would recommend?

You want to give that a go?

Yes. I mean I think a lot of the government sponsored and kind of independent sponsors, things like CTPAT, TAPA and others are good as really a baseline. But I think from the relationship standpoint and being able to have that direct knowledge of who is the driver that's going to be sitting in the seat, I think, is very important, and that relationship is very important as well.

Yes. And I think a little more on that, I think it's important to recognize you want to work with a company that has a relationship with both direct asset provider, but it's also a large scope national, both in Europe and in the U.S., specifically, that's where all the high value is. So there's another question on there about can you talk about process for shipments in U.S. EMEA and APAC Yes. In APAC and EMEA, a little more challenging because of the borders. Yes, we have our ground network set up with the customs process that allows us to move cross-border seamlessly with the same trailer, both in Europe and APAC. The ACM road network from China from Shanghai all the way down to Singapore, we have that particular ground network set today, we're moving product 6- to 7-day transit across borders all the way down to Singapore. So that's an active lane that's actually moving today. So it is set up in other parts of the world as well. In India, since it's one country, the line haul is very specific covering those areas. So a lot more detail we can get into in those parts of the world, but definitely feel comfortable that the coverage is there on that from a direct asset perspective and a ground network perspective risk.

So Kanny, to that point, we do have another question kind of sticking on that international topic. One question came in that's asking is this type of security available for international imports. If yes, would it be available at origin and for an actual container. So can we talk a little bit about, I guess, to the amount we can, I know that the ocean team would take on a little bit more of the container part, but can you address that piece?

Yes, sure. Yes, we have today in this particular model, we have containers coming in from Shanghai inbound to L.A. We transload that shipment into our GNS, our ground network. And then we move it, whether we move it on a secure load or a high-value load depends on what the customer wants. We would then put those protocols in place on that ground and move directly to your DC. Your customer's DC or to an RDC that's distributing somewhere. So active today in that process.

And that could be both ends of the spectrum, too, right? There could be some portion of inland security that's required to get it from, say, the manufacturer to the port of export. And then there's the international leg, Air Ocean. And then like Kenny mentioned, doing that additional inland leg in the destination country we can layer all of those on together. And again, like you said, we're actively coordinating again, amongst all of the transportation groups when those situations arise. And making sure that any facilities that the cargo is going to touch like if it does need to switch conveyances that we -- those facilities are secure and they're following all of our protocols as well. And often outside of the airport. Those are being done by -- at our facilities.

Yes, another question about the container or the bulkhead in the container. We are using those for the container. You're right about that. It will take up all the space. It's mostly around -- it's going to be on the ground network only that. The other question also -- sorry, Samantha, I'm going on a question, I'm just going to answer. The other one on Mexico. Yes, Mexico is high risk, and Mexico to Laredo to El Paso, Mexico, Laredo, Dallas, Denver, wherever you're going or back inbound, that's one of the advantages of this particular program. You're able to leverage into [ Guadalajara ] to Mexico City in Monterrey, even down into the Bay of Campeche with the routes, and they'll be able to come through Laredo or come through [ Juarez ] -- sorry, Nuevo Laredo or [ Juarez ] or even if we have to go through Macallan. We have routes all the way through. So you don't have to necessarily air freight it. Well, that's a major concern for some folks is the cost of air freight. With the risk factors in place, we're seeing some of these protocols save some money there. Now if it's so high risk, you need air freight it, air freight it. I wouldn't -- I will make that decision on your own through your own business discussions. But the opportunity is there if we want to move it over the road.

That's the other kind of point going back to what's the value threshold. I think it's -- like Kanny mentioned, there's case-by-case on what that value is and what that means to you. But it's also the risk profiles of where the transportation is happening. And those 2 things working in conjunction together, in some of the higher-risk areas, the value threshold might go down versus other geographies. So those are all factors that we're taking into play when we're building out these specific customized solutions.

Andrew, asked a good question, Andrew [ Parkerson ], he asked what the requirements are. In this particular model, within our ground network, we're moving LTL and full truckload and then in this enhanced high-value scenario, there is no brokering of loads. We're moving on direct assets, dedicated scheduled capacity. So it is completely different than what you see in a standard LTL carrier if you're going to go book with a load broker and then a broker broker. This is going through Expeditors who manage the origin. We manage the line haul and manage the destination all the way through. So very unique.