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

Good morning, everyone. Thank you for joining Expeditors' webinar this morning. My name is Joyce Perry-Taylor, Regional Sales Operations and Marketing Manager for Europe. Today, we have a session titled, The Role of Customs in Shaping Global Trade. We will be discussing customer practices and how have they been essential in shaping global trade from ancient practices to modern -- to secure the flow of goods across borders. Just a couple of house rules before we get started. [Operator Instructions] This session is not recorded. Our team will follow up with a survey after the webinar and a copy of the resources will be sent out to all attendees where a survey is completed. Just a quick note, today, I'm joined by Emily Fabian, sales operations for London. Emily facilitated this webinar and we'll be handling the Q&A box with the team today. Before we get started, our session today will be delivered by Alan Owen from the Amsterdam office, who has 50 years' experience in the industry. Tony McDermott based in Shannon, who has over 20 years logistic systems and customs tenure with Expeditors and Leigh Trevis based in Birmingham, who has been with expedites for over 20 years. Leigh's experience includes training and personnel development, distribution, dangerous goods and customs awareness. I'm now going to hand over to Alan to kick start the session. Thank you for joining us today, sit back, enjoy and we hope you find value in the webinar. Over to you, Alan.

Thank you very much, Joyce. It's a very, very kind of you. And thank you for all of those that have tuned in to listen to us this morning. We're going to be talking about the evolution of customs, I suppose, over a long period of time. And I'm the oldest guy on the team, so they've given me the history part to do. It's always the old guy that needs to talk about the history. But in any event, I think the discussion is sort of going to go in 3 phases. There's going to be a look at what happened after the war, what happened in the customs environment up until the turn of the century. And then obviously, from the turn of the century to where we are or where we were maybe a couple of years ago, with big changes in Europe. And then so I will deal with the history part. Leigh will deal with the post century part and then Tony is going to take us into the future. Thanks, Leigh. You can move me on. Now I'm sure that you've all seen this slide. It's a slide that we've used a couple of times. It's just a real placeholder to sort of take us back in time to when customs really started out or sort of first sort of identified as a, come to say, a control in some way or other on trade. This is obviously the Silk Road. And [indiscernible] and all of these great guys used to trade their silk and it grew, obviously, with Europe and it grew the whole East-West trade. I think the importance of the Silk Road for me is the fact that this is the first time in history that tariffs were imposed by -- legally tariffs were imposed on trade. Doing some research, I found that going back prior to the Silk Road, there were kings and queens and castles and rulers that used to tax a little bit on the routes but the Silk Road and particularly the Palmyra tariff was the first time that we have a documented tariff where any traveler that was carrying goods, whether that be by donkey or by camel or by cart or whatever was taxed, okay? Now although that tax was per donkey load of salt or per donkey or camel load of silk, whatever the case might have been, this was the first documented tariff and the first time that people used to officially collect a known tax when passing through that particular territory. Customs legislation was built primarily after the Palmyra tariff that sort of settled itself, then we started getting customs legislation, which I'll show you in the next slide, being built around the movement of goods -- are you going to move on, please, Leigh , thank you -- about the movement of goods across borders. Over time, the customs officer became known as the gatekeeper of international trade, okay? Customs legislation were specifically developed particularly around -- after the First World War when the industrialization started taking place, law came into being to govern the movement of goods across the borders. And that was when we got the real customs offices coming into being. I've put a picture of the portcullis over there. And this is the sort of historically been the emblem of HMRC, okay? The customs badge that you see on top of the caps of many of the customs officers around the world. The portcullis is the gate that fits into the front of the castle. There's usually 2 of these gates primarily used to capture enemy between the gates, so that they are an easy kill but also to secure the castle and to keep people out. So the portcullis became, in the British world, the badge of customs and we see, as colonialism grew around the world, we still see customs administrations, particularly those of British origin, Canadian, South African, Australian customs emblems still using the portcullis, which is, I suppose, teams out to secure and protect. Customs law in general, is just there to regulate the movement of goods across the border okay? It is also unknown amongst legalists as one of the most complex sets of legislation that there is to administer because of the various notions that there are. There's not only the movement of goods but also the prevention and the securing of the borders, okay? Summary that I've got at the customs legislation over here is basically just what the customs officer does today, what is -- has done in the past and what he will continue to do into the future. I started work in -- when was it? It was in 1974. Actually, in November 1974. So it's now in November. I've done 50 years in customs this month. And when I started, the customs world was completely different. I remember my first days within the customs administration was the reminder of piles and piles and piles of documents and files. It was all paper driven. It was all manually. We all had to build declarations, were using carbon paper in those days and it was just a mess of paper. As time went by, we started seeing new technological advancements. The container was one. The first container ship was -- and I remember this one because it's the year that I was born, 1957 was the first container ship that moved between 2 ports in the U.S.A. In the little town where I came from, Port Elizabeth, containerization arrived about the 1970s, early 1970s. I remember looking at mainly break bulk cargo as a young customs officer and the container was just like big metal box, okay, which didn't really mean anything. It was all sacks and bags being carried around by porters. We also used to -- we had to calculate our customs duties by means of manual sums, okay? And I was never a good mathematician at school. And I'm an old man and I still don't know -- understand why A+B is equal to C. But we had to do manual calculations to work out our duties and taxes. So as technological advancement came along, the calculator was one of my greatest tools that I had. Communication, the old telephones that you used to have, where you used to have to dial. It was almost like somebody running around with a letter on a stick. The fax machine was an amazing document. It was an amazing tool to be able to move a document. Although I can remember documents didn't last long. The first faxes that came out, if you didn't do something with them very quickly, they became very blank very, very quickly. Customs information pamphlets used to be printed on like a Rolex machine. It was the good old days but very, very paper driven. But the one thing that stands out in my memory the most is the custom stamp. It's -- this was the power, the tool that the customs officer used to be able to say, yes, you can have your goods or no, you can't have your goods, I want to see more. And like this poor chappy over here, I remember the days when we used to stamp through thousands and thousands of documents because each document had to be stamped, whether it was an invoice, a label or whatever. Our declarations in South Africa used to be presented, paper format in 9 copies. So you had to run through all of the stuff. That was memory lane. Obviously, things have changed a lot. We saw around the 1950s, last -- the development of the World Customs Organization. The World Customs Organization, I think, was firstly put in place to be able to coordinate the activities of customs offices around the world, customs administration. It's when this notion of post-war free trade really, really took off and countries had to facilitate trade to be able to develop and to grow. So the customs organization, primarily for the first 50 years of their life cycle and obviously, they're still going strong, concentrated on trying to be able to bring uniformity within the customs administrations around the world. And of the greatest achievements, I think, have been the harmonized system, the valuation code from GATT, et cetera, being able to devolve and spread that out amongst all their members so that at least the administrations around the world are working towards the same goals using the same sets of information. The Kyoto, the Revised Kyoto Convention and the Kyoto Convention set the standards for customs offices and customs administrations around the world. So in the late 1990s, when the Revised Kyoto Convention came out, it was a big step forward in terms of being able to provide the same type of facilities in each particular country around the world like inward processing, temporary importation, the use of [indiscernible] for example. All of this stemmed from conventions. So I will go back on the 50 years prior to the turn of the century and I'll say that was the time of conventions. That was the time of governments getting together, signing conventions as to how customs administration should be working around the world. The WCO, obviously, is the forerunner as well of the HS system. Now I don't know if any of you can remember these big fat books that we used to have in South Africa. We used to have 3 tariff books, okay? It was 6 schedules. And in those schedules, that was the tool of the customs checking officer and the entry writer. If you didn't have a tariff book, you couldn't really do your work. One of the worst jobs that we had as customs operators in those days was keeping these loose leaf tariff books up to date. I remember our tariffs used to come out on a Thursday and they needed to be updated on the Friday. So 1 week, you would get a list of 50 pages, which you have to replace. In the next week, you'd only have 1 or 2 pages but it was always a massive job to keep this up to date. The HS system is just one of the most fantastic nomenclatures in the world. It's a classification nomenclature, which has been kept alive and it's running. It's been going now for all ever since the 1980s. And it's continuing to evolve and to develop into a modern set of, let's say, classification rules that can be used for just about all -- it is used for just about anything that moves across the border, from electricity to water, to oxygen to drones, as we say, okay? It is also, I think the pride of a customs officer. If a customs officer really used to think he knew his job, he used to have to know the tariff. You get customs officers out there that will be able to rattle off tariff headings for things just one-off. And I'm not -- I'm just saying customs officer because at that stage in my life, I was a customs officer but I know there are entry writers in today's world as well that really, really study the tariff and know how to classify goods. Thank you, Leigh. In the 1980s, we got this thing called a computer down in South Africa, where I was in and we didn't -- we really didn't know what to do with it, okay, because we must remember that our system at that particular time was completely paper-based. It was completely manual. It was completely rubber stamped. Looking at information on a computer screen, especially when you had to learn new languages like DOS, for example, it was an incredible difficult transition for a lot of us. But it did change the way we started working, okay? It changed the way customs operated globally, was computerization. And computerization obviously has changed just about everything that we do in our lives today. I mean I've even got light bulbs at home that work off my cell phone. So it's just -- it's a crazy environment that we're in. One of my most vivid memories was always at the Johannesburg International Airport. We used to have a team of young ladies that used to sit there and capture that data and it was like walking into this big, long office with about 20 or 30 of these data captures that were clicking away, capturing the entries information from the declarations into the system. And we would never use that information other than calculating the amount of duty that needed to balance at the end of the day. So yes, times did change a lot after the computer. Also, I think I mentioned earlier on the first 50 years prior to the turn of the century, it was all about conventions. And yes, after the Second World War, we had the GATT agreement, which defined free trade around the world or defined trade and tariffs around the world. We have the WTO that slowly began to get more and more involved in trade facilitation and started to help pull the world to a certain direction. And that direction at that particular stage was free trade. Everything was about trade agreements, about countries getting together to enhance trade and development, trade and growth, trade and financial success. That was what the world was all about at that particular stage. Thanks, Leigh. And then this was in 1999, the EU published a very good document called Customs in the 21st Century. And I remember seeing this and this was even before I come to Europe, okay? I remember seeing this document and thinking goodness graciously me, this looks like a very bleak world that we're looking at. It's a scary world but I love the picture that Leigh has put on here where it shows darkness and light because that's exactly how I felt at that stage. I think that we really, really tried to understand where the world was going in terms of the computerization, the IT systems, the risk management profiles, balancing this with the amount of containers, with the amount of shipments that we're moving around the world. It has proved to be very, very successful, obviously. It's changed the way that customs worked in the 21st century. I think that the 21st century has led to some major changes but the guys that foresaw this in the late 1990s were very clever and could really, really foresee what was going to happen in the future. Obviously, at the turn of the century, things happened very, very quickly in the world. And the first really, really big issue that hit us was an event that took place in the United States. I'm going to turn over to Leigh now to take us from 2001 until a little bit later in the year.

Thanks, Alan. So to pick up from where Alan left off, as we saw the first 50 years, was talking about putting some standards, conventions into place, a structure. And as we're on the dawn of the next century, very much a case of how do we continue that journey. And unfortunately, this probably sits in all our memories for all the wrong reasons. And this really did change the way that we saw the world in many different ways, not just from a customs and compliance point of view but the way that 1 event had a massive ripple effect across the world. Obviously, we've seen infamous things from the war on terror to name a few. So what we want to try and do is kind of give you a view of, okay, so what did change after 9/11. So as you start to see from what Alan left off with, with the runup to the millennium as we were all looking forward to and in some cases, weren't sure what was going to happen at the stroke of midnight, millennium bugs and so forth was meant to bring our doom with computers, it didn't. And we moved into 2001 and we got hit with 9/11, 11th of September 2001. It opened up a huge void in an area that may not have been considered to be a bigger risk as it was. As we saw overnight, government agencies were scrambling to understand what was happening and also when those countries and jurisdictions were at risk. In early 2001 -- sorry, in late 2001 in November, the U.S. government introduced the C-TPAT, the counter -- sorry, the Customs-Trade Partnership Against Terrorism. And it was really designed, I guess, the first steps towards increasing supply chain security. So there was a real big sweep in some respects to who was running customs from a global level. We saw a lot more administrations change from the treasury departments and finance controlling customs and border towards security departments. We started to see introductions of advance manifest filing, not just in goods but also on people screening before. I remember going on a flight over to the U.S., not long after a foiled attempt to blow up plans and advance screening took 5 hours for the 1 flight. So all these different things were still coming in late 2007. So 2001 really started to drive the security element of what we see in customs today. As we move forward and to pick up on the evolution of customs from a EU point of view, the Community Customs Code started to evolve mainly because of the increased trading volumes, the EU was becoming more established, trade was definitely improving. And there was definitely a shift as we saw towards more technological advancement. Internet was around. We started to see more communication, whether it's down to e-mail, whether it's system sharing data, even down to the point of how we're submitting data to customs. Yes, there was still a documentation element. But that was very much going to go away as more and more technological advancements and systems to manage the customs procedures came in. In addition to this, we obviously saw additional security frameworks and more and more risks and if you could call it, gaps, for want of a better word, was started to being seen throughout the supply chain. So we started to see the introduction of risk-based models and one of those led to one of the pillars that we commonly see more so today than we ever did. The introduction of the AEO programs, the authorized economic operator and also how that actually dovetailed into the World Customs Organization SAFE Framework of Standards. Having in some respects, watertight procedures where companies within the supply chain, not just importers or exporters but transport providers, customs brokers who go through a registration authorization process to prove that they're doing the right things, to make sure that they can -- that they're following the security standards, whether it's down to signing in procedures, background checks, security cameras, even down to the way that we keep records and the security of those, the financial solvency and so forth. And a lot of this was designed to help build up a registration of authorized companies that were doing the right things, that we're acknowledging those companies that were doing the right things that were helping to create a safer world. And as we saw, AEO doesn't just do that. It provides some relaxation from guarantees. But again, as we see, this is just one of the many things that we've seen introduced post 9/11. On our next slide, we want to kind of give a visual of the complexities of customs around the world. Yes, we have export and import procedures and customs formalities in each country's jurisdiction. However, they do vary from country to country. Now we have a static graph here and green doesn't mean that it's easy and red means it's hard. What we're trying to portray here is the consistency that we see globally. So the green and the yellow areas are countries that are more consistent, follow the same standards, same controls and are trading in a similar pattern. Yes, there might be some variances from customs procedures, customs procedure, but they generally are following the same pattern. As we head towards the grey and the red areas, these are more inconsistent countries. They don't necessarily do things the same way as everybody else and there may be some additional rules and controls in place in addition to trade in these areas. And this gives us a little bit of a landscape -- a view of the landscape when it comes down to the complexity of the customs process but also the regulatory environment and how that is navigating. As we know, we've got the different customs procedures and that doesn't just stop there. We've seen so many introductions of regulation that will take us through into the next century. The introduction of the WEEE regulations, we're generating a hell of a lot of electrical waste, whether it's down to cell phones, devices, laptops, more than we ever did. Now where does this all go? So the legislation around this was to make sure that there was standards and regulations around the management of this cycle of new products to waste and return. We also started to see regulations around certain products, also known as the F-gas regulation. For those that may not be that familiar, you will be familiar with the late 1990s and the greenhouse and ozone gas effects. So aerosols, certain refrigerants that we used to do a very good job of what they were doing were having massive effects on ozone layer that protects us from UV radiation on our planet. So these F-gas regulations came in to try and help identify but also work on a plan of removing these from supply chains, replacing these gases with gases that wouldn't be ozone depleting. We also saw the REACH regulations, the registration, evaluation, authorization and classification of hazardous materials. This changed formulations of many different products, based on products within -- sorry, elements within the products that were banned or prohibited by the EU government. Now the reason why these items were prohibited is because their actual effects on the environment and the long-lasting impacts they have on our society. As you can see, there's definitely a theme running here around sustainability, around protecting the planet and also our communities for the next generation and beyond. We've also -- and I guess this is a topic that is on the horizon for many countries, how e-commerce is disrupting the supply chains, the availability capacity to move cargo around the world. But also how these products are often falling below the customs regimes by utilizing and leveraging de minimis quantities, in essence, bypassing controls. And then we lead on to our last 2 regulations that we're seeing coming down the line. The Carbon Border Adjustment Mechanism, which is targeting the huge producers of products that create huge amounts of carbon dioxide within the supply chain. The importers are driving these. Now when we look at the different products that fall under CBAM, we're looking at aluminum, steel producing products, fertilizers, hydrogen producers and electricity. But the idea of this actual regulation is to try and make the supply chains as carbon neutral as possible. Those supply chains that aren't will be, in some ways, penalized by having to pay for carbon certificates, which revenues from that will be used to help drive projects to help decarbonize the EU zone. Now other governments and jurisdictions around the world are seeing these emerging regulations come through and stopping and thinking are these the way -- are these regulations, the way that we also need to go to help also meet our commitments towards net zero on our retrospective countries. And finally, the EU's deforestation regulation, targeting specific products, a little bit like CBAM, with regards to targeting large amounts of carbon producing commodities, whereas the EUDR is targeting products like palm oil, certain woods, cattle, for example, that are direct impact to illegal deforestation around the world. We see this in the Amazon Basin where huge amounts of forests are being cleared and made available for large cattle ranches, large plantations, even down to the fact of products that are being placed without even governments being aware that, that's happening. So that legislation is going to be interesting as that emerges. And that was due to come in at the end of this year but the EU parliament voted last Thursday to push out to the end of 2025. As you can imagine, with all regulations and there's additional layers of controls, each country, each importer, each business, everyone in the supply chain needs to think how that's going to impact and also how they implement. So I guess the story is here and to kind of wrap up this slide is that customs is ever evolving, becoming more challenging as the years go on. But from thinking around these regulations, what we see today, they're there to, I guess, designed to give us a brighter future and hopefully, have a planet left by the time we all depart this planet and leave it to our children, our next generation. My last slide that I'm going to finish up with. I'm going to start off with when I first heard the term export declaration. Thankfully, it wasn't in this company. It was from a colleague that was also in the industry when I first set out 20 years ago. And he described an export declaration as, "Oh, that's just a statistical declaration. It's not really anything of value." Well, that's definitely not the case. We see export controls becoming even more controlled as we move forward, whether it's down to the control of products leaving a jurisdiction and who's actually importing it and buying it. This all led down to export controls, if we think about products of dual use, even down to the sanctions, export controls are in place to make sure that the products that are leaving a country are going to the right person, are allowed to actually go to that person and not going to get into the hands of somebody that will potentially use them in active terrorism. So I think as time goes on, we've definitely seen an increased level of sanctions for Russia and Belarus. And I think that's going to continue. I think we're on our [indiscernible] package now. But as you can see, this is becoming more and more of a consideration than it ever did. So yes, so that's me. So Tony, I'm going to hand over to you and you're going to tell us a little bit about where the Brexit starts.

Perfect. Thanks, Leigh. Yes, I suppose in terms of our time line and our history, where we are now is coming into more of the modern age, if you like, from a big change in relation to the Brexit side. But I think it's hard now looking back at where Brexit was. I think in many ways, we have forgotten the struggles and the challenges that came around Brexit at the time. I think a couple of things definitely that stick out and the 3 words across the top are not specifically related to Brexit in and of itself. But they're more about the challenges that we experienced from Brexit in terms of being customs professionals and being brokers in. Not knowing the when, not having a calendar, not having a timeline as to when Brexit was actually going to happen. In many cases, not knowing how it was actually going to work, particularly how goods were going to enter the U.K. and how, for example, inventory controls or how items will be released from ports, et cetera, was particularly challenging. I think from an economic sense, just on a pure practical level, this constant challenge around the go-live date, if I can call it that, was a huge issue for everybody, both from the wider industry but also from a customs and from a transport and logistics perspective as well because it's very hard to, if you like, ramp up and to plan in terms of what you need to do when you don't have accurate dates, Nobody is going to have people, if you like, sitting around waiting for all this additional work and then potentially not have it happen or have it postponed down the road or whatever. And that was a huge, huge challenge for -- everywhere, across the board. I think overall, I think Brexit has settled down relatively well. Of course, it has had impacts in relation to customs procedures and processes. It's made an awful lot of things far more difficult in terms of how both the EU and the U.K. trade, particularly in areas where we look at, if you like, sort of inward processing, for example, or warehousing or processes that existed where those goods moved between the U.K. and the EU freely. Those ones were particularly impacted in relation to it. And I suppose in the pharma side specifically, we've seen a number of challenges, for example, around sterilization. So kind of areas where there has been, if you like, not so much corner cases but I think they've thrown up or the light has been shown on some practices that existed pre-Brexit that were particularly difficult post-Brexit. I mentioned sterilization as one from the pharma sector. I'm sure anybody on the call from pharma will understand the challenges around that, where a company doesn't actually own the product and there is no transfer of ownership and no sale, for example, taking place but the goods are moving into the U.K. for sterilization purposes and then moving back into the EU. So areas like this that you wouldn't normally expect to happen in a customs process, I think they were particularly challenging for some companies and some sectors around that whole area on it. I think the other big areas that we've seen was, of course, the transportation side of it. Brexit was preexisting transportation. In many cases, it was road haulage and road haulage as a sector is not particularly well organized. Unlike, for example, air or ocean as a mode of transport. Where you have IATA or you have the IMO, you basically have a representative body who can organize standards, who can deal with systems, who can propose solutions and structures. In the road freight and the road haulage side of things, there's far less systems, far less, for example, EDI or systems integration or indeed, there's far less organization at an industry level. And so many of those are already in the process of providing transportation for Brexit-related goods but we're unwilling to get involved in the customs process. So it really created a whole new level for all brokers. I don't just talk about Expeditors but across the board, they created a whole new concept of brokerage only of stand-alone brokerage of brokers doing declarations where they were not actually involved in the transportation or in the freight movement. So yes, that was a big one, I think. The one thing as well that I would just call out, I suppose, on Brexit in retrospect and I think we did say this at the time, it's the only area that we can think of where a country through a free trade agreement actually moved backwards in terms of the restrictions that were placed. So that was an important thing, I think, that was quite often missed on the Brexit side of things. You went from a scenario where you had total free trade with 0 customs declarations, with no restrictions, with a meeting of standards, goods crossing the border, et cetera, 0 problems, delays, impact reporting, effectively nothing to do at all when you wanted to move goods between the EU and the U.K. And then suddenly, we went into this scenario where we had a "free trade agreement" or the TCA, the Trade and Cooperation Agreement, would actually impose more restrictions than were previously existing prior to that agreement. Now maybe it's a strange way of looking at it but it is --it's -- I suppose it's not what we've come to expect from free trade agreements, which have traditionally lowered barriers and aligned standards and brought things together. So yes, that was a fairly unique situation, I think. Also, I suppose, just on a more general sense, it's probably once-in-a-lifetime experience that you see the creation from a customer's perspective of a new trade border and a very, very substantial one at that, to have a country move away from a customs union, it just creates -- such a large and important country as the U.K., it just creates a different level of complexity that wasn't there, a very large player within that customs union. So I think it was something -- will we ever see it again? I mean, potentially. But certainly it was an experience that was unique as opposed to us in terms of suddenly having new customs controls in place at a country level, literally at midnight when they suddenly appeared so new challenges around that. So I think that reflection on Brexit, I think is certainly something that we will remember and I'm sure, Alan, is something that you'll remember for definite in terms of when you look back on a career from a customs perspective, I think it's going to be a once-in-a-lifetime experience. I'm not sure if I -- hopefully, it's a once-in-a-lifetime experience are willing it to be once-in-a-lifetime experience. So post-Brexit, where do we find ourselves then from an EU perspective really? And not just from an EU because there are some other systems changes as well. Right across the board and I speak here from an EU and the U.K perspective, really systems changes have been the order of the day for the past 3 or 4 years. Post-COVID, keep in mind that Brexit and COVID were closely linked, Brexit happened during COVID, which and of course, brought its own challenges as well in terms of communication, in terms of interaction, in terms of systems and so on. But post-COVID, there was a big backlog of changes that need to be done from a systems perspective. very little happened during that 2- to 3-year period in terms of new systems. And then all of a sudden, we suddenly started seeing the effects of the UCC, the new customs code coming through and the changes that was required there from the system side. By and large, they touched on 3 or 4 main areas, the import and export system, which is what we refer to here, really the 2 blocks on the right-hand side in terms of DMS in the Netherlands or ATLAS in Germany. And of course, all these systems changes have to be replicated out across all of the EU states. But likewise, the U.K. itself, with CDS had already initiated its own long-awaited systems change. [indiscernible] as a system, had been running since the early '70s and was increasingly becoming a challenge to keep us operating in today's terms, both from a technological perspective but also from a volume perspective. Trade had increased massively as Alan has outlined there earlier and that became a big challenge as well. So that always had a change on the cards. Irrespective of Brexit, CDS was always going to bring a change in any event that was required. The 2 other big ones back to Leigh's point, really around sort of 9/11 and the need for advanced manifest data, et cetera. And we're now in the process of ICS2, which has been rolled out initially 1 year ago with air and now we have ocean and truck coming up in the near future, in the next few months in relation to that. And this is really around customs authorities strengthening their borders and being more aware of what is moving into their jurisdiction prior to the goods actually moving. So again, in the same way, if you like, as we had that change previously where we had bulk and we got into smaller goods and more parties involved and greater level of granularity in terms of what's been imported. We now have the same thing in relation to ICS2, where we are now, for example, before you were allowed to move goods into the EU, you have to tell the EU what goods you want to bring in. And then the EU will decide, yes, you can load those and send them to us or no, you cannot load those and send them to us. And that's really around very high-level information of what types of goods are they, where are they arriving to and who are the parties that are involved in it. Again, all the consequence of that security type information that Leigh talked about earlier on at the start. One of the big changes that I would just call out as well as is just NCTS 5, sorry, Leigh, jumped the gun on you. NCTS 5 is going to be a big change that you'll hear more about in the next while. But again, it's around greater visibility. So that transit system impacting the U.K., impacting the EU but also any members of the CTC, the Common Transit Convention, including Turkey, for example, in Norway, all of those areas that will provide greater level of visibility of what's on the transit. Everything that's on the transit is going to have to be codified in terms of HS codes and it's going to have to provide visibility. And you will see that starting to come in January as well coming down the line. You're making me dizzy, Leigh, you go to the next one. So I suppose a couple of other things we just call out over the next while, that's going to be come up, the revised Union Customs Code starting off in 2028, a couple of big changes that are on the cards that are proposed as well in this area. The whole e-commerce scenario has been a big challenge for the EU overall in a while in terms of de minimis, in terms of, for example, goods entering the EU, where really there isn't any control. There isn't any real importer associated with those goods. We all are aware, for example, if you go and buy from an e-commerce platform such as Temu, Shein, any of these -- not so much Amazon who are typically shipping within the EU but in particular, the goods that are shipping directly from China. So any of those platforms present particular challenges from a customs perspective. There's questions raised around valuation. What's the true valuation of those goods? Are we capturing all of the duties and the taxes that are due on those goods? It makes it particularly difficult for EU-based companies to compete against those goods because really, the pricing is not at all clear. Consumers don't really know how much they're going to pay when they get those goods delivered to their door, how much duty, how much VAT, et cetera, when they pay. So they are all big challenges that are facing, that are coming down the line with the growth of e-commerce, which has really boomed massively in the past while. Likewise, questions around market access, questions around counterfeit goods. All of these type of areas, who's responsible for those. So some of the approaches that the EU have been looking at are around what we talked about here, where we talked about in particular, for example, a deemed importer. So a deemed importer will apply to the e-commerce platform. So in other words, the Temus, the Sheins of the world, for example, will be made responsible for those goods. And this is not just an EU thing. This seems to be the general trend from a customs perspective globally, or at least certainly in any of the major economies. We see the same thing happening on the U.S. perspective as well, where there's a big focus on the e-commerce side. So the traditional approach has been, these platforms have always said, well, we're just the enabler. We just provide the shop front, if you like, for the sellers to sell these goods and the person who's responsible for them is actually the person in the EU, who has gone on our platform and has purchased from the shop. That approach now will be turned on its head, and the approach of the EU is basically saying, well, if you're making commercial gains from these goods, i.e., you're providing the platform, then you have to take some responsibility for the goods that are being sold on that platform. Sot they will be deemed, as I say, to be the importer in relation to it. Likewise, there's a whole change in relation to Trust and Check trader that we talk about, which is a key factor. It's going to be the next level of AEO. It's about changing the levels of responsibilities and the challenges around that area. And you can see there's going to be a common data hub that we see, that we're talking about there, where we look in the middle block and a simplification of the tariff codes that are being used. So the removal of de minimis will change some of that from the e-commerce side. We will also be able to move into blocks of HS codes, which will have a flat duty rate associated with them. So in order to speed up in terms of the importing of these type of e-commerce goods, rather than providing classifications at a full 10 digit level, you will be able to basically block bulk them into certain types of goods. So whether it be textiles, for example, or be it electronics and they will have a flat duty rate associated with them. It will be optional. You don't need to use that. So if you want to claim, for example, FTA or preference in relation to some of those goods, then you will be able to go to your 10 digits and provide the full information. But if you want to take advantage of the block rate and be, I suppose, a little bit flatter in terms of the duty that you're paying, et cetera, that will be 1 way that you'd be able to do it. And then across the EU side, greater move towards centralization, a big impact there for some of -- customers, for importers into the EU, centralized clearance for imports being able to operate all of your customs activity in 1 EU country irrespective of where the goods arrive. So that's going to be big. It's long been, I suppose, promised in terms of a holy grail from an EU perspective. There's been a number of attempts around [indiscernible] and single European authorizations. But always there's been challenges around taxation, around control between different member states. The goods are arriving in 1 country, for example, let's say, France and you want to make your declaration in Germany and how the tax and how the VAT, et cetera, how examinations are dealt with. So again, it will be a major impact, a major player, a major benefit if we were able to go down those roads but it will be a challenge if we come across it. Just moving on to the last slide, I suppose, Leigh, if I can please. I suppose, yes, a big year of protectionism that we're going to see coming down the road. When we look at this historically and we look at where we were in terms of tariff reform versus free trade, there's been many changes in that particular environment. Free trade for a long time has been held out as being beneficial right across the board. There's been a drive for free trade. And in many ways, the image that you see on the left-hand side is what we've been associated with free trade. It's been beneficial for all parties. It's been beneficial for the importer, has been beneficial for the manufacturer. And in many ways that now has been questioned across. We're seeing that now in terms of tariff reform, where prosperity and happiness can actually be associated with some sort of protectionism. So this is kind of the change, and I suppose in many -- dare I say, the pinnacle of where we are at the moment. People questioning the value of the free trade, without a doubt, there's been some disadvantages to free trade. We've seen some countries take great advantage of the free trade side of it. We've seen challenges around that. So I think, yes, it's going to be a big change and it will be interested to see what direction this goes in over the next while. Alan, back to you.

Once again, I end the session talking to myself. Thank you, Tony and thank you, Leigh. Just a quick retrospect. I think if I can look back over 50 years and I can look into the future with a crystal ball, I haven't seen much change in customs itself, okay? We're still basically looking at the same levels of legislation, little tweaks here and there. Obviously, big things happened in our lifetime, like calculators, like computers, like e-commerce, for example, and also the desire of politicians to be able to rule our world and use the border as the method to be able to enforce some or other form of control. I don't see any particular changes that are going to happen in the future in terms of the basic legislation. Sure, we talk about centralized clearing. We talk about a single data system. We talk about things that are going to make it look easier. But there's always this big but, okay? It's our world that changes. It's the way we trade. It's the way we engage with each other as nations, as trading partners, that's what changes. I think e-commerce has really, really emphasized the fact that there's no real shopping, come, let's say, methodology anymore. And in the customs world, where we look at simple things like a buy/sell transaction. When we started out many, many years ago, the related party transaction was the exception. Today, it's an exception where you haven't got related parties trading with each other. We haven't got offshore companies working as importers. It's our world that has changed. And our world is going to continue to change and the methodologies that are applied by customs administrations are going to need to change with that. But I don't think that the law and the customs officer and the mission of the customs officer, the workings of the World Customs Organization, the facilitation efforts of the WTO. I don't think that they're going to change a lot. They're just going to continually to try and use the same basis, the same Revised Kyoto Convention, the same HTS system, obviously, updated on a regular basis to be able to manage the border. It's been a real pleasure talking to you again this morning. I'm going to hand over back to -- I don't know who I think.

Grab it for a minute from you, Alan, if I can. I'm sure no doubt you've seen the participants who joined us. I suppose, for all of our customers who have been with us, certainly, over the past number of years, I think we started doing webinars really, I think COVID and Brexit were really the 2 drivers that coincided together. And that was really, I suppose, for us was the start of our webinar adventure, prior to that had been nearly always in person. And by its nature, it meant we did less of them, maybe 1 or 2 a year in terms of meetings. But once we started on the Brexit side of it, it really has been a whole new audience for us and a whole new level. And this has been Alan's last webinar with Expeditors, hence, the retrospective of the 50 years, et cetera. I'm sure any of you will be aware, Alan, is leaving us towards the end of the year. And really it's been a fantastic experience with him. So I think on the occasion of our last public webinar, we invited Tim, Ali, Dana, to come and join us and just say a few words of thanks to Alan in terms of his career and that the work he's done, not just in customs, which, as he said himself, is a 50-year career this month but indeed his career within Expeditors, which is equally long career as well very beneficial and being great having worked with Alan over the past number of years. So Tim, I'll hand over to you if you want to say a few words with them, please.

Thanks a lot, Tony. Can you hear me okay?

Perfect.

Yes. So to the audience, thank you, as always, for joining our webinars. Alan has an incredible wealth of knowledge. And Alan is just a portrait of what Expeditors focuses on, with hiring people with the right attitude. Alan comes again, he's got a wealth of knowledge from customs but his attitude, his passion for taking care of our people and our customers. And I've just enjoyed working with him for all of his years here and then the past 10 years I've been in Europe. And Alan and I have worked alongside each other. And he just epitomizes what an Expeditors leader is because he cares so much about our people, he cares so much about our customers. And Alan, I can't wait to see you Friday night for our big retirement dinner. I can't thank you enough for all you've done for our company and our customers. And again, you are just the epitome of what Expeditors is all about. And I'll turn it over to Dana.

So thanks, Tim. And Alan, I think I have said on all of the meetings that we've had in the last, I want to say 1 month, I keep saying abate to you but I feel like it's -- we'll still be able to find you. For the folks on the call, I really appreciate the customers taking time out of your busy schedule and listening to us. But I know listening to Alan is never a chore. I have the greatest amount of respect for Alan. We have spent many years debating and lively chatter, sometimes over wine. I couldn't think of a person that epitomizes the customs product passion and making compliance fun, making it interesting and practical. And I'm quite sure it is goodbye for a career but not goodbye forever. And I just want to say thank you from the bottom of my heart for everything that you've done.

Alastair?

Yes, I'm really not sure I could add much to what Tim or Dana has said, apart from the fact I can't believe it's only 50 years, Alan. You look a lot older than that. But seriously, it's always a pleasure dealing with you in the various roles that I've had. But the biggest accolade I can give you, Alan, quite frankly, is you still a human being. Work aside, you're just a lovely person and it's an absolute pleasure to spend any time with you, work or social. So all the very best my friend and thank you.

So Alan, I think we'll give the last word to you, if there...

I am totally humbled and all I can say is, thank you, guys. Thank you very much. It's been good.

Thank you, Alan and see you Friday night, brother.

Perfect. Thank you.

Thank you, everybody. Bye-bye.

Thanks, everyone.

Okay. So thank you all for joining us today. And a huge thank you to our speakers. Alan, Tony and Leigh, for talking to us about the role of customs and how it shaped global trade, very insightful, as always. I'd like to take a moment myself just to give a special thanks to Alan, who's actually left the call now for his dedicated tenure at Expeditors. He's been a great help throughout my career here and I'm going to miss working with him. If you enjoyed today's webinar and would like to stay up to date with our event schedule, you can follow the Expeditors' events page on LinkedIn by following the link in the chat, I'm going to paste now. You can also keep up to date with market news, future events, webinars, blog posts and everything else by signing up to our newsletters. You can scan the QR code here to register for our Horizon brief, which covers global news and also for our local U.K. & Ireland newsletter. Thank you again for joining and I hope you all have a great day ahead. Thank you. Bye, everyone.