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

So the question is we want to understand what you think of this picture? Multiple choice should be up on the poll there. Let us know what you think. Just another minute, let people weigh in on the poll question here. If you're just joining, please feel free to answer the poll question. For anybody who is just now joining, you can go ahead and answer the poll question, but we're going to give it a few -- just another minute, while people are jumping on. I see we're climbing inverse, so we're just going to give it just a minute. All right. Do we want to see what people think here of this situation we have on the slide? Now we have a zero way to think outside the box. Usually, we get a few that are funny. Maybe that's the no comment there. Yes, this is absolutely -- I will tell you that I always blame my nephews for this because I think it's my one nephew, this little nephew to, "Hey, go stand on the back of a high while we lift it up in the air. Seems safe." So good morning, everybody. Hello, and welcome. Welcome to the Expeditors Supply Chain Risk and Carrier Liability Webinar. Thank you so much for joining us today. My name is Kerri Kwolek, and I am the Director of Risk Management and Insurance here at Expeditors. And I'm going to be your host today. So this is a little bit of an unusual role for me. Looking forward to it. We are going to be diving into a variety of contents, and our speakers have done a great job preparing information -- informative material for you today. But before we start, let's just go ahead and address a few things to keep in mind throughout the presentation. For your privacy, all attendees, videos and audio function will be disabled for the entirety of the webinar, but feel free to weigh in, put questions into the Q&A box. We're going to -- should any questions require additional feedback from a presenter, they will be addressed at the end of the presentation. But in the interim, I'm going to be going ahead and answering some of them online. So a little bit about our speakers. Ryan is beginning his 19th year with Expeditors. And during his career, he has held positions in air and ocean import as well as distribution, prior to joining -- becoming the Service Provider and Security Health and Safety Manager for our New York districts. That was in 2016. And then after leading a successful program, he was asked to take on both the North Central and the Northeast region in that role. So Ryan has received certifications in both environmental health and safety and supply chain security. Jamie has been with us for 19 years, and she has held multiple roles within the Cleveland district. Jamie has her Bachelor's in Communication from Cleveland State University. She started in our customs brokerage department, and for the past 12 years, has been part of the account management team. A little over a year ago, she took the leap of faith and joined risk and insurance team and has not looked back, for which I'm thankful. Jamie also has our IT of FIAT certification. And so without further ado, I'm going to turn it over to the presenters so that they can go ahead and talk about supply chain, security and carrier liability.

Good morning, everybody. Thanks, Kerri, for the introduction, and I appreciate everybody taking their time this morning with us. Today, I just wanted to review some cargo theft statistics as well as some ways that we can all work together to mitigate the risks involved in moving cargo in 2024 and moving into 2025. As Kerri mentioned as well, there should be some time at the end for questions. Feel free to pop them in the chat throughout, and then we'll try to get them answered as best we can at the end of the presentation. So thank you. So here, the first slide that I wanted to show is just some of the data year-over-year with the incident analysis. The one thing I do want to point out here that this is only reported, right? So some of these figures might be a little bit lower than you might be expecting. They might be higher, not exactly sure, but this is only impacted by reported incidents. So as you can see here from the blue to the green, year-over-year, we're seeing a significant increase in each quarter as well as the key demographics. Food and beverage is pretty much leading the way in '22 and '23. I do have a slide a bit later for some of the Q3 2024, so we could show the commodities that are being impacted as well. But again, food and beverage, household goods, electronics, these are our top commodities that are impacted by cargo theft right now. The location and classification in the bottom right, a little skewed because warehouse DC is a bit misleading. It's not necessarily people breaking into warehouses and DCs. This is more on the fraudulent pickup side or socially engineered, more strategic theft. So we'll talk about that a little bit more later on as well. But I did want to present that at least to show some ideas of where do the theft is happening and what's being targeted. And then the upper right there just a generic heat map. As you can see, LA area is still one of the hottest in the country, along with Chicago, some parts of Texas, Atlanta and then on the -- here in New York on the East Coast. So here are the -- a little bit more drill down 2022 and 2023 to find chain risk trends. As you can see, the incidents ballooned over 1,000 additional incidents from 2022 into 2023. Targeted type warehouse and parking lots still remain number 1 and 2. We're seeing a total value over almost $110 million more year-over-year, which is pretty alarming. Top 3 targeted states. Again, going back to that heat map, we do have California, we have Texas, we have Florida, accounting for 46% of all theft in 2022. 2023, does change up a little bit. Chicago and Illinois bumped Florida out, but those 3 states, Texas, California and Chicago or Illinois apologies, account for 52% of all the cargo theft in 2023. Again, household goods in 2022 led the way, and then food and beverage moved up in [ 2024 ]. So Q3 of 2024, just to kind of get a snapshot of what's going on currently in the market. If we do use this as an average and round this out for the full year, incidents will be up to about almost 3,200 for the year. Value does look a little bit down, but I think that's a bit misleading, just based on what kind of cargo has been stolen and reported missing, right? So -- but again, warehouse distribution centers, truck stop, same story, 52% of that theft in Q3 2024, still based in California, Texas and Illinois, with food and beverage and electronics still leading the way there as far as top commodities targeted. So I do want to jump in a little bit on the types of theft that we're seeing. The first is straight theft, which is still the most common type. This is the physical stealing of the goods, right? So this could be a scenario of one of those warehouse break-ins I mentioned before. This could be a truck parked at a truck stop or at an unsecured location and being broken into and being offloaded into cargo vans or, however, the thieves wish to steal the cargo, right? From a strategic theft perspective, we are seeing this rapidly grow, and the thieves are more and more organized than they were before, and is creating quite an issue within the supply chain these days. So this is strictly theft by deception, right? So the examples here could be a provider using a bid board to broker out the loads. The bad actors -- excuse me, with the criminals gaining access to those bid boards and basically stealing those loads from carriers that have access to those bid boards. Another way could be deception through forge documents, right? They could be picking up cargo offloading it after picking it up, changing the documents to show a different piece count and then making a delivery and the receiver knowing them the better. They count 16 pieces, 16 pieces offloaded yet the origin -- it originated with 20, and then the 4 things are missing. That's just a more specific scenario of things that we're seeing. Other examples too that could be a legitimate driver. And there's been a hacking of some sort and they are redirected to a different warehouse or a different delivery location that is housed by the bad guys and then they take custody of the cargo in that way. But these are all things right now that we're trying to combat as an industry, and I think we all play a role in helping prevent some of these things from happening. So this is just a picture. It's harder to show pictures of the strategic theft, but straight theft. This is just a quick snapshot of something that -- on the West Coast, if many of you have access to YouTube or social media, you've probably seen videos like this. But thieves are more and more -- are getting braver every day. This is wide open in a truck lot, well lit. There are several trucks. Somebody obviously took this picture from a distance. And within about 5 to 10 minutes, there are 3 cargo vans, if I'm not mistaken in this one, and freight was offloaded and gone within a handful of minutes. So we do want to make sure that we are conscious of where trucks are parking, whether they're in secure yards. We're going to talk about some additional locking mechanisms that can help mitigate backing the doors up against solid structures, things like that, that are not leaving trucks exposed to potential nefarious activities. I think another example I saw, I unfortunately don't have the video, but it was in Chicago at a very busy overpass. And the video showed us on the news, just an assembly line of people taking TVs out of containers and passing them down over the overpass into trucks. It's pretty wild right now. One other factor, I know this is geared more toward the Midwest and North Central. So I did want to bring up cargo moving on the rails. This map does show the definitive routes of what's coming in from the West Coast and how it's going into the Midwest and then along to the East Coast. So cargo coming in through either Washington or California is most likely moving either on Union Pacific or BNSF into the Midwest, where anything going from the Midwest to the East is likely moving on CSX or Norfolk Southern at this point. With that being said, we are seeing increases in rail theft. Union Pacific reported thefts have increased over 160% at the height of 2022. I'd be curious to see what those numbers are yet, but we haven't seen them released at the moment. I do want to point out these pictures are in Los Angeles, and -- there have been some moves to mitigate some of this from the [ steam supplies ] and the rail yards as well as law enforcement, but it's just such a vast area that we are still continuing to see these areas be a problem. As I mentioned earlier, organized crimes, these outfits are much more organized than we think they are. They have drones. Looters are waiting -- no longer waiting for the trains, they're hopping on and getting to new locations where they can fill for containers. Containers are being cut in one location, and they have teams of -- with Vans, potentially further down the rail to then know what containers to offload and then move quickly in getting cargo out of there. One thing I do want to mention more from a Midwest North Central perspective. I don't know if we can -- hard to say if things specific containers are being targeted. I think it's more opportunistic. For example, if you're moving heavy machinery, the containers are most likely being opened and then closed and moved on to the next one until they can be more opportunistic as far as the commodity that they could take. So we haven't seen true targeting at this point. It's just a matter of the opportunistic nature of the people that are cutting the seals on the rail. Some investments that we have made, Union Pacific has mentioned they're adding fencing, cameras, lighting, drones and more for patrol. But overall, it would be great to see more law enforcement presence along the rail to help prevent some of this before it gets into the terminals. All right. So this is from a trailer perspective, some enhanced security solutions that can be used to help prevent some of that straight theft that we talked about. And again, some of this might also be able to use on containers. For example, we have the image 1 and 2 roll-up door key locks and swing door locks. These are mainly used in conjunction with padlocks and can be keyed the same or have combination locks on them. What this does is it adds another layer of protection and the ability for us to protect the trailer a little bit more, right? Before I jump into the other pictures, I do want to point out to deter, detect, delay, right? The real triple D, not diners drive-ins and dives as well security professionals are going to relay these words quite often, right? The goal is to deter criminals from trying to break into our freight, detect. So that would be a way for us to identify when it's happening where the cargo is located and delay. Anything to take longer to manipulate seals or any locks, the better, right? The thieves will see something that has extra protection and say, well, that's going to take me a lot longer, more risk trying to break into this. So we're going to move on to the next one that might be a bit easier. So that's why some of these options are very good, right? So jumping down to images 3 and 4, the puck design and the pull pin design. They can't be cut off easily with bolt cutters. That's the key point here. You need more of a rotary tool or a grinder, which these things might not be equipped with at the time of breaking. So it's going to take a considerable amount of time for them to try to break into units that are equipped with these and make it harder to steal. Images 5 -- and image 5, air brake locks and kingpin locks. So this is more for cargo that is stored in trailers and trailers that are in the yards that are -- that don't have [ trackers ] attached to them. So the air break block is going to prevent the airlines from being connected, the air brake lines, so that trailer is not going to move until those air brake locks are physically removed. Similar to the Kingpin lock, the Kingpin lock prevents the trailer from being hooked to it, unless that person has the key and can then get hooked up to the trailer to pull it from whichever yard that it's stationed in. So those 2 options are good for preventing the actual trailer from being stolen if you're going to unhook and hook with a new tractor. So now more from a deterrent and detection perspective. There's some in-transit monitoring options and some additional features that can be done and some not picture on here as well. I'd like to mention, team drivers is another really good security measure to have. So you have 2 drivers with the cargo at all times that's never left unattended and does add a bit more security to that load. But images 1 and 2, we have live escorts. So that can be a cohort or overt situation where the escort is more prevalent and known or is the cohort where it's more of going on in the background and thieves might not be aware, right? Image is 3 is armored truck. So this is really not as much for the U.S., this slide was made for the Americas. So armored trucks are more likely used in Latin America as opposed to the U.S. But depending on commodities and things that are being used and being moved. Armored truck is a potential option. Under that, our GPS monitoring device was a screenshot of GPS navigation, where you'll see if you zoom in or look real closely, those little red dots are pings, every step of the way of locations of that route where that truck moved up from the North West into the Midwest there. Other options that are out there for us to use, and I do want to say that from a GPS monitoring device perspective, there is a cargo signal, which is a subsidiary of Expeditors does offer the service. They do custom SOPs, 24/7 monitoring, 365. There's 3 stations throughout the world that monitor that. So we'll provide some additional materials for that after the call. Lastly, I think from a customer security perspective, there's things that the customers and the shippers can do as well to help prevent any of these thefts. So from a shipping and [ receiving ] perspective, we need to really educate our shippers and our warehouses to make sure that they are looking for the right things and any kind of red flags that they're slowing down. I know we're all -- it's in our best interest to move cargo as quickly as possible. But sometimes, we do need to take a step back, slowdown, question any red flags and make sure that the right people are actually getting the cargo. So reviewing that documentation for discrepancies is very important, checking the piece counts and weights and verifying it against the origin or if you have the destination, making sure that, that piece count is what's expected. Reporting seal anomalies. Again, before we're breaking the seals. View Verify Tug Twist VVTT. It's very common just to ensure that, that seal has not been tampered with and taking pictures as well. From a freight pickup arrangement, proper vetting, educating the shippers and the warehouses, verifying proper identification, file references or shipping references and documentation. Even possibly having driver information ahead of time. So when that driver arrives, you can verify that, that person is who they say they are and really confirming you're getting that right freight, right driver connection. Rewriting requests. This is something that's -- could be pretty crucial if you are in a high-density theft area. If you're moving consistently and drivers using the same routes, might be a good idea to request different routes and not doing the predictable route every single time just to avoid any possible scenarios where people are catching on to that and then watching and following and knowing. Every Tuesday, this truck is at this place at this time. Changing that around will help keep things a bit more guarded. Lastly, incident reporting. I think one of the stats I've read recently was that the FBI agent -- or the FBI is speculating that there's billions of dollars of cargo theft going on in the United States. And as you can see from the data that I provided, only about $330 million was reported. So we do want to recommend and making sure that all thefts are reported to law enforcement for trending purposes and getting that information out to the authorities. So they understand the severity of the problem and can hopefully put more resources to it. So with that, that is all I had, and you are going to be receiving some information now from Jamie. I appreciate everyone's time today. Thank you.

Thank you, Ryan. Okay. Here we go. Let me put my video on. All right. So we have a pull up there. So with risk management, it's important to understand how you're currently handling your risk within your company, and we'll get into that a little further as we go throughout the presentation. But if you wouldn't mind just taking a few minutes to complete that poll, and then we will review the answers and move on. Right. So how do you currently handle your risk? There's a couple of different ways, right? You can buy transactionally from reporter or policy or you have a corporate policy that could potentially be looped in with your corporate policy, your workers' comp, your property and casualty. So this is something that is important to look into. There's also where you have a layered approach and some other questions that we put in there. Why would I need insurance of cargoes in your possession? And what is cargo insurance? So interesting feedback on these questions, and we will kind of uncover some additional items as we go through the presentation. So I'll go ahead and got in. There we go. Okay. Okay. So what you're looking at right now is a pretty simple supply chain process, right? The seller manufactures the goods, gets it on a truck, goes to consolidator, where it's entry to the port and then move for international transit, whether that be an air-ocean. Once arrived at the destination port, similar process, right? It goes from the port to the dryer deconsolidator then to final destination. Some supply chains, you're probably looking at this and thinking, well, this looks pretty simple, almost too simple. But what we really want to relay is there are many touch points within your supply chain. So that is another reason why understanding how your risk is handled is so important because bad things happen to good cargo, right? And we want to make sure that you're protected. So when it comes to your supply chain, how is the cost risk and obligation decided between the buyer and the seller, Incoterms. Although this seminar is not going in the depths of Incoterms, we do want to touch on it because we do feel that it is very important. So Incoterms is international commercial terms, which was developed by the International Chamber of Commerce in 1936, and then revised over time, right? And the theme that we're seeing about every 10 years. So the last update was in 2020. So we anticipate seeing another version in 2030, okay? And again, Incoterms are used to define the cost, risk and obligation between the buyer and seller. One thing I'd also like to point out here is there's a very special book, and it's -- I'll hold it up right here. It's Incoterms book. You can find this on the ICC website as well as it can also be purchased on Amazon. I do highly recommend purchasing this to at least you have a copy within your company. It's a very good reference material. And it breaks down exactly what the responsibility of the buyer and the seller and where that risk transfers or who's at risk or who's obligated, right? So I highly recommend it, it's recommended book. I don't let it on my hands often. So and I'm not going to give this out. Okay. So the significance of Incoterms, right? There are 11 Incoterms, 7 of which are Omni modal, which they can be used for planes, trains, automobiles and then four, which are ocean only. They do not specify when transfer of title goods takes place. They are not law. They do become legally binding if they are incorporated into your contracts. So it's very important than that is spelled out in those contracts. Okay. Be as specific as possible. The more specific you are, the less chance that something gets misunderstood. So it's very important. As I mentioned, the 2 distinct classes of Incoterms. So you have those 7 that are for all modes and then the 4 that are for ocean only. And although we are not getting into the depth today of Incoterms, there will be a webinar coming up in January, where I will be going into those, right, and really digging into those Incoterms. So be on the lookout for that invite as it comes out in the next couple of weeks, small plug there, okay. So now we're going to dive into carrier liability. I definitely want to touch on Incoterms because we do feel that's very important to understand. But really, we want to bring to your attention just the career liability today. What are the standards? What does that look like in the air, ocean, truck market? Really, we are resourced, we are here to help. So we will dive into that. And what we also like to do in the risk world is share pictures of unfortunate incidents, but we also want to bring to light that these things happen. What you're looking at right now is an ocean vessel that had a container full of magnesium on board. One thing that happens when magnesium gets wet is, well, it puts on quite a show. So as you can see, Cargo at rest is cargo at risk. So it's very important to understand how you handle your risk today. So let's go to the next one. And here, we'll kind of dig in a little deeper to the carrier legal liability, okay? Carriers are allowed to limit their liability. It's a set of standard terms that the carriers follow as well as Expeditors. And they limit their liability because they charge based on the space and the weight. They don't charge based on the value of the goods, okay? And if they are liable, in order to be held liable, they must be negligent, right, and causing that damage. Okay. So the limits of liability that are the standard in the industry, you have international ocean, which is limited to $500 per customary shipping unit or a customary freight unit, as you can see on the slide. What does that mean right? That's -- so they're going to give me $500 per piece per bit. So what that means is they're going to look at that smallest number on the bill of lading, okay? And if they are negligent, they would be providing that $500 per that one piece. So you have a bill of lading. And you have one container that includes 12 pallets, that includes 500 boxes, right? The smallest piece list on the bill of lading is the one container. So if the carrier is negligent and held liable, you would receive $500 per that container. Now again, being in the logistics side of things for the past 17, 18 years, right, values of cargo in these containers are definitely over $500. So again, this brings us back to how is your risk handled within your company, right? Are you protected from the ocean side? So because we understand that, that value is very minimal, okay? And again, that's only if they're liable. On the international air side, it's limited to 22 SDR, which is a special drawing right, it's a combination or an average of 6 different currencies, and it equates to about USD 30 per kilo. And then we have our trucking and warehousing. Our standard liability there is $0.50 per pound or $50 per max lot. And you're probably wondering what's lot, right? Well, it's more than a little. No, I wish I could hear everybody laughing, but I can't. But that's my risk humor in there. $50 per lot max is basically a pallet position, right, when you're looking at warehousing here. Moving in a pallet in, moving a pallet out. So you could get up to $50 per lot, okay? And again, the value and the type of goods have no impact on the freight charges or the carrier liability. So they only charge based on that space and not the value of the goods. So it's very -- we just really like to drive that out. As discussed, if they're liable, if they're negligent, that is when they have liability currently talking about this, right? So when are they not liable? Well, there are 17 reasons that I'm sharing now of why carriers would not be held liable. Some of them makes sense, act of God, act of war. One thing that we see common from the carriers is insufficiency of packaging. So if there was damage while in transit, okay, they may push back and say, okay, this was not packaged. This was insufficient, right? So they would not be held liable. And then if 1 through 16 apply -- or do not apply, I'm sorry, they would in built rule #17, which basically says that they are not liable. And then I do like to share some additional pictures and show you kind of what -- what's going on in the freight world. So this is a picture of the Hyundai Fortune that had about 60 to 90 containers that were lost at sea. There was a secondary explosion on the -- onboard the vessel that 7 containers full of fireworks also ignited. So as you can see the container that's kind of -- on top of the ship over to the right of the smoke, because of that explosion, it landed on top of the vessel, which is just crazy, right? It's very impactful. We feel when we share these pictures. And I'm sure all of you have heard about the vessel going into the bridge or there was a vessel in 2013, I'm all comfort that literally split in half. So there's a lot of wild things that can happen out there. Okay. Then another vessel. Again, I'd like to point out one of my fun tech lines is cargo wood -- rest is cargo risk and exactly, right? So you want to make sure that you're protected and understand how that risk is being handled. Because if something were to happen, you want to make sure that you're protected. Okay. And then here, we have a Delta flight, where the cargo was sucked up into the engine there. This is something that you never get -- you never think you would see, right, but carried as. So very eye opening, okay. Then we have another photo that I wanted to share, and we're going to launch a poll here. Kind of what do you think happened here? And would liability fall into -- would it play in here? Okay. Whatever happened here was not a good day. I can tell you that much. All right. So couple of options here. The driver took the turn too fast. The shipper didn't latch it down properly. Both very good options. Okay. Right. So 38%, the driver took the turn too fast. And we're looking at 60% shipper didn't latch it down properly. Well, both are actually correct. So when the claim was filed, it was advised that they're saying the carrier saying the driver took the turn too fast. And then pointing back at the shipper, you didn't latch it down properly. So these are things that we definitely see happen, and we see reasons why carriers aren't liable. So again, it goes back to really understanding how that risk is being handled within your company, and we're here as a resource and can help walk through whatever questions you may have. And that -- we'll do it for the carrier liability side, okay, here we go into Q&A session. So feel free. We can go -- I mean, Kerri, I'm not sure if we've been answering questions.

Yes. So we've answered a few online here, but we can go ahead and open it up. If anybody has any questions, go ahead and put it in the Q&A box. We did have some prior to the event itself. I'm sorry, we did have some prior to this webinar. I got to strike to my phone went off. It was like Pavlov's dogs over here. So one of the questions we received was I'm reading a lot about cargo theft right now, and we want to know what the industry is doing to combat that. So I know this is a big issue right now. We're reading about it. We're hearing about it. The best I can tell you is that we do have security standards in place with our vendors. I'm sure most logistics and forwarding companies do. To ensure we are doing the utmost, but cargo theft is currently on the rise. And you can read about it in all the stuff that's out there. We have actually joined a group with both carriers and rail to try and brainstorm on the best solutions. Ryan, I think you showed some there. They're putting drones in place. They're trying to build fences. But obviously, where the high theft is, they build the fences and they have the security measures there. But there's a lot of rail tracks out there. So we just have to continue to brainstorm and continue to work with the industry leaders in this area to try and figure it out. Thieves are -- they're just becoming more creative. So we just have to make sure that we're continuing to respond to that. We also participate in CTPAT and AEO, which I highly recommend that you check to make sure the forwarders they're working with you. So there's that right there. So we do you have some online stuff? Are the standards available for liability when it comes to carrier negligence causing downtime impact at the manufacturing plant? Thank you, Kevin, for that. So are the standards available for liability when it comes to carrier negligence causing downtime impact at the manufacturing plant? I think this -- Jamie, you want to answer that? Do you want me to carry on?

You can carry on. Go on.

I know. I'm so sorry. I kind of jumped in. So I think there's really 2 questions here, kind of wrapped up into one. First of all, is it causing downtime? I'm sure. And some downtime is going to be different than others. So for example, if it's capital equipment that took 9 months to create, absolutely. That's the worst-case scenario. If it's something that is a regularly manufactured item that you can get the plant to recreate, it would probably cause less of an impact. But mostly, it does cause a problem there. Also, I think I should point out that there has been on the table that industry standards are looking to change to maybe you have the ocean carriers have a little bit more skin in the game. However, it needs 20 United Nation countries to ratify it, and it's not been ratified yet. So there may be change out there. But we -- I think that so many countries are dealing with so many other issues that that's just not really been addressed recently. Okay. And then the second side of that is -- well, that is the second side, that we anticipate seeing something coming. And then Christine asked, I have a container come in and half of it was wet inside, which was a $600,000 -- I'm sorry, a $6,000 loss. Thank goodness it was a $6,000 not a $600,000. So Christine has asked me, who would be at fault?

Who would be at fault? So we would need to file the claim, and then we would be able to address that with the carriers. So we would preliminary put the carriers on notice that a claim could be coming, and then we can share instructions on how to file that claim, and then our claims team would work with carriers to dig into that.

I'm going to jump on that as well. And I think that who is at fault is tough to say. Did your vendor oversees -- assuming it was an import. Did your vendor oversees do a 7-point container inspection, which includes locking yourself in the container because the light comes in, which sounds horrifying to me, but it is a good way to see if there are holes in the container. So if your vendor did not do that, who's to say that container got damaged on while it was in transit. If there is a specific event, then we would go -- we would dig into that. Carriers -- transportation carriers don't always love to admit when there is an issue. So we launched an investigation and everyone is different. The Incoterm would tell you who's at risk, seller or buyer. But then going back to that, it would just depend on the investigation that occurred afterwards. Okay. How about carriers in other countries carrying items from U.S. such as [ UPS ] deliveries in Mexico? What are they planning on doing? Albert, so I'm assuming that you're talking about -- I'm going to answer this in 2 ways. One it would be the liability question, and then 2 it would be the security question. So from a liability standpoint, if you're talking about UPS small package, they limit their liability to $100 per package. Typically, it's considered small stuff that moves more quickly. So the integrators such as UPS would be in that space. UPS Freight would be under the same -- or the international would be under the same guidelines that Jamie talked about before, the $500 customer shipping unit. 22 special drawing rates per kilo or the -- or in the trucking world, it would depend on what the carrier -- the different UPS mode that's being used and what their liability is listed on their website. As far as theft and stuff like that in Mexico, Mexico is a high theft area. They -- it's a high risk if you're trying to insure it. I do recommend insurance in this case because then it would cover the same thing with wet cargo. But at the end of the day, Mexico is just a tough country. There's some corruption, there is -- there is just a lot of ways in which cargo can get lost or damaged. And so all we can do is prepared -- is trying to keep to the roads. So there are certain roads that we keep too that we have less thieves. So we can do GPS devices. I mean there's things that can be done, and we typically do that as an organization. I can't really respond to what UPS is doing in that case. So Ryan, Jamie, anything you want to add to that?

No. As you mentioned earlier, Kerri, I mean, the Expeditors standards for our service providers that we utilize, we go through that very rigid vetting process. We hold our service providers to the same standards, we hold all of our facilities too. So with that being said, we hope that insulates us from a lot of the issues. But yes, there would be potentially originally specific things that we would do additionally in those high-risk areas.

Jamie?

I'm good. Thank you.

So Max has a question, which makes -- this makes the risk management person me so happy to read this question out loud. Do we have any tips for documenting issues and damage while receiving to make filing claims a smoother process down the line? Jamie, you want to address that?

I would say make sure that when you're signing to receive that freight, you sign for it. Don't sign for a claim. If you notice something is wrong, make sure to notate that on the POD as well as taking pictures or just really notating that is going to be still very important.

Yes. Yes. Agreed.

Yes.

I think, too, depending on the size of the claim, you want to put your carrier -- bridge this gap. You want to put your insurance carrier, your insurance company on notice, if you do have insurance, especially the greater values so that they can request a survey if required. It just depends on the value, whether the transportation carrier and the insurance company can both request surveys in certain cases. But going back to what Jamie said, I can't say this enough, and we have claims management customers that we help with or we do claims management for them, so claims below their deductible. And this is the #1 issue why claims are denied. It was signed for clean. And once it's signed for clean, it's really the documentation that has to follow that to get the carriers to the admit liability. And remember, even if you have insurance, you want to do everything that you can to protect the rights of subrogation to your insurance company. So same, make sure that you document it, take pictures, because your insurance company can then go to the underlying carrier, get the money back from them and it lowers your overall loss history. So super important. And I would like to add, too, that if the driver is trying to get out of there, he has got a baby coming, he's late for lunch, whatever his excuses, I'm somewhat kidding there, he's going to maybe have some empathy, but we've discovered that the more quickly they're trying to get out the door, the chances are that there's damage to those goods. So make him sit and wait, even if you have 400 pieces, count them out, make sure that you have the full amount. And if they're in a hurry, I would even say and inspect it more closely. Sometimes we've had situations where drivers have picked up and by the way, this is not with Expeditors. This is an industry thing. But drivers have been in such a hurry to drop off and get out the door, that when you turn the cartons around on the pallet, it was damaged to them. So it was clearly like turned inside. So there's a lot of things that do happen. The more that you document, the better you're going to be.

I think you nailed it. Patience is key.

I get so excited about this because it is, again, the #1 reason why claims get denied. We don't want that. We want to make sure that you're getting what's right players. So if there aren't any more questions, we've answered what we can here. If you think of something after that, feel free to reach out, we're more than happy to follow up. But I would say this, that pretty much wraps things up. Thank you, Ryan and Jamie for doing an excellent job and presenting such great information. We truly appreciate you doing this for our customers. And then before we head out, we want to share some informative resources that we offer to our customers if you're not already on board with us. You can register to receive these communications through these QR codes here if you're not receiving them. but it includes the Horizon brief, which is a wealth of information and resources to help you stand the loop with all things in the industry and Expeditors, so you don't miss out on quality content like you heard today. So with that being said, thank you all for attending. On behalf of our teams at Detroit, Cleveland, New York, Minneapolis, I think we have some more on the line. Basically, just thank you for coming and we really appreciate your support as a customer. Have a wonderful day.