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

Hello, everyone, and thank you for joining us. We're so happy to have you with us today. We are going to be covering our Expeditors Mexico Air and ocean Market update. So we are glad to have you in attendance, and we are going to go ahead and get started here in just one moment. Okay. So I know we're going to have a lot more people start to in. We have started our recording, so we will get going today. So that's, of course, one of the questions we always get, and we'll let you know how to get the recording here in just a moment. Just a quick disclaimer. If you joined our webinars before, we just want to make sure that everyone who joins, especially if you have not been on one of our events in the past, you'd understand all of the content today is provided for educational purposes to support you as you are trying to understand the market conditions. We just encourage you to understand that, obviously, we don't want this to be relied upon for any legal, business or financial decisions. It is simply for the ability to have information about what is going on in the market. So for today's housekeeping items, just to let you know, we do typically have about 45 minutes of content of these webinars, and then we try to save at least 10 to 15 minutes at the end for Q&A. Now we will do our best to answer your questions throughout today's presentation. We do have several speakers and a few others that we will be supporting. [Operator Instructions]. And of course, how do you get the slides and the recording. As I mentioned before, that's always one of the first questions we get asked and many times typically because hopefully, you find this content valuable. So we will provide you with a short survey that we just asked for your feedback on the value of the webinar and the quality of speakers. And that will be sent to you via e-mail from myself. And typically, that will reach you within an hour or 2 after the webinar wraps up today. We just have to wait for the recording to process. And if you do not receive that by tomorrow morning, please feel free to reach out to me. My e-mail is in the confirmation e-mail you received for this webinar. I'll be happy to assist you. And then finally, you can also subscribe to get further information about our future events and market updates through our QR code, and I'll drop the link in the chat here shortly. So now to introduce our speakers, we have with us Eduardo Alba. He is our Regional Manager for Air Services for Mexico and the U.S. Southern border as well as Lorena Rosani, who is our Regional Manager for Ocean Services for Mexico and the Southern border. We're very happy to have them with us today, and they're going to share their expertise on Mexico and what's going on with air and ocean. So Eduardo, I will pass it over to you to get started.

Well, thank you very much. I hope the information today is useful for all of you. Can we go to the first slide, please, Sam? So as I speak to customers and carriers alike, -- it's undeniable that there is a lot of anxiety regarding what's going on in both the political and economical world. And of course, I'm going to -- I cannot talk expertly about any -- about both politics and tariffs. But I can -- I will do my best to explain what we're seeing in the market in order for you to make educated decisions and try to avoid speculation and just try to see what is in front of us, what we can actually describe based on the facts that we're seeing. So we're coming from a year 2024 that was relatively stable, and in regards to demand, economic growth in Mexico, United States and other countries. Also, it was a relatively stable year in the relationship of capacity and demand in Mexico. I'm going to go a little bit deeper as we go along. But some of the things that we've seen and the challenges that we thought we were going to have at the beginning of the year had to do a little bit with e-commerce, having United States and all across the world, Mexico, also in particular, a big impact in both supply and demand, particularly as it relates to Asia. And we've seen an increase of 4% of supply over the past 4 weeks. And the only volatility has to do a little bit with the beginning of the year and the Chinese New Year. So freighter capacity worldwide was a little bit down. Look, I'm going to dig deeper into the Mexico. And definitely, the situation with tariffs and whatnot has to do with -- has an impact on how we plan, although we probably didn't expect the things that are going on and how that has been impacting the economy. The one thing is we were all expecting a little bit more moderate growth. Can we go to the next slide, please? So again, we can see that worldwide, the relationship between capacity in the past few weeks, 4% growth and only the freighters and integrators were down. And again, it can be explained by what happened at the beginning of the year, demand going down a little bit and of course, the Chinese New Year. So I want to use this more as the base to make a comparison of what's going on with the Mexican market and how it worked on the past 12 months and the trends that we are seeing in the past 3 months. So if we can go to the next slide, Samantha, please. One thing that in particular about Mexico and demand on the air services is that -- on the export side, not just now, but since 2019, we're seeing a slowdown of the export has to do with a number of things going on. But even compared to 2019, the demand on the export side of close to 19% down, and it was down 9% during the entirety of 2024. That compares with 6% growth on imports but we're going to see a lot of it has to do with just one with China. And the total is down 3.5%. So we need to keep this in mind because this is not just what we see as expeditors. This is what the airlines see as they make their planning on how they're going to address capacity as they move forward. So can we go to the next slide, please, Samantha? So as you can see -- and I'm making this a little bit of a more extended period comparison of 2019 to 2024 because again, this is -- it gives you more of a wider range view on how the airlines and the carriers and everyone can see the market. We can see that there's a tremendous imbalance even when it comes to China. If we go to China in particular, we have 55% decrease from 2019 to 2024 on the demand. And it was coming from a base in which there wasn't rating balance since 2019 -- in 2019. We always have the balance [indiscernible]. And the imports grew by -- has grown by 47% in that same period of time. So one of the many things that it means is that supplies coming from China [indiscernible]. And actually, we've seen different trends in the market like, for instance, Chinese airlines or other airlines coming directly into the Mexican market, which didn't used to happen 3, 4 years ago. But we're also seeing that those same flights don't go back at full capacity if there's excess capacity going out on those flights. Same happens -- this happens in Mexico City, Guadalajara and Monterrey. And if we go into all the other origins and destinations, we can see in general a slowdown for the German market. Little bit of a flat was the United States. And the only country that has big increase and actually is balancing itself out is Brazil because there is -- it was -- 2024 was a great year for exports. And also it was a good year for the imports that was a little bit imbalance prior to 2024. Now when we think of Brazil, we need to also understand that a little bit of that has to do with infrastructure in Brazil, ocean ports being very congested. So we don't -- we cannot make plans on how that's going to look like in 2024 real well. And the main feature, and we can go to the next slide, please, Samantha, is that on the Chinese imports, the majority of the demand comes from e-commerce, from the [indiscernible], from the science, all these big companies that are selling a lot of product into Mexico and it has completely turned around the Mexican market when it comes to Asia. So things that we've seen, as I mentioned, capacity on the right flight and that changed the dynamic completely on how we brought products from China and Asia in general. Prior -- around the time of 2019 before the pandemic and even during the first years of the pandemic, the majority of the imports coming from Asia came via Los Angeles. Los Angeles was -- because of all the demand and all the capacity between China and the United States -- Los Angeles, it was the great place to consolidate cargo to Mexico, Guadalajara, Monterrey and all the Mexican market in general. And there used to be great capacity on different airlines coming from Los Angeles and Guadalajara, mainly that around the time of 2020, 2021, we had 3 airlines and all -- they all have about 5 to 6 flights per week on freighters, and that was more than enough capacity to service this market. Because of several things going on, one of them being the change of the Mexico City airports, now we have the newer one in Mexico airport. There were some connectivity issues that make it difficult for these airlines and we saw that Aeroméxico pull together the freighters from Los Angeles to Mexico. And all the -- and the remaining 2 airlines, [indiscernible] and MasAir [indiscernible] full substantial capacity. Both of these companies pull more than 50% of the total capacity for the market. So that's when the Chinese when [indiscernible] China scholars started to come into Mexico City and Guadalajara and on some other different airlines, and that changed the dynamics on how we bring products from China. But not only that, these flags done extremely compares to -- because these e-com companies purchase probably more than 50% of the capacity from Asia on [indiscernible] agreements. And the logic of how they purchase this capacity is a little bit different than what we see in general in the market. They are not as concerned as -- to rates as they are concerned about securing this capacity. So they can go out and purchase at rates that are probably a little bit higher than what other industries tend to purchase. And that brings the remaining of the capacity -- the price of the remaining of the capacity up on the import and what we see in general is that there is substantial congestion in Mexico City in Guadalajara. And also we not only see congestion on the aircrafts, we see substantial congestion on the ground when it comes to the Mexico customs and even in end users in the new airport at different points in time, we've seen severe congestion on those airports. Definitely, the imbalance, again, it puts pressure on the rate coming inbound, although we can see that there are very competitive rates outbound of Mexico. So at this very point, there's still very high demand coming from China, very, very high demand, even though there has been rates -- due to rates imposed by the Mexican border to China, but that hasn't slowed down the demand as we think. And definitely because of that when we made the comparison on the previous slide, we can see that the airlines, several of them are making -- are moving their fleet to attend this market, the e-com market rather than other markets that are less profitable for them. So there's a question of profitability in play that makes some of these airlines move their planes into this market and pull it out of different markets. And we're going to see a little bit in the next slide how that works. So if we can go to the next slide, going a little bit into how it looks -- and I took a 3-month sample and a little bit of a comparison with the entirety of last year to see what has been the reaction of the airlines to what has -- what I've been trying to explain to you in the past few slides, which is, again, that 2024 was not a great year for air freight, particularly air exports out of Mexico, Guadalajara and these market conditions that we're now facing. Well, Guadalajara, we can see that both in the last 3 months and in the entirety of 2024, airlines full capacity at a rate of 9% from the Guadalajara market. So what this means to the Guadalajara market, different things. It alters some frequencies. It alters the ability to connect with -- with different -- sorry about the [indiscernible] different flights across the world. And definitely, when we're making some calculations and we had these conversations with some customers, there is the expectation that because the market is going to slow -- is slowing down a little bit, and there is a threat that it might slow down a little bit more because of tariffs there is an expectation by some companies, by some people that this could bring the prices of the airfreight rate down. But the airlines keep pulling capacity, then this might change in a completely different direction because then we're going to be struggling to get capacity. And Guadalajara probably is one of the markets that we've seen this a little bit more acute. Can we go to the next slide, please, Samantha? In the case of Mexico City, and here, we need to address 2 airports, Mexico City and NLU. As you all know, Mexico City is only value passenger capacity. And although we've seen that the passenger market remains very healthy. In the past 3 months, we've seen capacity down in the Mexico City airport. Very difficult in the case of Mexico City to make a comparison of the past 3 months with the entirety of 2024 because since we pull all the freighter capacity out of this airport, we lost 53% of the capacity in that airport. But I think it's very telling that even on passenger belly capacity, we have been losing some capacity in the market. Can we go to the next slide, now on NLU and here's where we're seeing some of the effect of e-com and the things that are going on right now. It's a new airport and yet in the past 3 months, it has lost close to 15% of the capacity, and this is exclusively regular capacity. So what we're seeing is airlines such as Qatar pulling almost entirely all of their frequencies. And also, we're seeing some other airlines that are telling us that they're struggling to fill their entire flights, and that is altering their frequencies they're altering some of the scheduled flights that are not flying because of lack of demand or cargo in the airplanes. So we are waiting to see how the airlines are going to keep reacting to this reality in as well. So there's also another thing that is going on is that we're seeing that the rates in Mexico City, say, for instance, market like Europe that is served almost 50% by passenger capacity and 50% on freighters, we're seeing now a huge gap in rates between passenger that is not -- that doesn't have the pressure because of it's paid by the passengers, and we're seeing the rates going up or at least keeping at the same level in we go to the next slide, please. One thing that we need to is that now with this structure that we have with 2 airports, we need to navigate different dynamics of the 2 different airports on how they work, and it is in the best interest of every company to be able to do business on these 2 airports. Definitely, NLU is driven by cargo. It has lost connectivity because they cannot bring -- in the case of the Mexican airlines that I was telling you coming from Los Angeles, they have much better routes because they could bring some products and different products from South America on passenger flights on interline agreements now they can't. So that makes affect on profitability. And definitely, NL is more successful to e-com and the Mexico City Airport has become a little bit more reliable because it is -- depends a little bit more on travel. Although we can see seasonality, particularly when it comes to markets like Brazil, we see payload issues through the year when it gets a little bit warmer, the wide-body airplanes lose a little bit of their payload. So that makes it a little bit more unreliable. But all in all, we're seeing more reliability on Mexico City Airport and passenger capacity. Can we go to the next slide, Samantha. And lastly, Monterrey, even though we saw a huge growth in capacity in 2024 and a lot of companies getting a lot of interest because of nearshoring and business with China, we saw a 5% drop of capacity in the past 3 months, not just the new year and what happened in January, but we're seeing this happen across the board in a more sustained period. So that's one thing that we need to keep in mind. We saw in 2024 that Lufthansa made a big investment with 2 flights going to Europe. So that makes Monterrey a lot less dependent on Mexico City and Dallas to get capacity, and that's a good thing for the market. last slide Samantha. So finally, a couple of things. Again, as I mentioned in the beginning of the presentation, there's going to be a lot of speculation. And we understand that right now for many companies, planning is difficult, requesting for forecast is complicated because of the threat of tariff, there's uncertainty. So companies are looking for different sourcing in different parts of the world. We're looking for different markets to sell product to diversify and protect against tariff. We still see a lot of e-com taking the percentage of the existing capacity. And there is a danger of price instability and there is capacity decisions, meaning what airlines fly from where to where is going to be -- is going to depend on how demand looks. So that's going to make for a very challenging 2025. So what we can do for you, it's we, as Expeditors because we are non-asset based and we -- in this moment, we think that this is a much better strategy. We have a mix of different airlines carriers. We have a wide footprint, and we don't rely on just one airline or we don't rely on our own equipment. And we have different layer strategy on how we purchase this capacity on different spot purchases, additional capacity purchases and of course, soft block agreements, hard block agreements that allow us to provide some stability to a market that's going to be a little bit stable. We work with -- we have a wide relationship with trusted airlines. We don't do crazy things to try to get capacity. And our non-asset-based model brings flexibility and adaptability. And definitely, if we don't compete like some of our competitors, if we don't bring our own equipment into different markets, that's going to be always very appreciated by the airlines. And the fact that we're not stopped with trying to make these our own flights profitable that enables us to have a much better chance to get capacity in the market than someone that is competing directly with the airlines and they are trying to purchase capacity. Our network remains very strong. And definitely, our customer service and communication on the things that are going on [indiscernible] to help you through what looks to be a very complicated 2025. So if you have any comments or questions, I'll be more than glad to answer to you, either on this or if you can -- you want to e-mail me directly, I will be more than glad. Thank you very much for your time today.

Thank you, Eduardo. Lorena, I'll let you take over from there.

Thank you, Sam. Well, first of all, I will start with sharing some interesting information in regards to the ocean market on a global scale and then going further into the Mexican market. So starting with the capacity side. Overall, we saw an increase of approximately 27% in the order book in regards to the amount of fleet that is going to be deployed in the upcoming years. This specifically is going also to be shown and directly have an effect on the Latin America region where Mexico relies or is part of. So just to give you a comparison, in Q1 2025 in comparison to the same period 2024, we saw a growing capacity of 20%. So more now than ever, the ocean carriers have a close look into the Mexican market, not only from an economic standpoint, but as well as an increase on the purchasing power of the Mexican market by itself. This is also in line with several expansion projects, one of which is the Manzanillo airport expansion in Cuyutlán Lagoon as well as the Lazaro Cardenas APM terminal expansion, which specifically into this specific expansion in Lazaro Cardenas, it is foresaw that it is going to end by 2027. So this means that in a very short-term period, we are going to have an increase in the capacity of both ports, specifically Lazaro Cardenas is going to have with this port expansion of 4 million TEU capacity, dynamic capacity. And in comparison, Manzanillo, once this project ends by 2030 is going to have a 10 million TEU capacity. So by this, I mean that going into what I just mentioned, not only the ocean carriers, but itself, the government as well also looking into how we can portray a better capacity into the market as a whole. Now going in terms of the demand, it's important to note that the demand has also increased or increased in 2024. This by 7.7%. It is also foreseeable that -- this is going to be somewhat in line, but not as close as in the capacity side, and I will speak further of this as I go along in this next slide. However, specifically to the demand side, going further into the consumer goods as well as the capital equipment, both industries had an interesting increase in 2024. And surely, we are going to see some dynamics change in this specific and other industries just by the current geopolitical situations. However, there is still some optimism in terms of what this is going to bring. As we mentioned, Mexico is one of the few countries in the world that has the most commercial agreements with several countries. So this, by all means, can only mean that we have somewhat of an opportunity to keep close contact with our main trade partners. also figures in 2024. The last that we saw a trend is that Mexico is going -- grew 4.3%. Let's see how this first trimester of 2025 ends. But surely, we will have some of a slighter increases that we saw in 2024. Now going further into some outside factors, just to mention a few topics, which I will also mention as I go along on the next slides. There are different outside factors, disruptors somewhat of affecting, obviously, or having some effects on the capacity as well on the demand side. It is projected that the market is going to grow approximately 2.5%. This is going to have some shifts, as I mentioned, and also some political unrest that surely have some specific impacts. And it's also important to note as well as the tariff announcements. Let's see how that goes along in terms of the next few months. Next slide, please. Now going further in terms of the supply and demand, it's just important to note that, as I mentioned on the previous slide, is that capacity and the demand both are on a positive trend of sorts. However, there is an important gap to note on the capacity side being the red line in the graph, where we can see that there is set or predicted to be at a 5.7% by the end of 2025. This is obviously a forecasted information. But in comparison, the demand overall, and this is somewhat of a global numbers, where the demand specifically is going to be at around 2.5%. So as I mentioned, there is still enough capacity in the market in regards or in comparison to the demand side. This, as I mentioned, not only in Mexico, but as well as the rest of the regions. Next slide, please. Now we spoke about some of the industries being impacted on a positive trend in terms of an overall growth. And here, we can see, for example, the raw material industry with an important increase in December as well as the year-to-date analysis. These are figures for 2024. Also important to mention the machinery parts, an important growth as well on December, specifically at 17%. And also important to note that even though the high-tech industry had a slight decrease in regards to December 2024, it is important to note that overall, during the year, it had an important increase in comparison to what we saw with other industries. Important also to not being Mexico, a very in line with the automotive industry. The automotive industry as a whole had also important figures during 2024. Next slide, please. Now how this projects in terms of specifically Mexico. The figures are somewhat different in terms of what we saw globally. This, as I mentioned, due to different factors and disruptors around the globe. However, overall, I mean, figures that somewhat portray this specific need, specifically noting that on the high tech, we did have an increase on -- of 4%, which, as I mentioned, is also in alignment with one of the most, let's say, demanded products here in the Mexican market. So overall, this is some one of the figures that we wanted to show, figures that we can -- we will obviously share. And this is still, let's say, of a live organic information that we will be sharing as we go along in 2025. Next slide, please. Now important to note that on the demand side, as we saw on different industries, it is important to note that overall, Latin America, where Mexico, as I mentioned, is part of, had an increase in comparison to the different other regions. It was the region with the most demand, specifically led by Mexico, followed by Brazil. So overall, the South America trade increased by 15.4%. And this is surely a portray of the foreign investments that we are receiving from different countries as well, as I mentioned at the beginning, of the different trade agreements that we have with different countries. So surely, this will be somewhat of -- have an effect as we go along in 2025. However, good figures overall with this specific trend that we are showing in regards to 2024. Next slide, please. Now it is also important to note that we not only saw as a region, an increase overall, but we also saw an increase per lane. It is important to note that Europe was the trade that had the most increase in regards to other respective regions. So for example, meaning North America as well as Asia, whilst both have a positive trend, it is important to note that Europe and India specifically with an 11.3% increase, it's somewhat of a good news overall, as I mentioned, again, it's important to note that we are a strong market with an increasing purchasing power. Next slide, please. Now going into what we've spoken in different webinars mentioning these new alliances and what they are bringing into the market. Just to go very briefly into that. 2024, we saw different alliances, mainly with different capacities out there. These are figures on a global scale. However, these are also somewhat in alignment to the Mexican market by itself. So by this, I mean that a lot of carriers had direct services into Mexico as well as deployed at bigger vessels. This is because of the healthiness of the Mexican market as well as the projections -- the positive projections that the economic sector had in regards to Mexican market. So now going further now into 2025, we're seeing somewhat of a shifting on these specific alliances. The capacity as a whole is somewhat remains to what we saw in 2024, saying the carriers are still very optimistic in terms of what is the Mexican market going to bring, not only in regards to the nearshoring effect, but as I mentioned, with the increasing purchasing power of the Mexican market by itself. A lot of influx of foreign persons into the market is also creating somewhat of a boom of sorts buying of white appliances to name just as an example, right? So by this, we just want to portray that even though these alliances are already for 2025 set. And for example, the newest one being the Gemini cooperation has already started. It started in February. So this is going to bring somewhat of new solutions in terms of connectivity, ocean connectivity to other markets with bigger vessels, as I mentioned before, and also with, in some cases, faster transit times, not only on the Asian market, but as well as the European one. This is going to bring us a robust in the economy. And surely, we'll have some good news as we go 2025 in regards to the capacity. And we will see how the demand falls in terms of that. However, as I mentioned, there are some information out there that is still needs to be set in order to have a more definite understanding of what the demand is going to fall into. Next slide, please. Now we spoke about the demand. We spoke about the capacity. And going further into the different alliances and the different carriers into the Mexican market, there is also -- it is also important to note that the schedule reliability is still somewhat on the optimal side of things. So by this, we mean that it is above or closer to the 50%. And this surely with, as I mentioned, the deployment of bigger vessels, the capacity not only injected into the market by the ocean carriers, but as well as the port expansions in Manzanillo, Lazaro Cardenas port and as well some new expansion in Veracruz ports are also going to keep on increasing on the -- on improving the schedule reliability as a whole on a door-to-door basis. So just going a bit into this slide, we are showing the global schedule reliability right now figures up to now to January 2025, where we can already see some improvement in regards to -- or in comparison to January of 2024. This is important to note that this is -- this figure is still -- or this graphic is still somewhat of alive organic in terms of what we are looking at in the market right now. We do foresee that the schedule reliability is going to improve in the upcoming months just because as we mentioned during this presentation, there is some important connection implementations from the carriers and from the government as well with the projects mentioned before. Also, this has -- this is going to have an important effect on the global average vessel arrivals. So by this, we mean that these are going to improve as well as the schedule reliability improves. We can also share some information specific to the Mexican market as we go along on 2025. Next slide, please. Now important to note that the port status in the main ports in Mexico is on the healthy side of things. Going a bit further into the slide, Manzanillo, for example, which is a port very prone to congestion has now looking into a port occupation of 80%. This in line to different factors. It is well known right now that as the Chinese New Year ended, there's still a recovery period on the volumes once the Chinese factories are all full and open. And we are obviously going to see some improvements on the demand side to Manzanillo port. It is still something that we're looking at on a daily basis just because this can perhaps shift not so much like impacting so much right now, but it is also important to note the healthiness of the port itself. Also, it's important to note that the dwell times are also improving in Manzanillo. So this overall is going to improve on the terminal side, but as well as on the delivery side of the cargo. It's important to note as well that even though right now the occupation in Manzanillo, it's around 80% or so for week 10. The port itself has had some increases in regards to January '24. And surely, we'll be sending some information of the volumes that Manzanillo port and the rest of the ports have been handling right now. Lazaro Cardenas port also has -- it's somewhat of a 50% of occupation, same week 10. This is obviously going to shift it on a week-to-week basis. We will surely mention this -- we will share this information as we go along during the year. It's important to note that as well as in Manzanillo port, Lazaro Cardenas has also been impacted by a positive volume of 4.1% these figures of January 2024. However, as mentioned and shown, this is still -- there is still enough room in Lazaro Cardenas currently and in the forthcoming years in regards to the occupation. Now going into the Veracruz and Altamira Port, well, it's somewhat being impacted in comparison to previous years, I mean, comparison just January 2024, where there is a slight decrease on the volumes. However, this has been in part with the -- let's say, the with some demand issues as well as bad weather. I mean, as I mentioned, some global disruptors in this specific part of the coast impacting. However, this is going to be improved in the upcoming weeks just because of the healthiness of the Europe to Mexico trade and also because Vera Cruz and Altamira port are ports that we are receiving cargo from India even. So this is going to increase our -- the occupation on both ports and it's going to take them in a bit of a more optimal cargo flow there. Last -- next slide, please. Thank you. So as I mentioned, overall, there are different global disruptors affecting not only the globe, but also specifically Mexico. As we mentioned before, there are some imbalances in terms of the supply and the demand, not only affecting different parts of the world, but specifically Mexico, and this is going to be somewhat have felt during the time of or the transition of 2024. Also important to know some geopolitical concern. I mean, it's well known out there that different political and economic factors affecting the current stability of the country's demand. However, we do foresee that having a strong economy that this is going to be somewhat of a this is going to be something that is going to be felt during 2025 as well. Also important to note that 2024 was the year with the most elections worldwide. So this obviously has its specific effect as well as very aligned with the geopolitical one. Also, last but not least, it's important to note that as this new configuration of the carrier alliances bring new services, new products into the market, there's obviously a transition period between these new products. So we do foresee that there is going to be some disruptors we saw at the beginning of the Gemini Alliance during February. However, by -- specifically one of these carriers have mentioned that this is going to be stabilized as we go along into Q2. So we hope to have good news in that specific that specific topic. Some coasts being more impacted directly and indirectly than the other. However, overall, it's somewhat good to keep on track of the specific outside factors affecting the ocean market. Now going to the next slide, please. Now in terms of recommendations as well or in alignment with what we saw on the air market, update. We do recommend that let's have a close to accurate forecast. This will create some structure and some stability into what we can foresee in terms of the capacity out there, specifically to the Mexican market. Also, it's important to note that even though there is still enough capacity in the Mexican market or to the Mexican market and outside on the export side as well, it is important to keep on booking old cargo with at least 2 weeks in advance just to keep on the -- somewhat of structural and the cargo flow as optimal as possible to avoid any impact in the -- regardless if it's on the export or in the import side. Also, it's important to note that there is some PSS and other surcharges being implemented. This is not specifically on the export side into Latin America or the rest of Latin America. We'll surely have some notices or announcement specific to these surcharges to keep on the conversation going into the implementations that the carriers are going to use not only on the import side, but as well as the export side, as mentioned. Also, it's important to note that the flexibility and the adaptability of switching between destination ports, meaning Manzanillo or switching to Lazaro Cardenas port and vice versa can also be healthy in regards to any foreseeable or unforeseeable situation in both ports as well, we can use the same example in the East Coast ports, as same instruction or recommendation better set into Veracruz and Altamira port. And also last but not least, it's important to note that Expeditors does have a wide carrier footprint. So this allows us to keep on the capacity going regardless of any inconsistency, any disruption going out there. So rest assured that we have the best formula put there out there in terms of keeping on the healthiness of the supply chain. And also, it's important to note that as this 2025 has started being very dynamic. surely, we will have the same dynamism as we go along in 2025. Keep a close contact with your customer service representatives as well as any future market update announced by our sales teams. And I think that will be all from my part. Thank you very much.

Thank you, Lorena. We appreciate all that valuable information. We are now coming to a time of Q&A. [Operator Instructions]. And I think I think we do have one starting out at arena for you, but a question about dwell time they were asking why do dwell time average days? Why are they longer with volume detraction? And I believe they're referring specifically to Altamira and Progresso. Can you address that?

Yes, sure. Thank you. Due to bad weather impacting mainly Altamira port is right now currently a strong wind season in the northern part of Mexico. So surely, this has had an impact on specifically the time at that terminal itself, right? So this is surely why the dwell times are being impacted at the terminal.

Lots of different factors have the impact on these timings, right? Eduardo, the next question is for you. So they ask when exporting air shipments from the U.S. to a direct airport in Mexico, what do they need to know to make sure that their shipment is not held up?

Well, it has to do a lot more with customs -- customers' brokerage requirements. So my suggestion is that you approach our brokerage team, but it has to do with a number of factors, all the documentation such as certificates, different types of labeling that the product requires. It has to do a lot more with brokerage. And there's a really, really wide number of different requirements in Mexico that are very specific to each product with each HTS numbers. So it's going to be a little bit difficult to explain unless I know what exactly the product is, but it's mainly due to -- it's mainly brokerage requirements that are -- that need to be taken care of before the shipment is sent to Mexico, not just the United States, but any other country.

Great point. Obviously, too with so many things changing with customs brokerage in both Mexico and the U.S., important to also work with your customs brokerage representative to talk through the specifics. We could certainly align you with someone with our team. We are also hosting a Mexico customs webinar similar to this one next month. So I encourage you guys to obviously register for that event and hear the latest and what is changing in Mexico customs as well. I think that was the last question in our Q&A box unless anyone else has another one they want to throw out there. Eduardo, Lorena, Renee, also on, do any of you have any last comments as we wait to see if anyone has a final question?

I was just going to add -- excuse me, I was just going to add on that last question that something that we see a lot in Mexico, especially on the air side on delays, as Eduardo said, usually with customs, the one thing that we get all the time is just make sure who is going to be your import of record, right, in Mexico, especially if you don't have an entity in Mexico, that's when we usually see those delays. If you do have an entity in Mexico or a customer in Mexico, is just making sure that those processes are aligned before sending any air shipments or ocean shipment to Mexico. That's the key.

Perfect. Thank you for that additional information, Renee. I think that's very helpful. Again, Lorena Eduardo in your last statements or comments, things that we feel like the group should know, and we can wrap up and get everyone a few minutes of their time back.

No, just if you have any questions, please be sure to send it to us and definitely, we'll look into them. And I'm sure there's going to be a lot of questions.

Yes. For Ocean and thanking you again for your relationship with Expeditors and anything in regards to any further questions in at update, we are sure to help on that. Thank you.

Thank you both so much. We appreciate you providing all of your expertise. And I did drop a link into the chat here. If you guys have questions or want to subscribe to, I should say, to future events, you can follow that. I sure I thought I had dropped it appropriately to where it was link for you, but you could follow that to actually find a way to get subscribed to all of our market updates. And if there are no further questions, we will wrap up for today. Thank you all for joining us. Again, you will find your survey in your e-mail box in the next few hours. And once you complete that, it will direct you to the landing page where you can get a presentation and recording of today's event. Thank you all again.