Expeditors International of Washington, Inc. ($EXPD)

Hello. Good afternoon, everyone. Thank you so much for joining us. We are just hitting the top of the hour. So we are going to get started because if you've ever joined one of these Expeditors events before, you know we typically have quite a bit of content to cover, and today is no exception. So you are joining us for our trucking and transition webinar. We're going to focus today on what's changing in the U.S. trucking and honestly, North America market and why that matters to you and your business. So we're going to go into a little bit of housekeeping today. My name, by the way, is Samantha Hurst. I'm the one you get the e-mails reminding you that you have signed up for this event. And if you have any questions in the background or technical difficulties, we're going to drop a few hints here in the chat in just a moment on some things we know people commonly have issues with like echoes of my voice, if you're hearing that, I'm very sorry. But we'll give you some hint on how to fix that. And then we will go into introductions of our speakers. So Angie, you were right to go to that disclaimer. That's the first thing I want to talk about for everyone. Understand we are not legal experts. We cannot give you advice that should be relied upon from a legal business or financial decisions. We are here to give you information that will hopefully help you as you do make your own decisions about your supply chain and in that process. But we just ask you to understand that this is what it is. It's for informational purposes based on what we see both in public domain and just what we see in the market ourselves. So now to the fun, if you've not joined one of our webinars before, first of all, welcome when we're so glad to have you here. These events will typically go about 45 to 50 minutes worth of content. As I mentioned we have a lot to cover. And then we're going to try to leave some time for questions at the end. Please understand that we are not going to be able to cover something that's hyper specific to your business or industry, but we're going to do our best to get your questions answered. So if you have a question that's more related to your specific business, please do drop that into the Q&A and just understand that we will connect you separately with the right Expeditors experts. One of the questions we do always get, and we understand that hopefully, you'll want access to this content is how do I get the slides. So we will ask that you fill out a short feedback survey, and you will receive that via e-mail from myself within about 2 hours of today's event wrapping up. If you don't get the survey, we know sometimes people scan filters to block those because they come from a survey tool. If you don't get it, have no fear. We're going to get you the content. We want you to have that. We hope that you find it so valuable that you're itching to get it within an hour or 2. So -- that's how that works for us today. I'm going to introduce our speakers, and then we will get started. So with us today, we have Angi Varga, she's our Director of Transcon for the Americas. A lot of times, I speed right through these introductions because on our other webinars, we've seen some of those people a lot. So in case you don't know Angie, she is a seasoned transportation expert, and she's been within the industry for about 30 years across all modes of domestic transportation. And she's had about 18 years with Expiors, where she's built honestly a great reputation for developing strategic initiatives and high-impact customer programs. John Butler is our Senior Director of Ground Network Services, and he's going to explain a little bit about what that means in just a bit, if you don't already know. And he leads that ground transportation strategies as well as network operations. and has decades of experience with multiple logistics companies. We are fortunate enough to have had him on our team for some time now where he focuses on transcontinental transportation, network management and integrated logistics solutions. And we also have with us [ Ty Goodin, ] and Ty is our Director of Security, Health and Safety also for the Americas. She also has 20 years of experience. She's been driving safety, security and operational excellence in this role. She leads regional programs that protect both our people, our assets and our operations. You will also learn that she oversees our CTPAP program as she has known for translating those complex security frameworks into scalable systems. Finally, we have Gary Ernest, our Regional Manager of -- cross-border Solutions. So Gary is also about 30 years of industry. We've got a lot of expertise here in our panel today. He has been working for 25 years specializing in U.S., Canada cross-border operations and working through customs and border compliance as well as supply chain optimization. So you are in very good hands. I'm going to go over the quick agenda and then pass it on to John to get started. So today, we're going to talk about market insights, those impacts on rates, regulation enforcement because there's certainly been a lot of regulation changes in the U.S. and North American trucking industry, freight security, cross-border and domestic air updates and then honestly, wrap it all up. What does this all mean for you all? And what can you take away from today's webinar? John, I hand it to you to get started.

Okay. Thanks, Samantha. Good morning or good afternoon, everybody, wherever you're at. As Samantha mentioned, I'm John Butler, Senior Director of Ground Network Services. So first place I'd just like to start is what is Ground Network Services. So you're looking at our map that internally, we have our own Expeditors. We have our own LTL network. It's an expedited time-definite network that supports cross-product consolidations coast-to-coast into Canada as well as into Mexico. So our -- a lot of the areas that we'll focus on and touch on have to do with the activity and issues in the industry that we're seeing as it comes to impacting running our own operation, our own scheduled LTL network. and as well as the pickup and delivery components bolted on all of the ends of our operations vis-a-vis our different branches and hubs. And then finally, one other area that we focus on is trucking services. Just some high-level notes on our ground network and the map you're looking at behind the map, we're running about 12,000 to 15,000 truckloads a month in this network, servicing about 80 points on a daily basis and reaching to about 100 points through our pickup and delivery services every day. That is a very large network. It is -- we have 11 hubs. We probably run, I would say, 60% of this is solo, probably about 40% of it is teams, but covering all aspects and all different types of equipment and modes, we certainly see all of the impacts -- all of the industry changes going on impacting our network somewhere. I'll skip a little bit pickup and delivery and just get into the truckload services. For truckload services beyond, say, LTL, we support that here too, thousands of truckloads a month of all modes and all equipment types. So quite the experience and quite the exposure to what's going on in the marketplace. All right. Speaking of the marketplace, first place I kind of wanted to start talking about is what we've been seeing probably over the last year in terms of some of the macroeconomic or key performance indicators saying what way the market is going. I think we all, as we sit here in June, know that things have gotten very, very tight. But why have they got tight and what to expect next? Well, let's go back some months ago. I pull out some of the like 9 or 10 here, the key performance indicators, and we'll go into a little bit of a detail on a couple of them. But I color coded these earlier and literally 4 or 5 of these things have been trending up for some months now. What it is, is, I think we've seen pretty good economic performance in the economy. Freight is either an industrial, a consumer or a government initiated. And on the industrial sectors, things have been very hot for several, several months. If any of you are out there trying to buy flatbeds, you probably notice that market is tighter than any other market, and it's been tight for quite some time. I think from my point of view, flat beds, when they get busy, it isn't too long after that, where finished goods come out of it and vans get very, very busy. So -- but if we go into -- well, let's just take a look at some of these KPIs here. I'm not going to touch on all of them, but I do want to touch on -- let's go to the next one, Angie. The LMI, which is a Logistics Managers Index. The key take -- this is one of the leading economic indicators of the strength of the freight market. When you look at this right now, when you can just see the last -- I put my glasses on, year-to-date, when things really started to take an uptick on the trend. And when you start getting numbers above 50, it basically means economic expansion and everybody is a lot of cargo moving. The next one, KPI, just want to look at just one more, I promise. An the ISM -- this is Purchasing Managers Index. Same deal, this is kind of showing all the same trends, if you will. But literally since the beginning of the year, January, February, you'll start to notice there's a little bit of a sizable uptick. Now if you take that back to the left and go back to '24 and '23, you can kind of see that things have been kind of stagnant going back 4 years. I'm going to touch about that a little bit later on truck cycles. But from what we're seeing, obviously, there's been some inertia to move up the industrials and start to move more truck tonnages, and we see that across all indexes and all reports where things have been kind of hot, not on fire, but things have been improving almost noticeably since the beginning of the year and all those KPIs tend to indicate that. Let's go on to the next slide. All right. So we'll take a look at some of the market insights, and I want to focus on I said earlier, truck cycles. That last chart we just looked at kind of shows 4 years of sort of modest or stable operations. Typically, in the truck cycles, you go through periods where it's either undercapacity, in which case capacity will come into the marketplace because the rates support it. And then that operates in an equilibrium for perhaps a very short period of time until it starts to be overcapacity and then it starts to contract. The typical truck cycle is going to be 2 to 3 years, and that's historically what it's been. I've listed the cycles down here over since 2020. And you probably remember some of the stuff in 2000, most notably like in '07, '08, the financial crisis, that was a pretty tough year for all trucking companies. A lot of capacity exited the market. And then obviously, in 2010, things started to recover. And then you had some other, what I would say, regulation impacted cycles changes, the hour service changes in 2013 and most notably, the E cycles in 2016, '17 really led to a change in capacity. But those cycles lasted about a year -- 2 years to about 3 years on tops. Go over to COVID, I think we all remember capacity got very, very tight and trucking got very expensive right when COVID hit and through COVID. But that sort of came to an end in 2022. So here we are in 2026, 4 years later, we've still been in the same cycle where rates have not fully returned and we haven't seen a lot of capacity exiting the marketplace. If you -- I didn't list them on here, but if you look at the financial returns of the publicly traded trucking companies, they all got -- they've all had some pretty tough years. Even the best of the peers aren't making a whole lot of money. It's been a very tough 4 years in terms of finding good freight, getting rate increases and seeing expansion. I think most carriers would think that you would have gone through the cycle in '23 or maybe '24 and start to have capacity exit the marketplace, and that would lead to some yield improvement. But that hasn't happened. I think it's left a lot of people, including myself, scratching their heads going like, wow, this is an incredibly long down cycle. What's going on? Well, from my point of view, that started to turn around. I think anybody who writes about it, talks about it is kind of saying the same thing that we appear to be heading into a new cycle where the -- excuse me, the undercapacity right now is really showing signs in the marketplace. But why? -- why did it change? So I think I'm going to go to the next slide and start to get into some of the data that tells us is changing, and then we'll just discuss why some of the reasons. This chart right here and from Freightways just shows the load acceptance. The blue line is the current one there at the bottom. And if you'll notice, it's pretty stable. Not a lot of swings up and down. So that tells you kind of have the same number of trucks on the road today as you did a little bit ago. But let's go to the next slide and look at tender rejection rates. This one is absolutely a leading indicator. What this is, is the current tender -- excuse me, tender rejection rates are about, I think is 15.8 here. And that turns to numbers that approaching 20 in terms of the tender rejection rate. What that means is for every 100 loads tendered to a carrier, 20 of them you picked up or shippers have 100 loads, they can't cover 20 of the loads. That's a problem because they can go down the route guides, they can switch modes. They can get cargo moving with anything, but you've got route guide disruption every time you have high tender rates. Historically, the tender rates, and if you go back and look at the prior years, they're in the 5%, 6%, pretty normal. But you look at the yellow line there, which is 2025, you're going to see right toward the end of the year, November, December, things really jumped. And if you go back and you look at the gray data to the left, you're going to see that the tender rejection rates are absolutely through the roof. In fact, they're setting record highs. And this kind of matches some of the economic data on the other KPIs that we looked at before. So as we're heading into the busiest time of the year for shipping, which is June, that's when you got food and beverage moving, that's when you've got a lot of agricultural business moving. June is historically a very, very, very heavy month for trucking. And you can see that the tender rejection rates are already at all-time highs. So I guess we'll see what they go for the next few weeks, but we definitely got some stress in the marketplace. Let's go on to the next slide. All right. Just another view. This is from that. This just looks at the van to load ratios out there for dry vans. I didn't put reefers up here. We talked about flatbeds being incredibly tight, but this is just the dry vans, but all the equipment types are pretty tight. And all I'm trying to show here is basically things are pretty stable in the last couple of years and all of a sudden this year, since January, things have definitely tightened up. Now there's 12, 13 trucks out there for anyone -- loads out there for any one truck available. I think I looked at origin yesterday. I think it was like in kind of outbound Charleston or Savannah, had 10,000 loads available and 500 trucks. So odds of getting your loads covered are pretty low in that situation. And if I looked across the map of all the U.S. for all the different zones, I think there was only 1 or 2 what we call zones that were kind of like neutral. Everything was oversold, which means more loads than trucks. So when that happens, it's pretty obvious. Freight is not going to move, rates are going to go up and some freight gets left behind. So let's go on and look at the next slide, and we start to look at -- I think we start to get into what's happening in the rates. So when capacity gets really, really tight, well, typically on a spot market rate, people who purchased truck on the spot market basically book a load when it's available through a broker or perhaps through a carrier are going to typically pay a few percentage points lower than those contract rates. It's subject to availability, but shippers take advantage of that. But when capacity gets tight and shippers start to lock in their capacity, the amount of trucks available to cover loads don't match up, just like we talked about Charleston just a second ago. When that happens, the shippers start outbidding each other and it forces up the spot rates. When the spot rates leapfrog contract rates, that kind of signals that you're heading into a new truck cycle of growth and expansion. And that's what the data tends to indicate. Right now, as a comparative, if you're going to go down the road at, say, $2.50 a mile in a lane on a contract rate, the spot rate might come in about $2.40 -- but what's happening now is that spot rate is $260, $270, $280 and the spot rate is actually also -- I talked about tender rejection rates setting some record highs, but the spot rates in the marketplace have also setting some record highs. I think they're right up there with the all-time record high in COVID. I should have looked at that before this, but the 2 are both at all-time record highs, which shows enormous tightness in the marketplace. Let's go on to the next slide. So how is that impacting rates? Well I already kind of said it's going to go up. These 2 charts side-by-side kind of demonstrate that the amount of freight loads available is not strikingly changed. We talked a little bit about economic expansion. I start to look at other indexes. I didn't put the CA index up here, but there's any number of other indexes that kind of look at the amount of loads in the marketplace. And while they've been growing, it's been pretty modest and a little bit under control. But when you look at what's happening to the rates, it's a little bit of a phenomenon because the load count is staying about the same, but the rates are going through the roof. Market rates have gone up here by -- I think the all-in broker posted loads, the rates are like almost 50% higher than they were a year ago. That's blowing up budget, pretty bad. So there's a reason the spot rates are going up. And the spot rates, by the way, it doesn't take long before the spot rates start to pull up contract rates. You'll start seeing those in the form of GRIs from LTL carriers. We've already started to see some come a little bit earlier this year. Certainly, truckload carriers are probably knocking on your door or will be knocking on your door that contract rates because there is tremendous upward rate pressure in the marketplace. The next slide, we're going to get into why that is. Basically -- well, actually, a couple more slides. This kind of shows you some of the same data. The red line is current. You can kind of see what's happening to the dry van rates. This is the Morgan Stanley Index. You can see the years prior to that, '25, '24, '23, '22, stable, flat. Once again, the prolonged cycle, 4 years of basically a stagnant truck cycle. But you can see very much at the end of last year and through May 5, this last index, things are up higher than ever. The next slide is also going to show you some of the spot rates. Let's look at the national spot rates there on the left. The red chart once again is 2026, and you can see that is heads and tails above where things were for the last 4 years. So there's definitely some upward momentum going on -- it matches all the KPI, matches all the industry data, matches all the truck reporting. The national contract rates, you can kind of see to the right, while those are trending up, they're not going up as fast as the contract rates are, but that will probably continue to evolve over the next few months and the contract rates inevitably will start coming up as shippers -- excuse me, as carriers renegotiate rates with shippers, that's going to have tremendous upward potential. So rates are going up. Capacity has exited the marketplace, which is leading to basically spot rates going up and contract rates soon to follow. So let's go on to the next and say, why is capacity leaving the marketplace? This is kind of something that you would have had a conference call on trucking a year ago or 4 years ago, would probably have not come up. We had the ELD changes some years ago, and that was a bit of a game changer. But what's really happening right now is about 6 different or 7 different areas where there's tremendous regulation enforcement. And what it is, it's forcing trucks off or out of the marketplace. They're idling them, their park. There's just simply less trucks hauling for the. There's more freight out there today than it was 6 months ago, and there's far less trucks out there than there was 6 months ago, and that's why it's tight. I just clipped a few headlines here from some truck periodicles, but you don't have to go to some of the transportation magazines and resources. If you just turn on the network news or front page headlines, you'll see trucking in the news and particularly around -- some of the issues, 60 minutes, if you guys watch that, they had a terrific expos on Cameleion carriers. Talk about that in a second. But some of the issues in the trucking world are making headline news this day, so I don't think anybody is unfamiliar with it. But these are really the 6 areas right here that are really tremendously impacting capacity. There's literally tens of thousands of trucks coming out of the marketplace, both contract and the spot market. And obviously, that number is expected to grow. I'm hearing numbers anywhere -- I guess give different ex, anywhere between 250,000 trucks and 450,000 trucks. It could be higher. I don't think anybody ever really knows, but that is a tremendous amount of capacity that's being pulled out of the marketplace. 10% to 20% of trucks are kind of fall into this category. ELDs, we mentioned that they came online what 2017, '18 that's electronic tracking of the trucks -- electronic logging of trucks, excuse me. But here we are many years later, and I didn't know this relatively recently, there's over 1,000 ELD companies out there selling their services. And it's not regulated by the FMSCA. It's self-certified that if you have an EDL that you're -- it's effective and that it's accurate. But I think everybody is kind of finding out the hard way that many of these companies are not really doing what they're supposed to be doing and many carriers can actually have their electronic logs reset, allowing some drivers to drive well over the legal limits in terms of their hours that they can drive. So that's an issue. So there -- I think I just mentioned, if you go on some of like the DOT websites and you start to search some of the stuff, you'll see every month and almost every week, -- the DOT is decertifying a dozen here. I think I just read 8 more got decertified. Basically, the ones that are not providing the services that ELDs are supposed to be providing are being pulled from the available list of services. B1 drivers, these are drivers that they service -- excuse me, Mexico and Canada, but they allow us -- Mexico, excuse me, but they allow Mexican fleets to come into the U.S. Well, what's happening -- what's happened for years, and I don't think it's a bit of a surprise, the drivers are supposed to come up from Mexico, deliver a load, say, in Dallas, Texas or Phoenix, Arizona, and it's supposed to take another load back to Mexico. But that doesn't always happen. A lot of times they come up here, maybe they cross the border on June 1, they put themselves available for hire, take a few loads intra-U.S. and then go back in Mexico. So they're cracking down on that. And as they do that, that just pulls trucks that were for hire on the spot market out of the marketplace. I think -- there's been -- I got 3,200 licenses have been renewed. But I think -- excuse me, pulled from people violating that. But there's also the impact of people know that the regulation enforcement is in place. So if you were participating in pulling freight in the U.S. and now you know that there's a bit of a crackdown, far less people are attempting to skirt the loss. Nonresident crackdown. This is an area that's made tremendous headlines. There was a -- perhaps you've seen some pictures where we got people come to the U.S. The Visa may have expired 2 years ago, but they got a CDL, certain states issued CELs and the CDL might be good for 5 years. So the visa expired, but the CDL is still good, and that's about 200,000 right now that they estimate drivers who are not really should not really be driving a truck or at least should not have a CDL, but they do. You've seen -- if you had the news, there's a lot of states, Florida, Oklahoma doing a lot of road checks and the number of nonresident CDLs that they're stopping and pulling off the road is absolutely phenomenal. And once again, if you follow -- if you're a driver and you fall into this category, you may or may not wait until you actually get caught, you may just park your truck and decide it's time to go on to something different. So that's impacting capacity. English language mandate, this has always been a federal motor carrier safety regulation. It just wasn't enforced and it's being enforced right now. I'll just say this, the DOT and the FMSA, when we talk about -- there's been a lot of news headlines about fatal crashes and some of them made a lot of national news. The DOT is absolutely committed to getting rid of minimizing these fatal accidents that can happen with an 80,000-ton tractor. So there's tremendous regulation enforcement. We just came off a road check week. I forgot the capacity was pretty definitely impacted, double digits in terms of percentage of trucks pulled themselves off the road. But for the ones that remained on the road, and it's -- I think about 20% -- I may have that number wrong. I think it's about 20% of the trucks that got pulled over, they found issues with and they shut down. So they are really cracking down on this regulation is impacting capacity. CDL mills. That's where basically a driver can go -- well, a person can go get a CDL driver license literally in 1 day. Some of them don't even have any tractors. They just go in there and they just take a test and they issue a CDL. Obviously, that's a public safety issue and a number of -- let's say, 3, CDO offices or driver training schools, excuse me, have been shut down and 4,000 under investigation. I had no idea until recently that there are that many places that you can go out there and get your CDLs, but they popped up post-COVID. If you guys go back to '20 and '21, trucking was pretty hot, rates were pretty good. You had a lot of capacity coming in the marketplace. You had a lot of drivers come from all over the place join the marketplace. And obviously, the CDO mills popped up then. Finally, last one, I'll just talk about. This is what the 60-minute expose was on the 2 million carriers. Once again, this is a bit of an eye-opener for me some years ago. it doesn't take much to get a federal motor carrier to get a DOT number, literally a few hundred bucks and some applications. And there are many trucking companies out there that have 5, 10, 20, maybe more different motor carrier numbers. And what it is, is they go down the road and when there's an accident or a safety issue or insurance issue, they literally just take the MC number off of their side of their truck and put another one for a company that they operate on the truck. GenLogs is where they can do some electronic monitoring on the highways and any number of reports where the same tractors will have work for 8 different carriers in a short amount of time. Every time they pick up a load or every other week, they're changing -- they don't change companies. They just change the MC number and the name of the trucking company on the side of the truck. So there's many thousands of trucking companies out there. I think I was reading about one town and I think it was Wyoming. I'm not going to say the name because I might have to get the name in the town right. But they had literally they had more trucking companies than they had residents in the town. -- multiple trucking companies are being registered as a little bit of a fraud to facilitate this Cillion carrier strategy. In 60 minutes, if you haven't seen that video, I encourage everybody to go watch it. It was a fabulous job kind of explaining what that's all about. But as the crackdown begins, hundreds of thousands of trucks are coming out of the marketplace. Good news, and this -- you're starting to see that. So rates are going to go up, but behind the rates going up when capacity gets tight, carriers have to backfill drivers -- seat the trucks. So wages are going up. And this is, once again, if the COVID, I think we went through about 2 or 3 cycles of driver wage increases in '20 and '21, and things have been very flat and stagnant since then. But if you start to read some of the headlines, you'll see the trucking companies are starting to get driver wages again. So when that happens, drivers will jump from company to company who's ever offering sign-on bonuses or maybe better pay, and we're starting to see that. So that's turnover within the driver ranks, but also increases that they have to pay to seat the trucks or fill the trucks. And obviously, those are going to get passed on to shippers as well. Let's go on to the next slide. This is -- so I just recap that the regulation enforcement. That is absolutely impacting capacity. That is absolutely going to push up wages for the carriers -- for the drivers who are still good to run. And obviously, it's going to hopefully push up wages enough that you can attract new entrants to drive a truck because if hundreds of thousands of truck drivers become disqualified or exit the marketplace, they've got to be replaced to handle the same volumes, you have to bring literally hundreds of thousands of truck drivers into the marketplace who may not drive a truck today. So hopefully, if the wages go up, that will attract entrants to the market. And that will have to do that as the cycle moves along and deals with the tightness. Finally, there's one other issue that I couldn't have a presentation and speak about without mentioning because it's once again in the headline news every day. It's always been assumed that if you're a truck broker, you basically didn't have some of the liabilities about who you were -- third-party motor carriers that you hire. That been a bit of a debate. But nonetheless, there was a case that went to the Supreme Court 2 weeks ago, I believe it was. There was a Supreme Court ruling. And basically, what the rule said is the brokers now can have financial responsibility for the -- where they hired a negligent carrier or they should have known that, that carrier was negligent. So they've now got a little skin in the game. Obviously, that's impacting brokers and carriers and therefore, shippers alike. And this is pretty fresh to new is only on a few weeks. Some of the brokers that I've talked to, they're absolutely going through every one of the carriers. And some of these brokers have thousands or tens of thousands of carriers and they're trying to basically remove or identify the ones that they might have some -- might not be able to demonstrate that they are a safe carrier. It's a problem for brokers. It's a problem for other carriers, too, because 80-plus percent of the trucking fleets out there do not have a safety rating. So absent of firsthand knowledge or public knowledge where you should have known that maybe somebody's safety is sufficient, it's very hard for carriers and brokers to understand who can be identified as a negligent or subpar carrier and who is good. I think the conventional wisdom is this is absolutely going to benefit large companies, large trucking companies who have a demonstrated and documented safety history and the same deal would probably benefit large brokers. It's probably going to have a negative impact that will be much more difficult for the small brokers and even the small carriers because they simply won't be able to demonstrate that they are safe carriers because there isn't enough information out there for brokers or shippers to make that decision. So this obviously is going to have a tremendous impact, both on freight availability as well as who are the preferred carriers for shippers and brokers alike. So stay tuned to this because this is still making its way, I guess, to shippers to be impacted by that. Finally, one last article, one last topic, and then I'm going to turn it over to Tai,he's going to go on this thing. Cargo theft. Every carrier is dealing with this more than ever before. Just in a nutshell, organized crime is involved in cargo and a lot of them have figured out that it's much easier to say lobs and freight than it is maybe rob a store or bank in cargo thefts of all types. Pilridge, deception, you name it, some of the scams going on out there are just absolutely phenomenal. I don't know a shipper that's probably not been impacted by this. Ty is going to go into greater detail on this. But with these issues, I guess I'll wrap it up here and hand it over. These are the issues that you're seeing and we're dealing with every single day. At least shippers out there, some of them are dealing with every single day, some phenomenal issues in theft. So that, I'll leave it there, pass it over to Ty, and thank you.

All right. Well, good -- good morning, afternoon, everyone. Thank you for allowing me to jump on my security self-action speak about security. And my goal is just raise awareness with you all -- as John stated earlier, Cargo Beth is at an all-time high. It's been pretty much lining since really around cold at time is when we started seeing a lot of the schemes that we're seeing. -- terminal organizations have gotten more sophisticated, and they found something network. And so while we may not see growth year-over-year anymore, we see that it's flat hold at these record highs. The alarming back related to these record highs is that cargo that still goes significantly underreported. So it could be double of what you see out there, but most times, we're not seeing it as much being reported. And what criminal organizations are starting to use like we are, anything that makes our lives more efficient like the big thing now is artificial intelligence and using chat GPT and different things like that, like people are using that. Well, criminals are starting to leverage those things to make their room be more convincing, so in addition to their fishing schemes or their social engineering, they're also using voice over IP phone line, so you can't track them. They leverage AI to make sure that documents look at legitimate as possible in relation to freight details. As they continue to focus on what the industry is caustic [indiscernible] pickup as their tactic of use. That's primarily because they've been successful at it. Historically, we've had the main like cargo beth happens pretty much anywhere, especially in the U.S., but the main state for cargoes have been Illinois, California and Texas. But recently, what we've seen New Jersey has been overtaking Illinois with a lot of focus on the sort of commodities like the metals and copper that are being moved out of that market. even some food and beverage related items. And so we're starting to see an uptick in that New Jersey market. still the top targeted locations are related to warehouse and distribution centers. That's primarily in relation to the pickup being fictitious that we see often. So it's just related to that where it occurred. You still have crimes of opportunities coming up truck stops, people we freight somewhere that's not in the most secure area. So you do see that. Again, food and beverage gets targeted a lot because it's something that criminals can bake a buck of and that can't really be tracked. So they target those items. I will say I think some of them may be many economists because what they'll do is they watch the trend supply and demand and things that are with great demand and minimal supply, they will target those items because they know that they, on the black market can get a lot of money for those things, right? The tariffs up and down, we've seen differences with those, and so that's been impacting those trends as well. I'll talk more on the Cora. I do have a slide related to that because not something that is just noticed in the industry of people that move freight, but it's starting to get the attention of our lawmakers. Okay. I'm not going to speak too much on Canada because I know that Gary has some information to share there. I will say in the greater Toronto area, they have a really great pill levers that really focuses on mitigating those cargo crimes in that area. And then Mexico focused is generally on in-transit attacks as well as freight is left in an unsecured area. Next slide, please. But what we see as the emerging threats I stated before, it's really a focus on distraction a lot of time. So I will say people till to people's nature to be that good to Meriton, and they distract them and say, "Hey, I need help. Can you support me? Can you help me find certain things can you help me move a car while their crew is focusing on reaching the cargo areas of truck. Very recently, we heard the scenario where we had a truck in transit and the distraction was to have another vehicle cause a collision with the export vehicle. The export vehicle, of course, flowed over. They were in an accident. And it was actually terminals probably part of both million carrier forces that were actually the drivers behind the truck and so they sell the freight while the export was addressing the accident. -- we see these things happen in the market. And so these are things to be aware of. That particular shipment, my knowledge didn't have any additional tracking on it to be able to see where it went after it left the accident team. For those that do intermodal great, we have been made aware that criminals are sabotaging trains while they're out in the middle of nowhere, cutting break lines and things of that sort to get the train to force to stop in the middle of nowhere and then they're breaching different containers to pull freight office there. And then again, the strategic step is the biggest, biggest influx that we're seeing. We've also heard of may have seen a story written about that, where they've turned it as Trojan drivers, who was really this some online and waiting, working for a company, handling a couple of runs, and then once they get a load that they think is enough value than they take it. So we also term that as internal conspiracy. So these are things that we face, and it can be daunting, right? We long of the days straight stuff where people are hoping they don't get caught has become more sophisticated with strategic to where it is continuing to dose just continued pain point in the industry at March. What I will say is that on the next slide, I do want to talk about some of the things that we can to change our mentality as it relates. And so I always tell people about this when I go and say, "Hey, what are the things that we can do. " So many people always start off just from an area of trust, right? They want to see themselves and other people and you yourself, you're like, "Hey, I'm trustworthy, so I think that what this person is telling me is going to be top of mind. However, a 0 trust mentality really is an approach to always validating information, just because they've gotten a door, does it mean that we accept them like that Trojan driver aspect, right? We could have protected or that company could have been protected had that driver not done will move on their truck, right? So looking at who needs to know the information, why they need to know the information, will it impact their ability to do their job, right? The methodology of Zero Trust is operating off of a different model of never trust and always verify. So it evaluates the mindset from thinking people our trucks were to be inherently that everyone is a criminal that is looking to still my freight unless proven otherwise. So when you go to that mentality, that's when you determine what cargo the mitigation strategies that you can put in place. And I'm going to go through these very quickly from down the left and then down the right. So only work with vetted service providers that you've approved Gary mentioned that we use better service providers in our market. What I'll say is just using electronic means with betting a service provider at sufficient and that's because you have a million carriers out here that are going in and they're leveraging both items. You need to know who you're working with. -- the days of picking up of telephone and speaking with people, it's extremely important. No amount of technology can replace just that human interaction, so know who you're working with and make sure that you only share information within your operational control with people based on what they need to complete their work assignment. -- keep the lift as concise as possible, everyone doesn't need to know those details. In cybersecurity, many terminal organizations are using cybersecurity teams really to infiltrate physical security, right? So having a well-trained and resilient workforce helps to mitigate that. Just don't click that link or don't share that information because it looks familiar. Right? For us, it's always good to monitor any intelligence that's out there. You all are taking a great step in joining this webinar. I know you're looking at market trends and things of that sort, but even learning about how you can secure your freight is a good step. There's also many industry publications that are released on a periodic basis that will help you stay on top of understanding what those key risk indicators are as it comes to security your freight and transit. Starting on the right, driver and carrier verification, 1 of the most critical elements that any supply chain security resiliency is making sure that you early that driver. You look at their truck, you make sure that their truck look legitimate to make sure that there is missing plates or fireplace or anything of that sort, once you release the freight, it becomes more difficult to get your hands back on it, right? You also want to make sure you have proper security controls in place, physical security of cargo areas, facilities and yards -- and then any freight in transit, you want to make sure you have GPS monitoring and real-time active monitoring is going to be the best in any situation to know where your freight is and if something is happening while it's in transit to increase your possibility of recovery, -- our preferred provider is cargo signal. So if you any questions on that, feel free to reach out, and we'll get you some information on that. And then just say and align with compliance partnerships. So expediters ourselves, we participate in the custom trade partnership against terrorism and many other security certifications around the globe. We also collaborate with law enforcement. Those are going to be some of the things that are going to help you mitigate the risk. And then you may be wondering what are some of the things that lawmakers are doing -- so the combating organized retail Prime Act is legislation that's currently going through Congress. It was recently passed by the House this past May, and it's with the Senate. The great thing about this is if it passes, it is bipartisan legislation. And if it passes, it will provide more support with multiple law enforcement agencies that are to be able to collaborate and share information and be able to address these carbo prime closer in real time and be able to get the support that they need to prosecute via center.

So Gary is going to come on next talk about cross-border and then Angie will also jump on to talk about domestic RP.

Thanks, Samantha. Hi, everybody. So I just wanted to point out, I know you saw really great detail from John and teams regarding capacity driver impact, et cetera, how that impacts us. So I wanted to just kind of point out a few things as it related to the cross-border market, Canada specifically. So one of the things that you might or might not know is there's an impact difference between southbound and northbound. And by that, I mean freight coming from Canada into the U.S. or the other way around U.S. into Canada. So if we look at Canada, freight coming from Canada into the U.S. We've seen rates that are up nearly 30% and for multiple reasons, some of which are the same or similar to what John went over as well. It relates to carrier capacity, companies reducing headcounts and drivers not in the marketplace, right? So you see that. There's also actually more freight. A lot of people don't know this going what I like to call northbound from Canada into the U.S., then the other way around. Normally, we see -- we think of that the other way. it's about a 60-40 difference from a percentage standpoint. So what we also see from obviously, supply and demand, you actually can pay more going from Canada into the U.S. than U.S. to Canada. -- it's also a good time from that perspective. There's capacity available to move freight U.S. into Canada. So from that, why is the supply decline, and that is many of the things like John talked about as well, right? There's -- although we're seeing more bankruptcies on the Canada side, there were a ton of small providers. some of which we're working in those formats that we talked about and have been stopped. So some of them are out of business. The -- obviously, the drivers licensing enforcement is also something that the Canadian government and legislation is doing some things about, and that's starting to take play. Also some of those CDL mills, et cetera. So -- the other piece was market concentration. There's actually fewer of the really large carriers. Some of them have merged, some of them have gone out and bankrupt, et cetera. And because of that, prices have been hit. There is a reciprocity agreement between U.S. and Canada. So CDLs from a Canadian driver worked fantastically going into the U.S., no issue, vice versa, U.S. into Canada. However, that is not the case with Mexican drivers. -- so Mexico CDL drivers. But from that perspective, the -- if you've heard a little bit about the nondomiciled and I think John had talked about those as well, those are exemptions for U.S. and Canada CDL holders. Go to the next one. So again, on the capacity, about 78% of cross-border freight is actually moving with Canadian drivers and carriers -- so again, you kind of think about what you heard today, less impact because of that on those drivers. So the Canadian market is really still attractive from that perspective. Fuel remains high. I know like you haven't heard that before, every time we go to the pump, right? -- but Canadian fuel is actually more expensive significantly than in the United States. I kind of always has been. A lot of it is tax related. And they're seeing a slower decline in that price per gallon versus the U.S. If you think about it, I put a chart there on the right. I won't go through all that, but you can see a lot of it is tax input -- and between $90 and $1.40, if you do the conversion between Canadian dollars and U.S. dollars of US per gallon and you think of a normal tractor trailer or tractor has 250 300-gallon capacity. Significant difference from just in that difference in price of fuel in Canada and fuel in U.S. The good news, sustained market demand. We continue to see Canadians buying from from the other countries, from U.S. specifically, still a $4 billion a day market in freight between U.S., Canada and Mexican borders. I don't have anything on it in this slide. Maybe I do. Actually, I do have one on it next. But one of the things that we're really seeing is how to do some tariff mitigation from a standpoint of example, freight coming out of Mexico going into Canada, and we can just go to that next slide, show a graph of that. So this is a process. And again, this is expeditors related, but it's a way to move your freight, for example, from Mexico, can be from other countries as well, different modes work as well into Canada through the U.S. And I think John put up a map of what we call our ground network services, our D&S -- this is actually a slide of it using the GNS in bond, which is unique for an LTL environment or less than truckload environment and the ability to move that freight in bond all the way to the Canadian border, cancel the bond par clear into the Canadian marketplace and then blast out from there. And we've seen this being one of the real strategic hot buttons. We've seen a lot of attraction and activity for this particular program. You can also add your e-commerce orders. So remember, De minimus and all those things that impact you, these programs help mitigate that as well cost savings from international and domestic shipments, et cetera, I think you get the point. Last slide, just kind of on fact. So some of you may or may not know, Obviously, Detroit Windsor, Detroit, Michigan, Windsor, Ontario, Canada's busiest infrastructure from Canada into U.S. and U.S. into Canada traffic. There is a new bridge that's been being built for the last few years. They named it after a famous hockey player Gordihal. Gordihal International Bridge. So another international bridge costing just down the river, I'll say, from the Ambassador Bridge. That has just been completed a few months ago, infrastructure in place, a lot of benefits, 6 lines instead of 4, direct connections to the major arteries or freeways in Canada, a lot of different benefits. However, the Trump and Carne administration are in a lot of negotiations, like John says, you guys see the news. There's a temporary hold on the opening of that bridge, and I believe it will be -- we won't see anything until after like the July 1 USMCA renegotiations, et cetera. So looked that up, a lot of cool stuff going on from that period. That's going to be really cool when it opens. And that's it for me.

Thank you, Gary. All right. Just want to close with a couple of items relevant to U.S. shipping. So knowing that we've got a lot of commerce that goes from Canada to Mexico and U.S. to Canada. -- wanted to share what's going on with Mexico and customs as it relates to the importer of record for the southbound shipments. So Mexico has what they call the value manifest, and that's what's used to process and assess the duty amount. So what's changing coming up. It's an ongoing -- ongoing date of the effectiveness is this is not going to go from a hard copy submission to electronic submission of this. So what actually I can do now is actually put in -- this is in place for 6 months to a hard copy, and they can renew it every 6 months going forward when this goes electronic, this will be required for every pedamento that goes through the border. -- work across. So the date, like I said, has been a moving target. It was June 1, the effectiveness now is pushed back to August 1. And I think that's just due to making sure the system is in place and control, but also the imported records have a lot to do here. So if you look at this list here, I'm not going to go through all of this. Your compliance folks are aware of this or probably are should be. But this is more for operations people as well because this -- if this isn't a place or if you guys don't have all this information available, it could absolutely delay shipments at the border and they'll just sit in the yard. So the 2 items in blue, those are new. So that's as part of the electronic submission that's going to be new as part of this. So again, it's more so for awareness that there could be delays at the border once this does officially go live. There's usually a learning curve of this stuff, right, which we've seen from the compliance side of it. I did want to -- since we're talking about capacity, another capacity alternative that you can exercise in the states is U.S. domestic air freight. So I'm not talking about the all-cargo aircraft from the integrators, but more so the airlines that we all fly for business or leisure purposes, American Airlines Southwest, Delta, and the others, but that's actually a great place to put freight. Obviously, you've got to have freight that fits on an airplane, if you will, but they do have balanced capacity right now. And they've also kind of rightsized their networks in conjunction with the fuel increases. So flight schedules have already been realigned to amend to the fuel prices. But that being said, just a couple of things to mention with freight characteristics. So if you think -- I want to put -- in the U.S., it's mostly wants, standard aircraft, which also put narrowbodies in there versus widebodies, you see on international. We've got not as many widebodies, but the standard type aircraft is typical. You can get anywhere from 100 to 3,000 pounds on those aircraft. And with that, if you're tendering boxes on pallets, are almost always going to go loose. So we do ask the customers you do label each of those cartons. We personally label them as well. They'll go loose in the body of the aircraft. Then ship and then they get repelletized by your carrier at the delivery point. So they do get delivered back on the pallets not just lose boxes. So -- and then two, there are some wide-body options, wide-body aircraft that can take anywhere from 8,000 to 10,000 pounds on a shipment. So that's a great benefit there. Also, if you think about scheduling, so they're scheduling flexibility because there's usually a couple of flights that are going in and out on those routes today, sometimes many depends on the lane and then speed, obviously, speed to get there. And then as an example, if you've got let's say you've got a shipment of 10 pallets. And the end user really just needs one of those pilots right now just to maintain current operations. We've also done maybe a split we shipped that 1 pallet via airfreight and then got the other 9 on the road. -- and that 1 pilot maintains operations. So a lot of different ways you can use best today. So that being said, I just want to close out with some of the advice we've got based off all of our percentages here. So as we go to the second half, so early and accurate forecasting, I'm sure you guys have heard this all the time, but that's huge because it allows carriers to lock in capacity for your volume? And speaking of blocking capacity, especially as it relates to truckload, we started to lock in those contract rates and prepare your budgets for spot rates because as we see those spot rates are going up. And we have customer flexibility. So the shipper flexibility, you have control of that from your dock, but that -- if you got end customers that you're delivering to or maybe vendors that you're managing the freight you're picking up from flexibility is really if you can avoid the strict appointment times or limited facility access, I think you have the flexibility you can bring in is significant. And in that partnership mindset, so really becoming that shipper of choice, the big 1 here, that's the big red flag for all drivers. And I'm not talking about companies, the excellent drivers because drivers can't pick the loads they want even if they work for larger organizations is waiting time. Winning time eats into their hours of service and tell you what drivers they'll actually just decline loads going to your facility if they have to wait excess amount of time for loading or for offloading. And then Moteshift, we just talked about airfreight. We have gone from full truckload LTL, I know you do have to watch that because with some of the common carriers if you're shipping over 5 pallets, you may get to a linear foot or capacity surcharge and expeditors that work we do not charge for that. So there's no excess fees? And then we've also felt too if you've got maybe that -- I keep going back to my 10-pole example, but then on a 24-foot straight truck and run that. So usually, that's equally as fast and sometimes it can be a lower cost. And then closing out to what -- that shared the vet and Verify. So in your shipping facilities for anything that's coming out, making sure that the drivers, you got drivers name, driver shipment bill leading, you've got maybe a trailer number or if you're managing transportation or managing a pickup or the transportation from your vendors. Also, make sure you're sharing that information with them. It is very, very normal to ask for a driver's name, a trailer number, what not. And obviously, the traditional stuff we do is verify seals. So with that, I'm going to turn it over to Samantha to close this out.

Angie, great job digging us right in at the wire there. We always like to leave time for questions, but we have not because we had a lot to cover. But if you do have questions, you are welcome to e-mail me directly, I'll be sure to get them to the speakers. And we will get your questions answered. There are 2, I see in the Q&A that we haven't gotten to yet. We will get you answers on those as well. Finally, if you're still hanging on with us in the last minute, these are the upcoming events that we have from our other products and services. So we do have Onyx, which is our geopolitical arm, and they will be talking about Europe and impact to that country from the wars and other crisis that are going on around that region. With U.S. Customs market update coming up next week and Americas Ocean market update the week following. So thank you all so much for joining us today. We hope we found a lot of value out of this event. Please fill out the survey that we'll come to you in about an hour, and we'll get the materials sent your way. Thank you all. Thank you, speakers.