Hello, good afternoon, good morning to all of you who are joining us on the West Coast. We appreciate everyone who's joining today's webinar. This is Expeditors' focus on the air market update for the Americas. My name is Samantha Hurst, and I will be the host for today's webinar, and will just support in the background along with my colleague, Brendan Carruthers. I'm going to talk just a little bit about some housekeeping items, and then I will pass it off to our speakers. If we can go to the next slide, perfect. For anyone who's not joined our webinars in the past, we just want to make sure you understand how things will flow today and how you can interact with today's content and speakers. We will have about 45 minutes of content throughout today's session, and then we will go into a Q&A session to follow. Now, we encourage you, however, to submit your questions in the Q&A window that you'll see on the control panel throughout today's conversation. We do have a couple of different members from our air team, as well as a surprise guest from our Onyx team, who will be available to support on those questions. One of the main questions that we often get is, of course, how do I receive the slides and the recording of today's presentation? We do ask that you complete a short feedback survey, and that will be emailed to you by myself, typically within about an hour of today's session wrapping up. Once you complete that survey, do watch because you will get a thank you message. Right under that thank you message on the page is a link to the material landing page. That's where you will find the recording and the presentation links, as well as any additional resources we might provide. Finally, if you want to get information about our future webinars, you're not currently subscribed to get those communications from us, you can scan this QR code, and that will take you to a page to subscribe to those webinar invites, as well as our local and global market updates. Now just a brief disclaimer. We want to make sure everyone understands that the information we are providing today is, of course, part of the public domain, but we're not encouraging you to use this for any legal, business, or financial decisions. We do not guarantee that exactly what we say today will be what happens tomorrow because, as we all know, the market is constantly changing. Please just keep that in mind as you use this information to b e A guide, but not necessarily for legal purposes. Now I will introduce our speakers. We have with us today Joe Allegra, who is our Vice President for Air Cargo for the Americas, Rob Emmerich, who is our Director of Air Product for North America. As I mentioned, our surprise guest, we added one to the content lineup today, Fernanda Kroup, who is our Vice President and Head of Onyx Strategic Insights, is joining us to tell us a little bit more about what we are expecting to see as far as geopolitics and the market going forward. I believe I am passing things off to Joe to get us started. Terrific. Thanks, Sam. Hello, everybody, and thank you for investing in this next hour with us as we go through the dynamics of the air market and talk through some points that I hope are of interest to you. We'll kind of just summarize upfront and then dive into the detail as we go through. We'll touch on capacity, specifically really looking at how the market expectations on August 1st and what has led up to August 1st, as far as the trade negotiation and tariffs. Talk about the available capacity out there today with freighters, and then touch on the limited deliveries of new freighters and how we've seen some postponement of those deliveries, and then a pretty slim order book. The reduction of capacity post-May 2nd and how we've seen some aircraft retirements and maintenance from an E-commerce perspective, de minimis, and how that's impacted capacity and demand both to the U.S. and to other markets now around the world. How that's led to both e-ommerce players and freight forwarders canceling their block space agreements and really redefining their charter routes. A lot of time, we're going to highlight really how we're seeing some of that e-commerce get redistributed and deployed to new markets outside the U.S., and also how sourcing out of South Asia is really coming to play as we've seen less China demand. From a geopolitical and trade barrier perspective, Fernanda is really going to go deep on this, but we have seen high tech back to ship in the last 90 days with a pause. Non-China Hong Kong origins have really become shipping as normal, but demand is somewhat weaker. A lot of uncertainty post a 90-day pause. From a carrier perspective, their outlook, what we're seeing as far as where they're flying, their outlook towards trade barriers, reduction in e-commerce that they're moving. Also, how leisure travel is starting to reduce. Again, back to the delivery and postponed order book of new freighters. Right into it, when we look at capacity, first half of 2025 versus 2024, overall, you can see global capacity grew 4%. 4% on the Trans-Pacific, Asia-U.S, U.S.-Asia. Very different story. Now, this is both all capacity, so it's both freighter and passenger. Very different story, Asia to Europe, where capacity grew 17% and 14% going back. Another conduit because of the no-fly zones and the war in Ukraine and Russia, we're seeing divergence from Asia into Middle East hubs, also to. Deploy into Europe. Not flying over those zones. Very different story, though. Let me go back one second. On transatlantic, relatively flat, really not much to get excited about. Slightly down Europe to U.S., slightly up Europe. U.S. back to Europe. We are seeing a little bit of a capacity increase going down to South America. That is somewhat of an e-commerce story there where we are seeing capacity going down into Latin America, where some of those E-commerce companies are now finding new markets. In Latin America, in Mexico, and we will talk about Europe as well. Different story, though, on the freighter side. This is looking at just Q2 '25 over Q2 '24. This is just freighter capacity. Even though it matches overall global capacity increase of about 4%, very, very different story when we look at Trans-Pacific. Freighter capacity is actually down 3% in both directions from Asia to Europe and Europe, I am sorry, Asia to U.S. and U.S. back to Asia. Look at the freighter deployment now. Into Europe, up 8%, and from Europe back to Asia, 22%. That story about how some of that Asia business, mostly China, also utilizing Middle East hubs in Qatar, in United Arab Emirates. That is up 25%. That is when we look at the e-commerce story, and we are starting to see more of a shift because of the elimination of de minimis into the U.S. Much more of the E-commerce now by those E-commerce players moving into Europe, moving into places like Latin America, into Mexico, and also intra-Asia. Now, how about the mix between passenger and freighter? We will start with the left. When we look at total capacity increases for the first half of the year, 6% out of Asia-Pacific, 4% out of Europe and Middle East. Out of North America, very small, 2%, flat out of Latin America, and then the rest of the world. What is interesting here is when you look at the makeup of how much of that capacity is freighter versus passenger. Now kind of shift to the right side of the screen. Intra-Asia, almost 50-50. You have got enough wide body that can take some of that capacity where it is not fully freighter-heavy. Intra-Europe, it is all freighter because that is all narrow-body passenger flights. This is where it starts to get interesting. Asia to North America or U.S., heavily reliant on freighters in both directions. 74% eastbound, 70% westbound. That is really when you start looking at the lack of new freighters coming into the market and probably where you'll see the biggest impact. Asia-Pacific and Middle East, almost 50-50. Europe and Asia-Pacific, again, a little bit more on the freighter-reliance side. This is where you see the biggest spread between passenger and freighters, and it is Europe, North America. There is so much leisure travel, so many wide-body passenger flights. That really is the makeup of the transatlantic market, and there are no big expectations on that to change. You can kind of see the others: Middle East, Asia-Pacific, North America, Europe, Middle East, Europe, again, starting to get a little bit more balanced. Why is this important? We kind of talk about, and you have heard me mention on the opening slide, the declining expectations on delivery of new aircraft. When we look at what was initially ordered in September 2024 and November 2024, and then how those expectations started to shift further and further out, you can see that the revision of the scheduled aircraft deliveries in those four periods is now pushed even further into 2026. What is this doing? You can see it on the bottom. It is the average aircraft fleet or commercial age of the aircraft in years is starting to go up. That means more maintenance, more downtime. There is some good news, though. The good news is after some years of really static orders with both Boeing and Airbus, in 2025, we finally saw some increased orders in the book. Airbus added 73 orders in 2025, and Boeing 59 orders. Again, these are large freighter orders. Good news in that the order book has increased. Bad news still, though, that even though they are being ordered today, the expectation is that these planes will not get delivered into the market until 2027, late 2027, and then 2028. We still are not expecting much capacity as far as freighters to come into the market over the next 12-24 months. What about the demand side of things? Global trade surpassed 2019 by just over 2%. If you look at January to May this year over last year, we are up 6.7%. U.S. to Asia down. Everywhere else green, with the exception of some exports from Latin America into the South Pacific. Demand has been healthy for our first five months out of the year. When you kind of look at what the forecast or expectation is, we grew 6.6% in global air demand in first quarter. Q2. Is looked to be right around 6.1%. And then this is where we start to see it slow. The forecast and expectation from Accenture in this case is that it'll probably start leveling off between 3% and 4% for the rest of the year. But what does that do to the rates and pricing? Somewhat wobbling in 2025. Rates have remained somewhat static. This is a global average index, so it doesn't really speak to any particular flow. Somewhat down over the beginning of the year and slightly down over 2024. I think the better news is when we look at specific flows. When you look at Trans-Pacific eastbound, so Asia to the U.S., rates are actually down 30% over the same period in June over last year. Still up over 2019, but a good story that down over last year. Asia to Europe, same, except 19% down. Europe to the U.S., down 14%. Good story to be had here. I think the expectation as we start to see shifts in capacity and freighter deployment in certain markets. I think with the e-commerce specifically, that the U.S. may be a benefactor of that. When we look at the equilibrium between supply and demand, yellow line being the actual capacity available, or the supply, and the gray line being the demand or the actual kilos moved, we're kind of getting to the sweet spot where both supply and demand are relatively in line with each other. The only question remains is when you look at inventory-to-sales ratio. If inventory-to-sales ratio is down, that means air freight, the purple line, is growing, high demand for air freight when lower inventories. If inventory levels are high, the red graph, purple line is down, so air demand is subsiding. Here we go into 2025, and the market's really trying to react to all the different trade announcements that are going on, whether front-running and increased air freight or pull orders ahead of any tariff deadlines, even though they keep changing. Now, even though inventories are somewhat flat, I mean, they're not up or down. I think where there may be some risk for businesses is insufficient inventories for the rest of the year. If trade war with China continues and some of the other unknowns continue to take place. Maybe something to look at there on the inventory side, but air traffic and global air demand continues to be in good standing. With that, I'm going to pass it over to Rob, and he will talk a little bit more in depth about Asia-Pacific and what's going on there. Yeah, Joe, thank you. Thank you for teeing me up. I've got some great speaking points here to sort of walk everyone through in a little bit more detail, specifically what's going on in the Asia-Pacific trade, because the Asia-Pacific trade is probably the major driver, and the rest of the market is so dependent on everything that happens in Asia since it's really the head hold trade in terms of demand and really dictates how the carriers are going to behave and react with their networks and with their capacity planning. If I. There we go. If we sort of look at this at a high level and take a little bit of a step back, there are certain countries out there that have been major benefactors of China plus one and really the ongoing shift away from China post-pandemic. Countries like Taiwan, Indonesia, Malaysia, Vietnam, Thailand, all because of more preferential trade agreements, ultimately cheaper labor, lower-cost manufacturing. There's been just so much that has shifted there, but each of those markets is dynamic in its own way simply because of the industries that they serve. If we look at Taiwan, for example, it's driven very heavily by tech and supporting the AI industry. The same with Malaysia, for example. You look at other markets like Vietnam, and we'll talk a little bit more about that in a few moments, also supporting the tech industry out of North Vietnam, whereas textiles may be more supported out of South Vietnam. There are different industries that have moved a little bit more predominantly to some countries, but a large shift has taken place in South Asia, which we're going to touch on in some more detail in some following slides. There are other important things that are going on specific to the Asia-Pacific trade that has impacted everything. One of them being namely E-commerce. Second is really the reciprocal tariffs, which I know Fernanda is probably going to speak in greater detail about. With e-commerce, at one point last year, it was said that there was 10 747s worth of e-commerce flying around the globe each and every day. With the end of de minimis exemptions into the U.S. market as of May 2, that number has shrunken considerably. It's estimated to be about 50 freighters' worth of e-commerce flying around the globe each and every day, with the U.S. being a tremendous consumer of that. These large e-commerce players have some big obstacles to overcome. Such as creating fiscal representation and import compliance programs and just distribution networks throughout the United States. Shein figured it out. They figured it out early on, whereas Temu has not yet. So Shein is still shipping considerably into the U.S. market, whereas Temu has really subsided. There are still significant e-commerce volumes out there, but it is roughly half of what it was around a year ago. I mention this because really the carriers behaviorally are going to chase e-commerce around wherever it happens to move in the globe because ultimately that's where the demand is and it's guaranteed demand for their flights. The e-cigarettes actually shipping out of China into the U.S. was taking up considerable capacity as well. Because of all the stringent FDA regulations, we've seen some reduced volume there. Carriers have certainly adjusted their capacity as a result of that. Ultimately, with all this sort of coming together, there's been a lot of downsizing of China-U.S. capacity, and that capacity has ultimately shifted to other markets. I always like to take a look at sort of a longer-term view, not just going forward, but sort of looking back. There are important dates that we have to consider that have really created this evolution throughout 2025. In a typical calendar year, you always have sort of two main inflection points, so to speak. You have your Chinese New Year holiday, which usually adjusts, but typically takes place around late February. Then you have your traditional peak season, which typically takes place around the end of August into early September and carries through the rest of the year. If you take a look at this timeline grid here, at the time of the Lunar New Year holiday, there was a 26% reduction in supply out there in the market. This is pretty typical. It's typical because as airlines, specifically Asian-based airlines, anticipate lower demand around the Lunar New Year holiday, they will cut capacity. They will cancel flights. This is something that they do each and every year. If you fast forward a little bit and you start to anticipate what the Trump administration was putting out there in terms of the May 2nd de minimis exemption, volume started to pick up leading into that. You also had the April 25th initial tariff deadlines. You see supply started to ramp up. In anticipation that there was going to be heavier shipping through those periods, whether it be on the e-commerce side or any other industry. And then once the U.S. revoked the de minimis for the low-value e-com, you can see that there was a 21% reduction in supply. The carriers reacted very quickly and acted in a very nimble way within their networks to adjust to that. Now, ever since May 2, there have been looming deadlines and changing deadlines and negotiated deadlines in terms of 90-day pauses over the last 24 hours. It seems like there's going to be another extension on China-U.S. tariff deadlines as well. It is somewhat of a moving target, but it seems like we have leveled out at around a 10% decline in supply out there in the market as a result of everything that's taken place so far this year. The big question is, if that capacity is not coming into the U.S., where's it going? If we look at these first top left graph, what this reflects is essentially the capacity by both wide-body and freighter capacity. You can see freighter capacity dominates the market into the U.S. out of Hong Kong and China, and you can see that that's down about 13% as a whole. On the bottom graph, you see a 22% increase into the European Union. It is very evident here that what the carriers are doing is moving the capacity out of the U.S. trade and into the European trade because there's more favorable trade agreements going on with the EU, as well as the fact that the EU is much friendlier to E-commerce than the U.S. is right now. The graph off to the right will reflect sort of the individual countries that are the benefactors of that. You can see that Germany has widened the gap and has grown in a pretty significant way in terms of capacity going into that marketplace. This is both on the pure freighter side as well as on the charter operator side. You throw the integrators in there as well, and you can see that they're just ultimately following the demand that takes place in the marketplace. Now, it's not entirely going to Europe. What some of this capacity has done is shifted into Southeast Asia. Same graph reflecting the 13% decline to the U.S. market, but about a 50% increase going from the ASEAN market into the U.S. Now, there's a very, very small percentage of overall ASEAN outbound capacity that serves the transatlantic market, I'm sorry, trans-Pacific market directly. Most of this capacity will travel through a North Asia hub. Where we have seen the increases have been specifically out of a market like Vietnam and as well as Singapore. Now, if we look at this from a demand perspective, you have to sort of match up the two. These numbers not only reflect just the general industries out there, they do not even reflect the low-value E-commerce just simply because of the way the data is registered in the marketplace. What this is really demonstrating to you is out of the China and Hong Kong market, from the period of 2019 versus the first quarter of 2025, you can see from China and Hong Kong into the ASEAN market, it is pretty flat at 13% then and about 16% now. From China-Hong Kong into Europe, it grew at around 12 percentage points. Whereas from that same market into the U.S., it declined at around 17%. So, pretty dramatic decline into the U.S. that was made up by an increase into Europe. Now, if we look at more specifically the ASEAN market inbound and outbound, you can see that intra-Asia transacting between ASEAN into China-Hong Kong was at 38% in 2019, and that declined to around 26% in the first quarter of this year. It actually grew from 34% up to 46% into the U.S. marketplace. It just sort of gives you the correlation of the marketplaces and where the demand is going because ultimately that is where the supply is going to go. The carriers will ultimately follow the demand. Now, if we take a look at just sort of a few mockups of how capacity and demand could change between now and 2026, we looked at it a few different ways. Really, you have to look at where the majority of the capacity exists, specifically from China into the U.S. and into Europe. Ultimately, where this ultimately can shift as a result of all these changing trade policies and shifting demand levels. As China pivots to the EU and pivots to the ASEAN markets, the growth will continue to take place there, while the capacity and the demand is going to eventually shrink into the U.S. marketplaces. The carriers are going to continue to cut the capacity going across the Pacific that serves the U.S. market directly. That brings stabilization to rates. The one thing we have to think about is that as capacity starts to decline, demand starts to decline, and rates may start to decline on the Trans-Pacific, Eastbound, there is a possibility that the Trans-Pacific westbound rates could go up because the carriers ultimately need to balance out their revenue on their flights going in both directions. If we look at it through another lens, you can see here that there are more carriers adjusting hub allocations rather than completely repositioning their flights. They may just use shorter-haul flights into Asia that connect into longer-haul flights out of North Asia across the Pacific or into Europe. This is a possibility as well. We cannot neglect all the demand that continues to take place in and out of India from China as well. India continues to be a growth market, so carriers will look to continue repositioning capacity there as well. Ultimately, if the U.S. and China do not reach an agreement, an amicable agreement, so to speak, and the demand and the capacity continues to be removed from that marketplace, that is going to be very, very slim. It is going to be more favored into the European Union and into the ASEAN market as everything continues to shift around. This will obviously move as trade policies continue to shift and as deadlines continue to linger. One of the markets that has experienced some tremendous growth is Vietnam, and they have become the largest exporter to the U.S. It grew by 55% in the first five months of this year versus 2024. A lot of that has to do with the tech sector, specifically computer storage, like anything cloud-related or laptops, accessories. There is really a tremendous amount of growth that is taking place in Vietnam as more and more manufacturing shifts out of China, out of Hong Kong, into this marketplace. The reality of it is that the infrastructure needs a lot of work to keep up with all of the growth, both airport infrastructure as well as road infrastructure. There is a lot of investment right within the ASEAN region as well as foreign investment taking place within Vietnam, specifically to bolster all the growth to keep up with the demand in that marketplace. I will show you a simple example here of Hanoi, b ecause Hanoi in the north is the largest airport in Vietnam, and they are targeting Hanoi between now and 2030 for some significant upgrades and road infrastructure upgrades to go in or out of that airport to keep up with all of this growth that we continue to see in that marketplace. There is a lot more to come, a lot of exciting things on the horizon. I think from here, I'm going to turn it over to Fernanda to give more of a geopolitical and economic perspective through her lens. Let me stop sharing. Okay. It's all yours, Fernanda. All right. Thanks, Rob. Let me see if I can. All right. Thank you, Rob, for this. I'm going to be talking a little bit about the macroeconomic aspects moving forward, as well as the trade aspects and the geopolitical aspects, and highlighting the impact that those can have on the air market moving forward. I think the first thing to think about, and at Onyx, we've been seeing this for a while now, is that there's just a lot of cost pressure coming from everywhere. The big question here is, how is the consumer going to react, and how that is going to have a knock-on effect on demand and therefore on the air market. There's lots of uncertainties here. It does seem much more likely than not that costs will increase and that the consumer will feel the pinch. P&G came out today talking about how they are already seeing a lot of pressure on consumers. This week, we're going to see a lot of macroeconomic data coming out on the job market, on GDP. Lots of things coming up. It's also the August 1st deadline for trade negotiations and the reciprocals. I'll share a little bit about how we're seeing this moving forward. Now, on the economic side, just recapping here a little bit of how we're seeing this. We are projecting, all things being equal, a slowdown in GDP in the world, in advanced economies, in developing economies this year. In the U.S. economy, though not a recession. A little bit of a slowdown in China. Excuse me, in China. And a little bit of flat growth in the EU. A lot of this coming from tariffs and the rise in the effective rates. We did see a lot of weakness in H1. Some of it for the U.S. was due to the fact that imports increased considerably, people trying to take advantage of tariffs before the reciprocals. Now a little bit of a recovery. We are likely to see a pinch from the increase in prices moving forward and the knock-on effect on demand. Now, the Chinese economy is pushing against multiple headwinds, a lot of it related to the property sector still, and still requiring continuing stimulus. Question here is, is that a structural solution or not? It is not. How is the Chinese consumer going to react to this? In Europe, a little bit sluggish here. A lot of knock-on effects as well from it is. Highly dependent on exports. Slowdown in China is not good news for Europe. As well as in the U.S. A lot of knock-on effects here. Now, some pressure on U.S. inflation we're already seeing for this year, perhaps a little bit subdued because of so much inventory prepositioning that has happened in the first half of this year. We do expect, perhaps not this week necessarily, but coming up, a marginal decrease in rates in the U.S., but a real decrease in Europe. That delta between U.S. rates and European rates is a bit unprecedented. It may long-term offer a lot of opportunity to the European economies because of lower rates and lower inflation, but we shall see. A lot of it, because there's so much uncertainty, CapEx is subdued, and therefore lots of questions there in terms of investments in Europe. At the same time, Rob was talking about Vietnam, where costs of producing in sort of nearshoring or friend shoring countries like Vietnam, like Mexico, are increasing considerably. That adds to the pressure from rates. We know that every company is contending with this. A lot of pressure on sourcing and procurement folks to make sure the costs are kept down, but there's only so much that one can do. Now, these economies are a bit overheat. This is likely to shift. Once we have a better idea of the effective tariff rates and what's going to happen in those negotiations, there will be winners and losers. It's hard to tell. It's not just at a country level, but also at a product level. Will the additional tariffs erase any cost competitiveness that these countries might have? For example, there will be a lot of shifting sands here. At the same time, that is much more on the longer term. I mean, if you're committed to Vietnam, you are. It takes years to build a factory anywhere else. Lots of cost pressure here. I think we're seeing. Sorry. Joe, I think we're seeing your screen. Thank you. All right. Now, moving forward here, we're seeing a lot of investment shifting, though, and that points to a different makeup of supply chains. We went through a period of friend shoring and nearshoring, and now it's sort of opening up. Still lots of questions about where you're going to see the best tariffs, what is the best network that you can have, where should you put your factories, your plants, what is the best geographic footprint that any company can have. Lots of bets being made right now. We're seeing European investors, for example, diversifying widely. If you look at this horizontally, where you see number one there, it is investments coming out of advanced European economies into the world. Then China also diversifying, and a lot of it coming out of the Middle East. Here, it's a percentage change. You can see how you might have a lower base, and therefore the growth is exacerbated. Lots of investments, Middle East onto Middle East and Africa, but also in China, which seems to be almost counterintuitive if you think about the fact that most companies are diversifying away from China and from the U.S. I think this dovetails nicely with what we saw from Rob and from Joe, that global trade is already reflecting that diversification. It opens up a lot of possibilities for air and for carriers from the European Union into different regions here. You see somewhat sluggish growth, but from China to ASEAN to MERCOSUR, GCC, y ou see there it's the Gulf, so think U A E, Saudi Arabia, India. The same is true from ASEAN, elsewhere, and then even from India as well. There's a lot of diversification and a lot of rearranging of networks happening. That should open up interesting dynamics in lanes away from transatlantic. Now, in terms of, we're seeing a lot of movement in response to the politics of the day already. Where is geopolitics going? Starting with trade. We all know that there are kind of four looming issues here, really. Are we going to see a rollover on August 1st? We do have some investigations going on, Section 232, especially semiconductors, so advanced tech. The renegotiation of the USMCA, which coincides with the negotiations with Canada and Mexico. Are we going to see new trade agreements for the U.S. with the absolute priority of containing China? That is where the administration is right now. We do believe that there will be a rollover. I mean, it feels a little bit impossible that you're going to conclude all of those agreements in about three days. With that in mind, what is the strategy that's emerging? We do have a tier one of countries with some announced agreements already, where trade and security go hand in hand. Common investment and export controls, this idea of putting together a coalition of like-minded countries. The issue here is that in a lot of those countries, domestic politics became anti-U.S. In many ways, that is true of Canada, that is true of Australia to some degree, even in EU member states. Brazil, that's not on the list, same is true. Any concessions to the U.S. come with a political price. That being said, we believe that there will be further agreements coming up. We already have the U.K., we already have the EU announced. We already have, to some degree, Vietnam as well. Moving on to tier two, here is mostly trade containing China, but here really it's about transshipment. What is in for these countries? It's the security guarantee that the U.S. can provide these countries. In Southeast Asia, ASEAN walk a tightrope between trying to not be too aligned with China for security concerns, and then not too aligned with the U.S. because China is, for some, the first, for others, the second largest trade partner. They also depend on Chinese investment. An arm's length with an unclear timeline is China. We don't see yet a scope for a comprehensive agreement that can actually diffuse tensions. Quite the contrary, we believe that these tensions are going to continue in the medium run, with deadlines being pushed and some accommodation because there's so much codependency between the two economies, and the two economies are very fragile right now. This period of uncertainty is likely to continue. If I show you a little bit of where we are with these agreements, the U.K. agreement is the only one that really appears to be complete. The EU and Japan, for example, are still kind of statements of intentions. We haven't seen anything on paper. These agreements also need to go through domestic channels and ratifications. Unclear what process will be followed in the U.S. In the EU, typically, member states need to ratify, and France and Germany have already criticized the agreement that came out. Unclear on Indonesia, Vietnam, and the Philippines. There's still a lot to come out of this. Some concessions from the U.S. that have a lot of impact on air, semiconductors, for example. Some provisions also whose enforcement is unclear. For example, transshipments, so containing trade diversion from China via Vietnam into the U.S., how does one even enforce this? It's notoriously hard to enforce. May lead to congestion and delays. Lots of questions still. Because of this, we believe that the uncertainty will continue for quite some time still. My apologies. Coming out of this, even with the agreements that have been announced already, cost pressure is likely mounting. That speaks to that macroeconomic picture that I was talking about and the impact on the consumers and therefore on demand. There is a lot of walking back. You see on the left-hand side what is current, what has been agreed, and what was threatened. China, way above at 140%. What has been agreed is still high. Effective tariff rates have not yet caught up to what has been announced, but they will eventually. With what we have today that has been announced, adding the EU, we are at about 17.5%, which is the highest U.S. average rate in about 100 years. That has to have impact on inflation. There is only so much that companies can control in terms of costs before passing this on to the consumer. On the other hand, the silver lining is that partners are wary of both China and the U.S. Countries have actually enacted a lot of anti-dumping measures, for example, on Chinese exports. That is a reaction to the sphere of Chinese exporters that were bound to the U.S. now suddenly coming to them and what that can do to domestic industry. We are already seeing that in air data, for example. They also want that investment, so they want to go upstream, and they are also attempting to diversify. Canada and the EU, EU and Japan, EU, Mercosur, that one a bit less likely because of agriculture and pushback within Europe, but something unprecedented like EU collaboration with CPTPP and even Japan and South Korea. The fabric of global trade and therefore the fabric of the air market is bound to change. Just a little bit on geopolitical shocks here and where we see. If we take what we just talked about, different companies are looking at this in different ways. What we hear is some are staying the course. They believe this to be temporary. They are able to do the cost control. The question for them is really price-sensitive demand. Some are self-containing, are going for self-contained regions. They believe that tariffs are permanent. It is not just the U.S. Also in the first bucket on stay the course, lots of companies do not have a lot of flexibility in their geographic footprint or their network. Some are going for the middle, cordoning off the U.S. market, but then betting on increased trade and connections between different regions, for example, between Europe and Asia, between Europe and others. Middle East and others. Here there's a question. This is where the economics are going in response to tariffs and what companies are looking at. Back to the days of China plus one, then Vietnam plus one, now we're looking at plus three, four, five. If we think about where the geopolitics are going, there's a huge challenge here. We have these geopolitical fault lines that I often talk about. We're seeing a lot of escalation. Russia, Ukraine, we do not see a ceasefire as politically feasible. There might be something temporary or something on paper, but really this is politically a war for survival for both sides, including Putin himself. No Russian leader has ever survived losing a war. Anything other than actually annexing even just part of Ukraine is a defeat for Russia. South China Sea escalating. This is critical for supply chains. South China Sea and China Taiwan are intimately connected. One is an enabler of the other. Control of the South China Sea and military escalation in the South China Sea is already happening. There's a question whether what's going to happen before 2027, which is when most analysts agree the really dangerous period begins in terms of military capabilities. Israel, Hamas, and the Middle East still on an escalation path. This is all pointing towards geopolitical dynamics pushing against globalized supply chains and pushing more towards interregional trade now. It's that particular issue, this issue of political alignments. Are you going to have three blocs? Are you going to have four blocs? This is where geopolitics really pushes for self-contained regions. It won't be the same for every supply chain, but it is political pressure against very extended supply chains. If your company is one of those, there's going to be a lot of pressure to reconsider. Costs go up as a result. I'm going to stop right now. I know there might be some questions there. Samantha, this is what I had for today. Really appreciate the opportunity and happy to answer any questions alongside Joe and Rob. Absolutely. Fernanda, thank you so much. We appreciate all the insights you've added to today's conversation. Rob or Joe, anything else that you guys would like to add as people are putting questions into the Q&A box. If you are joining today as an attendee, remember there is a Q&A box on your control panel where you might drop those questions if you have any for any of our three speakers. Yeah, thanks, Sam. Nothing else for me. Hopefully, there was interest in our content, and we'd be glad to take any questions if there are any. Perfect. While we wait for anyone who might drop some in the box, I think I do see one. Oh, just a comment. Thank you so much. Someone just commented, Sonia, that we had a great webinar. Always appreciate the feedback that you guys do provide. While we wait to see if anyone else has any further questions, I believe we do have a slide just to show everyone our other upcoming events. If you guys do not mind, whoever is controlling, yeah, jumping ahead. I will just mention to you all that are in attendance now, we do have our August events slated and ready to go. We have a U.S. customs market update, or you can find out what has been hashed out by August 1 on August 6. We will have another U.S. customs market update on August 20. We continue to do those twice a month right now. We will focus on the ocean market on the 27th. You can scan those QR codes, and it will take you to the information, or excuse me, the registration page for each of those events. A couple of questions have come in as we have gone through the content. We did have a question about the increase in capacity out of Asia due to the implementation of de minimis regulation in the U.S. Yeah, I think the opposite has actually happened, right? As the de minimis went away and that benefit went away for a lot of the e-commerce platforms into the U.S., capacity has actually shifted away from the U.S. to other markets. As we have tried to highlight in some of the slides, we have seen an increase in capacity to Europe, which a lot of the e-commerce platforms have pivoted to versus the U.S. Freighter capacity to the U.S. is actually down. Joe, do you guys see that actually impacting capacity, like you said, going in other directions? Someone asked, and I am not sure I fully understand the question, but something related to is U.S. to, I believe, Asia-Pacific a new trade lane we see increasing? Yeah. The return flight, if we have got less capacity for major coming to the U.S., then ultimately, there will be less capacity from the U.S. going back to Asia. I think one of the things maybe we did not touch on, if these trade deals. Truly do benefit our exports, if we've got beneficial treatment, if you will, of U.S. products and no duties or tariffs in other importing countries of U.S. products, we may actually see our U.S. export demand go up while at the same time, capacity is coming down. At that point, we're going to start seeing some pressure on higher rates from the U.S. outbound to Asia. We do not see increased demand necessarily bringing additional capacity to the U.S. on our exports. If that were to happen, the rates would have to be significantly higher than we're seeing in today's market. Still a bit of a guessing game of what's going to happen next as all this shakes out. Absolutely. I believe that did touch on the last two questions we had in there, and we're getting really close to the top of the hour here. We will wrap up. Do appreciate, as always, anyone who has joined today. I just know that, again, you will get a copy of the presentation and access to today's recording once you complete the feedback survey, which, as I mentioned, you will receive in just about an hour. Thank you all for joining. Fernanda, Rob, Joe, thank you all for all the insights you brought today. We appreciate it. Thank you, Sam. Thanks, everybody. Bye.