Hey. Hello. Good morning to everyone. Thank you so much for joining us today. I am going to say a little bit of cheers to our friends on the West Coast. I know some of you have said these 8:00 A.M. webinars are a bit tough to get started in the morning. I hope you've got a cup of caffeine. If you've stayed up and you're on the East Coast, but you stayed up watching a lot of World Cup soccer, like my family has, hopefully you've got some caffeine, too. Today, we are going to talk about the ocean market. The ocean market. Apparently, I'm stumbling there. We're going to talk about the ocean market update, what's happening with things going on in our industry, and hopefully give you a bit of an update on all the changes that we have been seeing happening in that market. My name is Samantha Hurst. You are likely to have gotten several emails from me reminding you about this webinar and getting you registered. If you have any technical difficulties, you may respond back to those emails, and I'll do my best to support you in the background today. I'm going to talk first just a little bit about a quick disclaimer. If you've not joined one of our webinars before, these events are meant to be, of course, educational. They're not intended to give you any kind of financial advice, legal advice, et cetera. We are offering you what we understand to be happening based on the things we see in our day-to-day operations as well as what we've seen out in the news and many things you've read yourself, but we're trying to give a little bit of context to what you're probably seeing in the headlines. Please just understand that's the purpose of today, purely for education basis, and not necessarily to base any specific business decisions. As far as how things will flow today, we have about 45 minutes of content, as usual, with Q&A to follow. You are encouraged to drop your questions in the Q&A box throughout today's webinar. We do have a team of experts who I'll introduce here in a moment that will be supporting with those questions. We do ask, though, if you have a question that's just hyper-specific to your business or your industry, understand we may not be capable of answering that in today's webinar, but we are interested in trying to support you regardless, and we'll at least get someone back in touch with you here in the next week. One of the questions we get on every one of these webinars is how do I receive the slides and the recording? We're obviously flattered that you guys want to hopefully go back over this material, maybe even share it with people within your internal organization, and you are absolutely welcome to do that. We just ask that you fill out a quick survey that will allow us to understand how we did today and what other topics you would like to see in the near future. That survey will come to you via email from myself within about an hour or two of today's webinar wrapping up. Have no fear, if you do not receive that survey, we know some of you do not because of your firewall and security protections in your email. We will get the content to you. I typically send that out regardless via email within about 24 hours. If you would like, you can also scan this QR code, and that will help you subscribe to any of our future invites for our events and as well as get our market updates via email. Without further ado, let me introduce our speakers. We have a great group as usual from our Ocean team. They've always been great supporters of our webinars. In fact, they really are the team that kicked things off with Expeditors webinars many years ago. Scott Kelly is our Vice President of Ocean Services for the Americas. We have Blaine Steger, who's our Director of Ocean Business Development. We have Stephanie Mantz, who's one of our trade lane managers, and John Antista, who's also a trade lane manager. I don't want to fail to mention the people that we actually also have working in the background as support today. They won't be jumping on to directly speak, but they can answer questions. We have Denise Rogers, who's our Director of Ocean Services for Canada, Lorena Rosani, who's our Regional Manager of Ocean for Mexico, and Gabriela Romero, who's our Trade Lane Manager for Latin America. I'm going to hand it over to Scott to get started with our content. Thank you for joining. Okay. Good morning, everyone. We're going to talk a lot about what's driving the market today and why we're seeing what we're seeing. When we look at the environment and we look at the shipping world and what's happening, the five key pillars are always what's driving behavior and driving the capacity, and driving the investment, and driving the, of course, the rate levels that follow. When we look at the five pillars, we've got capacity, how much volume is there relative to the marketplace? What does the demand look like? Is it positive, negative, flat? Costs, financial performance, and outside factors. Right now, we're at a crossroads. When we look at the capacity, it's somewhat balanced with demand, okay? The demand is up, but it's not robust, but it is up, okay? The capacity that's come in has consumed all that additional business. Between those two things, there's some outside factors here that, like the Suez Canal, which is consuming a lot of the capacity that's going around Africa, okay? It takes two to three more ships to run a service now from Asia to Europe. We're seeing a lot of that excess capacity that people are expecting to see this year get consumed up or sucked up in those trade lanes. Of course, costs, fuel costs. We all saw what happened with fuel in May, June, and July. We expect that to come back down. That's affecting the carriers' behavior. The big one here is financial performance. The first quarter was not good for the asset owners. They're responding by really managing the steel. Where does the ship go? What ships go where? And they are managing it very tightly. We're seeing now capacity squeezes in places like Asia to the U.S., West Coast and East Coast. Asia to Mexico, very tight. Asia to Brazil and South America, very tight. Because of that, the rates have responded, and the carriers are responding very quickly to drive up the costs for the customers and the rates. Lastly, the outside factors, as we talked about Ukraine was one thing, but what's gone on in the Strait of Hormuz and relative to fuel capacity and costs has been significant. We talk about that, the customers are like, "How much business actually goes into the Persian Gulf?" It's not significant. It's a small market. The fuel costs that are the number one cost for the carriers have gone up dramatically, and now they're starting to come back down, and we'll start to see those excessive fuel costs and bunker costs come back down to reasonable levels, we think, in the next couple of months. With that, I'm going to hand it over to Blaine, who's going to go into depth on some of these fundamentals. With the supply and demand cycle, we happen to be in that bottom right-hand corner where you see where the carriers' rates fall, carriers reduce capacity, until demand increases, then there's a capacity shortage, and then they drive up the rates. When they drive up the rates, they all go to the shipyards at the same time, build ships, and the ships come into the market and drive down the rates a little bit. There's a capacity surplus, and the rates fall. This cycle that we see in the business used to be about a five-year cycle. Now we're seeing it's really a 15-month cycle. Much faster than it ever was before. That's why we see the volatility in the rates that we've seen in the last six years. That cycle spins much faster than it used to. I'll hand it over to Blaine. Thank you, Scott. Continuing in that vein with what's going on with the global capacity and the fleet. You saw on the first slide there that the fleet continues to grow, and what's on the order book is projected to be 1/3 growth over the next five or six years. That has slowed down in recent years as carriers worry about geopolitical events between the U.S. and China and how ship taxes and the trades to and from the North American marketplace could be taxed. Also as demand has curtailed following the pandemic. What you see here on this slide is total capacity and global throughput growth, so container growth in the gray bar, how the carriers have grown the fleet year-over-year in the black line, and then where demand has sort of fallen, that annualized capacity growth in the red line. What we see is capacity grew dramatically coming out of the COVID years as they reinvested that money, peaking over 10% in 2024, whereas the actual used capacity and fleet demand is down at 4.5%. There's a mismatch there. As those lines have gotten closer together, it's reinforced that volatility within the rates and caused the marketplace to be congested and to really become tight, not just on the head haul trades, but globally, even on some of the smaller markets. Another major factor in what's gone on with supply is consolidation in the marketplace. Coming out of the global recession in 2010, we saw this process begin as carriers began to merge at a country level, and then really sort of peaked with the bankruptcy of Hanjin, their exit from the market, and the 8% capacity flip that caused in 2017. What we're left with now is these 10 global carriers controlling upwards of 88% of all of the capacity. You can see MSC is the largest carrier in the world, continues to grow their fleet. CMA with what they have on the order books will move to the number two spot. Maersk, COSCO, and Hapag will follow. One interesting note in the marketplace, Hapag-Lloyd is in an agreement to purchase a large majority of Zim lines, which would further bolster their position, probably grow their market share by 7%-8% globally, really put them firmly in that fifth spot. Why this is important to you, the shipper, is this creates less choice. This also gives the carriers more control over the market, where they put their capacity, and how that maneuvers your ability to get space and have consistency of service and rates. It's a lot like the domestic airline industry in the U.S., where you see it consolidate down and you have a few large players controlling the majority of markets, and then a surrounding group of niche regional providers. Another major factor impacting capacity, is there's been very few deletions, and there are not a lot of places left in the world where you can cut up ships. It is very environmentally destructive in terms of the amount of fiberglass and microplastics that end up in the ocean. The scrap steel is in lower demand than it has been in previous years. There's less value for the carriers to sunset those vessels. As well as a worry that they will miss out on the next black swan event. You see a lot more older ships in rotation. That leads itself to some of the problems we see in the market as things have to go in and out of repair yards more often. It also just means capacity will continue to grow, and likely outpace demand for the foreseeable future. On the other side of that, the idle fleet is extremely low, with 2% of all those ships being in repair yards, and a lot of that is for engine updates to meet environmental guidelines, new propellers, normal things, paint, patch, things of that nature. Less than 1% of the fleet is truly idle or out there available to be chartered. I would also tell you that tends to run smaller container ships, things that are less in demand for long-haul, high-rate trades. This is also really important because with that Suez Canal closure that Scott mentioned from 2024, right, there's not a lot of elasticity in the market. As we have these events and upticks in demand, whether it be a 5% upshot in demand on the Asia to Europe trade, the largest in the world, or the peak season we see now in the Transpacific, there are less ships for carriers to push and pull, causing the rates to go up faster, also causing them to come down faster on the backside. In times where we see it get stretched globally, we talk a lot about canceled sailings. During the pandemic, this was a byproduct of congestion and the inability to get the ships where they needed to go. Following the pandemic, it was a way to measurably control the supply-demand ratio and keep rates from falling too low. Now we're in another marketplace where there is a lot of congestion. There's some ships trapped in the Strait of Hormuz and other things being positioned to overtake those. Most of the new capacity coming into the marketplace, some 38% of ship deliveries, is going into the Asia to Europe trade, where longer transits around the Cape of Good Hope, and congestion in North Europe, particularly Rotterdam, are causing a supply-demand imbalance, causing ships to be out of loop and carriers needing extra vessels in those rotations. It is impacting all trades. We see it here on Asia to the West Coast. This is where there are the most sailings per week, and also the most consistency within the percentage of blank sailings, sort of a rolling 10%-15% average. The East Coast of the U.S., less week over week, but more impactful to the market because there are less services. So where you see these weeks that have a 12% or a 21% void rate, that causes a cascading roll pool that takes a number of weeks to digest. The more full the market is, the longer that roll pool persists, the higher rates go, the worse the service is. Asia to North Europe, same problem. Less services, much larger ships in the 20,000-23,000 TEU range. So when they have a blank sailing, it really starts to backlog ports in Asia and the Middle East and cause problems, cascade forward, eventually ends up with congestion in North Europe that also slows the exports bleeding over into the transatlantic market. See here, that happened earlier in the year when Asia to Europe spiked up. It has settled a little bit. Then, of course, the Mediterranean to the U.S., any string that was connected to parts of the Middle East conflict had some problems earlier in the year. As carriers have sorted that out and reshuffled their deployments, we see less of that in the recent weeks. With that, I'm going to turn it over to John Antista, our trade manager for Americas imports, Asia, Middle East, India, Subcon, to talk about what we're seeing with demand trends. Thank you, Blaine. As mentioned, we are seeing a rollercoaster, right? The first quarter of demand was a bit of a rollercoaster, being down 2% and 1.5% in January, February, and March, but an increase in February. The anticipation is we're going to continue to see this rollercoaster. At the moment right now, it's anticipated that we're going to be in a tight market at least through the end of August. Part of that is natural demand. Part of that is some of what you've heard previously in carriers manipulating services, maximizing the value of their vessels, and really allocating vessels to certain areas of the world that really demand larger vessels. Moving on to the next slide. Yep. When we look at year-over-year containerized growth, if we're looking at Asia to North America, it's down. That's our largest trade. It's down, Kind of a mixed bag here, right? What we're seeing at the moment is it was always anticipated that it was going to be a lighter first half of the year, with a bounce back heading into the second half. Right now, all indications based on the market is moving that way, where whether it be shippers are trying to push more cargo out in the event to minimize any type of tariff issues or looking to get cargo out ahead of the looming potential of a Chinese vessel tax that was kicked down to October of this year. There's a lot of variables involved, but at the moment, what we're seeing is a hot market where it's very tight, vessels are moving at near capacity, which is great. That means the economy's getting better, people are buying more. The first half of the year kind of went as expected, where it was going to be a little bit of a down market. Granted, the situation in the Middle East was definitely a curve ball for all of us. We are still anticipating that we are going to be in this tight market at least through August, with a bounce back for the end of the year. When we look at industry, it's pretty impressive. It's almost all green, where all industries were up with capital equipment leading the way, Tech leading the way, consumer goods being down at least from March and relatively flat, but slightly up 1% for the year. Again, it's going to be interesting to see how the rest of the year plays out, especially on that consumer goods, retail, and fashion. Again, we anticipate we're going to see a little bit of a bounce back as we head into the second half of the year. When we look at region, overall, for the most part green for all of March, aside from the Middle East and India Subcontinent, no surprise there. Again, we are seeing the carriers manipulate the market, whether it be canceled services, specifically right now what we're dealing with in India where we've had major services canceled that would head to North America. Whether we have services that's being changed where Latin America freight's now moving over to Europe. It's kind of a mixed bag right now. When we look at the Transpacific market, we are dealing with certain carriers canceling services, enhancing services, blank of certain services. Specifically, when we speak to the India Subcontinent region, we did have two major services that were canceled. That's really causing congestion within various points in India, where there's a backlog of cargo, empty equipment's becoming scarce, and the carriers right now are taking it as an opportunity to maximize the value of their vessel. They're limiting the amount of fixed rate contracted cargo, and they're really taking on that FAK and wanting to capitalize on the situation. You can go to the next slide, please. Thank you. When we look at cost, we've seen obviously the height when we were back in May of 2025, and then as we gotten into 2026, rates really started to come down. Now we're kind of even with where we were in January. When we look at the Asia to U.S. trade, Asia to Europe, significant spikes there, where we're back into where we were in May of 2025. Europe to the U.S. is significantly high. That's a number of variables across the board, right? A lot of it has to do with what's going on in the Middle East. A lot of it has to do with artificial manipulation of the market, like we mentioned with carriers shifting services, creating that imbalance, creating that schedule imbalance, and then causing natural congestions due to that imbalance. Again, we are in this situation, we believe at least until the end of August, with carriers passing along peak seasons, certain GRIs on FAK freight, and again, we're in it at least until the end of August. When we look at cost for fuel, this is staggering, where you could tell right when the situation in the Middle East began. We are in this situation, and this caused a lot of carriers to treat fuel differently, where they implemented emergency fuel surcharges. Some carriers decided to go to monthly bunker adjustments, which we were all familiar with the quarterly adjustments. A lot of that was reactive to how high fuel went and continues to go. We are hopeful that hopefully the situation in the strait resolves itself at some point, and we start to see some reductions in fuel. For the foreseeable future, this is where we are. The situation of fuel increases provided exponential additional costs that were unforeseen to any of us, specifically for the carriers. When we get to the financial piece of the slides, you'll notice that some of the carriers really did not fare well in the first quarter of the year. A lot of that has to do with the additional cost that they needed to spend in a very short period of time. Some of those numbers are staggering. The reaction to the market and fuel is strictly because of, obviously, the strait, and we anticipate this is going to be the new norm for the foreseeable future. When we look at carrier financial performance, that tip of the mountain that you see right in the middle of your screen back in 2021, that's all your COVID years, right? Then as we started to come out of it, a relatively normal market started to come about. Then you had the situation in the Suez Canal, which kind of threw everything upside down again, and carriers started to make money simply because rates were getting back to COVID levels. The market started to stabilize as we got into 2025 and started to get to the back end of 2025. The situation in the Strait of Hormuz went into effect, and the carriers are not trying to go below that profitability line. They've become experts in how to manipulate the market, whether it be void sailings, blank sailings, shifting capacity where it makes sense, to trades where it makes sense, and keeping rate levels up. If you look at what I mentioned just a few moments ago, where carriers did not fare well, you see three carriers in particular that in Q1 of 2026, they struggled. They went below that profitability line. We know there's a strong emphasis for carriers not to go back to those years of 2018, even Q4 of 2023, where they were below that line. If we were to go further back beyond 2017, being below that profitability line was more consistent than inconsistent. Again, the carriers have become experts in how to make sure that they remain profitable. The carriers will do what they need to to make sure that they are allocating vessels where it makes sense to maximize the value of their vessels. With that, I'm going to turn it over to Stephanie. Hello, everyone. Good morning. We talked a little bit about the supply and demand imbalance. We talked about fuel as a disruption. Just a couple other disruptions that we're watching on the horizon we have, first is weather, and the Panama Canal. NOAA, which is a government agency that monitors weather, they came out two weeks ago, and you can see on the left a notice that an El Niño has formed. What does that mean exactly? Basically, what it means, in a nutshell, is there's water in the Pacific Ocean on the eastern side, you can see the dark red here, that becomes above a certain temperature for a prolonged period of time. What that does is it creates some imbalances in the wind direction, temperature, and can change up a lot of the weather patterns. If you remember from 2023, 2024, there was a drought in the Panama Canal, and they reduced the slots of vessels able to go through. It was, I think, down to 22, when normally it's about 38 - 40 slots a day. There were a lot of ships that were waiting outside the canal. As you can see too, looking at North America, this might result in a little bit of a warmer winter in the Pacific Northwest, and a little bit wetter when we look around the south here. This was a good infographic from The Economist, you can also find it on LinkedIn, just showing some of the impacts that an El Niño might have on South America as well. Looking at the U.S., if it creates a lot of more rainfall, this could create more exports in agriculture. You look in the northern part of South America, could create some droughts, heat waves, throughout the latter half of the year. If you look at the bottom, this was a quote from NOAA, there is a 63% chance of a very strong El Niño during November through January. If you saw on the news this morning, there is a heat wave going on in Europe too. They are suffering some pretty high temperatures. This is definitely something that we are watching closely. More on the Panama Canal. They put out a notice late May that because of this high risk of an El Niño, the Canal Authority, they have been implementing some water-saving measures throughout earlier this year and in 2025. Gatun Lake, which is the primary water source for the Panama Canal and what does feed the locks. They have tried to maintain it at a higher level so that they could withstand a drought throughout the winter. Right now, there is no impact to the canal, but it is something that we are watching. Just a couple of days ago, the bottom right, just as a reminder, there were a couple of questions we got the last couple of weeks. The canal, they just did some maintenance to some of the locks, and I think it was from June 6th to the 15th, they had just reduced the amount of transits going through the locks. Right now it is back to normal and operating as normal. This has not had too much press the last couple of weeks, but just as a reminder, earlier in the year, there was the CK Hutchison, a Hong Kong subsidiary. There was a couple of geopolitical events going on where the Panama Canal or the Panamanian government, they annulled the contracts that they had with CK Hutchison and gave it back to MSC and Maersk to operate the canal or two ports, I am sorry. Something that we have not seen too much press in lately, but there were quite a bit of Panamanian-flagged vessels being detained in Chinese ports. If you look to the right, the graph, earlier on in the year, February, March, April, we saw about up to 130, 140 Panamanian-flagged vessels detained in Chinese ports. The Chinese government said that they were doing inspections on these vessels, and detained them. There are a lot of Panamanian-flagged vessels, about 10%-15% globally. This did have a little bit of an impact, but not received too much press on it lately. No, not at all. The Strait of Hormuz just continues to be a contested area. If you see all the red triangles are all the tanker vessels or vessels that are carrying hazardous cargo. The green triangles are all the container vessels, bulk carriers, any other cargo-carrying vessels. If you see where all the blue little dots are, those are all where ships are moored or tied up. You see little areas where all the ships are bunched up. If you look, you see there's a lot of vessel bunching on the right side near Khor Fakkan, then also on the left side near Dubai for vessels that haven't gone through the strait. Over the weekend, U.S. Central Command, they put out a notice that I think about 55 ships passed through the strait because the strait was considered open again. Come Sunday, when Iran put out a notice that the strait was closed again, only about a dozen went through. This continues to be an area of a contested area. Like Blaine mentioned, some of this has absorbed some capacity, created a little bit of congestion. Obviously fuel is the number one factor because a lot of tankers and fuel come out of the Persian Gulf. You can go to the next slide. Talking about congestion as well, just looking globally at congestion. If you look out of China, Hong Kong and Japan, the dwell time is about a week on exports. Like John mentioned, the Transpacific eastbound market is very elevated right now, and the ships are running full. We see a little bit of a delay here, about a week. If we go to the next slide, just also looking in Singapore, Vietnam, and Southeast Asia, also about three to five days here of dwell time. Europe also, they continue to have a little bit of congestion, also about a week of dwell time. As Blaine mentioned, the Asia-Europe trader where vessels of over 15,000 TEUs come in, and if there's one vessel that's behind, this can cause some delays. Also, the rail lines in Germany have seen a little bit of congestion. About a couple of weeks ago, there was a fire on one of the rail lines, and that caused a little bit of a slowdown. All over Germany, they're seeing a little bit of a slowdown on the rail, and some of that's impacting the terminals. Give or take about three to five days of lead time. Overall bottom line, that all of this is going to impact schedule reliability. COVID was a little bit of an outlier. If you look to the left-hand side, the red line in 2021 is pretty low, about 30%, and all the other years are somewhere about 60% or so. With that, the global average to wait for the vessels is about five days. We continue to see all those disruptions impact schedule reliability. This is a schedule reliability by trade lane. If we focus on North America, if you can see on the left-hand side, the transatlantic westbound all the way at the bottom, the black line. That schedule reliability has improved quite a bit because the rate levels have come up to healthier levels, and the carriers have added a little bit more capacity to that trade lane. Before that, you could see it was hovering about 40%-50%. The Ocean Alliance had removed some capacity on that lane, now the carriers have stabilized capacity quite a bit. If you look at another one, North America to LATAM, doing very well, 86% and over 80% pretty much across the board in the past year. I mean, that schedule reliability has been really good. Asia to the North America West Coast, it's improving, as the rate levels go up and the market strengthens on that trade. We start to see schedule reliability improve. That's at about 73% now. That's been sort of where it's been all year. See a little bit earlier in the year, about 60%-65%. This is something that we continue to watch. With that, I am going to hand it back over to Scott to close us out for today. Thank you for your time. Thanks, everybody. Just kind of wrapping all this up, activity that we see going on around the world, it really forms our strategy, right? Our strategy is an extensive carrier network. We have contracts with every carrier that has a ship on the water in every alliance. Our network is very large. We've got options for our customers as our rotations change and as vessel sizes change constantly, which we're seeing in smaller markets. All the services that we have on both ends of the ocean services are integrated as well. Everything from customs brokerage to order management and purchase order management to origin customs brokerage, carrier allocation, delivery management, and cross-dock and warehousing. Of course, the capacity flexibility that we've got. Because we buy so much, we have the ability to shift to the left or the right, depending on which vessel rotation is best for the customer. Of course, we're committed to having boots on the ground in every major market, with an office with experts in that office in your local market. With that, I want to thank you very much for your time, we're all here for questions if you've got Q&A. I'll leave that to Samantha to manage. Absolutely. Thank you, Scott. Thank you, team. If you all would, just remember, you can drop your questions into the Q&A box. I know we did have a couple of questions come through the registration process. One of those, I believe John kind of touched on a little earlier, focused on kind of an estimated timeline on when GRIs and PSS should start to dwindle out. I believe we covered that. John, correct me if I'm wrong, looking at potentially August for those to start calming down? That is correct. We'll be in it until at least the end of August. It all depends on what happens with the trade and obviously geopolitical issues for sure. It's interesting as we've seen changes with all of that almost every time we turn around it seems. Sorry, go ahead. Yeah. It's become our new norm, which seems like since the day COVID hit, geopolitical. We can even go further back when we talk about the tariffs back in, I believe it was 2016, 2017-ish. Since then, we're nine years into these geopolitical situations that are directly having an impact on how carriers do business, how we do business, how importers, exporters do business. It's here until it's not. Speaking of one of those regular changes we've seen, someone did ask just now in the Q&A box about the tax on Chinese-owned ships. We know that was delayed. They're asking can we clarify when that was delayed until, and what impact do we think, if any, that'll have on pricing at some point? Yeah. That is delayed until October. Not to say that it's going to go in effect in October, but the discussions are going to be ongoing in terms of how the government is going to treat that regulation. What that would mean, and Blaine or Scott can correct me if I'm wrong here, is essentially if it's a Chinese-built vessel, Chinese-flagged vessel coming into the U.S., there would be a per container tax, or a surcharge rather, on that container. On each container, just to be clear. Thank you for addressing that. Yeah. We had another question just asking if we can touch on shipments from India to the U.S. again, what are those current delivery times? From an on-time performance perspective, we're still watching that shape up, as carriers transitioned from routings in January, February that had returned to the Suez Canal back to going around the Cape of Good Hope, we've seen those transit times, I guess, re-elongate back to the +seven to 10 days they were throughout 2025. The shifts that we touched on earlier in the market from a capacity management standpoint, then from a demand side when John was speaking, were some structural changes. Every carrier in that segment operates the vessel string independently. There are some VSAs, but they're non-alliance driven. We saw MSC remove one string from the market and enhance another. They took a vessel out, they upsized the other rotation, added some additional ports. That does allow them to kind of offer the same amount of weekly capacity but hide the ships. CMA took a loop which touched the southeast coast of India and Colombo, Bangladesh. That was a pendulum loop, Asia to the West Coast, back to Asia, through the Middle East to the U.S. East Coast, and split that up. Two services moved out, one enhanced, and you have a net reduction of 10%, 12% capacity week-over-week, that's driving additional demand, supply, demand imbalance in that market. Samantha, I'll just take this next one. Because of the recent data center and infrastructure expansion in the U.S., do we see a correlation in import volume and an increase exacerbating the capacity issue? Yes. Where most of that, what I'll call the hyperscale space, has been dominated by air freight and domestic truck for the last few years. As these customers expand and build out the data centers, more of that volume begins to touch the ocean, whether that's power generation, solar backup, the chillers required to air condition and water cool these facilities, all of that moves to ocean. We also talked about in the demand portion how much CapEx was up, and at least from a U.S. marketplace, most of that CapEx expenditure is in and around the data center space. Those large projects move in short periods of time. There are two of those going on in the marketplace right now. We know from central China to the U.S. Gulf that are going to exacerbate some of the capacity issues through the third quarter. We expect that as those projects and that race to be dominant in the AI space grows, that more and more of that will touch the ocean freight as people look to control cost. Blaine, it looks like we have a few more that have come in the Q&A box. I see we have one that's talking about Section 321 expiration. How are carriers and BCOs preparing for that tariff cliff? What front loading volume have you seen pulled in ahead of it? Can we speak to that a bit? What we've seen recently is probably less of a front load and more of an inventory correction through the first quarter of the year. Sales to inventory ratios in the U.S. had fallen to right around 1.1, which is really low, and there's a restock afoot. This is the traditional peak season, it's hard to tell how much of that is tariff prep versus restock. The tariff things changed so dramatically that I'm not sure folks can plan far enough ahead. Where we saw people maybe get well out in front of the previous tariff cliff because they were overdoing it, I think we're seeing a more metered approach from the import community now. Very well. What about the U.S. West Coast to Middle East capacity and routing? Do we have someone that can talk a little bit about that? Again, that's U.S. West Coast to the Middle East. Yes. Traditionally those services would route out on Transpacific westbound ships. They would go to either Singapore or potentially Colombo, if there was a vessel calling that part of the world, then transship on vessels to the Middle East. Prior to the conflict, there was a lot of investment and growth in the Asia to Middle East India trade. We're starting to see ships be repositioned to that market now. Transit times have fallen off. They're very inconsistent, and we still see a lot of rerouting and adjustments needed in transit for certain destinations. From a capacity perspective, it really ebbs and flows with what's going on in the Transpacific market because they share the same ships outbound. From a transship connection standpoint, it ebbs and flows on what's going on with that Asia, Southeast India to Middle East market. You sort of have some competing things there that cause rolls and delays. I would buffer a two-week delay right now just based on what we're seeing with our limited volumes that are moving that way. Thanks for taking that one. Oh, go ahead. I see one about has the general rate increase Asia to U.S.A. been finalized? I'm going to assume that means for July 1st. What's going on in the market today, because the carriers are chasing the rates where the demand is and repositioning ships to the hottest trades, it essentially creates a rolling rate increase filing. Carriers have pre-filed general rate adjustments every 15 days in their tariffs for the foreseeable future. Whenever demand curtails, we'll see that start to go the other direction. We just had another drop in about indication of when the Strait of Hormuz is expected to fully reopen. Any thoughts on that from the team? I can answer that. Sorry, my video's a little bit still going on. I think until war insurance premiums go down, it's always been an area, if you remember, in history, the Tanker War in the 1980s. It's always been an area that has been contested, like I said. Until- Of those- insurance premiums go down, and it's safe for vessels to go through and the vessel crews to go through, I think that's when it's going to fully reopen. Right now- It's safe We see a ton of ships going through. Again, it's deemed closed, not a lot of vessels going through. Stephanie. Another question that we had come up through the registration process. I know that we have Gabby on, I was going to see if Gabby, if you'd be able to address this one. We had some asking about getting freight out of São Paulo, Brazil, why that might be so difficult, they also referenced reefer shortages in that area. Gabby, I don't know if you're still with us, if you're able to maybe touch on that. Gabby had to drop off. Yeah, hi. I can. Oh. Yeah, hi. Thank you, Lorena. I'm Lorena. I can support on that. Gabby's having some technical issues. Thank you. Specific to the exports out of Brazil, well, it's somewhat more common since recent years that there are some congestions affecting not only the inbound but as well as the outbound. This is also in line with somewhat of infrastructures within Brazilian ports and also a high demand currently undergoing, specifically Brazil into the U.S. and also Brazil into Mexico. Overall, there are several factors affecting direct, landing directly, specifically out of Brazil port and also some within Brazil itself. Thank you so much, Lorena. Appreciate you jumping in. Okay. A few more questions here, Blaine, in the chat, specifically regarding our GRIs and PSS rounds. I think obviously people have a lot of interest in the impact rates are having on the market and when that is going to change. Any further detail we want to cover there? I think this probably ties back to the amount of control that the global carriers have in the marketplace and the commodity that space has become, right? Much like any other commodity market, what we see with fuel today, the cost will increase as long as that demand is there and customers are willing to pay those numbers. The GRIs are going to be filed every 15 days, somewhere between $1,000 and $2,000, and carriers propose those. As bookings are made or slow down, they adjust that rate to, I guess, market tolerance. The higher those spot market rates go, the more PSS is needed to incentivize that contract space. Carriers propose what is essentially a trailing PSS that allows you to maintain that long-term space. We're even seeing a little bit of that premium start to work its way back into the market as demand exceeds capacity through July. That starts to roll back as the demand drops down. Whenever bookings begin to slow, carriers will reduce rates to try and keep their ship full, and that self-defeating cycle works its way around until rates hit a floor. If we went back to that very first wheel, right, when the rates get to the point that they hit the floor, the carriers start to pull that capacity back out and you transition from the yellow to the black segment again, right? That cycle, to Scott's point earlier, has gotten much faster. If the demand begins to really subside following what is traditional peak season, so looking at the month of September, you would start to see the rates come down through the fourth quarter and then potentially some sort of re-elevation cycle ahead of Chinese New Year. Very good. It never fails. We always have to have that first question come in and then everybody starts feeling more comfortable to pose their question as well. It's a complicated market. Definitely no bad questions here. We thank you all for participating. A few things that we just want to remind you of as we close things out. We do have webinars happening, being supported by our regions as well as our Americas GO on a regular basis. Typically, we've got about two of these happening a month. We've been very busy in the month of June. We've had three. Coming up very soon, we just scheduled, if you are in the retail sector, we just scheduled a webinar July 1st for next week ahead of the CPSC e-filing requirements. When you get your landing page, you will see the ability to register for that event if you are interested, and you should also be getting invites from our team members coming out in just probably even as we speak. Encourage you to join that if you have questions about CPSC and that new e-filing requirement that's coming up July 8th. Again, thank you all so much for joining us. If you do have questions you didn't feel like got answered here, feel free to reach out to me and I will be sure to connect you with one of our Expeditors Ocean experts to make sure you get those questions answered. We look forward to seeing you on one of our next webinars. Have a great day