Hello. Good afternoon, everyone. Thank you so much for joining us. We are just hitting the top of the hour, 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. You are joining us for our Trucking in Transition webinar. We are 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. 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 emails reminding you that you have signed up for this event. 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. We'll give you some hints on how to fix that, we will go into introductions of our speakers. Angi, 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. We just ask you understand that this is what it is. It's for informational purposes based on what we see both out in public domain and just what we see in the market ourselves. Now to the fun stuff. If you've not joined one of our webinars before, first of all, welcome. We are 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. 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. 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 expert. 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? We will ask that you fill out a short feedback survey, and you will receive that via email from myself within about two hours of today's event wrapping up. If you don't get the survey, we know sometimes people's spam filters do 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 two. That's how that works for us today. I'm going to introduce our speakers and then we will get started. With us today, we have Angi Varga, and she's our Director of Transcon for the Americas. A lot of times I speed right through these introductions because on our other webinars you've seen some of those people a lot. In case you don't know Angi, she is a seasoned transportation expert. She's been within the industry for about 30 years across all modes of domestic transportation, and she's had about 18 years with Expeditors, 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. 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. Now we also have with us Tai Gooden, and Tai 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 CTPAT program, and she has known for translating those complex security frameworks into scalable systems. Finally, we have Gary Ernest. He's our Regional Manager of Cross Border Solutions. 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. 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. 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, 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'm going to 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, the Senior Director of Ground Network Services. First place I'd just like to start is what is Ground Network Services? You're looking at our map that internally we have our own, at 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. A lot of the area 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. 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 12,000-15,000 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. We have 11 hubs. We probably run, I would say 60% of this is solos, 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 industry changes going on impacting our network somewhere. I'll skip over the 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. Quite the experience and quite the exposure to what's going on in the marketplace. All right. Speaking of the marketplace. First place I 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's going. I think we all, as we sit here in June, know that things have got very, very tight. Why have they got tight and what to expect next? Let's go back some months ago. If I pull out something 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. I color-coded these earlier, and literally four or five 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's either an industrial, a consumer, or a government-initiated. On the industrial sectors, things have been very hot for several months. If any of you are out there trying to buy flatbeds, you probably notice that market's tighter than any other market, and it's been tight for quite some time. I think from my point of view, flatbeds, when they get busy, it isn't too long after that where finished goods come out of it and vans get very, very busy. 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, Angi. The LMI, which is a Logistics Managers' Index. This is one of the leading economic indicators of the strength of the freight market. When you look at this right now, you can just see at the last, let me put my glasses on. Year to date is when things really started to take an uptick on the trend. When you start getting numbers above 50, basically means economic expansion and a lot of cargo moving. The next one, KPI, I just want to look at, just one more, promise. Angi, the ISM. This is Purchasing Managers' Index. Same deal. This is showing all the same trends, if you will. 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 2024 and 2023, you can see that things have been stagnant going back four years. I'm going to touch about that a little bit later on truck cycles. 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 hot, not on fire, but things have been improving almost noticeably since the beginning of the year, and all the KPIs tend to indicate that. Let's go on to the next slide. All right. 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 shows four years of modest or stable operations. Typically, in the truck cycles, you go through periods where it's either under capacity, in which case capacity will come into the marketplace because the rates support it, and then that operates in equilibrium for perhaps a very short period of time, and so it starts to be over capacity, and then it starts to contract. A typical truck cycle is going to be two to three years, and that's historically what it's been. I've listed the cycles down here since 2020. You probably remember some of the stuff in 2000, most notably like in 2007, 2008, the financial crisis. That was a pretty tough year for all trucking companies. A lot of capacity exited the market. Then obviously 2010, things started to recover. Then you've had some other, what I would say, regulation impacted cycles changes, the hour service changes in 2013, and most notably the ELD cycles in 2016, 2017 really led to a change in capacity. Those cycles lasted about a year, two years to about three 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. That sort of came to an end in 2022. Here we are in 2026, four 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. I didn't list them on here, but if you look at the financial returns of the publicly traded trucking companies, they've all had some pretty tough years. Even the best of their peers aren't making a whole lot of money. It's been a very tough four years in terms of finding good freight, getting rate increases, and seeing expansion. I think most carriers would think that you would've gone through this cycle in maybe 2023 or maybe 2024 and start to have capacity exit the marketplace, and that would lead to some yield improvement. 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 undercapacity right now is really showing signs in the marketplace. Why did it change? I think I'm going to go on to the next slide and start to get into some of the data that tells us it's changing, and then we'll start to discuss why some of the reasons. This chart right here, and this is from FreightWaves, just shows the load acceptance. The blue line is the current one there at the bottom. If you'll notice, it's pretty stable. Not a lot of swings up and down, so that tells you kind of having the same number of trucks on the road today as you did a little bit ago. Let's go into the next slide and look at tender rejection rates. This one's absolutely a leading indicator. What this is the current tender rejection rates are about, I think this list says 15.8 here. I've heard some numbers that approaching 20% in terms of a tender rejection rate. What that means is for every 100 loads tendered to a carrier, 20 of them get picked up, or when 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, which 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. 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. 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. 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 heavy month for trucking, and you can see that the tender rejection rates are already at all-time highs. 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. This is just another view. This is from DAT. 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. This is just the dry vans, but all the equipment types are pretty tight. What I'm trying to show here is basically things were pretty stable the last couple of years, and all of a sudden this year, since January, things have definitely tightened up. Now there's 12, 13 loads out there for any one truck available. I think I looked at an origin yesterday. I think it was like in outbound Charleston or Savannah, they had 10,000 loads available and 500 trucks. Odds of getting your loads covered are pretty low in that situation. If I looked across the map of all the U.S. for all the different zones, I think there was only one or two of what we call zones that were kind of like neutral. Everything was oversold, which means more loads than trucks. When that happens, it's pretty obvious freight's not going to move, rates are going to go up, and some freight gets left behind. Let's go on and look at the next slide, and we'll start to look at, I think we start get into what's happening in the rates. When capacity gets really tight, well, typically on a spot market rate, people who purchase the 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 play a few percentage points lower than those contract rates. It's subject to availability, but shippers take advantage of that. 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, it kind of signals that you're heading into a new truck cycle of growth and expansion. 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 on a lane on a contract rate, the spot rate might come in about $2.40. What's happening now is that spot rate is $2.60, $2.70, $2.80, and the spot rate is actually also I talked about tender rejection rates setting some record highs, but the spot rates in the marketplace are 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. The two are both at all-time record highs, which shows enormous tightness in the marketplace. Let's go on to the next slide. How is that impacting rates? Well, I already kind of said it's going to go up. These two charts side by side kind of demonstrate that the amount of freight loads available is not strikingly changed. We talk a little bit about economic expansion, and I start to look at other indexes. I didn't put the Cass index up here, but there's any number of other indexes that kind of look at the amount of loads in the marketplace. While they've been growing, it's been pretty modest and a little bit under control. When you look at what's happening to the rates, it's a little bit of a phenomenon because the load count's staying about the same, the rates are going through the roof. The market rates 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. There's a reason the spot rates are going up. 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 even if you've got contract rates because there is tremendous upward rate pressure in the marketplace. The next slide, we're going to get into why that is. 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 Morgan Stanley index. You can see the years prior to that, 2025, 2024, 2023, 2022 stable, flat. Once again, the prolonged cycle, four years of basically a stagnant truck cycle. You can see very much at the end of last year and through May 5th, this last index, things are up higher than ever. The next slide's 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 the 2026, and you can see that is heads and tails above where things were for the last four years. There's definitely some upward momentum going on, and it matches all the KPI, it matches all the industry data, it matches all their 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. That'll probably continue to evolve over the next few months and the contract rates inevitably will start coming up as carriers renegotiate rates with shippers. That's going to have tremendous upward potential. Rates are going up. Capacity has exited the marketplace, which is leading to basically spot rates going up and contract rates soon to follow. Let's go on to the next and say, why is capacity leaving the marketplace? This is kind of something if you would've had a conference call on trucking a year ago or four 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. What's really happening right now is about six different or seven different areas where there's tremendous regulation enforcement. What it is, it's forcing trucks off or out of the marketplace. They're idling them, they're parked. There's more freight out there today than there was six months ago, and there's far less trucks out there than there was six months ago, and that's why it's tight. I just clipped a few headlines here from some truck periodicals, 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 exposé on chameleon carriers. Talk about that in a second. Some of the issues in the trucking world are making headline news this day, I don't think anybody's unfamiliar with it. These are really the six 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. Obviously, that number is expected to grow. I'm hearing numbers anywhere, and I just get different opinions, anywhere between 250,000 trucks and 450,000 trucks. It could be higher. I don't think anybody ever really knows. That is a tremendous amount of capacity that's being pulled out of the marketplace. 10%-20% of all truck's kind of fall into this category. ELDs. We mentioned that they came online, what was it? 2017, 2018. That's Electronic logging of trucks, excuse me. Here we are many years later, and I didn't know this till relatively recently, there's over 1,000 ELD companies out there selling their services, and it's not regulated by the FMCSA. It's self-certified that if you have an CDL, that it's effective and that it's accurate. I think everybody's kind of finding out the hard way that many of these companies are not really doing what they're supposed to be doing. Many carriers can actually have their electronic logs reset, allowing some drivers to drive well over their legal limits in terms of their hours that they can drive. That's an issue. There, I think I just mentioned, if you go on some of 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 eight 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. B-1 drivers, these are drivers, and they service Mexico and Canada. They allow Mexico, excuse me. 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 supposed to take another load back to Mexico. That doesn't always happen. A lot of times they come up here, maybe they cross the border on June 1st. They put themselves available for hire, take a few loads intra-U.S., and then go back into Mexico. They're cracking down on that. As they do that just pulls trucks that were for hire on the spot market out of the marketplace. I think there's been 3,200 licenses have been renewed. Pulled from people violating that. There's also the impact of people know that the regulation enforcement's in place. If you were participating and 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 laws. Non-resident crackdown, this is an area that's made tremendous headlines. Perhaps you've seen some pictures where you got people coming to U.S., the visa may have expired two years ago, but they got a CDL. Certain states issued CDLs, and the CDL might be good for five years. The visa's expired, but the CDL's still good. That's about 200,000 right now that they estimate drivers who 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 non-resident CDLs that they're stopping and pulling off the road is absolutely phenomenal. Once again, if you're a driver and you fall into this category, you may or may not wait till you actually get caught. You may just park your truck and decide it's time to go on to something different. 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 FMCSA, 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 lbs tractor. There's tremendous regulation enforcement. We just came off a road check week. I forgot the capacity was definitely impacted, double digits in terms of percentage of trucks pulled themselves off the road. For the ones that remained on the road, and 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. They are really cracking down on this regulation, and it's impacting capacity. CDL mills, that's where basically a driver can go, well, a person can go get a CDL driver license literally in one 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, what is it, 3,000 CDL offices or driver training schools, excuse me, have been shut down, and 4,000 under investigation. I had no idea till recently that there are that many places that you can go out there and get your CDLs, but they popped up post-COVID. You guys go back to 2020 and 2021, 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 CDL mills popped up then. Finally, the last one I'll just talk about, this is what the 60 Minutes expose was on the chameleon 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 or to get a DOT number. Literally a few hundred bucks and some applications, and there are many trucking companies out there that have five, 10, 20, maybe more different monetary numbers. What it is they go down the road, and when there's an accident or 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 tru ck. If Geotab is where you can do some electronic monitoring on the highways, and there's any number of reports where the same tractors will have worked for eight different carriers in a short amount of time. Every time they pick up a load or every other week, they don't change companies. They just change the MC number and the name of the trucking company on the side of the truck. There's many thousands of trucking companies out there. I think I was reading about one town in, I think it was Wyoming. I'm not going to say the name because I might have to get the name of the town right. They had more trucking companies than they had residents in the town because they had multiple trucking companies are being registered as a little bit of a fraud to facilitate this chameleon carrier strategy. 60 Minutes, if you haven't seen that video, I encourage everybody to go watch it. It does a fabulous job explaining what that's all about. As the crackdown begins, hundreds of thousands of trucks are coming out of the marketplace. Good news, and you're starting to see that. Rates are going to go up, but behind the rates going up, when capacity gets tight, carriers have to backfill drivers, seat the trucks. Wages are going to go up. This is once again at the COVID. I think we went to about two or three cycles of driver wage increases in 2020 and 2021, and things have been very flat and stagnant since then. If you start to read some of the headlines, you'll see the trucking companies are starting to give driver wages again. 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. 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. If I just recap 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. 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. Hopefully if the wages go up, that'll attract entrants to the market. That will have to do that as this 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 didn't have some of the liabilities about who you were third-party motor carriers that you hired. That's always been a bit of a debate, but nonetheless, there was a case that went to the Supreme Court two weeks ago, I believe it was. There was a Supreme Court ruling. Basically, what the ruling said is the brokers now can have financial responsibility 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. This is pretty fresh and new. This is only been a few weeks. Some of the brokers that I've talked to, they're absolutely going through every one of their carriers. Some of these brokers have thousands or tens of thousands of carriers, and they're trying to basically remove or identify the ones that might not be able to demonstrate that they are a safe carrier. It's a problem for brokers, and it's a problem for other carriers too, because 80%+ of the trucking fleets out there do not have a safety rating. Absent of first-hand knowledge or public knowledge where you should've known that maybe somebody's safety is deficient, it's very hard for carriers or 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 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, or 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. 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. Stay tuned to this because this is still making its way, I guess, to shippers to be impacted by that. Finally, one last topic, and then I'm going to turn it over to Tai. She'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 thieves have figured out that it's much easier to, say, rob some freight than it is maybe rob a store or bank. Cargo thefts of all types, pilferage, deception, you name it. Some of the scams going on out there are just absolutely phenomenal. I don't know of a shipper that's probably not been impacted by this. Tai's going to go into greater detail on this. 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 and theft. I'll leave it there, pass it over to Tai, and thank you. All right. Well, good morning, afternoon, everyone. Thank you for allowing me to jump on my security soapbox, as I often like to do, and speak about security. My goal is just to raise awareness with you all. As John stated earlier, cargo theft is at an all-time high. It's been pretty much climbing since really around COVID time is when we started seeing a lot of the schemes that we're seeing. Criminal organizations have gotten more sophisticated, and they've found something that works. While we may not see growth year-over-year anymore, we see that it's plateaued at these record highs. The alarming fact related to these record highs is that cargo theft still goes significantly under-reported. It could be double of what you see out there, but most times we're not seeing it as much being reported. What criminal organizations are starting to use, like we are, anything that makes our lives more efficient. The big thing now is artificial intelligence and using ChatGPT and different things like that. People are using that. Well, criminals are starting to leverage those things to make their ruses be more convincing. In addition to their phishing schemes or their social engineering, they're also using voiceover IP phone lines so you can't track them. They leverage AI to make sure that documents look as legitimate as possible in relation to freight details. They continue to focus on what the industry has called fictitious pickups as their tactic of use. It's primarily because they've been successful at it. Historically, we've had the Cargo theft happens pretty much anywhere, especially in the U.S., but the main states for cargo theft have been Illinois, California, and Texas. Recently what we've seen, New Jersey has been overtaking Illinois with a lot of focus on the certain commodities, like the metals and the coppers that are being moved out of that market. Even some food and beverage related items. 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. It's just related to that's where it occurred. You still have crimes of opportunities coming at truck stops. If people leave freight somewhere that's not in the most secured area. You do see that. Again, food and beverage gets targeted a lot because it's something that criminals can make a buck off of, and that can't really be tracked. They target those items. I will say, I think some of them may be mini-economists, because what they'll do is they watch the trends of 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 CORCA Act. I do have a slide related to that because it's 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? 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 Peel Police force that really focuses on mitigating those cargo crimes in that area. Mexico focus is generally on in-transit attacks, as well as if freight is left in an unsecured area. Next slide, please. What we see as the emerging threats, I stated before, it's really a focus on distraction a lot of times. I will say, people appeal to people's good nature to be that good Samaritan. They may distract them and say, "Hey, I need help. Can you support me? Can you help me find certain things? Can you help me move my car?" While their crew is focusing on breaching the cargo areas of the truck. Very recently, we heard of a scenario where we had a truck in transit, the distraction was to have another vehicle cause a collision with the escort vehicle. The escort vehicle, of course, pulled over. They were in an accident, it was actually criminals, probably part of those chameleon carriers, that were actually the drivers behind the truck. They stole the freight while the escort was addressing the accident. We see these things happen in the market, these are things to be aware of. That particular shipment, to my knowledge, didn't have any additional tracking on it to be able to see where it went after it left the accident scene. For those that do intermodal freight, we have been made aware that criminals are even sabotaging trains while they're out in the middle of nowhere, cutting brake lines and things of that sort to get the train to force a stop in the middle of nowhere, they're breaching different containers to pull freight off of there. Again, the strategic theft is the biggest influx that we're seeing. You've also heard of, may have seen a story written about that where they've termed it as Trojan drivers, where it's really just someone lying in wait, waiting, working for a company, handling a couple of runs. Once they get a load that they think is of enough value, then they take it. We also term that as internal conspiracies. These are things that we face, and it can be daunting, right? Gone are the days of straight theft where people are hoping they don't get caught, has become more sophisticated with strategic, to where it is continuing to just be just a continued pain point in the industry at large. What I will say is that on the next slide, I do want to talk about some of the things that we can do to change our mentality as it relates. I always tell people about this when I go into, "Hey, what are the things that we can do?" Many people always start off just from an area of trust, right? They want to see themselves in 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 zero-trust mentality really is an approach to always validating information. Just because they've gotten a door doesn't 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 known what was on their truck, right? 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. It evaluates the mindset from thinking people are trustworthy inherently to everyone is a criminal that is looking to steal my freight unless proven otherwise. When you go to that mentality, that's when you determine what cargo theft mitigation strategies that you can put in place. I'm going to go through these very quickly from down the left and then down the right. Only work with vetted service providers that you've approved. Gary mentioned that we use vetted service providers in our market. What I'll say is just using electronic means with vetting a service provider is not sufficient. That's because you have these chameleon carriers out here that are going in, and they're leveraging those items. You need to know who you're working with. The days of picking up a telephone and speaking with people, it's extremely important. No amount of technology can replace just that human interaction. Know who you're working with. Make sure that you only share information within your operational controls with people based on what they need to complete their work assignment. Keep the list as concise as possible. Everyone doesn't need to know those details. In cybersecurity, many criminal organizations are using cybersecurity schemes really to infiltrate physical security. Right. 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 securing your freight in transit. Starting on the right, driver and carrier verification. One of the most critical elements to any supply chain security resiliency is making sure that you thoroughly vet that driver. You look at their truck, you make sure that their truck looks legitimate. You make sure that there's no missing plates or expired plates or anything of that sort. Once you release the freight, it becomes more difficult to get your hands back on it, right? You also wanna make sure you have proper security controls in place, physical security of cargo areas, facilities, and yards. Any freight in transit, you wanna make sure you have GPS monitoring. Real-time active monitoring is gonna 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 recovering. Our preferred provider is Cargo Signal. If you have any questions on that, feel free to reach out and we'll get you some information on that. Just stay in align with compliance partnerships. Expeditors ourselves, we participate in the Customs-Trade Partnership Against Terrorism and many other security certifications around the globe. We also collaborate with law enforcement. Those are gonna be some of the things that are gonna help you mitigate the risk. You may be wondering, what are some of the things that lawmakers are doing? The Combating Organized Retail Crime Act is legislation that's currently going through Congress. It was recently passed by the House this past May. It's with the Senate. The great thing about this is if it passes, it is bipartisan legislation. If it passes, it'll provide more support with multiple law enforcement agencies and arms to be able to collaborate and share information and be able to address these cargo crimes closer in real time and be able to get the support that they need to prosecute these offenders. Great. Thank you so much, Tai. Gary's gonna come on next to talk about cross-border. Angi will also jump on to talk about domestic air updates. Thanks, Samantha. Hi, everybody. 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. I wanted to just kind of point out a few things as it related to the cross-border market, Canada, specifically. 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. If we look at Canada freight coming from Canada into the U.S., we've seen rates that are up nearly 30%, 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? 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. than the other way around. Normally we think of that the other way. It's about a 60/40 difference from a percentage standpoint. 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. From that, why has the supply declined? That is many of the things like John talked about as well, right? Although we're seeing more bankruptcies on the Canada side, there were a ton of small providers, some of which were working in those formats that we talked about and have been stopped. Some of them are out of business. 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. 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. Because of that, prices have been hit. There is a reciprocity agreement between U.S. and Canada. CDLs from a Canadian driver work 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. From that perspective, if you've heard a little bit about the non-domiciled, and I think John might have talked about those as well, those are exemptions for U.S. and Canada CDL holders. Go to the next one. Again, on the capacity, about 78% of cross-border freight is actually moving with Canadian drivers and carriers. Again, you think about what you heard today, less impact because of that on those drivers. 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? Canadian fuel is actually more expensive, significantly, than in the United States. Kind of always has been. A lot of it is tax-related. 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. Between $0.90-$1.40 per gallon, if you do the conversion between Canadian dollars and U.S. dollars, of UST per gallon and you think of a normal tractor-trailer or tractor has 250-300 gal capacity, significant difference from just in that difference in price of fuel in Canada and fuel in the U.S. The good news, sustained market demand. We continue to see Canadians buying from the other countries, from the 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 lied. I do have one on it next. 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. We can just go to that next slide, show a graph of that. 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. I think John put up a map of what we call our Ground Network Services, our GNS. 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, PARS clear into the Canadian marketplace, and then blast out from there. 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. Remember de minimis 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 fun fact. Some of you may or may not know, obviously, Detroit, Windsor. Detroit, Michigan, Windsor, Ontario, Canada, the busiest infrastructure from Canada into the 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, Gordie Howe, the Gordie Howe International Bridge. Another international bridge crossing just down the river, I'll say, from the Ambassador Bridge. That has just been completed a few months ago. Infrastructure in place, lot of benefits, six lanes instead of four, direct connections to the major arteries or freeways in Canada, a lot of different benefits. However, the Trump and Carney 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 we won't see anything until after the July 1st USMCA renegotiations, et cetera. Look that up. 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. Thanks, Gary. All right. Just want to close with a couple items relevant to U.S. shipping. 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. Mexico has what they call the valor manifest, and that's what's used to process and assess the duty amount. What's changing coming up, it's an ongoing date of the effectiveness, is this is now going to go from a hard copy submission to electronic submission of this. What actually IORs can do now is actually put in, this is in place for six monthly, a hard copy, and they can renew it every six months. Going forward, when this goes electronic, this will be required for every pedimento that goes through the border before it can cross. The date, like I said, has been a moving target. It was June 1st, the effectiveness. Now it's pushed back to August 1st, and I think that's just due to making sure the system's in place and control, but also, the importer of records have a lot to do here. 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, or should be. This is more for operations people as well, because if this isn't in 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 a yard. The two items in blue, those are new. That's as part of the electronic submission, that's going to be new as part of this. 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 with 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. 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. 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. They've also kind of right-sized their networks in conjunction with the fuel increases. Flight schedules have already been realigned to amend to the fuel prices. That being said, just a couple of things to mention with freight characteristics. If you think, I want to put in the U.S., it's mostly, I'm going to say, standard aircraft, which also I'll put narrow bodies in there versus wide bodies. You see on international, we've got not as many wide bodies, but the standard type aircraft is typical. You can get anywhere from 100 to 3,000 lbs on those aircrafts. With that, if you're tendering boxes on pallets, those are almost always going to go loose. 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, and then ship, and then they get re-palletized by your carrier at the delivery point. They do get delivered back on a pallet, it's not just loose boxes. Then, too, there are some wide body options. Wide body aircrafts that can take anywhere from 8,000 to 10,000 lbs on a shipment. That's a great benefit there. Also, if you think about scheduling, there's scheduling flexibility because there's usually a couple of flights that are going in and out on those routes a day. Sometimes many, depends on the lane. Then speed, obviously speed to get there. 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 pallets right now just to maintain current operations. We've also done maybe a split where we shipped that one pallet via air freight and then got the other nine on the road, and that one pallet maintains operations. A lot of different ways you can use this today. That being said, just want to close out with some of the advice we've got based off all of our presenters here. As we go to the second half, 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. Speaking of locking in capacity, especially as it relates to truckload, be sure to lock in those contract rates and prepare your budgets for spot rates because as we see, those spot rates are going up. We have customer flexibility. The shipper flexibility, you have control of that from your dock, but if you've 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, any type of flexibility you can bring in is significant. Then that partnership mindset. Really becoming that shipper of choice. I'm not talking about companies, the actual drivers, because drivers can pick the loads they want even if they work for larger organizations, is waiting time. Waiting time eats into their hours of service. I 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. Mode shift, we just talked about air freight. We have going from full truckload to LTL. You do have to watch that because with some of the common carriers, if you're shipping over five pallets, you may get the linear foot or capacity surcharge. In Expeditors network, we do not charge for that, so there's no excess fees. We've also found, too, if you've got maybe that, I keep going back to my 10 pallet example, put that on a 24 ft straight truck and run that. Usually that's equally as fast and sometimes it can be a lower cost. Closing out to what Tai had shared, the vet and verify. In your shipping facilities for anything that's coming out, making sure that the drivers, you got driver's name, driver shipment bill of lading, you've got maybe a trailer number, or if you're managing transportation or managing a pickup for 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, whatnot. Obviously, the traditional stuff we do is verify seals. With that, I'm going to turn it over to Samantha to close us out. Angi, great job getting us right in at the wire there. We always like to leave time for questions, we have not, because we had a lot to cover. If you do have questions, you are welcome to email me directly. I'll be sure to get them to the speakers, we will get your question answered. There are two 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 these last minutes, these are the upcoming events that we have from our other products and services. We do have Onyx, which is our geopolitical arm, and they will be talking about Europe and impacts to that country, from the wars and other crisis that are going on around that region. We have a U.S. Customs market update coming up next week, and America's Ocean market update the week following. Thank you all so much for joining us today. We hope you found a lot of value out of this event. Please fill out the survey that will come to you in about an hour, and we'll get the materials sent your way. Thank you all. Thank you, speakers