Episode Transcript
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[00:00:35] Speaker B: You are listening to the Freight Buyers Club, a home for those interested in international trade, shipping, procurement, logistics and air freight. In fact, all things supply chain in the Americas, Asia and beyond.
[00:00:50] Speaker C: Hello, I'm Mike King and welcome to this episode of the Freight Buyers Club Insight, produced with the kind support of Ontegos CL. We're available on all podcast platforms, on YouTube and over at www.thefreightbuysclub.com. so please subscribe, follow and share the pod. It helps more people find us. And frankly, if you're listening, you're already well ahead of the curve, aren't you? And of course you can find me in the Freight Buyers club page on LinkedIn. And that's where all the latest content tends to live and where the real time conversation sometimes happens. Now, with time tariffs tightening, shipping lanes shifting, and market sentiment somewhere between on edge and completely baffled, we're asking today how should shippers react in a time of deep geopolitical and economic uncertainty? To help us navigate all this, I'm delighted to say I'm joined by two senior executives from JAS Worldwide. Vivian Bruniolti is the Regional Development Director for the Americas and she's joining us from Miami. Hello, Vivian. Welcome to the Freight Buyers Club.
[00:01:52] Speaker D: Hello, Mike. First of all, thanks for the invitation. It's a pleasure to be part of your podcast list. This is fantastic. I have listed a lot of them, so it's really a pleasure to be here. Thank you.
[00:02:06] Speaker C: You are very welcome. And Andrea Goman, Senior Vice President for QHSE and Sustainability, based in Atlanta. Andrea, you're one of the star speakers at TPM in Long Beach. Welcome to the Freight Buyers Club.
[00:02:18] Speaker B: Thank you so much, Mike. We're looking forward to the discussion.
[00:02:21] Speaker C: Vivian. Andrea, welcome. Welcome. Andrea, to kick things off, can you give us some background about jas please, just briefly in terms of your services and your global footprint.
[00:02:32] Speaker B: Of course. So just the name stands for Jet Air Service and was founded 1978, so almost 50 years in Milan Italy and we are now headquartered in Atlanta, Georgia and we are family owned freight forwarder. So that's not very common anymore. Growing a lot. So right now we have 7,000 employees globally. We are present in all main markets in Asia, Europe, the Americas, very strong and also in the Nordic countries. Our backbone is of course Italy, but we also have a strong presence in all regions. Our strategy is really to be the freight forwarder that has a local connection to our customers and also to our partners, but also with a very strong global network. And we're focusing on all modes, air, ocean, contract logistics and also different vertical markets. Like now we just got into the perishable business for example, but also automotive, pharma, industrial goods for large customers, but also for SMEs. So that's our overall just company overview.
[00:03:40] Speaker C: So present in a lot of global markets. Maybe that's a good time to talk about markets because everyone's asking what is going on in air freight and an ocean freight especially ex China and Southeast Asia into the US Given we have this low tariff window right now and we don't know what comes next really.
And I might add that the US and China are in the midst of trade talks in London as this discussion takes place. So Vivian, if you want to jump in here, what's your take on markets at the moment, particularly that Trans Pacific market.
[00:04:12] Speaker D: Yeah Mike, in terms of air freight we see one of the biggest impact in the market was the minimis. So after May 2nd US officially eliminate the mini mes for China and Hong Kong.
[00:04:27] Speaker C: So this is the $800 limit for goods ship from China and Hong Kong into the US So before you didn't have to, it was duty free essentially. And now, now it's not. There's quite stinging penalties.
[00:04:40] Speaker D: Yes. So basically origin goods with valued under $800 now face dirties and customs clearance process. So basically affecting the E commerce business, any commerce business is one of the drive for their freight market. With this cancellation in three days, 50 freighters were canceled in May, 40% of capacity reduced from China to USA in the southeast Asia is different. They still have this benefit. But we can see that, you know the airlines is trying to shift and put their capacity to the other markets. One of the markets is Latin America and even the E commerce business trying to move to Latin America as well. When we think about ocean freight is a little bit different scenario because with the taxization that started in January, the volume reduced for sure China and US ocean freight and the carriers cut 40% of capacity middle of May with the flexibilization, 90 days flexibilization from US shippers started to place bookings from one day to the other. And then the carriers needed to put this capacity back to usa. What is my easy, what they start to do blanket savings mainly in Latin America. In the time that Latin America market is also growing up a lot with the EV cars and the traditional peak season for the retailers, Black Friday year end. So with this in the ocean freight market, we have a boom in the rates. So this is what and we have the two markets, air freight and ocean freight, with a tendency of rates increase.
[00:06:33] Speaker C: And if anyone's listening, please do check out episode 45 of the Freight Buyers Club because I go into great detail on where those air freight markets are, but particularly on the scale of this spot rate surge that we're seeing into the Trans Pacific where of course a lot of cargo moves under contract. But the spot rates give you a really good idea of where the demand is there up around about 100% into New York, from Shanghai and into the US West Coast. Yeah. So big, big increases in the cost of shipping there. Vivian, you just mentioned there about Latin America as being a driver in terms of E commerce. Is that inbound into Latin America from Asia?
[00:07:10] Speaker D: Yes, yes. So we can see that up to, let's say up to May, a lot of the E commerce was routed to Latin America by us. So now they are trying to see some possibilities to move the capacity directly from China to Latin America without this transition, this transshipment via US. We see some, especially in Latin America, we see some airports preparing themselves to receive the E commerce business because it's small package. So it's a different setup that the airport needs to have.
[00:07:46] Speaker C: How does this Trans Pacific market contrast to what's going on on the Asia Europe market? We're seeing a lot of poor congestion and spot rates on that market. They've also bumped up in the last few weeks, although not to the same extent as they have on the Trans Pacific.
[00:08:01] Speaker D: It's a different market, as I just said, for Latin America, they cut capacity to move to us.
It is possible in Europe. Asia Europe market in terms of this capacity shift is difficult because these vessels that serve is the biggest one in the world.
So when we look to Asia Pacific, to Europe, this is not the impact capacity, but container availability from China. When we think about container availability from China, this is going to impact all the trades. The port congestion in Europe, we know that we have some port congestion, but we need to look port by port. So for example, Algeciras is congested with a bees birth lineup.
Genoa, they are facing weather disruptions and labor issues, Antwerp strike and high ER utilization.
So it's a combination of a lot of factors that you have. Also the situation in Europe and anywhere, you know, even in Americas, you needed to look part by part to see the really congestion on that and the reason behind one. I don't know if you know Mike, but there is a very good online site that is called Linardix, you can join that online. And Slife, you can see the congestion in the ports with the vessels in the birth. It's a very good one.
[00:09:32] Speaker C: I'll tell you what Vivian, if you could send me the link to that site and I'll post it in the notes later, that would be fantastic.
[00:09:38] Speaker D: Okay, I do.
[00:09:40] Speaker C: Andrea, from where you sit, what are customers most worried about in terms of supply chains right now? Is it pricing? Is it capacity? Service reliability? I know from what Vivian said, maybe it's lack of equipment, maybe it's all of these things, the lack of predictability.
And how are you guiding customers through this fog?
[00:09:57] Speaker B: Yeah, for sure. There are so many uncertainties right now. I mean, we are used to that in our industry with the recent black swan events. But right now our customers are most interested or concerned about getting a way path forward that's working for them and their supply chain.
So we advise them to not to panic, of course, but need to cope with the situation. So from our perspective here, Jessica, this won't resolve short term. Of course, this uncertainty remains and a lot of changes might come along.
So we support the customers, of course, with the most competitive pricing that's possible.
Also referring to Vivian's comments about the high fluctuation and also the capacity shortages right now, service reliability and quality that also lies under my responsibility in our operation is of course the most important.
Never right now will the goods arrive in time. Is there any shortage to the supply of a production line. For example, when we talk to our automotive customers. So we also see a shift due to this uncertainties from ocean freight to air freight for very urgent goods and especially for goods that are maybe high margin and just very urgent in regards to the buyer of the goods. So there we see shift, but also maybe shift more to the reliability of the supply chain and not so much around the cheapest price because at the moment there's just a huge urgency to get the goods from A to B. I think that's clearly visible to us. It's a challenging times, especially for our colleagues and everyone involved in these supply chains. But owning this process and really having a strong partnership with our customer is.
[00:11:46] Speaker C: The highest priority for us and for either of you. I mean obviously these tariff bombshells are coming from the White House. What has this meant practically for customers? Are you seeing people looking at sourcing shifts or routing shifts?
[00:11:59] Speaker D: Yes, we see customers shifting the mode as Andrea just mentioned. Now we see this shift and what is important when we think customer is going to shift ocean to where because of tariff risk, avoid the port congestion delays and mainly to have the shipment inland before tariff restartment because they don't know how it's going to be after the 90 days. So it's going to be especially in the USA market they are going to shift a lot ocean to air and high value cargoes time sensitive goods. This is more common. And now because of this tariff situation they are going to shift more air to ocean. It's mainly when the lower margin goods or customer, you know they, they want to manage the high cost with air freight, rebuild inventory and potential tariff volatility.
So we needed to be closer to the customers and it's important time to mix strategy and this shift between air and ocean to have the the best time to arrival because needs to arrive especially in the US before the middle of August cost and also helping customer with this incent in the market.
[00:13:22] Speaker C: Are you seeing any changes in, in that planning and it's sort of around sourcing.
Obviously people are keen to look for low tariff alternatives and that where those places are is not entirely clear yet. But maybe it's in the Americas or maybe it's reshoring. Are you, are you fielding those questions? Is it too early to talk about long term planning?
[00:13:43] Speaker D: Yes Mike, we can see customer strategically starting the near shoring diversification. An example is for example the retailers customer they are looking to market as Vietnam, Indonesia, India. They want to reduce their dependence on the China market.
I was talking with one of the biggie retailers names. They have a goal to reduce 25% on Japanese China products up to end of 2026.
We also see similar movements in the technology companies.
Also technology explorer market as Taiwan, Malaysia. An example Apple. The iPhone production now is in India. The iPad is in Vietnam. So we can see this near shoring especially in Asia Pacific. But there is also attendance of near shoring expand more to Latin America. I was reading a summer research top 10 of the USA import products 7 rely more than 75% on China.
So imagine this is huge. So customers are trying now really to do this sourcing shift. You know, focus on the near shoring movement.
[00:15:08] Speaker C: Just on a different tack Andrea, how how do tariffs affect your role overseeing sustainability and quality at are short term decisions hurting long term ESG goals for example? Or do you see sustainability and supply chain resilience as maybe linked?
[00:15:24] Speaker B: Yeah Mike, that's a good question. Of course this topics ESG sustainability, quality and overall uncertainty are interlinked already. Before the current tariff development we advised a lot of customers how to go forward with the ESG goals. Most large company have said and we continue to do that. So we getting the requests and are in conversation every day with our customers how to get started and also how to substantiate their goals. Before I was more advising the customers to switch from air to ocean on the one hand to save cost but also to save a lot of emissions. So as we just discussed this is reversing right now but this might only be a short or midterm development. So I think this is again also our goal in the ESG field to see the opportunities of this this topic for companies and as you know also in Europe and in the US this is already in place. So we need to report on ESG metrics development. This is already something very ingrained in the governance part of many countries.
So we appreciate that this reporting I would say bucket is further simplified.
This also was a development in the previous quarter or so. So the unification and clarity for the companies is really something that our industry and also our customers needed to get more clarity on the reporting. And again our large shippers are reporting on these CSRD for example already and they cannot stop. So it's the regulation and they seek our advice how to go to the next level. And I'm really surprised, positively surprised that this development doesn't stop. And yeah, we're looking forward and just to really continuing to guide our customers and it's all about shared values. And of course supply chains are more important right now to really get your grip on it. But there's also the strategic part of this relationship. So that's our goal to to support our customers.
[00:17:35] Speaker C: Here is just tactics versus strategy.
[00:17:38] Speaker B: Exactly.
[00:17:39] Speaker C: Just on that strategy in terms of planning long term freight buying, are people taking a long term view or is it just impossible? Is it all short termism at the moment? I mean especially you mentioned the spot rate spikes. I mean how are people thinking about that or what are they asking you or what are you advising them?
[00:17:57] Speaker D: Currently the market is short term so we see customers with strategy with three, six months plan we see customer becoming more selective, secure core lanes with reliable Partner and leave room for spot market.
So you know, trying to balance the urgency with the spot market because the time now space is key.
So it's the spot bring flexibility in Jazz. We try to work very closely with our customer to try to find out this best solution. Minimize risk, optimize cost possibilities like distribution centers, free trade zones.
A lot of companies looking for free trade zones, especially in USA to have the shipments inland before the 90 days. And we also try to have a flexible capacity planning to balance the customers and the carriers. We are growing up a lot in the Asia Americas trade lane. What reinforces the support that we are providing to our customer doing acquisitions. Last year we acquired a company in Colombia that we became in the top 10 freight forwards in the market.
And in the China Brazil corridor air freight, we have shorters and we lead the market air freight market on that. So we are the ranked top one in Brazil.
[00:19:30] Speaker C: I was going to ask you about acquisitions. Okay, so plenty going on. How do you talk to customers about planning? Because I imagine there's a whole load of panic out there of like there's just so many unknowns. Is this about hand holding to a degree or are there real sorts of strategies that you can go okay, let's do this.
[00:19:49] Speaker B: Yeah, that's true the handholding part. And also give a lot of market intelligence to our customers like we're doing right now. Our US colleagues are for example, in close contact in regards to tariff, in regards to the current custom brokerage processes and really supporting our customers here. And also looking at this market statistics that are available and of course that we as Jazz have access to again for some commodities, it is not really a strategy to do a different planning process. The goods just need to be shipped. When we think about urgent pharma shipments, for example. But in the long term, we advise the customers of course to focus on further diversifying and detailing their forecasting, scenario planning. And also looking at the inventory levels. Like Vivian said, you having a lot of inventory possibly now in the US you want to use this inventory levels of course first, but will you then keep on adding to this inventory? So this is also a risk management balance. We you need to consider as a company also from the financial impact.
So looking at opportunities like Vivian mentioned, free trade zones, for example, for bringing in more goods or keeping the cargo stored for a while just to. Yeah. Limit the risk possibly.
This is something we talk to our customers about every day.
[00:21:14] Speaker C: Vivian, in your conversations with US based importers, is this something that maybe they're underestimating right now?
Like maybe a blind spot that the market maybe hasn't priced in.
[00:21:26] Speaker D: We can see that sometimes customers really focus on the trust time, the lead time. But there is a lot of steps involved.
The supplier production, the. The cargo needs to be ready to be shipped. So port congestion, equipment availability, space.
So there is a lot of things to be planning and behind than the lead time for the transportation. So they need to have more visibility in this whole package. And currency volatility, it's also linked with the payment time with the risk on that a lot of fluctuations in the Asian and Latin American market currencies and this currency can eat their margin on the product. We also see as a blind spot for example the flexibility between contracts and spots is becoming more often but needs to be more. The flexibility forecast. Forecast is not blind but it's challenging, you know because we always talk about that and this kind of situation is even more important to secure space. And as I said before the key for the customers now it's also to mix the strategies for ocean and air to see the real and the good time to switch.
[00:22:48] Speaker C: Andrea, what about opportunities? Is there maybe a silver lining here for a company that's agile or tech savvy or. I mean I'm part of me is guessing you're going to say yeah there's the silver lining is for our customers. But yeah, I'll throw the question there for you.
[00:23:03] Speaker B: Yeah, of course, that's a good point. So that you know this being here in the US on the Americas service industry, the IT or you say tech savvy industries are very strong here in the US and there's a great pool of talent and companies that can support the country with this transformation.
Making or taking really advantage of these agile approach and tech use cases is a huge opportunity I think for the region. For example bringing automation robotics in the factories and yeah therefore becoming more resilient as a country. That's a huge opportunity. And also looking at for example technology companies, what Vivian just mentioned like the diversification from certain markets but also looking at yeah automotive industry and that's already here. How can you scale that up and really be more effective with your operation? That's a big topic for our customers. Looking at the logistics facilities and the handling there and where used to be a lot of manual work involved. There's also of course automation is a huge topic and already implemented for a lot of manufacturers and retailers especially.
So from my perspective the opportunity here is really speed and managing your stakeholders. Right. So also getting your senior management involved if you want to implement such a transformation, even if it's involved with a lot of investment, pre investment. But in the long term, I think this can be really valuable for companies. On the other hand, of course, the proper use of technology and tools is only possible if you make the right use of data and analytics to make really these better predictions on your product production lines and inventory levels. So I think there's a silver lining here and the ones that move fast will succeed.
[00:24:52] Speaker C: Thanks, Andrea. Vivian, if just zooming out a little bit, you mentioned part of the JAS America's footprint and the expansion in Colombia. You've also got this global reach. Is there anything else going on in terms of development or where you see growth that might see a bit of investment?
[00:25:10] Speaker D: Yeah, we have a strong growing footprint in America. Capabilities in the key verticals, pharma, automotive, the retailers and often the core trade lanes with charters, multimodal service and cross trade solutions.
Just the strategic investments as they, including the acquisitions that I mentioned, we are investing also in the expansion of the contract logistics. Contract logistics was also part of the our acquisition years ago and now we are investing to expand this and especially with the cold storage facilities, strong technology tool that we always continue development of this tool to provide full visibility. So since the inventories that could be in our warehouse up to the air freight shipments and also monitor the CO2 for the shipments, that is good for the sustainability.
So it's we have the structure, we have the capability, we look for growth and for growth, you know, we needed to be a strategic partner and providing consultants to our customers really needed.
[00:26:26] Speaker C: Andre, more or less the same question for you, I suppose, but maybe you could look at it through the the lens of QHC and sustainability.
So what's next for JAS from a global standards and innovation point of view?
[00:26:39] Speaker B: Yeah, that's important for us to keep on pushing our ESG and quality culture for making it tangible for all employees. So not only having a global strategy, but really executing that. People in our offices, in our warehouses are really understanding the strategy and also are able to implement that every day. So that's our core purpose I think in general, ESG and quality is of course business standards. So this is something we have to cover and something we, we have to be in communication around with our suppliers, with the airlines, with the ocean carriers and our customers every day. In regards to ESG, our net zero target also of our industry is being net zero 2050 and this is also we as Jazz are committed to. Of course we see more and more regulation and also sanctions in place and we are compliant and keep on progressing year on year on this development in our industry.
What I really appreciate is of course the constant investments of our partners like our carriers, air freight and ocean freight into these topics. And when you look at the order books of the main ocean carriers, for example, this is a huge opportunity to reaching this 2050 targets also for us as their customer because there are so many new equipments coming in, new ships with dual fuel vessels with new fuel types. This is becoming more and more the new normal for our industry. And this is of course if they.
[00:28:11] Speaker C: Can get the fuel.
[00:28:12] Speaker B: Yeah, exactly. But bringing the new equipment in is the first step. I 100% agree with you, Mike. Also in regards to the ETF and EU fuel directive here in Europe, this is more regulation but sometimes you need this regulation to, to really push the topic. And the mandatory, the mandatory charges are I think the right step. But yeah, in order to reach these goals there's like a collaborative action needed now.
[00:28:43] Speaker C: One to watch. One to watch. Okay, just before we finish guys, we have geopolitical risk, tariffs, inflation, so much going on. If you're a freight buyer, we've sort of touched on this a little bit. You could be forgiven for feeling paralyzed.
What's one thing each of you would tell a logistics leader to focus on right now above all else?
[00:29:05] Speaker D: It's a difficult and challenging time to plan for everybody. So we believe that the key is market updates, get the information.
So what we try to do is constantly provide market updates to customers directly or provide some online events. For example, next week we are going on June 8th we are going to have navigating waves of changings discussion. This is ocean freight discussion with two big names from the market cross. Coincidentally both are named Lars. So it's Lars Hur, that is our EVP of Ocean and Lars Jensen that is a very known name in the market. So we have these online events with them quarterly to provide these insights to customer. Even you Mike, if you want to join us.
[00:30:01] Speaker C: Lars, a regular, regular attendee on this podcast too.
He's the best analyst out there.
[00:30:06] Speaker B: Yeah.
[00:30:07] Speaker D: So it's the key is information, is the market updates to try, you know, to manage a little bit the situation.
[00:30:16] Speaker C: And Andrea, have you got any thoughts you want to share?
[00:30:19] Speaker B: Yeah. For afraid buyers or logistics leaders at the moment, it's more important than ever to engage with your senior management, manage your stakeholders, also engage about the changes like Vivian said, the market updates and also mitigation strateg strategies of your supply chain, your supplier base and really create transparency about this risk of uncertainty also to other functions of the companies for HR finance, other operations.
So I think that's, that's the biggest opportunity to really create this attention, also to have the buy in from the whole company for, for mitigating those risks.
[00:30:59] Speaker C: Andrea Gomann and Vivian Bruni Alti, thanks so much for joining me today on the Freight Buyers Club.
[00:31:05] Speaker D: Thank you, Mike.
[00:31:05] Speaker B: Thank you very much, Mike.
[00:31:08] Speaker C: And thanks as ever to Karen Ball and Tom Matthews for putting all this together to on Tegos Cloud for their support and to all of you for listening. We've got more great content coming your way soon. Please like follow, subscribe and check out www.thefrakebuysclub.com I'm Mike King. Catch you next time.
Sa.
