Episode Transcript
[00:00:03] Speaker A: 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. This podcast is brought to you by your host Mike King and produced in partnership with Demurco Express Group, a global 3 PL that specializes in managing logistics to, from and within the Asia Pacific region.
[00:00:30] Speaker B: Hello and welcome to the Freight Buyers Club. I'm Mike King and as you just heard, this episode is produced with the kind support of Dimerco Express Group. We are available on all podcast platforms and on YouTube and on LinkedIn. Please do like, follow, subscribe, review and comment. It'd be much appreciated. You can also find us on the FreightBuyersClub.com where you can subscribe to get every episode direct to your inbox. As the end of the first quarter fast approaches, we've got a lot of big ticket disruptions in the pipeline, not least yet more tariffs due in early April from the US Tariff Day or Liberation Day as it's being trailed by the Trump administration. Lots to keep an eye on there. So today we'll be talking about how to manage freight market and your supply chains across markets and across modes in these confusing times. And we'll be diving deep on US Trade policy, including giving you hopefully lots of useful insights on policy implementation and how to cope with all the chaos and the noise that surrounds it. Coming up later, we have Robert Van de Veeck, CEO of Mexico cargo airline mas, formerly known as Mass Air. As many of you will know, Robert has had probably one of the highest profile careers in air cargo, covering most of the top carriers over the last 30 years and more. In this Freight Buyers Club exclusive, we'll be talking about the things he's learned throughout his career and we'll be discussing his new role and opportunities and challenges in the current market. Lots to look forward to there, but right now we have one of the world's leading trade experts. Previously she served as Vice President of Regulatory affairs and compliance, FedEx Logistics. She was also the executive director of the ACE Business Office at U.S. customs and Border Protection CBP, so very much an expert on how U.S. tariffs might be implemented. And in her current role as CEO and Managing Director of Tradeforce Multiplier, she helps major bcos with compliance issues, amongst other things. Cindy Allen, welcome to the Freight Buyers Club.
[00:02:46] Speaker C: Thank you.
[00:02:47] Speaker B: And Cindy is joined today by an old colleague of mine who I first met when we were both covering this industry from Asia quite some years ago when he when he was quite a young man then Almost, I'd say. He now lives down the road from me here in West London. Greg Nola, senior editor for Europe at the Journal of Commerce. Welcome for your. Your first and belated. I apologize, A belated appearance on the Freight Buyers Club. How are you?
[00:03:15] Speaker D: Yeah, hey, Mike, it's great to be here. I'm glad that you finally got me onto your podcast. Everyone else at the JSC has been on but me.
[00:03:23] Speaker B: Come on, I've heard that line before.
Passing the book to the state. Okay, Greg, let's start with where we are basically down the road. Heathrow, a major aviation hub globally. Top five airports for passengers. It's not a massive cargo airport. It handles around 120,000 tons of cargo each month, which is around top, top, sort of globally, but it is a major European and transatlantic hub. Now, a substation went down last week. There was no backup, and it wiped out the entire airport for an extended period. There was initial stories about, is this a terrorist attack? Counter terrorist, police were involved. Russia was involved in various things that have happened in the UK or has been suspected of involvement. So there was suspicion there, but there doesn't seem to be any evidence so far. All fingers are pointed towards this being old infrastructure and a lack of backup electricity supply. It was very hard to avoid the impact this had on passengers because there was a bit of a media frenzy, as there tends to be when there's anything problematic with UK transport. But I know you've been covering this at joc. How did things play out for freight and supply chains? And is it we come into the end of any disruption now or is it. Is it still playing out?
[00:04:40] Speaker D: Man, there's a rough sort of rule of thumb in the air cargo business that one day of shutdown will take around five days to sort out. So I guess this week we will see all the air cargo stranded all over Europe start to come back and the cargo stuck on the ground here will start to be lifted out. But there's a lot of blame going around at the moment about how such a critical piece of infrastructure could be offline for a day. I think the government is even looking into that. But, you know, I would argue that after a complete shutdown on Friday, you know, whatever contingencies that they were actually worked incredibly well to get such a busy airport back in business in less than a day. So, I mean, I think they. They didn't do too badly.
[00:05:25] Speaker B: I think you're probably the only person that said anything positive about the response I've seen in any media. Are you waiting? Are you after a visa or something now?
[00:05:35] Speaker D: I've already got one.
Remember that Heathrow is already operating sort of way beyond its capacity limits and demand is growing exponentially. So even a very small disruption can cause big waves. Last year was a record for air cargo tonnage and this year is off to a pretty good start as well. So, you know, people can criticize, but yeah, I'll happily stand out there waving my Heathrow flag.
[00:05:59] Speaker B: Classic. Well, yeah, I mean, just for anyone listening, Heathrow's got two runways. There's been talk of a third Runway for many, many years. And one of the things they're saying that would have come with that third Runway project, which now looks like it's more likely to go on ahead under this new government, would have been an alternative fuel supply. So we'll see how that works out. Anyway, Greg, let's go. Slightly more global and less local container shipping. Quite a lot going on there. So with peace prospects receding by the day in the Middle east, that ever can put it like that. I'm now assuming that any return to normal shipping via the Suez Canal, we can probably rule it out for most of this year at least maybe the full year, really. If you think about what the unwinding of that would look like, it'd be quite chaotic anyway for a few months and something would happen to happen really quickly for shipping to become normalized. So even with some port congestion in Europe and China this year, we've seen Asia, Europe and Trans Pacific spread, spot rates falling consistently. Are people you're interviewing at the moment putting this down to demand? Maybe it's down to front loading. Maybe especially on the Trans Pacific. There was a few good reasons for doing that. Is some of this sentiment around the economy a post lunar New Year lull? Maybe it's excess supply. I mean, I'm putting quite a few things at you there, Greg. You explain what's going on with container shipping?
[00:07:24] Speaker D: I think pretty much all of the above. You know, everyone's trying to make sense of what's going on and like all the normal trading conditions are just being heavily influenced by this on off approach to tariffs as well as all the geopolitics. The Red Sea, yes, it's going to remain closed this year. I don't think anyone's expecting anything to happen. I think about three weeks ago there was still a glimmer of hope at our TPM conference in Long beach that there might be a return to the Red Sea in the second half. But I think that's all gone now. What it does do, though. It actually brings an element of stability to Asia, Europe in the transportation sense at least. But yeah, I mean, the economic issues are going to impact demand both in Europe and in the U.S. europe's in really poor economic shape. And in the U.S. even though there was high demand in January, there's sort of widespread sentiment among shippers there that things are slowing down. Some of the big US Retailers are showing lower than expected sales. So that's pretty worrying from that side.
[00:08:26] Speaker B: Yeah. And for anyone listening out there who doesn't normally follow the Asia Europe trade, a lot of those Asia Europe annual contracts are signed sort of December, January. But because of the uncertainty, the unknowns about how to price in the Red Sea, a lot of people were holding back from doing that. But I think we're already would you say, Greg, we're already at a point where, you know, there's nothing really to wait for anymore?
[00:08:48] Speaker D: Yeah, absolutely, there's not. And I mean, rates are coming down on Asia Europe and they're coming down even with the transits around Africa because there's just too much capacity around. The demand's certainly not going to come to save the carriers. And the contracts that are being negotiated from now are not going to be as good as they were last year, for sure.
[00:09:09] Speaker B: Yeah, it's all priced in now. And one of the only things I didn't mention there in my long list I threw at Greg, of things that have been throwing question marks at Asia, Europe trade and container shipping didn't really mention tariffs, which is playing out across freight markets and changing global politics almost daily. We have new tariffs expected at the start of April from the US Administration, which we're definitely coming back to. But before we get to that, can you please explain to listeners, Cindy, as simply as possible, which as simply as possible seems like they the wrong word somehow because it's not that simple. But what new tariffs so far have we seen actually implemented since this administration took power? We're only talking about two months ago. And when I say which have actually been implemented, what I mean by that is which ones are now in force as opposed to those that were threatened and then withdrawn after, you know, a day or two.
[00:10:07] Speaker C: So, yeah, there's a lot of noise out there and there's a lot of we're going to do this, we're going to do that. You know, any whim on social media is reported on and taken as gospel because many times that's the only thing we get in advance of some of these duties. But what we have right now Is of course we have regular duty that's always in place. Then we have the 301 duties that were in place from the first Trump administration.
Those are mostly on China, but on a few other countries, some of those have been raised in the new Trump administration, although not very much. Then we have had steel and aluminum 232 duties on a few countries in the past. Now the new duty is on all steel and aluminum products. So 25% on all steel and aluminum in its primary form and any derivatives. And that's confusing for everyone because let's say you have my favorite a four wheeler with the roll top bar that's usually made of steel for the cage support. And that roll top bar is now subject to aluminum duties, even if you're importing the whole four wheeler. So any of the hub, the wheel hubs that are made of aluminum are now subject to duty on the value of those derivative products. So it's extremely confusing for everyone who's trying to import and determine what in my product is made of aluminum, what is made of steel, how much is it valued at and where did it come from? Because that's the other thing you need to know, where that steel and aluminum came from, where it was milled, where it was drawn. So that is probably one of the most complex duties we've had come in. And then you have of course the IEPA duty on Canada and Mexico for products that aren't claiming a free trade agreement, USMCA free trade agreement, and then another 10% on China. So we have 301, we have 232, we have IPA duties. It's stacking tariff numbers, stacking tariff duties, one on top of another. That has been extremely complex for the trade industry to actually make sense of. And the custom system in the us, the CBP custom system that I ran is having a hard time actually calculating those duties because it's compound rates on multiple levels for the same item. So it's a little bit of a messy process right now, but we're figuring.
[00:12:47] Speaker B: It out just on that example that you gave there about the type of product and how much of it and where it came from as part of an overall product. How do you actually process that and what sorts of bureaucracy does it involve? That sounds like an awful lot of form filling.
[00:13:02] Speaker C: It is, it is extremely complex. And you know, I'm a customs broker by trade, have been one for 35 years. And this is challenging for even the most seasoned individuals. So you have the duty rate of the four wheeler, you know, the off road vehicle, you have that and then you have to. On the same tariff line, when you're importing into the United States, you file an entry with customs and it shows the tariff line which determines the duty. So you have that regular duty. Then you have to calculate, go to the, the four wheeler manufacturer and say how much of this was aluminum, what pieces, what parts were aluminum, where was that smelted, where was that milled? They may or may not have that. So if they have it, fantastic. We have a different line. We report to customs to show that and pay the appropriate amount of duty, 25% if you don't have it. CBP actually just came out with guidance to say you have to claim the highest duty rate, which is 200% on Russia aluminum. So 200% on that until you come back and tell us where it was actually smelted. So there's a, definitely a drive for the manufacturers to understand where, where the aluminum came from and where it was smelted. And then if it's from China, then you have another line that you list that shows the IEPA duty. Then you have to add all of that up correctly and make sure you're paying the right amount of duty to customs. So customs brokers tend to like the complex things. I think we're regretting that position right now.
[00:14:47] Speaker B: What complexity drives profit, presumably. Right.
Just on that point there, how all of these things would have been hard to implement and manage for anyone in supply chains with notice. But a lot of this has happened almost, you know, as being said. Right, go ahead. This is instant as of my word right now from the Trump administration. That obviously makes it a lot more complex and raises questions about products that are in transit as well.
[00:15:15] Speaker C: Yeah, a lot of companies have ended up paying duty, probably more duty than they needed to because they don't know the information. It's in transit. Some of the rules allowed for in transit, some of them didn't. We know that, you know, there's been a lot of capacity issues in some of the areas of the world which have delayed arrivals of vessels. And there's been a lot of consternation around, you know, well, my vessel left in January and it's not docking until mid March and now I have to pay these duties because it's outside of the time frame. And the administration has just come back and said, yes, you're right, stop buying from other areas of the world, which we know is not a reasonable position, but it is what it is and they've been caught paying duties. And I think That a lot of the freight markets that Greg talked about are starting to recognize costs are going to go up regardless of what happens moving forward. And people in the US are starting to see that impact our prices and we're starting to see that impact buying patterns in the United States.
[00:16:26] Speaker B: Okay, let's just switch this round a bit. I'm trying to roll this out and I want to come to some of the problems at customs in the US and their capacity there and also look at de minimis in a second. But so far, and we're talking pre April 2nd, what sort of retaliation have we seen from other countries in terms of tariff wars? In the first administration we saw US agricultural exporters hit, for example by China.
[00:16:51] Speaker C: Yeah, so we've seen that again. We've seen China hit ag hard. We've seen them hit oil, coal and gas. We've seen them hit machinery and cars, the normal things that would have a big impact on the US export market. But we've also seen two other things that I think are sometimes overlooked. One, they have instituted export controls on things like critical minerals and that has impacted manufacturing in other areas of the world, specifically in the U.S. u.S. And some of those critical minerals can't be obtained anywhere else in the the levels that are needed and that we see out of China. The other thing is they tend to do investigations on U.S. interests. So we've seen in the press Google has been looked at. There have been some other companies that have been less forthright in in the fact that they're being looked at right now that I will say that has a huge impact. Anytime the US takes a step in a trade war, China doesn't just react from a tariff perspective. They react on multiple levels and that has a huge impact on US companies, especially those with interest in China.
Then for Canada we're seeing also at a country level we're seeing tariffs on ag products, on machinery, apparel, footwear. But interesting we've seen at a province level we've seen energy exports being looked at and controlled. We've seen you know, liquor boards remove U.S. liquor from their facilities. So it's kind of a two tier in Canada in that you have the country level actions then you have province level actions as well. And just over the weekend EU announced that they were delaying their previously announced tariff retaliation. So we'll see what kind of happens on that.
[00:18:47] Speaker B: But that's been delayed so many moving parts. I know Greg's got a question on this and that's de minimis. I'll just a little bit of background for listeners, de minimis exemptions are the means by which shippers skip import fees on lower value shipments. Over 100 countries have them in place. They are basically there to prevent mass pile ups of low value products and excess bureaucracy. I'm simplifying, but for our purposes, that'll do. As an explanation. At the start of February, when new U.S. 10% tariffs on imports from China were introduced, the U.S. postal Service announced it would no longer accept inbound mail packages for Hong Kong and China. As de minimis exemptions were also removed at the same time. What ensued was total chaos. And certainly at cbp, which you sort of referred to just briefly, then the system was quickly put back in place. But we are supposed to be seeing this maybe reimposed next month. Firstly, is this likely in your view and if it is, is anything in place to your knowledge that means it might work now when it didn't seven or eight weeks ago?
[00:19:54] Speaker C: Well, you know, de minimis has been under attack on many fronts in the United States and it's been around since the 1930s and it has gradually raised to $800 in the United States. The raise to $800.
Congress's intent was actually to facilitate small and medium sized businesses being able to trade freely. So that was the intent when it was passed in 2016, 2017.
Congress has come around to really being against this for several different reasons.
What I saw happen when that was taken, when de minimis was taken out. And it's estimated that 75% of all DE minimis comes from China. So the removal of de minimis for China created havoc. The simple reason was it needed more information. So in a de minimis transaction, there are not as many data elements that are required. There still is a lot of data that's required. Contrary to what a lot of people understand, there is still a lot of data. However, some additional data was needed on the products that wasn't needed in the de minimis environment. So I needed to classify them, I needed to know some additional information about them. If it was a section 301 or 232, I needed even more information about that and I didn't have it. So two things happened. One, normal air freight stopped because companies needed more information to be able to clear the goods through customs in a, you know, formal or informal environment, non de minimis environment.
The other big and more impactful thing that happened was the US Post Service couldn't handle and has no way to collect duty or to pay it to the government.
So right now, when a package comes in on the Postal Service, they take that information and it's cleared on a very limited set of data. Once the administration said, you can no longer use that process to clear any freight from China, the US Postal Service had one method to clear all of that freight. Anything that comes in over $800. Customs, actually. Or the Postal Service reaches out to the consignee and says, who is your customs broker? And then they get the name of the customs broker. The customs broker files an entry. This is all done by mail. So it can take weeks for that process to happen if that's the only way. And it's manual, it's not automated in any way. So it's completely manual. So we're talking to a million shipments a day. There's absolutely no way the US Postal Service could revert to that method. So they refused to handle freight for a period of time. However, that violated. The Postal Service is part of actually a the upu, which is a treaty. It is not, you know, an agreement. It's an international treaty. So some of our trade partners said, you can't just stop handling our packages. That's not legal. So they started, you know, handling the packages again. And that led to the administration saying, we have to suspend the suspension of de minimis and really figure out what we're going to do. And you see, when they revoked that, they said until such time as systems are available.
So what does that mean? Well, one, it gave the normal freight environment a little bit of time to put in processes to gather more information at the time the goods are shipped, because that's the time you really need it. You need to know, hey, there's some more information I need. I'm going to ask you when you ship it, especially on small products, you know, whoever's receiving it, I order a pair of shoes online, I don't know.
[00:23:56] Speaker B: This is t moving Sheen, right? This is this big drop driver of the air cargo market, for example. This is a lot of this is business director consumers in the US for out of China.
[00:24:06] Speaker C: Absolutely, absolutely. So. So it allowed the normal freight environment a little bit more time to put systems in place to collect that information. The bigger thing is, what is the post office going to do? They don't have a plan. They've never had a plan to address this. So I think they have a couple of options here. One, they can refuse to handle it. That would require renegotiating treaties with countries. I don't find that to be a viable option. And we saw them do that and revoke it really quickly. Two, Is they could develop software themselves to collect the duty at the time that someone ships something and then pay it to customs. They could buy normal software that a customs broker or anyone else uses to facilitate that. It would require a lot of investment, a lot of money. A lot of people at a time when our administration is cutting resources, don't find that either of those options are going to be viable. The other one is they could hire a customs broker. They could say, hey, Cindy, you are our customs broker for every postal shipment coming into the United States and you're going to transact customs business and clear these, all of these. I think that's, that's possible, actually. That's a possibility. The other thing is I could just completely privatize package handling all the way from start to finish. You tender it, you know, in the postal service, but UPS, FedEx, DHL, one of them comes in and they actually handle the package on behalf of the postal Service, which a lot of the express industry, which I was part of for a long time, they lobby for that. They want that. They think that that is actually going to be more economical. So I think one of those two things will happen. I have not seen any movement either way, but most of us are not privy to these types of discussions in this administration. Things are being discussed in an extremely small group of people. So who knows how it's going to be handled. But I don't see this as a quick fix.
[00:26:17] Speaker B: From your previous experience at cbp, was there a process by which, say, I know the de minimis exemption was moved from 200 to 800 under the Obama administration, If I remember, is there a process by which you plan policy changes and they're implemented through government? Because this seems very much top down, an instant.
[00:26:36] Speaker C: Yeah, usually. So I've been in this business 35 years. Usually what happens is the president, like a CEO comes in and they say, hey, this is the direction I want to go. This is the framework that I have. Let's, you know, try to get policies and procedures and positions that move that forward. And then the agency heads come in and they say, okay, this is my piece of that. This is what we think we can do. Then the agency head goes down to their team internal at their agency and says, what's feasible? What are your issues? You know, give me some proposals, help me write a position, let me give me your feedback and timelines and what it's going to cost. And all of those normal business processes happen that way. That isn't happening here.
Those individuals at the top, you know, A handful, and I'm less than five people seem to be making all the decisions specifically when it comes to trade. And a not only is that direction and position being moved forward, but the details are being moved forward and implemented top down. So those people in the agencies like CBP who had a hand in shaping policy and advising the administration on what that should be and how feasible things are and how much they'll cost, they haven't had an opportunity to give that input. And when that top down direction comes in, they're told, just do it. So this administration looks at the, at the agencies as implementers instead of as advisors and policy decision makers and, you know, regulatory writers. So this administration has spent the last four years preparing information in anticipation of a second Trump administration and now they are implementing all of these policies that they have taken four years to write and sent them down. So it's extremely different. And it's very hard for those of us in the industry who have interacted with previous administrations on both sides of the aisle and interacted with congressional members on both sides of the aisle to help educate on how trade works, how transportation works, how things that are done are going to impact those individuals. And they simply aren't taking those meetings.
[00:29:08] Speaker B: Greg, did you want to come in here?
[00:29:10] Speaker D: Yeah, I mean, Cindy, I just wanted to ask from an air cargo timeline perspective, when could customs or the post office or whoever's involved have that type of appropriate system in place that can, you know, apply the duties and collect the duties and pass on those duties of these low value imports?
[00:29:31] Speaker C: Well, I think to understand that question and the answer, really, you have to understand how it works today. So today in a normal air cargo environment, you have an ACAST filing into the US which is a security filing. The airline does that. They send raw data information as soon as they get it multiple times to cbp and CBP actually takes that into their targeting system and uses that to begin targeting. Then within the Trade act timelines, 12 hours, you know, five hours, four hours, whatever that is, depending on where the plane is coming from, there's a manifest filing. And that manifest filing, if you are requesting a de minimis release, has to list every single package individually. So if Mike buys a package and Cindy buys a package and Greg buys a package, each one of those are listed on the manifest, where it's coming from and who it's going to. So each of those individual packages and it says, hey, Cindy bought a pair of shoes, Greg bought a pair of pants, Mike bought a shirt. And they say what the country of origin of that is and what the value is. So that comes on the manifest.
Where the bifurcation comes is after that, every product has a request for release from customs. So that request for release for de minimis could come in one of several ways. If you're an express carrier, you request release on the manifest by giving a few additional data elements to cbpp. If you are not an express entity and you're, you know, Delta or Lufthansa or whoever flying into the U.S. a customs broker files about 10 data elements in a request for release separate, but it's still the same request for release on the border. There's also a mechanism in the truck manifest where they do the same thing. They list a few additional data elements and request release for de minimis shipment. Customs releases it and it goes down the road for anything over $800 or that doesn't qualify for de minimis. There is an additional filing, and that additional filing requires who is the seller, not just the shipper, who is the buyer, not just the receiver, where were the goods actually made? If you have component products, what additional information might be needed to accurately classify the goods so that additional information can come after the release? Most brokers have that ability to do that. They have the ability to collect that information.
Where the adjustment is, is the shippers providing that additional information and making it available so that that can be processed accurately by the customs broker. If de minimis goes away, truck de minimis is probably done for. They probably aren't going to allow it at all from China and Mexico just because there's no additional mechanism to marry that manifest and the entry. Well, customs brokers are going to do all of it. The express industry, I think, will kind of stay the same. I think that the administration will recognize that they've been doing this for 30 years and they have it, you know, they have it perfected in their screening and processes. So I always kind of push back on some of the folks who say, oh, this cargo isn't screened. You don't know what's coming into the U.S. how do you know you have all of this stuff coming in? They do know, just not in the extreme detailed level, on the product level. So. And then screened, you know, all air cargo is screened. All of it goes through some sort of screening mechanism for security purposes. So I hope that answered your question.
[00:33:22] Speaker B: Yeah, I could listen to you all day. I'm trying to. Trying to roll out all of the different things that are going on. My initial intention was to sort of lay out, where are we now and where are we going to go at the start of April? But we haven't even got to April this week. We're talking 24th of March, just to timestamp this on the 24th and the 26th. So that's the Monday and the Wednesday of this week. The U.S. trade Representative is holding public hearings on proposed actions on section 301. This is the investigation on China's targeting of maritime and logistics and shipbuilding. The headlines on this have been US port calls $1.5 million per Chinese ship, Chinese built vessel. How that's implemented, we don't really know. That could be the proportion of your fleet. It could be whether the ship was built in China. Anyone's guess at the moment. There's other things involved with that. Can you explain what we're expecting to happen following these hearings? Oh, Cindy.
[00:34:17] Speaker C: So this is one of the situations that actually are following the documented process, which is a relief for everyone. We're kind of in disbelief. They'll have hearings and then they will take in the feedback that they got in both the hearings and in the written comments. There's well over a hundred written comments now on this issue, mainly against this process, this duty assessment. The USTR will take all of that information and consult with the administration and determine what they're going to roll out. Some have said they could do do that as early as April 7. Some have said it's going to take a little longer. But we do know that the, the timelines of the original investigation, which happened in the Biden era, actually derive what is possible. But that doesn't mean it's going to happen April 7th. I think because of the high level of interest as well as the significant pushback on the fact that there just is no shipbuilding capacity in the US to be able to take this over. I think they might take a little bit more time to think about how they raise money to subsidize and incentivize a US Shipbuilding industry without completely decimating imports and exports, more importantly, exports from.
[00:35:40] Speaker B: The U.S. we covered this a little bit on the last episode with Steph Loomis ocean freight forwarder. Hairpoint on this was essentially this $1.5 million per PORP fee, which some shipping lines have said would mean that they would avoid secondary port and might cost the industry $20 billion. Steph's point was this is going to be paid for by consumers, but it's also penalizing carriers who essentially just bought at the best place that they could at that given moment. And it's not really Their fault. So there's a lot, there's a lot going on there. Greg, you've been covering this as well. What feedback are you getting?
[00:36:17] Speaker D: Well, I mean, something that's very much worth bearing in mind is that this comes from a, a national security concern over how, you know, China is ruling the seas. So whatever happens, there will be some kind of recommendation put forward to the White House, even though a lot of the public comments have been very much against this whole process. So there will be some sort of recommendation, but just. Yeah, what that is going to look like sends shivers down me timbers.
[00:36:44] Speaker B: Shivers down the timbers. Yes. Okay. That's, I mean, this is, there's so many things going on. That's one thing. I'll just park that for now. But separate to that, people are calling, Cindy, the 2nd of April. I say people, Donald Trump is calling the 2nd of April tariff day the big one. Liberation Day. What are we expecting to see announced? And is there anything companies listening to this right now can do to prepare for Liberation Day?
[00:37:13] Speaker C: Liberation Day.
I'm sorry, I just can't with that.
But I think we're seeing a little bit of softening in the approach. And I think there was some talk in the press today about the consideration of a delay. And I think that's driven by nervousness about the market, about a lot of individuals understanding how it is impacting the economy in the US and it's starting to show on softening sales and markets that are being affected that, you know, they didn't really think would be affected. But I think to get to the second part of your question, you know, what can people do? And I've been saying in an uncontrollable situation, which is exactly what this is for everyone in international trade, focus on what you can control. And what you can control is the data that you have on your supply chain, knowing your supply chain. You know, we've been saying that for a decade or more, but it's so much more critical now. And it's not just how the goods are transported, it is where you are sourcing them. What, you know, what secondary markets are you in? What duplications do you have in your process so that you know what your entire puzzle looks like and what pieces you can remove or shift around and still have the same picture? And that's really critical, I think, in this era, because nobody knows what's coming. Nobody can predict. Anyone who can predict what's going to happen on April 2nd is lying. We're just taking a best guess because there's no previous example to base us on other than the past two months.
[00:39:01] Speaker B: So we don't know anything about implementation dates. We don't know who's going to be targeted, what type of tariffs, reciprocal tariffs, timelines. Will this be instant? Will there be a planning? No. Okay. We know nothing.
[00:39:14] Speaker C: Well, we've seen, we've seen references to the dirty 15 by the administration and those are the top 15 countries that have trade deficits with the United States.
And we're, we're hearing more about so it's just going to be one flat fee instead of on a product by product basis, which would be horrendous to try to, you know, administer. But we're if something happens, it'll happen on those 15 countries. I think we can all say that. When it'll happen, what will happen? Yeah, it's anyone's guess.
[00:39:46] Speaker B: Greg, more prosaically, you cover transatlantic markets, shipping there. How have tariff policies been playing out there?
[00:39:56] Speaker D: Well, on the ocean side, the carriers say there's no real sign of front loading in their bookings.
But when you look at specific particular commodities, like in particular wine and spirits, which was where Trump threatened that 200% tariff, there has been quite a strong push by US importers to try to get their booze into the country before April 2nd.
[00:40:18] Speaker C: Because we're going to need it on April 2nd. That's right.
[00:40:20] Speaker D: Yeah, absolutely. You're going to be and yeah, you won't be celebrating, you'll be going the other way. But you know, when Trump made that threat earlier this month, it was probably already too late to get products on the water. So a lot of the cargo shifted to air and that's where we've been seeing a strong bump in tonnage over the last couple of weeks.
[00:40:40] Speaker B: Greg, you cover a global air cargo market as well. We've had a lot of uncertainty, especially around E commerce. We saw such a big demand driver as I mentioned last year. All of this is affected by the de minimis changes that we've been hearing about. TEMU and she and these big E tailers out of China. It's not just them but they've been the big growth drivers. People already saying that they're going to start moving to ocean. Rates have been dropping but showed a slight increase last week. What would you say the General sentiment is for 25 in air cargo markets and should freight buyers be expecting lower prices as the year drags on?
[00:41:20] Speaker D: Yeah, I think definitely expect lower pricing this year. The E Commerce volume to the US it won't collapse when the de minimis rules are rolled out whenever that does happen, but it will come down. So last year, China, like Cindy was saying, China accounted for 70% of the 1.3 billion de minimis imports. And that filled dozens of freighters every single day. So even a small drop in demand is still going to result in a lot of capacity being released back into the market. And that's going to keep rates under pressure.
[00:41:53] Speaker C: I would add to that. I also don't think we're going to see a collapse in the air freight market because of the de minimis. Remember, de minimis is a clearance method. Yeah. If they take it away, it's going to add a little bit more costs. But the real cost is the cost of flying those goods in. The transportation cost is much higher than the duty rate cost. So it's going to depend on what rates the air carriers are giving the de minimis market and express and commercial air freight. And if you're bringing in that many goods, you're going to still get pretty darn good rates. And there is going to be a limited incentive for people to move from air freight to ocean freight unless the duty rates get so severe on the products that it really does cut into the freight rate. And the temu's and the Sheehans are structuring their transactions to limit duty. Already some of their shipments are paying duty coming into the United States. They're bringing goods in bulk. They're warehousing it in the United States. So I don't think it's going to have the massive effect that people think it's going to have.
[00:43:04] Speaker B: Either way, lots of disruption. Greg, when you're talking to procurement or logistics planners, what are they saying about how all of this flux affects the long term? Are they waiting to see out 2025 and reassess the landscape?
[00:43:21] Speaker D: Yeah, I mean, the message that seemed to come out of our TPM conference in early March was don't panic. Everything is changing too fast. So you can't really do too much about it right now. So just wait and see, Wait and see what's happening. But of course, that doesn't mean standing still. Certainly not for any US Importer who's trying to figure out how to handle all these tariffs. We're talking about reciprocal tariffs, just how to build that whole moving target into the annual contract and whether to shift production somewhere, somewhere safer than China. But is anywhere safer than China? I don't know. India maybe. India's flavor of the month at the moment, but until it isn't. So, you know, it's all a bit of a mess at the moment. The US importers are worried about all their rising costs from the tariffs and exporters are worried that foreign buyers will go on and find new markets somewhere.
[00:44:13] Speaker B: Well, I know as Cindy mentioned there before as well, even if you were thinking, okay, well everything's pushing me towards establishing a factory in the US Even if you took that massive step, which would be a huge decision to take a number of years, you would have no idea how much your import costs might be and what regime they would be imported under. So that's, I don't know. Cindy, let's finish up a strategic look at global trade. Just a big one for you to finish on. Does all this mean that the current US policy is putting a big full stop on the post World War II trade in system? Do you see this as a new dawn, a new era of trade and geopolitical relationship? And if you do, or maybe you don't, maybe you just think it's total chaos and it might all come to an end at some point, the nightmare ends and we all wake up. But if you do, what does the future look like as we roll forward and how should businesses prepare for it?
[00:45:10] Speaker C: So I think you're exactly right. It's all of those things. It's chaos, it's change. A massive change in the way trade works. But I think we had post World War II free trade, free trade was a big thing. You know, GIs coming back from traveling the world saw a lot of opportunities in the world for global trade. And then post 911 we moved into a secure and fair trade area where there was much more emphasis on security. But still trade was important. It's facilitation. You know, we want to have fair trade. And now what I see is just enforced trade and heavy compliance focus. I think that we are moving into a new paradigm at least for the next four years and most likely even after that. Because it's hard to adjust to something after four years rather quickly and draw back things that are rolled out, especially when a large portion of the country feel that it's justified. Now that may change in the next, next, you know, a little less than four years, but we'll see.
Facilitation is not a welcome word right now in, in any administration discussion. So it's all about enforcement and compliance. So I think it's important for trade to understand again, know your supply chain, know what your data is, know all the way back to the origin. There's lots of technology companies that are perfecting this. Go Talk to several and see what they can offer you. Develop options and plans even if you don't carry them out. You know, if you know, let's say you move that plant to India and in three years India becomes the target, what happens then? Will you have regretted, you know, putting all your eggs in one basket again? You know, so those kinds of future forward discussions and strategy sessions need to be had right now so that you know what your options are. Don't do anything rash immediately because you don't know where this administration is going next. I would, if I owned a plant or a company, I would hesitate to just move everything. I would see how I could lower duty rates, lower my transportation costs in my current infrastructure so that I can make those changes.
Focus on compliance. Absolutely. Everyone needs to be doing a risk assessment right now. You need to know where your liabilities are, what problems you have. Do an internal audit of your processes and procedures because I'm going guaranteeing you where the only, where the only area we are seeing increased staffing is in compliance at customs. So you know they're going to look. You better look and know what you have before that.
I've heard a lot of talk about and I don't know if I subscribe to this or not, but I've heard a lot of talk about most of these changes are going to happen in the first year. They want to have the pain in the first year because if you, you know, follow the news, you heard Musk and you heard the president refer to we're going to have a period of pain, but then it's going to get better. The plan seems to be to roll out all of these big impactful things in the first year so things will normalize over the next three years. So that's why I'd give it a good year before people make massive changes unless it makes sense for you and your company anyway. So focus on compliance, get the data and stay calm. You know, the. What is that famous English saying, you.
[00:48:46] Speaker B: Know, keep calm and carry on?
[00:48:48] Speaker C: Yeah, stay calm and carry on for, for a year. You know, have a, have a cup of tea and chill out for the next, you know, 10 months and then reassess.
[00:48:57] Speaker B: We all keep calm here. Greg, are you feeling calm about the future? Is your English environment and those rolling green hills bringing a sense of becalmed, Mr. Nolan?
[00:49:09] Speaker D: Yeah, I'd be feeling a lot calmer if I was a technology provider because I think they are going to score out of all of this. But I mean, to the final comment, just, you know, it's the uncertainty here that is the killer. If there are 50% tariffs on a particular product, you know, make the ruling, give the market a date and let's move on. But don't give a deadline, then extend it, then remove the tariffs, then threaten to bring them back at 200%. And that just makes it impossible to plan for. And freight buyers absolutely hate that.
[00:49:38] Speaker B: Okay, thanks, Greg. After a short message from our sponsor, dimeco, coming up next is my exclusive interview with air cargo legend and Mass Air Cargo airline CEO Robert Van Der Weg. But for now, well, the lady who clearly should be running customs compliance for this Donald Trump administration, Cindy Allen, CEO, Managing Director at Tradeforce Multiplier. I'm Greg Noller, senior editor for Europe at joc. Thanks for joining me today on the Freight Buyers Club.
[00:50:06] Speaker C: Thank you.
[00:50:07] Speaker D: Thanks, Mike.
[00:50:11] Speaker A: This podcast is proudly produced in partnership with Demerco Express Group, a trusted provider of global shipping and contract logistics services in Asia, Europe and North America. Demerco's particular strength is in Asia where it gives shippers the freight capacity and local market expertise to streamline freight movements to and from the region, particularly for trans Pacific lanes. With 130 forwarding and logistics locations across China, India and Southeast Asia, Demurco connects Asia with the world like no other. Global3PL. You are listening to the Freight Buyers Club.
[00:50:46] Speaker B: Welcome back one and all. As promised, my next guest has seen it all in air freight. He started and rapidly rose up through the ranks during the halcyon days of 1990s KLM Cargo. He has since held senior executive roles at Airbridge Cargo, ECS Group, Atlas and Cargo Lux. That's a very much a who's who. He's the current CEO of Mexico cargo airline Mass, formerly known as Mass Air. Yeah, so basically he's seen it, done it and he's got the T shirt when it comes to air freight. ROBERT Van Der we're the Freight Buyers Club.
[00:51:22] Speaker E: Thank you very much, Mike. Really the pleasure and honor to be here with you.
[00:51:25] Speaker B: Robert. I want to run through your career in a moment and we'll look at the current market as well. But Fay, as you recently joined mass, which is based in Mexico, what was the attraction? What fleet are you operating on, what routes and what what's your target market? Well, I suppose I'm basically asking you to explain your business, please.
[00:51:46] Speaker E: Yeah, well, thanks for that. I mean, well, to your first point, when I was approached to join mass, of course I thought long about it because it meant moving to Mexico and being further away from my, my family and, and especially my mother with whom I'm very close. But I did it because I really believed in first of all in a company and I'll explain that. And, and secondly, for me personally it was like yeah, a sense of achievement after my career to be in charge of an airline, which is something I always had the ambition for. And yeah, as you said, I mean I had quite a rich career and I saw a lot of companies.
My career knew good moments and also not so good moments. But you know, all in all I saw a lot. But I was never really in charge of an airline. By the way, I do believe that, you know, authority is not necessarily the thing I'm looking for. It's more the responsibility to work with the team, to work with the shareholders, to step by step make this a success. So this was for me the real driver to make the step and to move to Mexico. On your other question, I mean. Well, Mass is a. Yeah. Is a well known name in the industry. It has a very good reputation. I think it's been. Yeah. In the past been run of course by, by Louis Schiela who was at the inception and later on Andres Fabre my direct predecessor. Yeah, they really did a great job in establishing the, the airline and you know, making the brand known. Basically we are an a Mexico based airline that is operating A330Fs. Our total fleet currently comprised of four airplanes, we're going to five next month and we have basically two business lines. One is well charter programs. So we run a charter program out of Europe for a customer that is big in fashion and we run also e commerce flights from China to Mexico. Those are long term programs and then next to that we have a scheduled business which is doing very well where we basically connect the US via Mexico to Latin America and vice versa. So we're, we're a scheduled business airline. We, we fly to, to Brazil, we fly to Quito, Bogota, Panama and LA in the usa.
[00:54:02] Speaker B: So quite a varied business then.
[00:54:04] Speaker E: Yeah, but the issue is that of course the airline is not in relative terms, not that that large. What I found here in the first two months is that it's a very capable airline. If you look at all the key capabilities, commercial maintenance, very important flight operations, it's a very professional airline with very good people, experienced people. It's the real cargo DNA. Right. To, to be quick and to be reactive. All these ingredients are there. I think the key challenge for the airline will be to grow because any airline, you know, benefits from better economies of scale and of course we Become more relevant for our customers. So this is one of the key priorities for the years to come to, to grow the fleet and to achieve that goal.
[00:54:46] Speaker B: What's the timeline for growing the fleet? Because I think there was plans previously during COVID peak to quite significantly expand that seemed to be reined back according to my research at least. What's the plan now?
[00:54:58] Speaker E: Yeah, Mike, you're right. I mean, well, essentially what has happened is that the Boeing 767 fleet was returned and the decision, strategic decision was made to go for the A330F. So of course this led to a bit of a setback in terms of fleet size, but strategically important to safeguard the long term profitability of the airline. So well, the plan is to grow. I have to also say that in general at the moment the, well, the widebody freighter market is very, very tight.
I remember the days when I was in cargolux and airbridge that was the reverse that it was. Actually the reason is that we're short of airplanes right now is that for about 10 years, say between 2009 or 8 and 2020, you know, there was, it was very hard to make healthy margins with freighter airplanes. So as a consequence the 7 for 7 days 8 program, well, it took off, but it never really flourished the way it could have. And therefore also new Theta programs were delayed and we are now in the situation. Well, we're now living the consequences of that. On top of that, the passenger business is still very good. Boeing and Airbus are facing delays in also delivering passenger airplanes. So there's also not enough feedstock of wide body planes to the conversion lines. So long story short, there's basically a shortage of widebody faders. So when I say that we want to grow, this is the goal, I'm quite confident that we should be able to grow by one unit a year over the next couple of years. But were subject to board approvals and finding the right candidate of airplane in terms of vintage and lease costs. But yeah, this is the goal. But I've been telling you it's not easy because again, there is a general issue on availability of widebody freighter airplanes.
[00:56:44] Speaker B: You mentioned there that the widebody market is relatively tight now. I mean it was very tight during part of 2024 sometimes quite surprisingly a lot of this was due to E commerce growth. So one of the markets that you mentioned just earlier, just previously on the podcast, before you joined us, Cindy Allen was talking about what's going to happen, how tariffs might affect air freight and de minimis changes in the US And Greg was saying we're looking at a slightly softer market this year. How will that affect you guys? How are you viewing 2025 as a market and where do you see opportunities for mass?
[00:57:18] Speaker E: Well, I think, I mean the market in Q1 has maybe been a bit more nervous than the year before, but generally still quite healthy. Of course there are certain scenarios that could unfold that would make the market worse in general. Right.
For example, if in the USA there is a, there is a cutback of E Commerce because of certain regulations and duties, this could impact the. Well, the topic I just referred to. Right. So that could mean that there will be more widebody airplanes available, whereas currently everything is sold out. That could happen, but we have to wait and see. I mean we've seen over the last couple of months already that yeah, there's a lot of back and forth on these kind of topics and we need to see how it really unfolds. So time will tell. And I think, yeah, it's exciting times and we have to see in our specific case for mas, I'm relatively confident because I mean we have of course a market in Mexico which is strong for both E commerce but also general cargo and we connect with our network, we connect, you know, South America to the US and back and forth. So we got a good spread of markets. We're not depending on one market and one specific commodity.
So I think if you look at our network and the underlying markets, I think we are in relatively good shape even in scenarios that could be, well, maybe more negative for wide body plants going into the usa. Also, I want to mention that in my experience, when there are external factors kicking in, for example tariffs or geopolitical issues or what we saw it with COVID too, maybe not maybe completely comparable. But in general, in my experience, when there is disruption, at least on the mid to the short to midterm freighter airlines tend to benefit, particularly the ones that have this flexibility and ability to adapt. Because when supply chains are disrupted, I mean people still have to live to enjoy. Yes, they may spend a bit less but still life goes on. So again, I think for us there is always going to be the two sides. We may get hurt in certain places, but I'm really convinced there will also be a lot of opportunity for airlines like us.
[00:59:26] Speaker B: Would you be hurt anywhere in particular, as far as you understand at the moment by being a Mexican operator? Maybe if there was tariffs between the US and Mexico? Or is most of your business into the US bypassing Mexico?
[00:59:39] Speaker E: Well, we, we of course have business between Mexico and the US Particularly on the automotive side. Having said that, we also have abilities to compensate for that because we, a big chunk of our business going to the US Is related to flowers and vegetables from South America. So again, our network, I think, will be able to cope with a reduction in volumes between Mexico and the US should that occur.
Because the other markets that I just referred to are actually frozen flower markets are strong, perishable markets are strong in general. So, well, there's Mexico, but of course we also serve a lot of other countries in South America. So I'm not, not overly concerned about it. Of course you need to always, you need to always worry, right? You need to always think about what could happen and anticipate. But in our view, we will be able to cope with that. Of course, we do not know the extent of how those things could escalate. I mean, in Holland we have a saying that. I don't know how you say this in English and maybe it's like, chances.
[01:00:41] Speaker B: Are I probably won't either.
[01:00:43] Speaker E: Okay, well, I'll try anyways. Right, so there's a Dutch saying is that the soup is not, not eaten as hot as it is served. The point is that there's a lot of rhetoric and a lot of things, but we need to really see what really happens down the line. So that's weight. But I'm not, not overly concerned now.
[01:00:58] Speaker B: Okay, so what, you plan as much as you can, but it's a case of you just don't know what's going to happen. So you know, you've got your plans, but you'll have to be lighter on your feet, presumably. Yes.
[01:01:07] Speaker E: And in the worst case, when things really again, there will be a lot of opportunity because supply chain disruption, in my experience, means opportunity. So then you need to have a cool head and with your commercial and operational teams, need to tap into those opportunities. But even in that worst case for a freighter airline, there will be plenty of opportunity, I'm convinced.
[01:01:28] Speaker B: Can I just wind you back slightly and draw on your deep well of knowledge, particularly over the last, the last few years. I think you're at ECS group for this period, but just talking on a general level, really. And unless you want to talk about your time at ecs, I'm just thinking, how do you think about those last few years? So say since 2020 for air cargo and for general trade versus the rest of your career was we, you know, we've had so much happen. We've had airspace closures, geopolitical unrest, wars, trade wars. And then of Course, Covid. Do you see it as sort of pre Covid and after Covid and. Or am I forgetting that there was disruptions before? I know there was disruptions before, but it's just been been an endless succession of them, hasn't it? Is it a different part of your career? Is that how you see it?
[01:02:15] Speaker E: Yeah, well, you know, it's maybe funny or not funny at all. You know, when I look back at all those years, I somehow managed to be in all cargo airlines when the time was the worst. So. And I've been there quite a long time because I was at klm, let's say when the first call it boom. You know, with all the semiconductors to high tech in Southeast Asia and general, you know, trade growth in the 90s. Right. When I was at KLM I was not at a faith airline, of course KLM, you know, when I was living in Asia, we enjoyed that. That was great. We did a lot of freighter flights as well. But, but when I joined Atlas and then Cargoly, which actually this was probably the period on average that was, wasn't, was overall not so great. Of course the good side of that is that you get very well, very disciplined and experienced in how to deal with. Because say the last two years it's not really complicated, right to manage or to market a freighter airplane. So I'm not saying that was bad for me. Maybe from our experience was great. And now indeed we live in different times. Of course. The question is how long will they last? As I said earlier on, I mean there is a shortage of planes. I don't think that this shortage will easily be solved even if E Commerce gets a bit of a setback. I think the underlying issues are so strong. You know, they're currently 747 planes built in 95, 96 that are flying 480 hours a month, you know, and that are, are heading for their, their fifth or sixth D check. You know, there is a lot of, I mean the industry never anticipated this to happen and I do not believe that the underlying consumer trends can be completely blocked simply by regulations. Growth may be more subdued than before, but I still believe that the supply demand factors probably will lead us to a couple of more reasonably good years for the freight business. Well, at least I hope so. But yeah, rationally I do think that is quite likely.
[01:04:14] Speaker B: I interviewed Jan Krems, who's now the president of United Cargo earlier this year. Unlike you, he's got this storied career in international air cargo. But it all started at KLM and he was very engaging and very persuasive about explaining what a great place it was to learn the trade, how it has really shaped how he's approached the rest of his career. Was that your experience or. I mean, you also spent a decade at cargo logs later on as well. I mean, how do you look back on those experiences? Very different, I guess.
[01:04:50] Speaker E: Yeah, well, I mean, Jan is a great friend and, and we, you know, the big thing in KLM was, I think first of all, we were friends. I mean, maybe it helps that you're working with a couple of Dutch guys, right, that are. We had all these, these trainees that were brought in and then we're just having a great time. We understood each other and, and the great thing about KLM was that we were all given chances. I mean, I was 26 when they sent me over to Singapore. I mean, can you imagine? I, I just had two, two years before I finished my studies, right. I still felt like student really, you know, and then suddenly you're in this position. And of course I fell on my nose a few times, but I learned so much. And the same applies to Young Clamps, Michael Steen who was at Outlaws, Cornell Costa who was at Virgin and many more. Franz Muller who left the industry, but who was the CEO of Ahold has in Holland. I mean, we had. And there's many more, I forget many. But. Well, the pity for KLM actually was that they had all these talent and it gave them all the chances. It's not that we were per se special. I mean, we just got a lot of chances and experiences very early and KLM could not really benefit because if you had all these people, I mean, where are they going to go?
[01:05:58] Speaker D: Right?
[01:05:58] Speaker E: Adrian Den Hayer, he's now the chief of Air France KLM cargo. He's still there. He stayed around and made a great career there. But actually it's a shame because all these people that KLM invested in and sending them to Singapore, Dubai, usa, God knows where, you know, the KLM didn't really benefit from, from that. For me, I, I really learned a lot at klm, particularly internationally, management wise. But then in. I really learned because if you're in klm, you learn all about marketing and you know, how to deal with customers and revenue management, ground operations, that's all fine. But of course the maintenance and the flight ops is far away because that's run by the mother airline, right? So that's not the best place to learn these kind of things. So when I was with Outlaws and cargolux. I really got deep knowledge there in terms of economics of an airplane, comparing airplane types, maintenance, flight operations, flight duty time, regulations. I mean, all the nitty gritty of running an airline. That's what I learned. That's what I learned there.
[01:06:58] Speaker B: Well, when you move to different companies and there's different nationalities, right, The Dutch people, if I don't mind me saying, they have got a reputation, which is also my own experience with a lot of my Dutch friends of. You're never left wondering what they think. Put it that way. You're going to get told straight when you're working with a whole load of all the Dutch people. That must be quite pretty easy if you're all used to it. Is it? Do you have to change slightly when you're working with people from different backgrounds? And you have to adapt? I mean, I like working with Dutch people, so.
[01:07:29] Speaker E: Yeah, no, you're absolutely right. I mean, well, you can never change your character. Right, That's. That's for sure. But you do tend to get a bit more sometimes. Yeah. Can I say elegant A bit more in how you, how you approach certain things.
[01:07:42] Speaker B: Diplomatic.
[01:07:43] Speaker E: Diplomatic, yes.
[01:07:44] Speaker D: Maybe that's.
[01:07:44] Speaker E: That's a better word. Yeah. So, for example, in Luxembourg, I learned that when you have a sensitive issue to discuss with one of the colleagues, you know, maybe it's better to have a nice lunch and discuss things, you know, at ease. And I learned that. Really? And it's very effective because, yeah, in Holland, we tend to go to the canteen and have sandwich with cheese and a cup of milk and we just say straight what it is. And. Yeah, that doesn't work everywhere. Right. So you realize that quite quickly that, that. And, and, well, I worked in Asia, in the US now in this part of the world, in the Middle east and in Russia. So, you know, you learn that. Yes, and, and. But you can never change yourself, right?
[01:08:26] Speaker B: No, I've been. I've been told to change myself many times and I'm. I'm just stuck. Stuck where I am.
Robert, looking back over your career again, I mean, is there anything in the industry that surprises you over that period? I'm thinking maybe in terms of service or the technology adaptation, is there anything that air cargo isn't doing that? Maybe it should if the end buyer is to get a, a better service. Do you have a go? How. How the hell. Over 30 years. Aren't we doing this better?
[01:09:00] Speaker E: Well, of course. I mean, it's affected that cargo for a long time, has been, for many airlines, has been a byproduct Right. So it never, the, I mean exceptions of course are always there, but never got the investment for people. And also let's say digital investments and I think in the last couple of years we see much more of that. So you see now the, the evolve, evolving of the, of the platforms, of the digital platforms. But there's also very qualified companies nowadays that consult cargo airlines, companies like Rotate or Accenture and, and Marco Blumen with his new company.
And they have business. Right. So there's a lot of investments going on right now in knowledge in the industry. There was not really so much taking place before and investment in digital. Having said that, I always got a bit irritated in the past when people were saying, well our cargo is a, is a backward industry and these kinds of statements because cargo and no matter how much technology we add to it and that makes our life more efficient and with better quality, it's still a people's business. And some people, when they hear this, there's another guy like that, but it's a business to business market and, and the customers, they really, they want this personal contact because contrary to buying a seat or a bunch of seats on an airplane in, you know, this business requires this personal interaction because there are so many variables that are gonna, in terms of rates, in terms of volumes, in terms of network that customers left to rely on the airline that they think there's a person there that I can deal with for better or for worse. And this is happening at the top level of the airlines and the customers, but also the levels below also in a specific station in Guadalajara, in Amsterdam, you need this interaction and airlines that in my opinion go too far in depersonalizing the business. I don't think they're going to succeed. I think the digital developers, it is a tool to make things more efficient, more reliable so that people can focus really on, on the more important things. But I'm really convinced it was and will be a people's business. And therefore, yeah, as I said, I mean some people, they make too easy conclusions saying, you know, it's backward because it's personal, but it's, it's the essence of this business.
[01:11:22] Speaker B: If we're talking 10 years from now, do you think you'll still hold the same views that the core of this business is about the people? It won't be about AI, it won't be about digitalization. It's still going to be about the people.
[01:11:35] Speaker E: I'm convinced, I'm 100% convinced. Of course, there may be less need for people to do day to day transactions, invoice checking, even quotations. I mean there's a lot of things that can be and should be digitalized, right? But it's so that there it's like in any industry.
And by the way, I do think that it's not just the platforms that it ends there. I think in the end it will be artificial intelligence, proprietary or to an extent, well, using tools like OpenAI but still making it tailor made for each airline, algorithms, et cetera, that will drive a lot of what we do. I think the platforms are just a step in that direction, but it's not the end game. But on top of that there will always be people that drive have the relationship. The human brain can deal with endless more variables and sentiments and feelings and perceptions than a computer ever can. And this continues to be a key thing in this business.
[01:12:33] Speaker B: Robert Van der Weg, CEO of Mass thanks for joining me today on the Freight Buyers Club.
[01:12:38] Speaker E: Great Mike, thanks a lot. And thank you for your time as well. And we stay in touch. Thanks everybody for listening.
[01:12:46] Speaker A: We hope you enjoy if you enjoyed this episode of the Freight Buyers Club, produced in partnership with the demurco Express Group, please subscribe and follow on your platform of choice or sign up for delivery to your inbox@the freightbuyersclub.com this podcast wouldn't have been possible without the fantastic editing of Karen Ball and Tom Matthews. And finally, thank you all for listening. The next episode will be with you soon.
