March 13, 2025 • 51 mins
In this episode of Logistically Speaking, Scott Case and Cameron Roberts sit down with Brandon Fried, Executive Director of the Airforwarders Association, at AirCargo 2025 in Dallas. Brandon shares his insights on the current state of the air cargo industry, critical challenges facing forwarders, and emerging opportunities in a changing global landscape.
This episode was recorded on Sunday, March 2nd and at the conference, the imposition of Canadian, Mexican and Chinese tariffs were discussed, came into existence and then in the case of Canada and Mexico, were partially removed two days later on USMCA-qualifying goods.
Key Topics:
- The evolution of the air cargo industry and the shift to multimodal transportation
- Impact of potential tariffs on trade with China, Mexico, and Canada
- Changes to de minimis regulations and their effect on e-commerce
- Air cargo security developments since 9/11
- Infrastructure challenges at U.S. airports and the AfA/NCBFAA white paper initiative
- Future of air cargo including autonomous aircraft and the need for freighter capacity
About Brandon Fried: Brandon Fried was appointed Executive Director of the Airforwarders Association in November 2005. He began his career as a sales representative in Los Angeles before moving to Washington DC, where he owned and operated the Washington office of a global freight forwarder specializing in time-definite air cargo transportation. Brandon joined the Air Forwarders Association in 2000 and was elected Chairperson in 2001, serving for two consecutive terms. He has served on the Aviation Security Advisory Committee, COAC, the CNS Advisory Board, and numerous other industry associations. Brandon brings decades of hands-on experience in the forwarding industry and continues to be a leading voice for air cargo interests in Washington.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:00):
My name is Scott Case. I'm Cameron Roberts. And this is Logistically Speaking.
(00:10):
Well, you can tell from the background noise that we're not in your house getting work done.
It could sound like my house sometimes, but it's definitely not.
No, no, no, definitely not. We are blessed to be on the expo floor of AirCargo 2025,
which is happening March 2nd through the 4th in Dallas. So by the time you hear this,
(00:30):
the event will have taken place. But it's going to be an interesting couple of days here,
and we're very fortunate as well to be able to have one of the three coordinating members of
the AirCargo conference of this event here with us, Brandon Fried. We're going to be talking our
way through Air cargo issues. I mean, there's a bevy of things in the regulatory space, in the
trade space. And with your firm, what do you guys do with Air Cargo? I mean, what are some of the
(00:53):
things you're engaged in? So what we see the most of is cargo claims related to the Warsaw Convention,
Montreal Protocol, and the Montreal Convention, which is the ultimate successor to these,
and the most common convention that you'll see if there's litigation about who dropped the box,
who stole the box, this type of thing. So that's a very, shall we say, clear area where the firm
(01:19):
gets involved. But we also do air charters and also work with different ground handlers and different
scenarios. And it should not surprise you that there's not a ton of litigation over it anymore,
because the nice thing about air transportation is there's a global treaty that the United States
(01:39):
is recognized and is participating, a high contracting party, and that makes things
known. And because the rates are, I think, per kilo, something that people can live with,
you see a lot of settlement of claims rather than litigation over claims. You tend to see
the litigation in the space where we can't figure out what happened. And I've got one of those
(02:02):
right now where there is a ground handling operation. We took an exception, picked it up
at the ground handling operation. We trucked it to the Constantine's door and they came back and
they said, hey, this is damaged. We're rejecting it. And I'm like, well, how hard is this? This
we took exceptions at the door. And it was on the terminal at LAX where we took the exceptions.
(02:25):
And so you'd think that'd be rather straightforward. But what we have subsequently
learned is the ground handler gave the cargo after it arrived to somebody else and it went
to an inland warehouse in Rancho Dominguez and came back. And now we've got a lot of finger
pointing about who gave it to who and why and what happened while it was on its little
(02:47):
side hustle over there, a little side trip to Rancho Dominguez. So it will be interesting.
I have no doubt about that. The air cargo industry has never been stronger.
The air cargo industry is in peril. The air cargo industry is ripe for innovation. The
air cargo industry is at a crossroads. And let's really just have a laugh at it because
the air cargo industry always feels like it's ready for the next big thing.
(03:11):
I mean, it could be the air cargo industry is ready to be fully digitized on the blockchain
and powered by sustainable fuel and pilots are going to be a thing of the past. And, and, and,
and, and. And I think the point is that both in the US as well as across the world, there's a
bevy of issues that the air cargo industry is trying to work through, all of which at any given
time or inflection point could be the most important. Just a short list that we came up
(03:35):
with in no particular order. Tariffs, I mean, which is just a drinking game right now. I mean,
it's a steady state of tariffs, changes taking place at the FAA, changes in the
de minimis regulations, a potential realignment of global alliances, infrastructure investment,
extreme weather and geopolitical events, which drive the need for more relief shipments to
(03:56):
more places. And that's just, I think, scratching the surface. And with all that having been said,
I think that there are fewer people better equipped to talk about these things and other
topics than our guest on today's episode, Brandon Fried, who is the executive director
of the Air Forwarders Association, the voice of the air forwarder in the United States.
Brandon was appointed to serve as the executive director of the AFA in November of 2005.
(04:19):
He started his career as a sales representative in Los Angeles, moved to Washington DC, where he
began, owned and operated the Washington office of a global freight forwarder that specialized in
time-definite air cargo transport. In 2000, Brandon joined the Air Forwarders Association
and was elected chairperson in 2001, talk about timing, serving for two consecutive terms.
And in August of 2005, he sold his company and was a freelance consultant for a few months
(04:43):
because who doesn't, until his appointment as the executive director of the Air Forwarders
Association. Brandon has served on the Aviation Security Advisory Committee, moment of silence
for that. Thank you. COAC, the CNS Advisory Board and countless other industry associations.
And let's face it, if you want to talk air cargo and you're in the United States,
(05:03):
Brandon Fried's the guy you call. Hi, Brandon. Hi, Scott. And welcome to Dallas. Welcome to
AirCargo 2025. It is absolutely wonderful to be here and thank you so much for hosting and
putting on this event. Full disclosure, Brandon and I have known each other for probably all of
those years because I was fortunate for a period of time to be the air freight chair of the NCBFAA.
(05:26):
And Brandon and I worked collaboratively with the TSA in its early days in setting the rules
and regulations that govern the modern day indirect air carrier security programs that we have today.
That's right. Shortly after September 11th, around the Gore Commission days. Yeah. I think I may have
even had hair back then. So yeah, it's been a long time. It's been a week or two. So we're here
(05:53):
in Dallas for the AirCargo Conference. Tell us about the AirCargo Conference. Who comes to this
thing? How long has it been going for? Give us some background on it. So this conference was
started back in 91 and they called it the Air Freight Management Conference and Exposition.
And over time it morphed into Air Cargo. And it's a yearly event and it has grown ever since. This
(06:18):
year we've got, as of this morning, 988 registered attendees and we'll likely have about 100 people
that show up off the street tomorrow morning. And we have 101 exhibit booths. It's a significant
conference. We have freight forwarders, we have trucking companies, we have software providers,
(06:38):
airlines, you name it. Everyone's represented here. And we're very excited about this year because
we have two keynote speakers this year. Great. And what do you attribute the diversity of
people that attend the conference? I mean, why do you think Air Freight is unique in that respect?
Yeah, because it's not just air freight, it's logistics. We're all involved. We happen to use
(07:00):
a lot of airplanes, but that's not... An air freight forwarder is really a misnomer now.
Find me a forwarder that doesn't offer surface transportation and probably that's a forwarder
that's not going to be in business long. So that's kind of what we're all about. We just
happen to use a lot of airplanes as well. And there's a lot of support that goes with logistics
(07:21):
nowadays. Everything starts and ends on a truck. We're starting to move more into automation. So
we have technology providers. Of course, we have the airlines with us. We have some seamstress lines
that come in. Anyone who's anyone in moving boxes is here. And this is a great conference for us to
(07:43):
meet people from Washington. We have regulators that come in just to be able to sit and talk
about significant issues. And hey, we all know we have a lot of issues to talk about this year.
No shortage. No shortage. No shortage of issues. And it's funny, as you say that,
we're looking at Booth gets stood up over to the side of us and there's icons for a plane,
a boat, and a truck. Definitely in that multimodal space. There's no question about that.
(08:08):
So you were a forwarder and every forwarder has a great story to tell. Do you remember a fun one
from cargo that you moved or something that was crazy or that you've had a member come up to you
and go, boy, let me tell you about this crazy project? As I tell people, I'm a recovering
freight forwarder. And yes, but I remember one where, you know, I started out in this business
(08:30):
right out of college. I graduated from Syracuse University in 1979, took a job with a small freight
forwarder in Los Angeles, and they specialized in high value artwork and, you know, shipments.
And one day I showed up on Rodeo Drive because I had a silversmith as one of my clients.
(08:51):
He would come in, buy things, and I would ship them. And one day there were these two brothers
sitting in his office, and they introduced them to me, and they were the Hunt brothers.
And they had come to Los Angeles to buy every piece of silver that they could,
(09:11):
and they were cornering the silver market. And so that night they said, we'd like you to,
once we get this packed up, we'd like you to escort it personally to Dallas. So that night
we bought out the belly of a Delta Air Lines L-1011. Remember the L-1011 wide bodies? They
(09:31):
flew them all the time. And I was aboard. I was out plane side, ramp side, as they loaded the
aircraft. We flew to Dallas that evening and met the Brinks people there. And these guys were just
storing silver everywhere. This is what happens, you know. So, and then there was another time,
real quick, that there was a presidential debate. This is before a lot of technology
(09:55):
that we use today. They used to, back in the old days, the questions for presidential debates
were drawn up, or they were drafted in Washington. And instead of, you know, transmitting through
digital ways, they would put them in an envelope and give them to an onboard courier.
(10:15):
And that particular year they had the debate at the Dorothy Chandler Pavilion in Los Angeles.
So, I got on a plane at Reagan, at the time National Airport in Washington, flew with the
questions. A man met me at the airport in Los Angeles and we both drove to Dorothy Chandler
Pavilion where I gave the questions to one of the moderators. And they opened them up and they
(10:38):
started the debate. Go figure. I still remember too, back in 2017, the keynote speaker was David
Charles Bernstein from Rocket. And when you and I went and interviewed him at that restaurant on
that rainy day in Philly- With the pouring rain.
With the pouring rain. We're sitting there on a patio and it is just pissing down rain outside.
And he told us a story about moving the music for Frank Sinatra's orchestra. That same sort of thing
(11:02):
where you talk about just like original stuff, like they have the spots. I mean, it was a funny
as all get out story. David just did the most amazing job. But basically, Sinatra had to cancel
a show at the Meadowlands because they didn't have the music for the local orchestra. And of course,
only Frank was the guy that could reschedule the Meadowlands. And I mean, David tells the story
better, but the punch line to it is he was worried that they did something wrong at his company.
(11:26):
And he's talking to Frank's producer or his manager. And the manager said to him point blank,
he said, listen, I didn't do anything wrong and you didn't do anything wrong. And the reason that
I know that is we're both still alive. There you go. But getting back to this
conference every year, we try to bring keynote speakers in who have a story. We've had local
(11:48):
heroes within the industry and just tell their stories. And we've had some really fun ones. David
Bernstein is just an example. We had Jim Crane. So this year we have a guy out of Northwest
Territories, Canada, Yellowknife, Northwest Territories to be precise. Mikey McBrien,
who's the son of the founder of Buffalo Airways. And you might say, well, who's Buffalo Airways?
(12:10):
This is a company that flies World War II planes. Now, these are not the planes that were made in
World War II. These were the planes that flew in World War II. And DC-3s, C-46s, DC-4s. Now he's
modernized the fleet. He's got L-188 Electras. I think the only two in North America. They just
(12:35):
bought their first 737-300 series. And they're flying throughout the Northwest Territories. And
he was actually, he was also the star of a popular television show that ran for seven seasons on the
History Channel called Ice Pilots in WT. So Mikey is with us and he'll be our keynote speaker. And
(12:56):
we're going to hear a point of view that a lot of us in the air cargo business never know here. So
we're excited about this. I'm curious how air cargo has changed in your mind in the last
decade? Because, you know, when I got involved in the industry and, you know, we're all here,
been doing this for 30 years or so. I mean, it was certainly you had to, you know, do your local
(13:19):
pickup and delivery and get it to the airport by the cutoff time and make sure the ground handler
had it. And maybe you built up your own LD3s or LD7s or whatever profiles that you wanted to
in order to get it into the aircraft. And, or maybe you put it on a truck and maybe you did
the forward air move with or midnight or one of the other predecessors that was around back then.
(13:44):
How in your mind has air cargo changed? Much more of a reliance on surface transportation. Back when
we were pups in the industry, you're right, everything flew. But then all of a sudden
things changed in September 11th. The flying of cargo became more challenging, if you will,
there was that security piece to it. But you had big, the large wholesale freighter airlines,
(14:11):
the Kitty Hawks, the Zantops, basically went out of business. And so companies like forward air and
Sterling and others started to offer ground transportation. Air Max. Right, right. They
offered ground transportation. There was much more of a reliance on that.
And then the integrated carriers started to offer wholesale services to the freight forwarder
(14:33):
community. So a lot of what, you know, the Kitty Hawks would haul of the past, would fly in the
past. Now all of a sudden UPS and FedEx and even DHL would fly domestically. So that kind of,
that really changed things, but it became a lot more challenging to get cargo into the bellies
of passenger planes. It's still done, but you know, everyone's got to be a known shipper.
(14:54):
Cargo has got to be screened. It's got to be safe. And, you know, we're about safety at the
Air Forwarders Association and, you know, security has become, has played much more of a prominent
role than it has in the past. And I think that's really created a lot of change in the business.
And then I think we have to look at automation and digitalization that has cut down on air freight
(15:17):
shipments in general. You know, the packets, the pouches that go out of law firms. It used to be
every night a law firm would send a box to their New York office or to their Los Angeles office.
It's not done as much anymore. It's all transmitted electronically. And that's taken its toll on the
air cargo business. At the same time, you know, there's still, it still flies, much more of an
(15:39):
emphasis on international cargo. That's still in the bellies of passenger planes. Half of the
cargo that flies internationally is flown by passenger carriers. 80% of it's managed by freight
forwarders. So that's what we've seen a lot of changes. Still very exciting business, by the way.
Well, I agree with you that certainly there's been a big divestiture, if you will, of the
(16:01):
airlines from, you know, they don't have the salespeople that they used to have.
They don't have the interest, shall we say, in pursuing the mom and pop shippers. And the
forwarding community has filled those gaps. And unless you're looking, I think most of the cargo
salespeople want to call in forwarders because they're handling all the paperwork for them.
You know, we've had airlines in the past, the passenger airlines, the popular passenger airlines,
(16:25):
everyone, many of them have tried to go direct to the consumer. But they have found that we've
all kind of found that's not what they do best. They do best flying airplanes from one airport
to another. And the freight forwarder will deal with the picking it up within the city,
the delivering it, the paperwork, the security compliance, whatever has to be done,
(16:46):
the banking, whatever has to be done. That's more the job of the freight forwarder. And airlines
prefer to deal with the freight forwarder. And now that we have such an over-encompassing security
regime, most airlines, or many of them, don't want to be doing business with just the occasional
consumer. They want to deal with the freight forwarder. And they tell these consumers,
(17:09):
go to a freight forwarder. Here's a list of them. You pick which one you want.
They all have agreements with us. Agreed. Especially, you know, they're not in the
business of having a dog kennel so that they can take care of the cargo and half a dozen other
nuanced ways of moving specialized goods. And you got to remember something else,
Cameron, you know this, is that the relationship between the freight forwarder and the customer
(17:35):
is, it's very personal. You know, there's report, there are a lot of freight forwarders. Here in
the United States, there are 3,500 freight forwarders that are registered with the TSA.
There must be 100,000 freight forwarders internationally. And they all have their
business niches and they have their relationships with their customers. And airlines just can't
support those relationships. And the freight forwarder doesn't pass.
(17:58):
We see it too in the ocean space. I mean, there's just certain times that the carriers want to
have that direct relationship and sign with that PCO, but it's really to their best interest.
If they were trying, and the way they've sort of thinned out their customer service teams,
they don't have the people or the processes in place to handle those onesie twosie shippers
anymore. And VOCCs exist for just that reason, to be able to support and broaden those counts.
(18:22):
You talked about security, Brandon, and we certainly saw the evolution of it in the time
that we were working together. We have seen the advent in the addition of both pre-departure
and pre-arrival filing requirements. I remember both of us together and working with it at the
time, a gentleman who works with the AFA, Doug Britton. Doug was in charge of air cargo at TSA
at a time when somebody tried to put printer cartridges into the air cargo supply chain,
(18:47):
and those were caught. Most recently, we saw stories about Russia testing,
sort of doing the raptors at the fences thing, trying to find places that, which again,
got the air cargo supply chain up and worried. As we look at these reporting requirements,
with the idea of being technology to exist as a screening thing, the known shipper,
the people knowing who they're working with, do you think that those started from here in
(19:10):
the United States and other people adopted them? Or is there sort of a mutual recognition on either
side of an air cargo transaction going, we've really got to have this in place for the security
of the people at origin and destination, and they're just underneath the planes as
they're flying all together? I would say that prior to September 11th,
we saw a lot of overseas initiatives and security to greater and lesser extents. But I would say
(19:33):
that after September 11th, the United States certainly took a leadership position in it.
With the Air Transportation Security Act that was passed in what, 2002, that established TSA,
we really became the trendsetter in security and the rulemaker. We sit at a lot of meetings at
TSA in Washington, and I've kind of over the years realized that these people come to the
(19:57):
U.S. and say, whatever you want us to do, we'll do. Not only just to continue trading with the
United States, but because the United States does very well at protecting its borders,
you can argue all day long about the porosity of borders and people coming in, but the reality is
we're good at keeping things off planes that shouldn't be on planes. And we operate on some
(20:17):
very strict security programs here in the United States. TSA has 500 inspectors whose job it is
just to focus on the freight forwarding community and freight forwarders. That's an enormous amount
of people, and they are in our offices constantly. And it can be a very expensive day for a freight
(20:37):
forwarder if you don't follow those rules. And many have not, and as a result, have left.
At the Air Forwarders Association, as soon as Doug Britton left TSA, we grabbed him and he's now on
our staff. And we spend a lot of time engaging with the TSA. And we represent the freight forwarders,
but the person sitting next to me lost her husband on Pan Am 103. We have victims rights groups,
(21:02):
we have flight attendants, we have pilots, we have all the stakeholders that sit and advise
the Department of Homeland Security on aviation issues. So one of the things we've learned is
that, especially after September 11th at the Air Forwarders Association, you got to be at the table.
And if you're not at the table, you're on the table. You don't want to be on the table.
(21:24):
I mean, other places you don't want to be, you don't want to be named in a Justice Department
press release, which a number of forwarders have found themselves in as well. And it's just,
it's your, that's not one you're usually going to win.
Well, looking to the future in 2025, with all the tariff noise, because at this point,
it's a very fluid situation. And while we have a number of presidential proclamations,
(21:45):
we have executive orders, we have memorandum, we have interviews, we have, you know,
true social, all of the above. Where do you see the air cargo industry going in 2025,
in the first couple of quarters?
Well, there'll always be opportunities. And, you know, there've been a lot of executive orders
signed by President Trump. But there are some proposed initiatives coming out of the White
(22:11):
House that we have some concerns about, not the least of which are these tariffs. First of all,
I want to be clear about tariffs. We think tariffs are essential. They're an essential tool
in balancing trade. You need to have them. But when you start talking about 25%
tariffs on our closest trading partners, Canada and Mexico, and then of course,
(22:31):
China as well, you're really going to have an adverse impact on air cargo flows, you're going
to have an adverse impact on trade flows, I think, in general. And that's a big concern of ours going
forward. We think that, you know, we want to keep freight moving. We want to keep commerce moving.
And not everything can be made in the United States anymore. The ship has sailed, so to speak.
(22:53):
And the reality is, is that, you know, that's not everything can be made here. And it's going
to take a long time. It took China 40, 50 years to ramp up their manufacturing. I know the White
House wants to shift manufacturing to places like Vietnam, Cambodia, and Thailand. And yes,
that can be done over time. But, you know, and India as well. But it's going to take some time
(23:15):
to get that done. And so I'm concerned not only from an air freight perspective, I'm concerned from
a commercial perspective, an economic perspective, and the adverse impact it could have on our
country going forward. I was curious to see, you know, some articles in the Wall Street Journal
talking about how people had nearshored bringing things predominantly into Mexico as a strategy
(23:39):
to deal with tariffs. Do you have a lot of members doing a lot of work between United
States and Mexico? And how do you see the, shall we say the relationship with Mexico impacting your
membership? Yeah, so the answer, the short answer is yes. We have many members who set up shop
along the border and are working in Mexico. We have many members who have invested in e-commerce
(24:05):
and are doing work in that area as well. Not all. I mean, freight forwarders are, it's a game of
niches. So, but at the same time, we do have members have made substantial investments in
Mexico. But I think we need to look at and see what the White House is trying to accomplish here.
I don't think this is a money move for the United States. I think what the President is trying to
(24:26):
do at this point seems to me is correct behavior. So as an example, you know, you look at Mexico,
they wanted to stop the trade flows coming in from China to Mexico, the cargo being
reworked and then brought over to the, you know, the U.S. border at a cheaper rate.
(24:47):
And the new President Scheinbein in Mexico pretty much put a stop to that with a 25%
tariff on goods coming in from China into Mexico. I think there was a lot of pressure from the White
House on that. When you look at, as an example, those four arrests that were made the other night
in the United States with those narco folks who had committed crimes, murder on the U.S. shores.
(25:12):
They brought those in. That's part of the negotiation. But I think that the White House
is using tariffs as the big stick, the baseball bat, if you will, to correct the behavior. And
then, of course, we need to be talking about fentanyl. Fentanyl is a big issue. I think the
White House has been blaming, they've been blaming the de minimis, the low value shipments coming in
(25:33):
for the precursors that are being transported into the United States that ultimately
build or comprise the fentanyl, which apparently killed 100,000 Americans last year.
It's a big concern. They're looking at the freight forwarding industry as an issue,
as a cause. We have to wait and see what it is. But I think a lot of these tariff threats
(25:57):
are being driven by that. And we'll see what happens over time.
And Scott and I have talked about this de minimis thing back and forth.
I don't think CBP liked de minimis ever. They always felt overwhelmed by the number of
shipments, the inability, the lack of uniformity. I mean, it's one thing to get a container load
(26:18):
full of footwear that's all somewhat the same. And now we're talking about getting things that
are an ocean freight or an air freight freighter full of 100,000 packages of anything from a hair
clip to a scrunchie to a t-shirt to a laptop. And so what's in there? And it's hard to know.
(26:38):
The online ordering horse, as you will, has already left the barn.
The American consumer likes to order online. We saw that during the pandemic. And, you know,
I sat at the table because I was on the CBP's commercial operations advisory committee,
the COAC committee, when the de minimis was being crafted, if you will. And I knew that
(27:00):
the express operators, the FedExs, the UPSs, the DHLs, that, you know, that they were behind this
and they really wanted to get goods into the country quickly without the customs formality.
I will tell you that the de minimis right now in the United States is 800. It's one of the largest
in the world. But the average de minimis shipment coming into the United States, the value is $54.
(27:24):
That's what CBP tells us. But we knew that this would be a challenge for CBP. And CBP knew it as
well, sitting at the table, because there would be this onslaught, this tidal wave of shipments
coming across. And you would know what was in every single shipment. Your technology had to be
so precise and be able to detect the threats and the misdeclarations and the shipments that were
(27:52):
higher value coming in. That's been a big challenge. I think they've made significant
strides. I mean, I talked to people at CBP who tell me, oh, no, we're a lot more adept at
detection than we were. But the reality is it's on the bargaining table now, and de minimis is
going to change. The interesting thing that I've always found about de minimis, and it's great that
(28:15):
CBP is putting that $56 number on there, but the problem is, and correct me if I'm wrong, Cameron,
there's no way to validate that $56 number. This isn't like they're getting a numbered entry
that they can go back in if they chose to sort of like chase it back to origin.
It's just what somebody's filed. It's just whatever the paperwork is there. I mean,
maybe they have a way to take that individual hair scrunchie and tie it back to the e-comm
(28:38):
purchase. I don't know. But I kind of think that there's a certain amount of vapor attached to that
$56 number that they can't get like they would with a regular importer operating an import program.
The current data pool is far less than anything close to an O1 type entry or O3 or half a dozen
(29:00):
other entry types we could talk about, because you're just not filing. You don't have the
commercial invoice, the packing list, all of the normal partner government agency paperwork.
None of that's coming in as a general rule. It's all just on a manifest. So you are right to say
that you're not getting the data validation and the supporting documentation. But I don't even
know what Customs is really doing with those. A lot of times they're relying on just raw data
(29:25):
being entered into ACE by the broker, and they're not even providing the documents. Yes,
they're being cross-referenced against ISF and AMS. And there is the statistical data that they
can look at to see if that kind of makes sense. So I think they're a little more comfortable with
that. But at the end of the day, it's always been about do we trust you or don't we?
(29:48):
At the end, we spend a lot of time on Capitol Hill. We have a lobbyist on the Hill. And when
you're up there and you're talking to House and Senate offices, really you hear two concerns.
You hear the revenue hawks saying, look how much money we're losing. But then you hear people talk
about personal safety of the American public. And that's a big concern at this point. Is the
(30:11):
public safe from contraband that's being imported in by the business? And that's what a lot of the
debate's about. That's fair. So one of the things that the pandemic drove was an incredible amount
of inbound cargo. It's hard to believe that we're coming up on five years of everything
grinding to a halt. I mean, if you want to play the Where Were You game, I was at my daughter's
(30:35):
middle school theater performance. And when I turned my phone back on after that was when I
found that they were canceling the European flight banks. And off we went from there.
But once it started flying again, and the PPE started flying, and then the e-comm started flying,
people were waiting for weeks upon weeks upon weeks to get air cargo for a variety of different
(30:57):
reasons. And that was something that the AFA, working in concert with the National Customer
Brokers and Forwarders Association, said, we've got to think of about a better way to do this.
So that touched off a process that I would love for you to sort of talk about the white paper
and where that's at and what the current state of that is.
Yeah. So if you look at the US airports, you see that most of them, the cargo areas at least,
(31:22):
were developed 40, 50 years ago. So let's place back 40, 50 years ago. Not a lot of us were around,
but back then the standard tractor trailer length was about 40 foot, maybe 48 foot was the top.
And now you have 53 foot tractor trailers routinely coming into these cargo areas that were
(31:44):
designed for much smaller trucks. And so we found that during the pandemic, you had truck waiting
times, seven, eight, nine hours at the major airports, even the minor airports, the non-CADX
airports, you had these long waiting times. And our phones at the Air Forwarders Association
(32:05):
started ringing. And one day I called my counterpart over at NCBFA, the National
Customs Brokers and Forwarders Association. I said, are you hearing this too? And they said,
we absolutely are. And of course you might've had your ideas as to why it was happening,
but we decided to get together, two associations coalescing, working as one, and we decided to
(32:26):
launch a survey. We sent that out to 400 stakeholders, not just customs brokers and
freight forwarders, but airlines and ground handlers and airports themselves and said,
what's going on here? Why do you think the reasons, what are the reasons?
And we came up with about six concrete reasons why this is happening. And we wrote a white paper
(32:48):
at 65 page white paper that we all kind of agreed on. And we took it to Capitol Hill and we sat down
with members of Congress and the Senate. We said, you don't know a lot about our business because
we operate very silently, you know, off the side of the airport. And you probably have no idea
how much cargo is in the belly of passenger planes, but we need to tell you that this is
(33:11):
hurting commerce. And we were able to get the attention of three US senators who ultimately
backed us in a government accountability office study, which was embedded into the FAA reauthorization
law that was passed last year. And that study is because it's legally mandated is now underway.
(33:36):
And we think that it will validate our premise that these airports need help. And you know,
Scott, if you've seen one airport, you've seen one airport and each airport has its own issues.
But what we're going to do at first is hopefully this, our issue will be validated. We're going to
(33:59):
have a pilot program where, and I think it's going to be Miami because they've stepped up
to the plate first and they've come up with four wishlist items. We're going to get those
funded for Miami. We're going to show Congress that this is in fact possible. And then we're
going to probably have hearings on the Hill about this. And we're going to make sure that
these airports get the money that's needed to bring down these waiting times, these trucks,
(34:23):
because in the end, it's a commercial issue. And remember, air freight is about time. It's a value
play. It's all about time. And we can't afford to have trucks waiting at airports during high
volume times, seven, eight, nine hours. And let's also remember something else. Air freight is,
is predicted to grow at over 4% over the next 20 years. Just do the math on it. There's no way that,
(34:50):
that these airports are going to be able to facilitate. And we've already seen, by the way,
you can't move air cargo elsewhere because we are dependent upon passenger lift. And passenger lift
is not going to fly to, let's say Ontario and others. Yes, there's a market in Ontario,
California, but they're not going to move all flights out of LAX over there simply because of
(35:11):
cargo. So anyway, that's what we've been doing. And, and the, the effort continues. I can tell
you the GAO is actively working on this. They're probably about 30 GAO employees now focused just
on the air cargo study. Whatever happened to the blimp? I'm just curious. I was, I was like,
you know, how do you see that role being played? I think that there is a future, maybe even a
(35:36):
market for drones and blimps and things like that to haul cargo, but that's future fun stuff.
I think the big thing we're looking at right now is not so much blimps, but automated or rather
autonomous drones flying cargo. And the technology, if you look at, there's an airline over in Africa
(35:59):
that is flying... Astro, right? I think Astro Aviation. Astro, right. Yeah. I see those guys
at conferences and because Africa is less restrictive, they can fly pilotless planes
around and they're doing that. The, the issue there is the technology is, is proceeding at a
(36:19):
rate that exceeds the policy. And so the policy can't keep up with it. And so we got to ask
ourselves, are we going to have pilotless planes flying cargo in the United States? And, you know,
even FedEx has launched some pilot programs and pilotless programs. Yeah. I was about to say
there's a lot of irony in the use of that term. And then UPS has probably done the same thing.
(36:42):
I think they have as well, but the point is, is that that's where, you know, we're looking.
And I think that the, you know, the blimp market, I don't know. We'll see what happens over time.
I was just curious out of all the things I've seen, I always thought that was very dramatic
and would be very impressive to see if how it went and then if weather was still on the table.
Yeah. Five or six years ago, it was a big deal at our conference. Yeah.
(37:04):
It was a big deal. People were talking about it a lot. And it's like a lot of things that
it's a lot of hype at the front end, and then maybe it'll hit its stride at the right place,
at the right time, with the right market. And by the way, special project market,
there's a lot of opportunity there, you know, for delivering radio towers and
(37:24):
wind vanes and whatever up mountains, just drop them off at the top. Yeah, that's all fun stuff.
But when you get back down to earth, the reality is, you know, let's talk about whether or not
these planes are going to need pilots in the future. You do sort of, though, raise a point
with some of those locations, some of those very hard to reach locations with very large pieces,
(37:44):
with sort of the aging of the 747 fleet, with the Antonov fleet being pretty much off the table for
a lot of people to be able to... Well, at least on the 225. Yeah, exactly. So, I mean, there's
real limited sort of capability there. I mean, there's going to need to be a suitable successor
for those types of things. And I mean, you've got a number of members that fly the 74,
(38:04):
and they get a ton of traffic, and you see it on LinkedIn, and business is good for them.
But again, as those airframes age, and fewer things, and we're seeing it too with the issues
with Boeing and Airbus, just being late on deliveries, a lot of sort of airframes that
would go to being converted for cargo are still being kept in passenger operator fleets, because
(38:26):
they haven't gotten their new aircraft yet. Yeah, it's been a big concern. And Michael
Steen, the CEO of Atlas, has expressed the concern as well, that just there's the largest 747 freighter
operator right now, and you just don't have enough feedstock for the future. And obviously,
now you have the 767 conversion program that's out there, you have the 777 conversion program.
(38:51):
But the reality is that there are not enough air freighters. And it's a big concern going
forward. And that's why we're also seeing the advent of narrow-bodied freighters. I mean,
I saw that there's now a flight operating a narrow-bodied freighter that's running
in conjunction with United Airlines. I think Global Crossing or Global X is running it out
(39:14):
of Chicago to San Juan and back on pharmaceutical runs. And, you know, we'll see what happens. But
the reality is, we need that wide-body feedstock. And that's what the freighters have been all about.
And certainly, the Antonov situation, the destruction of the 225, that was a very vital
piece of equipment. It's gone now, unfortunately. My heart pines for the fact that every time I fly
(39:39):
to Pearson in Toronto, and I see that Antonov there that's just sort of a negotiating chip
between the Canadian government and racking up parking fees. Man, a war hedge. I mean,
O'Hare just bumped theirs up quite a bit when I went and parked this morning. I can only imagine
what Toronto's charging to park an Antonov for years at this point. Running freighters is not for
(39:59):
the faint of heart. It's not cheap. And, you know, they operate under a different set of maintenance
rules. FAA watches them like a hawk. And they require a lot of upkeep.
Can we just pour one out for the Polar brand, too?
Yeah, well, you know, I mean, I think a business decision has been made by Atlas on this.
(40:20):
And, you know, in conjunction with DHL, they have to run their business as they see fit. And I think
the reality is that they don't think the Polar brand is as viable as it once was.
No, that's fine. Just every time I would see that P on the tail, it reminded me of
Flying Tiger's tail. So that's sort of the historical connection for me there.
Well, I'm trying to figure out how we're going to see this double-digit growth
(40:43):
at the same time when we're looking at the threat to the econ. And how do you see the
industry trying to manage that? Do you see that there's a workaround?
I see that you're going to see an acceleration of manufacturing out of the Southeast Asian
countries. And you're going to also see India stepping up to the plate. Although
(41:04):
India, from a manufacturing standpoint right now, you know, doesn't hold a candle to what
China is manufacturing. But you got to remember, the U.S. consumer is driving a lot of this. The
consumer demand is up. We like ordering from Timu. We like ordering from China. We like ordering from
Amazon. It's funny. A lot of us like still going out to stores, but the stores are really like
(41:27):
showrooms.
They don't have the inventory. And I just bought a pair of shoes.
And your point is well taken. I went to my local running shoe store. And I was trying on the shoe
because, you know, it's important to try a shoe on when you wear it, especially if you're going
to go walk a significant distance. And they didn't have anything that I wanted in terms of the color,
(41:49):
you know, style combination. They only had what they had on the shelf. But you go on the internet
and it's triple.
Yeah. So here's the question. How much can the American consumer sustain in terms of additional
costs? You know, I mean, if you if you think about a 10% bump in tariffs, that's probably
(42:09):
okay. You know, a third will go to the manufacturer. A third will go to the consumer.
A third will go to the retailer. But when you start talking 25% tariffs or 60% tariffs.
And I think the thing, too, is, is just and Cameron, you and I have talked about this. It's
like you see this sort of reciprocal thing. It's like, what is the compounding upon the
compounding of the compounding? It's like, hey, here's 25% for you. Hey, here's 15% back. No,
(42:33):
it's going to be 35. Is that 35 on top of the 25? Which gets I mean, all of a sudden,
it's a tobacco auctioneer thing. And I was in a store, I will not name them. But their name includes
the denomination of currency featuring George Washington. And all of the prices were a quarter
more than than George's currency denomination. And that was basically across the store.
(42:55):
But you got to remember, also, you know, there are a lot of uses for air cargo,
we've got a member that ships rock band equipment. And, you know, the think Bruce
Springsteen and the Rolling Stones and whatnot, no Taylor Swift, and they'll run three and four
freighters a time at a time just to get the concert move from one venue to another venue
in another city, maybe even another continent. So there are a lot of uses for air cargo still
(43:19):
the thing that I'm wondering is about and I saw quite honestly, it'll be a question here. And
then also that that I'm going to ask the NCB FAA with the President's selection to head Health and
Human Services. They already canceled and didn't reschedule a meeting for the flu vaccine coming up
for this fall. Pharmaceuticals play a very large role in a lot of what air forwarders move. And
if there's any, if there's any sort of national level change to policy regarding pharma life
(43:45):
sciences, any of that type of stuff, that's also going to affect what airlines and what what air
forwarders have been have been set up to move. Absolutely. I agree with you that will that will
have an adverse impact on air cargo. But I tend at the Air Forwarders Association, we tend to be
bullish on our industry, and we see opportunities. And every time I'm on an airplane now, there's
(44:08):
never an empty seat. No reason not to. I mean, the planes are not stopping flying. I think there's
just a lot of consumer demand out there. We the trick is, how long will consumer demand stay?
The thing I'm trying to figure out Cameron, let me know if you agree with me on this or not.
It's kind of like, I'll make the joke for the guy that was in Long Beach and I can make an
article reference. It's like when they when they get close to as container ships get closer and
(44:30):
closer to the shore, eventually you just you turn the engine off because you're going to have to
coast in until you slow down. And I'm just sort of wondering, as we as we see the threats or
actual tariffs that come in, what's the coasting effect before the U.S. economy catches up to that?
And is it the tariffs that do it first? Is it the number of people that are going to be filing
first time unemployment for whatever reasons? I mean, there's there's a lot of sort of different
(44:53):
moving pieces here that that I'm I do not profess to be an economist to ask these questions of. We
we certainly asked him a Paul, but we had him from S&P a couple of episodes ago. And speaking of
frontloading, I mean, you've seen a lot of frontloading. And these these companies have
anticipated these tariff potential tariff increases. They've loaded up warehouses,
their front loaded warehouses here in the U.S. And I think they kind of know what's coming.
(45:19):
But going back to Cameron's central question is what what kind of an impact is it going to have
on their cargo? I don't think it will adversely necessarily adversely affect the freight
forwarding industry because we're always going to have to move boxes some way or another.
But the reality is it could have an adverse impact on cargo volumes.
I was looking at the Wall Street Journal and I got the news feed. An article just
(45:41):
dropped this weekend because somebody stopped talking about the Ukraine for five seconds.
So something else got snuck out. And that's an interesting pivot in the whole foreign policy
of the United States and the impacts and implications, especially for the air cargo
industry that does a lot of support to that theater. Yeah, but there are other theaters
as well. Don't forget, you know, we've got the situation with Taiwan. We've got Gaza,
(46:06):
you know, and the U.S. is supporting those theaters with armaments and defense related
equipment and relief and everything else. Yeah. So there's a lot a lot of air freight going to
these regions. Absolutely. A lot of air freight you never even think about or nor do you know about.
And and that's just the way it's always been. I don't recall in my lifetime where we've had
(46:28):
such a tense geopolitical situation that could just erupt in so many red zones,
it could erupt so rapidly. And yeah, I mean, we're you know, we're going to be essential.
It'll be interesting to see how we pivot out of China, because I think there's some real
concerns about pivoting out of China into Vietnam. I was just noticing that we already have a trade
(46:52):
deficit of about half with Vietnam that we have with China. China, we have a 295 billion
and Vietnam is 123 billion. Not that far behind. I mean, that's not that far behind if you don't
think if you think about it, especially if all the there's a big shift to Vietnam being
the manufacturer of choice. And now Chinese companies are coming into Vietnam and setting
(47:15):
a manufacturing shop all day long, all day long. Right. So they see what's going on. Well,
they came to Mexico as well. One of the things that we learned from Carlos Sesma, one of our
other interviews recently, a lawyer in Mexico, was the number of Chinese companies opening up shop
in Mexico, trying to take advantage and creating basically towns in China. And there's been
(47:39):
argument. You've seen this for over a decade. I had a lawyer make a case or make a point at an
I was at a couple of weeks ago, because as you're talking about that all over the place,
the question isn't necessarily going to be the country of origin. The question is going to be,
what's the country of ownership of the manufacturer? Now, that's going to be a lot
(47:59):
more legal gymnastics to work yourself through around and to try and get to the bottom of that.
That if all of a sudden we start saying it's not just where it's coming in from,
but what's the corporate seat of the company that's making it? I think that that's a whole
another crazy conversation to get into. I'm curious, can you actually get a plane all the
way, a freighter from continental United States to India, or do you have to do a layover?
(48:24):
So the quick answer is yes, but don't put anything on board the plane.
You know, certainly the 747-800 series can fly a good distance, but that's why we have gas stops
like Anchorage. You know, you can fly a 747 out of Asia. If you don't load it up to the gills,
(48:45):
sure, you can fly it anywhere into the United States, but that's why they fly 144 miles out
of the way, gas up in Anchorage with a full load, and they're able to hit every U.S. city
quickly because they've made that tech stop. So the same thing applies to India.
We use the term flyover country. Do you know who's back in the game for doing that now
(49:07):
because of the Russian airspace closures? Kazakhstan.
Yeah, certainly this, the whole Russian thing has cost us, cost our industry a lot of money
because we're not able to overfly Russia anymore, and certain countries still do,
so it's made us not as competitive, and it's increased costs. So it's tough, but I guess
going back to your question is, yeah, sure you can, just don't put a lot of freight on the plane.
(49:30):
Fair enough. I'm just trying to ferret out, like, as supply chains pivot and shift,
how does it impact the industry, and then how does the industry adapt? Because I'm a big believer
that natural history, that which adapts, survives, and that which does not adapt goes extinct.
Absolutely, and nature abhors a vacuum. There's always someone creative out there
(49:51):
coming up with another solution, and I think we're going to see that as well.
That's why freight forwarders are such a fun bunch to be with because of the creativity.
I mean, something we don't even touch on here in North America is sea air services.
So like a lot of that stuff out of India, they'll put it in a container, and they'll run it to a
Middle East or Gulf. They'll run it to Dubai. They'll run it to Qatar, and then from there,
(50:13):
it's going into Europe. That was sort of the workaround that they were using for the Red Sea
for a period of time, too. It's like, hey, we can cut off your transit time through the Med
by just getting it to here, and then we'll strip it out. We'll transload it, and the next thing you
know, you spent a week on the water from India. That's good enough. We'll have it in London in
two days after that. Well, Brandon, you've got a conference to host for the next couple of days,
so I'm told. Thank you for taking the time to meet with us. Yeah, thanks for having me,
(50:37):
and I hope that we see a lot of your listeners here in Dallas. This is going to be a really
great conference. Next year, by the way, we're in Orlando at Champions Gate, expecting an even
bigger turnout there. So if you don't know what to do, come on down to the Air Cargo Conference.
It's the one for the rest of us. Aircargoconference.com. Brandon,
(50:59):
thank you. Cameron, a lot of fun as always, my friend. Thank you so much for your time.
My name is Scott Case. I'm Cameron Roberts. And this is Logistically Speaking.
(00:10):
Well, you can tell from the background noise that we're not in your house getting work done.
It could sound like my house sometimes, but it's definitely not.
No, no, no, definitely not. We are blessed to be on the expo floor of AirCargo 2025,
which is happening March 2nd through the 4th in Dallas. So by the time you hear this,
(00:30):
the event will have taken place. But it's going to be an interesting couple of days here,
and we're very fortunate as well to be able to have one of the three coordinating members of
the AirCargo conference of this event here with us, Brandon Fried. We're going to be talking our
way through Air cargo issues. I mean, there's a bevy of things in the regulatory space, in the
trade space. And with your firm, what do you guys do with Air Cargo? I mean, what are some of the
(00:53):
things you're engaged in? So what we see the most of is cargo claims related to the Warsaw Convention,
Montreal Protocol, and the Montreal Convention, which is the ultimate successor to these,
and the most common convention that you'll see if there's litigation about who dropped the box,
who stole the box, this type of thing. So that's a very, shall we say, clear area where the firm
(01:19):
gets involved. But we also do air charters and also work with different ground handlers and different
scenarios. And it should not surprise you that there's not a ton of litigation over it anymore,
because the nice thing about air transportation is there's a global treaty that the United States
(01:39):
is recognized and is participating, a high contracting party, and that makes things
known. And because the rates are, I think, per kilo, something that people can live with,
you see a lot of settlement of claims rather than litigation over claims. You tend to see
the litigation in the space where we can't figure out what happened. And I've got one of those
(02:02):
right now where there is a ground handling operation. We took an exception, picked it up
at the ground handling operation. We trucked it to the Constantine's door and they came back and
they said, hey, this is damaged. We're rejecting it. And I'm like, well, how hard is this? This
we took exceptions at the door. And it was on the terminal at LAX where we took the exceptions.
(02:25):
And so you'd think that'd be rather straightforward. But what we have subsequently
learned is the ground handler gave the cargo after it arrived to somebody else and it went
to an inland warehouse in Rancho Dominguez and came back. And now we've got a lot of finger
pointing about who gave it to who and why and what happened while it was on its little
(02:47):
side hustle over there, a little side trip to Rancho Dominguez. So it will be interesting.
I have no doubt about that. The air cargo industry has never been stronger.
The air cargo industry is in peril. The air cargo industry is ripe for innovation. The
air cargo industry is at a crossroads. And let's really just have a laugh at it because
the air cargo industry always feels like it's ready for the next big thing.
(03:11):
I mean, it could be the air cargo industry is ready to be fully digitized on the blockchain
and powered by sustainable fuel and pilots are going to be a thing of the past. And, and, and,
and, and. And I think the point is that both in the US as well as across the world, there's a
bevy of issues that the air cargo industry is trying to work through, all of which at any given
time or inflection point could be the most important. Just a short list that we came up
(03:35):
with in no particular order. Tariffs, I mean, which is just a drinking game right now. I mean,
it's a steady state of tariffs, changes taking place at the FAA, changes in the
de minimis regulations, a potential realignment of global alliances, infrastructure investment,
extreme weather and geopolitical events, which drive the need for more relief shipments to
(03:56):
more places. And that's just, I think, scratching the surface. And with all that having been said,
I think that there are fewer people better equipped to talk about these things and other
topics than our guest on today's episode, Brandon Fried, who is the executive director
of the Air Forwarders Association, the voice of the air forwarder in the United States.
Brandon was appointed to serve as the executive director of the AFA in November of 2005.
(04:19):
He started his career as a sales representative in Los Angeles, moved to Washington DC, where he
began, owned and operated the Washington office of a global freight forwarder that specialized in
time-definite air cargo transport. In 2000, Brandon joined the Air Forwarders Association
and was elected chairperson in 2001, talk about timing, serving for two consecutive terms.
And in August of 2005, he sold his company and was a freelance consultant for a few months
(04:43):
because who doesn't, until his appointment as the executive director of the Air Forwarders
Association. Brandon has served on the Aviation Security Advisory Committee, moment of silence
for that. Thank you. COAC, the CNS Advisory Board and countless other industry associations.
And let's face it, if you want to talk air cargo and you're in the United States,
(05:03):
Brandon Fried's the guy you call. Hi, Brandon. Hi, Scott. And welcome to Dallas. Welcome to
AirCargo 2025. It is absolutely wonderful to be here and thank you so much for hosting and
putting on this event. Full disclosure, Brandon and I have known each other for probably all of
those years because I was fortunate for a period of time to be the air freight chair of the NCBFAA.
(05:26):
And Brandon and I worked collaboratively with the TSA in its early days in setting the rules
and regulations that govern the modern day indirect air carrier security programs that we have today.
That's right. Shortly after September 11th, around the Gore Commission days. Yeah. I think I may have
even had hair back then. So yeah, it's been a long time. It's been a week or two. So we're here
(05:53):
in Dallas for the AirCargo Conference. Tell us about the AirCargo Conference. Who comes to this
thing? How long has it been going for? Give us some background on it. So this conference was
started back in 91 and they called it the Air Freight Management Conference and Exposition.
And over time it morphed into Air Cargo. And it's a yearly event and it has grown ever since. This
(06:18):
year we've got, as of this morning, 988 registered attendees and we'll likely have about 100 people
that show up off the street tomorrow morning. And we have 101 exhibit booths. It's a significant
conference. We have freight forwarders, we have trucking companies, we have software providers,
(06:38):
airlines, you name it. Everyone's represented here. And we're very excited about this year because
we have two keynote speakers this year. Great. And what do you attribute the diversity of
people that attend the conference? I mean, why do you think Air Freight is unique in that respect?
Yeah, because it's not just air freight, it's logistics. We're all involved. We happen to use
(07:00):
a lot of airplanes, but that's not... An air freight forwarder is really a misnomer now.
Find me a forwarder that doesn't offer surface transportation and probably that's a forwarder
that's not going to be in business long. So that's kind of what we're all about. We just
happen to use a lot of airplanes as well. And there's a lot of support that goes with logistics
(07:21):
nowadays. Everything starts and ends on a truck. We're starting to move more into automation. So
we have technology providers. Of course, we have the airlines with us. We have some seamstress lines
that come in. Anyone who's anyone in moving boxes is here. And this is a great conference for us to
(07:43):
meet people from Washington. We have regulators that come in just to be able to sit and talk
about significant issues. And hey, we all know we have a lot of issues to talk about this year.
No shortage. No shortage. No shortage of issues. And it's funny, as you say that,
we're looking at Booth gets stood up over to the side of us and there's icons for a plane,
a boat, and a truck. Definitely in that multimodal space. There's no question about that.
(08:08):
So you were a forwarder and every forwarder has a great story to tell. Do you remember a fun one
from cargo that you moved or something that was crazy or that you've had a member come up to you
and go, boy, let me tell you about this crazy project? As I tell people, I'm a recovering
freight forwarder. And yes, but I remember one where, you know, I started out in this business
(08:30):
right out of college. I graduated from Syracuse University in 1979, took a job with a small freight
forwarder in Los Angeles, and they specialized in high value artwork and, you know, shipments.
And one day I showed up on Rodeo Drive because I had a silversmith as one of my clients.
(08:51):
He would come in, buy things, and I would ship them. And one day there were these two brothers
sitting in his office, and they introduced them to me, and they were the Hunt brothers.
And they had come to Los Angeles to buy every piece of silver that they could,
(09:11):
and they were cornering the silver market. And so that night they said, we'd like you to,
once we get this packed up, we'd like you to escort it personally to Dallas. So that night
we bought out the belly of a Delta Air Lines L-1011. Remember the L-1011 wide bodies? They
(09:31):
flew them all the time. And I was aboard. I was out plane side, ramp side, as they loaded the
aircraft. We flew to Dallas that evening and met the Brinks people there. And these guys were just
storing silver everywhere. This is what happens, you know. So, and then there was another time,
real quick, that there was a presidential debate. This is before a lot of technology
(09:55):
that we use today. They used to, back in the old days, the questions for presidential debates
were drawn up, or they were drafted in Washington. And instead of, you know, transmitting through
digital ways, they would put them in an envelope and give them to an onboard courier.
(10:15):
And that particular year they had the debate at the Dorothy Chandler Pavilion in Los Angeles.
So, I got on a plane at Reagan, at the time National Airport in Washington, flew with the
questions. A man met me at the airport in Los Angeles and we both drove to Dorothy Chandler
Pavilion where I gave the questions to one of the moderators. And they opened them up and they
(10:38):
started the debate. Go figure. I still remember too, back in 2017, the keynote speaker was David
Charles Bernstein from Rocket. And when you and I went and interviewed him at that restaurant on
that rainy day in Philly- With the pouring rain.
With the pouring rain. We're sitting there on a patio and it is just pissing down rain outside.
And he told us a story about moving the music for Frank Sinatra's orchestra. That same sort of thing
(11:02):
where you talk about just like original stuff, like they have the spots. I mean, it was a funny
as all get out story. David just did the most amazing job. But basically, Sinatra had to cancel
a show at the Meadowlands because they didn't have the music for the local orchestra. And of course,
only Frank was the guy that could reschedule the Meadowlands. And I mean, David tells the story
better, but the punch line to it is he was worried that they did something wrong at his company.
(11:26):
And he's talking to Frank's producer or his manager. And the manager said to him point blank,
he said, listen, I didn't do anything wrong and you didn't do anything wrong. And the reason that
I know that is we're both still alive. There you go. But getting back to this
conference every year, we try to bring keynote speakers in who have a story. We've had local
(11:48):
heroes within the industry and just tell their stories. And we've had some really fun ones. David
Bernstein is just an example. We had Jim Crane. So this year we have a guy out of Northwest
Territories, Canada, Yellowknife, Northwest Territories to be precise. Mikey McBrien,
who's the son of the founder of Buffalo Airways. And you might say, well, who's Buffalo Airways?
(12:10):
This is a company that flies World War II planes. Now, these are not the planes that were made in
World War II. These were the planes that flew in World War II. And DC-3s, C-46s, DC-4s. Now he's
modernized the fleet. He's got L-188 Electras. I think the only two in North America. They just
(12:35):
bought their first 737-300 series. And they're flying throughout the Northwest Territories. And
he was actually, he was also the star of a popular television show that ran for seven seasons on the
History Channel called Ice Pilots in WT. So Mikey is with us and he'll be our keynote speaker. And
(12:56):
we're going to hear a point of view that a lot of us in the air cargo business never know here. So
we're excited about this. I'm curious how air cargo has changed in your mind in the last
decade? Because, you know, when I got involved in the industry and, you know, we're all here,
been doing this for 30 years or so. I mean, it was certainly you had to, you know, do your local
(13:19):
pickup and delivery and get it to the airport by the cutoff time and make sure the ground handler
had it. And maybe you built up your own LD3s or LD7s or whatever profiles that you wanted to
in order to get it into the aircraft. And, or maybe you put it on a truck and maybe you did
the forward air move with or midnight or one of the other predecessors that was around back then.
(13:44):
How in your mind has air cargo changed? Much more of a reliance on surface transportation. Back when
we were pups in the industry, you're right, everything flew. But then all of a sudden
things changed in September 11th. The flying of cargo became more challenging, if you will,
there was that security piece to it. But you had big, the large wholesale freighter airlines,
(14:11):
the Kitty Hawks, the Zantops, basically went out of business. And so companies like forward air and
Sterling and others started to offer ground transportation. Air Max. Right, right. They
offered ground transportation. There was much more of a reliance on that.
And then the integrated carriers started to offer wholesale services to the freight forwarder
(14:33):
community. So a lot of what, you know, the Kitty Hawks would haul of the past, would fly in the
past. Now all of a sudden UPS and FedEx and even DHL would fly domestically. So that kind of,
that really changed things, but it became a lot more challenging to get cargo into the bellies
of passenger planes. It's still done, but you know, everyone's got to be a known shipper.
(14:54):
Cargo has got to be screened. It's got to be safe. And, you know, we're about safety at the
Air Forwarders Association and, you know, security has become, has played much more of a prominent
role than it has in the past. And I think that's really created a lot of change in the business.
And then I think we have to look at automation and digitalization that has cut down on air freight
(15:17):
shipments in general. You know, the packets, the pouches that go out of law firms. It used to be
every night a law firm would send a box to their New York office or to their Los Angeles office.
It's not done as much anymore. It's all transmitted electronically. And that's taken its toll on the
air cargo business. At the same time, you know, there's still, it still flies, much more of an
(15:39):
emphasis on international cargo. That's still in the bellies of passenger planes. Half of the
cargo that flies internationally is flown by passenger carriers. 80% of it's managed by freight
forwarders. So that's what we've seen a lot of changes. Still very exciting business, by the way.
Well, I agree with you that certainly there's been a big divestiture, if you will, of the
(16:01):
airlines from, you know, they don't have the salespeople that they used to have.
They don't have the interest, shall we say, in pursuing the mom and pop shippers. And the
forwarding community has filled those gaps. And unless you're looking, I think most of the cargo
salespeople want to call in forwarders because they're handling all the paperwork for them.
You know, we've had airlines in the past, the passenger airlines, the popular passenger airlines,
(16:25):
everyone, many of them have tried to go direct to the consumer. But they have found that we've
all kind of found that's not what they do best. They do best flying airplanes from one airport
to another. And the freight forwarder will deal with the picking it up within the city,
the delivering it, the paperwork, the security compliance, whatever has to be done,
(16:46):
the banking, whatever has to be done. That's more the job of the freight forwarder. And airlines
prefer to deal with the freight forwarder. And now that we have such an over-encompassing security
regime, most airlines, or many of them, don't want to be doing business with just the occasional
consumer. They want to deal with the freight forwarder. And they tell these consumers,
(17:09):
go to a freight forwarder. Here's a list of them. You pick which one you want.
They all have agreements with us. Agreed. Especially, you know, they're not in the
business of having a dog kennel so that they can take care of the cargo and half a dozen other
nuanced ways of moving specialized goods. And you got to remember something else,
Cameron, you know this, is that the relationship between the freight forwarder and the customer
(17:35):
is, it's very personal. You know, there's report, there are a lot of freight forwarders. Here in
the United States, there are 3,500 freight forwarders that are registered with the TSA.
There must be 100,000 freight forwarders internationally. And they all have their
business niches and they have their relationships with their customers. And airlines just can't
support those relationships. And the freight forwarder doesn't pass.
(17:58):
We see it too in the ocean space. I mean, there's just certain times that the carriers want to
have that direct relationship and sign with that PCO, but it's really to their best interest.
If they were trying, and the way they've sort of thinned out their customer service teams,
they don't have the people or the processes in place to handle those onesie twosie shippers
anymore. And VOCCs exist for just that reason, to be able to support and broaden those counts.
(18:22):
You talked about security, Brandon, and we certainly saw the evolution of it in the time
that we were working together. We have seen the advent in the addition of both pre-departure
and pre-arrival filing requirements. I remember both of us together and working with it at the
time, a gentleman who works with the AFA, Doug Britton. Doug was in charge of air cargo at TSA
at a time when somebody tried to put printer cartridges into the air cargo supply chain,
(18:47):
and those were caught. Most recently, we saw stories about Russia testing,
sort of doing the raptors at the fences thing, trying to find places that, which again,
got the air cargo supply chain up and worried. As we look at these reporting requirements,
with the idea of being technology to exist as a screening thing, the known shipper,
the people knowing who they're working with, do you think that those started from here in
(19:10):
the United States and other people adopted them? Or is there sort of a mutual recognition on either
side of an air cargo transaction going, we've really got to have this in place for the security
of the people at origin and destination, and they're just underneath the planes as
they're flying all together? I would say that prior to September 11th,
we saw a lot of overseas initiatives and security to greater and lesser extents. But I would say
(19:33):
that after September 11th, the United States certainly took a leadership position in it.
With the Air Transportation Security Act that was passed in what, 2002, that established TSA,
we really became the trendsetter in security and the rulemaker. We sit at a lot of meetings at
TSA in Washington, and I've kind of over the years realized that these people come to the
(19:57):
U.S. and say, whatever you want us to do, we'll do. Not only just to continue trading with the
United States, but because the United States does very well at protecting its borders,
you can argue all day long about the porosity of borders and people coming in, but the reality is
we're good at keeping things off planes that shouldn't be on planes. And we operate on some
(20:17):
very strict security programs here in the United States. TSA has 500 inspectors whose job it is
just to focus on the freight forwarding community and freight forwarders. That's an enormous amount
of people, and they are in our offices constantly. And it can be a very expensive day for a freight
(20:37):
forwarder if you don't follow those rules. And many have not, and as a result, have left.
At the Air Forwarders Association, as soon as Doug Britton left TSA, we grabbed him and he's now on
our staff. And we spend a lot of time engaging with the TSA. And we represent the freight forwarders,
but the person sitting next to me lost her husband on Pan Am 103. We have victims rights groups,
(21:02):
we have flight attendants, we have pilots, we have all the stakeholders that sit and advise
the Department of Homeland Security on aviation issues. So one of the things we've learned is
that, especially after September 11th at the Air Forwarders Association, you got to be at the table.
And if you're not at the table, you're on the table. You don't want to be on the table.
(21:24):
I mean, other places you don't want to be, you don't want to be named in a Justice Department
press release, which a number of forwarders have found themselves in as well. And it's just,
it's your, that's not one you're usually going to win.
Well, looking to the future in 2025, with all the tariff noise, because at this point,
it's a very fluid situation. And while we have a number of presidential proclamations,
(21:45):
we have executive orders, we have memorandum, we have interviews, we have, you know,
true social, all of the above. Where do you see the air cargo industry going in 2025,
in the first couple of quarters?
Well, there'll always be opportunities. And, you know, there've been a lot of executive orders
signed by President Trump. But there are some proposed initiatives coming out of the White
(22:11):
House that we have some concerns about, not the least of which are these tariffs. First of all,
I want to be clear about tariffs. We think tariffs are essential. They're an essential tool
in balancing trade. You need to have them. But when you start talking about 25%
tariffs on our closest trading partners, Canada and Mexico, and then of course,
(22:31):
China as well, you're really going to have an adverse impact on air cargo flows, you're going
to have an adverse impact on trade flows, I think, in general. And that's a big concern of ours going
forward. We think that, you know, we want to keep freight moving. We want to keep commerce moving.
And not everything can be made in the United States anymore. The ship has sailed, so to speak.
(22:53):
And the reality is, is that, you know, that's not everything can be made here. And it's going
to take a long time. It took China 40, 50 years to ramp up their manufacturing. I know the White
House wants to shift manufacturing to places like Vietnam, Cambodia, and Thailand. And yes,
that can be done over time. But, you know, and India as well. But it's going to take some time
(23:15):
to get that done. And so I'm concerned not only from an air freight perspective, I'm concerned from
a commercial perspective, an economic perspective, and the adverse impact it could have on our
country going forward. I was curious to see, you know, some articles in the Wall Street Journal
talking about how people had nearshored bringing things predominantly into Mexico as a strategy
(23:39):
to deal with tariffs. Do you have a lot of members doing a lot of work between United
States and Mexico? And how do you see the, shall we say the relationship with Mexico impacting your
membership? Yeah, so the answer, the short answer is yes. We have many members who set up shop
along the border and are working in Mexico. We have many members who have invested in e-commerce
(24:05):
and are doing work in that area as well. Not all. I mean, freight forwarders are, it's a game of
niches. So, but at the same time, we do have members have made substantial investments in
Mexico. But I think we need to look at and see what the White House is trying to accomplish here.
I don't think this is a money move for the United States. I think what the President is trying to
(24:26):
do at this point seems to me is correct behavior. So as an example, you know, you look at Mexico,
they wanted to stop the trade flows coming in from China to Mexico, the cargo being
reworked and then brought over to the, you know, the U.S. border at a cheaper rate.
(24:47):
And the new President Scheinbein in Mexico pretty much put a stop to that with a 25%
tariff on goods coming in from China into Mexico. I think there was a lot of pressure from the White
House on that. When you look at, as an example, those four arrests that were made the other night
in the United States with those narco folks who had committed crimes, murder on the U.S. shores.
(25:12):
They brought those in. That's part of the negotiation. But I think that the White House
is using tariffs as the big stick, the baseball bat, if you will, to correct the behavior. And
then, of course, we need to be talking about fentanyl. Fentanyl is a big issue. I think the
White House has been blaming, they've been blaming the de minimis, the low value shipments coming in
(25:33):
for the precursors that are being transported into the United States that ultimately
build or comprise the fentanyl, which apparently killed 100,000 Americans last year.
It's a big concern. They're looking at the freight forwarding industry as an issue,
as a cause. We have to wait and see what it is. But I think a lot of these tariff threats
(25:57):
are being driven by that. And we'll see what happens over time.
And Scott and I have talked about this de minimis thing back and forth.
I don't think CBP liked de minimis ever. They always felt overwhelmed by the number of
shipments, the inability, the lack of uniformity. I mean, it's one thing to get a container load
(26:18):
full of footwear that's all somewhat the same. And now we're talking about getting things that
are an ocean freight or an air freight freighter full of 100,000 packages of anything from a hair
clip to a scrunchie to a t-shirt to a laptop. And so what's in there? And it's hard to know.
(26:38):
The online ordering horse, as you will, has already left the barn.
The American consumer likes to order online. We saw that during the pandemic. And, you know,
I sat at the table because I was on the CBP's commercial operations advisory committee,
the COAC committee, when the de minimis was being crafted, if you will. And I knew that
(27:00):
the express operators, the FedExs, the UPSs, the DHLs, that, you know, that they were behind this
and they really wanted to get goods into the country quickly without the customs formality.
I will tell you that the de minimis right now in the United States is 800. It's one of the largest
in the world. But the average de minimis shipment coming into the United States, the value is $54.
(27:24):
That's what CBP tells us. But we knew that this would be a challenge for CBP. And CBP knew it as
well, sitting at the table, because there would be this onslaught, this tidal wave of shipments
coming across. And you would know what was in every single shipment. Your technology had to be
so precise and be able to detect the threats and the misdeclarations and the shipments that were
(27:52):
higher value coming in. That's been a big challenge. I think they've made significant
strides. I mean, I talked to people at CBP who tell me, oh, no, we're a lot more adept at
detection than we were. But the reality is it's on the bargaining table now, and de minimis is
going to change. The interesting thing that I've always found about de minimis, and it's great that
(28:15):
CBP is putting that $56 number on there, but the problem is, and correct me if I'm wrong, Cameron,
there's no way to validate that $56 number. This isn't like they're getting a numbered entry
that they can go back in if they chose to sort of like chase it back to origin.
It's just what somebody's filed. It's just whatever the paperwork is there. I mean,
maybe they have a way to take that individual hair scrunchie and tie it back to the e-comm
(28:38):
purchase. I don't know. But I kind of think that there's a certain amount of vapor attached to that
$56 number that they can't get like they would with a regular importer operating an import program.
The current data pool is far less than anything close to an O1 type entry or O3 or half a dozen
(29:00):
other entry types we could talk about, because you're just not filing. You don't have the
commercial invoice, the packing list, all of the normal partner government agency paperwork.
None of that's coming in as a general rule. It's all just on a manifest. So you are right to say
that you're not getting the data validation and the supporting documentation. But I don't even
know what Customs is really doing with those. A lot of times they're relying on just raw data
(29:25):
being entered into ACE by the broker, and they're not even providing the documents. Yes,
they're being cross-referenced against ISF and AMS. And there is the statistical data that they
can look at to see if that kind of makes sense. So I think they're a little more comfortable with
that. But at the end of the day, it's always been about do we trust you or don't we?
(29:48):
At the end, we spend a lot of time on Capitol Hill. We have a lobbyist on the Hill. And when
you're up there and you're talking to House and Senate offices, really you hear two concerns.
You hear the revenue hawks saying, look how much money we're losing. But then you hear people talk
about personal safety of the American public. And that's a big concern at this point. Is the
(30:11):
public safe from contraband that's being imported in by the business? And that's what a lot of the
debate's about. That's fair. So one of the things that the pandemic drove was an incredible amount
of inbound cargo. It's hard to believe that we're coming up on five years of everything
grinding to a halt. I mean, if you want to play the Where Were You game, I was at my daughter's
(30:35):
middle school theater performance. And when I turned my phone back on after that was when I
found that they were canceling the European flight banks. And off we went from there.
But once it started flying again, and the PPE started flying, and then the e-comm started flying,
people were waiting for weeks upon weeks upon weeks to get air cargo for a variety of different
(30:57):
reasons. And that was something that the AFA, working in concert with the National Customer
Brokers and Forwarders Association, said, we've got to think of about a better way to do this.
So that touched off a process that I would love for you to sort of talk about the white paper
and where that's at and what the current state of that is.
Yeah. So if you look at the US airports, you see that most of them, the cargo areas at least,
(31:22):
were developed 40, 50 years ago. So let's place back 40, 50 years ago. Not a lot of us were around,
but back then the standard tractor trailer length was about 40 foot, maybe 48 foot was the top.
And now you have 53 foot tractor trailers routinely coming into these cargo areas that were
(31:44):
designed for much smaller trucks. And so we found that during the pandemic, you had truck waiting
times, seven, eight, nine hours at the major airports, even the minor airports, the non-CADX
airports, you had these long waiting times. And our phones at the Air Forwarders Association
(32:05):
started ringing. And one day I called my counterpart over at NCBFA, the National
Customs Brokers and Forwarders Association. I said, are you hearing this too? And they said,
we absolutely are. And of course you might've had your ideas as to why it was happening,
but we decided to get together, two associations coalescing, working as one, and we decided to
(32:26):
launch a survey. We sent that out to 400 stakeholders, not just customs brokers and
freight forwarders, but airlines and ground handlers and airports themselves and said,
what's going on here? Why do you think the reasons, what are the reasons?
And we came up with about six concrete reasons why this is happening. And we wrote a white paper
(32:48):
at 65 page white paper that we all kind of agreed on. And we took it to Capitol Hill and we sat down
with members of Congress and the Senate. We said, you don't know a lot about our business because
we operate very silently, you know, off the side of the airport. And you probably have no idea
how much cargo is in the belly of passenger planes, but we need to tell you that this is
(33:11):
hurting commerce. And we were able to get the attention of three US senators who ultimately
backed us in a government accountability office study, which was embedded into the FAA reauthorization
law that was passed last year. And that study is because it's legally mandated is now underway.
(33:36):
And we think that it will validate our premise that these airports need help. And you know,
Scott, if you've seen one airport, you've seen one airport and each airport has its own issues.
But what we're going to do at first is hopefully this, our issue will be validated. We're going to
(33:59):
have a pilot program where, and I think it's going to be Miami because they've stepped up
to the plate first and they've come up with four wishlist items. We're going to get those
funded for Miami. We're going to show Congress that this is in fact possible. And then we're
going to probably have hearings on the Hill about this. And we're going to make sure that
these airports get the money that's needed to bring down these waiting times, these trucks,
(34:23):
because in the end, it's a commercial issue. And remember, air freight is about time. It's a value
play. It's all about time. And we can't afford to have trucks waiting at airports during high
volume times, seven, eight, nine hours. And let's also remember something else. Air freight is,
is predicted to grow at over 4% over the next 20 years. Just do the math on it. There's no way that,
(34:50):
that these airports are going to be able to facilitate. And we've already seen, by the way,
you can't move air cargo elsewhere because we are dependent upon passenger lift. And passenger lift
is not going to fly to, let's say Ontario and others. Yes, there's a market in Ontario,
California, but they're not going to move all flights out of LAX over there simply because of
(35:11):
cargo. So anyway, that's what we've been doing. And, and the, the effort continues. I can tell
you the GAO is actively working on this. They're probably about 30 GAO employees now focused just
on the air cargo study. Whatever happened to the blimp? I'm just curious. I was, I was like,
you know, how do you see that role being played? I think that there is a future, maybe even a
(35:36):
market for drones and blimps and things like that to haul cargo, but that's future fun stuff.
I think the big thing we're looking at right now is not so much blimps, but automated or rather
autonomous drones flying cargo. And the technology, if you look at, there's an airline over in Africa
(35:59):
that is flying... Astro, right? I think Astro Aviation. Astro, right. Yeah. I see those guys
at conferences and because Africa is less restrictive, they can fly pilotless planes
around and they're doing that. The, the issue there is the technology is, is proceeding at a
(36:19):
rate that exceeds the policy. And so the policy can't keep up with it. And so we got to ask
ourselves, are we going to have pilotless planes flying cargo in the United States? And, you know,
even FedEx has launched some pilot programs and pilotless programs. Yeah. I was about to say
there's a lot of irony in the use of that term. And then UPS has probably done the same thing.
(36:42):
I think they have as well, but the point is, is that that's where, you know, we're looking.
And I think that the, you know, the blimp market, I don't know. We'll see what happens over time.
I was just curious out of all the things I've seen, I always thought that was very dramatic
and would be very impressive to see if how it went and then if weather was still on the table.
Yeah. Five or six years ago, it was a big deal at our conference. Yeah.
(37:04):
It was a big deal. People were talking about it a lot. And it's like a lot of things that
it's a lot of hype at the front end, and then maybe it'll hit its stride at the right place,
at the right time, with the right market. And by the way, special project market,
there's a lot of opportunity there, you know, for delivering radio towers and
(37:24):
wind vanes and whatever up mountains, just drop them off at the top. Yeah, that's all fun stuff.
But when you get back down to earth, the reality is, you know, let's talk about whether or not
these planes are going to need pilots in the future. You do sort of, though, raise a point
with some of those locations, some of those very hard to reach locations with very large pieces,
(37:44):
with sort of the aging of the 747 fleet, with the Antonov fleet being pretty much off the table for
a lot of people to be able to... Well, at least on the 225. Yeah, exactly. So, I mean, there's
real limited sort of capability there. I mean, there's going to need to be a suitable successor
for those types of things. And I mean, you've got a number of members that fly the 74,
(38:04):
and they get a ton of traffic, and you see it on LinkedIn, and business is good for them.
But again, as those airframes age, and fewer things, and we're seeing it too with the issues
with Boeing and Airbus, just being late on deliveries, a lot of sort of airframes that
would go to being converted for cargo are still being kept in passenger operator fleets, because
(38:26):
they haven't gotten their new aircraft yet. Yeah, it's been a big concern. And Michael
Steen, the CEO of Atlas, has expressed the concern as well, that just there's the largest 747 freighter
operator right now, and you just don't have enough feedstock for the future. And obviously,
now you have the 767 conversion program that's out there, you have the 777 conversion program.
(38:51):
But the reality is that there are not enough air freighters. And it's a big concern going
forward. And that's why we're also seeing the advent of narrow-bodied freighters. I mean,
I saw that there's now a flight operating a narrow-bodied freighter that's running
in conjunction with United Airlines. I think Global Crossing or Global X is running it out
(39:14):
of Chicago to San Juan and back on pharmaceutical runs. And, you know, we'll see what happens. But
the reality is, we need that wide-body feedstock. And that's what the freighters have been all about.
And certainly, the Antonov situation, the destruction of the 225, that was a very vital
piece of equipment. It's gone now, unfortunately. My heart pines for the fact that every time I fly
(39:39):
to Pearson in Toronto, and I see that Antonov there that's just sort of a negotiating chip
between the Canadian government and racking up parking fees. Man, a war hedge. I mean,
O'Hare just bumped theirs up quite a bit when I went and parked this morning. I can only imagine
what Toronto's charging to park an Antonov for years at this point. Running freighters is not for
(39:59):
the faint of heart. It's not cheap. And, you know, they operate under a different set of maintenance
rules. FAA watches them like a hawk. And they require a lot of upkeep.
Can we just pour one out for the Polar brand, too?
Yeah, well, you know, I mean, I think a business decision has been made by Atlas on this.
(40:20):
And, you know, in conjunction with DHL, they have to run their business as they see fit. And I think
the reality is that they don't think the Polar brand is as viable as it once was.
No, that's fine. Just every time I would see that P on the tail, it reminded me of
Flying Tiger's tail. So that's sort of the historical connection for me there.
Well, I'm trying to figure out how we're going to see this double-digit growth
(40:43):
at the same time when we're looking at the threat to the econ. And how do you see the
industry trying to manage that? Do you see that there's a workaround?
I see that you're going to see an acceleration of manufacturing out of the Southeast Asian
countries. And you're going to also see India stepping up to the plate. Although
(41:04):
India, from a manufacturing standpoint right now, you know, doesn't hold a candle to what
China is manufacturing. But you got to remember, the U.S. consumer is driving a lot of this. The
consumer demand is up. We like ordering from Timu. We like ordering from China. We like ordering from
Amazon. It's funny. A lot of us like still going out to stores, but the stores are really like
(41:27):
showrooms.
They don't have the inventory. And I just bought a pair of shoes.
And your point is well taken. I went to my local running shoe store. And I was trying on the shoe
because, you know, it's important to try a shoe on when you wear it, especially if you're going
to go walk a significant distance. And they didn't have anything that I wanted in terms of the color,
(41:49):
you know, style combination. They only had what they had on the shelf. But you go on the internet
and it's triple.
Yeah. So here's the question. How much can the American consumer sustain in terms of additional
costs? You know, I mean, if you if you think about a 10% bump in tariffs, that's probably
(42:09):
okay. You know, a third will go to the manufacturer. A third will go to the consumer.
A third will go to the retailer. But when you start talking 25% tariffs or 60% tariffs.
And I think the thing, too, is, is just and Cameron, you and I have talked about this. It's
like you see this sort of reciprocal thing. It's like, what is the compounding upon the
compounding of the compounding? It's like, hey, here's 25% for you. Hey, here's 15% back. No,
(42:33):
it's going to be 35. Is that 35 on top of the 25? Which gets I mean, all of a sudden,
it's a tobacco auctioneer thing. And I was in a store, I will not name them. But their name includes
the denomination of currency featuring George Washington. And all of the prices were a quarter
more than than George's currency denomination. And that was basically across the store.
(42:55):
But you got to remember, also, you know, there are a lot of uses for air cargo,
we've got a member that ships rock band equipment. And, you know, the think Bruce
Springsteen and the Rolling Stones and whatnot, no Taylor Swift, and they'll run three and four
freighters a time at a time just to get the concert move from one venue to another venue
in another city, maybe even another continent. So there are a lot of uses for air cargo still
(43:19):
the thing that I'm wondering is about and I saw quite honestly, it'll be a question here. And
then also that that I'm going to ask the NCB FAA with the President's selection to head Health and
Human Services. They already canceled and didn't reschedule a meeting for the flu vaccine coming up
for this fall. Pharmaceuticals play a very large role in a lot of what air forwarders move. And
if there's any, if there's any sort of national level change to policy regarding pharma life
(43:45):
sciences, any of that type of stuff, that's also going to affect what airlines and what what air
forwarders have been have been set up to move. Absolutely. I agree with you that will that will
have an adverse impact on air cargo. But I tend at the Air Forwarders Association, we tend to be
bullish on our industry, and we see opportunities. And every time I'm on an airplane now, there's
(44:08):
never an empty seat. No reason not to. I mean, the planes are not stopping flying. I think there's
just a lot of consumer demand out there. We the trick is, how long will consumer demand stay?
The thing I'm trying to figure out Cameron, let me know if you agree with me on this or not.
It's kind of like, I'll make the joke for the guy that was in Long Beach and I can make an
article reference. It's like when they when they get close to as container ships get closer and
(44:30):
closer to the shore, eventually you just you turn the engine off because you're going to have to
coast in until you slow down. And I'm just sort of wondering, as we as we see the threats or
actual tariffs that come in, what's the coasting effect before the U.S. economy catches up to that?
And is it the tariffs that do it first? Is it the number of people that are going to be filing
first time unemployment for whatever reasons? I mean, there's there's a lot of sort of different
(44:53):
moving pieces here that that I'm I do not profess to be an economist to ask these questions of. We
we certainly asked him a Paul, but we had him from S&P a couple of episodes ago. And speaking of
frontloading, I mean, you've seen a lot of frontloading. And these these companies have
anticipated these tariff potential tariff increases. They've loaded up warehouses,
their front loaded warehouses here in the U.S. And I think they kind of know what's coming.
(45:19):
But going back to Cameron's central question is what what kind of an impact is it going to have
on their cargo? I don't think it will adversely necessarily adversely affect the freight
forwarding industry because we're always going to have to move boxes some way or another.
But the reality is it could have an adverse impact on cargo volumes.
I was looking at the Wall Street Journal and I got the news feed. An article just
(45:41):
dropped this weekend because somebody stopped talking about the Ukraine for five seconds.
So something else got snuck out. And that's an interesting pivot in the whole foreign policy
of the United States and the impacts and implications, especially for the air cargo
industry that does a lot of support to that theater. Yeah, but there are other theaters
as well. Don't forget, you know, we've got the situation with Taiwan. We've got Gaza,
(46:06):
you know, and the U.S. is supporting those theaters with armaments and defense related
equipment and relief and everything else. Yeah. So there's a lot a lot of air freight going to
these regions. Absolutely. A lot of air freight you never even think about or nor do you know about.
And and that's just the way it's always been. I don't recall in my lifetime where we've had
(46:28):
such a tense geopolitical situation that could just erupt in so many red zones,
it could erupt so rapidly. And yeah, I mean, we're you know, we're going to be essential.
It'll be interesting to see how we pivot out of China, because I think there's some real
concerns about pivoting out of China into Vietnam. I was just noticing that we already have a trade
(46:52):
deficit of about half with Vietnam that we have with China. China, we have a 295 billion
and Vietnam is 123 billion. Not that far behind. I mean, that's not that far behind if you don't
think if you think about it, especially if all the there's a big shift to Vietnam being
the manufacturer of choice. And now Chinese companies are coming into Vietnam and setting
(47:15):
a manufacturing shop all day long, all day long. Right. So they see what's going on. Well,
they came to Mexico as well. One of the things that we learned from Carlos Sesma, one of our
other interviews recently, a lawyer in Mexico, was the number of Chinese companies opening up shop
in Mexico, trying to take advantage and creating basically towns in China. And there's been
(47:39):
argument. You've seen this for over a decade. I had a lawyer make a case or make a point at an
I was at a couple of weeks ago, because as you're talking about that all over the place,
the question isn't necessarily going to be the country of origin. The question is going to be,
what's the country of ownership of the manufacturer? Now, that's going to be a lot
(47:59):
more legal gymnastics to work yourself through around and to try and get to the bottom of that.
That if all of a sudden we start saying it's not just where it's coming in from,
but what's the corporate seat of the company that's making it? I think that that's a whole
another crazy conversation to get into. I'm curious, can you actually get a plane all the
way, a freighter from continental United States to India, or do you have to do a layover?
(48:24):
So the quick answer is yes, but don't put anything on board the plane.
You know, certainly the 747-800 series can fly a good distance, but that's why we have gas stops
like Anchorage. You know, you can fly a 747 out of Asia. If you don't load it up to the gills,
(48:45):
sure, you can fly it anywhere into the United States, but that's why they fly 144 miles out
of the way, gas up in Anchorage with a full load, and they're able to hit every U.S. city
quickly because they've made that tech stop. So the same thing applies to India.
We use the term flyover country. Do you know who's back in the game for doing that now
(49:07):
because of the Russian airspace closures? Kazakhstan.
Yeah, certainly this, the whole Russian thing has cost us, cost our industry a lot of money
because we're not able to overfly Russia anymore, and certain countries still do,
so it's made us not as competitive, and it's increased costs. So it's tough, but I guess
going back to your question is, yeah, sure you can, just don't put a lot of freight on the plane.
(49:30):
Fair enough. I'm just trying to ferret out, like, as supply chains pivot and shift,
how does it impact the industry, and then how does the industry adapt? Because I'm a big believer
that natural history, that which adapts, survives, and that which does not adapt goes extinct.
Absolutely, and nature abhors a vacuum. There's always someone creative out there
(49:51):
coming up with another solution, and I think we're going to see that as well.
That's why freight forwarders are such a fun bunch to be with because of the creativity.
I mean, something we don't even touch on here in North America is sea air services.
So like a lot of that stuff out of India, they'll put it in a container, and they'll run it to a
Middle East or Gulf. They'll run it to Dubai. They'll run it to Qatar, and then from there,
(50:13):
it's going into Europe. That was sort of the workaround that they were using for the Red Sea
for a period of time, too. It's like, hey, we can cut off your transit time through the Med
by just getting it to here, and then we'll strip it out. We'll transload it, and the next thing you
know, you spent a week on the water from India. That's good enough. We'll have it in London in
two days after that. Well, Brandon, you've got a conference to host for the next couple of days,
so I'm told. Thank you for taking the time to meet with us. Yeah, thanks for having me,
(50:37):
and I hope that we see a lot of your listeners here in Dallas. This is going to be a really
great conference. Next year, by the way, we're in Orlando at Champions Gate, expecting an even
bigger turnout there. So if you don't know what to do, come on down to the Air Cargo Conference.
It's the one for the rest of us. Aircargoconference.com. Brandon,
(50:59):
thank you. Cameron, a lot of fun as always, my friend. Thank you so much for your time.
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