Lars Jensen Discusses The Ripple Effects of Suez Canal Blockage on Container Shipping

In this episode, we brought on Lars Jensen, CEO & Founder of SeaIntelligence to discuss recent headlines and to get his thoughts on the current state of the container shipping industry.

In this episode, we discussed:

1. The ripple effects that the Suez Canal Blockage will cause for the container shipping industry and how shippers can think through the challenges they may face.
2. Why supply chain resilience is the name of the game in 2021 and how the Suez Canal Blockage emphasizes this further.
3. Why Lars believes the pandemic and recent port congestion is just "large-scale noise" that is just accelerating an underlying fundamental shift in the container industry.


🔴 Subscribe to the NYSHEX YouTube channel for more valuable (free) content on ocean contracting and supply chain best practices:

YouTube ► https://www.youtube.com/channel/UCpAbLM5WE0YJP7c8mZZjDVw

🔴 Subscribe to The Supply Chain Secrets podcast. Perfect for people that are on the go:

Podcast ► https://supplychainsecrets.buzzsprout.com/1717053

Connect with NYSHEX:
LinkedIn ► https://www.linkedin.com/company/7930436/
Facebook ► https://www.facebook.com/NYSHEX/
Instagram ► https://www.instagram.com/nyshex/?hl=en
Twitter ► https://twitter.com/NYSHEX
Website ► https://www.nyshex.com/


✅ For questions or feedback on the podcast direct message Don and Bryan on LinkedIn: https://www.linkedin.com/in/bryan-most/
https://www.linkedin.com/in/donaldadavis/

#SupplyChain
#ContainerShipping
#Logistics 

Transcript

0:01

All right, guys. You ready to go? Yep. Cool. Well, hi everyone. I'm Brian, most SVP of retail strategy at and former VP of supply chain at Walmart. And I'm Don Davis. I'm the senior vice president of carrier strategy here at nice shacks and former executive of Hapag-Lloyd. And CMACGM we're back again today with our podcast supply chain secrets, Don and I are really excited to announce today. We have our very first guest on the show. Mr. Lars Jensen, who is certainly no stranger to many in the supply chain industry. He's a leading expert in container shipping and specializes in combining analytics skills, in-depth knowledge and container shipping industry knowledge and his management experience. He's often used as an expert speaker at international shipping conferences, as well as private engagements, focusing on clients that want updated information on market developments. Lars, welcome to the program. Thank you so much for inviting me. Absolutely. So today we want to do something a little bit different. We'd love to once in a while, talk about current events or headlines that are in the news. And, you know, we've all worked in this virtual workplace for the most part for, for the past year and the traditional water cooler or break room talk is it's just kinda hard to have. So maybe we'll, we'll have a little bit of that today and, um, there's no shortage of headlines. So, uh, you guys want to get started. Absolutely. Go ahead. Awesome. Um, well I think we've, we have to start the show with, uh, with the issue going on right now in the Suez canal. So the, the evergreen ship, the ever given 20,000 TEU ship, uh, is currently, uh, blocked, blocking the, the Suez canal. And it has caused all sorts of ripple effects. And Lars, I know you've been, been watching this one closely, but. Would love to hear kind of the updated information and your perspective on, on what's happening here. Yeah. I mean, uh, we're now three and a half days into, this debaccle. And from my perspective, we are now entering the period where this changes from being let's call it an annoyance to be something that's going to have significant ripple effects. Maybe you should take the annoyance part first on the normal circumstances. If you then suddenly have this Suez canal closed a couple of days, that would cause serious problems. However reality is that the supply chains already in disarray after all the pandemic effects of the last year. So with most vessels being four or five, six, seven days late, anyway, an additional delay of two days would barely be noticeable in this environment. But we have now passed that point and the ripple effects will materialize over the coming months. Now, no matter what we do, even if the canal was to open. Tomorrow, what you will then be faced with is a massive log jam of vessels. That will take many days just to clear the backlog. So we are now looking for some of these vessels of a week, delay no matter what we do at a very minimum, we are already seeing carriers now, redirect vessels to take the long route around Africa as also to me, a pretty good indication. They don't expect this to be resolved in the short term, in terms of ripple effects. There will be many. First of all, this is going to be filled, especially with shippers in the Mediterranean. Shortly after that in North Europe is actually the export shippers. That would feel it the most because they will have cargo. They want to take down to the port to put on ships that are right now not arriving because they have stock in port. The next rebel effect you're going to see is. The capacity shortage on containers on empty containers that has been the headlines for the last four months. This problem is now going to get worse. It is not going to get better because a large part of solving that is the repositioning of empties from Europe back to Asia that is now stuck in the lockdown as well. So that's another ripple effect. A third rebel effect is of course, when we talk Suez we tend to think about Asia and Europe. But you as East coast will be similarly impacted when you have a large amount of cargo that goes on the Suez routing and the knee jerk effect might be to say, well, that's not really an issue because we can just use the other us roundings. In normal times. Yes, but these are not normal times. The other routings to the, through the West coast and through the Panama canal already suffers from a severe shortage of vessel capacity and a massive congestion at the ports. So redirecting the Asia via Suez to us cargo onto the, I was about to say traditional us routes. Is not really operationally possible. And the third ripple effect you're going to feel is if you go around Africa, this will effectively remove a large amount of vessel capacity from the market due to the much longer sailing distances, all vessels in the world are already sailing. So the question then becomes, where do we take this extra capacity from? And that is likely to be done partially of course, by impacting the services directly hit. But also other services, would I continue to operate the way I do on the transatlantic? Or would I divert some ships to help with this? Would I continue to operate as paranormal from us to Australia? Or would I divert some ships from this? This is going to have a ripple effect on all trades. Absolutely. Don, when you think from a carrier perspective, what, what are you thinking if you're a carrier right now? Uh, I'm thinking, um, I hope this is going to be resolved soon and probably a false hope because I'm sure they're getting bombarded with questions and it's never pleasant. To try and respond to something that you not quite sure how long it's going to last or what the implications are. And it's very difficult to cope with something so unpredictable, particularly when you're talking about customers cargo transit times, and this is definitely going to have an impact on your, um, on your transit, but you're just not quite sure what you're going to do. How long do you wait versus make a decision to turn around and. With hindsight, you know, it could look completely different, the decision you make, but you're just trying to make the best decision you can with the information you have that's available. And it would seem logical that it's, you're probably at a point where you need to start thinking about taking the long route. And even though that has transit time implications, at least you're dealing with certainty versus just waiting and hoping. And, and that just doesn't really feel good to customers usually. That you're just, you're just waiting without any sense of when it's gonna get resolved, because I think most people thought if it wasn't resolved quickly, it's probably going to take a while and a while could be seven days a while could be 14 days. It's just hard. It's anybody's guess. Yeah. I mean, I think that's the biggest question, right? I mean, there's certainly been various news reports, uh, even from some of the salvage companies saying that it could take weeks. Right. I mean, are, they're certainly trying to dig out the bow. They've got tugs, trying to pull there. They're even hoping, you know, for, for, for tides that are, are going to help, you know, free the free the ship. So to your point, I'm not sure anybody really knows. And you know, for me, from a shipper perspective, this is just another reminder, you know, 20, 20, 20, 21 is just this reminder for this continuous need for diversification. Right. The idea of also having visibility into your supply chain and resilience. I've heard Lars talk about those things. A number of times over the last 12 months, and the idea of being a supply chain manager and thinking that these are just one-off issues. Just, I don't think you can, you can. Except that anymore. I think you just have to know that you're going to walk into your job each and every day, and you never know exactly what's going to happen in the world. Now do a lot of us. That's the excitement of the job. But if you don't have that resilience and diversification built into your supply chain, you're just going to have a ton of challenges. And I think the idea, first of just knowing. What cargo you have, you know, do I even have cargo on the evergreen ship or do I have cargo on it, on any of these ships that are either waiting or being diverted? So I can communicate internally to, to my stakeholders and make decisions on future cargo. And then the last thing is large talked about the idea that if you're a TPE eastbound eastbound shipper, and you go to the East coast, you know, the idea of having. Um, freight that flows both through the Panama and the Suez canal. Right. And, and, and being able to continue to flow freight. If one of those was, was not open shippers that employ those types of strategies are going to benefit in these types of situations. And Brian, do you think this is one of those cases where as a shipper, you then say, or someone, some senior manager might say to you avoid the canals. That, that we're, we're contract planning now for next year. And any service that, uh, uses a canal, you avoid it, or do you think that's something that could happen? Or do you think that this is something that you just say, well, you know, Uh, one of those things that we don't expect to happen again. So we shouldn't try and plan around it. It's all about minimizing risk. And sometimes there's only certain, you know, certain ways you can get to places, right. But this idea of saying I'm going to optimize for, for transit, for price, for diversification, et cetera. And. I may have 75% of my cargo that, that transits the Panama canal, because it is the best and uniquely fits where, where my network needs. But this idea of having something meaningful 20%, 25%, a third that also uses the Suez canal. So I have a meaningful outlet should something like this happen. I can work with existing partners, um, both with carriers and with ports too. Just to shift cargo if I need to. Um, so to me, it would be talking to that, that, that executive about optimizing for our network, but building resilience and redundancy in should a situation like this happen to, to, to me, this might also be one of those times where, I mean, at least this is the way I see it from a shipper perspective. There is a very high risk, and I understand the inclination right now to spend time on the wrong problem. There would be an inclination for shippers right now to be extremely concerned about what happens to my cargo on those boxes stock, in that queue off the Suez canal is how I would look at it. I'll say I don't, I wouldn't spend time on that because nobody knows it's it stuck there. Nobody knows it's not something I can do anything about. No matter what I do, however. I know there's a freight train coming a few weeks and a few months down the line, the ripple effects here will be poor congestion, lack of containers, blank sailings. So I would instead spend my time Mustang. Okay. If I try to project, where will these ships be? Three, four, five, eight, 10, 12 weeks down the line. What are the sailings that are now going to be canceled? How do I make sure that I at least get my cargo moving? In April, may, June and July. That's something I can do something about right now, but looking at the cargo that right now is stuck in that jam. That's the last thing to spend time on because honestly, nobody knows, and there's nothing you can do. No, it's a, it's a really good point. And then if you don't have some of those alternatives, um, already established, you know, now to your point would be the time to start. Obviously you might be behind some of those that already have other established routes or, um, relationships with providers in some of those other lanes. But I think it's great advice Lars, to focus on because. I think it really speaks to just the bigger issues, right? This is one issue and it certainly is dominating the headlines. But if we talk about overall market, right? I mean, you know, one of the headlines that came out of, out of the TPM was this idea that container chaos will take through Q3 to resolve right. Whether that's true or not. I don't know. But there is this perspective that, um, some of the disruption that we have had will continue on and, and Laura's, I'd love to hear your perspective on the broader market disruption. Yeah. Th th the problem is, I mean, before this Suez said, dip will happen. I would also have the perspective that. The problems we see now they should have abated by end of Q2 in a normal and relatively benign environment. But right now this is anything bought in normal and benign environment. Under normal circumstances had the market been normal. We could have handled this a Suez blockage because there's usually excess capacity in the system. Reality right now is there is zero excess capacity because all of that has been soaked up with the pandemic fallout. So we have no buffer in the system. So whatever disruptions we had over the last six months, there is no way we can now clean up on those until not only that the Suez canal opens, but we have to wait to the ripple effects of that one is dealt with. Um, I know one of the things that has been dominated the last couple of months is of course, this. Massive lock jam of vessels waiting off the California coastline in particular, it doesn't take many more days of closing this Suez canal. Then you can look a few weeks or a month into the future, and you can see the same image of the major ports in Europe. The major ports in Europe are extremely efficient, very good at what they do, but when you open the canal, You're going to see cargo come like you out of a ketchup bottle that has been stuck down there. And it doesn't take a lot more days of additional cargo on top. Then you also run out of capacity in the European ports, and the problem then becomes exactly the same as for example, in California. The port has a limited capacity for how many vessels can you handle per day? That's problem number one. And when you then do get the cargo off, there's a limit as to how many trucks and barges and railway wagons you have behind the port to actually clear it out of the port to start with, when you think about, learning from what we've experienced in LA long beach and applying that. So either learning what not to do or what to do. Again, Don or Lars, is there anything from a carrier shipper or terminal operations perspective? You'd say we've learned this and let's apply it or not apply it to, to maybe what what's going to happen in Europe. No, it was, I'll say, I'm not sure whether it's a learning point. It was something I started, annoying people with already several months ago when I was told, well, how should we make our supply chain strategy for 2021? And basically my standard response ever since, and this just emphasizes it even further is don't plan for just-in-time supply chains for 2021, you will be horribly disappointed don't plan for the cheapest possible freight, because you will be at the back of the line. Resilience is the name of the game. That counts also when you go forward here. So right now you have no idea when the cargo will arrive. At some point in time, the Suez canal will open. You will receive finally and advisory from the carrier saying, well, your 27 boxes of garden furniture is now due to arrive in Hamburg on April 22nd. Don't rush out and just put it in the bank that the cargo will actually be accessible to you on April 22nd, you might be lucky and it is, or it might be a week, or it might be two weeks because we might run into this catch up effect. Don. What do you think on, on just in general market? You know, I know the headline says Q3 to resolve, but essentially is there going to be any lull as we go from where we are today into, into peak season? Is it just going to be one continuous stream? Do you see any breaks? What do you think? I think I do not see any breaks. Um, I see a couple of things and. In, in my role, I talked to a lot of carriers. I talked to a lot NVOs and I think the first observation is carriers are trying to really manage expectations this year, in terms of their contracting strategy. And they're getting a number of requests for customers to increase MQC to look at. Um, new, I could see customers are looking at new carriers and they're trying to bring their business to someone else. And carriers are really being hesitant. I would say, in terms of taking on too much MQC or taking on too many new customers, because my impression is they want to deliver. A good result in 2021 and really clearly manage expectations. But while you're also seeing is that on the other hand, that there's people that are starting to get concerned about what they're going to do, because some companies have significant growth plans. Their year on year growth has been tremendous and now they need to find a home for their cargo. So I think what that points to is that a very, very strong market leading into the third quarter. And I think if you look at the third quarter as the traditional peak season on top of volumes that are already expected to increase, I don't see any sort of lull until maybe after golden week. So you're talking fourth quarter of this year. Um, does that roll into Chinese new year for next year? Quite conceivably? It could, uh, I think there's a number of things that we don't know at this point, but it's not. Uh, it wouldn't be a huge surprise to me to see the strength of the market continue, because again, you're not seeing this outlet of capacity or that there's some. New service coming online that could handle all this additional volume. I think it's going to be very difficult. So I don't see much of a change or much of a reason to believe it's going to change based on what we're hearing today. Yeah. You know, Lars, there's been this talk of once, um, vaccinations get out and we reach, you know, whatever herd immunity is. Is that there, there could be this shift between consumers. Hunkering down and buying, you know, again, goods for their homes and then trading off into services or travel or things of that nature. Do you see that happening or any effect on demand and what we see for, for the second half of the year, we're not seeing any signs of it happening yet. Uh, that one is very simple. I would, however, still hold out the belief that at some point in time you will see the shift. Uh, the, the question, which is almost impossible to answer is. When will it happen? And how quickly would that happen? Both of them are important for the container flows. If it happens quickly and suddenly I could certainly see a handbrake being pulled on the part of the importers saying, hang on a second. Suddenly our sales are plummeting. Maybe we should hold off, ordering more goods, at least for a little while, until we figured out what's going on. So you can have this short-term period of a month or two where suddenly. Container demand goes into reverse. And then it normalizes after that, the problem is no one knows when this has happened. I mean, this side of world war II, we have never had such a constraint placed upon consumers and what you can spend money on. So there really isn't anything to model it on. If this shift, however, happens very gradually, we might not see that backlash because then it's just going to kind of be a slow easing off. For the importers and let's keep in mind right now, despite the enormous boom in cargo in recent months, the latest numbers and inventories actually shows retail inventories are down. And that's despite all the cargo that came in. Yeah. I, I think, you know, when you talk about some of those headlines, to your point, we don't know when it's going to happen, but we do know what's happening now. And you know, some of the headlines read retail sales rise, 7.8% in February as consumers remain hunkered down. You know, U.S. Front, U.S. Importers front-loading that adds to bullish transpacific, Q2, outlook, et cetera. And then back to the disruption effects on retailers that we've talked about, um, when you have headlines that says yes, U S retailers see millions in sales delays, amid shipping log jams in the LA times, or Peloton supply chain is broken a hundred million dollars. Won't fix it from freight waves, you know, Nike sales growth slows because of supply chain issues. When these companies are having to talk about supply chain issues because they are creating financial material impacts. I mean, I think that tells you just how deep right, these, these problems are. And you touched on this idea of saying, Hey, if you're a shipper to think that you are going to seamlessly flow goods just in time is probably not a good strategy or negotiating for the lowest rate. Is probably not a good strategy. And I think there's a lot of shippers that are caught, you know, because that's what they've always done. And that's what they're used to doing. But this idea of saying not this year, this year, I'm going to be more focused on what is a fair rate that I can invest in price and receive. A degree of predictability or a, or reliability that allows me to start to make an impact on some of those opportunities that are causing lacking lack of sales or, or out of stocks. Um, because you may be trying to negotiate to save a couple hundred bucks on, on your ocean freight rate, but the downstream effects could actually turn into millions. But, but, but you're gonna say here, you're touching on also a different topic. At, at least in the last year tends to have been somewhat forgotten because at least that's my view on it. There, I tend to call the pandemic noise. It's large-scale noise. It's huge volatility, but it's noise. It's a temporary effect. We have an underlying fundamental shift in this industry. That's actually far more important is very much like when we had the financial crisis, the financial crisis was not important. It was noise. But underneath that, the entire industry shifted because we went from this high growth environment to a more mature environment and that fundamentally changed dynamics and started the whole consolidation process. We are at a point where that process has now come to his conclusions. They actually had already prior to the pandemic, it just went unnoticed. You have a structural situation going forward, where carriers have a far larger degree of pricing power than they ever had. That's because of the consolidation. That's not going to change. You have carriers that now have acquired the ability. To tactically turn up and down capacity to match it to demand. They don't have to start price Wars to fill their ships. That's here to stay irrespective of the pandemic. And on top of that, after 10 years of gradually absorbing over capacity, 2021 is actually where you got to the point where the overcapacity was absorbed. Irrespective of the pandemic you are heading into a structural up cycle. Carriers are now beginning to order vessels. More and more, but that means this op cycle at the earliest will end in 23 on 24. So the new normal that we will be getting no matter whether we had a pandemic or not is one where the pricing power, the shippers have enjoyed over the last 30 years has been severely eroded. It's a market where the carriers to a much larger degree can control capacity. And it's an up cycle where you will have temporary capacity shortages, no matter what you do. So on that basis, Lars, do you believe then that this new rate level we've seen particularly to transpacific that that rate is here to stay and you would see less rate volatility than he might've seen in years past? Uh, that's two different questions. Let's say them one by one. The raid levels we see now is from what I see overshooting the Mark. I clearly understand the carrier's impetus. Of course, when you have an extremely strong market, sure. You sell your product at the price, you can sell it to 'em. I get that. It's overshooting the Mark. What is the level we should expect going forward? And what at least I have my eyes fixed on is remember 2016 and 2016, the market crashed horribly. And if you look at the freight rates, both spot and contracts in many trades, it took an entire level shift down once, which was of course, Warren did tactically that year and the carriers had been trying ever since to reverse that level shift. As a first fixed point of benchmark, I would look for that leverage shift to be permanently erased, which means the level you should be looking for as let's call it. The new normal is back where we were in 2014, 2015, which is actually substantially up compared to where we were in 2019, but also quite a bit lower than the prices that are right now in the market, because the ones right now of course are also colored by the tactical situation. Then. The other one on the volatility. I w I would expect to see a much more stable rate environment in the future. The way I look at it is again, because of the carrier's ability to turn up and down, uh, on the capacity side. So in the let's call it the good old days, the normal state of affairs was a permanent price war. And then there was a few festive events where the carriers could turn up the prices and make money going forward. I see it as the exact reverse. You're going to have a higher. But more stable price environment. And then yeah, on a few events, you might have a price, war, and prices will drop, but the balance between the two are going to be reversed. So this is to both both of you guys. I, I think that shippers, because this past year has been so difficult, they're, they're looking for any Ray of hope and. So to see a headline, like somebody like evergreen, you know, spend billions of dollars on 20 new ships, or what have you thinking that, Oh, maybe the carriers are going back to their old ways. Uh, you know, Lars explained, even if they are going back to their old ways, there's still several years before we get there. But is there anything inside of, of the numbers that say, maybe you don't get excited yet shippers, that this is either replacement tonnage or it tends to more lean towards. Uh, trying to meet environmental goals or maybe the ships aren't even as big as, as they are today. I w w what would you look at inside of the data that would say don't, don't get too excited yet. Yeah. I mean, first things first. I mean, until recently the audit book was still only at about 10%, which was even not enough for replacement on it. Now we are pushing about 15%. So finally it's beginning to look a little like something. Um, when I look at the vessels that are being ordered increasingly, uh, the carriers are taking a step down. Most of the orders coming in now that's the 14, 15,000 TEU range, not the ultra large ones. Right. I see that as a positive sign and actually the shippers should also long-term see it as a positive sign because going down slightly in size, that means that the carriers rather than go for ultra large ships would rather go for a higher service frequency. You're going to have war more weekly services with that kind of, sort of tarnish, which at the end of the day would also mean you can cover more port pairs directly. You will have a more fine grain network. But that's not going to be something you will see the effect of for the next two or three years. Yeah, I think that, um, with the order book, there's just certain challenges that carriers have in terms of thinking about ordering ships and thinking about what they're going to do with their, uh, environmental emissions policy and how do they, how do they tackle that? I think that there's, um, Quite a bit of thought. I think some carriers have come out already and given their, uh, ambitions to be carbon neutral at a certain point. I think there are certain implications on the vessel side. You can see that LNG is a way forward for some carriers, but, um, you know, you, it's, it's very difficult to convert a ship or very expensive to convert a ship. Uh, an existing ship to LNG. So does that mean that you have to acquire new ships? I think these are some of the things that carriers are looking at. I think we're all, probably NASA was just talking about, uh, this very thing, uh, because they converted one of their ships to LNG and it was quite expensive. So, um, but it's, it's, it's something carriers are looking at and experimenting with. And I think until. They're clear on the cost implications and what that looks like and decide on their way forward. Then you're going to see a little bit more comfort in terms of the order book and how carriers are going to start ordering ships. But I still think there's a lot of questions around that carbon neutral, um, ambition. And, and what does it mean? And what's it going to take to get there? And once that starts to become clear, then carriers are going to become more comfortable with, uh, replacing some of the ships they have today. You just as a side comment here, this is also where the fallout from Suez is going to be interesting to watch because there has clearly been a ramp up in the focus on environmental emissions, also from shipping in recent years, as long as the Suez has closed, forcing everybody to go around Africa. This is going to have a major impact on the emissions numbers, not just from container shipping, but from all shipping lines. And there really isn't any alternative right now. That's going to cause a major stir at some point as well. Yeah. You know, I just wonder inside of the technologies, do you do either one of you have any insights as to maybe what some of the leading tech I know technologies are? I know that people are testing LNG, some are still retrofitting with scrubbers. Is, is there anything that looks like it's leading or is it still just really in test and learn phase, at least what I've seen so far? It appears to be in a. Let's call it test and learn, but not quite. I mean, I think a good indication is for example, the announcement from Maersk a few weeks ago, that they were going to order a methanol feeder ship for delivery in 2023. The interesting part about that is at least as a reasonable size ship is a 2000 TEU feeder ship. Because ships of that size in other sectors already exist running on methanol. So when we saying trials, it's not like it's a five TEU ship. It's not a maker carrier either, but, and this might be where, I mean, remember my background is in theory, not in practice, actually theoretical physics, but, but the way I always look at it is if you can build something as a workable prototype, Then it is just a matter of scaling. And if engineering has turned humanity, learned humanity, anything over the last 200 years is once something actually works, making it smaller and more powerful. That's just a matter of time. And when I look at all these different fuels, not just methanol, but all about the hydrogen and ammonia and all the other ones, we're at a point where it works. W we do have working prototypes. So it is not cutting it science anymore. It is said. Good old fashioned hard work on engineering. How do we then scale it? And that's where we have again. And again, seen that is to something that just takes time, but it will happen where we make it in time for 2030. I don't necessarily have a good bet, but if I was to look at my gut, feel. I would tend to lean towards yes. That is entirely feasible. Yeah. Well, it's, it's great perspective. Um, Don, you bring up, uh, an issue before too, right? There's going to be some cost implications to all this and you know, who ends up paying for it? I don't know, but. I know shippers with, you know, spot level rates at six and $8,000. Certainly don't want to look to pay for anything else at this point. But, but I think it, it leads to, to kind of the, the discussion around the situ I think that we we've talked about this structural situation. There's no doubt that the carriers have a leverage this year. And in terms of negotiating with shippers and you see headlines like carriers, cherry picking customers as rates continue to head North. In the load star or seismic change, Maris commits long-term to longterm relationships with shippers. Do you see this structural move and the carriers now being in a position to treat and engaged customers differently. Do you see that now? Really starting to take effect. I mean from my side, I think that, um, you know, with the leverage, the carriers have is that they have the opportunity to be selective. And I think they're looking at a variety of things. I think they're looking at a cost to serve. Um, so if you create a bunch of costs internally and, um, then you have a below average yield, then, then carriers might be looking to reduce. The amount of volume they carry with certain customers. I think there's other customers which fit a strategy. And with, if it's aligned with carriers, growth ambitions, whether that's out of a certain region to another region or, um, the overall growth that they might have, and a customer will fit into that maybe it's entering into new trade lanes and things like that. I think carriers have the luxury to be a lot more selective and strategic. Um, then they might've been in the past because the situation in the past was they were always trying to sign up cargo to fill their ship. And the struggle was always to make sure the ship has fall while that that's changed, that carriers are having very little trouble filling their ships. The biggest challenge for, for carriers is of course managing the fall down and making sure they can get that right, because there's still a fair amount of fall down and ghost bookings. That starts to turn into a different topic, but to answer your question, I think that they're there. What I hear from carriers is there's a lot of thought around certain customers that make a ton of sense, and you can see the carriers lean in, try and sign multi-year deals or take a different approach. Whereas other customers, you can hear they're being shut out and restricted and there's, there's different reasons for that. So the selectivity and the carriers is definitely being felt by the market. No, I would also tend to look at it this way and say, if I'm in the market right now, clearly is in the carrier's favor. And the carrier is also using that for all that is I think before we see a new one. Yeah. Morality established. And as I was saying before, me, not very much lean towards that new mallet, not new normality, being more in the carrier's favor than what we've seen in many decades. I think we still need to go through another swing of the pendulum because the last year, I mean, they've. To be honest, too few are shipped, but what have you seen? You've seen your rate quadruple and quintuple and service levels go through the floor that is not going to leave a happy customer, no matter what, what the rational explanations for those developments have been, which it means I also believe we need to go through another round. This is where the carriers are going to have a hard job ahead them because they need to mend the relationships with a lot of customers over this, uh, absolutely that we have to go through that phase as well. Yeah. And for me as a shipper, we we've, we've done webinars. And we've talked about this idea that, that you now have to, to be essentially this, this customer of choice. Right. You know, if carriers now have this newfound leverage where they are going to be selectively taking shippers that match a certain profile or, or help them. Um, from a, from a network perspective, you've got to make sure that carriers know what you have to offer. So where you do have global volumes and you know, how you forecast and how you plan and how you interact with your carrier partners, I think is, is going to be more important than ever. And if you haven't built out those capabilities, you certainly need to start building out those capabilities. Because if this truly is a structural move, In somewhat of the new normal, um, I think you've gotta be ready for it now, personally. I think that it's good overall for, for the industry, more transparency, more planning, more collaboration is going to create efficiency for, for everyone. But I think this is certainly going to force, um, or accelerate some of, some of that work that I think, you know, both shippers and carriers need to do, but. If you're a shipper and you haven't started on that journey, you better start this year and, uh, and make meaningful strides. If I think you want your cargo to be attractive to carriers, obviously we've talked about, you know, being a fair, a fair rate and a profitable rate, but I think there's going to be much more than rate that allows a carrier to say that this is a customer. No, but, um, but, but maybe to latch onto that and then stop me if I'm getting to strain too far. But once we we've also here talked a lot about the capacity and volume and rates. One thing we haven't talked about is what is the differentiation the carriers can bring to the table. We ma we make it sound like they're all selling exactly the same and exactly the same commodity. And I don't think that necessarily is true. I mean, let's go back to where we started this conversation in the beginning and say, let's look at, for example, then we have the, all the carriers that announced stock in a line down to the Suez canal. There's not a single carrier that can differentiate servers there. I mean, they're all just stuck in the same queue, but where the differentiation then comes in is okay, fine. Then eventually you may get out of the ketchup bottle and you have all these piles of cargo. Who then has the best network on the ground to help the customers navigate, to get the cargo out rapidly, to actually be available, to get a truck, to get a chassis, to get a rail car when it is actually needed. That is where all the opportunities for differentiation actually starts to come up. It's not on the vessels themselves, even though we tend to talk a lot about those, but that's actually the important part where the bulk of both the value add, and also the competition is going to. And Don, when you look at carriers, are there, are there certain carriers that, that are set up to capitalize on that? Because I think certainly from a shipper perspective, there's a lot of attractiveness to be able to, to start to get into discussions that are much more around predictability we've we've certainly talked about, you know, getting specific commitments. Uh, and, and right now, as Laura said, Uh, a commitment now is just, you know, getting out and getting a piece of equipment, getting on a ship and not getting rolled. But this idea, maybe somewhere when networks settle more of this time, definite guarantee on arrivals or being able to connect to other nodes of the supply chain that help fulfill, um, closer to, uh, distribution points. Do you see certain carrier networks, better position to be able to execute? Not just promise it, but be able to execute at a high level. Uh, I do. I do. I think, um, what you find is that carriers that have some sort of terminal position are able to get some sort of priority or cut corners there and, and jump the line. Um, I think you've seen that with, uh, how carriers have built some priority services. Um, you saw that on the West coast with priority discharge and making containers available. If you have the ability to, to work with the terminals, of course, This is a bit of a different situation. Obviously we're talking about where you have a severe congestion in the terminals, but I think that your relationship, the carrier's relationship with the terminal is going to make a difference. I also think that, um, this is where, you know, the merch and CMA model, where they have a forwarding component that, uh, I know from my time at CMA, that, that, that, that gave them certain opportunities. To use Eva to then take on some different landside capabilities and do some different things outside of the typical carrier framework. So I do think there's things carriers can do, um, and that they're certainly willing to do. And there's, you're going to have some position if you have the scale, the terminal relationship, or if you have a forwarder connection, I think all those things can help, uh, deliver a better service for the customers. Cool. So guys, just time check. We're about 40 to about 40 minutes in, uh, are there any other topics or headlines that you'd want to hit before we, we close out or Scott too? For, from your perspective, anything that we should either expand on or go back to, or that, that we didn't touch on. Cool, Don. Don, do you want to just, do you want to finish this out? Uh, sure. Cool. No problem. All right. All right. Well, Lars, I just want to say thanks for coming on our podcast. I hope you enjoyed participating in supply chain secrets. Um, For our listeners, uh, where could they find you? How can they get more information on your company? And if they want to connect with you, I would encourage them to go find me on LinkedIn. I spend a lot of time, uh, usually every day, providing different updates on at least how I see the market developments and what are the key takeaway soap come find me on LinkedIn. Super that's. Great. Well, thanks for a great show and hopefully we can invite you back, uh, at another point in time in the near future. And we can talk about the headlines again. Well, in that case, let's hope everything is open. You can invite me over physically. That would be brilliant. That would be awesome. I'd love that. Awesome. Great job, man. That was a good one. Yeah. Good stuff.