WEBVTT - Technology, Travel, And The Supply Chain 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:23.000 at Bloomberg dot com Slash podcast. All right, Hinali Tech 0:00:23.640 --> 0:00:28.680 Media Telecommunications. That's t MT to the cool kids. Um, 0:00:29.280 --> 0:00:32.480 I love this part of the market because it's changing. Boy, 0:00:32.479 --> 0:00:34.840 it seems not just on a daily basis, but maybe 0:00:34.840 --> 0:00:37.200 an hourly basis. You really got to stay on your toes. 0:00:37.240 --> 0:00:41.080 Mark Gibson. I know Mark Gibson absolutely is on top 0:00:41.120 --> 0:00:43.160 of this space. Mark Gibson's a u S Tech Media 0:00:43.200 --> 0:00:46.640 Telecommunications leader for KPMG. Mark, There's a lot to talk 0:00:46.640 --> 0:00:49.400 about when we talk about tech and tech trends. I 0:00:49.479 --> 0:00:52.600 want to start with cybersecurity because this is something that 0:00:52.640 --> 0:00:55.560 we hear companies talk about ramping up their spending to 0:00:55.640 --> 0:00:59.800 protect their networks every single year, yet we still see 0:01:00.160 --> 0:01:03.720 hacks and ransomware. How do you think about this space? 0:01:03.760 --> 0:01:05.840 What are you telling your clients, what are you hearing 0:01:05.840 --> 0:01:09.240 from your clients. Yeah, Paul, thanks for the chance to 0:01:09.280 --> 0:01:12.759 be with you today. Great to be here. And cybersecurity 0:01:13.000 --> 0:01:17.120 is certainly an emerging risk that is accelerated up the 0:01:17.400 --> 0:01:20.560 up the risk factors for tech companies, no doubt. Um, 0:01:20.600 --> 0:01:23.399 it's interesting we have We've been surveying and talking with 0:01:23.520 --> 0:01:26.039 execs that our clients in the tech sector for years 0:01:26.120 --> 0:01:28.880 and its cybersecurity has always been in the top list 0:01:28.920 --> 0:01:31.960 of risk, but you know, somewhere near somewhere near the bottom, 0:01:32.160 --> 0:01:34.800 and it's just sort of sat there and through the pandemic, 0:01:34.880 --> 0:01:37.039 and I think through the last eighteen months or so, 0:01:37.640 --> 0:01:40.119 we've really seen and accelerate to the top where most 0:01:40.160 --> 0:01:42.279 of the exacts we're speaking to in the tech sector 0:01:42.319 --> 0:01:45.000 are viewing that as one of the top business risks. 0:01:45.000 --> 0:01:48.520 And I think it's unique to tech because like all sectors, 0:01:48.960 --> 0:01:51.200 all of the companies in the tech sector have to 0:01:51.240 --> 0:01:54.440 worry about attacks within their own walls and within their 0:01:54.480 --> 0:01:58.160 own data. But it's also a reputational thing for tech 0:01:58.200 --> 0:02:01.120 companies because they're responsible for a lot of the products 0:02:01.160 --> 0:02:03.280 and solutions that are out being sold out in the 0:02:03.320 --> 0:02:07.000 market that are other companies are relying on to to 0:02:07.120 --> 0:02:10.760 protect against these cyber attacks. So it really is both 0:02:10.880 --> 0:02:12.959 a business and a reputational risk for a lot of 0:02:13.000 --> 0:02:15.840 a lot of the tech companies. Technology is such a 0:02:15.880 --> 0:02:18.839 broad term and when you speak to any investment bank 0:02:18.840 --> 0:02:22.000 around Wall Street, they say all their clients are transforming 0:02:22.040 --> 0:02:26.760 to digital economy. And what does that even mean? I mean, 0:02:27.040 --> 0:02:31.680 to be relevant in this new economy? What technologies do 0:02:31.720 --> 0:02:33.760 you think are really going to move the needle for 0:02:33.800 --> 0:02:37.800 the big corporations? Yeah, Shivani, it's a great question because 0:02:38.000 --> 0:02:40.799 you know, the disphrase digital transformation has been out there 0:02:40.840 --> 0:02:43.200 everywhere and it means a lot of things to a 0:02:43.200 --> 0:02:47.600 lot of people. And we we surveyed some tech exacts globally. 0:02:47.639 --> 0:02:50.160 We do that quite often, and we abolutely really interesting 0:02:50.200 --> 0:02:54.280 results this year where UM most of the responses of 0:02:54.320 --> 0:02:57.400 what are the transformational technologies that are going to drive 0:02:58.320 --> 0:03:00.640 the sector going forward? They were new things at the 0:03:00.680 --> 0:03:03.480 top of that list. It was things like artificial intelligence 0:03:03.480 --> 0:03:08.000 and IoT and robotic process automation. And it was much 0:03:08.000 --> 0:03:11.120 different from what we've seen in the past around transformation. 0:03:11.200 --> 0:03:14.320 And I think what it tells us is UM, before 0:03:14.360 --> 0:03:18.119 the pandemic, most companies view digital transformation as a way 0:03:18.160 --> 0:03:20.560 to drive costs out of their business you know, sort 0:03:20.560 --> 0:03:23.520 of grow the bottom line, update their processes, get their 0:03:23.680 --> 0:03:26.720 get their systems into the cloud, things like that, take 0:03:26.760 --> 0:03:29.200 back in cost out. But what we're seeing now through 0:03:29.240 --> 0:03:32.240 the reasults of these type of technologies are really focused 0:03:32.320 --> 0:03:35.800 on growing market share in the top line and enhancing 0:03:35.880 --> 0:03:38.560 customer loyalty and things like that that are much more 0:03:38.560 --> 0:03:41.760 competitive advantages. And so I think a lot of the 0:03:42.080 --> 0:03:46.240 tech companies are viewing these, uh, these newer emerging transformational 0:03:46.280 --> 0:03:51.000 technologies as a way to really generate new insights, attack 0:03:51.080 --> 0:03:54.760 the data security issue that we talked about previously, and 0:03:54.840 --> 0:03:58.200 really drive you know, competitive advantage in the market to 0:03:58.280 --> 0:04:00.680 be a winner going forward. So it is really emerging, 0:04:00.720 --> 0:04:04.120 but it's a great, uh, it's a great emerging question. 0:04:04.680 --> 0:04:07.720 So one of the technologies that seems to have just 0:04:07.800 --> 0:04:11.800 exploded this year and maybe even just in the last 0:04:11.800 --> 0:04:16.360 six months is crypto, and it just seems like that's 0:04:16.400 --> 0:04:19.480 where all the cool kids are going now, to bitcoin, 0:04:19.520 --> 0:04:21.760 to crypto. They're not going on to the trading desk 0:04:21.839 --> 0:04:24.159 Morgan Stanley to trade the long bond, They're going out 0:04:24.160 --> 0:04:29.760 and doing crypto stuff. What do you tell clients about that? Yeah, 0:04:29.800 --> 0:04:33.159 I think everybody's looking at that it's certainly become something 0:04:33.160 --> 0:04:37.360 that seemed to be UM out of the mainstream for 0:04:37.400 --> 0:04:39.880 a number of years, and a lot of clients were 0:04:39.880 --> 0:04:42.440 we're we're looking at that, but viewing it as something 0:04:42.480 --> 0:04:44.240 they deal with in the future. And I think it 0:04:44.279 --> 0:04:48.680 has made its way onto the agenda now for discussion UM. 0:04:48.680 --> 0:04:52.039 You know, blockchain is certainly an important topic for the 0:04:52.080 --> 0:04:56.120 tech sector UM and that's uh integrated some way with 0:04:56.200 --> 0:04:58.880 crypto UM and I think we're seeing more and more 0:04:58.920 --> 0:05:02.479 companies investigating how do you lean into that, how do 0:05:02.560 --> 0:05:06.480 you accept payment? How do you transact business using those 0:05:07.000 --> 0:05:10.560 alternative payment means? And so it's got it's made its 0:05:10.560 --> 0:05:12.680 way onto the agenda, I think for the clients that 0:05:12.760 --> 0:05:15.640 we talked to you, and I think the we still 0:05:15.640 --> 0:05:18.360 maybe we'll wait to see exactly how how it's you 0:05:18.880 --> 0:05:21.360 buy a lot going forward? All right, Mark, we'll talk 0:05:21.360 --> 0:05:23.200 about that one in the future because it's here to stay. 0:05:23.240 --> 0:05:25.919 It seems like Mark Gibson, u S t MT leader 0:05:25.960 --> 0:05:30.040 for KPMG giving us the latest on trends in all 0:05:30.080 --> 0:05:37.880 things text well, all reports that we're hearing over the 0:05:37.920 --> 0:05:41.080 past few days is despite the only cron variant and 0:05:41.120 --> 0:05:44.239 the challenges there people are traveling. You know, it's Christmas 0:05:44.279 --> 0:05:46.440 and people are heading out and getting on planes and 0:05:46.520 --> 0:05:50.440 driving and going back and forth for the holidays. Let's 0:05:50.520 --> 0:05:52.919 chick in what's really going on with the airlines with 0:05:52.960 --> 0:05:56.640 that whole industry. Peter McNally, Global lead for Industrials, Materials 0:05:56.640 --> 0:06:00.560 and Energy at Third Bridge. Peter, what do you think 0:06:00.640 --> 0:06:03.680 holiday travel is gonna look like for these airlines? Uh, 0:06:03.720 --> 0:06:07.839 it seems like people are heading to the airports and 0:06:07.880 --> 0:06:11.720 flying out. Yeah. Well, good to be with you. The 0:06:12.720 --> 0:06:15.599 You know, it's undeniable that people do want to travel, 0:06:15.800 --> 0:06:18.599 and we've seen it, you know this year, as people 0:06:18.680 --> 0:06:22.360 got vaccinated, they booked flights and they wanted to travel, 0:06:22.400 --> 0:06:26.640 the airlines themselves ran into some trouble and dealing with 0:06:26.680 --> 0:06:31.360 the demand because it was less predictable than in the past. Um, 0:06:31.520 --> 0:06:36.160 people are booking much closer to their travel dates than 0:06:36.200 --> 0:06:39.480 in the past. But the difference we've seen Thanksgiving and 0:06:39.960 --> 0:06:43.560 now coming into Christmas is that the airlines know when 0:06:43.600 --> 0:06:48.600 those dates are UM and they can staff and get 0:06:48.600 --> 0:06:51.080 the aircraft in the right places at the right time. 0:06:51.560 --> 0:06:54.400 Whereas you know, through the summer in the fall, as 0:06:54.520 --> 0:06:58.479 like the delta variant emerged and then receded. It was 0:06:58.560 --> 0:07:01.080 a lot harder for the airline to do planning. So 0:07:01.240 --> 0:07:04.320 over the last few weeks, you know, we've seen better 0:07:04.360 --> 0:07:07.520 performance out of the airlines and demand is on the rise, 0:07:08.200 --> 0:07:10.560 you know. And first of all, I must say I 0:07:10.640 --> 0:07:13.960 was also a buck Now graduate too, so you know, 0:07:14.200 --> 0:07:20.880 you must really know what you're talking about. So you know, 0:07:21.080 --> 0:07:24.000 here's the thing. A lot of things are being canceled 0:07:24.040 --> 0:07:27.320 that would have spurred a lot of global travel. That is, 0:07:27.360 --> 0:07:30.120 things like Davos or things. I guess there's a lot 0:07:30.120 --> 0:07:33.680 of private planes, but but still it bought a lot 0:07:33.720 --> 0:07:36.440 of people flying around the world. The JP Morgan conference 0:07:36.600 --> 0:07:40.840 events are being canceled. How does that shape what the 0:07:40.880 --> 0:07:44.640 beginning of the next year starts to look like. Sure, well, 0:07:44.800 --> 0:07:48.440 the way we're looking at it at third bridges to markets, 0:07:48.440 --> 0:07:51.520 we've got the domestic market which is basically in a 0:07:51.560 --> 0:07:56.840 full recovery, but the international market, even by midsummer next year, 0:07:57.040 --> 0:08:01.440 we still expected to be off. It's off levels like 0:08:01.520 --> 0:08:06.480 it's not going to be until in all likelihood that 0:08:07.160 --> 0:08:11.520 UH international air travel does make that full recovery, whereas 0:08:11.520 --> 0:08:15.680 the domestic market a lot more leisure domestic business is 0:08:15.720 --> 0:08:20.120 still different. UH, leisure, domestic travel has come back and 0:08:20.240 --> 0:08:24.200 has come back strong, and things like delaying returned to 0:08:24.320 --> 0:08:30.080 office or conferences being canceled. That's more impacting the business market. 0:08:30.480 --> 0:08:34.800 So um, you know, it is really important to segment 0:08:35.600 --> 0:08:39.200 um the different types of travelers that that you're seeing 0:08:39.200 --> 0:08:41.360 when looking at the airlines. All right, A car larry 0:08:41.480 --> 0:08:46.480 to kind of the airline industry is the oil business. Energy. 0:08:46.520 --> 0:08:49.199 It's a big cost for these airlines. We've seen oil here. 0:08:49.200 --> 0:08:52.640 We've got w t a Coude oil and fifty cents. 0:08:52.720 --> 0:08:55.800 I mean, this seems to be supply seems to be 0:08:55.840 --> 0:08:58.400 fixed and oil seems to be moving simply on where 0:08:58.520 --> 0:09:01.280 demand or perceived demand is going to be. How are 0:09:01.280 --> 0:09:05.480 you thinking about that? And when you look at your companies, Well, 0:09:05.679 --> 0:09:07.840 the first thing to think about, you know, oil, is 0:09:07.880 --> 0:09:12.600 that inventories are extremely low. We've really flipped the script 0:09:12.640 --> 0:09:15.520 from where we were eighteen months ago. And this really 0:09:15.600 --> 0:09:18.920 has to do with OPEC, and OPEC has managed supply 0:09:19.040 --> 0:09:22.600 lower um and inventories have come down, so that has 0:09:22.679 --> 0:09:25.840 led to this recovery in the oil price. That said, 0:09:25.920 --> 0:09:27.880 for the first time in a year and a half. 0:09:28.840 --> 0:09:31.160 When we look ahead to the first quarter, we actually 0:09:31.160 --> 0:09:35.240 see inventories rising for you for crude oil, and to 0:09:35.600 --> 0:09:39.840 US that's likely to cap prices. UM. There is a 0:09:39.880 --> 0:09:43.520 significant amount of under investment that has gone it, you know, 0:09:43.559 --> 0:09:46.360 gone on over the last few years in the sector 0:09:46.400 --> 0:09:49.520 that will have long term implications. But over the next 0:09:49.559 --> 0:09:52.440 six months for US, it's kind of hard to see 0:09:52.480 --> 0:09:56.560 oil prices running away with inventories on on the rise. 0:09:56.600 --> 0:09:59.839 And this has to do with OPEC has steadily been 0:09:59.840 --> 0:10:04.559 in greasing production UM and the US has also increased. 0:10:04.559 --> 0:10:06.959 But we think that in particular is a lot of 0:10:07.360 --> 0:10:10.640 low hanging fruit in terms of supply. At the same time, 0:10:10.760 --> 0:10:13.920 you know, look, the demand recovery is underway. Jet fuel 0:10:14.040 --> 0:10:18.960 is still off, but diesel has been very strong. Gasoline 0:10:19.040 --> 0:10:22.560 is picked up. So that's that's the dynamic we've seen 0:10:22.600 --> 0:10:26.240 it in oil prices. But regardless, you know, the cost 0:10:26.280 --> 0:10:28.600 of oil for airlines is definitely higher than it was 0:10:28.640 --> 0:10:31.520 a year ago UM, and this is leading to a 0:10:31.600 --> 0:10:38.600 situation while revenues we think in do recover higher fuel costs. 0:10:39.080 --> 0:10:42.120 Is one of the reasons why profitability won't get back 0:10:42.160 --> 0:10:45.000 to twenty nineteen levels just yet for the year. Now, 0:10:45.080 --> 0:10:47.160 what does this all mean for the consumer at the end. 0:10:47.240 --> 0:10:50.360 If you want a flight apparently to the UK near term, 0:10:50.360 --> 0:10:54.640 you're paying a thousand bucks. You know, you're it's expensive 0:10:54.840 --> 0:10:57.679 to fly right now. So what is the direction of 0:10:57.720 --> 0:11:02.480 travel so to speak here for for pricing. Well, there's 0:11:02.600 --> 0:11:06.319 there's limited capacity right now going you know, to the 0:11:06.480 --> 0:11:09.520 to the international destinations. Right. It was only November eight 0:11:09.679 --> 0:11:13.960 when the US opened up to thirty three uh countries 0:11:13.960 --> 0:11:17.840 that had been had been closed before, and the airlines 0:11:17.880 --> 0:11:22.120 are just moving capacity into you know, serving those markets. 0:11:22.120 --> 0:11:24.520 Whereas like if you want to go to Florida, right, 0:11:24.600 --> 0:11:28.319 this is where all the airlines have been competing to 0:11:28.480 --> 0:11:31.520 get that leisure traveler. Um. So it's a lot more 0:11:31.559 --> 0:11:35.760 seven thirty seven but three twenties and three that are 0:11:35.800 --> 0:11:39.960 targeted of that, but there's fewer seven and eight three 0:11:40.040 --> 0:11:43.800 fifties in position to carry people to these international markets. 0:11:43.880 --> 0:11:47.640 And that's why you're seeing this dispersion in what it 0:11:47.679 --> 0:11:50.840 costs to travel. Hey, Peter, thanks so much for the update. 0:11:50.880 --> 0:11:53.719 Really appreciate you taking the time. Peter McNally, he's a 0:11:53.760 --> 0:11:57.280 global lead for industrials, Materials and Energy and the firm's 0:11:57.400 --> 0:11:59.920 name is Third Bridge. So getting an update there on 0:12:00.160 --> 0:12:06.600 some some airlines and some travel and some energy there. Well, 0:12:06.640 --> 0:12:08.200 I have to admit that when I was getting my 0:12:08.320 --> 0:12:11.160 MBA at Duke University's Fucal School of Business, where are 0:12:11.840 --> 0:12:14.960 um our next guest actually had some studies there, I 0:12:14.960 --> 0:12:18.439 have to admit I didn't pay much attention to the operations, 0:12:18.440 --> 0:12:22.880 management and logistics classes I know, and that was a mistake, 0:12:22.920 --> 0:12:25.640 because those are the folks that are, uh, you know, 0:12:25.800 --> 0:12:27.839 really at the center of attention right here. Mike Powa, 0:12:28.240 --> 0:12:33.839 CEO of DHL Express America's joint US Mike supply Chain, 0:12:33.920 --> 0:12:36.120 I'd probably say a three or four times a day. 0:12:36.120 --> 0:12:40.160 It's an excuse for basically everything UH in my world. 0:12:40.760 --> 0:12:43.080 Give us a sense of kind of where we are 0:12:43.400 --> 0:12:47.120 right now and managing these challenges with the supply chain, 0:12:47.160 --> 0:12:48.439 and kind of how do you think it's going to 0:12:48.480 --> 0:12:51.760 play out over the coming six months. Day. Thank you 0:12:51.800 --> 0:12:54.559 Paul and Chanelli, thanks for having us, and by the way, 0:12:54.600 --> 0:12:58.839 go Blue Devils as you know UM and hopefully we 0:12:58.880 --> 0:13:02.400 can do something nice for Coach k on his way out. UH. 0:13:02.400 --> 0:13:06.040 But back to supply chain first and foremost, I'd have 0:13:06.160 --> 0:13:09.360 to say that we are really pleased with where we're at. 0:13:10.360 --> 0:13:13.319 UH as we kind of start to wrap up this 0:13:13.400 --> 0:13:16.280 peak season. UM. And I don't know what you call 0:13:16.360 --> 0:13:18.760 peak season these days, because we've been in peak season 0:13:18.840 --> 0:13:22.920 since last May. But we've had a strong peak season. 0:13:22.920 --> 0:13:28.160 Our volumes have been up. We started planning for what 0:13:28.240 --> 0:13:30.680 we call the super Bowl of peak season back in 0:13:30.800 --> 0:13:34.199 June of this year, going out and hiring two thousand 0:13:34.200 --> 0:13:40.120 two additional UH individuals just alone here in the US. UM. 0:13:40.160 --> 0:13:42.160 But so far, knock on wood and we're in the 0:13:42.240 --> 0:13:44.920 last what we would call the last week, last couple 0:13:44.920 --> 0:13:48.600 of days of the hurdle. We've performed quite well and 0:13:48.679 --> 0:13:50.920 I can speak to that as we go through this. 0:13:51.360 --> 0:13:54.560 You know, it's interesting. We've been talking to retailer after retailer, 0:13:54.720 --> 0:13:57.480 and the ones that are winning say they have just 0:13:57.559 --> 0:14:01.320 gotten their inventory management right. But I want to be 0:14:01.440 --> 0:14:04.560 also clear because you have someone like Cathy Wood who 0:14:04.600 --> 0:14:07.640 says the biggest risk to businesses are the fact that 0:14:07.679 --> 0:14:10.080 people have over ordered and that's going to come to 0:14:10.120 --> 0:14:14.440 bite them next year. I'm wondering, what is a delicate 0:14:14.520 --> 0:14:18.800 balance here at this very tricky time when it comes 0:14:18.840 --> 0:14:23.000 to the world of managing your supply chains. Yeah, well 0:14:23.000 --> 0:14:25.760 that's that's a good concept. That's UH. I talked about 0:14:25.760 --> 0:14:28.160 this about nine months ago and I called it four 0:14:28.240 --> 0:14:32.040 oh fear of running out UM, and a lot of retailers, 0:14:32.200 --> 0:14:34.800 a lot of our customers went from just in time 0:14:34.840 --> 0:14:37.880 to just in case. So it speaks exactly to the 0:14:37.920 --> 0:14:41.640 point you're referencing to. But we've also seen a big 0:14:41.680 --> 0:14:45.160 shift UH in supply chain. So a lot of what 0:14:45.320 --> 0:14:47.840 used to go maritime or ocean, or a lot of 0:14:47.840 --> 0:14:50.840 what used to go freight forwarding has moved over into 0:14:50.880 --> 0:14:54.840 our space of time definite international. And that's because we 0:14:54.920 --> 0:14:57.920 have a fixed air network and you know, we're not 0:14:58.120 --> 0:15:00.920 unique in that sense. Our competitors are there. Some of 0:15:01.040 --> 0:15:06.520 us planned ahead of others and created that capacity from 0:15:06.520 --> 0:15:10.400 that perspective, So yes, I would say there is a 0:15:10.440 --> 0:15:13.600 bit of that that is going on UM, and it 0:15:13.680 --> 0:15:15.960 may not be too bad, to be honest with you, 0:15:16.000 --> 0:15:18.640 because I think they will have the inventory that's appropriate 0:15:18.640 --> 0:15:22.840 and needed as you moved into the next peak season, 0:15:22.920 --> 0:15:25.080 which will be the run up to Chinese New Year, 0:15:25.160 --> 0:15:28.920 which is you know, late January of next year. Mike, 0:15:29.040 --> 0:15:31.640 when you I guess, just based on your internal analysis 0:15:31.640 --> 0:15:35.200 and your discussion with your customers, what's your best estimate 0:15:35.240 --> 0:15:37.520 of when the global supply chain will. I'm not sure 0:15:37.560 --> 0:15:40.120 what the right term is, but but just normalize a 0:15:40.120 --> 0:15:42.920 little bit more, UM, because it's been you know, a 0:15:42.960 --> 0:15:47.560 good twelve plus months here. Absolutely, everything that we are seeing, 0:15:48.160 --> 0:15:52.560 every analysis we've done, every conversation we've had, every session 0:15:52.600 --> 0:16:00.920 we've attended, indicates late or even early. Absolutely, so we 0:16:00.960 --> 0:16:05.160 don't see any change in twenty two. Uh. And especially 0:16:05.320 --> 0:16:08.800 with the variant and the explosiveness that we have seen 0:16:08.880 --> 0:16:11.400 and you've seen it. I'm living here in South Florida 0:16:11.480 --> 0:16:14.280 right now. We're up to a hundred and eight thousand 0:16:14.880 --> 0:16:19.440 new cases just Monday alone of this week in South Florida. 0:16:20.240 --> 0:16:24.440 All the testing sites are up. We are out of 0:16:24.600 --> 0:16:27.800 at home testing kits at least here in South Florida. 0:16:27.840 --> 0:16:31.160 That's what I can speak to, UM. And I don't 0:16:31.240 --> 0:16:34.720 see this changing in twenty two. So we're headed for 0:16:34.800 --> 0:16:39.080 another uh, you know, pandemic year in twenty two where 0:16:39.120 --> 0:16:41.800 we thought it would be an endemic. Hopefully at some 0:16:41.840 --> 0:16:45.520 point it will change. But again, no change in capacity 0:16:45.560 --> 0:16:48.720 in twenty two uh. And we think we're well positioned. 0:16:48.760 --> 0:16:52.280 We went ahead in twenty nineteen and purchased fourteen triple 0:16:52.360 --> 0:16:54.920 seven YE bodies from Boeing. We then put in another 0:16:55.080 --> 0:16:58.680 order for eight uh and we continue and we added 0:16:58.800 --> 0:17:03.520 one new aircraft every week from June of this year 0:17:03.560 --> 0:17:05.760 to the end of the year. I'm curious, and we 0:17:05.840 --> 0:17:08.639 only really have thirty seconds year. Can you do this 0:17:08.680 --> 0:17:12.400 in a way that's greener. We are working on that 0:17:12.440 --> 0:17:15.600 through sustainable aviation fuel, which we started in Europe and 0:17:15.640 --> 0:17:18.280 in the United States. We kicked it off in San Francisco, 0:17:19.000 --> 0:17:20.679 uh and now we're looking to kick it off in 0:17:20.760 --> 0:17:25.280 other markets, but absolutely from that perspective, and we will 0:17:25.359 --> 0:17:30.280 launch the first twelve fixed wing electric aircraft in the 0:17:30.320 --> 0:17:34.800 United States through a partnership with Aviation at a Western Washington. 0:17:34.880 --> 0:17:37.200 So stay tuned for that. All right, Hey, Mike, thanks 0:17:37.200 --> 0:17:39.240 so much for joining us. Really appreciated getting the update 0:17:39.280 --> 0:17:42.040 on the supply chain. I didn't necessarily like the timing 0:17:42.440 --> 0:17:46.919 that Michael suggesting. Late Mike Para, CEO for DHL Express 0:17:46.960 --> 0:17:51.399 America's um again talking about supply chain challenges remaining uh 0:17:51.520 --> 0:17:55.119 well into tree. So again we'll have to see how 0:17:55.200 --> 0:17:58.240 that plays out going forward. Certainly a challenge for the 0:17:58.240 --> 0:18:06.800 global economy. All right, So infrastructure, we got that infrastructure 0:18:06.920 --> 0:18:10.720 built through bridges, tunnels, all that kind of stuff. The 0:18:10.760 --> 0:18:15.320 Gateway project, for example, new train tracks underneath the Hudson River, 0:18:15.359 --> 0:18:17.719 which we so desperately need, which has been my pet project. 0:18:17.960 --> 0:18:20.159 Looks like that's even gonna get funded. So this is 0:18:20.160 --> 0:18:21.760 a great time to talk to our next guest and 0:18:21.920 --> 0:18:25.600 Fan Dazi, chief executive officer for Richie Brothers. Richie Brothers 0:18:25.640 --> 0:18:27.679 trades on the n y S E r b A. 0:18:27.880 --> 0:18:32.080 It's a global asset management company that sells industrial equipment 0:18:32.160 --> 0:18:35.520 and trucks through live and online auctions and distributes through 0:18:35.560 --> 0:18:37.919 other channels as well. So a really cool company. I 0:18:37.960 --> 0:18:41.400 didn't even know this existed until we spoke earlier. Um, 0:18:41.440 --> 0:18:43.880 and thanks towards for joining us here. It looks like 0:18:44.400 --> 0:18:47.399 we're gonna get a lot of infrastructure. What's it like 0:18:47.480 --> 0:18:50.520 out there in the used equipment business? Are people scrambling 0:18:50.520 --> 0:18:55.320 trying to get stuff to build stuff with? Yeah, Paul, 0:18:55.400 --> 0:19:00.920 so they're trying, but the supply chain it doesn't seem 0:19:00.920 --> 0:19:04.520 to be cooperating with us. So the way that used 0:19:04.520 --> 0:19:09.600 equipment works, uh, is that you know, people replace used 0:19:09.640 --> 0:19:12.560 equipment typically with new equipment, and if there's a lag 0:19:12.600 --> 0:19:16.080 and new equipment, they can't dispose of their used equipment. 0:19:16.480 --> 0:19:20.040 So what's happening is very little supply in the uthed 0:19:20.080 --> 0:19:25.080 equipment market. It is, however, resulting in an incredible price 0:19:25.200 --> 0:19:30.200 environment for sellers. Oftentimes these days, because people are scrambling, 0:19:30.240 --> 0:19:34.119 as you said, for the infrastructure bill, they're busier than 0:19:34.119 --> 0:19:37.520 they've ever been before. Some used assets are actually selling 0:19:37.680 --> 0:19:42.359 above their original acquisition costs, unheard of unprecedents that has 0:19:42.400 --> 0:19:45.160 never happened before. You know, I'm kind of wondering here 0:19:45.280 --> 0:19:49.160 how long this lasts for and the investments that people 0:19:49.200 --> 0:19:51.240 are going to need to make to get through all 0:19:51.280 --> 0:19:56.400 of this uncertainty. Yeah, so that that is the question. 0:19:56.560 --> 0:19:58.600 That is the question, how long does it last? You know? 0:19:58.640 --> 0:20:02.960 When this started UH, So I joined Richie Brothers January 0:20:02.960 --> 0:20:07.520 of UH. Similarly, when I started looking at the company, 0:20:07.520 --> 0:20:11.480 hadn't heard of it. It's incredible, UH, an incredible marketplace 0:20:11.920 --> 0:20:16.479 for global use industrial equipment UM around the globe. So 0:20:16.520 --> 0:20:21.080 I started in UH. And you know, the first inkling 0:20:21.160 --> 0:20:22.719 we had that there was going to be a supply 0:20:22.800 --> 0:20:24.800 chain issue kind of came towards the end of the 0:20:24.880 --> 0:20:27.600 year from the O E. M S. And originally it 0:20:27.680 --> 0:20:31.359 manifested like a chip shortage. You know, hey, chip shortages 0:20:32.200 --> 0:20:35.040 UH and then it went to containers and shipping containers 0:20:35.040 --> 0:20:38.600 and labor and gluts and you know, uh and and 0:20:38.680 --> 0:20:41.960 the question on everybody's minds is when does it end? 0:20:42.200 --> 0:20:45.680 And so we know it's not now, if anything, is 0:20:45.720 --> 0:20:50.760 getting worse now because the supply chain still remains difficult, 0:20:51.280 --> 0:20:55.400 and the demand because of the infrastructure bill and just 0:20:55.600 --> 0:20:59.760 making people busier than they've ever been before. We're anticipating 0:21:00.000 --> 0:21:03.880 on time this year, but looking like towards the back end, uh, 0:21:03.960 --> 0:21:07.000 not the first half for sure, So give us a sense. 0:21:07.160 --> 0:21:09.080 And I mean, you know, it's all tied together the 0:21:09.359 --> 0:21:12.879 new equipment that used equipment market. What are the caterpillars 0:21:12.920 --> 0:21:16.119 and the deers and all those other manufacturers. What are 0:21:16.119 --> 0:21:19.159 they saying about their production schedules and how they'll be 0:21:19.200 --> 0:21:22.880 able to supply the market. Yeah, we're watching those very 0:21:23.000 --> 0:21:28.280 very closely, and they are experiencing the very the very 0:21:28.359 --> 0:21:30.719 problems that I alluded to. So we're kind of listening 0:21:30.760 --> 0:21:34.400 to their public filings, obviously meeting with dealers as well 0:21:34.400 --> 0:21:38.639 as corporate players in the space to understand what folks 0:21:38.680 --> 0:21:41.600 are feeling. And the reality is that, uh, you know, 0:21:41.680 --> 0:21:45.639 the demand from their dealers are higher than anything the 0:21:45.680 --> 0:21:49.800 companies can supply how they've chosen to kind of balance 0:21:49.880 --> 0:21:53.080 that is more fulfilled the demand on the retail side, 0:21:53.119 --> 0:21:56.320 so for retail sales and kind of uh you know, 0:21:56.320 --> 0:21:58.800 where they're feeling the brunt of the pause is on 0:21:58.840 --> 0:22:04.119 their rental fleets, which are aging. Uh and uh don't 0:22:04.240 --> 0:22:07.439 have a replacement cycle that's coming up. The nice thing 0:22:07.480 --> 0:22:10.320 for Richie Brothers with that is, uh, you know, as 0:22:10.359 --> 0:22:13.200 equipment continues to age, it for sure he'll need to 0:22:13.240 --> 0:22:16.399 be disposed of. Uh. And you know that's where we 0:22:16.520 --> 0:22:19.080 come in. The question is not if, it is when 0:22:19.440 --> 0:22:22.119 and we are waiting patiently for that day. You know, 0:22:22.200 --> 0:22:25.680 this idea that equipment demand is really being driven by 0:22:25.760 --> 0:22:29.560 infrastructure projects, how does that play out on the ground. 0:22:29.560 --> 0:22:33.520 What does it look like? Oh yeah, exactly. So the 0:22:33.960 --> 0:22:37.280 interesting thing is was how busy everybody has been the 0:22:37.359 --> 0:22:40.720 infrastructure money hasn't actually started to blow. So I think 0:22:40.760 --> 0:22:43.760 we're seeing the tip of the iceberg here. I think 0:22:43.840 --> 0:22:49.000 do covid um Infrastructure construction has been being an essential service, 0:22:49.040 --> 0:22:52.160 so we've kind of seen that steadily rise. Obviously people 0:22:52.280 --> 0:22:55.879 working from home, uh, so kind of construction on the rise, 0:22:56.040 --> 0:22:59.560 and and you know home improvement, those types of things. Uh. 0:22:59.560 --> 0:23:02.159 And now how right on the heels of that is 0:23:02.160 --> 0:23:04.200 going to be this infrastructure of money that's going to 0:23:04.280 --> 0:23:09.000 be desperately needed flooding in um and the supply chain 0:23:09.200 --> 0:23:12.520 will for sure catch up. The question is when what 0:23:12.600 --> 0:23:15.400 piece of equipment or or type of equipment is most 0:23:15.440 --> 0:23:18.280 in demand or which one is experiencing that, you know, 0:23:18.359 --> 0:23:22.879 supply demand mismatcher, you're really having some problems, picket. And 0:23:22.920 --> 0:23:28.560 it's there anything transportation to construction, to crane to mining, right, 0:23:28.600 --> 0:23:31.280 It's it's actually interesting. So I'm you know, I I've 0:23:31.320 --> 0:23:35.600 seen from the car space over a decade between Ford 0:23:35.680 --> 0:23:39.720 Motor Company and Chrysler uh and so kind of Uh. 0:23:39.760 --> 0:23:42.760