Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast.
Speaker 1: I'm Joe Wisenthal. Unfortunately my co host Tracy Elloway is
Speaker 1: off today, but um I will continue on without her.
Speaker 1: So obviously, Tracy and I have been talking a lot
Speaker 1: about logistics, supply chains and so forth. We know there's
Speaker 1: an extraordinary amount of disruption in the space lately, but
Speaker 1: there's still uh, I guess I would say links in
Speaker 1: the supply chain that we haven't covered. So we've talked
Speaker 1: about shipping a lot, we've talked about trucking and so forth,
Speaker 1: but they're all still all kinds of all kinds of
Speaker 1: links in the chain we haven't talked about. And of
Speaker 1: course one of those links is warehouses, and so we've
Speaker 1: talked about. You know, there's this been this incredible boom
Speaker 1: and sort of like e commerce demand for goods from
Speaker 1: China that's created issues with the shipping and the containers
Speaker 1: and the trucking. But of course along the way everything
Speaker 1: at some point stops in a warehouse. And warehouses setting
Speaker 1: aside even the pandemic and all of the tensions. Now
Speaker 1: this has just been a booming area and people think
Speaker 1: about Amazon warehouses and the rise of e commerce and
Speaker 1: warehouses in general because of all this are expected to
Speaker 1: grow massively in the future. So we wanted to explore
Speaker 1: further this sort of current moment where there's all this
Speaker 1: bullishness on warehouses themselves, with this current tension that we
Speaker 1: see in supply chain disruptions, I'm very excited. I think
Speaker 1: we have the best guest for it. Today we're going
Speaker 1: to be speaking with Mark Manduca. He is the chief
Speaker 1: investment officer of g XO, which is spitting off from
Speaker 1: the big logistics and transportation company XPO very soon, and
Speaker 1: he's going to be talking to us about this moment.
Speaker 1: So with out further ado, Mark, thank you so much
Speaker 1: for joining us. Jerry, thank you for that kind introest. Absolutely,
Speaker 1: why don't you start off actually by explaining g x
Speaker 1: O just a little bit, because it's sort of confusing.
Speaker 1: I know it's part of XBO, it's on the verge
Speaker 1: of spinning off into its own publicly traded company, But
Speaker 1: what do you just tell us what what g XO
Speaker 1: is for listeners and how that how that spin will
Speaker 1: work and the timing and all that. Absolutely, so, g
Speaker 1: x is a warehousing company, as you as you eloquently
Speaker 1: explained at the start of the pool. G XO hands
Speaker 1: around nine hundred warehouses across twenty seven countries and we
Speaker 1: solve people's problems for them. And you mentioned a number
Speaker 1: of supply chain problems that exist in the market, and
Speaker 1: I'm happy to to talk about those on this call.
Speaker 1: The reality is is that we we fix what's in
Speaker 1: the warehouse. We we take parents, we distribute parts, We
Speaker 1: manage your supply chain for you within the warehouse. And
Speaker 1: it's such an important part of someone's business. We've got
Speaker 1: some of the bluest blue ship customers in the world
Speaker 1: and we are we managed, We managed their back office,
Speaker 1: so to speak, to make sure that you can get
Speaker 1: the goods back into the front office. And that is
Speaker 1: that's our bread and butter. Do you own the warehouses?
Speaker 1: So we least the warehouses by and March got it.
Speaker 1: So what don't you exploit a little further? Like what
Speaker 1: is the relationship with the customer? So I mean, I
Speaker 1: get I gather the sort of relationship is different from
Speaker 1: one to another. But what is sort of a typical uh,
Speaker 1: you know, a client comes to g x O for
Speaker 1: what service, What is the sort of nature of that arrangement? Yes,
Speaker 1: So when a customer moves to g X, so it's
Speaker 1: it's not a cost decision, it's actually a revenue decision.
Speaker 1: And what I mean by that is that logistics represents
Speaker 1: about three percent of the typical customers cost space. But
Speaker 1: if you pick the wrong provider to provide you with
Speaker 1: third party logistics, and for whatever reason it doesn't work out.
Speaker 1: Maybe there the third party logistics providers too small, maybe
Speaker 1: that they don't have to write balance sheet, maybe they're
Speaker 1: not global enough, maybe they don't have the right technology stacks.
Speaker 1: Then what happens is is that ultimately about a hundred
Speaker 1: percent of your revenues end up suffering. So this is
Speaker 1: not a cost decision anymore for for customers, it's an
Speaker 1: absolute necessity. And this is exactly why customers are increasingly
Speaker 1: demanding a best in class, scalable third party logistics. Provided
Speaker 1: you asked what we do well in so many ways,
Speaker 1: the biggest portion of our businesses is e commerce, and
Speaker 1: as you know, e commerce has has made the lives
Speaker 1: of our customers incredibly exciting but also incredibly complicated. So
Speaker 1: in the old world, what you would find is that
Speaker 1: a thousand T shirts would arrive on a pallet in
Speaker 1: a warehouse, and they would need to be organized in turn,
Speaker 1: and then you'd have two palettes. Ultimately that afternoon, leaving
Speaker 1: the warehouse, they'd go to a brick and mortar type institution.
Speaker 1: So a thousand T shirts arrive and basically two boxes
Speaker 1: or two palletts will leave that afternoon. That's the old world.
Speaker 1: In the new world, what will happen is that a
Speaker 1: thousand T shirts arrive and then a thousand separate boxes
Speaker 1: have to leave that afternoon. And that complication has just
Speaker 1: called caused a volcano effect in most people's back offices,
Speaker 1: most people's supply chains Joe, and that's effectively resulted and
Speaker 1: not only a three x two ten x need for warehousing,
Speaker 1: it's also resulted in a demand for scalable players, multinational players,
Speaker 1: players that provide a good balance sheet, long term relationships,
Speaker 1: and technological advancements, and just that happens to be us.
Speaker 1: So I want to focus obviously aren't the warehouses, but
Speaker 1: just real quickly, can you just explain for listeners g
Speaker 1: XO is part of XPIOT, like what has happened, like
Speaker 1: how it is formed within XBO and then what is
Speaker 1: the plane going forward? Here? Yeah, easy. So g XO
Speaker 1: is in effect around of the revenues of XPO, which
Speaker 1: is the conglomerate, which is largely based around lt L
Speaker 1: as you mentioned at the start of the call, as
Speaker 1: well as brokerage and of course our warehousing business, and
Speaker 1: we're planning on spinning that out as the second of August,
Speaker 1: and therefore g XO will become its own entity. As
Speaker 1: spinoffs goes, some spinoffs are always good company, bad company,
Speaker 1: and that's not the case here at all. Once, once
Speaker 1: your listeners look at the look at the numbers, look
Speaker 1: at the look at the company, and hear what I
Speaker 1: have to say, you'll see that this is great company
Speaker 1: spinning out great company, XBO spinning out g x So
Speaker 1: it'll be it'll it'll be a very exciting spin I think.
Speaker 1: And the goal ultimately will be able to allow g
Speaker 1: XO to to focus on its own strategic priorities and
Speaker 1: ring fence the business with its own capital structure going
Speaker 1: forward and ultimately play in its own field with its
Speaker 1: own decision making. Now, what we we talked about trucking
Speaker 1: a few weeks ago, and one of the things that
Speaker 1: really stood out to me was just how incredibly fragmented
Speaker 1: the space with it, and I actually until that episode,
Speaker 1: I had no idea that there is essentially no like
Speaker 1: really dominant market leader and trucking and something. There's some
Speaker 1: insane stat about tens of thousands of new truck and
Speaker 1: companies having entered the market just the last few months.
Speaker 1: Of course, many of them quite small. What does the
Speaker 1: warehouse market look like in terms of size and fragmentation
Speaker 1: and how big is g XL within that market. There's
Speaker 1: a few things to know. So we've got some phenomenal
Speaker 1: secular tail ones in this market, unlike I think any
Speaker 1: other market that I've ever looked at. I've covered the
Speaker 1: transportation and the just acceptor for the last fifteen years.
Speaker 1: So from my perspective, we're in the right place at
Speaker 1: the right time, whether that's e commerce, automation, and outsourcing.
Speaker 1: In terms of your question about the total addressable market,
Speaker 1: the total addressable market is roughly around four hundred and
Speaker 1: thirty billion dollars. Remember we're about an eight billion dollar revenue.
Speaker 1: To contextualize that, as the biggest market player out there
Speaker 1: that is a pure play asset, that's being US g
Speaker 1: x O. We've go got five per cent of the market.
Speaker 1: So everything you've just said about fragmentation is very much
Speaker 1: the case here, and we're waiting for a white night
Speaker 1: to emerge within this four dred and thirty billion dollar market. Now,
Speaker 1: within that four billion dollars, there's a hundred and thirty
Speaker 1: billion dollars that's already outsourced and three hundred to get
Speaker 1: you to four hundred and thirty three hundred billion that
Speaker 1: is still sitting in hops. And what I mean by
Speaker 1: that is companies running their own logistics networks. I'd like
Speaker 1: to start with all these things like what the pre
Speaker 1: pandemic normal looked like, and I don't you know, and
Speaker 1: as much as you describe what is you know, the
Speaker 1: sort of February twenty or March nineteen world look like
Speaker 1: for a company like g X, so just we could
Speaker 1: sort of get a sense of the changes in the
Speaker 1: new trajectory. Let's let's let's characterize that as old world
Speaker 1: the world. So in the in the old world, in
Speaker 1: the brick and mortar world, and that's not obviously just
Speaker 1: pretty pandemic, it's it's it's it's a long way for
Speaker 1: the pandemic. But in the old world, what you'd have
Speaker 1: is is the dickensiean warehouse where cardboard boxes would would
Speaker 1: rule the roost and there will be very little alternation.
Speaker 1: In fact, the industry is still outside of outside of
Speaker 1: our good selves, there's there's very little automation. If you
Speaker 1: look at some of our smaller peers within the space.
Speaker 1: The punch line here is very simple, and that is
Speaker 1: the Dickensian warehouse evolved didn't have automation. It was largely
Speaker 1: focused on brick and water operations. And therefore what would
Speaker 1: happen is is that there wouldn't be the same level
Speaker 1: of complexity that there is today. And what I mean
Speaker 1: by that is not so much our own complexity with technology,
Speaker 1: but actually customer complexity. Very simply, today one in three
Speaker 1: items are returned in an e commerce world, whereas in
Speaker 1: the old days it would be more like one in ten.
Speaker 1: To give you a sense of that volcano that I
Speaker 1: talked about that is erupting on the the balance sheets
Speaker 1: of so many of our customers. And therefore the customers
Speaker 1: are seeing more complexity in regards to working capital, they're
Speaker 1: seeing more complexity in regards to their day to day operations.
Speaker 1: I mean, you can imagine if you all of a sudden.
Speaker 1: Have you know, you send out a hundred boxes and
Speaker 1: ten boxes used to come back, and now all of
Speaker 1: a sudden, thirty boxes are coming back. You up pulling
Speaker 1: your hair out and end up crying for help. And
Speaker 1: that's that's ultimately where we step in. Is that White
Speaker 1: Knight that I talked about. In so doing, you've you've
Speaker 1: referenced a bunch of interesting points post pandemic. What's happened
Speaker 1: ultimately is that the the industry has become a bit
Speaker 1: log jammed elbow to elbow. Clearly people have been buying
Speaker 1: online rather than going to the cinema having experiences, And
Speaker 1: in so doing, what's happened is is that you've had
Speaker 1: a lot of the supply chain outside of the warehouse
Speaker 1: getting a bit log jammed. Now there's a bunch of
Speaker 1: reasons for that. Most prominently, buying patterns have changed. I
Speaker 1: referenced that, and the question you should ask, I guess
Speaker 1: is when we're consumers go back to pre pandemic buying pattern.
Speaker 1: I hope you have the answer to that, because that's
Speaker 1: the that's the trillion dollar question everybody wants to know,
Speaker 1: so we better come up with an answer. On this episode,
Speaker 1: we will we will, we will, we will endeavor together.
Speaker 1: Let's and then the other thing that's changed, obviously, is
Speaker 1: the flying patterns have changed. You'll know, of course that
Speaker 1: the world's available cargo capacity. If you think about the
Speaker 1: amount of cargo capacity that we have in the world,
Speaker 1: half of it, half of it lies in the in
Speaker 1: the belly of passenger planes, and clearly without people flying
Speaker 1: as much as they used to at the moment, that
Speaker 1: means there's less supply, which means air freight rates have
Speaker 1: gone gone through the roof, and in so doing, people
Speaker 1: have shifted their mode of transport towards shipping, so that
Speaker 1: in turn has led to a log jam in the system,
Speaker 1: which is why you're seeing in part things going on
Speaker 1: in the port of Los Angeles. So that log jam
Speaker 1: ultimately needs to unwind itself at some point in the
Speaker 1: next in the next six or twelve months. But all
Speaker 1: of these things, whether it's the truck driving point that
Speaker 1: you mentioned, whether it's the inflation that we're seeing at
Speaker 1: the worker level, whether it's the log jam that I
Speaker 1: talked about from the ports and the shortage of containers,
Speaker 1: all of this leads to one thing, which is that
Speaker 1: White Knight, someone needs to help me run my business
Speaker 1: because I need to focus on whatever it is selling
Speaker 1: t shirts, selling shoes, making cookies, while my back office
Speaker 1: needs to be managed by someone else who has expertise
Speaker 1: precision scale, good balance sheet, technological advancement. That's where we
Speaker 1: have stepped in effectively. As sad as it sounds, we have.
Speaker 1: We have benefited from the last twelve months because people
Speaker 1: have realized that they can't do it on their own.
Speaker 1: Let me ask you before we forget. You know, you
Speaker 1: mentioned something about your model, which is that you lease
Speaker 1: the warehouses, and I'm curious, like, I guess what prevents
Speaker 1: the rent so to speak, from accruing largely to the
Speaker 1: warehouse owners because I imagine that actual like physical warehouse
Speaker 1: space is not infinite. That is a big advantage if
Speaker 1: you own it. What what what gives you or your
Speaker 1: client sort of leverage to not give up all of
Speaker 1: the margin to the warehouse to the people renting it to.
Speaker 1: So the question is is very much a case of
Speaker 1: availability of real estate and that's cually a challenge at
Speaker 1: the moment, as you've seen from vacancy rates yourself and
Speaker 1: the stuff that you've been reporting on. You know, the
Speaker 1: industry has seen vacancy rates falling to single digits, particularly
Speaker 1: in Europe, and um I really believe that this highlights
Speaker 1: of strength of our services. Not only does it point
Speaker 1: to increased uses of usage of warehousing and logistics capabilities,
Speaker 1: but given the given our scale as the largest pure player,
Speaker 1: the second largest warehousing company globally, it it leaves it
Speaker 1: leaves us relatively well placed to secure leases for our customers.
Speaker 1: So we have obviously dedicated relationships with some of the
Speaker 1: exact same warehousing companies that you've mentioned that therefore provides
Speaker 1: us with bargaining power logically, So if your decision is
Speaker 1: I need a warehouse, either I'm going to do it
Speaker 1: on an in house basis or I'm going to outsource
Speaker 1: it to the third party logistics provider. You've already decided
Speaker 1: that you need a warehouse, and you can have that
Speaker 1: close to the last mile or you can have it
Speaker 1: further away. It doesn't change the demand for warehousing. But
Speaker 1: if you can have someone who has bargaining on labor
Speaker 1: has the scalability to negotiate rents for you on a
Speaker 1: global basis, that does provide a value add the dynamic
Speaker 1: of you either paying it directly to the to the
Speaker 1: segrea of the plodgers, yourself or getting a third party
Speaker 1: logistics provider to do it doesn't really change the price dynamics.
Speaker 1: But what it does do is we can provide potentially
Speaker 1: better bargaining power, which in turn provides arguably a lower
Speaker 1: price for the end customer. So using a third party
Speaker 1: logistic provider is useful. I don't know, Like, I'm curious
Speaker 1: if you have a stat in the industry that answers
Speaker 1: this question. But you know, obviously I want to get
Speaker 1: into this world deeply. But automation is a huge theme
Speaker 1: you mentioned as one of the key tail winds for
Speaker 1: your business. How would you compare I don't know, is
Speaker 1: it humans per dollar moved per day or something like that, Like,
Speaker 1: is there some or human wages per dollar per moved
Speaker 1: per day by the warehouse? Like can you sort of
Speaker 1: contextualize the degree to which the sort of like the
Speaker 1: old brick and border warehouse versus today's warehouse, And how
Speaker 1: much more efficient a warehouse of today is versus what
Speaker 1: we think of the old fashioned ones. So there's there's
Speaker 1: plenty of examples in the technology sphere of how technology
Speaker 1: has helped make warehouses more efficient. We put a number
Speaker 1: of stats within our Investor Day presentation last week specifically
Speaker 1: talking about how the Dickensian warehouse of old has accelerated
Speaker 1: in so many ways um and become the warehouse of
Speaker 1: the future. And we've got plenty of examples across our network,
Speaker 1: whether it's advanced automation, whether it's improved efficiency, reducing the footprint,
Speaker 1: whether it's some of the class based, cloud based systems
Speaker 1: that we use, or some of the intelligent robotics of
Speaker 1: how this saves money for for our customers, and naturally
Speaker 1: it results in customers coming to us because very few
Speaker 1: people have the amount of dedicated automation implementation that we
Speaker 1: have across robotics and automated guided vehicles and vision technology
Speaker 1: and advanced sortation systems. But if you look specifically at
Speaker 1: say a robotic arm, I'll answer your question right down
Speaker 1: the line. In the old days, a typical pick let's
Speaker 1: call it would be around two hundred and ten cases
Speaker 1: per our picking rate. With a robotic arm, you can
Speaker 1: do four x that, so effectively eight hundred cases per
Speaker 1: hour picking rate. So you can see explicitly how manual
Speaker 1: goes to automation and how the customer benefits and it
Speaker 1: generates dramatic productivity gains as you can see both for
Speaker 1: our customers and for us. And we'd obviously share any
Speaker 1: economics of that when it comes to thinking about other
Speaker 1: other other factual numbers out there that we can we
Speaker 1: can help you get a sense of of how technology
Speaker 1: improves on the automation side for our customers. Obviously, robotic
Speaker 1: d stackers early good example you get in the old
Speaker 1: manual world versus the automation world as six x saving
Speaker 1: taken automate a gantry, for example, you can get a
Speaker 1: sixty next saving if you think about the cases per
Speaker 1: hour that can be picked um by gantry. So there's
Speaker 1: so when you when you think about an automated warehouse,
Speaker 1: what you find is is you find different different operations
Speaker 1: across the entire supply chain that that offer. So you
Speaker 1: can take the adjustable heights of various gantry cranes across
Speaker 1: the across the warehouse and that allows you to in
Speaker 1: affect lighting more efficiently through the warehouse school. So obviously
Speaker 1: though I mean you know most of the attention to
Speaker 1: the warehouses. You know, there's been numerous stories about Amazon
Speaker 1: for example, So despite and the stories are always that
Speaker 1: the hiring is just absolutely voracious and that there's just
Speaker 1: an incredible demand still for actual people. So what is
Speaker 1: the you know, you you describe all these efficiency gains,
Speaker 1: and yet it doesn't seem like hiring needs have really
Speaker 1: slowed down for the industry. What does it look like
Speaker 1: for year? If you think about inflation that you're seeing
Speaker 1: in the system right now, there's there is undoubtedly inflation.
Speaker 1: We're certainly seeing that across the markets that we operate in,
Speaker 1: and clearly it increases the global problem for customers. And
Speaker 1: this isn't just a phenomenon that's taking place in any
Speaker 1: particular market. As I mentioned, were seeing it coast to
Speaker 1: coast in the US, and we're seeing it in the
Speaker 1: UK and specific terms, and labor inflation is clearly an improblem,
Speaker 1: that a problem that's here to stay for our customers.
Speaker 1: If you think about the silver lining in terms of
Speaker 1: inflation volatility, I think it goes back to my key point,
Speaker 1: which is that it drives demand for those third party
Speaker 1: logistics providers, and labor inflation obviously causes our customers to
Speaker 1: want more automation and more robotics as well. And clearly,
Speaker 1: as I mentioned we're a global global tech leader when
Speaker 1: it comes to automated warehouses. But it is a problem.
Speaker 1: I think it is here to stay. There is demand
Speaker 1: for labor, and so there should be in so many
Speaker 1: ways we we we aspire to make sure our teammates
Speaker 1: are all a hundred thousand teammates are all exceptionally well
Speaker 1: rewarded for for their efforts. But it is it is
Speaker 1: something that we're very good at managing from a bargaining
Speaker 1: power perspective in a similar way to the way I
Speaker 1: described Joe on the on the warehousing side of things.
Speaker 1: But just in terms of pure numbers, I guess is
Speaker 1: what are we're trying to get at? Like how much
Speaker 1: hiring do you have to do? So, even with all
Speaker 1: of the automation you described, what is the trajectory of
Speaker 1: the actual numbers of people that you've had to hire?
Speaker 1: Because again, just going by the news reports from say Amazon,
Speaker 1: I'm sure they have incredible technology investments, but they still
Speaker 1: just have to keep you know, they seem to be
Speaker 1: hiring people nonstaff. Yeah, we ultimately will see the same
Speaker 1: the same trend in regards to the way we plan
Speaker 1: on expanding. I mean, our revenues are planning to expand
Speaker 1: next year at about eight after some phenomenal growth already
Speaker 1: this year that we've already seen with a number of
Speaker 1: new customer winds, and with that will obviously come its
Speaker 1: o unfair share of being able to grow a warehousing
Speaker 1: footprint and thus our employee footprints. So you know, teammates
Speaker 1: will continue to grow at g X. So we're a
Speaker 1: fast growth company over the next few years and we
Speaker 1: intend to partake within that growth as as as an
Speaker 1: industry leader. Do you see a difference in labor market
Speaker 1: titaness globally because obviously there are a lot of economist
Speaker 1: debates about well, why is it hard to hire? And
Speaker 1: some people point to unemployment insurance, and some people plointed
Speaker 1: to the persistence of the virus and the lack of
Speaker 1: childcare and so forth. But you have a global footprint
Speaker 1: and so you, I guess you can see sort of
Speaker 1: a natural experiment, so to speak, with different labor markets
Speaker 1: across the different set of policy and virus outcomes. How
Speaker 1: global is the tightness right now in or the challenge
Speaker 1: of hiring? I would say the similarities in our two
Speaker 1: core markets two thirds of our revenue is is obviously
Speaker 1: Europe one third is board in North America. When you
Speaker 1: think about those two markets, I would say that the
Speaker 1: similarities are there. I would say that the US is
Speaker 1: probably three months ahead of what we're seeing in the
Speaker 1: in the European market. What do you sorry do you
Speaker 1: mean by that labor wedging question? Europe's lag what you're
Speaker 1: seeing in the US, what you have seen with all
Speaker 1: the articles that you refer to, Yeah, it's probably three
Speaker 1: months three months lagging in the European But ultimately, what
Speaker 1: you're saying is this, this is not just a U
Speaker 1: S a U S. This is definitely not just a
Speaker 1: US phenomenon. This challenge of hiring under no circumstances, this
Speaker 1: is just a US phenomenon. In fact, the same applies
Speaker 1: for for for warehouse vacancy rates. Were seeing similar phenomenons
Speaker 1: within the European European market as we are in the
Speaker 1: US market. That's really interesting. Go back to the automation question. Obviously,
Speaker 1: you know that I assume you know you're constant spending.
Speaker 1: How do you how do you keep up? You know,
Speaker 1: again going up against big tech giants. What is your
Speaker 1: um what is your edge so to speak? And how
Speaker 1: much investment does it require? On your part in terms
Speaker 1: of high tech automation to be the status quo or
Speaker 1: be an industry leader in automated warehouse. So let's let's
Speaker 1: plup the question on it's head. Joe, if I was
Speaker 1: to give you, if I was to ask you a
Speaker 1: number of how much do you think you talked about
Speaker 1: the big industry tech giants that in so many ways
Speaker 1: we're not going up against our major Our major competition
Speaker 1: is actually more in the logistics speriments in the tex spit,
Speaker 1: so to speak. But if I was to say to you,
Speaker 1: how much do you think the industry overall is automated
Speaker 1: right now? Would you pin it more at right now
Speaker 1: in terms of total automation across all warehouses. I guess
Speaker 1: think by the way you frame the question, I'm guessing
Speaker 1: it's pretty low. Still, yeah, you're totally right, So it's
Speaker 1: around five to give you a sense. So with within that,
Speaker 1: if you look at our European operation, we're about automated.
Speaker 1: Can you actually explain that further? What does that mean? Actually?
Speaker 1: I realized we haven't even because any warehouse, even with
Speaker 1: plenty of robots, is going to have humans. So when
Speaker 1: you say a warehouse is thirty percent or would you
Speaker 1: say thirty percent automated? What does that actually mean to say, okay,
Speaker 1: this warehouses we can we we call this automated using
Speaker 1: any form of automation, whether that's hardware or software, to
Speaker 1: eliminate siloes, to overcome space and labor constraints, to increase
Speaker 1: fulfilm and speed and accuracy, and provide superior visibility in
Speaker 1: control at any point through the warehouse chain. And therefore,
Speaker 1: so would you say when it's just would you say
Speaker 1: that the industry is just five percent? You mean there's
Speaker 1: ninety percent of warehouses that are literally just people in
Speaker 1: boxes old school, I mean not people don't know, people
Speaker 1: and the boxes. Sorry yeah, people and people and the boxes.
Speaker 1: Yeah sorry, that's really so that is pretty striking other
Speaker 1: industries that have yet, Like is there an industry pattern
Speaker 1: that's like, okay this these types of industries have embraced
Speaker 1: it really fast, or there are certain types of goods
Speaker 1: that have not um that are less likely to be automated,
Speaker 1: Like what are the patterns in terms of who has
Speaker 1: actually invested significantly in technology? I think brush you would
Speaker 1: you would assume that the industry could over time get
Speaker 1: to around fifty six automation. I think that that will
Speaker 1: take many, many years and possibly decades to get there
Speaker 1: um and it very much comes down to the demand
Speaker 1: from the customers. This is not us trying to enforce
Speaker 1: technology onto onto every in any solution, So it depends
Speaker 1: on customer demand clearly, as you can see from the
Speaker 1: numbers that I was giving you earlier about your set
Speaker 1: of palettes and cases and gantries. You know, the reality
Speaker 1: is that we are clearly driving automation going forward. But
Speaker 1: are there any sectors that it seems sort of I mean,
Speaker 1: you mentioned fifty six percent, Like, what are the areas
Speaker 1: that aren't going to go their way? Or what are
Speaker 1: other industries in which that is a it's a more
Speaker 1: difficult proposition to automate a warehouse than others. I see
Speaker 1: what you're saying. I think you were talking about other
Speaker 1: other sectors outside of wares. And if you think about
Speaker 1: the industrial sector, which isn't a major portion of our
Speaker 1: book of business because we are largely, as I mentioned,
Speaker 1: e commerce and consumer technology orientated about fift our sales
Speaker 1: come from those those lines of business. If you think
Speaker 1: about the small element of industrial business that we do
Speaker 1: within our overall mix, it is harder to automate within
Speaker 1: that because in some in some cases you are dealing
Speaker 1: with very heavy hardware. E Commerce tends to be an
Speaker 1: area where automation is best suited, So too is that
Speaker 1: the food and beverage market. There's some logical, logical savings
Speaker 1: that we've made there for customers. I think Day is
Speaker 1: a very good example of that. Over and lesser in
Speaker 1: the UK. But the industrial warehouses tend to have slightly
Speaker 1: less automation, and our competition clearly is more geared towards
Speaker 1: those industrial businesses, and therefore that kind of explains partly
Speaker 1: why you're seeing a differential between someone who's extremely e
Speaker 1: commerce focused versus maybe more industrial and heavy industries some
Speaker 1: of our competitors. I see you're saying. So let's talk
Speaker 1: a little bit more about labor, and we we've establed
Speaker 1: that labor markets are type both of the US and Europe.
Speaker 1: You know, in past episodes, we've heard from people talking
Speaker 1: about different ways that they're trying to address that. From
Speaker 1: a hiring perspective. Obviously wages are one area, but also
Speaker 1: other aspects of flexibility. How are you thinking about this
Speaker 1: both from a wage perspective but also other other strategies
Speaker 1: that have worked in hiring. So we have a significant
Speaker 1: amount of our workforce that is variable in nature um
Speaker 1: and therefore we have the capability to flex workforce up
Speaker 1: and down to allow all changes in volume demand. So
Speaker 1: with what you're pointing to is actually a revenue positive
Speaker 1: for both our industry and our customers. You know, we've
Speaker 1: seen extremely robust sales momentum, with billions of customer agreements
Speaker 1: signed in the first four months of this year alone,
Speaker 1: and these obviously include the fulfillment services and a few
Speaker 1: tech wins that we've had as well. Revenue being booked
Speaker 1: until thirty two, So a lot of what you're saying
Speaker 1: in terms of demands tightness is actually a positive from
Speaker 1: a revenue standpoint. There is demand for our customer services
Speaker 1: and therefore there is demand for our services and intern
Speaker 1: there is demand for labor, which makes up around three
Speaker 1: billion dollars. Remember, in the context of the seven to
Speaker 1: eight billion dollars of revenue that I talked about, makes
Speaker 1: about three billion dollars of of our cost base. So
Speaker 1: when you think about the first point I would make
Speaker 1: is this is a strong pipeline, high growth industry that
Speaker 1: has a huge demand for not only our services, but
Speaker 1: our customers offerings right now, and that's that's a good thing.
Speaker 1: The question member comes is is how do you reward
Speaker 1: the workforce and the teammates for providing that service, And
Speaker 1: the answer is you reward them very well. In turn,
Speaker 1: what you do is you also try and make the
Speaker 1: workplace safer, stronger, and a more fun place to work
Speaker 1: in a more alternated place to work as well. This
Speaker 1: isn't a future of people versus robots. This is the
Speaker 1: people and robots working arm in arm, hand in hand together,
Speaker 1: and that's really something that we're trying to proliferate through
Speaker 1: our warehouses. We're also trying to drive productivity savings of
Speaker 1: our labor by using smart tools such as our smart
Speaker 1: system so g x SO Smart saves around five to
Speaker 1: seven percent on labor productivity and this can be This
Speaker 1: can be anything from spotting picking rate problems very quickly,
Speaker 1: all the way through to managing the analytics and the
Speaker 1: HR data and modeling and planning of any single warehouse.
Speaker 1: And we've had some amazing impacts with customers with our
Speaker 1: smart tool. It's currently deployed around six bur gx SO
Speaker 1: websites at the moment, so using technology efficiently, using particularly
Speaker 1: robotics and are smart tools to optimize labor force through
Speaker 1: peaks and troughs as you discussed, and particularly as we
Speaker 1: head into as we head into Black Friday, and also
Speaker 1: and also that Christmas shopping period, we need to make
Speaker 1: sure that we're extremely intelligent about the way we manage productivity.
Speaker 1: And that's something that I think that we're best in classes.
Speaker 1: How you know you mentioned Christmas, So let's get to
Speaker 1: the question how frustrating is Christmas going to be? The
Speaker 1: fear for SHARP I think what we're seeing is early
Speaker 1: signs of extremely strong demand as we moved towards peak.
Speaker 1: I don't think there's going to be frustration, so to speak.
Speaker 1: I think what we'll do in our part of the
Speaker 1: supply chain is make sure that we run an extremely
Speaker 1: the operation to make sure that the goods get back
Speaker 1: in store very quickly. If you look at some of
Speaker 1: the items that I mentioned earlier in regards to the
Speaker 1: one in three, you know customers come to us because
Speaker 1: reverse logistics is such an integral part of very commerce offering,
Speaker 1: and what we do best, I feel is we get
Speaker 1: the product back into store quickly to remove that frustration
Speaker 1: that you talked about, Joe, and make sure that the
Speaker 1: consumer's life and the customers life is an easy one.
Speaker 1: But from me, so, if I'm a consumer and I'm
Speaker 1: doing my typical Christmas shopping, do I have to worry
Speaker 1: about ordering earlier this year than normal because of these
Speaker 1: supply chain disruptions that, as you said, maybe have another
Speaker 1: I don't know, six to twelve months ago. I think
Speaker 1: that the supply chain disruptions will continue. I think that
Speaker 1: the consumers have to be vigilant about the border supply
Speaker 1: chain maybe outside the warehouse, But I don't think it's
Speaker 1: going to impact consumers by weeks. I think it could.
Speaker 1: It could be more by hours and days, so to speak,
Speaker 1: and provide a little bit of the bottom back than
Speaker 1: a lot of the bottom. Okay, well that that's hopeful.
Speaker 1: You know, let's look at that broader logistics. Obviously we're
Speaker 1: just talking about the warehouse, but you have to you know,
Speaker 1: you're dealing with trucking companies and shipping companies, etcetera. Why
Speaker 1: has it been so long? Like we're here in mid
Speaker 1: July getting to be late July one. How would you
Speaker 1: describe why we're still dealing with such extreme problems. And
Speaker 1: when I look at things like say global shipping rates,
Speaker 1: whether it's from China or Asia to the U S
Speaker 1: and of forth, it doesn't it's not getting it's not easy.
Speaker 1: It seems to be just getting. In many cases, it
Speaker 1: is getting more expensive, getting worse. Why why is it
Speaker 1: taking so long to adjust? And without one to answer
Speaker 1: a question with a question, I would pose the question
Speaker 1: to you, which is, when was the last time that
Speaker 1: you went to a cinema? Right? It was December. I
Speaker 1: start uncut gems in the theater, and as a result,
Speaker 1: you shifted your buying patterns towards buying things online while
Speaker 1: and enjoying the experience. That's true, and when when you
Speaker 1: shift those back, the log jam will be uncold. So
Speaker 1: it's it's my fault. But I'm not canning blame. But
Speaker 1: it begins with It begins with me. All right, I'll
Speaker 1: go to the theater soon to see if I can
Speaker 1: start a to see if I can get some momentum
Speaker 1: behind that and change consumer behaviors. I haven't going to
Speaker 1: restaurants again, to be fair, Well, that's when when was
Speaker 1: the last time you took a flight? I took one
Speaker 1: sometimes and no, it has been a while, but I
Speaker 1: am taking one in a few weeks, so that in
Speaker 1: turn has caused an air freight spine, and therefore you've
Speaker 1: seen that modal shift that I talked about towards towards
Speaker 1: shipping and people deciding and actually the price is just
Speaker 1: too expensive. They weren't even bother shipping it at all. Yeah,
Speaker 1: there isn't an interesting dynamic this idea that because so
Speaker 1: talk to it. What was about the sort of the
Speaker 1: pre crisis mix of vessels shipping versus air cargo shipping,
Speaker 1: and how is that? How does that look to that.
Speaker 1: I'm definitely on an expert and all things container shipping
Speaker 1: and air freight, but broadly half of the world's capacity
Speaker 1: is carried in the belly of the plane, and therefore
Speaker 1: air frace is obviously an integral portion of getting things
Speaker 1: just in time, because obviously you can get there in
Speaker 1: twenty four hours. Air froces is booked on a very
Speaker 1: short short notice. And what happens is going to container
Speaker 1: ship cle that you can't do it overnight. So for
Speaker 1: example that typically the average container shipping life cycle would
Speaker 1: be abound sixty days. So people tend to ship very
Speaker 1: different things within both the container ship versus versus a
Speaker 1: conco CORNGO is is really immediate demand inventory shortage, and
Speaker 1: therefore that has added to the complexity and the contortion
Speaker 1: within the system as you can imagine. So back to you,
Speaker 1: when are you going to be flying again? That will
Speaker 1: remove the bottle back? All right? I'm flat, I'm I
Speaker 1: have a fled scheduled for August. You know you mentioned
Speaker 1: just in time, and I'm curious, like, is it. One
Speaker 1: of the things that this crisis exposed is that we
Speaker 1: live in this era of incredible efficiency and it's pretty
Speaker 1: amazing and I can order something sometimes and get it
Speaker 1: delivered that day or twenty four hours later and so forth,
Speaker 1: but that there are costs when an extreme disruption hits.
Speaker 1: And obviously the pandemic was an extraordinary disruption, but we
Speaker 1: live in an era of climate disruption, and it is
Speaker 1: reasonable to expect other things. You are there going to
Speaker 1: be permanent changes in your view to the way companies
Speaker 1: think about logistics or where you're thinking about logistics, to
Speaker 1: build in buffers or to build in other uh buffers.
Speaker 1: I guess. So there we don't have this sort of
Speaker 1: extreme disruption like we got this time around I think
Speaker 1: this really triggers this idea of outsourcing. The outsourcing of
Speaker 1: the numbers I gave you at the start of the
Speaker 1: hundred and thirty billion of the market that's already been
Speaker 1: outsourced versus the three hundred billion it's still yet to
Speaker 1: be outsourced. I think that this, this crisis, this pandemic,
Speaker 1: and in the last twenty four months, has really triggered
Speaker 1: people to reconsider their supply chain functions. And obviously, you
Speaker 1: know that the historically been handled in house, that's referred
Speaker 1: to either the four thirty and you know, with expectations
Speaker 1: of speed and precision rising, I think supply chains are
Speaker 1: obviously they're going to become more complex and that drives
Speaker 1: more business towards the party logistics providers like US. So
Speaker 1: I think that that's going to be a big theme
Speaker 1: over not just the next you know, three to six months.
Speaker 1: I don't view this is anything other than a secular
Speaker 1: trend over the next ten years, and I think that
Speaker 1: will expose some very strong underlying themes in the industry.
Speaker 1: You've touched on obviously, the automation theme. You've touched on
Speaker 1: e commerce as well, and a leading tech innovator like
Speaker 1: US that has a bluechip customer base, will have remarkably
Speaker 1: strong visibility and its business model as a result. Speaking
Speaker 1: of characterizing yourself as a tech innovator, you know you
Speaker 1: mentioned for example, software that you're developed to uh, you know,
Speaker 1: reduce the number of errors and so forth. How much
Speaker 1: is developed strictly in house in terms of you have
Speaker 1: your own engineers and coders a software team versus sort
Speaker 1: of repackage third party technology that's sort of built in
Speaker 1: conjunction with you know, some household software giant name that
Speaker 1: we might know, Yes, a good good points a couple
Speaker 1: of things to be aware of. So on the proprietary
Speaker 1: software tool which is obviously the smart software that I
Speaker 1: that I mentioned, it is exactly that about the house
Speaker 1: proprietary and nature. So that is that is something that
Speaker 1: customers come to us for. For the five to seven
Speaker 1: percent savings that I mentioned in regards to the robotics side,
Speaker 1: very exciting because although you would argue that the that
Speaker 1: the mode so to speak, is is relatively shallow, I
Speaker 1: would I would argue differently, which is that it's very
Speaker 1: rare to have a scale provider like us to stack
Speaker 1: a warehouse the way that we do that have the
Speaker 1: experience across so many different types of warehouses, the way
Speaker 1: that we the way that we stack a warehouse from
Speaker 1: a robotics standpoint, and I urge you to go and see.
Speaker 1: You know, so many of our operations, whether it's what
Speaker 1: we're doing in Indiana for some tech giants, or whether
Speaker 1: it's what we're doing over in less per as I
Speaker 1: mentioned for Nestl, these are very much warehouses of the
Speaker 1: future with huge alternation. I mean, we're going to have
Speaker 1: roughly three thousand one D robots and advanced automation systems
Speaker 1: by the end of this year. So it's something our
Speaker 1: customers are demanding. And is it less about say, developing
Speaker 1: the robots per se, and more about the know how
Speaker 1: of putting it all together, so to speak, within the
Speaker 1: context of the warehouse, not using robotics for the sake
Speaker 1: of using robotics. It's about that nohow, It's about that experience.
Speaker 1: You've done it before, we lived it. You've done it
Speaker 1: for this customer in that way you say, you say
Speaker 1: significant game share, so you've you've given them continuous improvement
Speaker 1: over a five year period. This is the experience factor
Speaker 1: that drives the precision for the next contract and that
Speaker 1: bargaining power and scalability across different customers is something that
Speaker 1: customers come to uschool. Let's, you know, just talk a
Speaker 1: little bit about the future. I mean we've talked about okay,
Speaker 1: so you've identified the big tail winds, including e commerce
Speaker 1: and automation. I got substance about the total addressable market.
Speaker 1: How much is currently automated? What are the you know, like,
Speaker 1: how many warehouses are are there today, how many much?
Speaker 1: How fast is this going to grow? How much room
Speaker 1: does just e commerce itself have to grow? In your view?
Speaker 1: How much? How much time is left? I think two
Speaker 1: things are gonna happen. So let's let's give you some
Speaker 1: very explicit numbers the e commerce market right now. If
Speaker 1: you wanted to break it down, you'd say entire retail
Speaker 1: as as a as a pie chart, you'd say the
Speaker 1: e commerce represents in the markets that we serve in
Speaker 1: North American Europe, Roughly around t is e commerce and nature.
Speaker 1: So in terms of the runway, you couldn't possibly find
Speaker 1: a more runway between e commerce, automation, and outsourcing. These
Speaker 1: are very nascent themes. As much as we believe that
Speaker 1: e commerce has been around for twenty five years. We
Speaker 1: are still just getting started in regards to that theme
Speaker 1: over the course of the next century. So when you
Speaker 1: think about the growth trajectory there, we view e commerce
Speaker 1: is growing broadly around ten percent plus and therefore, for
Speaker 1: an industry and business like ours that has bits of
Speaker 1: its operation geared towards e commerce, it's very much right place,
Speaker 1: right time, um and our customers are benefiting from that.
Speaker 1: When it comes to thinking about automation, I've given you
Speaker 1: my view in terms of how what the run way
Speaker 1: it could be for that, and that's obviously a compounding
Speaker 1: factor in terms of driving e commerce going forwards. And
Speaker 1: the reason automation is important is that it helps us
Speaker 1: serve our customer. Within that e commerce theme, it's particularly
Speaker 1: on the reverse logistics side, where we were returning goods
Speaker 1: to the customer storefront that that is giving a differentiation
Speaker 1: to our model versus versus o our other competitors. We
Speaker 1: can do it quicker, I believe we do it with
Speaker 1: precision and customers come to us for that. And then
Speaker 1: obviously the outsourcing theme, I think that that's going to
Speaker 1: set set to accelerate not just post the pandemic, but
Speaker 1: structurally as people reassess their own supply chains, as we
Speaker 1: talked about before. And I don't think this is just
Speaker 1: the commerce element of our customer base. I think it's
Speaker 1: going to happen across our entire customer base, whether it's
Speaker 1: consumer packaged goods, whether it's consumer technology. Our Blue Chick
Speaker 1: customers are all looking for for for viable three pl
Speaker 1: players right now. So it's a very exciting time to
Speaker 1: be in this industry. And these are customers that are
Speaker 1: fly by night. These are customers. If you look at
Speaker 1: our top twenty customers, you know they've partnered with us
Speaker 1: for fifteen years or war. So when they start a partnership,
Speaker 1: the switching costs tend to be relatively high. Do you
Speaker 1: think it is delivery by drone ever going to be
Speaker 1: a big thing? I think it's going to be an
Speaker 1: important part at some point. It hasn't had the penetration
Speaker 1: that I originally thought it would over the last five years.
Speaker 1: I think the technology still needs still needs to be
Speaker 1: adapted for the world that we live in. And you
Speaker 1: know you mentioned the warehouse capacity is extremely tight right now,
Speaker 1: what about actually just like physical like more, how many
Speaker 1: more warehouses and the land available to them like how
Speaker 1: much footprint are we going to see? How much more
Speaker 1: construction of warehouses are we going to see in North
Speaker 1: America and the US. To give you a sense, we've
Speaker 1: got nine hundred warehouses, we've got about five of the
Speaker 1: outsource logistics not to that extent. We're growing, as I mentioned,
Speaker 1: are at eight to twelve per cent over the next
Speaker 1: over the next twelve months. To give you a sense
Speaker 1: of the e commerce and automation and outsourcing themes that
Speaker 1: I've talked about earlier, if you were to underpin that growth,
Speaker 1: and say, if you were to extrapolate so the sixteen
Speaker 1: percent that we've done over the last twenty years, you
Speaker 1: can get a sense for the demand of warehousing or
Speaker 1: at least for the creation of warehouses as we grow
Speaker 1: our customer base, and all of these themes have the
Speaker 1: potential to accelerate over the next decade. As I mentioned.
Speaker 1: So the demand is definitely there in my view, Whether
Speaker 1: the space is there on the outskirts of major cities,
Speaker 1: I think I think it definitely is. Whether when you
Speaker 1: get closer to the last mile it becomes more and
Speaker 1: more complicates and include the demand as you know, for
Speaker 1: customers to get closer and close to the last mile
Speaker 1: is ever more prevalent, and therefore the need to work
Speaker 1: with people who have dedicated relationships such as US. So
Speaker 1: what I mean, I mean this is a problem like
Speaker 1: you know, any building in st. New York City, there's
Speaker 1: all kinds of issues that arise, the cardboard boxes that
Speaker 1: pile up everywhere, major sorts of frustration. What might change?
Speaker 1: You know, if we think about like buying patterns, and
Speaker 1: I'm sure you think many years ahead, how might be
Speaker 1: e commerce experience of getting shipped, whether it's twenty four
Speaker 1: hour shipping or one hour shipping or two hour shipping
Speaker 1: or whatever it is, um how might it change for
Speaker 1: a you know, this very intense competitive urban market out
Speaker 1: a few years of the future. So I think there's
Speaker 1: a few things you touched on there that really resonated
Speaker 1: with me. With me is as a company, and that
Speaker 1: is you mentioned the couple box, but not I think
Speaker 1: if there is going to be a change, I think
Speaker 1: what I'm seeing across a number of our customers right
Speaker 1: now is it will focus on environmental targets. I know
Speaker 1: your point was more geared towards the efficient syperiment, and
Speaker 1: I think that that will be solved over time as well.
Speaker 1: But I really see this in every contract that we write,
Speaker 1: a commitment to achieving some very bold environmental targets. Not
Speaker 1: only sits with us as the customer providing so this provided,
Speaker 1: but also with our customers as well and their stakeholders.
Speaker 1: So we've put out some I believe, very bold targets
Speaker 1: and we're very focused on attaining those. Those are S
Speaker 1: two targets and helping our customers in turn and chief
Speaker 1: first targets. But that is something that's going to be
Speaker 1: at the cornerstone of everything that we're seeing in regards
Speaker 1: to e commerce, making it, as you say, less packaged
Speaker 1: and more efficient. E s G is going to play
Speaker 1: a major role within that mark. I think that's a
Speaker 1: great place to leave it. I don't know, is there
Speaker 1: any any other key themes or things that we haven't
Speaker 1: touchdown that you want to get a crime Joe, You've
Speaker 1: been incredibly kind and thank you for allowing me to
Speaker 1: talk about g X, so you can clearly see I'm
Speaker 1: very excited about the spin that is planned for the
Speaker 1: second August. I've joined the company as you know, two
Speaker 1: months ago. That is a rare breed growing a secular
Speaker 1: secular tail winds as we've discussed across those three major themes,
Speaker 1: and with strong revenue growth and strongly bit dark growth
Speaker 1: and amazing returns, and I hope we're going to do
Speaker 1: an amazing job for our stakehold. You know you've just
Speaker 1: from I did me of one one last question I had.
Speaker 1: So you're you're new to the company. Your title is
Speaker 1: c i O Chief Investment Officer. Do you explain what
Speaker 1: is what is the role of the c IO within
Speaker 1: a company like this and how much UM is your
Speaker 1: future like predicated on buying more, buying out other, buying
Speaker 1: out competitors, buying out space and sort of applying that
Speaker 1: know how that you've built up to what you perceive
Speaker 1: as less efficient operations out there. Great, great questions, Joy,
Speaker 1: So a couple of things I'd be aware of, um. So, firstly,
Speaker 1: in terms of my role, I think I've got one
Speaker 1: of the coolest roles in the building. Quite frankly. I
Speaker 1: get to work right next door on and arm with
Speaker 1: with our CFO, who's very judicious when it comes to
Speaker 1: the capital in particular, has got an amazing background of
Speaker 1: capital markets as well, and we get on extremely well
Speaker 1: as friends as well, which is always always a nice
Speaker 1: thing in the workplace. When it comes to thinking about
Speaker 1: the role, very much focused on investment, whether that's external internal,
Speaker 1: and that can involve everything from the media through to
Speaker 1: podcasts all the way through to dealing day to day
Speaker 1: with investors. So there's definitely an investor relations element to
Speaker 1: the role. As you said, there will be an element
Speaker 1: of this which is also strategically orientated as well, whether
Speaker 1: that's M and A or otherwise, but basically services servicing
Speaker 1: the purposes of the company, making sure that the spin
Speaker 1: is a success, making sure that the messaging is heard
Speaker 1: aloud and clear, and working with the CFO to make
Speaker 1: sure that we create as much shareholder value on a
Speaker 1: sustainable basis as possible. When it comes to at your
Speaker 1: question on M and A, go back to that point
Speaker 1: that I mentioned around the five of a hundred and
Speaker 1: thirty billion dollar out source logistics market. There's two ways
Speaker 1: you can think about this. One is that as per
Speaker 1: our history, we've got a strong balantry, we've got a
Speaker 1: track recording successful M and A, and we obviously therefore
Speaker 1: sit in the perfect position as a consolidator in the market.
Speaker 1: As the right opportunities presented to present themselves come along.
Speaker 1: I have no doubt that we will look at everything,
Speaker 1: but it obviously has to attain certain targets in the
Speaker 1: context of our amazing organic growth tential that we have
Speaker 1: as a business. That's clearly that organic growth is clearly
Speaker 1: going to be the priority for our business and in
Speaker 1: so many ways if we're making center return on invested capital,
Speaker 1: we have to believe that any deals that we do
Speaker 1: have to have a hurdle rate above that, otherwise you
Speaker 1: would just go and do organic growth. My senses with this, Joe,
Speaker 1: is what will happen is is that there will be
Speaker 1: a lot of inertia in the industry at at the
Speaker 1: tail of the industry when it comes to contract bidding,
Speaker 1: and what we'll see is these contracts of our customers
Speaker 1: migrating towards the scale players over time. So whether it's
Speaker 1: the top two or top three players, we will see
Speaker 1: a wave of smaller customer contracts coming to us at
Speaker 1: the top of the piles. So in essence, I think
Speaker 1: the big will getting well. Mark, really appreciate you joining us,
Speaker 1: Good luck with the spin and thanks for coming our
Speaker 1: other life, so thanks for me so nice. Absolutely take
Speaker 1: care remote well, if Tracy were here, this is where
Speaker 1: we do our chat in our takeaways. Obviously she's not,
Speaker 1: so I have to monologue a little bit myself. But
Speaker 1: obviously to me what was interesting is obviously just how
Speaker 1: under at least according to Mark, how under automated the
Speaker 1: space is, which surprised me. I wouldn't have guessed that
Speaker 1: there's still so much sort of pure as he put
Speaker 1: in dickensiean warehouses with humans and cardboard boxes moving around. Yeah,
Speaker 1: that that obviously definitely surprised me. And also, of course
Speaker 1: just this idea that until consumer buying or consumer consumption
Speaker 1: patterns change, we're probably gonna get this disruption. Like I've
Speaker 1: been looking at these charges of say, shipping rates from
Speaker 1: Asia to the U S and so forth that do
Speaker 1: not seem to go down, and I think Mark put it, well,
Speaker 1: there's no real reason to think they're going to go
Speaker 1: down as long as consumption pattern is abnormal and things
Speaker 1: I guess are normal I in some sense, but it
Speaker 1: is true it's been like over a year and a
Speaker 1: half since I was in a movie. I've barely taken
Speaker 1: any flights. So even though I am going to say
Speaker 1: like restaurants more often a lot isn't normalizing yet, and
Speaker 1: as such, you know, it's probably we're not going to
Speaker 1: see any real form of normalization in logistics, which I
Speaker 1: thought was made sense, but it's something I hadn't quite
Speaker 1: put together in that way. So, without further ado, this
Speaker 1: has been another episode of the Odd Lots Podcast. I'm
Speaker 1: Joe Wisnthal. You can follow me on Twitter at the Stalwart.
Speaker 1: Follow my co host Tracy Alloway at Tracy Alloway. Follow
Speaker 1: our producer Laura Carlson. She's at Laura. I'm Carlson. Followed
Speaker 1: the Bloomberg head of podcast, Francesca Leavi at Francesco Today,
Speaker 1: and check out all of our podcasts at Bloomberg under
Speaker 1: the handle at podcasts. Thanks for listening to year