The below transcript has been generated by an AI system and may contain inaccuracies, errors, or omissions. While efforts have been made to ensure the accuracy of the content, the AI-generated transcript should not be considered fully reliable or definitive record.
Konstantina Georgaki
Hello, everybody. Thank you for attending today's webinar, logistics for the AI era, how to move the world's most critical infrastructure. My name is Constantina Giogaki, and I'm the general manager here at Flexport leading the Northwest. We have a great webinar for you today. And before we begin, I have just a few housekeeping items. So up to the right, you'll see, on your screen a sidebar on the right of the main stage with a couple of things. One is a chat where my colleague, Carol, will be dropping some useful, information for you. Next week, there is a documents tab where we, will share the document of this presentation and other useful resources, like Flexforce tariff simulator and tariff calculator. And then you'll see on the right hand side q and a where you can drop your questions. And, we will manage the pace today so we can answer lots of them. And if we don't get to all of them, we'll be sure to answer via email. One more call out. You'll see a button above the slides here that says supply chain analysis. If you click on it, then you have to click on it twice. You will fire off a request to the Flex team to request a supply chain analysis. And during this presentation, I will walk you through, what this entails. Alright. One more housekeeping note, a legal note. The contents of this webinar are made for general information. They are not guaranteed to fit your specific circumstance, so we always advise our audience to reach out directly to discuss your individual business needs. Now let's dive in. Joining me today is my colleague, Alexei Boutte, our vice president of and global head of air freight here at Flexport. I am, particularly excited for this webinar because I live here in, San Francisco. And and walking to the office today, I saw about a dozen AI billboards. So it's really palpable what's going on. You can feel, the energy. And Alexi and I are very excited today to build back the curtain a little bit and show you what we are seeing on the ground and hopefully share some very useful content with you. So here's how we're gonna spend the next forty five minutes. First, I'm gonna walk you through some of the key numbers and statistics of the AI infrastructure super cycle and translate it into freight. From there, I'll speak a little bit about supply chain challenges and opportunities specifically for shippers and what we're seeing in the market today. I next, Alexi will take, the lead and take us deep in the logistics playbook, what to look for your logistics provider, how to move your, supply chain, and go deep in the different, levers you have at your disposal. From there, I'll take the mic back and walk us through cost mitigation strategies, how to look at your supply chain as a portfolio. And as you can see, I'm speaking really fast because we have a lot of content, and we wanna leave good time, for q and a. Alright. Let's dive in. The AI infrastructure super cycle. We are now seeing the largest infrastructure build out in The United States history and probably globally. The interesting comparison here, if you think about from the past, the largest, infrastructure build out previously was The United States interstate highway system. In today's dollars, that was 635 billions, and that was deployed over thirty six years. Now we are looking at an investment on AI and digital infrastructure that, at the most conservative estimate, would be at least 3,000,000,000,000. Some analysts even put it at north of 5,000,000,000,000. Half of that will be deployed right here in The United States, and it will be deployed in the next five years. So that's a very different order of magnitude and very different playbook on on how quickly this will unfold. Now let's look in some of the the numbers underneath that. About 600,000,000,000 of this most conservative 3,000,000,000,000 would be capital expenditure by the large hyperscalers. The 600,000,000,000 is just in 2026. It's up 36% from the year before. And if we take all of that investment combined, we're gonna reach globally about 200 gigawatts of global capacity. That will be double of what we have today. Today, most of this capacity is deployed for AI training. For all intents and purposes, we're in the early innings. You'll see the models getting better every day. So a lot of the the data center capacity is still dedicated to training the models. In the next five years, we expect that all of this will unfold really quickly. And by that time in 2030, most of the capacity will be dedicated to inference, so actually running the models. Now let's start translating what this means in terms of freight. What we saw in '25 is that data centers are coming for about 1,400,000 kilograms, of air freight, and that's a convert in Zebra divestment. And if you start squaring a little bit on the graph to the left, the biggest exporting countries, unsurprisingly, Taiwan and China. Now let's see what it means in terms of growth. So AI infrastructure was about 15% of the air demand growth in '25. Only second to ecommerce still riding from the previous boom. But if you look at the number here, it's been growing 49%. So if we project that out in the next couple of years, it will most likely supersede ecommerce as the biggest driver of our of our growth demand. So that's significant. So, because that is concentrated in a a few corridors, that has created crumbs in some, on direct capacity in some of the AI highways. So namely Taiwan to The US, China to The US, Vietnam to The US, China to India as an inter Asia lane, and Thailand to The US. So we're seeing some cramps on the direct capacity on these AI lanes, and particularly Taiwan and Vietnam have an extra layer of infrastructure challenge as maturing that capacity and some measure of geopolitical volatility. So what a shipper should do in this with environment? So one is explore creative rulings all the way from very fast options all the way to deferred options because the market is really expensive, right now in these highways. And then for time sensitive, shipments, so if you have, like, a project that needs completion or you have, like, a line down situation, essentially, build a very resilient car, speed mix, have many airlines on hand, and tap into fixed space commitments. With that, I'm gonna call my colleague, Alexi, on stage to walk us through what it takes to execute on the AI infrastructure supply chains.
Alexis Boutet
Good morning, everyone. So Alexis Boutte here, VP and global head of air freight at Flexport. So in this section, we are gonna discuss first what component typically move for AI company, and the typical logistics terms they face. Then we'll go through execution best practice. So I will, deep dive on how to execute for AI supply chain. And lastly, moving this infrastructure can be very costly, so we'll explore, what are the cost mitigation lever, that you can use. And throughout this presentation, I will, do a mix of best practices, and, I will share real, case study from our customer to make it a bit more, lively and not be too too theoretical. So let's now look at the typical AI supply chain. So I'm gonna do another simplification, but just to anchor with everyone, what is an AI supply chain. So first consideration is there's a wide variety of components, of different value moving on the supply chain from hundreds, of supplier, sometimes thousands. So it can be any of the subcomponents in that picture all the way up to the full, server rack that you see that you can see. And you have company that move, a lot of these components, almost all of them all the way up to server rack, and you have company that only specialized in subcomponent, for example, chips or cooling system. For the sake of this presentation, I will assume a company of the highest complexity. So that's the that has a broad area of component from low value component all the way up to, to server rack. That way we will explore all the scenario and how to execute for, different type of format. Second important thing, when we talk about, an AI supply chain is to understand the typical two modes they use. So they would use either a mode which is an inventory transfer to a regional distribution center, and then they distribute directly to client. But sometimes, you would ship directly to, a project site. So that's called a direct shipment. And this direct shipment, then have higher visibility need because now suddenly you need to coordinate with the site manager or potentially someone from the client of your AI client, and we will dive into these visibility test challenges. Last little thing, the very high value components for AI company typically have shop watches, tilt watches, or tracking device. So, you need to move the physical supply chain of this good, but you need also to be able to, cater for all the signals, that come with these devices. So you need to be able to see when a, shock watch has been activated, when a tilt watch has been activated, record that, and and there's this exception. Alright. So these are the, like, high level, picture of, the supply chain. So now let's talk about the logistic challenges now moving, this, AI component. So very high level again, there's three type of challenges we need to address. The first, thing is that this is these are extremely high value and fragile components. To give an, an idea, a modern AI cluster can cost up to, $1,000,000 per rack. They are extremely, sensitive to vibration, and a single road map could just unseat a GPU. Second element is that these are large heavy crates, and there's a lot of dangerous good. So it it really requires a dangerous good. Why? Because there's battery packs, there's liquid in the cooling system. So wide array of, dangerous good. So it really require deep expertise on all your operation step. For example, your trucker actually need to know how to segregate the dangerous good so that it loads the dangerous good properly. And you can also flag that, hey. This DG actually is only allowed for ocean freight, so it shouldn't have been added to this air freight shipment. So deep expertise for all actor in the chain, the tracker, your own team at a logistic provider is really required to to move this good. And the third thing, it requires extreme speed and reliability. So in 2025, 57% of data center project, had a delay, and a large part of this was, due to logistic challenges. So you if you if you step in as a logistic provider, you need to help, with, this challenge. And when you do a direct shipment that will go directly to, to a site manager, it's very important that you have not only speed but precision. It needs to arrive at the right time, not before, not not after. And everyone needs to have a signal that, hey. It's arriving on that date, and you need to keep everyone coordinated. So these are the the high level challenge and why it makes, AI logistic a fundamentally different risk category to to general freight. Alright. Now let's discuss, a little bit, the playbook, to deliver good execution for a company. So I have five, 15 no. I have 15 slide of contents with detailed pointer on execution. So my intent through this webinar is really to if you're a logistic manager, to give you a checklist of what you should look for, in term, of assessing new provider or evaluating your provider or just assessing, how you are doing in your current supply chain. So so that's that's that's that's really the intent, giving you good tip to to source your provider. If you are not operating an AI supply chain, there's a lot of these checklist that you can still reuse for your most critical component. So I'll discuss that, the six pillar of execution on AI infrastructure. And then I will also discuss cost mitigation strategy. How do you make sure that you execute on an extremely high value supply chain, but don't overpay for it. So what are the things you should look at? So let me go through, six speed of execution. So first, you need to be the fast and resilient AI network. Second, you need to have the lowest amount of handling throughout the chain, and lowest amount of end of so that you keep your cargo secure and moving fast. Third pillar is, you need to have very specialized trucking expertise, and, my advice is to have a dedicated tracking team serving your clients so that they build reps on your clients. Third key pillar of execution, you need to provide live visibility for all parties. If you're delivering into a site, then it's very important that you are able to provide the availability to the site. To put it very plainly, the typical CAN Excel reporting is not good enough when you're delivering on, an AI supply chain. Fifth speed of execution, you need to be able to do live exception recording and resolution. And the last speed of execution, you need to provide fast, highly compliance clearances and low inspection. I have slight detail here of this. We're gonna go through this together. On the cost side, you don't want to overpay. So you need to be able to segregate components and really have different execution paths with your forwarder for low versus high value components. And it's critical so that you don't end up, like, putting everything on the costly highways, basically. Second thing you need to look at in particular, if you have a wide variety of, supplier coming from the same country is you need to look at your consolidation program. Are you doing multi supplier consolidation for air? Are you doing buyer consolidation for ocean, or are you leaving money on the table here? And, the last thing thing is you need to constantly evaluate, your transit time trade off. With the Middle East crisis right now, for example, all the Middle East, transit, was blocked. Prices have gone significantly up from, Southeast Asia going into Europe. Maybe it's a good opportunity to explore via US to Europe, for example. So you need to be dynamic on, your, your supply chain, be able to to reevaluate the option when on how the market evolve and do that with your forwarder. Alright. So this has a general principle. Now we are gonna deep dive on every single of the point on this slide, with a detailed explanation. Let's go. Alright. So first, how do you build, fast and resilient air network? Here's the thing you should look at when you assess your provider or your current setup. So you need to have daily guaranteed uplift on allotment, block space, or charter on the core lane where you move the majority of your volume. The second thing that's very important is to have an integrated demand planning process with your forwarder. For example, if you are shipping as a full, server racks, it's pretty important that you try to cut your PO at four racks because four racks, is what you can load on an airline ULD altogether. So it's one full unit of freight that's gonna move together at a single unit, and it's it's provide you the best agility in your supply chain. And, also, typically, your trucker has 2,000,000 of insurance for racks, where each rack is 300, k to 500 k. It's gonna move all in one truck. So that but so this type of consideration with your forwarder are very important. Like, you really plan your PO to get the maximum speed, and execution through your supply chain. Third point, you want to have a multi airline procurement strategy. So you need to ask your forwarder, hey. How are you gonna move my freight? Because what you want to do is to isolate from geopolitical of weather events. If suddenly that the weather event in Anchorage and all the freight going to North America via Anchorage is blocked in Anchorage, you don't want that to stop your supply chain. So you need to have an outlet via another corridor to be able to to move your freight. Or if there's a crisis in The Middle East and you are reliant solely on Middle East airline to move your freight, that is not good. You, so you need to assess the resiliency of your portfolio to this type of event. Four things that is very important, you need to have, to assess that your provider has access to live freighter capacity. So if you look at the typical server racks, they used to be around eight feet, so it was barely fitting in a a triple seven aircraft. Now what I'm seeing is more and more very big crate that can be nine feet tall. Unfortunately, nine feet tall, then it's gonna have to go on a seven four seven aircraft. That's a subset of the freighter aircrafts that exist in the market. And if you have a provider that do not have access to large capacity on this aircraft type, you will be stuck. You will be stuck because you're not gonna be able to move this large crate, or you're gonna have to recut your PO to adjust, to, to what is there. So that's one thing to to look at. And, of course, when you have rushes, you need to have a provider that, has priority access to extract charter capacity. So that is that has deep relationship with the charter operator, company like Atlas Air, for example, or National, and that can, like, really ramp up capacity for you in a heartbeat, to deliver on your supply chain. So this is how you build a resilient network, like, these are the key principle. Now I'm gonna deep deep dive into a very specific example of a client to just make it very real about how you do that in practice. So this client is one of the world largest, company by market cap. They are leader in networking solution and AI infrastructure. So this this is to, to let you imagine the type of clients that would be. They ship, from Hanoi in Vietnam, and they have they have this regional distribution center in Guadalajara in Mexico. And this is a solution we put, together for them to build resiliency. So what you see is we have so that is the bottom of my, little drawing. We have direct shipments going from Hanoi, to Mexico, using Qatar Airways and CargoX. So that's one execution chain. We also and, so, Cargo Lux and Qatar Airways are freight freighter aircraft. We also have a second, execution chain, which is Annoy, to LA, and it's moving on, Nippon Cargo Airline, KZ, and Capet, a top seven four seven, aircraft, but also on US that only has passenger aircraft for, the the components that are not the racks. It goes to LA bonded truck to Guadalajara. So that's the second execution chain. And we have a third execution chain, which is going from Hanoi to Shanghai on, the airline, CK on China Eastern, and then goes on our own, freighter, flex port freighter. So we we run our own plane from PVG to, to LA. It needs a seven four seven. So this is how the chain were was set up, and we also have a truck going to PVG. So in case, for example, there's fuel shortages in an oil jet fuel shortage in an oil, we can still track the cargo all the way to PVG. So now let me talk about a real example in the Middle East crisis. Okay. So we are in March, and we start to have tension in Iran. The airspace is blocked over Middle East. So suddenly Cargolux and Qatar Airways, they can't operate anymore. Well we still add our Anoyed to LA solution plus trucking to Guadalajara and then we started to have jet fuel shortages in Anoyed as a threat. It does not yet fully materialize on international cargo but it's a threat. Even if that would be to happen and we could not refuel in Hanoi in Vietnam, I could still truck all the way to Shanghai and move it to my charter. So the the chain of execution will still remain uninterrupted. So that's what I mean by building a resilient chain of execution. Make sure that no matter what happened in the world, you have multiple option to route your freight. And for that particular client, despite the the crisis, we maintain 98% plus, on time performance. So that's a little example on really how you build your chain to for resiliency. Let me move to, the second pillar of execution. So you want to have the lowest amount of handling, for speed and safety. I mean, you don't you want to make it very simple. The least amount of forklifting that will trigger the shock watch or potentially damage the cargo is the best. So what you're gonna do, you're gonna do only built up unit because at BUP, in the forwarder lingo, from the forwarder warehouse at origin to forwarder era, warehouse at destination. There is no loose handling at the airport terminal. At origin, you want to have a warehouse that is on airport so that you you don't have to truck the cargo from a warehouse of airport to the airport, with late delivery cutoff in this warehouse at origin so that the cargo literally doesn't sit at the warehouse. You know, it gets delivered, boom, boom, boom. So four crates are built on the PMC, and it goes straight to an airplane. At destination, you would want to have runway pickup. Where possible, not all airport allows this, but where possible, you want to make sure that the cargo, as you see in this picture, is unloaded from the plane directly into a truck and go straight to the forwarder facility so it doesn't go through an airport terminal. If that's not an option, at least you want to have what is called a dedicated bypass door. So, basically, it gets from the plane into a a little tractor, and the tractor go, put it on a belt that goes straight to your truck. It's second best option, in that case. And you want to have dedicated trucking for p for pickup and delivery to not, mix this cargo with all our cars. That's typically how you would under supply chain. Okay. This is, an example of our setup in Hong Kong. I'll go very quickly through that. So, for example, in Hong Kong, you can deliver, cargo all the way up to midnight. So if you think about it, the supplier would finish the production of the day, get it to a truck, shoot it to our so they produce in the case of Hong Kong in South China, shoot it to a truck, deliver before midnight at our warehouse, and it would go on the early morning, flight straight up into The United States. Our warehouse is straight in the terminal, so there's no double checking or document by the forwarder of the warehouse and the terminal. It's one entity. It's actual, in the case in Hong Kong, and we have direct access, to to the air side. So, really, like, we we put the cargo in a ULD and, flow it straight to, to the airplane. And last thing, we have CCTV recording of all steps. So if ever we were to activate a shop quite, with a forklift, we can immediately record the event, see what happened to the cargo, show a picture of the client, say, are we okay to to move it? So that's little case study of, like, offset up, for example, at origin in Hong Kong. Okay. Next important thing in term of execution is the tracking. So let me walk you through, like, the kissing you want to look at on tracking, kind of your checklist for the tracking. So you want to have the prebooked truck at the major shipping location, literally a truck on standby, ready to go at your major shipping location. You want to have the same team of driver on a new large, distribution location. Very important that they are trained on your, on your SOP as a client, and it's always the same person. They really know all all your procedures. You need to have high value tracker with over 2,000,000 of insurance. And why is that is so important is if you're moving, very high value components like several racks at 500 k a piece, I told you some some of them can be up to 1,000,000 a piece or or more, Well, you don't want to have a truck run with just one server rack. So you want to be able to have on the truck as much cargo as possible. So they need to have very high value, so that you don't have to cut PO to adjust to the value of your tracker or, to to have to take side insurance to cover, the value that is uninsured. Third thing, you want to have GPS localization and active monitoring on all truck. If a truck stop on the route, which they should never, you you need to have the truck air dispatch immediately calls the driver, make sure that everything is okay, that this is not, tentative of theft. You want to have absolutely shock free handling and driving, so air ride trucks, airbags around the server racks, high security hardware. So you would have both seen on all truck and container. What we were doing for some customer also is hardware close. So it's like chicken wire on some of the pallets was part of their SOP, to make sure that there could not be theft. And last thing that is important, you want to have, drivers that are trained under goods, that know how to segregate dangerous goods, to not create a truck fire, and that know how to say, hey. This particular type of dangerous goods cannot be loaded on air freight, so I'm not gonna accept this particular piece because it should go on an ocean shipment. So they act as a further safety net on your supply chain, and they are part of your execution chain. Next important thing, secure facility and verification of cargo at each step. So you're gonna go through bonding facility. You want this facility to, adhere to the highest security standard. Typically, you would be certified. You want to have cloud accessible CCTV surveillance twenty four seven so that you can see at all time what happened to your cargo. Make sure everything is scan in, scan out. You know, that's one of the asks that you should have to forward there. I want all pieces to be scan in, scan out so that there's always a clear inventory of the pieces and picture at of all the high value shipment at every single, touchpoint, basically, through the chain. Next, let's talk about the team. So the the way we organize, the team that supports this account is we have one global account manager, and this is typically a very senior leader with deep operation expertise. So that these are the type of calibers that we would put on this account. And then you have an account management team twenty four seven with dedicated, supervisor in all geography with deep expertise on the account. And the the team is organized as a fully empowered infrastructure. So let me talk about this in in effect. So for example, this team is allowed to bypass the procurement team, in my organization and call a chapter operator to, go find a chapter for the clients. So they can take this decision and just bypass everyone in the organization to do what's right for the customer. Of course, this is because the individual we put on this team, have a different level of, of experience, and they they are able to make this type of decision. And the last thing, all the on top of, like, a team that is very expert, that builds rep on the account, We digitize all the client SOP, so that, basically, they get to see what's needed to serve the account, what exception pop in real time versus the SOP of the customer, and they can act immediately. I think, actually, I have an example of this in the next slide. Yeah. So this is our SOP configuration platform. So, basically, we can ingest any client SOP native language running through through our platform and we it will create, basically, rules of how you execute on this account. And this rule, we call that create work items. So what an operator need to do to execute on this account, and this work item can be executed automatically by your system. For example, automatically send a shipment notice to this email address five day before, the arrival to the site, or, it can flag an action to be done by your team. Hey. Now you need to call the site manager because we have, twelve hour to delivery, for example. So this is how it work, and this is a a screenshot of our system with, in this case, a demo account. Alright. Sorry. Like, my slide movement, was a little slow. Next thing that is important, is to have live visibility for all parties. So not only the logistics, team. So traditional calendar reporting is not gonna cut it for this type of execution. What you want is to be able to provide full visibility to, the logistic team and to potentially a site manager or the client of the, AI company so that everyone knows when a specific PO and can search, in this case, in our system, when a specific PO will arrive and can coordinate all the subsequent action. So if you look at what you should be able to provide, purchase level, purchase order level live tracking is paramount. You need to be able to share, the shipment status with the final client or the site manager. You need to provide centralized communication and source of true for all actor. You need to make sure that all transit exception and immediately surfaced and resolved. All tilt and watch, tilt and shock watch events are fed instantly into the forwarder system and, is are visible to the client, and we can take decision on, hey. Do we keep shipping on this particular shipment or do we hold it? And you you you want the same level of visibility on the account teams, the clients, and the the site manager for direct shipments so that they can all take decision together. Oh, so this is an example, for example, of how in our system, we have an ability to share a public link to either a site manager or the client of our, AI client so that they can track the shipment, but with control on the visibility. So for example, they could not be able to see the commercial invoice. They they can only see, like, the actual shipment milestone, the expected delivery dates, information that are relevant to them, and it's configurable. And they could receive it, through email notification or through mobile notification if they are on the way. Okay. Last piece of execution, you wouldn't want to have, like, a super fast ground and air supply chain and just get added in custom clearances. So you want to avoid any type of, custom delay. So the way you do it is you want to have the product portfolio stored in your forwarder system. You want to prescreen all your HS code and you want to a system that is able to flag when a specific HS code has, expired. I think this, you will see it in my presentation actually, how how we actually flag it in our system. Prior to flight landing, you want to make sure that all the clearances are prefilled, with an AI audit as that run to make sure that we don't do not have, any error. And, so so that basically you are able to maintain 99% plus, on time and compliant clearance. And the last thing is add a shipper. You want to be very careful to maintain your CTPAT or equivalent cert certification, which allow you to lower the inspection rate, for example, when you cross a border. So the CTPAT is basically a certification that you participate in the current terrorist crime of The United States. If you have this, your, inspection rate crossing the border to The United States will be lower. So this this is how the thing we always look at with our client, what certification do they hold, and we recommend them which one they should actually have that they don't have. With that, I've talked about best practice in execution. We have roughly eight minutes in this webinar, so I'm gonna hand over to Constantina to discuss the cost mitigation strategy before, we actually close-up.
Konstantina Georgaki
Alright. Thanks, Alexi. Okay. I will pick it up on the cost mitigation, side of things, and that's actually something that comes up fairly often with customers that have large supply chains that are exposed to a lot of air freight in AI or actually also beyond AI. So what's important here is that we take a look at, at the cargo as a as a portfolio. So it's pretty tempting to look at a a large infrastructure project and say everything's to move really fast, but that can get very expensive very quickly. So then you need to look at the portfolio and really segregate how fast, like, a 300 k to for half a million rack should move and with what kind of, like, protections and white glove, delivery versus, like, a very low value component like a widget that's also, like, a not time critical for, for an infrastructure project. So when you work with the forwarder, you want them to give you, like, the full gamut of options. So all the way from, like, a next flight out solutions, which will be, like, the fastest way you could possibly move, all the way down to deferred air. And not only that, also have some, like, hybrid instruments on hand for you. So a Sierra solution to Europe, for example, or, like, a a fast boat, into The US. And that extends all the way into tracking. So in infrared, we frequently say that, speed is one on the ground. So I will change this to say that, speed is modulated on the ground. So you could have, a tracking solution that goes slow or that goes fast. So here on the left hand side, you'll see an example of flows that inbound into, into LA, and then they get tracked down into Mexico. So depending how time critical the flow is, it could have, like, a slow option, regular clearance at the border, takes a couple of days, two, three days, or you could have a fast option, direct bonded bonded track that goes all the way to to destination direct. Alright. So that gives you a little bit of a lay of the land of what you should expect and what you should, demand from your logistics provider. To close us out, I wanted to spend a little bit of time on a topic that has come up, fairly frequently, lately, and that's on BIAS console. And, that's relevant to the little, action bar at the top, where if you click it twice, you would be requesting supply chain analysis. So, this is an example of a supply chain analysis we did for a large tech company where we analyzed their ocean flows, and then we, discovered more than 10% optimization potential, of the cargo. So we did that by looking at their LCL volume and not the FCL volume and how much of that could combine into fewer containers. So, the idea is simple, but the modeling is hard. So we've seen many instances where our customers have taken a crack at it with some junior analysts that didn't understand the the constraints of physical movement and and cross border and what needs to wait for what. So if you have that analytical capacity on your team, it's a it's a great exercise for them. If not, work with your logistics provider or Flexport is happy to to help you with that. So that is the modeling part. Now, you have that analysis that you say, okay. I looked in the rearview mirror. That looks great. How do I put in this practice? So what we have done at Flexport is we've have embedded it into our platform. We there is a module in our platform where the model runs continuously in the back. And then depending on your business rules, how sensitive the different components are to translate and how far you would allow them to be fetched at origins to put, like, in, in simple terms, then you either give, like, a preapproval, for us to consolidate your cargos into into fewer containers, or you say, I want to be, in the driver's seat every time. You'll have to present me the opportunity, and I want to be the one, authorizing that. And it will always give you a summary of how much, money you saved, what trade offs you actually made in terms of, transit time, and then pre present you with your essentially, a cockpit of of your consolidation engine. Alright. What did we do today? So today, we reviewed, your AI playbook for logistics. So it runs on two parallel tracks. One is execution excellence, what Alexi took us deep into, how you ensure that the air network that's built around your supply chain is fast and resilient, how we minimize, different, risks to your cargo, both from, a safety perspective and also from, like, integrity of the cargo. And on the other side, cost mitigation strategies, you can run up a pretty hefty bill if you're not careful, with how you you segregate your supply chain and different instruments you have at your disposal for that. And with that, let's go through q and a, and we also have opened up, the survey. So please give us feedback. What would you like to see next? How we can make this webinar most useful for you? A, Alexi, is, a question you would like to pick a pass at?
Alexis Boutet
I can take the first question that was posted. Oh, there are a lot of question. Okay. So the first question is not specific to AI supply chain. It's, about, AI to assist airlines. So let me read it, back. So how can AI assist airline to reduce the operational issue with moving the good or splitting it? Is Flexport working with airline to achieve it? So, yes, we are working with airline. We also have our own plane, so we have a necessity, for example, to work with Atlas Air, who is the operator on our own plane to, improve, the the quality of execution. High level, here is how AI can, help you execute better than an airline. So the first thing, it can allow you to digitize, the SOP of your forwarders that are your client in the case of an airline and understand exactly what they want. And the same way forwarder surfaced an execution failure, for a for a shipper. Well, as an airline, you can surface execution failure on the forwarder. So that's number one. It's not AI, but it's predictive analytic. You can use predictive ad analytic to drive a better overbooking, strategy. You can use also predictive analytic to, better predict, the available cargo capacity you will have on a plane. If it's a passenger plane by predicting how much, baggage, the passenger will, will bring. For example, if it's a cargo plane, by, looking at historical data on the weather and say, oh, I expect a lot of, headwind on that route, and, therefore, the the payload will reduce in the coming day. So it can allow you to to drive your available cargo capacity. With AI what we're implementing AI right now, not predictability, but AI as well is, detection of maintenance needs. So maintenance is a very, very hard thing, for, for the airline community because it's not very deterministic. You know? Each each airplane is its own beast, so you need to combine the data on what elements are, susceptible to to fail with the human expertise of these technicians that knows the airplane and say, no. I think I think this airplane is gonna be is gonna be okay or no, I think we need to change the piece a little bit earlier. So AI is very good at this at surfacing to humans. The action just should take or check. And the last thing where, we're implementing AI with, airline and our own fleet is just anomaly detection. Hey. This client typically booked this much, and today, they have not booked. Maybe we should call them and make sure that the usual bookings they have, is gonna come. Otherwise, we should just replace the cargo. This is our just example, and I can go a bit deeper, but I don't want to take all the time in this, in this, webinar. Constance, now you want to take, the next, question in. line?
Konstantina Georgaki
I'll read them out. Do you think the demand for this particular type commodities, to stay as a structural change for air cargo, how far it could move to sea freight in the future? And I'll combine it with the next right now, it seems the movement is concentrated on a few lanes. Do you see this changing any soon? So there are sort of, like, two two kinds of, thought. One says, okay. AI is, is here to stay, which is, where with the one I subscribe. And the one thing this is, a lot of, like, a excessive investment that will decrease in the future. So just to acknowledge that there there is sort of, like, descending, thoughts on this topic, for now, given how quickly the infrastructure needs to be deploying, I I do see it being air freight dominant. However, because it is, so expensive, there's already, a lot of push to move parts of the supply chain, into ocean. And then ocean itself has enough it has a certain amount of, like, fast boat options that help, help bridge the gap. So there's already some amount of the infrastructure going to ocean, but not the sensitive cargo that's, that's way too risky. And then, on the other question, if it's gonna be the same corridors or others, this is very interesting. It came up recently in a conversation. So US is a dominant, destination. However, what drives the build out of the sites is is suitability of the sites. And the suitability of the sites right now is access to behind the meter, electricity and water. So you'll see sort of, like, if I were to pull, like, a US map, the concentration of data centers is driven by that. A now the interesting part is that this is a big opportunity for countries. Right? So a lot of countries are putting incentive in place, to start attracting some of the data center build out investments. So I have customers in their portfolio that are serving this build out, in India, for example, or other Southeast Asian countries, which it might seem nice, but it's, like, for smaller modular data centers because everybody is trying to diversify the portfolio and and give a boost to their country. So it's a very interesting, environment and but I expect this to take, like, at least a couple of years before you see, like, Taiwan to The US being dethroned or, like, Thailand to The US being dethroned. Alexa, do we have time for, like, a couple more?
Alexis Boutet
I think just one more because we are, overrunning. So maybe take, another one.
Konstantina Georgaki
I okay. I'll take a quick one. Does the flexible system feed customer's ERP system or only receives, purchase order information and provide shipping information for customer to customer to track PO status in the flexible platform. Quick answer, it does both. So if you have an ERP solution, the flexible system connects to your ERP solution and writes into it, your purchase order updates and also stores it in the platform. So then you can store your ERP system, keep it as a system of record. But if you want the solution to be able to chat with your providers in your ecosystem, you can do it on the platform, and they're both synced and they will show the same information.
Alexis Boutet
And, typically,
Konstantina Georgaki
Alright.
Alexis Boutet
actually, our platform is a bit, more intuitive, when when it's like a mobile service team or a site manager that is not. from logistic. You know, they can literally just search the name of the project or the name of the piece and and actually see it in our platform. So that's the advantage of, our platform for this. And I think with that,
Konstantina Georgaki
Thank you very much. Please, make sure to leave us feedback in the survey. It's a very rich topic. We would love to do a follow on according, to the interest of our audience. Thank you very much.
Alexis Boutet
Thank you very much.
Konstantina Georgaki
Okay.
