 Hi everyone! Welcome to our first Spring Live series. Thank you for joining us today. I am Paulo Souza Jr., course lead for SC3x Supply Chain Dynamics, which is part of the MITx MicroMasters in Supply Chain Management program from MIT. I am happy to be co-hosting this live event today with my colleague Miguel Rodriguez Garcia, course lead for SC1x Supply Chain Fundamentals. Hi Miguel! Hi Paulo and thank you so much for the introduction. So I'm really happy to be here with you guys and excited to share some great insights about supply chain with all our learners and today we're going to follow this agenda. So first our speaker will give us a presentation that will last around 25 minutes and after that we'll have some time at the end, around 15 minutes for you guys, for the audience to actually ask some questions to him and Paulo and I will be channeling those questions throughout the presentation. So please use the Q&A feature in Zoom to ask the questions and we'll be working on that throughout the presentation. So before I'll introduce our guest speaker I just wanted to remind you guys that this is a cross-course live event from SC1x to SC3x and verification is still open for both courses so remember that verification is the only way that you can actually have a certificate from us from MIT and it's also the best way to support the program and allow us to keep doing this and giving this content for free to many learners around the world. So if you like the content as I said we'll be posting the verification links in the chat so please if you like it keep supporting us and now back to you Paulo so you can introduce Luis. Thank you so much Miguel. So today we are honored to have Luis Gosling joining us. Luis is currently a senior vice president at LX Partners, a global management consulting firm. He has over 10 years of experience driving projects and diligence for clients in capital intensive industries such as transportation, logistics, infrastructure, manufacturing and warehousing. Prior to LX Partners, Luis covered the logistics, shipping and infrastructure sectors at a logistics M&A advisory firm for clients from Asia, Europe, Latin America and also led diligence for over six billion dollars in transactive assets. He holds a bachelor's degree in industrial engineering and a master of science in logistics from PUC, he also holds a master's degree in supply chain management from MIT. By the way, he also took our micro masters courses just like many of you are doing right now. So welcome Luis, the floor is yours. Thank you Paulo, thank you Miguel, thanks everyone and thanks for being here and having me today. What I want to talk about today is global supply chains. We titled this presentation how did all this stuff get here and really what we want to talk about is we're going to pick one product and we're going to follow that product throughout the world. We're going to go from Shenzhen, China from the port of Yantian all the way to its final destination somewhere in the United States and you're going to see more about that in a minute. To begin with, Paulo gave a brief overview of my background so I'm not going to spend a lot of time talking about myself. I've been doing logistics and supply chain touching a little bit of everything under the sun for the last 12 years or so. Focused on finance a lot in the early years of my career, have done a lot of M&A and now I've been focusing on operations and helping our clients better manage those assets, better manage those operations. So anything related to rope freight or ocean freight or air freight, that kind of asset, port terminal operations, that's kind of in my wheelhouse. So we're going to dive right in. The first thing I'm going to do is give you a quick overview of this industry and we selected, we decided to have some fun with this. So we selected the toys industry as our example for today. This is the panoramic 10,000 foot view of what the toy industries look like. I'm not going to read this entire page to the audience but I'll leave it up on the screen so you can read it on your own time. Basically, toys are a sub-segment of consumer products and like a lot of different segments in consumer products, it's very fragmented. There's not one single company that holds 50% of the market, for example. There's a lot of big conglomerates. They're very global and it's a very emotional industry and I like talking about this. It doesn't affect just toys but when you think about toys, you're thinking about kids toys, adult toys and pat toys. Those are the three big kind of verticals of this space and no one buys toys trying to save money. You buy toys with some sort of emotional driver to that consumption decision so it's an industry that benefits from that in a number of ways. At the same time, if you look at number two in three columns on the page in front of you, this industry has very strong fundamentals. It's been growing for the last 10 years non-stop. COVID actually helped the toys industry even though retailers were pretty disrupted between 2020 and 2022. You have an industry that's been booming, if I may say so, with even further growth in recent years because playtime and physical toys and physical goods have seen a boost in the man. At the same time, you have costs, pressure coming very hard, very strongly for these companies, not only supply chain costs like ocean freight, which skyrocketed, the cost of ocean freight skyrocketed between 2021 and 2022 and now it has recently seen a certain depression in rates but also raw materials. You have toys or really products, if we want to call that, that are getting increasingly complex and the existing materials are getting more expensive. You have wage inflation and raw materials scarcity in some cases. Lastly, you don't buy toys directly from the toy manufacturers, you need to go through a retail channel and retail channels as you all know from other modules in this program have been undergoing some disruptions. Omni-channel is a big one. It basically changes everything we've been doing in retail for a number of years and also consumers have been gaining a lot of power recently, which kind of undermines what used to be called the retail art in the late 90s, early 2000s and so a lot to come there. Toys are obviously subject to all that and this is just a very high-level overview of what we're talking about when you think about the industry. I don't want to dive into the operations without letting you, giving you this lead on, hey, this is the space we're looking at. Moving on. So this is a toy. I'm sorry for the spoiler on the next page. This is a toy and I want to give you a couple of examples of what a toy is. This is a very simple toy. It's a single-body plastic figurine. You probably seen it in a couple of board games. This is a very simple product. Easy to make, cheap to make, cheap to handle and ship around the world and you can make it in bulk and it's cheap to purchase. This is also a toy. This is a sexier toy. It's more complex. It's way more expensive to make, way more expensive and complex to manage. There's so many components and they're so different when you think about an Xbox gaming machine and it's way more expensive to purchase. This goes for at least $500 in retail and it has a few different options when you're thinking about buying one but there's really limited customization. This is also a toy and this falls somewhere in between. This is a collector's figure and it's very complex. It's somewhat cheap to make because most of the parts are plastic or simple metals but it's very complex to assemble. It's very manual and pretty hard to manage. It's hard to forecast the demand for something like this. It's very expensive to purchase which means it caters to a certain niche of the toy industry. It's people that are willing to spend $300 to $500 for a min condition figurine just to put it on the shelf. We didn't pick this one example by chance. This is Megatron, a Transformers character. He's the villain of the Transformers franchise and we're going to follow him throughout the world so he's going to accompany us on our journey. Before we jump into that journey, I just wanted to highlight that these toys from a simple plastic figurine to a video game that's super complex, they're managed by mega conglomerates around the world. They all have different strategies from forecasting to how they execute their operations and how they design the supply chain and they all work. There's no single right answer when it comes to supply chain and I'm sure you've heard this over and over again and these companies are good examples of that. They have very distinct approaches to how they manage the supply chains and they're all successful in doing so. This is a quick overview of what the Megatron supply chain looks like. It's very complex because you have so many different parts going into this product and then finally you have a single point of assembly that takes us all the way to the customers and this is our international logistics piece. That's what we're going to focus on today. We're going to look at how do we go from finished product all the way to product received in the hands of our happy customer. Let's jump right in. This is a quick roadmap of our journey before we jump into the specifics and I'm going to take you in a quick deep dive on each one of those seven echelons. We're going to talk about packaging and load building. We're going to talk about ocean shipping. We're going to talk about port terminal operations. Once you get inland we're going to talk about rail and road freight. Finally we're going to talk about warehousing and obviously DC operations and inventory management which is extremely important what to buy, when to buy it, how to replenish and then lastly the last mile delivery pun intended which is how we get our products from that last point of consolidation all the way to the end customer and of course Megatron is going to follow us through all the pages. He's keeping an eye out for him. The first piece of our supply chain is load building and I cannot stress enough how important this is. Load building is basically how do you put your products in a box. It can be a box, a corrugated box, a different type of packaging. Sometimes there's a plastic cover with some branding. Packaging is really important because packaging some of it will be customer facing. Not all packaging is a boring brown corrugated cardboard box. Some of your packaging will have the company logo and some art in it. That's also part of the customer experience. So packaging is important. Stacking is also important. It can maximize or not or impact the way you ship your goods and how much you can chip and how efficient your supply chain can be. Third, you have load building. This is usually software-assisted these days unless you're talking about a very local, very manual operation. This will be more mathematical and quote-unquote scientific really but oftentimes reality doesn't follow math. As supply chain practitioners, I'm sure you all know this. Lastly, our pallet carrying a bunch of boxes including Megatron is going to be put in a container and that container is going to travel around the world. One thing I wanted to highlight and I'm going to try to bring some real-life examples in a couple of these pages. I think that illustrates well the concept we're discussing here. If you're not familiar with this diagram, this is a utilization scatter plot. Every container has space and it also has a certain amount of weight it can carry. When you put boxes or pallets, when you load a container with products, you need to think about maximizing the usage of that space but also maximizing the usage of the weight capacity. Some products will cube out before they weigh out and some products will weigh out before they cube out because they're very dense. That's what this chart is representing. This is an example of 10,000 containers plotted on one chart. As you can see, the top right corner of your screen is really, really good. This means these points, these containers had a lot of weight and the volume of the box was really well utilized. You really filled that container. This is a supply chain dream. As you move to the bottom left of the chart, you start having containers that are empty or very light. There's a number of reasons why that can happen. Maybe you had an urgent shipment and you didn't have time to wait for consolidation. You just had to leave with the container half empty. Maybe you have just not that much volume this week and the container had to set sail and not wait for more shipment. When you think about ocean shipping, for example, if we're talking about global logistics here, ocean shipping works in weekly cadences, weekly schedules. If you have something that's arriving on Thursday, you can't wait one day, it's going to be put in a box next week. That's just how it works. If you look at, I brought two examples here on the next page. Points A and B are so dramatically different when you look at what they really mean. Picture A shows us a container that has 50% of the volume occupied, which means it's half empty set another way, and only 8% of the weight utilized, which means it's very light. They're carrying very low density products. While point B, it's not perfect, obviously by all means, but it's way better. We're looking at a container that has 55% of the weight capacity utilized and 60% of the volume. This is by no means a perfect load utilization, but it's much better than the left picture. The last thing I want to talk about when it comes to load is the stacking. Stacking is important because of reasons that defy math. People can do all kinds of things. If you've been in the industry for long enough, I'm sure you have pictures like this. This is absolutely what you don't want to happen with your pallets. If you look at the left side of the screen, you have loads that are almost falling from the pallet because this pallet was broken from the bottom, which is an absolutely no-no. When you're building your loads, you need to think about how am I going to use those loads in the future. If you have a box that you need first, that box should be on top. This is just common sense, but also you have physical constraints to your pallets. For example, if you look at the top right, this pallet is very high. This is very tall, which means it's hard to handle, and you risk tilting your loads and letting some box fall during your supply chain execution. Inside the warehouse during transportation, you name it. Finally, at the bottom, you see there's a box here that got crushed by the weight. This is not good because you risk damaging your product inside that box. This is what causes claims, returns, and so on. This is a good example of what not to do. Let's move on to ocean shipping. We put all those boxes and pallets inside a container, and we set it up out to the ocean. First thing first, there's something called Drage, which is the act of taking a container, putting it on a truck, and taking it to the port. Throughout that entire piece of our supply chain, and really from here all the way to the United States on the water, we want visibility of what that load is. We want to know who's holding it, where it is physically on the map, if possible, and what's our ETA or the expected time of arrival at the next piece or the next part of our supply chain. Finally, the third column here, the third element of ocean shipping is the shipping itself. This works very similarly to road freight. You have carriers that handle your loads, and this is a commoditized service. A commodity service basically works in cycles of supply and demand. Right now, in the barometer or the escape valve of that relationship between supply and demand, is rates. When you look at ocean shipping rates, they have gone up dramatically during COVID because demand was just so high and supply was constrained around the world. Recently, for the past maybe seven months, starting in the second half of 2022, we saw rates declining very dramatically on some lanes, even going to pre-COVID levels. There's a number of nuances around that, and we can spend hours talking about it in the Q&A, but reality is this is a commodity service. It has cycles, and that's it at this level. Finally, port selection is important because you want to go to a port that is as close as you can to your final destination. You don't want to go to a different country and then get on a rail if you don't have to. You also want to go to a port that gives you access to the logistic infrastructure that you need. If you want to put your container on the rail track on a train and take that to the next point of your supply chain, then you want to go to a terminal that has that capability. If you go to a terminal that doesn't offer rail access, that means you're going to have to put that box on a truck, take the truck to another terminal to do transshipment, then put it on the rail and then move on. This can get really expensive, and it's another touch on that box, which means it's harder and more complex to manage at scale. Finally, once we get to the United States, and this took us maybe two to three weeks on the water, we land at a port, and I want to quickly call out that a port and a terminal are different things. A port is a region on the map to put it very simply. It's a region on the map, usually owned by the municipality, and they can subdivide that area into different mandates, some of which are terminals, which are the rectangular spaces, sometimes not rectangular, that actually handle the loads. A terminal is usually divided into four parts. You have the marine, which is what touches the water, touches the vessels. You have the yard, which is where you store containers or handle containers or inward or outward handling. Finally, you have your gateways, which is essentially the paths that a container will take to leave or enter the terminal, which is rail or trucks, which set another way, rail yard or gates. I have a few examples here. That's why I didn't want to talk too much about that on the previous page. This is what a terminal looks like. This is a picture of the Long Beach Container Terminal in Long Beach, California. You can see here the marine area with all the SCS cranes. They're touching the water, which means that's where the vessels will stop in birth for the containers to be loaded or unloaded by these cranes. Finally, you have a pretty automated RNG yard here on the bottom of your screen, covering the entire bottom section of the picture, and then gates in the rail yard or not on this frame. Louis started to interrupt Megatron's journey. I just want to remind some learners that they can use the Q&A feature from Zoom because some learners join us later. If you have questions, we'll be addressing them at the end of the session. Please use the Q&A feature in the chat box. Let's continue now. Thank you so much. Absolutely. Good call out. So a couple of more shots and information about how a container terminal operates. This is what the marine operation looks like. You have the gantry cranes loading and unloading containers from the vessel. Sometimes the vessel will require one, two, three cranes, sometimes more. It depends on the size and depends on the schedule for the, you know, how you're manning that shift that day or that morning. Finally, the cranes take the container from the vessel and they put it on the ground, which is essentially putting it on a truck. And in this case, I have a picture here also from LA with a pretty automated part of that terminal. That container is being put on an automated platform or flatbed, and that flatbed knows exactly where it's taking the container. It's either fully automatic or moved by joysticks with an operator in the room somewhere close by. So this is a really good example of where automation can really drive efficiency and reduce the risk of accidents, for example. Finally, this is the rail yard. Those boxes are going to sit on a yard, either the main yard or the rail yard for outgoing track, outgoing train, sorry. And they might be stored there for a couple of days, maybe a few days. You don't want to store your boxes, your containers at the terminal for too long because you have to pay for it if that happens. You usually have a window of free days. And after that you have to pay the merge and you don't want to do that because it can really stack up and it gets increasingly expensive. Then that box is going to be put on a track, on a car, sorry, a train car, which is going to flow anywhere in the country. And rail is probably the most efficient way to handle container loads, to handle intermodal loads. It's not perfect. You're still limited to the train schedules. You're still limited to the rail capacity and capability. If you have loads that are not perfectly fit for a container box, that can be a little tough to handle or you have to pay a lot more money. Also, you don't have the flexibility that you have on a truck of just picking it up whenever you want and going anywhere you want, right? On the rail, you're subject to the network of terminals, which is pretty abundant. It's pretty rich, but it doesn't go anywhere and everywhere throughout the country. So moving on, let's talk about rail. Rail works a little bit like Ocean Freight. You have major operators, not a lot of them. In the U.S., we have seven class one rail operators and they are operating all the way from Canada all the way to Mexico. So you really look at North America when you talk about rail and schedule, visibility, lead times, all the things that we touch on for ocean carriers is also very important for rail. Rail sourcing is a complex activity and there's a number of things involved in that. We're not going to dive into that right now, but it's complex and it's as complex as any other type of freight sourcing. To give you a picture of where our journey is going, I wanted to show you this map. If we're going from LA to Chicago, which is the journey we drew for this example, we're going to take a path that's pretty long and it crosses pretty much half of the United States or even a little bit more than that. Chicago is a great hub for rail. It handles over half of the entire intermodal freight in the U.S. and it's serviced by six out of the seven major rail operators in North America, which is great. No other city in the U.S. can do that, can say they do that, which is really good. If you look at the right side of the page, these are the seven major operators in North America. Two of them are merging. KCS and CP might become a single company in the future, so we'll see what happens there. I think the commentary here is that it seems like an old school industry because it's rail and it's old infrastructure and it's pretty brownfield, but when you think about it, this is also very fast-moving and it changes and it's a commodity service, so you can't just not pay attention to it. Finally, after you land in Chicago in the rail, that container is going to be picked up by a truck who's going to take it all the way to a storage facility or a distribution center, a warehouse, you name it, in Everett, Massachusetts. We're going to Massachusetts because we're taking Megatron all the way to MIT in Cambridge, and so we're going to go to the closest possible Amazon DC to E40 in Cambridge. That's in Everett. Freight sourcing is a science and an art at the same time. You have one big decision when it comes to road freight, which is do you do it yourself or do you hire someone to do it for you? You make or you buy. Purchasing freight can be complex. It can be as simple as you want. Routing is very important, especially if you're the one managing that operation and executing that freight, because you can make multiple stops. You have multiple schedules. You need to better utilize your assets to the best of your abilities. Lead times and SLAs are super important. If you have an outsourced freight carrier, that's how you make sure that you're getting what you're paying for. I cannot stress that enough. And then finally, the last piece that I think is really important here when it comes to road freight is load consolidation or deconsolidation. To better utilize your assets, you got to go back to what I mentioned earlier. You got to increase and drive utilization. As a transportation professional, we often joke that you want to do less transportation. And that's absolutely true when it comes to road freight. Moving on. After our truck takes her loads to our storage facility, now it's time to sit in a warehouse for a few days, maybe a few weeks, until it's time to go to the final customer, get on a little Sprinter van and go to the final customer. When you think about a warehouse or a distribution center, really, at the scale we're talking about here, an Amazon DC, it services an entire region. Inbound and outbound logistics is extremely important for these guys. So doctors managing how fast or how well you can manage your shifts and load and unload loads so you don't have that bottleneck in your facility. Same thing for the yard outside the warehouse. That's extremely important. Also, how you manage your storage and your DC operations, that's very important. You can automate it. You can put a number of automation solutions inside the four walls. And that changes how efficient you're going to be, how many people you're going to need. And that goes hand-in-hand with technology, which is a third element I put here on the page. Technology is really good and it's really sexy when we say it like this. But it can also be very challenging because it's expensive. And because the more you deploy technology within the four walls, the more you have to train your workforce and make sure that you're executing it perfectly and that you're troubleshooting. And then you're prepared to deal with technology when it doesn't work, right? And that's not easy. It's just more complexity to your supply chain and you have to pay attention to that as well. Then finally, another extremely important part of any storage operation is inventory management. You want to make sure and I'm sure you guys are going to learn all about inventory management during the MicroMasters. But to put it very simply, you've got to know what to buy, when to buy, and how much to hold and for how long. Some products deserve to sit on a shelf for a week. Some products don't deserve to sit on a shelf for even a day. You want to move it very, very fast. That's it for storage. We're going to tick Megatron out and we're going to put it in the box and take it to the end customer. That's called parcel freight and you can do it yourself if you're managing your own, I guess, limited scale operation. But usually companies at this level, these conglomerates, they're using third party freight providers. In the United States, we have three major carriers or should I say four, if you count the USPS mail, but it's basically FedEx, UPS and DHL. They're really good at different things. There's no single solution for the practitioners in the room. You know that you're going to end up using all of them for different aspects of your operation. But parcel sourcing, parcel freight really works similar to road freight. You need to worry about utilization. One of these vans can make roughly 30 stops. That's not a lot. If you think about a container, an entire container has hundreds and hundreds of boxes. And so this is very quote unquote expensive. And if you're looking at an urban environment, routing through the streets is very challenging because you have a lot of restrictions. You cannot enter every street and alley. You have hours of the day that you just cannot operate. So there's all these challenges. Then finally, tracking in systems. These are things that have been evolving a lot in the supply chain space. We call it log tech, logistics, technology, solutions have been really out there for the last 10 years or so, really evolving and growing with the space. So we wanted to highlight this. At the same time, you have facilities up to this date in the United States that are extremely manual. And you will see people manually typing or scanning barcodes, which is obviously opportunity for improvement. The last thing I wanted to highlight on this page is that the trucks, the little van on the left that looks very futuristic. That's actually one of the newest FedEx electric vans they're deploying throughout the United States. So we expect to see a lot more of those cool looking cars in the next months or years versus the traditional Sprinter vans. And then a quick shout out to the rest of the world. We don't only have the United States. When you talk about parcel, you also have a lot of other very large players. They're very, very good at what they do across Europe and Asia, South America. But really in this example from Megatron, we're really talking about FedEx, UPS and DHL, which hold combined around 80% of the entire market share of the United States. They're really good at different things. You wouldn't use one provider for all your needs, but have your relationship with all of them can be challenging because it's more things to touch and more players to manage. Then this is the end of our journey. The parcel was delivered to MIT at E40 in Cambridge, Massachusetts. And this is a quick highlight of where we went across the world. We went all the way from the port of Yantian, China, all the way to the east coast of the United States. This would take you roughly a month or maybe three weeks if you're being really fast. And the one thing I wanted to highlight before jumping to questions in Q&A is that this is an ever-changing space. This is a very dynamic industry and not only new technologies are coming online, but also macroeconomic factors are always affecting the way we operate and what a good solution looks like. And also new players, newcomers are always trying to disrupt things on every point of the supply chain. And if this complexity feels overwhelming, it's because it really can be. And I think we don't know what the future holds, but what we do know is that the big winners of all this are us, the customers and companies that use all of these services. And that's it for the Megatron journey. Megatron is probably happy now sitting on someone's shelf in Cambridge, Massachusetts. And I am going to close here. And before we jump into the Q&A, I want to leave you with three questions. We talked about the whole supply chain as a very descriptive story, but if you had to really manage this, you would have to make decisions that we didn't really dive into because it was not our focus here. But basically, supply chains often come down to do you want to drive cost efficiency or do you want to drive speed and agility? And so I'm not going to answer this right now because this will take more than a minute. But as you think about it on your own time, I want you to reflect on for this figurine or for any other toys that you can think of, should you be driving cost efficiency and trying to be as cheap as you can on the supply chain and gain scale? Or should you try to be fast and agile and drive speed? Then the last question on the page is really about alternatives. It's really important to have plan Bs. And so I propose here, it's a little tease, to think about what could a plan B be, pun intended, when it comes to ocean shipping. Rates went down recently, but what if they kept going up? It would be increasingly expensive to ship things from China to the US. What could you do about it? There's a number of solutions out there. A number of approaches are not only possible, but very realistic. And we see them every day with different companies. And I would love for you to think about it on your own time and see where you can find examples of these things. Thank you very much. Thank you, Luis. I mean, this has been pretty amazing. I'm pretty sure that Paolo shares my feeling and also our learners. From my perspective as the SE1X course, I think this has been an amazing overview and introduction for the learners to mainly transportation, because they are going to see a lot of that at the end of the course. So this has been just brilliant. Thank you so much for everything. And now, yeah, I think we can jump right into the Q&A. I have selected here a couple of questions to start with. So the first one is related to what we saw, mainly right after COVID in many ports around the world in terms of congestion. We saw the Port of LA with more than 150, I think it was over 100 boats just standing still, basically, for a long time. So Anis Otsoi, sorry if I pronounced it wrong, was actually asking us what would be the best way to manage this kind of operation. So in order for this not to happen again, like looking forward. I'm pretty sure that also this is relevant not only for us, but for many carriers out there, because at the end of the day, it was a lot of money lost for all that congestion. So I don't know, Luis, what are your thoughts on that? Absolutely. And that's a great topic. And it feels like we planted that question, but we did not, I promise. But I do have a backup page that I'm going to use in a second to illustrate a little bit of what that congestion looked like. They did have hundreds of vessels waiting to birth. And some of them were not even accounted for because they started waiting outside of the port waters. They went to open waters to wait in the ocean. And that doesn't even get into the count. So it was really disruptive for the Port of LA and also for different parts of the supply chain in land, because you're basically waiting for all of that to become a big bottleneck. So there's a little, a couple of things that I heard in the question. One of them was how do you manage that? And I'm hearing this from the perspective of a practitioner. So you are the shipper or the BCO. You have your loads waiting on a vessel. And then there's another nuance there, which is how do you prevent that from happening in the future if you are effectively managing the terminal? You're the port of LA, right? The simple answer. And there's a few different things you can do or that we've seen companies do very successfully in the last few years. When that happens, what you can do is immediately diversify. If you're exposing your entire supply chain to one gateway, maybe that's a risk that you're holding. Trying to enter the United States. And that's what we saw. Immediately companies shifted their volumes to the East Coast. That was a little easier. It takes a little bit longer to go through the Panama Canal and then navigate all the way to the East Coast. But using the ports of Miami, Savannah, Norfolk, New York, New Jersey, those were good solutions at the time. Doesn't mean they're better than LA, but they were not as affected by that congestion, specifically on the trans-specific routes. Secondly, you can go to Mexico. You can go to Seattle. You can go to other terminals on the West Coast and then put your box on the rail and then ship it to the United States. That's a very mature solution. It's not like you're going to be trying something new that I don't know has ever done before. So we've seen companies do that as well. Short answer is, if you're exposed to LA, you've got to wait in line. If you have alternatives, then you can explore it. And what I just wanted to show you real quick, I have my cheat sheet pages here to help me answer the question. But this is the Global Schedule Reliability Index. And what this means is you have two charts on the page, and this is tracked every month by Sea Intelligence. What you're seeing here on the left is how often are sales on time. And being very high is really good. Traditionally, historically, we've seen vessels being on time 70, 80% of the time, sometimes almost teasing a 90% result. In 2020, if you look at the green line on the page on the left side, it really went down. It took a dive. Vessels were always late. Not only they were always late, but if you look at the right side of the page, they were getting late increasingly more. They were late by more days. In recent years, and the pink line you see on both charts is 2022, in recent years, they have been steadily improving that schedule reliability, which means they're more often on time. And when they are delayed, they're delayed by less days. So instead of eight days delayed, they're now delayed by five days or so. And so we track this very closely, and this is really important. Awesome. Awesome. This brings a lot of clarity, I think. And thank you so much for the detailed answer to our learners' question. Paulo, did you want to go with another question? Yeah, sure. Thank you so much, Luis. You addressed some key points from F3x, supply chain dynamics. You mentioned about complexity, the drivers of complexity, global supply chains. And we have a couple of questions here. So I want to combine two questions. One is from Aloma and the other one is from Muhammad. So the question is, Luis, we see a lot of companies trying to have a more local supply chain after the COVID challenges and impacts. How do you see this changing the way supply chains work? And the other question combined with this is, in the era of increasing nationalism and protectionism, what are the implications for global supply chains, and how can companies navigate these challenges? Yeah, that's a great question. So we had a different lecture, I think, on fall that touched a little bit on X-shoring and near-shoring. What we're seeing is a little bit of a mixed basket of solutions when it comes to that. There has been, for the last 10 years, I would say, this movement of near-shoring supply chains for all kinds of reasons, some of which are technically very savvy when you think about supply chain risk mitigation or diversifying your supplier base and not being exposed to one manufacturer in Thailand or Singapore or China and rather having plan Bs or alternatives that can supply your goods or raw materials or make the assembly perhaps in Mexico or Eastern Europe or Northern Africa. We're seeing Tunisia growing in that space as well in recent years. More recently, there's been a couple of very tough macroeconomic sanctions and conflicts, and I'm going to say for the last maybe four years. Near-shoring is a reality. It's here to stay. I don't think this is going to basically, look, for the Asian countries in the Southeast Asia to become what they are today, that took decades. That's not going to be undone in a couple of years. That's not a big risk. I'm not concerned about that. What we see happening, and that's the trend I was trying to illustrate, is some of that volume shifting to neighboring countries or plan B solutions. Even more than that, companies and supply chain leaders really starting to think about what the plan B should look like so that when the problem happens, when any disruption happens, be it political, be it macroeconomic, be it COVID or any sort of supply chain decision, they're not caught off guard. That's kind of what the feeling is in the industry right now. Thank you so much, Stuart. Go ahead, Miguel. Yeah, no. I was about to say before going into the next question, because we have a lot of questions. We are not going to be able to answer them all. I can tell you that, guys, but thank you so much for posting them. But what you just mentioned, Luis, is super interesting because we have a researcher here at MIT, one of our colleagues, working exactly on that and looking at some companies actually overreacting because of reshoring. And sometimes it's also a matter of economies of scale. And as you mentioned, Southeast Asia and also China, of course, they have been doing an amazing job for many years in terms of manufacturing many of the electronics products and other things. So changing all that and moving all that knowledge all the way here is not an easy task. And we're seeing companies sometimes overreacting and losing a lot of money sometimes because of those decisions. So it's a trade-off and really interesting topic for sure. So now I'm going to jump to another question from Mohamed. And I'm going to combine it with a question from Norman too, because learners are also interested in learning about technology and how technology affects supply chain. And you mentioned a lot of the automation that is coming. Things that are already there, as you said, in the Port of LA with the automated platforms or straddle carriers, that's how they call them, I think, in the Port of LA. And that's amazing. So I don't know, we want to hear your thoughts maybe on what you think is more promising also from the perspective of maybe artificial intelligence, blockchain or automation. And the other thing is that one of our learners is asking us where the program addresses this automation and technology advancements. And I would say that SC4x, the last course of the of the MicroMasters, is the one that focuses more on this kind of state-of-the-art topics, while other courses are more the basics of supply chain. Even if we, of course, renew the content every year, but still SC4x is the one that focuses more on technology. So, but Luis, what are your thoughts on this emerging technologies and things happening in the supply chain? Well, there's a lot of stuff to unpack there. Technology is always interesting. And I usually look at technology when it comes to logistics, operations and supply chain decisions in three buckets. The first one is, you know, big capex, automation, that kind of stuff. And then the second one is more software oriented. It's more logical. It's an SAP module or a particular, you know, solution that was designed for routing or for, you know, pick by light, that kind of, you know, pick by route. These very targeted niche solutions, they're really, really good, but it's not like your automated and entire SDS crank. And then third, you have, you know, the other stuff. For example, I've seen sensors and telematics. We're seeing that taking a bit of a bump in recent years, which is really good. I saw the other day, this presentation from, from, it was a startup. I don't know if I can call them a startup at this point, but it's a company that they put sensors on the whole of a vessel, which can track how dirty the hole is. And when it's too dirty, it creates a lot of drag under the water, so the ship gets less efficient from a fuel consumption standpoint. And then they can like track that and do whatever they have to do to, you know, clean it or scrap or sand it and make sure the fuel efficiency is there. So like, these solutions are so niche and so interesting. They're like, it's hard to predict what's going to come next. How I see these things, I think it's great. And automation is probably the hot topic when it comes to container terminals right now. It's a big part of my work. Container terminals, not automation per se. But one thing that will always important to remember is that you have unions in the United States and Canada that pretty much govern the labor relations on both coasts east and west. It's very different. The relationship in the west coast and east coast are very different. But I think it's unrealistic to expect that a terminal in the United States can get 100% automated like we see in a few terminals in Europe and Asia. In the next, I don't know, five years or six. It's just complex. There's a lot of discussions to go on. It's not just let's spend the money. We're sitting on a cash, on a war chest of capital right now, and we can invest this in automation. That's a simplistic view. Yeah, totally. Thank you. Thank you so much for the answer. Paulo, do you want to go ahead? Yeah, we still have many questions here. Many learners are thanking you, congratulating you for your great presentation. I chose another one here. So Kevin is asking, which of the lags that you talked about are the biggest cost drivers? For instance, ocean, railroad, warehousing, storage, etc. And how much does that vary based on the product being managed? For instance, Megatron versus Xbox versus game pieces, etc. Well, that's an entire presentation on itself. So to ship Megatron from China to Cambridge cannot cost more than Megatron, right? Someone's paying for that shipping. It's not free, but it's done at scale, which means a container that will cost you, I don't know, $10,000, $12,000 to ship overseas for that one box will only really, if you want to allocate costs, will really only cost you maybe 10 bucks, a few bucks perhaps, because you have hundreds of those boxes inside that container, right? If I had to guess, I think the most expensive part is the part, well, apart from all the pieces and raw materials that go into the product, which means everything upstream of your supply chain, it will be the part, it will be the echelon with the most labor, the most labor intensive echelon, or set another way, the least scalable part of your supply chain, which is obviously downstream. There's no question about this. It's not ocean shipping. It's not the container terminal. It's definitely not the rail transport. It's probably not the road freight. It's probably storing and parcel delivery. These things are expensive when you think about a little box. Again, a van, a sprinter van, a FedEx van can make 30 stops in a day. Keep in mind, you cannot drive a van 24 hours a day. You have regulations and labor guidance and a lot of very hard restrictions. You can only drive for eight, 10 hours a day, depending on the state, depending on whatever, which means you're going to make 30 deliveries that day. That's it. A container can carry hundreds, if not thousands of boxes. So it's just a different scale entirely, right? Someone mentioned drones here in the chat. Drones are not a solution today. They might be a solution tomorrow, but for consumer goods like Megatron or Plastic Toys, even Xboxes or more expensive things, they're not a solution. One drone cannot make 30 deliveries a day in eight hours. It's just, yeah, they don't rest. You can use them 24-7, but the battery technology is just not there. There's a number of things that were kind of moving in the right direction, but it's just not there. It's a great technology, and we should absolutely be investing in it. It's not the disruption we expect in 2023. It's just not there yet. Yeah. Actually, you just answered one of the questions from another learner in terms of drones being used for last-mile delivery. We actually have some research here going in MIT in this area, and it's still, I mean, it's not mature at all, but it's promising, I would say. Maybe not 2023, but maybe at some point. Yeah, we'll see. No, it's definitely moving in the right direction. I'm not discounting the drone space. It's great. It's just not something, it's just not the solution for every type of product out there. Totally. Yeah. And not only that, I mean, it comes with a lot of regulations from aerospace, like many other things, so for sure. Yeah. So I think we only have time for one more question, maybe. So I'm going to steal one of yours, Paolo, if you don't mind, because I think this one is really good to close the life event, because one of our learners, the VIG, sorry if I pronounced it wrong, is asking us about what you see that are the key hard and soft kills needed for someone interested in pursuing a Korean supply chain management, like looking at the complexity in supply chains nowadays, like the volatility, how things change, and what it requires to actually design a robust supply chain, what do you think are the keys for our learners to pursue a career in this field? Should I do a quick, like, advertisement for the MicroMasters program right now? Of course. So look, supply chain is an industry that's so interesting because it blends elements of engineering and business so well. It's very quantitative. There's no question about that, so you've got to get your math concepts sharp. But that's not to say that you just have to be really good at calculus. There's a lot of very technical elements involved in there, from, you know, inventory optimization, transportation management, but also a lot of finance, a lot of business, you know, concepts, they're very, very conceptual, but also very quantitative. And so all this matters on day to day, from cost accounting to cost management to inventory planning and forecast. Forecasting is an entire science on itself, right? So that's the quantitative aspect of it. Then there's also a qualitative element. Supply chain leaders are people managers, first and foremost, there's not avoiding that. You've got to manage people and simply because, even if you don't want to, simply because there's no way you can do everything on your own. It's supply chain is such a vast field. And for global organizations, like a consumer products company, like the ones we saw in this presentation, they have hundreds of people on each department, on each continent. It's incredible, incredibly complex. So people management, you got to be good at simplifying things, having common sense. Supply chain often comes, or should I say logistics, often comes down to real life common sense. It's not just about the science, it's a little bit about the art as well. So, a little bit of everything to be completely honest, you don't have to know anything about biology, that's for sure. Well, now that sustainability is becoming a huge topic too, I don't know, maybe even biology. So yeah, we are multidisciplinary, that's for sure. So you guys just heard from Luis that yeah, this is a tough field, but also like probably one of the most interesting ones to enjoy. So thank you so much, Luis, Paolo, everyone for being here. I just want to remind the audience before we wrap up that this was the first life event of a series of three webinars that we are going to have between SE1S and SE3X during the spring. So we still have two upcoming webinars, stay tuned for those. And yeah, again, enrollment verification for both courses, SE1S and SE3X is still open. For SE1S, it closes really soon, in only a week. So you're already a learner, but you haven't verified, feel free to go into the main page and verify for the course. If not, you can still enroll right now by clicking on the links that we shared before. And yeah, again, just thank you so much, Paolo, thank you so much, Luis. And of course, thank you everyone for joining us today. Thank you very much, guys. Have a great rest of the week. Thank you so much, you all. Goodbye. See you soon, guys.