How to Cut your Supply Chain Emissions with Data-Driven Insights

Hi everyone. Thank you for attending today's webinar how to cut your supply chain emissions and cost with data-driven insights. My name is KJ and I lead the climate team at Flexport. Uh before we dive in, a few housekeeping notes to help everyone get oriented. If you haven't joined us before, on your screen you'll see a sidebar to the right of the main stage where you can submit questions. Uh at the end of the webinar we'll also hold a Q& A and answer a few audience questions, so get those ready. Um in the same sidebar you'll also see a tab labeled docs and that's where you can download a copy of today's slides if you so wish. Um next we'll just go over Yes, uh brief legal note. Uh please just bear in mind that all the information provided in this session is based on the situation at its current time and may not be customized to your specific business requirements. Um we always recommend reaching out to a Flexport export expert to get your particular uh situation discussed and we're happy to support there. And I'm excited to say that joining me today is Michelle Fiolli who is our head of supply chain optimization and analytics control tower team here at Flexport. Thank you, Michelle, for joining me. Hey KJ, nice to be here. — [gasps] — And today's agenda, uh we're going to start off with climate data as a growth enabler, dive into supply chain optimization introduction, go through a number of case studies to give some examples about how we actually make this work, um and we'll end with some key takeaways and the Q& A as mentioned. So, um setting the stage here, right? Flexport's mission is to make global trade so easy that there will be more of it. But we also know that increasing shipping costs put pressure puts pressure on businesses and that supply chain activities contribute significantly to the world's greenhouse gas emissions. So, today we're zeroing in on how supply chain managers can build more financially sustainable businesses while also keeping emissions in check. And Yes. Um in August this year we're kind of incorporating two bits of Flexport tech, let's say, to help us zero in on this goal. Um One part of that is uh granular emissions reporting. So, in August this year Flexport integrated with EcoTransIT World, uh the industry's leading uh supply chain emissions calculator organization. And our increased in granularity into supply chain emissions on a leg-by-leg basis has helped clients better understand their emissions profile and identify areas for reduction. By incorporating these emissions measurements insights through that granularity with EcoTransIT directly into other Flexport products like our supply chain optimization tooling, we've created a multifaceted picture of how modality switches and consolidations impact not just supply chain's bottom lines, but also their emissions footprint. So, that is a good segue to actually ask Michelle, if you could uh give us an overview and introduction, what actually is supply chain optimization? That I know things, KJ. So, um we had a SCO webinar like a couple of weeks ago. So, if you attended that, some of this might sound a little bit familiar, but we'll uh we'll review it again um uh for the new faces. So, supply chain, like this can mean a dozen different things really depending on you know, where do you draw those system boundaries, but when we look at um it from an optimization perspective, what we're really looking at are kind of like three nodes, right? Um so, you first start out with your uh manufacturing node. This is really figuring out you know, what and how much you want to produce and at what cost. Um this is where really your like demand forecasting and supplier relationships really come into play. Then you have your transportation mode. So, you know, how do you get those goods from point A to point B? Are you moving it via air, ocean, uh trucking, rail, etc. Um and then we have the receiving node. So, that's basically, you know, where is this cargo or shipments uh where's it being stored? Is it going to a warehouse? another uh manufacturing facility? And ultimately, the objective when we look at all of these different nodes is to manage the fact that each of these has different and often competing goals, which can play into cost and CO2 and all this other stuff. So, that is where we're at for kind of SCO and what we call SCO. Yeah. And Michelle, can you maybe walk us through a little bit more how CO2 emissions plays a role in the decision-making process when we're talking about — To- totally Yeah, no, totally totally. Um so, it's a really great question because most of the time when we're looking at um we might be looking at optimization, our objective function might be how do you reduce cost or how do you minimize cost. But, CO2 emissions really play a critical role in the decision-making process because every step that we were

looking at before, like from the manufacturing to the transport to the receiving to the ports, they all have a specific kind of carbon uh burden, you could say, or carbon impact. And so, I was looking at some stats the other day and then, you know, when you look at freight transportation, depending on where you draw those system boundaries, can produce up to 11% of like, you know, the global emission greenhouse gas emission. So, for today and this discussion, we're really just going to focus on the transportation part, so that middle part of the node we were looking at earlier. Um specifically looking at how does how do the different ways that you ship impact uh your your CO2 uh emissions. And so, so at the end of the day, everything is really this battle of tradeoffs, right? So, you have this balance of how do I balance out cost? transit time? If I'm going to have a stock out, you know, or a line down situation in a manufacturing line, not great. I'm going to have to restart it. recover from it. And then you have this CO2 impact as well. So like top it all off. And so you start changing one variable, then the other one start to move and you're in the situation where it's like what is most important to me at the end of the day. And so one question KJ really for you is like how have you seen emissions impacted based on decisions clients make about how to move their goods? Totally. It's a great question. Like you say there's a lot of competing priorities. And so we've tried to visualize this a little bit more. And I think if you don't already know, I love the modality switch, which is the highest impact to start, right? And this one is an amazing example of cost savings and emission savings going hand in hand, right? So you can see that switching from air to ocean for example, it's a 68 time reduction or increase if you're going the opposite direction. Um reducing total container count on the water, right? So how do we make a more efficient supply chain? Maybe moving the same amount of goods with fewer TEU, right? Looking at optimization. Um looking at improving average utilization. So that can also go on with reducing entire full container counts. Um and making sure that you have an efficient LCL and FCL volume mix, right? Um and then lastly there are also what we call buyers consoles, which is largely a cost lever. So there can be reductions in that space, but it's really like okay, how are we optimizing your supply chain? Maybe it's not reducing emissions, but you are still reducing the cost. And so these are kind of the areas that we look at Flexport when we are assessing how a client might be able to save emissions within their supply chain already from an optimization perspective. Um and this is a lot of information on this side, so I would love to actually now flip it back to you, Michelle. And just ask how can a client, right? We've got a lot of supply chain managers on this call. How can a supply chain manager look at this side, know their supply chain, and see if any of these solutions or situations might actually be something that they could take advantage of and incorporate into their supply chain planning? No, totally know this is that's a great question. And I think yeah, so like where where do we begin? How do we actually start? And so what we could do is when we look at how do you move your goods the best way? Sometimes the answer is really two places. It lies in two places, right? You have where have you been and where are you going? So maybe like you were a startup and you're just growing as a company. You're using air freight because you need to get your goods out as quickly as possible in order to you know, capture your market share or something like that during this ramp up period or you know, maybe you've scaled you're at a nice stable place in your in your business and you know, speed at all cost is not really something that's sustainable anymore. And so you start looking at hey, how can we maybe shift how we're moving, maybe shift even your manufacturing footprint, you know, moving from one country one region to another, identify more of those consolidation opportunities KJ that you were mentioning earlier. Um maybe you know, 6 months ago stuff these opportunities didn't exist in your supply chain and now 6 months later they do. And so how do we take a look at what happened in the past and also take a look at what's going on in the future and kind of merge those two together. So what we would like to start with is really that historical analysis. So this is kind of what is about what has happened in the past and how do we as Fact Work tackle this? We really look at it through two lenses. So the first lens is how to helping essentially with strategy. So it's like a diagnostic tool. Um we offer two versions of this. So, we have a bespoke analysis. So, that's where we'd look at a deep dive of your data. Um and it will depend on uh where we want to focus cuz you could focus on so many different things. Sometimes we'll start with like a skew level analysis that we'll go into in a couple slides or we'll just look at on the shipment level, are there any like, you know, consolidation call

consolidation opportunities? And then we also have this thing called an in-app analysis. you're an existing Flexport client, you have this continuous kind of auditing mechanism. So, it holds us accountable to make sure that, "Hey, are we actually capturing these opportunities for you? " It looks at both cost and CO2 emissions. So, you can see, "Hey, how are the decisions impacting um how are the potential decisions that I could make impact my supply chain? " And then that historical analysis is really only half the battle at the end of the day. The second lens is the forward-looking analysis and so or the forward-looking tool. So, this is where you'll take those past opportunities that were identified and then you'll say, "How do we implement this um in the future and how do we actually execute on this? " And we'll go in a couple slides down, we'll talk through, "Hey, how does this actually work in practice? " And go from there. — [clears throat] — Awesome. Um I mean, this sounds great and I've seen it live so I know that it's great. Um and everyone else here will soon. Um but one of the questions that I always get, right, if we're talking about modality switches and these types of things like clients like, "Okay, great. Yes, this sounds great. I have some of this information, but if we get into the nitty-gritty details, right, which is, as they say, where the devil lives, um what do you clients need to consider, right? There's a lot of different parameters, always a lot of moving parts in supply chain. So, how do we go about starting these studies and what do our clients need to consider when they're evaluating what options might work for them? " Yeah, I know it's So, this one is a uh how do we again how do we start how do we look at our own supply chain? So we really start with this kind of like three-step framework. It's kind of like identifying what is your what are your primary goals? So identifying your constraints and your goals. Um are you trying to optimize for cost? speed? Um are you even looking at carbon footprint? Uh you really can't hit a target unless you set it. So it really helps us identify where do we want to focus? Um and then we map out those constraints. So for example uh do you have specific container sizing? uh shipment sizes that you're working with? Any stackability constraints? Um a big thing is like lead time. So for example if you need to hit a transit time target otherwise there's going to be a fee every day that you're late. That's really important to know. Um and then we identify you know what are the levers that we can use um based on your data. So can we look at things like uh PO size? So hey are you cutting orders in a way that can handle more efficient uh shipping? Uh consolidation opportunities that we mentioned a lot. Uh not just on a buyer's consolidation. So buyer's consolidation meaning hey I have a bunch of suppliers from different locations. They're all from the same company same client. Um they can go into the same container. So you can imagine you just have your big container with all your suppliers and uh LCL or even FCL consolidation. So let's say you have a supplier at a um specific location. They have a couple of shipments that are coming in the next few days. They can actually consolidate them together into a bigger container rather than having say two separate containers. Um and then we can also look at mode and like network design as well. So for example hey where is the stuff actually going? And will and like are you using rail? Are you using trucks? Like how are you getting stuff maybe across the country or so? And then once we really identify these uh Uh, we can go and pick one you know, trial it. That's a very important aspect of any of these opportunity identifications. And one thing you might notice on this slide is CO2 is not explicitly mentioned anywhere on here. So, usually as an objective function, we've been using cost, but CO2 emission is one of those things that is really a complement to any of these analysis analyses. So, for example, when you start reducing cost or reducing container count, it naturally complements the kind of financial impact as well. That is really helpful, Michelle. Thank you for that overview. Um, I think now we are ready to dive into a couple of examples and case studies just to put this into practice. Totally. So, the first one we wanted to look at it kind of segues into this whole network design element. Um, is let's say for example, you're coming in from Shanghai. You're maybe doing premium LCL shipping or something to LA. And then you have a uh, several different destinations. This is the United States. So, you have say something in Salt Lake City. You have another destination in Dallas, Texas. Then you have something else in Ohio. And and you're coming into LA and then you're trucking everything across the country. You might be doing that for a specific reason. It's probably for transit time, right? You want to say, "Hey, I want to get there as quickly as possible, but I don't necessarily want to use air. " So, what we could do is take a look and say, "Hey, let's take a look at your supply chain and let's see if there's a different way that we can, you know, move the shipments to your final location. " That could be something like

you'll probably notice here that the number of containers in this particular example are the same, but you'll notice that the if we look at the distribution of what's FCL versus BC, you'll see it changed a little bit. So, what this is saying is there was actually some LCL volume we were able to consolidate that together. Overall, with the LCL reduction, we were able to see a cost savings. The cost savings though is not just on hey, how do I ship this? It was also what mode of transportation do I use? So let's say again, you're starting with trucking because you want to get there as quickly as possible, but let's say you change a little bit of the planning around. So you decided let me try rail. So let me see if I can get to the final destination more direct rather than going to like a hub and then trying to go to my final destination from there. Impact would be transit time. So now all of a sudden instead of getting there in maybe 5 days, maybe it takes an additional like 10 days. But because of that, you're actually able to reduce the CO2 emissions as well as the cost. So in this case like for example, if you were starting with trucks, you maybe had 24 tons of CO2 and then if you go and try to use rail to get stuff at the same destination again with maybe an increased transit time, you'll see the reduction in CO2 emissions which is a really again that complementary solution that you can have. Yeah, and just to conceptualize what 16 tons of carbon equivalencies means, it's roughly the same emissions estimated as driving around the globe 1. 3 times in a regular passenger car. So it's quite a lot and there's again the hand-in-hand benefits of modality switch here. Very cool. Um we wanted to just dive into a little bit more about seeing, you know, the lower emission technology becoming closer to cost and to traditional fuel. So diesel truck versus rail, I mean rail has been an option for freight for generations. But there's some new technology that's also coming out that is allowing lower emission technology to be more accessible with regulatory and market incentives, improving technology and operational benefits. Battery electric vehicles for example, for drayage, don't necessarily have to be a more expensive option anymore. Um, so it's something to consider when you're making decisions about network design. Maybe you're moving a warehouse or you're debating which ports to go into to start incorporating that low-emission uh framework into your planning and see, are there opportunities that you can now take advantage and support this transition? Um. Great. Uh, and Michelle, just on that. Um, so this is more of like the technology, right? Um, we're looking at modality switches. Um, if a client can't do that, right? Supply chain is very complex and complicated, right? So, sometimes we say modality switch and it's like, oh, but I can't move, you know, my entire ocean my entire air supply chain to ocean, right? So, is there a way to identify some low-hanging fruit that we can start with? Yeah, this one's a fun This one's always a fun one, um, because it really is kind of like a system shock, I guess you could say, to do your supply chain when you start having a this switch this switch going on, um, because everything might be planned in a specific, you know, lead time, and then all of a sudden you're like, wait, I have to go faster, um, or slower, whatever direction you're going. So, um, we have this concept of like a skew or SKU, however you want to pronounce it, analysis for modality switching. Um, so, primary key here is one of the biggest cost savers. I think KJ, you mentioned it earlier, was going from air to ocean. It was like what, the 68 times reduction in CO2 emissions? That would be when I consider like low-hanging fruit in terms of the carbon impact, that is one of the areas that we would take a look at. Um, and so, how do we go about doing this is a bit of a interesting task. So, usually what we'll start with is, um, again, we You this two components. You have your strategy side and then the execution side. Um and the strategy is what we're going to focus on right now. And what you have is how do we identify, you know, what SKUs should we even evaluate for this type of analysis? Um this is an interesting question because when you start looking at your own like business, hey, how many SKUs do I have? It can really vary depending on what you're shipping and and um and how you're shipping it. So, for example, if you have something that you know is a very steady demand, so you have a stable demand. Typically, those are already moving as ocean. If they're not, that is something you should consider to move as ocean. Um so, what that means is you know that over the course of the year you're going to have X number of units throughout the months. You can plan very far in

advance. So, that's a very good candidate for ocean without doing really any further analysis. Um one thing to note is we've also seen scenarios where for example, you have a sta- you actually have a stable demand. And again, this depends on you what you want to do in your supply chain. You have a stable demand, but you do this like peak order. So, you order everything all at once. And then you ship everything. And then it stays in the warehouse or something for a while and you kind of draw down the inventory. That is a way of doing it. Sometimes we've also seen cases where people have used air for that. And then it becomes a question of wait a minute, let's take a look at your inventory turnover rates to see do you actually need to use air to ship to do this bulk shipping at one time just to have it draw down over a few months. That's another candidate for ocean. Um if you have something that's a volatile demand. So, something where you don't exactly know that it's it's going to I guess you could say go viral. So, sometimes you might have top products that all of a sudden people really want. And then you didn't weren't expecting it. And that's really a candidate for air to be quite honest because you really want to capture it like the market share when it when people really want it. Or if you have something where you know on the manufacturing side, if you're going to have a line down situation, you want to ship that as quickly as possible. That's going to be an air candidate, not an ocean candidate. So you can kind of just by looking at hey, what's what am I shipping and what's that particular SKU, you can start to evaluate hey, this is air versus ocean. If you do have something that's seasonal, this one's an interesting one because sometimes on the seasonal side, even though it's seasonal, uh you do know it's happening. So let's say you have something that's always going to be around the holidays, you can start planning for that far in advance potentially um and then use ocean to kind of handle that seasonal demand as well. So really just depends on how defined your forecast is and how much you can plan in advance for you to be able to switch from that air to kind of ocean modality. Um and so and then the other thing is new products are uh an interesting one to take as well because new products really depend on how new. So is it like new to the market? Like no one has ever seen this before? Um that might have that might not be a good candidate for ocean just based off you don't know maybe what the actual demand is going to be. Um uh if it's new product but very similar to something else and that has a pretty stable demand, then you could probably say hey, this should probably be ocean. So this is without going into any math at all. So just looking at it from like a qualitative perspective. And so then what you do on the math side of things is you start to say hey, like let me take those SKUs that I have and do what's called like a segmentation analysis. So I'll take uh and you can do the segmentation analysis in a variety of ways. You could look at hey, what's my uh demand forecast, how much am I selling, um what's uh my seasonality or whatever way you want to cut your SKUs. And then you can just segment your SKUs into sections. So like A, B, and C is like a very typical analysis, and then you could say, "Hey, all of my maybe A products, those ones I want to look at and see if that could be a candidate for air or ocean. Um maybe my C products I don't want to look at it all because I don't know uh what the demand forecast is going to be on a very reliable for reliable level. So, once you've done that segmentation analysis and you've identified, "Hey, these are the potential SKUs that I want to take a look at. " Then you could start to look at how do we evaluate versus ocean uh logic and how do we choose? And that decision uh is a culmination of a lot of different factors. So, it's not just the transportation side of things. So, for example, when you're looking at the just the pure cost of air to ocean, it's going to be like, "Oh, yeah, air ocean is more economical. " But then when you start looking at, "Hey, what's the inventory impact? " So, if I have to Now my transit time changes from 10 days to 30 days, how do I handle the fact that I'm not going to have the recurring shipments that I'm used to, and I'm probably going to have to hold more inventory to maintain like the service levels that I was able to achieve with air? " And so, we'll do this analysis where we'll look at both the transportation cost and then the inventory cost based off of what your uh product distribution actually looks like. And then that's the strategy. So, that will say, "Hey, this these are probably the candidates that can shift from air to ocean. " And then the execution part becomes something, you know, "I have these upcoming shipments. How do I apply this in the future? Maybe I should trial it, etc. " But we won't focus on that part for this particular next few slides, more on just the strategy part. That sounds good. Um so, that Yeah, no, so with that, we have kind of What is the process for this? So, we went through, "Hey, I need to identify uh which candidate which SKUs are candidates for this analysis. " So, usually the first thing that you want to do is once you've done that, you want to kind of map out your supply chain to understand the lead time. So, this is how far in advance do I need to order in order to make this

this piece of material or product? And then that will tell you like basically your lead time for the manufacturing process and then the lead times of hey, if I'm shipping air, this is how long it's going to take and then if I'm shipping ocean, this is how long it's going to take. So, you can kind of model out the transit times for each process that you're choosing or each mode that you're using. After you've done that, then you want to look at okay, let's provide a demand forecast. So, usually we'll look in the future and we'll say hey, this is my forecast. You like it more on a weekly level. Know that forecast is are pretty much always wrong, right? That's the uh truism there. But we'll take a look at a demand forecast over a set time horizon. Again, try to do this on a weekly level and then from there we'll calculate okay, what is the transportation cost if I were to move uh ocean, air, what happens to my inventory uh cost if I switch my modes? And then you'll get a chart. You can kind of get a chart depending on what your uh what your supply chain looks like uh on that chart on the right. So, you'll see on the left-hand side it's saying hey, you should probably you can ship uh ocean and then anything on the right it's like ship air cuz it will depend on uh what that trade-off is between inventory and transportation cost. Wow, this is really cool and also I mean very in-depth, right? Like you pointed out it's to make this switch it's quite involved, but it's really cool to see you know, the supply chain optimization team you guys have developed kind of a methodology around this that helps our guide uh cuz I I'm even a little overwhelmed looking at this. So, I can imagine some supply chain managers would find this very interesting. Um no, but this is really cool. So, a question then for you cuz we see, you know, the air on the one side, the ocean on the other. Um is this a binary decision or what kind of like flexibility, let's say, um or live planning, right? Cuz I mean, we all work in supply chain. We all know that things change constantly. So, sort of what's the flexibility there and is there a mix? Yeah. It So, I know we were saying like, "Hey, if you're going to the chart on left like shift from air to ocean, this is what it would look like. " But the I the answer I feel like everything in supply chain is like it depends. It's never black or white or air binary must be this. So, for this one again, the first answer is it depends. Um it would probably be a You could also do one option that you also have, which is a good option as well, um is a hybrid option. So, you don't necessarily have to say, "Hey, oh I wish I was everything was air and I want to shift everything to ocean. I'm going to make this this switch and it has to be one or the other. " Another great option is a hybrid approach where you say, "Hey, maybe up to a certain amount. " Like maybe you know you're going to have some level of stable demand, but then you're going to have some uh peaks and valleys depending on, you know, the time of the year. Then you could say, "Hey, up to a certain point. " So, maybe up to a certain number of units and you could set those units and say, "I'm going to ship all these ocean. " And then anything that's above that. So, if I have any peaks, I'm going to ship that air. So, then you can handle kind of the variability in your demand forecast, but still take advantage of the fact that I know that some I will always have like a base demand. So, I would say it's never one or the other and it might switch also. So, one thing that we didn't talk about was like, "Hey, this decision-making process, this strategy-making process, um how often should you do it? Like once a year, every quarter, every 10 years? " So, it will it I would recommend you do this type of like retrospective analysis maybe even once a year because your supply chain is it's a Consider it like a living organism. It's always changing and so, what worked yesterday might not work tomorrow and there's always this level of continuous improvement. I don't know if that answered your question. Yeah, definitely. I I really like the idea of having kind of this base load ocean supply and then right making air that as needed and the exception not the rule, right? So still giving I would say generally when I talk to supply chain managers, right? It's like they get a lot of pressure from sales teams of like we have to have this in we have to be meeting you know X Y and Z. So having that that base load supply and then being able to handle that increased demand or those peaks with air freight as an exception I think gives a lot a nice flexibility. Totally. Great. Thank you. I guess and then that kind of segues into we were talking a lot about strategy, right? Like hey, how do I to choose whether we should do this or that? Um and that's always great but it's still the past and you can't change what happened in the past. So how do we move forward in the future? And so the last thing we wanted to share was you know how do you improve container utilization? Uh just with upcoming shipments. So we're going to focus we're going to kind of shift back into the ocean side of things. So let's assume hey, you went from air to ocean and now you want to look at how what are some optimization opportunities with even within the ocean space? Um and just one thought while I just remember this but since we were

talking about air on the air side there's also it's not just the air to ocean switch but there's also opportunity if you do air consolidations where you can save CO2 emissions as well. Maybe the overall kgs the same but then when you start looking at the destination side right? Like if you start consolidating truck loads that should help impact uh your CO2 emissions, right KJ? Yeah. Totally. It's uh just as you said all it's always comes back to it depends. Um but the more consolidations, right? The fewer movements that you can perform with a higher utilization regardless of the mode is going to be a benefit. Awesome. So that's a way to write into this which is hey, let's look at how we can use SCO to reduce costs while still meeting transit times. And again, the carbon impact is still complimentary. So let's take a look at an example here. So let's say we had three actually three containers. Each supplier they has their own PO associated with each container. And then we'll take a look at the CO2 emit the CO2 impact here. I put that in bigger value so everyone can take a look at it. Now let's say there's an optimization opportunity, right? You can just see it visually like if you look at the second container, it's like half full. We're assuming that this is stackable, so you can still add few more things inside. And so then we'll say, "Hey, like let's look at the recommended scenario. " So now we went from three to two containers. And then we'll look at, "Hey, the CO the cost went down as anticipated. The utilization goes up, and then your CO2 emissions in this case went down by a little bit as well. " So how can we take a look at this in real time? I'm going to switch to another screen. Let's see if this works. So all right, you guys should be seeing kind of the home page. This is where we have our supply chain optimization main page or dashboard. So imagine you're coming in and you say, "Hey, I have some shipments. " And the purpose of this tool is to surface recommendations to you. You don't have to accept or reject, but at least you have the opportunity to say, "Hey, I do have a couple of upcoming shipments that might be able to consolidate together. " And depending on the constraints again that you set, if you're flexible on transit time, not flexible, uh this will take all that information and surface those recommendations based off of your specific case. And so what you could do here is you could come in and you say, "Hey, like these are the savings available. This is actually the CO2 reduction the TCO2 reduction over here. " And so then what you could do is click on this and then you'll get a list of potential opportunities. So you get something like this, and I've opened one up already so you could just take a quick look at it. But, imagine you're coming in and you say, "Hey, let me look through my options. " And then you click on one and then this is what you'd see. So, you would say, "Hey, like this is my recommendation opportunity. " So, this is a mixture of FCL and LCL. So, you'll have a slightly underutilized FCL container and then some uh LCL shipments that could be combined together. You'll see the transit time impact. So, usually if you're doing a buyer's consolidation, in this case, the FCL will be a little bit later, but then the LCL because you are missing that consolidation leg. I guess KJ also goes with that. Less touch, less movement like less touch it on the shipment, uh it will actually come a little bit earlier. Um and then what you could do here is take a look at the estimated carbon impact as well. So, you can kind of see a picture of, "Hey, how what is this recommendation? " And then uh being able to make a decision a little bit more quickly because the data is just uh right there in front of you. So, this is how you could execute in uh real time. Um what I love about this is that exactly as we said before, if you have already shifted your supply chain, right? And you have that ocean that ocean-based freight or you've got, you know, your kind of flow, right? Your forecast for the year. We all know that forecasts change. And so, I what I love about this tool is that it does surface those potential opportunities at the time, right? Actually when you're freight and you're still able to make those decisions for your supply chain so that every new every year you're not just running a retroactive, right? A retrospective look at what could have been done differently. We're trying to, let's say, move things up in the cycle of your shipments to be able to identify those early on. Um which I think is a Yeah, it's really cool. It's just it's really bringing the cost savings. And then now with our integration, given our new emissions expanded emissions reporting, uh also the emissions impact of these opportunities um further up in the chain, which is really cool to see cuz that's where it has to happen. Okay. Um awesome. Here? Then I think that is what we had for real-time execution on the recommendations and maybe I'll hand it over to you KJ for the key takeaways. Yes, no, thank you Michelle for running through this. I'm always excited to be on calls with you because great energy and also just to see how your team is thinking about this and incorporating the information you know that we already have

on our client supply chains, right? That and being able to be more proactive and support them in being more proactive and making decisions that are better for their defined as you said, right? Their defined requirements. So, thank you for running us through that. Um yeah, you know, we know supply chain managers have a lot of competing priorities. We kind of structured this webinar sort of around Earth Day, you know, our integration, our expanded emissions reporting to try to also bring another lens through which supply chain managers can look at their supply chain planning. And our goal is, you know, building these products that allow our clients to measure, manage, and compare the impacts of decisions across time, cost, emissions, etc. Um we have three kind of main takeaways there. So, a reminder, use your emissions data as a decision tool, not just a disclosure and a check in the box, right? They emissions data can surface your most expensive lanes. So, focus on those low-hanging fruits. As we talked about in the skew example, right? Make that the exception, not the rule. Um remember that the biggest emission cuts are also the biggest cost cuts. If we're talking pure modality switches, right? Same thing, you know, air to ocean, rail to truck to rail. Those are cost savings and emission savings. And then lastly, and this is hugely important for every element across the supply chain, Um, build those cadences across your teams. So, build that optimization mindset across teams, whether that's your sales or your procurement, your logistics teams. Um, optimizing and keeping in mind your network design. Um, and then monitoring those choices regularly, right? So, we've provided or we're building now this proactive tool, um, but also setting up that cadence that you review, you know, how many emergency air shipments did we have last month? What was the root cause of that? Helps get all the teams uh, really engaged in seeing this as a win-win across the board. Um, so, I think that is what we have for our key takeaways. Um, for all Flexport clients, you also have dedicated emissions report on the Flexport platform. So, if you're actually not at all sure what your emissions currently are from your supply chain, go check that out. It's under uh, insights and reports. Um, and you can also request a free analysis for supply chain optimization. Uh, reach out to your account manager and we are always happy to help. I think that brings us to the Q& A now. Okay. Um, let's see. Sorry, give me 1 second. I haven't done a webinar in a while, so. — You could do I think the first maybe we could look at the air ocean hybrid routes. That's actually a good question too because we didn't really we spoke about hybrid in the sense of hey, you know, you could ship like the full route um, oh, like one part ocean and then use air for the kind of variability part, but then there also is that air ocean hybrid. So, um, where the the the latest one is actually going from APAC landing in LA via you you could do that via premium ocean um, and then from LA taking air uh, an airplane to Europe. Um, I would say that in terms of where the industry is at, I I think this is one of the key modes that you can use as a means of transportation. I don't think it's a like an emergency backup plan or anything. Uh so, I would say that it's definitely an option uh to evaluate for your specific supply chain. Yeah. Great. Um I've got a question here with CSRD coming into scope for more European businesses. Um how confident can we be that Flex emissions data from Flexport is audit ready? So, uh as I mentioned at the top of this, um Flexport is integrated with EcoTransIT World, um which is in alignment with GLEC, um with the Global Logistics Emissions Council framework, which is the basis for ISO 14083. Um so, we work very closely with the EcoTransIT team to integrate um and what we're doing with our integration is we feed the data that we have from your specific shipments in your specific uh chains of control, modes, hub reporting. Um we also have additional air pollutants, um which such as the NOx, SOx uh air pollutant uh information. So, we have the reporting available, um and we're always happy to walk through if you have any questions on that. Um let's see. Maybe that consolidate There's Okay, so there's another question about um Flexport allowing consolidations using different forwarders. So, that's an interesting one. Um the what we shared with the in-app scope, it's all the Flexport um handled shipments. What we've done historical analysis, so

for example, if you want to take a look at your entire supply chain, and it's always good to have like eggs in multiple baskets as well, we could take a look and see uh just in a historical perspective, but right now the tool is not using um information from different forwarders together. Yeah. Um I have a question here about container utilization. So, what is the container utilization rate we should be targeting before we consider a shipment well optimized? So, yeah, kind of I guess what is the benchmark for good utilization? Yeah, no, that's a fun one because the container utilization one is all it it's it's fun, but it's a tricky one because if someone says to you, "Hey, my container utilization is 70%. " Without any context like context, I'm like, "Is that good? Is that bad? " Um and what I mean by my context is, "Hey, what's going on? Um like what's going on upstream? What's going on downstream? " Um that's the that's an important element to understand if 70% is uh good or bad. Um I guess we shouldn't say good or bad. Like most effective or not. Um so, what do I mean by that? Uh it depends on which industry you're actually working in. So, for example, maybe you're in um a uh e-commerce type thing industry and you need to get stuff out a little bit quickly, otherwise you're going to stock out um and you're not going to meet your customer's expectations. Having a slightly under utilized container is actually more important for you because the cost of that stock out event is more important than the not more important, but it is going to cost you a little bit more than hey, if you were to wait another week and then you ship a full container and then no one's there to take that material, then you're you kind of lost out there. And same thing with like uh if you're in a manufacturing plant and you need to get material at to whatever location at a specific time, you might have to ship something a little bit under utilized in order to meet your expectations. So, uh I would say that your container utilization will depend on what you're shipping, which industry you're in, and then for example, what I've seen is like furniture is it depending on the size of the furniture. If you're in very uh like nice boxes and flat boxes, you could fill a container really well. But if you're like an odd shape, you're probably not going to be able to achieve really high container utilization. So, if you are interested in that, we could take a look at your shipments and see like, "Hey, is there any opportunity that we can increase it a little bit more? " Obviously, we'd love to increase it because then you get the carbon uh uh impact as well as the cost savings there as well. Yeah. That's also an interesting one from an emissions perspective. Um and where we get into there's kind of a difference between the absolute emissions, right? Which is when you're thinking about, you know, 5 tons of carbon equivalencies versus your emissions intensity. And that's actually a a measure of how efficient a move was. So, the higher and the more that you can build up a container and you have more weight in that container, the more efficient your supply chain is going to be. Um GLEC and uh the ISO have kind of a standard measure for how much um what let's say the carbon is on a on one TEU, for example. So, the more weight you can build up in that TEU, the more efficient that move is going to be and the more efficient from an emissions perspective your supply chain is. So. Great. Um let's see. I think that is it. Um and if you click the button, uh it should say poll, I think. Um if you were interested in saying uh in having a supply chain optimization study with Michelle and her team, um please click yes, and we would be happy to help you with that. Um like Michelle said, you know, we can do historical analyses. We can also look at your non-Flexport shipment emission shipment uh shipment data um provided you have that information available to really look at your entire supply chain. Um Um, if you are a Flexport client, uh, there are in-app solutions for supply chain optimization. There is reporting for, uh, emissions as well, um, and your account managers will be able to point you in the right direction, uh, if you have specific questions there. Thank you all so much, uh, for joining us today. We hope you found it useful, um, and we are looking forward to making cleaner decisions a part of your supply chain planning. Thanks very much, and, uh, have a great day. Bye-bye.