Maybe good afternoon to some of you if you're joining us from Europe. Appreciate you jumping on today. You are joining for Expeditors Mission Critical: AOGs Across Aviation and Aerospace Supply Chains webinar. We appreciate you joining. My name is Samantha Hurst. If you've not joined one of our webinars before, I typically serve as host on these and really work in the background just to make sure that you have the best experience possible. If you have any problems with today's webinar, feel free to email me directly through the confirmation email you would have received when you signed up for today's event. I'm going to go over a little bit of housekeeping before we introduce our speakers, and then we'll get right into today's content.
I will say just one thing that I thought was kind of interesting, Jim, when we were going through the practice session for this, said, "I know we're maybe boring you with all of this aerospace aviation talk." I said, "Not really. I grew up in Huntsville, Alabama, with a grandfather that worked on many space missions." I know that this is actually very interesting to me, and I imagine probably very interesting to all of you, including some who aren't directly in the aviation and aerospace industries. But we hope you find all of today's content really valuable. If you are hearing my voice twice, an annoying echo, I apologize. Make sure that you are not accidentally joined in two different places on your devices. That can sometimes happen. We don't want you to have to hear an echo of me or the speakers.
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We also can't give you legal or business advice or financial advice about how to go about the things we're going to talk about today. But we can give you advice from the logistics side of things and what we know from their experience working in these types of supply chains. That's just our quick disclaimer to make sure everyone understands that this is all informational and educational purpose content. Okay, now I will introduce our experts. We have with us Jim Cangiano, he's our Global Director of Aviation and Aerospace. Oscar Stiles is our Regional Manager of Aviation and Aerospace for the Americas. Chris Greenmun is our Senior Director for Critical Logistics Services. Got a little tongue-tied on those titles there, but now I'm going to pass it over to Oscar, and he's going to get started with all of our content.
Thank you, Samantha.
Thank you.
Good morning, good afternoon, everybody. Just real quick, high level, we wanted to just give you an idea of what the agenda was going to be like today. What I'm going to be covering is kind of a growing demand and some of the backlogs that we all hear about. Really, what this is doing is it's just giving you a good kind of global overarching theme of what we see in the marketplace at large. From there, Jim's going to take over. He's going to talk about changing industry and the needs. Then Chris Greenmun's going to get into a little bit more about how to respond with critical logistics. I'll also mention very briefly before we start that I'm going to be showing you just some charts and some other tables. This is all from publicly available sources.
We will have that information again when Samantha shares the presentation with everyone if they are looking for it. Generally, this is all coming from either IATA, it is coming from Boeing, it is coming directly from Airbus. There is nothing proprietary Expeditors here. It is all just publicly available information. We think it is important because it still tells a good story that most of the time we do not necessarily see, because on our day-to-day, we are so focused on what it is that we are doing with our own little cog in the wheel of aerospace. The first thing we wanted to start off with is that there is strong demand, and there is projected to be strong demand for the next 20 years. These are estimates of what GDP growth is going to be like over the next 20 years.
Really, if you are kind of wondering why GDP growth is a big thing, as GDP increases, especially in countries like India and China, we have heard before about the growing middle class. What that means is that more people will be traveling for leisure purposes, I guess. This is looking at how GDP is growing compared to the number of yearly trips per capita that are going to be happening. While the U.S. and the EU are remaining mostly static over the next 20 years, just because there is already so much travel that is coming from those two geographies, you can see how much India and how much China, Brazil, some of these other countries, how much they are growing. If more people are flying, there is just going to be more demand on airplanes. What does that demand look like? This is from Airbus.
This is what they showed the global fleet to be like in 2025. Again, because it is Airbus, this is looking at it through the lens of commercial aviation. So, 18,700 aircraft in the fleet in 2025. Airbus is predicting that fleet is going to grow by almost 20,000 aircraft to 37,000 in the next 20 years. It is important to note, and most of you may already know this or suspect this. It is not just growing by that 18,700 aircraft because in the next 20 years, it is expected that over 15,000 aircraft in the current fleet are also being replaced. What that really looks like, as this chart shows, is that there are almost 34,000 new aircraft deliveries happening.
In the next 20 years, it is only expected, or at least according to Airbus, it is only expected that 3,000 planes that are currently in service today will still be flying in the next 20 years. Let us look at it a slightly different way about the complexity of what this supply chain is looking like. This was kind of a shock to me almost. It is very interesting, at least. This is strictly looking at Airbus A321 cabin configuration, so narrow body aircraft, regional aircraft, regional planes. This is not your larger wide body aircraft flying the larger international longer routes. It has historically been a one- to- two cabin configuration, but you can see 10 years ago, you started to see a third cabin class with certain airlines. As of this year, there are now four cabin classes on several of these airlines flying narrow body aircraft.
It seems almost like it is interesting, to say the least. You can see as we have more cabin classes coming on even narrow body aircraft, it is just increasing the complexity of these manufacturing lines. It is not just low cost carrier configurations of 240 seats on one of these single aisle aircraft. Now you are looking at four different cabin classes for these things. That is more seat components, more laboratory components. The overhead bins could be different in size just depending on where within the cabin. The galleys that they are fitting for all of these multiple classes on narrow body, again, it is just quite interesting. That complexity is only going to continue to grow within the next 20 years as the industry also continues to grow. This is very similar to what I just said, but it is from Boeing's perspective.
Just because we want to be fair here, we do not want to just talk about either Airbus or Boeing. This is Boeing's outlook on things, and you can see it is very similar. Their estimates of what the 2025 fleet look pretty close to how Airbus was showing it. Boeing is predicting much stronger growth over the next 20 years, from just under 40,000 to now 50,000 aircraft in the fleet within the next 20 years. The average annual revenue growth is also exceeding what Airbus was even predicting. An interesting thing to note on Boeing's slide is they even have the services outlook. This would be spares programs. This could be MRO work that they are predicting. They are estimating the thousands of additional new personnel and the billions of dollars that will be spent on the services side of things that happen after new aircraft are delivered to their airlines.
The rest of this, you can kind of see single aisle still completely dominates what the aircraft manufactured deliveries are. Single aisle is the largest growing kind of size of aircraft that is out there. Some of you probably may not necessarily be interested in commercial aviation, and so I wanted to show this as well. This is global military aircraft deliveries. With certain events that are happening globally right now, we know that there is a lot of focus on drones, a lot of focus on unmanned aircraft. But as you can see, the darkest line, the darkest area that is on the bottom of the graph, still represents piloted fighter aircraft. The next one above that is rotary wing, piloted rotary wing aircraft. As military spending continues to go up, there is still strong demand coming for piloted systems.
Fighter aircraft, bomber aircraft, helicopters, those are all continuing to grow, as well as military spending globally continues to increase. Also, for our general aviation people that are here, you can see that there is still, for the next 20 years, strong demand for fixed- wing piston. You can see there is growth for fixed- wing turbine, how much of that is starting to grow. Rotorcraft is starting to grow. Experimental and other, what might be these new flying cars from companies that offer these single seat electric vertical takeoff- landing aircraft to the larger air taxi companies that we hear about in the news, that is all increasing as well as part of general aviation. Here we have these three distinct sectors of what I like to call aerospace, and they are all growing. The projections for the next 20 years is nothing but growth.
There are different things that are driving this growth, right? You have passenger growth, fleet expansion on the commercial side, military spending goes up, modernization programs on the defense side. General aviation, corporate travel continues to increase, right? There is larger demand for business jets. Turbine fixed-wing was one of the larger growing segments of general aviation. It all kind of sounds great, which is the golden days of aerospace, right? It is like we are all just growing over here. But it is interesting to note that the challenges that we are finding, the challenges that we all run into day to day, has nothing to do with demand. It has to do with capacity. Because if you are a manufacturer of landing gear, or aerostructures, or avionics, or turbines and piston-driven motors, your companies are constantly in this balancing act of, "Are we going to be providing to military?"
Are we going to be providing to general aviation, to commercial aviation? Then beyond that, it is are we producing spares for the aftermarket, which is growing, or are we producing for new production lines that are out there, right? Because the reality is there is just not enough capacity, there is not enough manufacturing lines across all of our companies to be able to satisfy these demand needs that are out there in the market. Let us start going back a little bit in time and seeing, everyone hears about this aircraft backlog and how it is created this supply chain problem. These two charts from IATA kind of show it in a stark way. Starting back, we obviously see the big dip that was the pandemic, right? New aircraft deliveries dropped quite substantially because the whole world, for the most part, shut down. I think we all remember that.
It was very interesting times. It is also very interesting that even though new aircraft deliveries slowed down significantly, sales didn't, right? Salespeople were still being salespeople. They are still out there pounding the pavement and selling new aircraft. That is when it really started to exacerbate this backlog situation. I like to point out, though, and it is not to pick on anyone, but it is interesting to note the backlog actually started the year prior, in 2019. There were some specific events that occurred that year that caused Boeing to have to start stopping or slowing down their new aircraft deliveries in 2019. While they may have been able to recover from that quickly, the fact that the pandemic happened immediately after, you can see how the deliveries just dropped off. Ever since then, the industry has just been trying to play catch-up.
The truth is that they have not been able to. The other chart is now talking about the age of aircraft. What is the average age of the fleet that is out there? You can see just before the pandemic, things were looking great, and it matches up with the aircraft delivery rate on the left-hand side chart. New aircraft were being delivered at a rate that we had not seen before, and the average age of the global fleet was going down, down. Then again, 2019 happened, then the pandemic happened, and suddenly you see this massive spike where, as of 2024, and it has only gotten worse in many respects, the average age of the aircraft in the fleet is older than it has ever been in our history. Right? Aircraft that were predicted to have 10, maybe 12-year life cycles are stretching out into 15 years.
There's a lot of implications that go along with that. Newer aircraft that are coming out in the last 10 years with newer engines are promising fuel efficiency gains. Because those aircraft cannot be delivered, airlines that had budgeted for these fuel efficiency gains now are suddenly in a position where they are having to continue to spend on fuel with their less efficient engines, their less efficient airframes. It is just keeping the costs up, right? I make this comment with some of the customers that I visit with. It is like we thought that at this point in life, we would all have flying cars, we would all have Nikes that lace themselves, and airfare would be super cheap. The reality is because a lot of what these market conditions are causing, airfare has not really gotten any cheaper for us. In some respects, sure.
Low-cost carriers are not quite as viable as they used to be, and everyone now is starting to act like a normal commercial air carrier. Just to show you what this looks like, this is through the end of May of 2026. This is showing, again, the deliveries, the orders, and the total backlog that has accumulated so far for both Airbus and Boeing. As the deliveries continue to go, and it is great that different organizations, EASA, FAA, are continuing to increase the number of deliveries that these manufacturers are able to make. Their sales, their orders are still completely outstripping what their delivery rate is. As you can see right there, the estimated backlog towards the end of May for Airbus was just over 9,000 aircraft, and for Boeing it was just under 7,000. So it is quite substantial.
The truth is that backlog continues to grow because not a week goes by where we do not see that some airline in some country has just placed a new order for another 100 aircraft. I will point out that there are other regional aircraft manufacturers not listed here that are very much in the same boat. So it is a very large problem that is happening. As this backlog continues, as the fleet gets older, it is causing these aircraft, these airframes, to have more flight hours on them than were originally anticipated and budgeted for when the aircraft were delivered 10 years ago, 12 years ago, and they were budgeted for 15 years ago. What this causes is now you have more engine shop visits.
If any of you are in the MRO sector, if any of you are on the engine side of things, you know what this is like. You know the challenges of trying to make sure that these engines now are hitting their induction dates, and finding space at an MRO to be able to get an engine in is quite challenging. If you are in the actual MRO, you are going to be seeing engines from all over the world, where before it might have been a little more regional for you. So engine shop visits are really just driving up this higher MRO demand, and it is causing a lot of parts shortages and parts delays.
And again, a comment that I made earlier, a lot of you tier suppliers out there, you're having to make the decision. Am I going to use my production capabilities to satisfy the parts shortages that exist in the aftermarket, or am I going to be satisfying my contracts with the OEMs to produce for new aircraft deliveries? Because we don't have the capacity out there, it's just increasing the backlog, which increases the age of the fleet, which increases the fly-away, and we're just in this cycle that seems that there's not really any way to get out of it or to fix it. What we found, and it's a very interesting thing, is that the engine MRO is the pressure point here. Global MRO spend, is estimated to $96 billion-$100 billion just in spend.
It's looking like it's going to be continuing to grow at a rate of about 5% every year for the next 10 years. The interesting thing is, of all of the MRO spend, almost half of it is dedicated to engines. It's the most cost of MRO for any airline. The entirety of everything else, components, airframes, line maintenance items, all of that makes up the other 50%. It's such that as you can see, this is only looking at CFM International LEAP. There's a lot of different engines out there on the market. Just looking at CFM International LEAP, you can see how this was noticed early on in the pandemic, that third party MROs realized that this was going to be a problem, and they started investing in facilities.
You can see now that third party MROs are doing more of the CFM International LEAP work than CFM themselves are doing. It's just a very interesting dynamic. It's not something that historically, at least, we've seen within aerospace. Historically, any of the MRO work was guarded and done by the OEMs, by the original manufacturers themselves. Now, because there's just so much work, there's so much demand, third parties are much more involved in that. Looking at it at a different way, and again, this is just narrow body engine shop visits. These are the probably seven most common engine types that you'll find on narrow body aircraft. You can see, again, it's the same thing as the average age of the fleet. The largest number of engines in the fleet going back 10 years was a lot of the older models.
The CFM56s, the IAE V2500s, the Pratt & Whitney PW1100G-JM. That's been going. About 2020, 2021, a lot of those were supposed to be retired, and the new LEAPs were supposed to really come in and start to take over for that. Pratt & Whitney's GTF engine was supposed to really come in and take over for that. You're seeing that because the fleet got older, that didn't really happen. The number of CFM56s that are still out there in service is still quite high, and I know a lot of the activity that we see for moving engines is tied to CFM56.
So it is just this interesting dynamic now where before it used to be like we need people to fly more so that our industry can continue to grow, and now there are so many people lined up waiting to fly, and the growth is only going to be managed by how quickly the industry can turn around engine MRO work. So very different, like a paradigm shift within aerospace. It is a large change. As aerospace changes, everyone else that is tied to aerospace in one way or another is also having to change. Here is where I will leave you, and I am going to turn it over to Jim, and he is going to talk a little bit about what changes have to occur.
Thanks, Oscar. Appreciate it. Wow, that was a lot of data to be shared in 25 or so minutes. A lot coming at us. But very telling and important information. Looking back and as we prognosticate and look forward, as Oscar said, we take the information that is available to us in the public domain. The second part of the webinar here, we want to talk a little bit about what we did as a company. In reading the tea leaves that are out there and in collecting all of this data, what does it mean? Really, it is the headline in this slide, which is we said, "Hey, w e need to change as well." But what does that mean? Is it a step change? Is it a massive change? What does that mean for us? I will talk a little bit about that.
The quote that you see there on top, everything that Oscar just talked about that we see near term or medium term, this is a quote from IATA just within the last couple of months. Despite signs of improvement in the supply chain, this is not going to normalize until 2031 - 2034. My goodness, this is going to be going on for a long time. These three questions, as we looked at this and again, we saw this coming from a couple of years ago. How could we adapt to help our partners? Would the company choose to invest in aviation and aerospace solutions? Those of you that know Expeditors know that we work in many different industries.
We have our vertical industry structure, that we have our focus industries, but my goodness, we work, and we are very appreciative and honored to work with so many customers in so many different industries. It gives us such a broad base of knowledge to choose from. If we did invest, what would we propose? What does that look like? That is our team in the aviation vertical that would go through that. Oscar, if you go to the next one. What we did not want to do is we did not want to change our roots. Expeditors, for 45 + years now, we have got an operating model. We have got a model that we use that is our core. As we went and looked and said, "Okay, our global network we have 300 + offices, deep local experience."
Each one of those offices is an individual office with their own financials and their own people, and really a local knowledge. That was key to Expeditors, keeping that local knowledge. Our service providers, as a non-asset-based provider, our service providers are our lifeblood. Relationships and having good, strong relationships with our service providers, we knew we didn't want to change that. Expeditors and aviation fit well because of our compliance. That was something that was not going to change. Again, that's our core. Almost like safety is the core of aviation and probably the core of many or all of your companies. Compliance is for us as well. Then T&I. When we say T&I, that's Transition and Implementation. Basically the handoff from the sales process to account management. It's almost kind of preparing for the wedding and then the marriage.
T&I is our Transition and Implementation. We had strong discipline there. Again, as we looked at what Oscar just described and what was coming, we said that's our core and that's really what we want to keep. What happened? A couple of years ago, and Oscar, if you go to the next slide. A couple of years ago we went to our senior leadership, the aviation vertical team, in concert with some others, and we tried to answer these questions and speak with them about what was coming, about framing up where we were and what we saw coming, and did we want to do this? Our executive leadership team said, "Absolutely." There was a few changes that we needed to make recognizing what was coming. Speed. Every other synonym for the word "speed" that we could use. Rapid.
We knew that speed in quoting, routing, and delivery was going to be key. Not that we don't do that now. Of course we do, but there's always the balance as a logistics company and working with our partners of cost and speed. We know that. Recognizing that speed in this world, if we were going to look at really enhancing our AOG solution and critical logistics solutions, that embracing that speed and what that meant. When a part is finished, it had to go, whether that's for someone who manufactures new components, whether that's a spare part. In this world, we needed to do that. Again, we did this quite a bit all day, every day, but we took a hard look at our processes. Then the second one is really, again, where our executive leadership came in.
We didn't have to invest here, but the company chose to do that. We said, hey, yes, with the things that we do well, we think that fits the industry well, so let's invest. We brought in some folks. We really focused on training our people throughout the network even more, say deeper dive training. The company absolutely did invest. Then if so, what would we propose? That was up to us to go to our leadership and say, hey, this is what we proposed. Again, just like I'm sure your organizations, we had some very clear tenets. Those four kind of pillars that I showed were core to what we do. What we did was enhanced our model. We didn't change our model.
Expeditors, again, has been in business for 45 + years, but we did carve out a small section in what we would classify as a more centralized operation. This complements our model. It doesn't replace it in any way, shape, or form. Chris is now going to walk you through a little bit of what that means in a little more detail than I described. Hopefully that was a good bridge from what Oscar talked about with what was coming to our thought process around it, and we hope that it helps you as you frame up your thought process around what needs to change. Chris, I'll hand it to you to talk a little bit more about what we did.
Cool. Thanks. Thanks, Jim. Thanks, Oscar. Again, kind of shifting gears now to kind of what is important for a CLS program overall. Again, this is not just Expeditors, but any CLS program that you're actually looking for. Just as Jim said, we recognize the need in the industry, and there's always been a recognition that AOG requires definitely special services. But really the need has never been greater based on that changing environment. The recognition is, again, express services fall short, these fixed cutoffs, these hub consolidation, CFS delays, this is no longer acceptable. I mean, AOG really is a separate program within itself. The second point here is that urgency is not. Again, urgency, it needs to be part of a larger program, and traditionally it has not been. You can't handle urgencies ad hoc.
You definitely need that centralized booking, that centralized management for these very specialized high-touch- type shipments. As Jim had mentioned, again, customers ask for more. They need to be able to reach, or you need to be able to reach your service provider, your forwarder, at any hour. You need proactive updates. You need accountable owners throughout the shipment life cycle and so on. That was definitely recognized. Next slide, Oscar. In addition to the, Jim had talked about, again, some of the foundational elements that are important for CLS programs. In addition to those, really, CLS programs have evolved to be better suited for the changing environment that Oscar had outlined. These are kind of the three additional elements that are really critical when you're looking for a CLS type program or an AOG type program.
The first one really is CLS regional hubs. We recognize that it's important to rely upon the network, the network district local offices, but there has to be those regional hubs. Ideally, those regional hubs are centered around kind of the aviation center of gravity. There's a lot of shipments that actually happen within the hub itself, as well as extended throughout that particular region. That hub drives accountability, oversight, proactive management. Very important that when you're looking for a CLS type of provider, that they do have some regionalization going on in addition to those local districts. The second kind of critical element here is in-office 24/7. It's recognized that just having somebody on call, with a cell phone next to their bedside, that's not enough.
We need staffed desks, not on-call rotations, as well as an extended network of 24/7 providers and escalation paths, not only between the hubs, but also between your service provider, I mean, your AOG provider, and their service providers as well. So again, very important to understand what those escalation paths are, and that both origin region and destination regions are basically pushing and pulling that shipment all the way through. Then the final component here, and Jim had touched upon this through the training piece, is really having specialized teams. So having aviation or critical logistics specialists doing that work every day, trained, and each customer has a specific onboarding process as it relates to critical logistics, as well as the customer SOPs.
The customer SOPs are very important because it just recognize each customer has different requirements, and making sure that they are onboarded into a CLS program is very important to keep that high level of premium services. So again, these are kind of the three high level components that you should be looking for in a CLS program, in an AOG program when you're looking for providers. Next slide. Here's Expeditors hubs. Again, this is what we have done. So we would expect that any provider, any AOG or CLS provider that you're doing have something similar set up. So six regional hubs. Each hub is responsible for their whole region, not just for the freight in their backyard. Then supported by the larger office network.
It's these two things working hand in hand, regional oversight, regional accountability, but still having boots on the ground in the local office, which really is meant to meet basically a formula for the best success. So again, we recognize that other AOG, other CLS providers may have different nuances of this, but I think that this is really a critical component that you should be looking for when setting up, when deciding your service provider program for AOG/ CLS. Okay, next one. So in addition to those three major components, here are some finer nuances of what every CLS shipment needs. So again, strict KPIs. So this is important that it's not only the acknowledgement and the booking, it's also the quote turnaround, and it's really that proactive live updating of every subsequent milestone all the way through to delivery.
So again, that touches up on the second point, that proactive management of it, where shipments, each regional hub, again, is that push-pull model. So at origin regional hub, pushing that out, destination hub, pulling that in. Each shipment is very proactively managed. Each KPI is very proactively managed. So as those KPIs are approaching, it's very important to have that oversight office ensuring that that event will be happening timely to avoid any unnecessary delays. The third point here is rapid quotes. So we recognize that not all AOGs are actually quoted as part of an RFP, that many providers require spot quotes. So again, being able to turn around a quote very quickly, like within about 45 minutes or so, is really critical as part of the booking process, as part of that shipment actually moving through the network.
Please be looking for that as a component when you are looking for providers. The fourth component here, flagged as critical. Again, I think this is pretty obvious, but we have to make sure that everybody in the hubs, everybody in the network, understands when a shipment is flagged as AOG or critical, and we call that CLS, so Critical Logistics Services. It is very important that the network understands the premium nature of that particular service, and so it is never mixed in with just general freight. It is never treated similar to what a general freight shipment is treated. Fifth point here, 24/7 escalation. Again, very important that the hubs are running 24/7, as well as we have escalation processes with our service providers, with our local districts, as well as with government agencies and whatnot.
It is very important that the hubs understand the working hours of government agencies as well as if there is special provisions for after-hour services. Again, it is that high level of expertise throughout the network, I think, is a very important component to actually see that. Then finally, customer SOP. I mentioned this a little bit earlier, but every customer is set up, and it should be introduced specifically to the CLS program. When you are talking to providers around critical logistics services, just make sure that they have a good onboarding process, a good SOP type process. Okay. All right. Next slide. Okay. Again, I labeled this one beyond standard freight because, again, there are other aspects of CLS, right? It is not only just we have the next flight out, so I think that is pretty obvious. On premium service levels with carriers.
It is very important that we are adhering to that. But there is also just beyond freight itself. So we have hand carry options, and so that is very important. That is recognized that we are able to do hand carries and have broad coverage for hand carries, as well as understanding the special requirements for hand carry. Sometimes boxes cannot be opened. Again, having those pre-arrangements for how that hand carry is going to be processed is very important. Then we also have charter aircraft in addition to hand carry, and so that could be a dedicated aircraft. Having a provider that can actually have good relationship with service providers to be able to go and get those charters in place very quickly is a pretty important component. Already mentioned about 24/7 ground providers. Again, as a non-asset-based carrier, it is very important that these providers are organized upfront.
Then as we onboard customers, if there is oversize needs and whatnot, that we are accounting for those special customer requirements when it comes to the pickup and the delivery portions of this. Because that often is a very, very critical part of an AOG type shipment. Service recovery. Again, each of the hubs or each one of the people involved in this need to be able to understand that when we are proactively managing these shipments, if it does look like that something is going to be amiss, that they are immediately on it and escalating accordingly, and then have a full recovery plan to be able to get that freight back on track. Then the final component of a good AOG/ CLS program is visibility and exception, so live shipment status.
Definitely be looking for providers that have the opportunity to put GPS sensor monitoring on the freight. Those GPS sensor monitoring are very important to be able to create geo fences, to be able to create exception delays. If you have special cargo, for example, where the cartons cannot be opened, those sensors can actually go inside those cartons, and you could have light and dust monitoring, as well as all of the other parameters that would be expected to go along with a particular sensor. Just realize that complementing these AOG/ CLS shipments with GPS tracking can be very effective to help reduce service delays as well as increase the ability to monitor on those particular shipments. Oscar, next one. We couldn't not talk about compliance. Compliance obviously is very important factor.
A lot of this goes back into some of those foundational components that Jim had mentioned. We do a lot of this with all of our freight. When it comes to AOG and CLS type services, it's even more important because a solid compliance program will minimize any type of delays that could actually occur from the compliance side of things. So again, just goes back to the customer SOP. I think this is the third time I've mentioned it, so that's obviously very important. Then the standard controls of chain of custody. It's very important that you are vetting your providers to make sure that they have the proper controls in place.
DGR IATA, not only for your provider's ability to be certified, but also the service providers may have higher level of things like DG certification when it comes to being able to do pickups, and affecting those transports directly to the carriers, without it going through your server provider warehouse. Vendor governance. Again, all the service provider program governance. Please make sure that you're checking with your providers to make sure that they have a highly qualified program because those service providers are an extension of their service. Then security and trade as well as training and certification are all very important parts of a certified program. Oscar, you want to go to the next one? Okay, two more slides on my side here. So, this is the process. Again, very high level. There's much finer nuances to this.
It's important that when you are looking for CLS providers, that you understand what does the booking look like. Can you make a booking with any one of their hubs? Is it a centralized booking? Can it be done via email? Can it be done via phone? Can it be done via EDI, and so on? Then the confirmation piece of this. Between the booking and the confirmation, those KPIs listed below are very important. Again, this is what Expeditors does, 15 minutes to acknowledge request, 45 minutes to quote, route, and confirm the booking. Again, I would expect other providers to provide very similar KPIs. It's important to hold them to those expectations. Then the collection piece of it, again, 24/7, we've mentioned that a few times, for pickup and tenders and specialized cargo, oversize, weekends, holidays.
Again, these are all very important. Then the freight flies. Again, very important to have proactive management as well as your provider should be updating you in the way that you want to be updated, whether that's a pre-alert, an email, whether that's a phone call. Again, it's very important that the provider adheres to how you want to be communicated. Then the final delivery of it, and then every step of these subsequent milestones needs to be very proactively and live, basically touched upon live. Then just acknowledging here that, frankly speaking, AOG/ CLS type service processes, they're not as efficient as normal. These are high touch, and they're not as efficient as normal freight, and that is as designed. These are very purposeful, high touch.
We absolutely trade efficiency for expediency, for urgency, to be able to make sure that we are absolutely minimizing service failures whenever possible. You should be looking for that in any provider. Okay. On the next slide, Oscar. Then finally, what we do for aviation, for all those non-aviation customers that have joined us. Again, it's absolutely extendable to other industries. So again, you have high tech here, healthcare, high fashion, automotive, and these foundational elements that we kind of mentioned as well as the evolution of the CLS program are extendable to these other industries. Now, some of these other industries may have different nuances for how they're handled. They may have different center of gravities and whatnot, but the basic components of a CLS service is extendable beyond just aviation into lots of other industries, and there's just four here that we indicated. Okay.
Oscar, you want to wrap up? Next slide.
Thanks, Chris. There we go. Just some of the key takeaways for the future of AOG. What are successful companies doing? As we've mentioned, the backlog is not going away soon, and I had a customer once kind of articulate it this way, that they keep every year, every few months, they keep preparing and hearing in the news about what the next big disruption is that they have to plan for.
What he said was, when he was able to see the information, the data from this point of view, he is like, "The next big disruption, that happened back in 2019, and everything that we have been fighting has just been a symptomatic problem of that." Instead of focusing on whatever the current news is, how do we contribute to the larger disruption, and how do we contribute to make sure that we are prepared for that and helping to fix that from our side? AOG is a fact of life. As Chris pointed out, it is no longer good enough for companies to transactionally or in an ad hoc manner react to AOGs. Similarly, for service providers, freight forwarders, and the like, it is no longer good enough for us to have ad hoc ways of executing on AOGs. What are you doing?
How are you making sure that you have a process for that in place as a company instead of just constantly reacting to those scenarios when they come up? Because as mentioned, this is going to be here. We would love for AOG to not exist so that I am not stuck at a gate waiting for a tire to get changed on an aircraft the next time I need to fly, but it is just the reality of life now. The main thing is, for years, aerospace really focused on kind of following the automotive model of the whole kaizen, the Lean model. Just in time. It was about like, how can we have the quickest, the most agile, the most reactive supply chain?
The way that these disruptions have affected aerospace, it is becoming clear that the most successful supply chains, the most successful companies operating good supply chains have resilient supply chains, not just reactive supply chains. So it is not how can you react to the market disruptions, it is how can you set up your supply chain to survive every disruption that comes up and not be negatively impacted to such a large extent as may be occurring right now. Hopefully, you have found this information helpful. Hopefully, you have found it informative. I believe we have some questions. Samantha, were you going to read through some of those?
Yes, absolutely. I wanted to mention one of the questions we got in the registration process, and you guys hinted at this a little bit, but one of the questions was, can you talk about the preparedness, like common preparedness gaps that you all see organizations commonly overlook? I think, like Chris hinted at knowing who your provider's provider is or the compliance pieces that we talked about. Can you guys reiterate some of those? What are some of those common gaps that you see?
Chris?
Yeah, sorry, I'm getting off. I would say, again, the biggest one really is just the onboarding piece. I think is very important for us to be able to understand your business, the provider's business, and the nuances of that business. Because even though there's broad coverage, 300 offices, six CLS hubs, and whatnot, there's always going to be special nuances with oversized freight, emergencies, freight going into difficult compliance- related destinations. By having a good onboarding process, it allows us to be able to understand the government agencies that are going to be involved, any service providers that need to be specially alerted and whatnot, and then being able to walk that process all the way through. I think that within itself is a very critical component for success of an AOG program.
Great. Thank you, Chris. Kind of piggybacking off that a little bit, Oscar, I'm going to pitch this one over to you. We had someone in the Q&A box ask about the complications of compliance, especially when the airline is not domiciled in that particular country where we have an AOG situation. Can you talk a little bit about how we work with customers who have those complicated pieces of the supply chain for AOGs, and what we can do to assist?
Sure. I'll also start off by saying that, I don't believe Jim, Chris, or I are the customs and compliance experts, especially in the global compliance space. I will say, John, that from that perspective, we do have companies that we've worked with in the past that will act as importer of record or exporter of record for customers, in the case where there is no legal representation in a country where an aircraft might be in. Every country's rules about that are also different, so depending on how the part is getting there, if it's being flown in on another aircraft of that same company, it could be moved as COMAT. There are fly-away kits. There are other schemes that allow for repairs to be done where a customs entry like light, I suppose, could be filed, to just say that this is a part coming in.
It's not going into commerce, it's just going to be used to repair this aircraft and then immediately leave. Certainly, it's something that we can follow up with you on and have more detailed discussions, preferably with one of our compliance experts on the line as well.
That is certainly one of the things you all talked about too, is having a provider that does have those capabilities globally, right? That has the compliance experts in each of those countries that can support, which is certainly important.
Yeah, it's a great-
I'm going to pivot a-
Oh, sorry, Samantha. I was going to say, John, it's a great question and, I think, very timely again, as I think all three of us alluded to the speed and the necessity of this. So, if it's okay, we'll put you in touch with our customs experts who have been doing this as well. So, that's probably the best way to go.
Right. Pivoting a little bit, but still on the subject of speed, because that's definitely a common theme here, is, "Let's talk a little bit about air quoting," and, from our perspective, this is very Expeditors specific, but how are we working to speed up that quoting process of being able to get back a cost to customers who need to move fast?
Yeah, this is very exciting. So again, just speaking it from Expeditors' side. Very similar to the changes that we've seen in the CLS and AOG. We've had also quite a bit of evolution when it comes to quoting and pricing. We have formed five, not six, but five regional pricing teams, who are managing all quotes, basically quotes for RFQs and spot quoting. That team is opening up their spot quoting tools for our AOG/ CLS hubs. Now they're able to basically turn those quotes around. We're not quite 100% there yet. We still need probably about another month or so. But once those internal spot quoting tools are opened up to our CLS teams, they will have the ability to turn those spot quotes around very, very quickly, especially for destination door charges.
Origin, door to airport side is not a problem because the CLS hubs is responsible for that region. But the destination door charges, especially for AOG type services, it's probably been the most difficult for us to be able to quote quickly.
That makes sense. Good news to hear that there's some updates coming in that realm, too.
Yep.
Okay. Finally, I think that's all the questions we have in the Q&A box. But in general, we talked a lot about trends that are shaping aviation logistics and how companies like the ones that are joining us can evaluate just how ready their AOG program is. Can you all talk a little bit about what they can do? And Oscar, you hit it on this a little bit in one of our last slides, what they should do leaving this webinar to make sure that their program is, a lot of them that have programs, that they are as ready to take on the next challenge as possible?
Yeah. Again, we're going to be providing the slides to them, and I would just ask them to take these components of a CLS program and basically incorporate that into their discussions with their providers. As well as, again, if they want to understand finer nuances of the program, please feel free to reach out to any three of us and we can actually give them some customized feedback based upon their lanes or any specific concerns that they may actually have about their particular business. So we're very excited to engage with them on that.
Yeah. It's not slowing down. It's only going to speed, speed. Like you said, Samantha, that's been the theme of the webinar here. But hopefully this was an insight into, oh my gosh, we knew this was coming. We knew we were going to, but please, action now. If the information that we provided helped, whether it's resources, human resources, just modifying your model. Maybe not changing your model, but a little bit of what we talked about. Complementing, carving out, or complementing the model a little bit. So hopefully we gave the participants something good to think about.
I think you guys absolutely did. Thank you so much for all the content you provided. Thank you to everyone who joined us today. I know you're getting on to the next thing on your list. For some, that may be lunch. But keep your eyes open for an email from myself, again, within an hour or two, and that will include the link to our survey. We'd love to get your feedback about the content today and what else you'd like to see from us. Also, you'll have an opportunity to let us know if you would like to schedule a follow-up meeting with any of these three gentlemen or other experts within Expeditors to help support your program. Yes, please.
Thank you all for joining us. We look forward to seeing you on the next webinar. Have a great day.
Thank you.
Thanks a lot.
Thank you.