Jim Cangiano, Global Director of the Aviation and Aerospace Vertical, talks about the Aviation industry's resilience over the last couple years.
Chris Parker: Hello everyone, and welcome to The Expeditors Podcast, where we look at the logistics and freight forwarding industry through the lens of a global logistics provider. I'm your host, Chris Parker, and today we're going to take a look at Aviation manufacturing and understand how one of the most profitable industries is faring today after a wild three years. How does this industry support itself and keep planes in the air, whether through maintenance or fulfilling orders from airlines? Today, I have Jim Cangiano, our Global Director of the Aviation and Aerospace vertical, to talk more about this. Jim, welcome to the podcast.
Jim Cangiano: Thanks, Chris. It's so great to be here. Really looking forward to our conversation. We have a lot to talk about, a lot to cover.
Chris Parker: I'm excited to go through all this, yeah. It seems like there's a lot to chat through here, but before we do that, let's get a little bit of background on you. Walk me through your background, your history, and why are you interested in Aviation? What's your career been like?
Jim Cangiano: Absolutely, yeah. I started in the aviation world about 20 years ago, working for suppliers of primarily cabin interior components, so suppliers that made seats, suppliers that made bins and galleys, and everything for the inside of the plane. And started on the production floor very much, seeing how parts made their way through the factory and to the final customer and realized early on that I loved the customer side of things, what the customer's customer almost thinks, and what's important to them. Really just a passion for that.
So, I wasn't an engineer by trade; I never really grew up as an airplane nerd. I'm an airplane nerd now, proudly stated airplane nerd, but I never grew up that way. But yeah, that's my background, and I have worked really close with the airlines and been able to be fortunate enough to visit many airlines around the world; growing up as a kid in rural Maryland, I never would've thought that was possible, but it's been fantastic the opportunities that the industry has given and excited to talk about that today.
Chris Parker: And this is a relatively new role for you as global director. What are your responsibilities now? Actually, talk a little bit about what you've been able to accomplish within Expeditors.
Jim Cangiano: Been with Expeditors for seven years and just recently into the role of the global aviation director. And in that role, we're really responsible for our aviation business in general, our strategy, innovation, new products, and what we do with our partners. And those are the airline's suppliers but also base companies and defense businesses. There's so much going on, and we'll talk about the Boom Supersonic aircraft and the air taxis; my gosh, we have such a wide breadth of industries that we cover and call on.
So, myself and my team we are, I guess you could say, within Expeditors, kind of the subject matter experts of what those supply chains need now, but also what they're going to be like in the future. And that's where we spend a lot of our time, certainly working with our teams on current pain points maybe that our customers have, but very much on the innovation side of what's next and working with our colleagues here at Expeditors. It's a great place to be.
Chris Parker: I imagine when you started working on the manufacturing floor, was it just to get a job, just to start working?
Jim Cangiano: Okay. The first story is that I graduated from college, and my first job was at a golf course, literally picking up balls on the driving range. I'm sure my parents were so proud of me at that point using my college degree, but that was my first job out of school. I didn't have anything lined up. And I was fortunate enough, one of the members that was playing golf, I was loading his golf bag onto his golf cart, and he knew that I had just graduated and said, "Hey, we've got a big contract that we just won. Come talk to us." And one thing led to another, and that was my entry-level job. So, it could have been an automotive company, it could have been a pharmaceutical company or a high-tech company. It just for me happened to be an Aerospace company. And once I was in, I just absolutely loved it.
Chris Parker: Yeah, I was going there because my next question was, what has kept your attention or held your passion really through this industry?
Jim Cangiano: Absolutely. I have such a passion for it because it touches so many people. You, Chris, I'm sure, have flown many times, and you have your opinions on things that you like and things that you don't like, and you are just trying to get that right. Again, back in my cabin interior days, trying to get that right and being able to really influence that, let's say. Influence something that really everybody touches. And not everybody, I mean, we still have a long way to go from a global perspective of getting people on airplanes, and that's where our growth will come from, but that's really where the passion was.
And I'm a pretty competitive person by nature, and it's a pretty competitive business, so I also like that the opportunities to win and to be successful with the companies and the teams that I'm with. So that comes out as well.
Chris Parker: Oh, good. Well, thanks for sharing that. I appreciate that.
Jim Cangiano: Absolutely.
Chris Parker: All right, so let's go ahead and get started with our first question here. We're talking about the aviation manufacturing industry. This is different from whenever we talk about Aviation in terms of transportation. And we've covered other industries before, automotive, healthcare. What sets the aviation industry apart from them? What kind of special needs does it have? Why is it important for us to have specialists within this space?
Jim Cangiano: Yeah, it's a great question. It's a timely question too, Chris. As we're recording the podcast, the Paris Air Show just happened earlier this week, which was really the Super Bowl or the World Cup or whatever huge sporting event we could equate it to where the two major OEMs, Boeing and Airbus, just booked I think another 1,200-airplane worth of orders. So, if Chris Parker Airlines is going to start here anytime soon, and you wanted to buy 100 planes from Boeing and 100 planes from Airbus, you could get them in 2032, I think. So, it's pretty strong demand.
And so, what makes aviation different, whether you're a supplier or an airline, is the core of everything that everyone does is safety. And that's really the middle of the concentric circles. Safety is always in the middle. And what derives from that are things like parts. Every part of the airplane that you fly is certified in some way, shape, or form. The parts are certified, and the assemblies are certified. So that compliance piece, it really permeates through the whole industry. And what it does is it also dictates timelines for suppliers to make parts, timelines certainly for the OEMs right now to make aircraft, but it impacts everything. So, everything permeates from there.
Here's an example. So, a supplier, some of the suppliers that I used to work with had test facilities where really these are multi-million-dollar, state-of-the-art facilities to test conditions that the FAA mandates that they're tested to. So, there's some dynamic testing where literally parts are moving, but these test facilities require a huge investment. That's a big part. I know there's automotive testing, obviously. So, thinking that you've probably seen the videos of automotive testing, a lot of aircraft parts go through that as well.
And then we have the manufacturing facilities. So, the manufacturing facilities are certified and audited to different requirements, ISO, so they're not easy to move if there's a geopolitical situation happening in one place, or God forbid a fire or something like that happens somewhere, and a facility burns down, getting them back online makes it pretty tough. So that's one, so safety is one.
Another one is what I touched on before, which is just the demand in the industry and the backlog. So this is an industry, I always joke with a lot of my colleagues here, that it's tough to name another industry with literally eight years-plus, probably more now after Paris, of backlog. It really is. And what that means is just those long cycle times. So, Boeing and Airbus could stop that; I use them as they're the two biggest OEMs, they could stop selling airplanes today, and they'll be building airplanes through 2032.
Chris Parker:
Geez.
Jim Cangiano: It's really phenomenal what that means. And so, of course, that trickles down to the tier one suppliers, the tier two suppliers. So, that demand and what that does then for the industry is hugely important. And then you get into some other things, the critical logistics space, AOG requirements. If you've ever had an aircraft that you get the delay notice and there's a maintenance issue or something like that, sometimes that's our responsibility to get parts to that aircraft so it can be fixed so you guys can go. There's nothing worse than that kind of delay. And then some other things like oversized and expensive items.
So, all of these items are certified, and that adds cost then to the actual part, but moving these oversized and expensive items comes with some risk as well. So, having a compliant partner that is very focused on customer service, on detail, it becomes mandatory. We're a little bit like the automotive world, but unlike the automotive world in that we don't deal with maybe hundreds of thousands of parts, but in a lot of cases, we deal with tens of thousands of parts. And so, it's not as massive, let's say, as the automotive, but it's more customized.
Chris Parker: What would you say is the most recent innovation or development in terms of safety that really has changed the way that the industry does things?
Jim Cangiano: Yeah. So, the industry is a learning industry. Every fatal accident, of course, is learned from by not just Boeing and Airbus or other aircraft manufacturers, but the industry is, you know, all the statistics, the most dangerous part of your travel when you're on an airplane is actually to drive to the airport. So, the industry is amazingly safe and secure, but that also trickles down then to the suppliers as well. Their attention to detail and kind of the stringent requirements then that the governing body set for everyone too. So, that's really what it comes down to is that it's very much a learning industry.
And unlike some others, I think that there's maybe a knowledge sharing that happens at times, even between competitors, because really back to the core of safety, if suppliers or OEMs don't keep things necessarily, see there's certainly IP and proprietary information, but if it benefits the industry, there's many conferences and industry get-togethers where all that information is shared. I think that's pretty unique and pretty special.
Chris Parker: Yeah, that's interesting. I like that. So, even as profitable and as competitive as the industry may be, there's still some good sportsmanship almost in terms of sharing this information so that everyone is compliant and operating as safely as possible.
Jim Cangiano: When it comes to that world, for sure. That compliance and safety piece. Now, there's certainly competitive nature in interiors. I could speak to that because that's where I came from. Who has the better seat? And my parents were just here, and they were telling me, "Well, we," I'm not going to say the airlines, "We like this airline because they have comfortable seats, and this one wasn't as comfortable." It makes a difference. I use them as a proxy for just passengers, general passengers in general of what they think. And does that one have the TV on the back? And all that kind of stuff. So that's a fun little aside there.
Chris Parker: Yeah. So, you mentioned that this is a learning industry. What would you say are some of the vulnerabilities that this industry has learned about when it comes to supply chain and moving parts, keeping things going and supplied?
Jim Cangiano: It's a great question and one that we grapple with basically every day. And it's really linked in a chain, and it starts with the aircraft manufacturer. So, I'm thinking of an inbound manufacturing situation where starting with the raw material that goes into then maybe a smaller part that goes into an assembly, that goes into a larger assembly that goes into an aircraft. Those links have sub-links. And in each one, in a lot of cases, there are very strict requirements and regulations, and at times you can fall behind with, again, a failed test or an engineering design maybe that didn't work exactly as it should have or that you would hope that it would.
So, those links, it can cascade, and supply chains can quickly fall behind, which then we'll, if we're not involved at the front, we'll step in and try to do some expediting. So, there are some other ways that we can work through that. But here's an example, the inbound to manufacturing at the aircraft manufacturer, they have a very strict, they call it their skyline, their production line, basically of that this aircraft is coming, then this one, then this one. In some cases, it's a moving line, it may be moving just incrementally, but there's a very strict sequence of when parts go either on the aircraft or into the aircraft. So, missing that is a major, major deal. I mean, every red flag that you can imagine would go up.
So, supply chain, kind of back to your question of being vulnerable, there are a few spots where you've got some vulnerability there. Right now, we're seeing that with the, not even at the apex, kind of where the aircraft manufacturers are, but a lot with the third and fourth-tier suppliers because of COVID. So during COVID, we had in our industry what some referred to as a brain drain were very seasoned people. I mean, our industry went down by some measure, 70% in some segments, 50% in others, 80% in others. That sparked, unfortunately, layoffs, which sparked retirements. Those folks let's take the early retirements; you're losing at times 20 and 30-year people and replacing them with folks that don't have as much experience.
Well, there's an impact there because they have to be trained, you don't walk in obviously with 20 years of experience, but these are very skilled manufacturers that we're talking about in a lot of cases. And so companies can quickly get behind, and that's happening right now. When we say that supply chains are constrained, we can't keep up with the demand that's required. So, those would probably be the most vulnerable parts. So, it's always the people and the parts; it's those two levels right now that are taxing, I would say, the supply chain.
Chris Parker: And I chatted along with someone on a previous episode, and help me remember the number here, or the average number here; how many parts suppliers are there under a single umbrella for an airline?
Jim Cangiano: Oh my gosh. Yeah, it is obviously for an airline, and really, it starts with the aircraft manufacturer; if you're buying a car and then you have the car, you have to do the repairs. Some measures could be different for different providers, but 10,000 to 15,000.
Chris Parker: That's insane.
Jim Cangiano: Chris, you go to some of these conferences and expos, and you just look around at how many suppliers, even for specific industries within the industry. Interiors, avionics, propulsion, there are so many suppliers in each one. And there's a market for it because they all are going concerns. They've been here for a while, and we always joke that their boots keep getting bigger each year at the shows, so they must be doing something well. But yeah, it's a big number. And we could do a whole 'nother podcast on how many parts go into each plane, and that's a big number as well.
Chris Parker: Yeah. Stay tuned for our 20-part series on how a plane gets built.
Jim Cangiano: I'm here for that. If you want to do that, I'm here for that.
Chris Parker: Well, you mentioned COVID earlier, and this kind of leads me to my next question here over the last couple of decades, how has the aviation industry fared or absorbed the impact of global events? I'm thinking of, I mean, 9/11 was obviously a really big one. You could draw a line in history for that one, at least in recent history, by that event. And even the Reykjavik eruption, that was a big thing that affected air travel. How did the industry, the manufacturing industry, absorb events like that, and how did it kind of survive and get through those?
Jim Cangiano: Yeah. These events almost mark if you go back and look at a profitability chart for aviation; those events are markers. There's a marker where the global industry as a whole was profitable, and then boom, terrible event. And it's down for anywhere from a few months to maybe a couple of years to COVID being the worst case, but it really is a rollercoaster. If you go back to the late '90s or early 2000s, before things really started to pick up, profit and loss were kind of incremental. You had a zero line, and you'd be above a little bit for some years and below a little bit for some years.
Right around 2013, 2014, that changed, and not the impact of global events because we are just coming off of the worst global event that the industry had ever seen from a profitability level, obviously. But in about 2013, the airlines really focused on profitability measures. And that's where you saw things like when you log on now to book a flight from Seattle to LA; you can buy a seat assignment, you can buy check bags, you can buy a meal on board for your flight in the future. So, there was this decoupling of, I buy a ticket, I can choose my seat, I can check some bags, I can buy food in a lot of cases. We're generalizing, obviously, but that decoupling led to even more profitability for the airlines, and people paid for these things. So, it's very much been a rollercoaster.
And the question for us in the industry is not, "Well, are the shocks behind us?" There's going to be another shock. We don't know what it is, but the one thing that the industry has done is that the industry is, well, there are two things about it. Number one is its resilience because, after every one of those shocks, the industry came back. And that's exactly what's happening now, is that there is a pent-up demand to travel. What's different this time around is that usually, corporate travel comes back first, but through-
Chris Parker: It's been a lot of leisure stuff, leisure travel.
Jim Cangiano: Leisure stuff. And again, people like my parents who want to travel, they're retired a little bit more comfortably, so they're willing to buy up to a premium economy type offering to have a little more space, a few more amenities, but the business and the demand now, people couldn't see grandma a few years ago, people couldn't go on girls' trips and boys' trips and golf trips and fishing trips, and we couldn't get together for family reunions and classrooms. That's all back open now, thank goodness. So those possibilities are back out there.
You look at the industry now, and the corporate travel's still a little bit behind; it's still lagging. Depending on who you talk to or what you see, it's about 80%, 85% to 2019 level, so not quite all the way back. But the industry was profitable, peaked out a little profit last year, and should be more profitable this year. So, Chris, it's a resilient industry. It just keeps coming back because of that demand to travel.
Chris Parker: So, that's on the travel side. What about the manufacturing side? How does it absorb impact, and what's the state of that industry like right now?
Jim Cangiano: Yeah. So touched on a little bit before what the suppliers are going through right now. They're constrained, the brain drain of people leaving the industry, folks with less experience coming in, having to be trained. There are some other things that are going on in the industry as well. Suppliers are looking at the opportunities to potentially do things that they maybe wanted to do before, but were too busy, big things like moving manufacturing facilities. "We have a manufacturing facility in Asia. We're a US-based corporation, and we want to look at Mexico or somewhere else in South America or maybe Canada." Just looking at that nearshoring, or as our friends at Onyx would say, friend-shoring.
There are some of the geopolitical things that are going on right now. It's tough to do that during the days of COVID when your business is down so much; those kinds of capital investments are difficult. But there's also a second sourcing. So in the past, supply chains and Aerospace supply chains have gotten in trouble typically when there's a single source, when there's a single source, and something happens. But this is the only company that can make this part that goes into this aircraft. I mean, you talk about if you're a project management professional, that single point of failure, that's it. So, bringing on second sources and where those facilities are hedging your risk a little bit.
I don't think this is Aviation specific; I think we see this in a lot of other industries as well. China's the easiest example. "We've got a factory in China, but we want another one maybe in Southeast Asia or in South America, or somewhere else just to mitigate that risk." So, from that perspective, the manufacturers and the state of the industry are important.
The highly regulated environment that's not going to change. It's going to be hard for suppliers, Boeing, on the heels of, they've been very public about on the heels of the 737 MAX situations. They're looking at how they do things a little bit differently as well, and that trickles down. Kind of what Airbus and Boeing are doing, trickle down to the rest of the industry. There are the labor shortages and layoffs, retirements, the knowledge leaving the industry.
But here's the deal. From an Aerospace manufacturer perspective, what do companies like Expeditors need to do as a supplier to tier 1, 2, 3, and aircraft manufacturers? The key things in our industry are reliability and meeting commitments for many reasons. And this is on the new production inbound to the manufacturing side. We say, "Something's going to be there then," because the rest of the planning is around that. Price will always matter, and price, it's incumbent on us to be as price competitive as we possibly can. Reliability and meeting commitments, and that compliance piece that, again, for us, just like it's the core for Aerospace, it's the core for us to be compliant, those are a given.
But that reliability and commitment, especially in an industry that's ramping up the way that it is, critically important to us these days.
Chris Parker: I'm hearing a lot of, and it's not just the Aviation industry like you said; it's other manufacturers are thinking about changing their sourcing. Given the highly regulated nature of aviation manufacturing, does that put them at a disadvantage in getting that space because there are more considerations for safety?
Jim Cangiano: There's such an irony in the Aerospace industry, Chris. It's so interesting that to get from, we're in Seattle to New York by the best alternative means of transport, like a bus or a car, is days. And it takes hours to get from Seattle to New York in an airplane; it's very fast. The ironic part is that a lot of times, the supply chains move very slowly. Innovation and the time that it takes to do things is very, very slow. It has to be slow because of the regulations and the compliance and the certifications that are required to keep that core, to keep all of us safe, as safe as possible.
Chris Parker: Yeah, that's paramount.
Jim Cangiano: Nothing trumps that. So, to your question, the answer is yes, it does take longer in a lot of cases. So, we talked about the brain drain, the new people coming in, well, the aviation industry is also competing with the high-tech industry, and I mean the Automotive industry and the other industries to get good, solid folks into the industry so that absolutely hurts. If a company in another sector is going faster and their facility is up and running, while maybe an aviation company has to go through half a dozen more checks or something like that on the labor side, that absolutely could have a big impact on the talent that you get available.
Chris Parker: So, what do you think they have to leverage themselves? What's the special card in their hand that they have to play to say that they can keep up with these other industries then?
Jim Cangiano: A lot of it is the magic of flight and the magic that is-
Chris Parker: Yeah, it's such a cool industry.
Jim Cangiano: It's such a cool industry. We always laugh, "You don't go into aviation to be paid a bazillion dollars." Maybe that's different for some people, but we always laugh about that. But just to be part of that, at the risk of sounding a little melodramatic, it's pretty special. I have a lot of pride when I get on an airplane and know that we, Expeditors, have moved some parts that are on that plane; we certainly have a lot of cargo underneath that plane, but it's really a special, magical is the best way to think about it, feeling.
And also, there's what I touched on before, the competitive nature. I mean, it's a very competitive industry from the top of the pyramid to the bottom if you're a curious person. There is a lot of opportunity, and there's a lot of learning that you can do. In a time like this, if you go in, work hard, and prove yourself, there's opportunity as glory. I mean, look at me. I started on the shop floor, for goodness' sake, and then got to the customer side, and now I work for this amazing company. So we have a lot of opportunities. And again, with the ramp up in some of those more experienced folks exiting the workforce, I would argue that now more than ever, there's a lot of opportunity for folks who are less experienced or that are competing, or should I go work for that?
Chris Parker: And with that opportunity, I mean, the industry is going for a really big change here, and this kind of leads us to our next question here - Boeing just announced a new plane with a really innovative design. It's got these trusses that support these super long wings. And I read that it's aimed at greater sustainability, reducing emissions, and just increasing fuel efficiency. How do you think the next generation of planes is going to change the way parts are moved and the way we build them?
Jim Cangiano: You touched on the keyword there in terms of sustainability. So far, it's so not a buzzword. I've never seen the industry rally collectively around a cause like I have for this. And here's another example where I mentioned it at the start, some major manufacturers just penned a letter. I don't have it with me, but I did see it on their collective sustainability commitment. I mean, that's a great example. That's not IP; that's just the right thing to do. So certainly, Boeing is involved in that.
And just to clarify a little bit, the aircraft that you're referring to, Chris, I think that was a concept that they were looking at. But I mean, it's a great example of what is to come in the future and maybe what our kids will be flying on. Here's another example or a quick story. So the 787, the Aerospace industry considers the 787 a still pretty relatively new product. The 787 was first rolled out of the factory here in Seattle on July 8th, 2007. So, seven, July 8th. Yeah. You see what we did there.
Chris Parker: Cute.
Jim Cangiano: 787. Even I can remember that date. So anyway, 2007. We're in 2023, for goodness' sake, now.
Chris Parker: Yeah, it's a new product still.
Jim Cangiano: That was literally kind of the debut of the aircraft. The first delivery was in 2011 with ANA, but that's still 12 years ago, for goodness' sake. And that's considered new. I mean, Boeing took a ton of orders for the 787 this week in Paris. So long innovation cycles, that's what we talk about in this industry because of some of the challenges that you've got, not dissimilar, I think, to the automotive industry in terms of what they're doing in the electric vehicle space. It's just a bigger challenge for aircraft. Again, we could probably do another podcast on sustainability. I know you've done a few of those probably, but there's just not a big enough battery that you can carry to have an electric aircraft for anything over maybe like an hour flight right now.
And that's going to change, and it's going to evolve, and the exciting thing for the industry is absolutely that, how we evolve. And then, in terms of the next, you touched on the next generation. So, the next generation, I mean, these are things like the vertical takeoff and landing aircraft, air taxis, drones, all these things that are so exciting and interesting in the field of mobility, I would say, how we get from place to place. From a manufacturer's point of view, there are things like additive manufacturing; 3D printing is maybe the more common word where you don't actually have to source apart; you have to make it. Now, a lot of hurdles there. It's already being done in some cases, but still a lot of hurdles to get through from a regulatory or a sort of-
Chris Parker: That's what I was just thinking. Yeah, how do you verify the safety of a product when it just magically appears?
Jim Cangiano: You can imagine. And the other beauty of the innovation is that it's a very collaborative innovation. Boeing and Airbus don't go in their own room and do these things on a whiteboard alone. They pull in, I mean, the first thing they do is pull in the engine manufacturers. The engine manufacturers are so important, as interior manufacturers and propulsion. What does this design do, or what could it potentially do? And that sustainability piece now, it's not an add-on anymore. It has a seat at the table, if you will, for any new design that's coming.
Chris Parker: Another space too that's exciting is the technology that's used to manage supply chains. I feel like lately, you can't really go anywhere without hearing a reference to AI or ChatGPT and how it's going to take all our jobs away, blah, blah, blah. But is AI or other kind of burgeoning technologies making themselves known in the aviation industry?
Jim Cangiano: The best way to frame that is around predictive maintenance is one of many AI applications. I'm not sure we can foresee all the applications for AI, but predictive maintenance. So, here's the difference. You, Chris, are flying, let's do our Seattle to New York example, and the coffee machine on your plane is broken in-flight, let's say. Unfortunate situation, but it's a component with moving parts. Right now, when the plane lands in New York, someone gets on the plane, the flight attendants would write up that the coffeemaker is broken, and someone would go off. "Oh man, the coffee machine's broken."
It's not important enough for a pilot to say phone ahead and say, "Hey, our coffee machine is broken." So, the maintenance crew would come on, take it off, they would go back to their warehouse, they would put their old, repair it, they would take a new one, come back on the plane. Well, depending on where the warehouse is, depending on what other things the maintenance workers are doing, my gosh, that could hold up the next flight going out. And now you're talking about customer sentiment, people that might miss connections.
So, here's the difference of what's happening now, certainly with AI, we're not quite there yet, but these are the things that we're thinking about are applications like this where a flight attendant maybe has an iPad and he or she puts in, "Broken coffee maker on flight 5487," whatever it is, "From Seattle to JFK." Now, when the plane lands and the people are on the plane, the maintenance workers are right there at the gate with the new coffee maker in their hands.
Chris Parker: Ready to go. Yeah.
Jim Cangiano: And they walk on, take off the old one, and put in the new one. It's completely transparent to the passengers other than the folks that didn't get their coffee on the way from Seattle to JFK, but that's for the actual flights. Think about what that can do for repairs as well. The diagnosing of repairs, just the possibilities are really endless. From a manufacturer or supply chain point of view, this is where digital twin technology comes in. And the digital twin, the estimates of where that's going is exponential.
We obviously have an application for that now within Expeditors that we use with several of our airline partners and supplier partners being able to do different scenarios. And if we did this, what would the knock-on impacts be? I'm not a digital twin expert by any means, but it's something that, again, I know we have those in the network, Chris, so you can talk to them. But the applications there are phenomenal. So being proactive or predictive instead of reactive, and what that does ultimately for customer sentiment.
The airline industry is cutthroat. Every major airline, no matter where they are and what their niche is, whether they're a huge international carrier or a low-cost domestic carrier, every seat that they can fill is incremental profit for them, so every minute counts. There's an old industry adage that planes don't make money sitting on the ground, they make money up in the air, and that's what every airline is laser-focused on. So, this technology that's coming, whether it's AI with the digital twin technology, it's something we absolutely have to be all over. And I think that's kind of in our DNA as Expeditors; that's what we do. So, it's exciting for what's to come there.
Chris Parker: Once the aviation manufacturing and the airline industry have made a full comeback, what do you think will be the next big challenge to tackle or the big question to answer?
Jim Cangiano: Yeah. The big one right now is the airlines as they go through and have their earnings calls now from quarter one of 2023; I think each CEO and each COO that spoke on these airlines' calls, and these are Americas, of course, but this is a global situation, was infrastructure. And as we've talked about multiple times through the podcast, the industry is growing; the demand is growing. The airlines, if they could snap their fingers and have more aircraft, they would deploy them today. But things like slots, literally a gate at an airport, there's a finite number. So those challenges are not easily fixed.
Where can you expand the runways in Los Angeles? Where can you expand the runways in New York, Chicago, Seattle? And that's the Americas. I mean, think of London Heathrow, my goodness, there's hardly any space there. And that's also why some of the aerospace analysts think that places like Dubai, and maybe India for sure, are going to be the largest growth market in the world for aviation. Almost everyone has said that. And on the heels of Paris, that became even more and more clear. So that infrastructure piece that's not an easy solution. It's not easy to expand infrastructure. And that's happening again; that's a global phenomenon.
The other one, Chris, is air traffic control. So, air traffic controllers and some of the technology that they have, being able to upgrade that seamlessly without impacting the industry, is also a big deal. Again, back to what our theme has been, it's that safety is the core. There's nothing that will jeopardize that safety from that perspective. So being able to upgrade our air traffic control system, it's something that our governments and our airlines and that it's big time on their radar. And then people coming into the industry, we want that magic of flight and people who are driven competitively and really industrious and looking to do a great job and being recognized for that great job. Those are the ones that we want to come into the industry.
So, it's not like we talked about before, it's not that there's not going to be another, there's going to be another shock. But we think what the airlines and what the suppliers have learned through, like you said, 9/11, the volcano, and SARS in Asia is how to navigate some of those things as best as possible? No one saw COVID coming and some of the challenges that were there. Certainly, there are lessons learned that came out of it. But I hope that answers the question.
Chris Parker: Yeah.
Jim Cangiano: Those are some of the bigger challenges. And to end it with the people. We need more pilots, and we need more flight attendants, we just need more-
Chris Parker: Mechanics. I've heard there's a shortage of mechanics. Yeah.
Jim Cangiano: Mechanics, absolutely. Skilled mechanics. We just need more people who embrace the magic, let's say, of airline flight in the industry.
Chris Parker: And with that, I think that brings us to the end of our conversation. Jim, thank you so much for taking the time here to walk me through all this. I always enjoy learning about the industries like themselves and just all the problems, the questions that they have to ask themselves, and the different, interesting ways that they're being solved, so I really appreciate you talking to me about this.
Jim Cangiano: Absolutely, Chris. Again, I can talk all day, every day, about these types of things. I just love it. And for any of your listeners that are out there who are interested in this, please, I will make time. My team will make time to talk about the opportunities in the industry. We just love it.
Chris Parker:
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