Meyer: Saudi Arabia to Benefit from Geopolitical Trends

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00:00I will ask you about your investments and initiatives in Middle East and Africa.

00:04But I'm sure the main question that everyone's been asking you is just simply,

00:08what are you seeing in terms of trade flows this year? Because this has been a year where

00:11we have not stopped talking about protectionism, about tariffs, about trade war. How has it

00:16actually translated to merchandise volume? Well, thank you for having me this morning

00:21and indeed a lot going on this year as it comes to trade. The negative, much reported on,

00:26you just referred to it, significant changes in U.S. trade policy, tariffs imposed by the

00:31president. And that has an effect on our customers, first and foremost, that are under pressure. We

00:36see that in the Chinese-U.S. trade, but also U.S. exporters under pressure due to higher prices

00:43for input factors. But I think there's an important part of the story that we shouldn't miss. And

00:48for us, really, the September figures of China's exports were quite extraordinary.

00:53Yeah, that's true. If you look at that, significant growth, despite a drop of 27%

00:59on the U.S. trade lane, overall up 8%, with strong growth to Europe, with strong growth

01:05to Southeast Asia, with strong growth here to the region, to Middle East, but especially

01:10to Africa. Do you think that's going to hold up into 2026? What's your forecast for next year?

01:14We do think that this will be the case because China has built competitive value chains,

01:19especially in manufacturing, not only electronics, as we've seen this for a while, but also in

01:25industrial segments, in automotive. So these are the goods that are now exported into other

01:30parts of the world.

01:31I was on a World Economic Forum trade panel last week, and I had the UAE trade minister

01:36with us. And he said this really beautiful analogy. He said, trade is like water. We'll

01:40find a way to flow. And we'll find a way to flow around the various obstacles. But I do

01:46wonder whether, you know, what we're seeing out of the U.S. and these tariffs have actually

01:50opened up opportunities in other parts of the world in terms of enhancing inter-regional

01:55trade. Are you seeing that? Are you seeing more economic blocks increase the amount of

02:01trades that countries are having with each other as opposed to globally?

02:04Yes and no. So the average distance of trade has not shortened. And that was not what some

02:12people expected. And that is mainly because of that China trade we talked about. China

02:17to South America, one of the longest trade lanes on the planet. Nigeria, now the dominant

02:23trading partner being China. So these are the flows that are very long and that continue

02:27to grow. But also, yes, here for the Middle East especially, we see stronger ties between

02:33the GCC countries. We see stronger ties within the regions. And we think this is a good thing.

02:37Yeah. So your company and your prior earnings, you've talked about a focus on efficiency improvements

02:42and growth markets. Let me ask you about the growth markets. Are they in the Middle East?

02:47Hence, you know, some of the investment that you're putting into this region and also into

02:51Africa as well. Absolutely. We have two axes that we look at. The geographic one, we have

02:5620 countries that we think will benefit also from the geopolitical trends that we're currently

03:00seeing. These are the ones we focus on especially. Saudi, for instance, is part of that. But

03:06we also have a sector focus. We look at life science and health care. Many in our industry

03:10do that. But we have a very specific focus connecting the different modes of transportation. Our warehousing

03:16and distribution capabilities that we have, which really helps to make pharma supply chains

03:21shorter, more efficient. We have e-commerce being now a third of the group's revenue. So these

03:27are specific industry focus sectors. Yeah. And to meet some of that expected rising demands,

03:33are you buying more freighter planes? I mean, how does it work out in terms of the additional

03:37capacity that you may need? So we had a program now for several years. We upgraded our intercontinental

03:43fleet especially. We operate the largest fleet now of Boeing 777 freighters, for instance. This

03:48is important to us to deliver quality, but also sustainability. These are the most fuel efficient

03:54planes in our industry. So that's what we focus on. We have the capacity. What we're particularly

04:00excited about here in the region is the warehousing and distribution capability. We really think this

04:05can make a difference to some supply chain, to some industries. So that's a very specific focus.

04:10And what visibility do you have on pricing power as well? Because I know that, you know, that has

04:15also been one of the key focuses, improving some of that operational efficiency, either by reducing

04:20costs or by introducing slightly higher prices. What visibility do you have for this part of the

04:26world on pricing? Well, we need to obviously manage capacity. This hasn't been easy this year for our

04:32customers, for ourselves. If you look at the redeployment that we did from the Trans-Pacific. So it is a very

04:38volatile world. We try to be a good partner to our customers to keep an outlook, to not be too erratic in what

04:45we have to do in terms of pricing. But it's not easy in this volatile world. What's important for us really here in the

04:51region is we want to continue to grow. We have really big ambitions and we want to follow through with that with

04:57significant investments. Yeah. And finally, let me just ask you, when you talk about some of the warehousing and

05:03logistics opportunities over here, which parts of the world are you expecting to take advantage of that in terms of

05:12trade? Is it is it global? Is it, you know, both East and West or is it more, you know, again, localized?

05:18Well, I do think we need to see that with a change in U.S. trade policy, there is a certain decoupling of the U.S. from the

05:25rest of the world when it comes to its economic ties. It's not only import substitution. Those tariffs increase the cost of

05:33input factors make U.S. exporters less competitive. And this is a void that others fill, particularly

05:39Chinese companies not only selling globally, but now also manufacturing globally. We see really not only

05:46global distribution structures out of Asia and out of China, but we see global manufacturing networks as

05:51traditionally operated by Western OEMs. So this is a substantial change, which the Middle East is also

05:57part of having strong champions and having a strong consumer base.

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