Good afternoon, ladies and gentlemen, and welcome to the Second Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode; later we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call may be recorded. I would now like to turn the conference over to your host today, Mr. Lee Fishman, Director of Investor Relations. Sir, the floor is yours.

Thank you, Joanna. Joining me on the call today are Matt Cox, Chairman and Chief Executive Officer; and Joel Wine, Senior Vice President and Chief Financial Officer. Slides from this presentation are available for download at our website, www.matson.com under the Investors tab. Before we begin, I would like to remind you that during the course of this call, we will make forward-looking statements within the meaning of the federal securities laws regarding expectations, predictions, projections or future events. We believe that our expectations and assumptions are reasonable. We caution you to consider the risk factors that could cause actual results to differ materially from those in the forward-looking statements in the press release, the presentation slides, and this conference call. These risk factors are described in our press release and presentation and are more fully detailed under the caption Risk Factors on Pages 24 to 34 of our Form 10-Q filed on May 5th, 2020, and in our subsequent filings with the SEC. Please also note that the date of this conference call is August 5th, 2020, and any forward-looking statements that we make today are based on assumptions as of this date. We undertake no obligation to update these forward-looking statements. I will now turn the call over to Matt.

Thank you, Lee, and thanks to everyone on the call today. I want to begin with a brief overview of our second quarter results before discussing our approach to the COVID-19 situation and our current priorities. Matson's businesses showed strong performance despite the challenges posed by the pandemic and its economic impact. Ocean transportation had a successful quarter, primarily driven by our China service, which included seven voyages in our CLX+ supplemental service and improved year-over-year volume in our regular CLX service. Our Hawaii service saw better-than-expected volume as we carried some of Pasha's volume during a vessel dry docking. In Alaska, volume surpassed expectations as the local economy started to reopen in late May and into June, boosting freight demand. However, logistics faced challenges due to the pandemic, with a significant decline in operating income attributed to lower transportation brokerage and freight forwarding contributions, largely due to decreased retail-related volumes during this time. On our first quarterly earnings call, I detailed how Matson was navigating the pandemic and economic uncertainty, and I'd like to revisit those actions and where we currently stand. The operational and financial measures implemented in recent months have aided us during this difficult period and unlocked new opportunities. For example, the launch of the CLX+ service significantly contributed to the year-over-year increase in consolidated operating income for the second quarter. Other initiatives included moving the Daniel K. Inouye to the regular CLX service at the end of June, reducing port call frequency in our Hawaii neighbor island barge service, cutting maintenance and vendor costs, trimming discretionary costs, instituting a hiring freeze, and implementing a salary reduction plan. We are currently evaluating additional initiatives, such as consolidating our Seattle terminal operations into Tacoma, which we expect to complete in the third quarter. We are also seeking further cost and revenue opportunities as this period of uncertainty evolves. Overall, we remain on track with the operational and management initiatives discussed on the May 5th earnings call, and we are exploring further opportunities for operational improvements. Collectively, we anticipate exceeding the higher end of the $40 million to $50 million range for operating results improvement. Looking ahead to the third quarter of 2020, we expect consolidated operating income, net income, diluted EPS, and EBITDA to surpass last year's third quarter results. Our current priorities include safeguarding the health and safety of our employees, guided by relevant health guidelines. We are also focusing on ensuring the consistency of our Ocean Transportation services, which is crucial for the communities we serve and our international customers. Maintaining excellent on-time performance during these challenging times is imperative. We also aim to provide outstanding service for our logistics customers as the supply and demand situation fluctuates. Additionally, we prioritize cost and capital discipline in preparation for potential prolonged downturns. Despite some economic improvement, the outlook remains uncertain, so we are focused on generating free cash flow and reducing debt while delaying or eliminating non-essential capital spending. Our ongoing committed capital projects include the Hawaii vessel renewal program, the initial phase of the Sand Island terminal upgrade, and the scrubber program. We also plan to complete the final vessel in our four-vessel new build program for Hawaii, with the Matsonia scheduled for delivery in the fourth quarter of this year. Our Sand Island terminal project is on track, and we expect to finish the first phase later this year as we prepare existing cranes for regular service. The scrubber program is progressing smoothly as well, with four units installed and functioning effectively. In terms of performance, Hawaii container volume for the second quarter dropped 4% year-over-year, mainly due to significantly reduced tourism and the temporary closure of retail shops during COVID-19 mitigation efforts. However, this decline was partially offset by increased volume from Pasha stemming from a vessel's dry docking. The westbound container market decreased about 15% year-over-year. The Hawaii economy remains in turmoil, heavily impacted by ongoing COVID-19 restrictions, with the state's 14-day quarantine for visitors extended through August, and many hotels remaining closed. Volume trends for the third quarter so far show a roughly 2.4% decline in westbound container traffic for July year-over-year, which remained consistent throughout the month. Primarily, these volumes comprised essential goods with a small portion of retail items as some businesses reopened. We noticed no Pasha volume in July and don't expect to carry any in the future beyond the second quarter. Moving on to our China service, Matson's volume in the second quarter of 2020 was up 68.1% year-over-year, mainly due to the launch of the CLX+ service, which included seven chartered voyages. Demand surged for our expedited service as disruptions in the air freight market prompted customers to seek additional ocean capacity. With the economic downturn reducing vessel charter rates and fuel costs, what began as a short-term opportunity evolved into a longer-term offering for Matson. We aim to make the CLX+ service a permanent option depending on customer demand and market conditions. In the third quarter, we anticipate ongoing disruptions and capacity losses in transpacific air cargo and ocean freight markets. This expectation underpins a continued demand for reliable expedited ocean service, along with a resurgence in retail-related goods as COVID-19 restrictions ease. Our Eastbound container volume in July showed a notable increase of 125.6% year-over-year, again attributed to CLX+ volume and higher capacity on CLX service from our new vessels. In Guam, second quarter container volume dipped 12.5% year-over-year due to lower retail demand amid ongoing COVID-19 restrictions and some impact from reduced tourism. However, July saw a year-over-year increase of 8% in westbound container volume as conditions improved with business reopening. We expect some ongoing modest improvement in retail activity, although tourism challenges persist. In Alaska, container volume dropped 9% in the second quarter, with fewer northbound volumes due to reduced demand for retail goods amid COVID-19 restrictions. However, the gradual reopening of the economy led to better northbound volume results than initially anticipated. The unemployment rate saw improvement, but the lingering effects of reduced tourism will continue to weigh on the local economy and freight demand. Our terminal joint venture, SSAT, showed improvement, contributing $3.7 million in the second quarter, up from $900,000 the previous year, mainly due to the absence of additional expenses from lease accounting standards implemented last year, despite lower lift volumes. We expect some rebound in SSAT lift volumes as transpacific ocean capacity is reinstated. Moving to logistics, our operating income for the second quarter stood at $8.9 million, a decrease of $2.4 million from the previous year, largely driven by lower contributions from transportation brokerage and freight forwarding due to reduced retail volumes. Despite these challenges, we saw pickup in intermodal volume and overall business activity remained steady. I will now hand the call to my partner, Joel, for a detailed review of our financial performance and recent updates on capital structure.

Thanks, Matt. Now, on to our second quarter financial results on slide 16. Ocean Transportation operating income for the second quarter increased $22.6 million year-over-year to $42.3 million. The increase was primarily due to a higher contribution from the China service, including the contribution from the CLX+ service. Lower vessel operating costs including the impact of one less vessel operating in the Hawaii service and the timing of fuel surcharge related collections, partially offset by a lower contribution from the Hawaii service. The company's SSAT terminal joint venture investments contributed $3.7 million or $2.8 million more than the prior year period. The increase was primarily due to the absence of additional expense related to the early adoption of the lease accounting standard in the second quarter of 2019, partially offset by the lower lift volume due to canceled transpacific sailings during the second quarter of this year that Matt mentioned. Logistics operating income for the quarter was $8.9 million or $2.4 million lower than the prior year period. The decrease was due primarily to lower contributions from transportation brokerage and freight forwarding. EBITDA for the quarter increased $21.3 million year-over-year to $86.2 million due to higher consolidated operating income of $20.2 million, higher other income of $0.7 million, and $0.4 million of higher depreciation and amortization which includes dry-dock amortization. Interest expense for the quarter was $8.2 million or $0.4 million lower than the first quarter of 2020. I will comment further on our interest expense run rate later in the presentation. Lastly, the effective tax rate in the quarter was 26.3%. On a year-to-date basis, Ocean Transportation operating income increased $21.1 million year-over-year to $50.2 million. The increase was primarily due to a higher contribution from the China service, including the contribution from the CLX+ service and lower vessel operating costs including the impact of one less vessel operating in Hawaii service, partially offset by a lower contribution from the Hawaii service. The company's SSAT terminal joint venture investment contributed $7.7 million or $1.7 million less than the prior year period. The decrease was largely attributable to lower lift volume. Logistics operating income on a year-to-date basis was $14 million or $5.4 million lower than the prior year period. The decrease was due primarily to lower contributions from transportation brokerage and freight forwarding. Slide 17 shows that we allocated our trailing 12 months of cash flow generation. For the LTM period, we generated cash flow from operations of $281.2 million, borrowed $45.5 million on a net basis, and we received $14.3 million from sale-leasebacks from which we used $86.8 million on maintenance CapEx, $205 million on new vessel CapEx including capitalized interest and owner's items. And $21.2 million on other cash outflows including $18.5 million in financing costs related to the two Title XI transactions, and amendments to the debt agreements in the first half of 2020 while returning overall $38.1 million to shareholders via dividends. Please turn to the next slide on 18. I want to spend a few moments on cash flow generation in the second quarter. Our LTM cash flow from operations remained strong with second quarter cash flow from operations of $72 million. On our first-quarter call, I mentioned that under the CARES Act, we would be able to reclaim the remaining amount of our AMT receivable. In the second quarter, we did indeed receive the full $22.9 million of our AMT tax receivable, which can be found in the prepaid expenses and other assets line item in our cash flow statement. The chart on this slide shows the bridge from LTM EBITDA to LTM cash flow from operations. And on an LTM basis, EBITDA and cash flow from operations were approximately equal with the AMT tax receivable inflow of $22.9 million, a meaningfully positive contributor in the LTM period. Turning to slide 19 for a summary of our balance sheet, you will note that our total debt at the end of the quarter was $890 million, and our total debt, net of cash and cash equivalents was $870.5 million. In accordance with GAAP accounting rules, deferred loan fees related to the new Title XI debt and recent private placement debt and revolving credit facility amendments are shown as a reduction to long-term debt on the balance sheet as noted in the footnote on this slide. Deferred loan fees include approximately $15.7 million in guarantee and other payments we made as part of the two Title XI transactions we executed during the quarter. Going forward, though, we plan to continue to show in the earnings release, the earnings presentation, and in the notes to our financial statements aligned representing total debt excluding the deferred loan fee balance to make that clear to investors. I also want to spend a few moments on our capital structure and leverage on slide 20 as there were a number of important capital structure changes that took place during the quarter. First off, we executed two successful Title XI transactions for approximately $325 million in aggregate at a weighted cash interest rate of approximately 1.28%. Each tranche has a 25-year final maturity date and has a straight-line amortization schedule over that period. Secondly, two of our higher coupon private notes which matured in 2044 and 2045 were redeemed for approximately $170 million, and one private note matured for $3.5 million. And third, we reduced our revolver borrowings by $179 million from cash flow generation and proceeds from Title XI transactions. Net of these capital structure actions, we reduced our total debt by $34.9 million and significantly lowered the weighted average interest rate on debt outstanding. Based on the outstanding principal amount of debt at the end of the second quarter, the weighted average interest rate is now approximately 2.7% or a full 100 basis points lower than it was at the end of the first quarter assuming a rate of 3.25% on the revolving credit facility on June 30. The annualized cash interest expense based on the interest rates in outstanding principal at the end of the second quarter is approximately $2 million per month or $24 million annually, which is approximately $10 million less on an annual basis than our interest run rate at the end of the first quarter this year. So overall, we made substantial progress this quarter in reducing our interest expense run rate. Significant progress was also made on the leverage ratio, which was 3.03 times at quarter end, compared to the 3.4 times at the end of the first quarter for our amended debt agreements. The available borrowings to the allowable leverage ratio of 4.5 times at quarter end was approximately $433 million, compared to approximately $164 million at the end of the first quarter. As a reminder, the EBITDA we reported in our press release and in this presentation is different and lower than the EBITDA calculated under our debt agreements. As Matt mentioned previously, one of our current priorities is to reduce our leverage ratio in preparation for an extended downturn. Over the last couple of years, we have said that we want to reduce our leverage ratio to the low two's following our nearly $1 billion new vessel build program. Given the uncertainty of the environment we are in, we want to reiterate that reducing our leverage ratio to the low two's remains an important priority. Moving to slide 21. On our first-quarter earnings call, I walked through the Title XI transaction that we executed in April on the Daniel K. Inouye. This slide lists some of the details of that transaction and also the second Title XI transaction we executed in the quarter on the Kaimana Hila. Turning to slide 22 for review of our new vessel payments. For the second quarter, we had new vessel cash capital expenditures of $5.7 million and capitalized interest at $1.7 million for total capitalized vessel construction expenditures of $7.4 million. The table on the right-hand side of the slide shows the cumulative and remaining new vessel progress payments as of June 30. Following the quarter close, we paid a $35.3 million milestone payment in July after the launch of the Matsonia. So as of today, we have only one milestone payment remaining upon the delivery of the vessel in the fourth quarter for approximately $25.3 million. The picture on the slide is of the Matsonia at its christening on July 2nd at the NASSCO shipyard in San Diego and the Matsonia is currently 91% complete. With that, I'll now turn the call back over to Matt.

Thanks, Joel. Every day, we are reminded by the uncertainty this pandemic has presented us. There is uncertainty in the timing and staging of reopening plans in each of the local economies we operate as mitigation efforts evolve. It's difficult to know what's going to happen with the broader economy, the recovery trajectory, and the ultimate impact it may have on our businesses. There's also a lot of political uncertainty as we head towards election day in the US. Despite the sea of uncertainty surrounding us, Matson's goal is simple: remain focused on exceptional customer service and on-time delivery to meet our customers' needs. We're also focused on finding new businesses and opportunities like our CLX+ service, to build new relationships and drive current and future lines of profitable business as the pandemic evolves. Our strategy since public inception in 2012 has been to broaden the portfolio of businesses and diversify the revenue streams across geographies and services which has helped derisk our cash flows to weather times like these, while also providing a strong foundation to grow. And make no mistake, we will look for opportunities created by the recession that we're now in the middle of. I'm proud of the work our team has achieved year-to-date in managing in this challenging environment, but there continues to be a lot more work ahead of us to navigate through this unprecedented time. And with that, I will turn the call back over to the operator and ask for your questions.

Thank you. We have our first question. It's coming from the line of Steve O'Hara from Sidoti & Company. Your line is open.

Hi, good afternoon. Thanks for taking my question.

Hi, Steve.

Hi. Regarding CLX+, can you provide some insights? I understand you're committed to navigating through the peak season in October, and then you'll assess the situation. If you decide to move forward in October, how quickly can you adjust if things don't go as planned? Additionally, could you explain how this situation differs from the CLX2 that was previously in place years ago?

Both are great questions. In response to the first part of your question, we have chartered six vessels for this service and have also leased additional equipment from traditional lessors. We have accelerated some capital spending on container purchases to facilitate a potential increase in our China service. This transition has been smooth. Our goal is to continue the CLX+ if our customers find value and book cargo consistently. Whether we can sustain it depends on the support of our customers and the market dynamics. We've leased these vessels for a relatively short duration, so if we decide to stop, unwinding the leases will be straightforward. Additionally, we can off-hire leased equipment, which means our capital expenditure is ahead of schedule but not excessive, as it's part of planned replacement spending. Our costs for exiting are minimal. Regarding CLX2, which some may not be familiar with, we attempted to establish a second service to South China years ago, but faced an economic downturn that reduced consumer demand. There are similarities and differences to consider now. Currently, we’re in our core market and have become a service leader in Shanghai, Ningbo, and Xiamen over the past 15 years. A considerable portion of freight on this service comes from displaced air freight, and recovery in air travel from Shanghai to the U.S. is not expected until 2024, which supports our outlook. The consolidation among international ocean carriers since CLX2 is significant, and these alliances have managed capacity effectively to meet market demand, helping to maintain high freight rates. The Shanghai International Freight Index recently achieved a 10-year high, indicating a stronger underlying market than when we had to withdraw CLX2. We are cautious but optimistic about the future and will assess the market as it develops.

No, that's very helpful. That's good information. As a follow-up, considering your other markets today, and acknowledging that this may be a sensitive issue, do you believe all of your markets are still viable in a post-COVID world in the long term?

Yes, it's a good question and now is an opportune moment for every business operator to review their portfolio to ensure it is sensible. In short, yes, all of our businesses are profitable and ready for recovery whenever it happens. From a planning perspective, we are being cautious about how quickly some of the core Jones Act markets will rebound. We are not relying on a swift recovery in those markets for Matson to continue flourishing. This was partly why we capitalized on the market opportunity during the significant disruption in the China freight markets, enabling us to initiate the CLX service. I believe all of our businesses are strong and solid. We have made the necessary adjustments to resize our networks, overtime hours, and numerous individual projects to adapt our businesses to the new environment. We feel each is fundamentally sound and a valuable part of our portfolio, and we are actively searching for additional business opportunities.

Hey, great. Good afternoon, and guys, congratulations on a phenomenal quarter given all the volatility that you faced. So great job executing that.

Thanks, Jack.

So, I guess just to kind of go back to CLX+ for a moment. And I do have some of the things I'd like to talk about, but I think that to me is the most exciting thing when we kind of look forward into 2021 beyond. I guess can you kind of walk through the decision tree over the course of the next couple of months as you sort of think about making that service more and more permanent? I mean what do you need to see whether it is in terms of market rates or customer commitments to commit to that service into 2021, because I mean, I would imagine that the air freight shortage will be around for a while.

Yes, Jack, we view this as a crucial business opportunity. There has been significant friction regarding who can access our core CLX service, and when we launched the second chartered service, it quickly filled up. We recognized this as a chance to begin. Initially, we faced high demand, particularly as many governments were unprepared for the need for PPE and other supplies. However, demand has shifted as many customers are now cutting back on air freight spending amidst a recession while e-commerce continues to grow, creating a need for expedited services. We are seeing a variety of customers turn to these services for various economic reasons. As we move forward, we are currently in peak season with full vessels. Although this is traditionally a busy period, it is difficult to predict the future. After peak season, we expect a decline in market demand across all products. Nonetheless, Matson has managed to keep our CLX service relatively full throughout the year, even post-peak. While we won’t delve into the financials, we are prepared to accept lower profitability during slower months, anticipating reduced contributions in the fourth and first quarters while positioning for a busy second and third quarters. The key question will be whether we can handle lower profitability during off-peak months and what that threshold looks like. If freight demand remains strong, we will continue to support this business.

Okay, that's great. I think that would be fantastic for the longer-term story if that were the case. So that's great to hear. Can we shift gears and maybe talk about Hawaii for a moment. You know, I thought the July update was pretty encouraging given the fact that there is still no tourism going on in the state. Do you feel like the down low-single digit westbound level of activity is that reflective of the current economic outlook? Or do you think there is some sort of inventory restocking that's happening in Hawaii? Just, how do we think about the July run rate relative to sort of what's happening there from an economic level?

Yes, I believe there might be some speculation involved. As noted in my prepared remarks, there has been a recent surge in Hawaii with over 100 new cases reported daily. This situation is prompting the Governor and Mayors to think about reimposing additional restrictions to control activity. Therefore, it seems unlikely that we will see a reopening on September 1st. They haven't made any official announcements yet, and while I don't have any insider knowledge, we anticipate that they will be very careful about reopening the market while managing the current mini outbreak. That said, we feel that as the economy starts to reopen for travel within the state or as businesses partially resume operations, a decline in the high single-digit range seems appropriate. It could be around 10%, but we expect it to be between 7% and 10%. There was a slight increase at the end of July as people prepared for the hurricane season, but I doubt that contributed more than 1% or 2%. Overall, we believe that a decline of 7% to 10% is a reasonable estimate during this phase, which we think will last for some time in Hawaii.

Okay, that's helpful. I have one last question before I rejoin the queue. Regarding the $40 million to $50 million in costs associated with operating initiatives, you've done a great job with that. How should we consider the breakdown of that amount? Specifically, how much is associated with the CLX+ service, if at all, and what portion relates to temporary versus more permanent cost reductions across the business?

Jack, it's Joel. We want to emphasize that we believe we will exceed the $40 million to $50 million target. This includes the CLX+ initiative, which is a significant part of it, but it's not solely about cost-cutting; it's also about revenue and growth initiatives that we have implemented in response to the current COVID environment. While CLX+ is the largest component, there are many other factors involved. We feel that many of the cost reductions can be permanent, although some are due to the decrease in volumes in our network and businesses. This allows us to lower certain cargo handling costs without negatively impacting our customers. When volumes increase again, we will need to reinstate some of those costs as we expand our gate and terminal hours. However, we believe that several of these reductions can be long-term. The CLX+ initiative remains the most significant aspect. Additionally, our compensation could fluctuate based on performance, along with other G&A costs that are linked to business outcomes. Therefore, it’s a mix of permanent and temporary cost reductions. We plan to provide updates on these aspects toward the end of this year and into next year.

Okay, great. Maybe we'll try to sneak in one last quick question, Joel, for you on CapEx for the second half of the year. I know you guided to $62 million in progress payments related to vessels. I think a slug of that has already been paid in July. Well, what's your total CapEx outlook for the second half of the year?

We're not providing an outlook at this time. However, the capital expenditures for the first half of the year amounted to $34 million. The two major projects we discussed, which are committed, are the scrubber projects and the Sand Island projects, and they will proceed as planned. Each scrubber in the overall six scrubber program costs $10 million, so about half of that expense will occur this calendar year. Currently, only a third of that figure is reflected in the $34 million of capital expenditures to date. We anticipate seeing similar numbers for the remainder of the year due to the scrubbers and the Sand Island projects. Additionally, we are assessing the need for more equipment due to growth in volumes for our China and CLX+ services. We generally purchase equipment throughout the year, and we may expedite some planned equipment purchases from 2021 to ensure we are well-equipped for the CLX+ service. Therefore, if you notice an increase in our capital expenditures in the third and fourth quarters, it will relate to growth initiatives, while most of what you've observed this year is tied to the ongoing scrubber program and the Sand Island infrastructure project.

Okay, great. Thanks again for the time.

Thanks, Jack.

Hey, Matt and Joel. Hope you guys are well.

Hi, Ben. What do you think?

Yes, good. So I, most of, I have a lot. Maybe I'll have to get back in queue. It seems like that's the formula for today, like going on, but I'll start with the CLX+. I know, I believe APL and ZIM have both also introduced sort of expedited China to the West Coast services. Can you maybe compare and contrast from a service perspective what you guys do versus what they do?

Yes, certainly. First, APL has been offering expedited service for the past few years, competing with us in the Central China, Shanghai, and Ningbo markets. They have increased the size of some of their vessels to provide more capacity in response to the dislocated expedited air market. ZIM is also operating an expedited service from South China, specifically from Hong Kong and Yantian to LA. However, this service does not directly compete with Matson’s offerings. We have managed to attract some freight from South China to our CLX or CLX+ service, but the impact is minimal. From what I gather, both ZIM and APL are operating at near full capacity in South China. The key difference lies in their ability to charter ships and operate at higher speeds, but they struggle to move their cargo through the LA Long Beach area as quickly as we can. Our terminals enable us to make cargo available more rapidly at the bonded facility at Shippers Transport, providing us with a significant service advantage. In Southern California, we have an unparalleled service that offers transit benefits. Essentially, when our Matson ships are fully booked, we reach out to APL, which reflects the established practice. They’ve been doing well, but there remain advantages to our service, and we expect to see others entering the market. Nonetheless, we have a 15-year track record and a strong brand presence in China. When there’s a need for shipping—whether it's a late order or an e-commerce shipment—customers know to reach out to Matson, making us their first choice in this market.

Okay, there’s a difference of a few days, but that leads into my next question. Clearly, our primary competitive advantage lies in our unique infrastructure that others cannot match. This also applies to openings, for example, in Seattle. Looking at the long-term, do you see any potential to replicate what we're doing with CLX+ in other regions where we have a clear competitive edge?

Yes, it's a good question. The answer, the short answer, in the long run anything is possible. But the warehouse infrastructure, the trucking rail capacity infrastructure, the local market wants to go to LA. That's where this cargo wants to go. That's where the air freight infrastructure is. That's where the forwarders are. That's where the millions and millions of square feet of distribution centers are. There is a fraction of those in Seattle/Tacoma or in Oakland, and so there could be some individual customers that want to set their infrastructure, but the market is in Southern California because that's where it all wants to go.

Okay. Well, and then just to flip that. I mean would you think about or is it possible to add maybe more port calls and I don't know Southern China or Korea, Japan, anything like that.

Today, we are seeing an influx of cargo on our CLX and CLX+ services, primarily from Thailand, Vietnam, Japan, and Korea. This cargo is either shipped by air to Shanghai for our sea-air program or is already crossing the China border from Thailand to be integrated into our CLX service in Shanghai and CLX+. Over the past 15 years, a significant volume of this cargo has been part of various sea-air or truck-air programs. While we could consider adding another port, our main priority is to provide exceptional service to the Shanghai and Ningbo markets, where we've witnessed remarkable growth in e-commerce, particularly at the Ningbo port. Our current strategy is to maintain a straightforward service to ensure reliability and speed, so we don't anticipate needing to expand our port calls at this time.

No, no, no. Right, that's helpful. And then lastly for me, and I'll turn it over and maybe get back in, but when thinking about, over the course of the last quarter and even currently air freight obviously spilled out into the sea and air freight pricing just went crazy, although it's come in a lot. When you guys are pricing your freight, and I appreciate you don't break it out specifically, what have you, but when you're pricing your freight, has there been any fluctuation in sort of how you're pricing and/or is this here is the price and it's all about just extra volume that you're able to get out of it?

Yes, as you mentioned, Ben, the initial use of the CLX+ was primarily due to the significant disruption in freight transportation. There was a major shortage of air freight capacity, and what little was available had been secured by national governments caught off guard by global PPE shortages. The market has become more stable now. Air freight rates, which were extremely high, have started to return to more typical levels. However, in the past month, we've noticed an increase in air freight rates again. We are mindful of the air freight rate trends and where ocean freight rates stand since we operate as a hybrid model. We've demonstrated our ability to set prices that enable us to maximize cargo on our ships, but we consistently have more demand than our capacity, even with the CLX+. We will leverage this situation to adjust prices accordingly, ensuring we achieve a good return, especially during peak periods.

Okay. So maybe put it another way, I think you had said in July your CLX was up 125% or so. We should not expect this on an aggregate basis or a specific basis that yes, air freight pricing came in, that 125% should be materially less from a pricing perspective and some of the pricing that you were able to experience in the second quarter.

I wouldn't say that. I would say we've said we expect to make more money in the third quarter than we did in the third quarter of last year. And I would say we've seen healthy freight rates and continuing to see healthy freight rates.

Okay, great. Thank you again.

Okay, thanks, Jack.

Thanks, Jack.

Thank you, speakers. I am showing no further questions at this time. I would like to turn the conference back to Mr. Matt Cox, CEO. Sir, please go ahead.

Okay. Well, thanks, everybody for listening in. I hope everyone stays safe and well. And we look forward to catching up with you on the third quarter call. Thanks.

Thank you, speakers. Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.