Group 1 - The strengthening of the New Taiwan Dollar and South Korean Won is linked to negotiations with the United States, where these countries may be asked to raise their currency exchange rates [1][3] - The New Taiwan Dollar reached its highest value against the US dollar since 2022, while the South Korean Won also hit a high not seen since October 2024, indicating a significant appreciation trend [3] - The rise in Asian currencies is not solely due to currency appreciation expectations; ongoing de-dollarization since April has also played a crucial role [4] Group 2 - The Hong Kong Monetary Authority intervened in the foreign exchange market for the first time in three and a half years, selling Hong Kong dollars and buying US dollars to manage the appreciation pressure on the Hong Kong dollar [4] - The shift away from the US dollar is prompting global investors to reconsider their investment allocations, leading to a potential trend of capital outflow [5] - The recent appreciation of Asian currencies is influencing the future exchange rate of the Japanese Yen, which has seen fluctuations in response to these changes [7]

Financial Data and Key Metrics Changes - Consolidated revenue for Q1 2025 was $21.5 billion, a decrease of 0.7% year-over-year, aligning with expectations [7][30] - Consolidated operating profit increased to $1.8 billion, up 0.9% compared to the previous year [7][30] - Consolidated operating margin improved to 8.2%, an increase of 20 basis points year-over-year [7][30] - Diluted earnings per share rose to $1.49, reflecting a 4.2% increase from the prior year [7][30] Business Line Data and Key Metrics Changes - U.S. Domestic segment operating profit increased by $164 million year-over-year, with an operating margin expansion of 110 basis points [8][38] - Total U.S. average daily volume (ADV) decreased by 3.5%, with ground ADV down 2.5% and air ADV down 9.6% [32] - International segment ADV increased by 7.1%, with all regions showing growth [38] - Supply Chain Solutions revenue decreased by $471 million, primarily due to the divestiture of Coyote [40] Market Data and Key Metrics Changes - U.S. import volume is approximately 400,000 pieces per day, representing less than 2% of total global ADV [21] - Revenue from China to U.S. trade lanes accounted for 11% of total international revenue, while other trade lanes contributed 17% [21][22] - SMBs represented 31.2% of total U.S. volume, the highest concentration in ten years [34][19] Company Strategy and Development Direction - The company is executing a significant network reconfiguration, including 164 operational closures, to enhance efficiency and reduce costs [14][43] - The strategic focus includes reducing dependency on Amazon's volume by over 50% by June 2026, while maintaining profitable segments [12][46] - The company aims to improve revenue quality by targeting growth in healthcare, international, B2B, and SMB markets [18][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating a dynamic environment, emphasizing the importance of agility in operations [6][28] - The outlook for 2025 remains uncertain due to changing trade policies and tariffs, with no updates provided for the full-year outlook [26][50] - Management highlighted the need to model various scenarios to adapt to rapid shifts in business conditions [26][50] Other Important Information - The company generated $2.3 billion in cash from operations and paid $1.3 billion in dividends during Q1 [42] - The efficiency reimagined initiative is expected to deliver $1 billion in savings by improving operational processes [17][60] Q&A Session Summary Question: Cost savings from the $3.5 billion target - Approximately $500 million of the $3.5 billion cost savings was realized in Q1, with expectations for ramp-up in subsequent quarters [78][79] Question: Impact of tariffs on SMBs - SMBs are facing significant uncertainty due to tariffs, particularly those reliant on single sourcing from China [80][81] Question: International volume growth outlook - The company anticipates that trade flows will shift, allowing for potential growth in international markets despite challenges in the China to U.S. lane [89][90]