Global Trade This Week – Episode 135
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Pete Mento 0:00
You're watching Global Trade This Week with Pete Mento and Doug Draper.
Hello, everyone, and Happy Mardi Gras. coming to you today from global trade this week. I am Pete mento. And with me as always when I'm not on it or he's not on it, I suppose that always my good friend and my partner Doug Draper. God, what's going on?Doug Draper 0:27
Not much. Just enjoy the weather here in Denver. I don't know why I always talk about weather, right? It's like a bunch of old guys complaining. What is it Mortimer?
Pete Mento 0:37
Who are those guys are the Muppets. I don't remember both of their names. But yes. How's your arthritis stuck? What talk 401k is, like me? Yeah, I feel pretty good.
Doug Draper 0:46
Yeah. Damn kids. Anyway, Pete, I'm in Denver. I'm loving it. It's good to have you back on the show. I know. I'm sure it is between you and me. And Keenan is the glue of this whole operation. So I'm glad that he's able to fill in when he fills in.
Pete Mento 1:02
I prefer he's more of a paste. I don't know if he's glue. He's the pace that keeps the operation together. I am coming to you from Greenville, South Carolina, where I am speaking on Thursday at the South Carolina Manufacturing Association's automotive Summit, which is Evie heavy, Doug, which, you know, I know we got a topic today. But I just flew in yesterday from New Orleans road and Debian as I always do. I had a great weekend. But I'm not there for Mardi Gras day. Tell you, Doug. I'm just not a Mardi Gras day kind of guy anymore tool for that pal. So yeah, well, but Happy Mardi Gras to everyone. Happy Fat Tuesday. It's not skinny Tuesday, it's Fat Tuesday. So do what you want to have a good time and enjoy it before before the great fast for those of you that are Catholics over the next couple of weeks? Yeah.
Doug Draper 1:49
Yeah, for sure. All right. All right. Hit me. All right, we're gonna kind of we have a common discussion point. So we'll just get that started off. And we've talked about this in advance what up? I think I spoke about this just in the last couple of weeks. But every single week, there's more and more validation statements and things happening out there that are that are justifying my ultimate comment, right? So it's all about the Red Sea. Right? And everybody's thinking it's over there. The problem is over there, and I import over here in the United States. And it's not really my problem. And it shouldn't impact me. And the answer to that is yes, hell yes, it's going to impact you it's going to impact the imports is going to impact the trucking. And all of this is just the supply chain, right, the chains all connected and the touch points and the transition points that we've spoken about. So anyway, Red Sea crisis, rates and schedules are going to continue to get wonky, you're going to talk about that in a little bit. Right, rates are gonna go up, they're not gonna go down once they're up. For the most part, they stay up. Now I know the pandemic and the COVID was a little wonky out there. And in the west coast, the schedules, right, that's the big thing is that the boats and the vessels are not going to be in a position to where they need to be to take the next step in their in their journey, right? Because it's taking longer to go around Africa. So that boat is not where it's supposed to be. That's a delay or a redirection. Then you got the Panama Canal, that drought happening, same things going on, vessels are not going through there. That's creating the problem. East Coast labor is an issue coming up, right. So even if you get to the Panama Canal, we spoke about 2024 was the year of labor with all of the union negotiations. Well, it's the East Coast term turn this year, Pete, I believe it's October, when all the ports out there on the East Coast, September of October. And it's not going to be as as labor friendly. This go around, I think they're going to be in a in a they meaning the union is not going to have the heavy hand, like we saw on the West Coast. The overcapacity remains very high on the west coast. So all of that Pete says the Hollywood is back baby. I've said this before, and it's very important. So if you do all this chaos going all over the country, you're like, screw this. Interest rates are high, I'm borrowing money against my inventory. I don't have time for it to sit on a boat. I need access to it immediately. I'm going to the West Coast, and more people go to the West Coast, it's going to start to get a little congested, but there's tons of capacity in a warehouse guy. I know what the Southern California market is right now. It's a little bit off. So you're gonna have everybody coming through LA that means West Coast carriers that are taking that from the port to the warehouse, the warehouse inland, full truckload LTL. There's going to be capacity, things are going to go into that area. So if you provide services or import your goods, or shoot me if you provide services Through the West Coast, you're gonna have a banner year because people are just wanting to get access to their goods as fast as they possibly can. Now I know Mexico, became the largest importer, into the US recently, and we talked about that. But I'll tell you what, man, the chaos across the world, Panama, Red Sea schedules being up ended, California is back, and it's going to be the cool place. It's where all the cool kids are going to hang out, Pete, and you're going to see a lot of traffic driving through there, and a lot of carriers taking advantage of product that needs to move inland. So Hollywood's back baby, yeah,
Pete Mento 5:36
I actually agree here, you're going to have just simply because of the transit times than the cost, you put those two things together, it's just a fait accompli. And also now, you know, because of the issue with equipment, it's there's not enough containers, getting back in time. So it's, you know, it's it's definitely going to cause some some madness there. I think, Doug, that we just, we can't underscore enough. How well designed and engineered the West Coast arrival from Chinese base ports is it's just, it's more efficient. And now that you've added inefficiencies of having to go around the horn, or go through the canal, just make sense. The only problem I'm foreseeing is that so much traffic has been pushed on these larger ships, by the carriers to try to get as much profit as possible out of it. That might mean capacity issues. And once that once that happens, then the transportation providers and middlemen, the nvoccs, the free foreigners will start seeing more money. But right now, it's just more cost. We're not actually making more money to help companies to do this. We're just passing through higher costs, you know, limited profit. But I agree with you that this is this is definitely going to be a West Coast year.
Doug Draper 6:43
Yeah, yeah. Cool. All right. Well, I started the conversation about the Red Sea. And I know you've had some some thoughts and tips on that, you just will roll into your topic number one.
Pete Mento 6:53
So the, you know, the Red Sea issue that remains problematic, is having some sort of defense for ships that go through. And right now the lion's share of that has been done by the British and the Americans. But a lot of the traffic that's going through is not going through for Britain, and for the United States, it's actually going through for China, and you have a lot of energy that is going through tanker traffic through that, that area for China. And China now is being desperately negatively affected because of energy rates, that they can see four or five, six months down the road, because of the refining process, going through the roof. So unfortunately, because China has not been effectively taking part in the defense of that region, they don't want to cooperate with the Western powers. It doesn't appear to be a quick fix for this. So with war, Risk Insurance continuing to go up and insurance as a whole going up, along with the fact that more and more mariners are refusing to actually serve in this particular part of the world, you're going to have a deeper issue on mariners vessels. And then insurance companies deciding whether or not they want to service that energy route for China. So this is going to increase energy costs into China dramatically, as this crude is not getting to the places it needs to get to to be refined. And ultimately, that's going to mean desperate increases in diesel, gas, jet fuel everything into China. I don't think we've talked enough about that. The United States has the ability to be self sufficient. When it comes to energy. China simply does not.
Doug Draper 8:19
Yeah, I think the insurance piece Pete, you brought that up before that I had not really thought about but at some point insurance companies are going to say uncle, we've seen that in California with the with all the natural disasters out there. But that's a key point. That's going to drive up costs that has nothing to do with operating a vessel or the cost of cargo on the on the on the ship.
Pete Mento 8:40
Greed, buddy.
Doug Draper 8:41
Yeah. All right. Well, I'll lead us off with our I'll do the intro cap logistics there. The the the the paste there, the glue P not the pace. They're the glue keeps the show together. We appreciate them putting us on every single week. And you can visit them at cap logistics.com All right. What a rip, buddy. You got to go to halftime. Yeah,
Pete Mento 9:03
man. So Elon Musk's company, neuro Link has put their technology into a human being. The first use of this is to allow paraplegics to be able to operate their prosthetics, and to be able to use technology to speak through for those that are nonverbal. And it's amazing, you know, but in reality, we don't know how long this person can deal with the technology. It's like anything else, it's going to be a slow rollout. But it's incredible to think that in 2024, we're at the point now where a computer is directly associating information and data back and forth from the human mind into a server. And as this gets deeper and deeper, you know, the intent is for us to be able to record basically our existence, but for now, it's mostly medical. So I think it's incredible, Doug, they're they're way way ahead of schedule, way ahead of schedule where they thought they were going to be. Not let anybody cut into my brain anytime soon done. Hopefully I don't ever needed. But it's an incredible scientific leap forward. And I think that they should be applauded for what they've done. Nice.
Doug Draper 10:08
Agreed. I think that's good stuff. We'll have to wait and see a lot of next self reported though, so we'll have to see how much of that shakes out. That's right. So
Pete Mento 10:18
you get a great one this week hit me.
Doug Draper 10:19
Yeah. Well, it's one day delay because we couldn't get this thing done on Monday, but it's Super Bowl related. Right. So here's my four bullet points. Really three on Super Bowl. Let's talk about commercials, right? I think team you won the show. Right? It was blue animation. catchy song had a different tagline, which was shot like a billionaire. I thought that was really cool. Because they ran it I don't know, four or five times, catchy tune the whole nine yards. It wasn't fancy celebrities or anything. So I really liked that one. I think people would put it down on the mid level as far as ranking commercials but But I liked that one. Maybe the dunk canes just for a comedy show with you know Matt Damon and then Aflac and I think Brady was in that one and JLo so that was kind of cute. Here's the deal with the halftime so my second point. I was incredibly disappointed. I like Usher. I mean, literally I put his songs and moonwalk to my car every single day. So I'm a huge Usher fan. I think that halftime was like bottom three right of all time. It just didn't have any pop or pizzazz. And I'll tell you what the top three were painting. I know the one that you think's number one. So personally, I'm going third to number 1/3. You to number two Katy Perry. I love that one from like 2015. And obviously prints you made mention to that when he was just rocking it out in the rain in Oh something or others but not a big fan. I love Usher not a big fan of the Super Bowl halftime show. And then the one thing I know if you saw that RFK Jr. Commercial, it just kind of popped out of nowhere. And he used like some old footage from JFK A's election in 1960 or something. And then his family came out and basically said, This guy has he may have the same day name but he has no none of the values none of the vision and none of the judgment of our of our family which I didn't know that was just a strange commercial. He says he didn't even know it was happening. I don't know. It's just just kind of weird, but excellent game probably one of the best that we've seen in many years, but those are my three takes on the Super Bowl.
Pete Mento 12:39
Okay, so point number one. The dunk kings commercial was just next level epic. And right now and Dunkin donuts.com You can buy the sweatsuits Oh, really? They went on sale today, Doug, so I think you and I need to get a pair for our next our next personal visit any place I think you should wear dunking sweatsuits. I love that commercial. Because because of the people that were in it. Second of all, man that that that halftime show was a top 10 For me, and there's a reason for that. Right. So I'm in New Orleans for the Super Bowl, ushers in Atlanta guy. And he basically brought all these fantastic Southern r&b and hip hop people. Will John was there. You know, Alicia Keys was there. I think Missy Elliott, at one point was there like he had everybody show up. And in as as they turned up, and sang with him. The bar was at got louder and louder and crazier and crazier. And when Little John came on, if the roof was going to fall off the place, it was insane. So it was I thought was fabulous. I really did like the middle time. As far as Kennedy goes. You know, he did say it illegally. He's absolutely right. It was done by a pack. The pack gets money from everyone and he is not allowed to endorse their messages. As a matter of fact, it's illegal for him to see the messages before they go out. So he didn't know what they were going to do. It featured his father and his uncle, and is one of the oldest surviving Kennedy children. I think he has the right, you know, tell us his father's image. As far as Kenya JFK goes, I suppose they have a point there. I thought it was an excellent commercial as far as political commercials go was very positive, made a lot of positive messages and really didn't linger on negatives. The game was awesome. I'm not really a fan of either team. I did bet on it. And I lost. I only put about 20 bucks on it. So it's not a big deal. But man, I thought that was a fabulous game to you know, back and forth over time. And you just knew that when they barely had a lead at the half that it's mahomes baby like he's, he's the new Tom Brady. You just have to give him a little bit of space and he's going to beat you every single time. So it was amazing to watch it come up with it. Shanahan needs to be fired. ball first in overtime What a moron move against mahomes but man, what a I've got a feeling you're probably gonna see that same Super Bowl next year, buddy. That was just awesome. It was awesome. Great stories all around. And I believe that they only showed Taytay for 76 seconds or something throughout the whole Superbowl but every time they did it got a very mixed emotion from the people at the bar with me. Yeah.
Doug Draper 15:26
Nice. Good, good, good. Well, we agree on the game, all the peripherals, I'd say we're not on the same page. No,
Pete Mento 15:33
no, the dunk kings commercial is just because you know, I'm gonna label the guy was fascinating and it was wonderful. You're blinded by the pinstripes, that stat is going to be every kid from Boston is going to be saying that to anybody they meet from New York from from here on out.
Doug Draper 15:50
Well, I heard a new term called Massholes. Which are I don't know if that's new or whatever. But I'm like, yeah, that kind of fits.
Pete Mento 15:57
No, that is an excellent derogatory term for someone from the Commonwealth. It is very much and, and as you also know, Dunkin Donuts is like a cultural thing in New England, so it fits pretty well. Commercial fits pretty well. For an alternative to that I highly suggest that Casey Affleck, Saturday Night Live Dunkin Donuts commercial, which is probably a little more true to life about Dawkins, in doing
Doug Draper 16:20
this is awesome. I've seen that one is epic. I love it. So
Pete Mento 16:27
what's our next topic?
Doug Draper 16:28
All right. So this is the crazy part about the show, Pete is that we have comments and sometimes they go one direction and the next week they go another so last week, I was talking about EVs and how China was coming hard for Elon, and their market is exploding. I'm taking a 180 on this one. As far as the rest of the industry, right? So I want to say Pete, are we witnessing the death of the electric vehicle market? And here's why I'm saying that right. So there are a couple of bullet points. Number one, there's a huge backlog of EVs, EVS at dealerships across the country. They're trying to get rid of them. Right? Hurts announced maybe a year ago, two years ago how they were going to purchase 20,000 electric vehicles to put into their fleet. Now they're selling them because nobody wants to deal with an Eevee on a rental car. I had a personal experience that I've talked about before. There is a company called cake, which is an Eevee motorcycle company out of Sweden, bankrupt. Most recently a company called arrive which was an Eevee automaker in the UK, a bankrupt Lordstown here in the US, you may have heard of them. They went chapter 11. Now everything's up for sale. The recent cold that we had a couple of weeks ago, maybe a month ago, batteries weren't charging people were stuck people freaking out. So listen until charging stations resemble gas stations where you can come in there one on one. They're plentiful, they're everywhere. Number two, you can charge up your car in like five minutes. There's still that fear of being stranded. And I think people are just kind of coming full circle on it. But there is the rise of the hybrid. I think that it's a good combination of hey, there's gas when you're going across country, so you have that comfort level. And then you can kick it into evey mode when you're in the city. And the companies that have existing infrastructure to support that is the Big Three automakers. And so I think they're really going to shine with hyping up the hybrid model versus pure electric but I think that there's just all this money was thrown into Evie. At one time and all of these companies are starting to peel off and in falter I'm sure there's others out there that aren't as well known that are having difficulties. But I think the the sentiment on EVs P is dramatically changing. I would be curious to see what you're hearing on Thursday, in South Carolina.
Pete Mento 19:01
Well, I'm here now. And the talk of the whole of the whole symposium that started with Volvo pulling out of the Pole Star agreement. They're I guess they're not they're not investing in it anymore. The lightning, the Ford lightning, which was one of the darlings of the industry, it's just not selling, and how there seem to be these specialty cars, like the the rivian. Right, that's doing quite well. And just the good old fashioned Tesla, the bigger version, I don't know what it's called, we continue to sell quite well. And it remains, in the opinion of a lot of people inevitable, right? Like, this is an inevitable adoption of technology, we're going to see inevitable, but inevitable between then and now. It's an awful long time. So and it really comes down to a policy question. And that's a big one. The first side of that policy question is, are we ever going to lower the tariffs on Chinese batteries? Are we ever going to get to a point where The most expensive part of the car by far, is something that is not so horribly expensive. There's only one company really in the US manufacturing batteries right now. And they can't make them fast enough, you know, then the usual car companies are saying they can make 400 a week, you know, 500 a week, but they're only able to make at least 100, because of demand, and because of the inability to get these batteries. So it's, that's another problem. The second part of the policy is, are we going to use general funds to create more charging stations, from what I understand these car companies are just buying the Tesla connection, so that they can be used at all the Tesla, you know, energy spots, there's a lot of expense that goes to that as well. And there's only so many of those, you know, if you wanted to drive from Washington, DC to New York, depending on the coal, depending on performance, you're probably going to have to stop along the way to recharge at some point. And that is a long time. It takes a while. So yes, EVs are inevitable. And they're already a part of our life. But I think adoption of it is going a lot slower than people realized. And a great example of that is the lightning, the Ford Lightning as a as a marvel of technology. But it's just so damn expensive. You could buy a pole star, and spend 50 or 60 grand, and get into what's basically a, you know, a base model Camry, or you can buy a Toyota Camry with the same stuff on it and had everything from heated and cooled seats to you know, top of the line everything and leather and all the rest of it. I think that the average American car buyer is still thinking with their wallet, they're not thinking about the environment as much. And they're probably not thinking about the technology. They're saying, What can my money get me? How long will it last me? And what are the creature comforts? I get with it. And until those things reach the same level? You're absolutely right delegates. It's inevitable, in my opinion, but there's a long time between now and inevitable.
Doug Draper 21:53
Yeah, yeah, that's a great way to put it there at the NPT. I like your I like your summation. So all right, you get to bring us home, rip it up.
Pete Mento 22:02
All right, so nerd alert, everyone, just get ready for it. The the World Trade Organization is having its meeting that happens every four years, where all the big trading nations are going to come together. And they're gonna talk about the baselines for trade policy. And for walks like me, this is super important, because this is all the details of rulemaking that will end up turning into free trade agreements. That's not the thing I wanted to talk about. What I wanted to talk about is the nation that's going to probably be pushing all the arguments in agreements is India, for as long as there's been a WTO, for as long as there's been these meetings, it's always been China, the US and Europe that were pushing most of the conversations, not anymore duck, India's coming in now realizing their place in the world. And they're going to demand change in a lot of areas, agriculture, fisheries, pharmaceuticals, they're going to take a stand. And they're making it very clear so far, that they're not going to back down from their expectations. So first of all, good for India. This is an excellent situation to be in. And second of all, the United States needs to start considering India more as an equal partner in trade rather than something that they can use to leverage other areas of trade. So I'll be excited to see how it comes out. Over the next couple of weeks, once it's done, Doug, I'm sure we'll have an extra nerdy review of how it went.
Doug Draper 23:21
I love it. I liked the fact that you said India's finding their place in the world. That is the perfect statement. And it'll be fun to see how their place comes out after this after this meeting. So all right, well, I'm just gonna wrap this thing up real quick global trade this week. I think it's episode 135. And we want to thank all of our listeners for joining us every single week. You can listen to us, you can see us you can gain access where you can get access to all of your favorite pods so kappa logistics, thank you for your support as always, he what's the name that thing around your neck again?
Pete Mento 24:03
It's mine Damien members medallion member member on Debian the crew of in Debian. So Happy Mardi Gras, everybody. Yeah,
Doug Draper 24:11
and thanks for listening, everybody. We'll catch you next week on another edition of global trade this week. Take care
Transcribed by https://otter.ai