Global Trade This Week – Episode 138
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Speaker 1 0:00
You're watching Global Trade This Week with Pete Mento and Doug Draper.
Doug Draper 0:10
Welcome, everyone to another edition of global trade this week, I am part of the show. I'm your co host, Doug Draper. And I come to you from Denver, Colorado this week. And on the other side of the United States is my other co host, who is Pete mento. So he, you're a world when you you move like the speed of the Road Runner. So where are you? Where does this podcast find you this week? This
Pete Mento 0:36
week is DC in Newark, New Jersey. Last week was Indiana. And next week we'll be Milwaukee E. Charleston, and Chicago, Chicago. The week after that I have middle of nowhere, Pennsylvania, and then Atlanta.
Doug Draper 0:59
Nice. Yeah, that is a heck of a schedule for sure. You know, it's funny, whenever you when you jumped on, I had enough people right out of college. Half of them went to Chicago, because they wanted to get into the ad agency business with J. Walter Thompson and Jada. And the other half went to DC because they wanted to be interns for low level politicians. And so I visited enough houses in and around the beltway to see what they felt like. And when you jumped on, I said, I think you're in a house in Washington, DC area based on the windows and the and the and the sound behind you, I know you're on a hardwood floor with some windows, and you're probably overlooking something pretty cool.
Pete Mento 1:41
But it's a northeast thing. Really, it is. I think if I can, if I could take the architecture of any city and move it to a city I actually want to live in. It would be Pittsburgh, believe it or not.
Doug Draper 1:58
That's where I would want to live or that's where the architecture is. No, I
Pete Mento 2:01
want to take the architecture of like Pittsburgh, and Cleveland. And I'd want to move it to different times lots of old mill buildings, lots of much like Manchester, a lots of high Florida windows, see a ceiling, ceiling to floor windows, you know, industrial feel on the outside, but read on the inside, lots of art deco buildings and archistar architecture on the outside. I really liked that look. But I don't want to live in Cleveland, or although I love Cleveland, I love Cleveland, or Pittsburgh, just not the kind of town for me. But I do love the way it looks Colorado, Denver in particular. There's still pieces of it that feel that don't feel very modern to me from an architecture standpoint that I also really get a kick out of I love what you guys do with the train station there. I think it's incredible. I love I love that. I like taking things that are still perfectly wonderful on the outside and making the monitor on the inside. I think it's really cool.
Doug Draper 2:59
All right. All right. Well, that's our next podcast is to talk about modern architecture and the impacts on global trade. But not today. Man. We're talking global trade this week. And we got a couple of great topics. So Pete, I'm gonna let you rip them. Go for it. You start first.
Pete Mento 3:16
I had to get the name of the company. Right. So I wrote it down. But I think it might be rising the machines, Doug, I think Skynet might be in its infancy. We might need to find a hole in the ground to live in. Probably in Colorado, frankly, probably is a good place to be. Amazon is now using fully functioning humanoid robots in its warehouse. I'm gonna say that again. Dud. Amazon is currently using fully functioning humanoid robots in its warehouses. So what is a fully functioning human robot, it has articulate arms and legs and hands that can grasp things. They move from place to place, they can pick things up. No lower back injuries, buddy. You know, if a if a forklift runs it over, just get it, get it repaired and put it right back out there. And I don't know that they think so reading all the articles that I read, they're given repetitive, difficult, heavy tasks, like picking up boxes over and over again, stacking things, and they use software to be very precise and how they do it. And where we are now is apparently just the beginning. Right? It's beginning that they're being built to work in places like hospitals, you know, to move things around 60 minutes to the story a few weeks ago, we talked about it I think about the ambassador from China and and they they were showing the Chinese versions of these that are taking over repetitive tasks. First thing I see when I see this is man it's only a matter of time before they they weaponize these things and we're living in holes in the ground. And then on top of that right there A new version of the chat bot that just came out. I think it's called Carlos or as Carlos or Carl or I can't remember. That is it's starting to get past that wall that they've got, where you don't really realize that you're talking to a machine. So between humanize, you know, human humanoid robots in chat engines that it's hard to distinguish if you're talking to a person, Doug is, is the warehousing and logistics industry? Are we getting pretty close to not needing people in warehouses and customer service on phones? No.
Doug Draper 5:35
Next topic. Yeah, no, first of all, a couple of things. On a funny note, when you put humanoid and robot next to each other, that's like talking about nucular power, right. People freak out just because of those two terms. No, I did see that is really cool. And is it coming? Yeah. Is it decades away? In my opinion? Yes. Right. The repetitive tasks and all that kind of stuff is definitely needed. There are solutions out there that are coming around? I don't know. It just looks too, too real to me. I mean, Kiva, which Amazon bought decades ago, were a little RTD tools that would bring product to you. So you didn't have to walk. Right, I guess back in the day that was intimidating, or, or a cutting edge. So maybe we're getting close to there. But that's still how I envision an automated warehouse that that is out there the humanoid thing? And Skynet. I don't know I? Is it going to happen? Sure, in some form, or fashion, is it next next year? Nope, it's going to be quite a long time. But it is unique companies like Amazon, I'm sure. Walmart will have something similar that there'll be flashing out there because you got to show the technology. It's like the CES show in Vegas, right? There's some amazing technology that comes around. The practicality of it in the real world is still a long ways out. But I like it. I do like it. It's not quite there yet to replace jobs, but it's coming to some degree. I
Pete Mento 7:15
was told once done by my friend Adel travel a to when you think about robots don't think about the robot from Lost in Space. You know, danger Will Robinson don't think about that. Think of devices and software that take over repetitive tasks. And he challenged me once to just think about in a day, all the things that I've done, that had some kind of automation associated with them. And it is shocking, before this topic really fascinates me is how comfortable we are with just the idea. I mean, these robots aren't at a point where I can say, a robot, you know, go go pick up that heavy box and bring it down to storage. That'd be fabulous. If you could, there's a lot of work that gets to that most of these robots are given singular tasks. And they're built for that task in their, their program for that task. And they do it over and over again. But I guess that next level of evolution isn't far away, where they'll be able to multitask. And if you look at the ones Tesla is building, that's entirely the point behind them. And I'm telling you, man, we're gonna have robots walking around with guns any day, my, my daughter and I did a campus visit to where she's probably gonna go to school. And there are over 200 roving robots on wheels. And in your, in your dorm room, you can order Starbucks from the campus, Starbucks, Chick fil A, thinks for the bookstore, it delivers it to you at your dorm, and there's zipping around all over the place. So there are robots around us all the time, I don't think that we fully realize that it's happening. And within what's left of our lifetime, Doug, I think we're gonna see a really fast evolution of the technology. Yeah.
Doug Draper 8:55
fast evolution. I will, I will agree. That's 100% where we are. So we'll see. All right, buddy, what's
Pete Mento 9:03
your first topic?
Doug Draper 9:03
All right, this one, I my two topics are kind of related together. So I'm going to go on this, this first one here, it's about pricing. And it's been the the term I'm using is surge, pricing. And I think it's coming to supply chain and logistics. So basically, and I think the group that's going to bring this to the table first, which already is starting to happen, and I'll talk about that on my second topic. But if a carrier is under capacity, and kind of has like extra space in their network, why not provide lower pricing to attract more volume? And then if capacity is is tight, increase the prices to tamper down the demand. So have these levers that go you know, based on on volumes and search because you know, you got ocean freight is pretty much static, meaning that you sign a rate for a period of time. Yeah, there's GRI is another kind of surcharges that pop up from time again. But for the most part, you know it's static. Let's see, you got warehousing is static in my world, you set a rate and as long as you comply to the profile that it was priced for, generally speaking, that rate is is honored, rail is static LTL is static, the only two ones that have you know, surge pricing or variability would be the air freight. And full truckload is very dynamic unless you have contract versus spot rates, spot rate pricing, but I think specifically in the parcel market, it's ripe for it. UPS and, and FedEx are right there, in the machine learning to understand the algorithms as a whole, as well as in the most you know, what's going on in the center city of Denver, Colorado, tomorrow, and what has traditionally happened, therefore, the pricing search is going to happen. So the technology, the machine learning, and the data analytics are coming to the point where it may not be the big boys, you know, the large users, like the Walmart and things of that nature. But if you're a small to medium sized business, I think you're gonna see surge pricing, pricing hit and I think, I don't know if there's a winner and a loser in that per se, but it's going to be the small users of parcel kind of people that are selling stuff on Tiktok shop, or an E commerce because they don't have the technology to respond to surge or dynamic pricing. They basically say, hey, if I'm going to order, if somebody's going to order something on my site, it's $15.95 to get an anywhere in the country. And so that'll be kind of unique, but surge pricing, dynamic pricing, whatever you want to call it is just around the corner. And we spoke about it briefly on our prediction show. So it's real, it's coming. What do you think about that?
Pete Mento 11:53
Well, you've unfortunately unwittingly walked into the minefield of one of my favorite topics, Doug, which is behavioral economics. And behavioral economics focuses on what would compel someone to do something, or what would deter someone to do something. And it's mostly focused on buying. So why would you spend this money in this direction why than another, and for well, over 100 years, there was no way to do really definitive learned research until of all things Uber came out. So when Uber came out with their surge pricing, they were able to understand certain behaviors and environments that would impact price, rain, holidays, traffic, there were all these different data points that they used, I don't know them all, but there was a ton of them. And an economist named failor, took that information, and built really the first working model of understanding what happens with surge pricing. In economics, we have a different name for it. It's called dynamic pricing models. Dynamic meaning things from the outside impact the price. And what's different now than before, is there's always been dynamic pricing, right. But the dynamic pricing unfortunately, happened in such a long term, it was difficult to see it as it happened. So the first implementation of this was actually by McDonald's. Apparently, other companies are doing it now as well, where they would lower the price of their goods based on dynamic information that they've gathered, knowing that from 1130 until 115, or so, that was the rush. So to get people to come and eat a little bit later, or to get people to come and eat a little bit earlier, they would lower the price of their goods in order to compel people to come and enjoy it, or they would raise it at certain points. Because they were able to make more profit off of that. When this information became available, all kinds of companies wanted to play with it. The issue has always been technology, being able to take that information and use it in real time, to places where there's always been dynamic pricing, or us the transportation industry, we've always moved to the market, and a lot of that has been local. So everybody on a Friday wants to get their truck down for their consolidations to New York and move stuff, well, we know the price is going to be higher. And because things happen at a contract we have what pricing, Spot pricing, you've always had that kind of stuff. But now we're able to do it in a more dynamic way. What behavioral economists have told us is that the person who brings a price first, so the first person to answer a bid, wins 60% of the time. So the first responder is generally the one who wins the business for a lot of economic and emotional reasons. The ability for us to put this into our business has sprouted up all kinds of technology, whether it goes back to free quote that was bought by ch Robinson, which they themselves has had a big part they said themselves has had a big part in their ability to capture that business that that first response business or even DSV you know, we have electronic methods that We used to be able to answer very quickly in an automated way, this is going to become normal. This is going to become the use of economics, econometrics and behavioral economics, to be able to capture business first. And to create a more dynamic market for transportation. We've been waiting on this forever. You know, we've said we've wanted to use the internet technology and this forever, I think what we're seeing now, Doug is realistic, meaningful applications that allow companies to actually do it, and we're gonna see more and more and more of it in our business.
Doug Draper 15:30
Yeah, realistic and meaningful. Those are the two words that just you just said, that pop out that it's going to be, and, you know, the technology is there. So it's gonna move fast, right? It's gonna be there's gonna be a lot of coverage on it, there's gonna be a lot of discussion. In the near future, why
Pete Mento 15:46
will it move so fast behavioral economics, there is there's so much money to be gained by being good in the first at this, that people are going to invest in applications, they're going to invest in processes that allow them to have, you know, as people bid on stuff automatically, to be able to get the response at a good rate at a contract that we can agree with at a service level as fast as we possibly can. So it just goes back to economics, like everything dug like everything.
Doug Draper 16:17
Yes. Well, here's somebody that has no economics in it, because you and I can talk about whatever we want. And that is halftime of our show. It's brought to you by CAP logistics. So please visit cap logistics.com. They're the ones that give us this platform. And I don't know if you want to go further. Let me go first, let me go first, because mine short, mine short and sweet. And then yours is more thought thoughtful. So anyway, I don't know if you saw this, and we spoke about it. But the lawyers that helped Tesla's void for the lawyers that help Tesla void, Elon Musk's, like 50 billion or 55 billion payout package, are now seeking $6 billion in legal fees. And they actually want that to be paid to them and Tesla stock. Just, it's a money grab all the way around, right? I don't know whether to applaud these lawyers for having such a bold move, or whether it just speaks that money makes the world go around. And they kind of cut down and, you know, it's ludicrous to be able to be paid $55 billion. But it's not ludicrous to have lawyers want $6 billion for their efforts, and then add insult to injury? Or maybe that's not the right word. But oh, yeah, we just go and pay some Tesla stock, so we can then sell it and make more if things still go, you know, follow the trajectory of Tesla. But anyway, I thought that was hilarious. And I just wanted to bring it to the attention of the global trade. And listeners, what did you hear about this? And what's your take on it? So
Pete Mento 18:00
Doug, might, initially I have to make a disclosure, I am team Elon, for practically everything. Alright. So the man starts a company and says, in lieu of paying myself in cash, I want this company to invest in me like I'm investing in it, not going to take much for a cash compensation. I want stock because it's my company. And I believe in what we're doing. That's how much I believe in it. I want all of my employees, for a company, I've got to think that way. I will be rewarded based on the growth of the company over anything else, because it was my idea, mostly my initial technologies. And I'm the one out there getting my head ripped off whenever anything goes bad and celebrated when anything goes good. I deserve what I get paid. The idea that it isn't fair after the fact would be like if I blew my Commission's away, and my boss said What wasn't fair? Because, you know, it's just not fair. Pete, you know, no one expected you to do this. Well, well, I did. I expected me to do this. Well, and that's why I took the compensation package I took in what is truly insulting and absurd, Doug, is that the people just as you said, the people who were hired to prove that it wasn't fair to be paid on the on the on the outcome to be paid on the quality of your work, are now asking to be paid on the quality and outcome of their work and absurd amount of money. So it's just hypocrisy at every turn. I hope that when he goes to appeal, he trashes this. And I hope that he buys their law firm and fires them all. Because that's probably what I would do.
Doug Draper 19:38
Yeah, yeah. I was waiting for the sticky note where you slapped on your screen that says how you like them apples.
Pete Mento 19:44
That's what gets me fired up, man. Yeah, I think anyone that believes in themselves enough to strike out and build their own business. We've worked for those people that you know, all the respect in the world for somebody, because I've done it. I started my own consulting firm. You know, anybody that can You stand up and say I'm going to make a viable business. I'm going to manifest something out of nothing. How dare How dare you come after them when they become successful? That's nothing but just being jealous. So I get where the board's coming from, right? They want to maximize their own personal value and value to the company. Too bad. You're the morons that signed off on on the beginning. So 10 Tesla, Team Elon, all the way. I hope he finds a way to make these guys eat crow.
Doug Draper 20:25
Nice. All right, there you go. You got two topics you're been fired up on so bring us comment down, mellow it out and give us your your halftime it's
Pete Mento 20:37
easy to be mellow about this one, but also passionate at the same time. I I often ask people do you have a collecting hobby? And I'm like, Well, do you collect anything? And some of the answers I get are incredible. I have a friend of mine. She has collected every quart from every bottle of wine she's ever drank. And it is it is an impressive collection. You know she has, she has the ones that she's really proud of that she displays in her home. And then she probably has no exaggeration, 10,000 more that she has, you know, that she uses for crafts and stuff. But you know, the question today really is do you collect anything now? Or were you ever a collector, I collect two things. Primarily, I have been a comic book collector since I was a boy in a in a stroke of unintended genius. When I was about 12 years old, I bought a fantastically excellent copy of X Men number one that is in a safety deposit box that I could probably pay off some mortgages with. And then the other thing that I've always collected has been baseball memorabilia, I have a pretty intense collection of autographed baseballs. And I have some pretty awesome autograph cards. You know, considering if I were to win the Mega Millions, I think it's what tomorrow night. If I win my $650 million, I would probably amass a pretty incredible baseball memorabilia collection. So Doug, do you collect anything now? Where did you when you were younger?
Doug Draper 22:09
It's a great question. And I collected now No, I've been in a hardcore purge mode since our move, and you probably were in the same. So there was a lot of things that we were going through my wife and I like why don't we have that get rid of it. So there was a few. They weren't collecting minds. They just they just meant to me. But he as I said, Whenever when we got things started, I collect memories, right? That's when I collect his memories. And some of them are on the phone. Right? Some of them are on the phone right here. But we do have scrapbooks and things of that nature. So baseball cards, no comic books. No. If there was, maybe I should have collected the twist off caps from Mad Dog 2020 Because there was a lot of those that I could have collected back in the day. But no, I would say it sounds kind of funny and maybe cheesy. But memories. Pete That's what I that's what I collect.
Pete Mento 23:04
It does sound cheesy. It does not sound funny. Do you think people should try to collect more memories, I think living a life of experiences is a wonderful way to live. So Doug, I approve that message, my
Doug Draper 23:17
good. And with that with approval, then we can jump into the second half of our show. Halftime is always fun. Thanks for letting us banter about things that we want to get off our chests. But global trade is about global trade. So let's pump over to the second topic. It
Pete Mento 23:31
is International Women's month now in March. So hats off and shout out to all the women in our lives, daughters, wives, family members. Shout out to all the women in our industry in particular. And the reason I'm bringing it up is that Charlie Simpson was named the CEO of JB Hunt. I've had the fortune of meeting Charlie Simpson, a very nice, very competent, very smart professional. And it comes as no surprise I mean, everyone saw the writing on the wall that this was going to happen. This industry, particularly international trade is one that is filled. I don't want to say dominate it because that isn't fair. But we have a tremendous amount of women that do work in this industry. In particular, overseas in Asia. There are a lot of people in my business in particular regarding international trade on customs, both there and here, who have risen up through the ranks to manage customs operations. If you were to look through the leaders of many of the customs operations of most of the large freight forwarders You'll find they're women. Mine is a woman so our Vice President of Global customs who's just an absolutely amazing professional. She is a woman, Bernadette meticulous, as was at one point it expediter is the absolutely you know investable, incredible, amazing Roseanne Esposito and now they also have a woman who's running that group yet you'll find that it's just women everywhere. So congratulations on all the success that they're having in our industry first of all, but say Second of all, this is a place and a time where we don't often talk about the rise of leaders that are women. You know, it's sort of anecdotal. But I can point to our industry to show that that's happening, a great deal, still work to be done. But women are being seen for their merits and transportation. And that's one place I can point to it.
Doug Draper 25:18
Yeah, kudos, I have nothing but admiration for the for the selection. You know, JB Hunt, started Arkansas, and, you know, kind of some, some good old boys and that are getting to the retirement point and realizing this pivot needs to take place and not say we need to replace it with a female when you replace it with the best person for the job. And if you've look, I clicked on her LinkedIn, probably like millions of people today, I clicked on her LinkedIn, and the pedigree and the things that she's done over there in the last 30 years is just continued to work her way up, make good decisions, and I'm sure she'll be an excellent leader for that organization. And it couldn't have happened at a better time, with national women's month. And I think National Women's day is Friday, technically Friday. So we'll see how that goes. But yeah, kudos.
Pete Mento 26:09
All right, Doug, bring us home, buddy.
Doug Draper 26:10
I man, this is related to my first topic about technology. And while I was doing a little research on my first topic, I came across this thing called deal manager that UPS has created, it's been around for a little while. It's not like it came out last week or anything. But essentially, by leveraging data, they're making the sales process a little bit more efficient with dynamic pricing technologies. So again, it's targeting the small to medium sized businesses, where essentially, you can go on typing some too few things about your profile, and UPS will just kick out a rate and say, Here it is. That that may seem Yeah, okay, they've been doing that forever. But the process began in the small parcel industry way back when there was a company called airborne Express. Even to this day, it's manual, it's a salesperson going out there and talking about it, trying to get the right volumes and sizes and destinations, submitted it to a pricing department, they come back to the salesperson, the salesperson says that's too high, we'll never get the business. They're told to present it anyway, they present it, they realize it's too high, and they get stuck. And there's this banter back and forth, it just wastes time and in human resources. And so as we as you had mentioned, you know, the people that come first to the table when 60% of the deals, deal Manager, you can do all this automated and from what they're saying what UPS is saying is that it can change, you know, an account setup to actual shipping, used to take days and up to a weak is now happening within minutes. So again, another example of leveraging data and, and automating things and having this just very tangible examples, like you said, that are going out there in our industry. So anyway, I thought it was worthwhile, even though it's a little bit similar to my first topic to call that out. And I'm sure maybe it's already out there. I didn't see it on any of my research, but I'm sure FedEx has something coming along. Maybe DHL, but I think the the parcel piece can can be can be a good test, test service offering. So I don't know if you heard a dealmaker from ups are
Pete Mento 28:19
not until you talked about it or sent the text about it. i The last topic of our show is always given the least amount of attention. If you watch old shows, the last topic usually is the one that we talked about the shortest, not today. So I you know, I looked at this and I've I thought to myself, you know, small parcel, right? High Volume, okay. But UPS, FedEx, DHL, these are companies that compete with DSP, right? expediter ch Robinson, we compete with every level of logistics company, every single one, whether they're a smaller to midsize to family run, they're competing against us, and we're competing against them. And it's this type of technology, that gives them a very difficult advantage to overcome the amount of money that they're spending on technology that when I say they, I mean, the upper echelon of our business, ends up creating, you know, a stumbling block into entry into the marketplace for other companies, because they don't have it. So you end up dealing with salespeople who are, as you said, in a human way, manually collecting the information, but at the same time building a relationship with the person being able to ask questions that I don't think something is probably run in the background off an Access database is able to do and to understand the needs and desires of the customer. So I don't think that it's going to eliminate, necessarily right the face to face sales call thing. There is a market for people who just don't want to deal with a salesperson. And I think this is a great way to manage that. The second Half of it done. I was going to talk about this, but you brought it up. One of the most frustrating things about our business is going back to the procurement people, and air freight ocean freight over the road, whatever it is and saying, I have a customer. This is what the customer needs. The price for the market is around here. Here's what they're paying now. Are they lying to me? They could be. And you tell them and they give you a price that's positively out of the universe of what you need. And they say to you, well, this is this is what the market says, How would you know, you're not in the market? Right? You're not you're in the market of procuring the cost. But someone out there is doing a better job than you. Because I'm being told that our price is completely out of whack. So when I would go out there and sold things other than customs, which is like running into a wall, right it the amount of time that someone in procurement would tell me I didn't know the market, when they weren't in the market made me nuts. I know what people are willing to pay. They tell me every day, why aren't you finding a price? It'll make me get more business. It drove me nuts, Doug. So if there's a way to automate it, and build in a lot of algorithms, I imagine to decide, you know, where we'll lose money where we'll make money, what makes sense, that could help both sides of the equation sales and procurement?
Doug Draper 31:19
Well, there's some senior executive on the sales front that's yelling at us right now that says, the problem is you keep selling price, there's more to the surface offering
Pete Mento 31:27
price, the price, I still value add, man, I mean, I'm, I'm a trade consultant, what are you nuts? All I'm selling is our ability to solve a problem, you have to go to a company and say, you have to get them to agree that there's a problem that needs to be fixed, then you have to agree to them that that there, there is a solution. Like, oh, wow, I never thought about that, then you have to get them to agree that you're the right person to do it, then you have to get them to agree on a price that they're willing to do it. And then you have to get them to agree on your terms, whether that's the service level, or the contract, or whatever it may be, you got to get to agree to that part. Each part of that is progressively harder. It's much harder. If what you're doing it is based on price at some point that's going to fail. Someone else is going to come in there and they're going to beat you on price. You better have something better than price, baby. And I like to think it's custom stuff. That's just, yeah,
Doug Draper 32:19
you better have something better than price, baby. I think that's a good one to end on. Yeah.
Pete Mento 32:27
Well, we want to thank everybody for joining us. As always, Doug, thank you for being the greatest wing man in the history of the game. Thanks to Keenan back in Colorado, chugging Kim Bucha, I imagined in eating vegan chili with his crocs on and as always, thank you to our great friends at CAP logistics for always supporting us and giving us this platform. Tell your friends reach out to us. Let us know what you think. Go ahead and ask questions. Be happy to answer them. And we'll see you again for another great episode of global trade this week next week. Take care. All right. Great. Bye
Transcribed by https://otter.ai