Global Trade This Week – Episode 130
What’s going on in Global Trade this Week? Today Trade Geek Pete Mento & Doug Draper of Inland Star Distribution cover:
3:15 -New CBP Ruling Has People Wondering
8:06 -2024 Will Be A Year of Autonomous Trucking
13:02 -Halftime
22:31 -US Energy Exports Up 35% Since Red Sea Crisis
25:52 -Brad Jacob's New Venture, QXO
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Keenan Brugh 0:00
You're watching Global Trade This Week with Pete Mento and Doug Draper.
Doug Draper 0:11
Welcome to Global Trade this week episode two 2004 2024 and we are back in the saddle. I'm Doug Draper. I'm a host number one coming to you from the great state of California, Fresno, California once a month. I usually run this show out here. It's great to be out. And back in the saddle, as I mentioned is my other co host on the other side co host, Mr. Pete mento. Pete, what's going on? Man? I don't even where does this podcast find you this week?
Pete Mento 0:43
I am in Milwaukee, Wisconsin, which I believe means the good land that if you haven't seen if you haven't seen Wayne's World, you're not going to get that joke, but Alice Cooper is from Milwaukee and he does a bit there but I am in beautiful. Milwaukee, Wisconsin, which I do love this town. I love this town. Right now. Not so cool, buddy. It's it's been snowing like crazy. And I drove from Madison to Milwaukee yesterday in an absolute whiteout Blizzard it was. It's been a trying couple of days with the weather. But people here are nice. And it's a wonderful place to hang out. So in Milwaukee this week, I'll be doing the show next week from Seattle. I have a seminar with DSV that we're doing on next Thursday. Pretty excited for the first of our of our seminars, there 24 cities seminar run for 2024.
Doug Draper 1:36
Yeah, that sounds interesting and exciting and tiring, right. I'm sure there'll be some travel stories coming down the pike.
Pete Mento 1:44
So there will but I love talking about this stuff. Doug. So looks at Yeah,
Doug Draper 1:48
yeah, for sure. The thing about Milwaukee, if anybody knows there's Summerfest. Right. So the concerts and I know enough to be dangerous. But I heard this year, my my son in law, my in laws from Milwaukee, in that whole area of Carnival walk is really where they're from. Anyway. Summerfest used to be like 10 days in a row, just boom, boom, boom, roll up in your Harley setup camp and just go xox. Now, I think it's like three weekends in a row. And it's all gotten to the point where they can bring more people in. And maybe that's been going on for a couple of years. But first time I heard about it was was yes, was over the holiday break. But it's morphing and changing. But Summerfest is a good. A good party to be had up there. Yeah,
Pete Mento 2:30
it's like Jazz Fest in New Orleans, which is four weekends now. Friday, Saturday, Sunday, you get in 12 days of music. Now. Same thing here in the bands they get for summer fester. Awesome. Just awesome. So that's one of my favorite stories about Milwaukee is when you fly into the airport, somebody on top of one of the warehouses painted in gigantic letters. Welcome to Cleveland. Is that still there today? It's still there. Yeah. So when you fly in and you look out the window, depending on which side of the aircraft you're on, you'll see on top, you know, welcome to Cleveland, these big letters. I think that's fantastic.
Doug Draper 3:05
Yeah, you know, what else is fantastic beat this show. And it's about to start with our topics here in 321. You go first.
Pete Mento 3:13
All right. Thanks, buddy. So Topic number one this week is something that I think all of us in the custom side were waiting to get a definitive answer on. And boy, did we get it on the 18th of December, customs released a ruling where a relatively small operator of customs house brokerage, asked customs, if it would be against the law, for them to use foreign employees to enter all the data entry on a customs entry. And to clearly define the role of a customs house broker. This all comes from a very simple rule when anyone who becomes a customs broker learns this that says that all customs business must be supervised by the US customs house broker. And then it must be done in the US Customs territory. Well, what was customs business? Right? That's that's a little harder to define. Many of us have thought that it was the transmission of the entry to CBP talking to customers face to face, you know, but it's bigger than that. It's broader than that. And for probably a decade now, Doug, there's been a real push and pull between more traditional customs house brokers, and the quote unquote, ie brokers who were using this gray area to do a tremendous amount of work in foreign service centers. They also used Foreign Service Centers for HTS classification, commercial invoice creation, document creation, holding they're holding their records. Well, Customs has come out and definitively said, that can't be done. This is all considered Customs House business, and it must be done in the US Customs territory. This is also on the heels of a pretty big change with customs regarding how they enforce us the customs Has brokerage community in 2022, the rules changed, where we take on more responsibility. And Customs has said without saying, right, they've kind of put through the coconut telegraph, that they were going to give the Customs House brokers a little time to get ready. So there was going to be not a grace period so much, but some some time to kind of catch up with the regulations. And now in 2024, we're going to be under more scrutiny and more enforcement than we have ever before. And I think there's going to be a lot of companies who are going to find out that their business practices were not necessarily in line with what customs expected, how they enforce it. I don't know. I can't tell you for sure. I don't know if they're going to shut people down. I don't know if there's going to be big penalties for the past, or if they're just going to say, Hey, knock it off. Now that we've come out and definitively said something, you need to move on in the right direction. My my, my inclination, right, is that they're, they're gonna actually go after people for things they've done in the past. Because customers house brokers, as hard as this might be believe, are enforced even more brutally than importers. We have a pivotal role, customs thinks we should know better, and they generally come after us harder than the people that we serve. So it's going to be an interesting year of change for a lot of companies that have been doing it this way. I praying for him, and of customers coming down pretty hard on those of us that transact this business to do it the way that they expect us to dub.
Doug Draper 6:26
Yeah, that's interesting when you mentioned this topic this morning, and I was unaware, right? And I'm sure, I am a perfect example of the vast majority of people in the supply chain logistics world. But I think the key two things here, and I'm sure we're gonna mention this first one multiple times as we walk through the show over the years, it's an election year, what do you do? You chill out and let it ride? Do you enforce depends on what side of the group you're trying to, you know, gain votes from and everything else. So we're going to be very, I have personally to be very careful in my comments related to political matters. But the other piece is, what about the AI? Is this going to hyper accelerate the use of artificial intelligence to do the blocking and tackling of an entry? We spoke about that on the horizon? So did the horizon just become a lot closer and smack us in the face with this ruling? And it's all gonna depend on on if they are the enforcement strategy? So that's the
Pete Mento 7:25
billion dollar question, Doug, what you just asked is, given how technology has become so pervasive in our industry, and everybody, I don't care if you're doing truck brokerage, customers, house brokerage, air, freight, ocean freight, we all use our technology platforms to make us more efficient by inserting information and language into documents. So what's customs gonna say about this? When so many logistics platforms, you know, our operating systems were created with that premise of speeding things up by having connectivity from the point of origin to the point of import? It's gonna be a hell of a year, Doug?
Doug Draper 8:01
Yeah. Good point. I like that one. I like that topic. Alright, man, my first topic is 2024 is going to be the year of autonomous trucking. Right? There's been so much hype in the last couple of years related to electric vehicles, and how do we get these class eight trucks to become electrified? Right. And if anybody's followed it, the Nicolaas saga, I can't remember the gentleman's name, but he's now in jail for fraud, you know, the whole nine yards. And so that's kind of weighing it's a little more difficult. There's all kinds of challenges with weight issues. How do you charge these things? It's a whole nother talk. Topic, right. But the infrastructure to support something of that scale is just not in place right now. And so that's going to be challenging, especially in easy, adaptable markets like the LA ports, Houston, and things of that nature. So my take is that it's going to be the year of autonomous trucking, specifically with a company called Kodiak robotics. Right? I just saw that their sixth generation is ready to go live in Texas. And the cool a couple things here. P number one is the way I understand it. It's a retro uplift of existing so they're not building new trucks. They're they're uplifting or retrofitting them so that means it adaptability is a little more quick, quickly. There's a heck of a lot of redundancy in these things. I'm sure that is an absolute yet it makes me feel safer. I think they're gonna hide that and really underscore the safety especially with the 737 max that's transpired in the last couple of days. Here's the one thing that companies like Werner IKEA, the US Department of Defense, Tyson, CR England, and then load Smith just committed to like 800 unit It's mayors has even engaged. So there's lots of big names multibillion dollar companies that are embracing this. And obviously, this works well out west. Right, Texas is the is the epicenter of testing. So the I 35 corridor is going to be huge for this. And then the long hauls from Kansas City to Denver, Denver to Salt Lake City if you go up and around. But here's the deal. The last thing I'll say on this is, here's what autonomous trucking brings brings trucking brings to the table efficiencies, managing driver shortages, safety, maintenance, reducing accidents, all of those things equals saving money, right? The challenge with Eevee is it's a nice to have. But in the big picture, it didn't save any money. And these are all businesses, and you got to follow the money. And so the adaptability of the autonomous trucking industry, there's others out there beyond Kodiak, but it's really going to ramp up in 2024. And it's all related to the cost savings that are involved. Not a nice to have with an electric semi that you can showcase because you have one in your fleet. So it's the year of autonomous truck. And my man, what do you think? Just want
Pete Mento 11:15
to clarify, because you know, when I saw this topic come across last night. This is converting just regular diesel and fossil fuel trucks to have autonomous control. Yeah. Yeah. I can't wait to learn more about it. So when that came up last night, I saw the topic, I kind of had this I'm a moron moment, like, you know, like, appointments a moment? Why hadn't I heard more about this? Like, why haven't we heard more about this idea of converting? What's working now? Working now, I guess, you know, depends on who you are, whether or not it's working. But these diesel trucks, the smaller gas trucks, you know, why haven't we just tried to convert their drive systems to one that's controlled by a robot? And like, why haven't I heard a lot about why haven't I heard a lot about this? Is it was it because the people that were making these trucks are in direct competition with EVs and they didn't want to, or they didn't have the technology? You know, I didn't know. But what a fascinating topic done, you know, what a, what a fascinating idea that, in the meantime, while we figure out the weight problems and the battery problems, maybe we can take one of the things that we think will be an effective solution and apply it to the existing technology. Really, I mean, why are we seeing more about this? Why aren't more people talking about it? If I were Killingworth or Mac or someone like that, you know, I, I'd be pushing this on my trucks. I have no, yeah,
Doug Draper 12:46
yeah. Well, it's definitely a strategy they have rolling out. So we'll have to have our listeners, do a little bit more research and give us your feedback. We ask for feedback when we post these things out. So give us your thoughts on on what you think there. So all right. My favorite part of the show is halftime, you and I banter about stuff that has nothing to do with logistics maybe every once in a while. But it's brought to you by CAP logistics, which is our producer and our and our host and providing us the platform. So people you let it rip brother, I got to cool. And when I want to I want to go second this go around. So what do you got for halftime this week?
Pete Mento 13:25
I've enjoyed a lot of shows, even shows that I've watched before, because I'm flying a lot. And there comes a point where I just need to not work on the plane. And like I watched all of Game of Thrones from start to finish every watch madmen. And I was really, I mean beyond tickled duck I was. I was euphoric. When yesterday morning, I was having my breakfast at the fluido center in University of Wisconsin. And I turned I opened up Amazon and lo and behold, my friend, northern exposure was available for streaming. And this has been something people have been crying out for me go on the internet, go on Reddit go anywhere. And they're gonna say where is Northern Exposure? eight seasons, I think it's 13 episodes a season. And the reason that they couldn't do it was because there was so much music that was used in the show. And they were having a hard time with the rights associated with it. And I guess they've overcome that by in many cases, laying down alternative tracks that they could get. So they would remove the music that was used before. And they've overlaid it now with music that they could get the rights to really interesting. But the show for me, I remember when it came on. It was it was something that I actually bought a VCR to record. So I didn't miss episodes. And I just liked the idea of a fish out of water from New York. For those who don't know, he's a doctor and in order to pay back a loan that he was given by the State of Alaska. He has to be a doctor in a rural town, and all the personalities, all the other weird people that are in that small town are all very relatable. And the stories never got boring. I was fortunate that a friend of mine took me to the town in Seattle, Washington, where they actually filmed the exterior shots of Sicily, Alaska. Beautiful. And I love that show. So, I have been to Alaska a billion times, Doug, I, I you know, shipped up there. I've spent plenty of time in the great white north. It is. It's breathtakingly beautiful. It is an odd place. As much as I love it, Doug, I don't know if I even me, you know, Mr. curmudgeon. I don't know if I can handle living in a small Alaskan town. So that's my my question this week. Doug, I know you're moving to a place a little more remote, but it's not remote. It's still a lot of people there. Would you move to Alaska?
Doug Draper 15:58
No, no.
Pete Mento 16:01
Next topic, you wouldn't be able to do it.
Doug Draper 16:03
Now, which seems counterintuitive because of where I'm moving. Or have technically moved. But yeah, I don't know, man. It would be fun for a bit. And then I think I would go nuts, especially in the winter, the beauty all those types of things that get it right, but that's
Pete Mento 16:21
like, you and Keenan are big skiers, you're big outdoors people. I would think that it would be I'm a big hunter, you know, so for me, Alaska would be a paradise for that part of it. But all that stuff means the two of you live outside, even in the winter. So you wouldn't know.
Doug Draper 16:39
Yeah, you can eject and get back into society pretty quick. And Colorado, right? I mean, I would I wouldn't be afraid to. Yeah, I'm starting to get more claustrophobic. When I get older. Like I go through the Eisenhower tunnel for people that are here in Colorado, you're probably in that thing for, you know, a minute and a half. If you're driving, I freak out if things slow down, or there's ever stopped in there, right? I would feel the same way with the isolation of being at some town that the only way in and out is on a plane and there's a storm and I'm running out of food. And I'm in a panic. So no, I would not want to live in Alaska.
Pete Mento 17:12
I'm interested to see what Keenan thinks when we get off the show. If he would do it, if he'd be up there making his Gorp and, you know, living off a moose burgers, but I guess we'll find out. Alright, Dan, what's your halftime topic?
Doug Draper 17:24
All right, so mine is all about space, which is kinda like Alaska to some degree, right. And so, you know, there was a moon rock, and I'm trying to remember the name of you remember the name of it here. I wrote it down. looking it up here. It's
Pete Mento 17:40
talking about the new Atlas, the new SpaceX wants to
Doug Draper 17:44
do. Yeah, static I am with doing it. But anyway, I was going to talk about that and how there's human remains that are on the rocket. And like, shortly after the takeoff, it's been redirected because there's a fuel leak, and there's not enough juice to get it to where it needs to be, to be able to land. So the whole thing has just been, it's still in space, it's still doing some things, but it's coming down. And a human remains will not be sprinkled on on the on the moon. But I started doing a paragraph, that's the name of it, paragraph P r, I G, P E, R E, G R I N E. Anyway, so it got me looking at some space things. And this one really caught my attention peaks super important. And I'm gonna read some of this because I don't want to mistake because this is super important stuff that's going to affect you and I, probably tomorrow, right? So there's a doctor who is an associate at a research university, who has spent decades studying Neptune and Uranus. But she's not been been involved with the study. But they're essentially saying that the color change in your anus is not as dark blue, as had originally been indicated that those two planets, the color P is more closely aligned. And earth based studies is the summary here. The comprehensive study should finally put both of these issues to rest. But I didn't even know there was an issue with the two colors of a planet right? And it will this other one, it will be vital, I don't even understand what this means be. It will be vital in placing the discoveries of this future mission into their broader context. Right, so I don't it's, I don't get it. I don't understand how discovering that one planet is a different shade of blue than we used to think that we don't really have that many problems down here on Earth. And so I just caught that out as the absurdity of certain things. And I'm sure there's some scientists out there they're gonna you know, rip me because it has some some sort of value but my life is really going to change tomorrow. But now that I know that information. What about you? Well,
Pete Mento 20:02
Doug, a friend of the show on gear, who, you know, you met him at Microsoft, he is, he is the only person that I know that is more obsessed with the space program than I am. And we've we've talked about stuff like this. So the planets you're talking about have been unexplored by human probes. And the colors that we see are generally a good indicator of the environment, that's the gases, the material that's on that planet, and the spectrums of light, that they, you know, they show up on. So our ability to explore to send probes and that kind of thing will be will be really go hand in hand with the environment that it's going into. And if we've been basing our science off of what we've been seeing, right, we might have to completely change the way that we determine how we're going to land on those places with probes in the future, what it could mean for human exploration, there's some planets that will, we'll probably never put a person on like Mars and Jupiter. But Venus is a possibility that will, that's the next step after Mars. That's probably where that comes from. You know, if you're not watching for all mankind, it's an incredible show. And it gets into the opportunities that come from space exploration, rare earth minerals, in this season there, they're actually focused on exploring, finding meteorites out in space. In this particular season one is made almost entirely of iridium. And Iridium is is very important for the future of EVs and, and our technology here, but there's very little of it. So how would we use exploration to get that a lot of these rare earth materials are on Mars? You know, would it be worth bringing that back through from from that way? That's how they're gonna monetize these explorations? That's probably where it comes from. But yes, Doug, that is a pretty weird, interesting, but like, you know, weird area of science. I would love for some, Alan probably knows, to tell us why the pillars are so important. But But that's, yeah, I mean, it just points out how dumb the two of us are that we don't.
Doug Draper 22:01
Dumb, uneducated and disinterested. Right?
Pete Mento 22:06
We were boxes a crap for people. That's what we do. We're,
Doug Draper 22:09
yeah, yeah. Anyway, it would be fun to talk to Elon about it, because maybe I'm completely wrong. And it will literally impact my life starting tomorrow. But we'll have to see. So anyway, that wraps up halftime cap logistics up, put that together for us, please check them out of their service offerings at cap logistics.com. All right, but you're up
Pete Mento 22:31
number two. Second topic, I was doing some research for my seminars. And I came across a pretty interesting statistic. American LNG gas exports from no November to December, since the October 7, nastiness that went on in Israel, more importantly, with the Red Sea issues have gone up 35% 35%. So American energy exports are going through the roof right now. And that has a lot to do with the inability of vessels to go through the Suez and to transit, the Red Sea. And in particular, Europe, needing to get as much energy as possible from the US. So if you start reading about this on Bloomberg, and Forbes, and Financial Times in The Economist, all of them say that this points to what's probably going to be a decade or more or more of American increased exploration for natural gas, drilling for natural gas and then exporting it, which is super important for the American economy. But another knock on effect that they mentioned is increased exploration and drilling is probably going to mean more oil and gas in the US, which should probably dramatically lower gas prices. So really interesting that there was a knock on effect, like a silver lining of what's going on over there, which is kind of a real embracing of American energy exports, and the money that comes from that. So it was a fascinating rabbit hole. I went down over the last couple of days, but 35% That's, that's no small potatoes do. That's that's not marginal. That's a big deal. Yeah, you're saying it's probably going to grow even higher. But this time next year, if the conflict continues, it could be as high as a 50% increase. So pretty interesting. Yeah.
Doug Draper 24:19
Well, when you got all the chaos, and you got to drive, or navigate your vessel around the Cape of the Horn of Africa, right? Hey, let's just go over here to the US and buy some stuff and have the transit time a little bit shorter and, and our whole supply chain is condensed back to the level that it was and our citizens and the things we need to use oil from are not impacted. So totally get it. The one thing Pete that you just brought up that I had not thought of is that if there's a buyer, and we have their product they want to buy in the ground, and we're going to find more of it to sell more of it. We're also going to benefit Initially, when I was saw this topic, I'd be like we're going to be, it's going to be punitive and punitive ly affecting us. Yeah. But I think you're right. Just turn on, literally turn on the gas and let and let's see, and I think it will. It's an interesting spin. I'd not not thought of that one. But yeah, we'll have to see how it plays out.
Pete Mento 25:19
One more thing to add to that, Doug, you know, West Texas guy, Colorado, Kansas, Louisiana, as well, a lot of jobs. A lot of jobs are dependent on this particular area. And because of our embracing of alternative energy, a lot of those jobs have been slowly slipping away. This could be a recognition of that whole job market, which know Odessa and the Permian Basin up in Texas, they need it. So it's good for Canada as well, which I think I neglected to mention. Yeah, yep. All right, Doug, bring us home. But all
Doug Draper 25:53
right. Well, this this headline, right, I was trying to come up with a fun headline. And this one is, don't sleep on Bradley Jay Wright. And I'm talking about Brad Jacobson, you know, I don't know if you've seen the starting to? Well, he grew XPO through acquisitions and mergers, and made a lot of money for a lot of different people. And then he split it off, right. So he built it up, and then you split it off. And now he's moving on to his next thing. A lot of people may not realize that he did the same general concept with United rentals, which does commercial renting of, of larger equipment, and then not waste management. But there was another waste company that you started. So his angle is ingenious, defined unsexy, under the radar. Not poorly automated, but just old mom and pop operating industries that are absolutely critical and taking them up. So what I'm talking about Pete and I'm gonna pull in some of the stuff up, so he's starting a new venture called QXOQX. O. and E is going to basically have a tech forward building products distribution, through accelerated mergers and acquisitions. That's, that's the aspect. So you know, the Georgia Pacific's of the world, the ABC supply, those types of companies that are providing it, construction, ah, back infrastructure, landscaping, and he's gonna bring it all together over licensed tech and, and then probably a break it off in the future. I don't know if that's true or not. But the guy found another unsexy industry that he's going to ramp up, change the dynamic and how it how it grows. And think about the housing market. And I think there's like, you can talk about different statistics, but 3 million, you know, homes that are short, 3 million units or dwellings underneath demand right now. And so there's going to be a whole heck of a lot of building when that interest rate drops a little bit more, there's gonna be a lot of retro building a lot of infrastructure management and replenishment. So it's genius, right? I have a lot of respect for this guy. He's done some amazing things. And, you know, don't sleep on that. Bradley, Jay, you know, he's going to do some amazing things. And I think his name is going to be up there with gates and Bezos with everything that he's doing. And if anybody knows, Brad Jacobs, Senator Bradley Jacobson, you know, we want him on the show. I want him on the show. Hell, I'll just do my own little podcast on the side and interview him. I think the guy is amazing. He's done some some amazing things, very forward thinking and check out XPO or excuse me, q x. Oh. And oh, by the way, he's involved with the logistics company that can move all this stuff around XPO. So it'll be interesting to see how this whole thing develops. And anyway, I saw it on the news the other day, and really dove into it and thought it was really interesting and wanted to share it with everybody.
Pete Mento 28:55
Yeah, I started looking at I heard about any of this stuff until you brought it up. It's very Berkshire Hathaway, if that's a way of describing it, you know, it's yeah, it's a, it's a bedrock kind of industry, that could use some disruption, but it already makes great money. So just by doing it, the way it's done, now, there's this nice catch to it. So if you can find a way to make it more efficient, you're gonna make even more money, and then doing it at scale, you're gonna be able to control markets. So yeah, this was a pretty interesting topic in that it has so much to do with what we do. A lot of the materials are important. A lot of them are going to be moved vast miles from from where they were originated, to where they're going. I just think it's, it's interesting that even in 2024, when you think nobody can find a way to automate something, no one can find a way to combine it. There's still so many industries like this, that could really gain from consolidation and the insertion of technology and then just having somebody really move it at scale so fascinating, really fascinating. Guy feel it's gonna make a lot of money. Yeah,
Doug Draper 30:04
yeah. Well vamanos Bradley J. Hammock call us man love to talk to him in more detail
Pete Mento 30:09
about it. So we'll just have to stalk them on LinkedIn, buddy. That's what we'll do. Yeah,
Doug Draper 30:14
exactly. Cool.
Pete Mento 30:16
That's all I got. Yeah, that's, that's gonna do it for us this week at global trade this week brought to you by our good friends at CAP logistics. To learn more about CAP logistics and their services, check them out at cap logistics.com. I bring this up all the time. We don't work for CAP logistics. And for years now, they have been supporting the show, making sure that this content gets out to you. So please do us a favor and go ahead and check them out. Thanks to Kenan back in the booth. And thanks to all of you for watching and listening. And we'll see you again next week with another edition of book trade this week.
Doug Draper 30:46
Excellent. Thanks. Thank you guys.
Transcribed by https://otter.ai