Global Trade This Week – Episode 180
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Doug Draper 0:00
You're watching global trade this week with Pete mento and Doug Draper, Hello everyone, and welcome to another edition of global trade this week. My name is Doug Draper. I'm one of your co hosts. The other co host is across, not across the pawnees across the country, and by the ninth 1600 staircase behind him, that's like nine inches wide and a foot and a half tall. You must be in the nation's capital. My friend, how are you doing? I'm
Pete Mento 0:32
doing good, bud. Thanks for asking. I'm feeling a lot better. Whatever this cold was that everyone's been getting. I don't don't get it, folks. Wash your hands. Stay away, stay on airplanes, do whatever you can. It's been almost two weeks now. Wow. I just, I just feel like hell still. So
Doug Draper 0:47
nice, good. Well, I didn't introduce you properly. It's Pete mento Pete. I usually toss it over to you on that one, so my apologies, but I'm glad you're feeling better. You have the baseball cap. I have the stocking cap. I woke up today and it was negative 17 in Steamboat. So it's cold, cold everywhere,
Pete Mento 1:05
yeah, but it's in the low 20s here, and sunny and cold, which is not normal for Virginia. So there's snow on the ground ice everywhere. People are not ready for this,
Doug Draper 1:16
yeah, yeah. We're in the thick of it. So, and what also happens with being in the thick of it, Pete is this show. So let's get this party started. What's your first topic?
Pete Mento 1:26
My first topic is one that I am sure Doug is going to hate. Like, I don't even know why I asked you what you're going to think about it in the in the pre show, text message. But SpaceX has been slowly leaking out information, videos, data on their website about the use of their rockets to move people. And one of the most eye catching things about it is anywhere in the world to anywhere in the world in an hour. So from any major city in under an hour, any major city in America to any major city. So as an example of that, the first launch is between Shanghai and Houston and Austin, excuse me, will take 23 minutes. New York to Amsterdam will be 17. And these are rockets that will go into low, low orbit, low earth orbit, and then come back down. And they'll just be reused over and over again, which is kind of the point of the technology. At first they're saying it's going to cost about 10 million launch, but it should get down to about 2 million pretty quickly. Million pretty quickly. And given the payload, that's 1.5 million pounds, kilos, excuse me, of cargo that it moves. So really, to me, the people side of it, I could, I could honestly care less. I think it's going to be a very expensive Lark for some people to get to do. But for the cargo nerd in me, it's fascinating, this idea that they'll be able to move basically serve at $2 million they're serving the the the public at about 75 cents a kilo Doug, which is pretty incredible, and it's going to completely change the infrastructure of the world when this happens, not if it's a question of one, and when it does, where all these major airports are, which cause all kinds of problems. We've talked about this in the show before, like, why? Is Chicago hair where it is? Why is JFK where it is? Why is LaGuardia where it is? They tend to be in parts of the city that just creates congestion by them simply being there. He's going to build these rockets then build tunnels from where the rockets discharge the cargo and distribute it from there. Doug, I know you're going to hate this. I just feel it. But I for 1am, all about it. I think it's fantastic and incredible, and I can't wait to watch it actually happen. Hopefully I live to see it. But Doug, where are we at with SpaceX and rocket cargo?
Doug Draper 3:31
It's silly that I don't even know when I saw this one. Pete, so let's say all of this comes to fruition decades, 50 plus, years down, like the infrastructure that's needed. And it's going to be very, very few markets that this would be able to realistically. It's just, I don't, it's silly. You know, it
Pete Mento 4:00
the modern start, really modern ocean container shipping is only around 50 years old. So think about that, right? And then the use of air cargo, you're probably looking at just, you know, probably 100 years that we're moving cargo via air regularly. So I think you're, you're just, you're not thinking about tomorrow, buddy. You gotta think about tomorrow, like, like, Fleetwood Mac said, but, you know, there's something pretty incredible on the horizon.
Doug Draper 4:26
Well, it, yeah, I still think it's nonsense, but, you know, whatever, it's the infrastructure. We've talked about that a lot, right? Infrastructure and whatnot. And it's like, doesn't it's not like, it needs to be improved. It does not exist, right? It does not exist, and so you got to create that first and then. And this is rhetorical questions you don't have to answer. Who's going to use it, who's going to pay for it? What's the purpose? If the purpose is to get there faster, and the infrastructure to have a rocket land is not outside of O'Hare or or DFW. Two, right? It's in the middle of nowhere. So if the idea is speed, you may get it from point A to point B, really quick, but to get it to the end user or a hospital or something that is urgent, it I don't know it's not really going to happen, but I guess the biggest, peak, biggest piece Pete, is the infrastructure doesn't exist that is decades, decades away. You and I will never see it. We'll
Pete Mento 5:24
see Doug. I hope I get to clear an entry on a shipment that came in from space. You
Doug Draper 5:29
know? Yeah, I have to admit, this is and I can't remember this. I just thought of this. Why we're talking there was something that we disagreed, and it was probably space logistics, and you were had a very eloquent way of talking about humans and the foresight and how you have to shoot for the stars, and we wouldn't have done the things that we did with with without that vision. And I had my my family listen to that, and when they got done, they looked at me and said, You're an idiot, Dad, you're an idiot. Pete described it perfectly in the vision. And then I'm like, You know what? Who's going to write the check for the mortgage next month? Because it's not going to be this, this lofty vision. Well, that
Pete Mento 6:08
lofty vision of what you do today was just a concept when we were beginning to be in this business. And over time, the beautiful science of what we do has evolved. And I think now we need to realize there could be a whole new mode of transportation. And it's not just, it's not a might happen. Doug, it's gonna happen. So you know, talking about tunnels with with the Hyperloop technology that they own at Tesla, cargo moving over 500 miles an hour from one destination to another using vacuum tubes. It's, it's, it's gonna happen. It's the question of, when you know it's inevitable, the question is, at what point will it no longer be inevitable? It's going to take a while, but I will never, ever bet against Elon Musk and Tesla and their ability to make the wildest dreams reality. Okay, okay, all right. What do you got? Doug, right.
Doug Draper 6:59
I'm landing the spaceship and getting back to a little reality here. Pete, there's two things that popped up in the news recently, which is consistent to a trend that we've seen in the industry. One, one was last week, and I think it just kind of got lost in the shuffle, right? But FedEx is going to spin off, or divest itself from their LTL business unit, right? We saw that with UPS 2001 I believe, when they sold everything to T force, the Canadian based company. So FedEx is in the same process of doing that and divested itself with the LTL business. The other piece, unrelated story, but there is a connection that I'll make here in a second. Is that UPS and USPS are ending their Sure Post partnership. So FedEx has a similar program that I think is called Smart post. I think they've renamed that to like ground economy or something. But basically, for those listening, it's having the post office take the final mile, right? They deliver to every zip code in the country, and let FedEx, or UPS, take it all the way to the destination delivery unit, I think, is where they inject that stuff, and then they make the final mile. So a lot of this specific to the UPS, USPS, end of their partnership, part of its related to the contract in 2,003rd or 23 when the Teamsters, you know, when, when they needed to get access to more packages. That was part of their deals, they wanted to move more, more packages. So this is a direct result of that. And then the post office, you know, they're reevaluating all of their contracts, right? Which is kind of this one's interesting, right? They shifted air cargo from FedEx over to UPS, but then they UPS just canceled the agreement that they have. So that shows that all parties are transparent. All parties are trying to find the best solution for their business. But the bottom line Pete is it shows that that there's increased vertical integration, that we're moving towards networks of profitability UPS has been the leader in this, in my opinion, of just getting rid of the noise and the nonsense. They got rid of coyote logistics A while back, and they got rid of their LTL, obviously, and so their laser focused on their parcel. So FedEx has got their plan. UPS has got their plan? I hope the post office has their plan. I don't think that they're a loser in this arrangement. I think it's a great way for them to right size their network look for efficiencies and savings opportunities. I just hope they take advantage of this and and do it. So I don't know, did you hear about the spin off or the divestiture? I think is the correct word to be used,
Pete Mento 9:50
not, not until you sent it over. There's such big moving parts, you know, and there's, there's so much going on in these gigantic, monolithic companies, when you've extracted all the profit. You can from. It makes sense to sell it. Let's see if anyone else can find more oil in that, in that patch where you've been drilling. And I agree with you. It's just another great example of how companies are refocusing on what it is they're supposed to be doing, and letting other people who want to focus on those niche or maybe less obvious areas of business to focus on it. This will not be the last time we talk about this this year, but I think we're gonna see a
Doug Draper 10:23
lot of it. Yeah, yeah, for sure. All right. Well, that brings us to halftime, one of our favorite parts of the show. It's brought to us by CAP logistics. As we always say, we wouldn't be here week in and week out without their support. So again, thanks for capitalistics. Check them out cap logistics.com. So Pete, what do you got? What's your halftime topic for today? The
Pete Mento 10:44
perfect sandwich. Doug, I am a sandwich guy. I find them painfully convenient. I can load them up with a lot of vegetables. It's like salad with some bread. Buddy. So I, I have been thinking a lot about a particular sandwich lately because it's so far away from me, which it really makes my heart sad. But the perfect sandwich, Doug, if you were going to order a sandwich, where would it be from, and what would it
Doug Draper 11:11
be? Yeah, I thought about this one couple things where I would order it. So folks in Colorado may know this, right? So there's a sandwich place in Frisco, Colorado. It's a great little Main Street. It's called deli belly, and it's owned by some folks from Boston. And when you, when you walk up there, first of all, they don't take, it's only, it's cash only. They don't take any credit. And they got a machine in their store. And this and the sandwich places, I think maybe four people can eat in there. But you walk in, you got to have your act together. They're probably not being mean, but you feel they are, because they're from Boston, and you got to have your act together. So they have a grinder piece that is really good because it's shredded lettuce and they have lots of oil and vinegar on it. And I'm just a basic guy. Give me an Italian slash grinder sandwich. So if anybody does any skiing up there, go to Frisco deli belly. They don't take credit cards, so be prepared. And they're going to get a little up in your business when you take when you place your order. But that's just Boston being Boston. Go check it out. That's my sandwich, the
Pete Mento 12:18
Doug. We're in agreement. The perfect sandwich is the Italian cold cut. The Italian cold cut, for me, the best one you could possibly get is at a bakery in Boston called bovas. Not Mike's. That's that's a bakery, but not Mike's, not modern, but a little bakery down near pizzeria Regina, called bovas. They make their own bread every day, and they hand slice all the deli meats, one at a time for you, as you order your sandwich, they pile it high, and they have the all the necessary things for a true New England submarine sandwich. You know what you're you're talking the shredded lettuce, the the diced tomatoes, all those things in lots of oil and vinegar. They're huge. And when I was in graduate school, my grandfather had opened up a account with them where I could go there and spend like 100 bucks a month on sandwiches, and Bovis fed me through most of my Harvard experience. But that is the perfect sandwich, in my opinion, a strong runner up, very strong runner up is the Falafel sandwich on basically any New York street corner where you have your falafel inside the pita. Some guys go shawarma. Not that guy, but I believe that's the perfect secondary sandwiches. The falafel, lots of tahini sauce, you know, cucumbers, all of it. It's fantastic. And there's some guy who's just serving it out of like a little metal box on the side of the street. Always cheap, always good, and you don't have to wait very long, so if you're busy, it's a great way to get things
Doug Draper 13:46
going. Yeah, I love it. That's cool. We got my sandwich was some folks from Boston, and there you go. So the shredded lettuce and I forgot the diced tomatoes, yeah, yeah. I also
Pete Mento 13:58
like the pickles on the restaurant. See, we talk about trade for a long portion of this, but it's nice to talk about, talk about a little sandwich shop and do a shout out to my friends at both. Is God blossom.
Doug Draper 14:09
Yeah, very good. Very good. All right. Well, I was talking to some friends about this one the other day, and I'm not going to do this topic justice, but I wanted to bring it up. Right? We were actually, bear with me on this. We were listening to Barry Manilow, right? I don't know how this came about. We were listening to Barry Manilow, and I don't know if you knew, but he wrote an insane amount of jingles from the 70s and 80s that you and I know. Keenan probably knows a couple of them. And I was just blown away. And then we were watching TV, and then all of these weight loss drug commercials came on, right? Ozempic, and we go V and all these kind of stuff. And the one common thing is they have great jingles, right? And so I'm not going to sing for you, Pete, but I'm going to give you a couple of jingles from this. The 70s. And the irony here is they were trying to sell us food that probably wasn't very good for us. And now those people have gone on, and they're boomers, and now they're retiring, and now here's all this stuff to have you lose weight and guardians, I think, does like kidney disease, things like that. But so here's some berry mantle and jingles. Right? One was, you deserve a break today. By McDonald's, you deserve a break. Yep, yep, and then on, if you remember this, but Dr Pepper, literally had a commercial that said 10 to four Dr Pepper, yes, they wanted you to drink a Dr Pepper at 10am 2pm and 4pm
Pete Mento 15:39
my daughter is a Dr Pepper fiend, and she has the T shirts, the old timey t shirt, yeah, three times on, yeah, yeah. So
Doug Draper 15:46
here's a jingle drink three sodas a day, right? That that's good for you. And then the other one, well, go check out Barry Manilow, because he does a whole bunch of these that, you know, Band Aid and a bunch of other ones. But, you know, he did Kentucky Fried Chicken. Grab a bucket of chicken. But it's funny. So all of these jingles in the 70s were to promote probably unhealthy food. And then now we're selling jingles to do with GOP one, drugs, specifically, oh, ozempic, zambic, yeah, exactly, and everything else. So I just thought it was kind of a fun come full circle on this one. And the bottom line is that marketing is still powerful if you associate it with a catchy song,
Pete Mento 16:29
Doug, my head is full of them. I hate, I hate to admit that, but my my mind is full of all kinds of random, pointless crap, and a good portion of it are these jingles, some examples that immediately come to mind, brown eggs, or local eggs. Local eggs are fresh. In the 1980s there was this push for people to eat brown eggs, like, don't be afraid of the brown eggs, right? And I specifically remember that one, and I remember Diet Coke. It's one of a kind you can look but you'll never find all you have to do is play the first couple of notes. Doug, you know, it's like, name that tune. I'll just start whistling them out for you. But I remember when they went from Have it your way. Remember that? Have it your way? Have it your way. Burger King, that was like a big game. But dude, jingles are the best. I remember on Two and a Half Men, right? That's what Charlie did. Charlie Sheen's character, he wrote jingles, and their stupid jingles are stuck in my head as well. Maple nut crunch and all the rest of them. I remember. It's maple, maple, maple, delicious Doug. I'm telling you, full of them in
Doug Draper 17:33
my head. Yeah, yeah. Well, there we go. I would encourage anybody in the audience to Google Barry Manilow and just somehow you know, whatever your prompts may be there, I think there's like seven songs that you and I would know in a heartbeat that he wrote. So there you go. Shout out to Barry mantle ones
Pete Mento 17:51
that make you buy groceries. Yeah. Well, thank you to cap logistics as always, for supporting us and for supporting this entire podcast, let alone halftime. Really do appreciate it. But my my next one, Doug, I'm going to get a little fired up. I'm going to get a little upset. Okay, go for it. There's a there's a lot of rumors and speculation that the incoming president inauguration days today, by the way, it just happened moments ago. Our new president right about lunch time got himself inaugurated. There's a lot of movement right now in DC to reinvigorate the US Merchant Marine, which I am all for. Big fan, five stars can promote like I'm all about it. We need more ships. And recently, there's been a lot of rumors that, in order to induce people to build ships, use American shipping. That cargo coming to America on American made vessels will not pay tariffs. So as a way of helping to induce the building of ships, if your cargo is delivered by an American ship, you don't pay tariffs. First of all, I'm not sure it's legal, so I'm going to be looking into that. But second of all, I think we have maybe 80 or 90 container ships under US flag. That's it, and most of them are already leased out to the US government. So it's, it's a fool's errand right now, and foolhardy. And at this point, America can manufacture about 15 ships a year. We have no infrastructure for it. We have to start at the beginning, which is opening up shipyards again. We have to have these large opportunities to do so by having big bids to build more American ships. Us, Merchant Marine needs them, or US Navy needs them. And it's time that we actually invented that infrastructure. Imagine if I told you that we couldn't build planes in America. How absurd you would think that was, honestly, that we can't build ships in the war with any country. Ships are going to be necessary in order for us to be able to project our power. And we're woefully inefficient and dependent on our allies far too much to move our cargo
Doug Draper 19:58
if you're running for some. Uh, position out there. I'll vote for you, right? I'm
Unknown Speaker 20:03
unelectable, my friend.
Doug Draper 20:07
Yeah, I saw that one. I saw your post on it, either the yesterday or this morning. Great. Here's the deal. I love the creativity, right? I don't know the origin of the story, but let's think of creative ways, you know, to help America succeed, right? So I like the idea, but to your point just now and in the LinkedIn post, is that it's a drop in the bucket, right? There's just, there's just no capacity to build if we were able to do it, I'll tell you what will happen, Amazon, Walmart, don't, yeah, they'll buy a ship, or they'll buy it, build it, whatever, and they're already getting into the freight forwarding racket, but they're the ones that would be able to make it possible. So the big get bigger and the big get stronger. So I love the idea, I love the creativity, but it's not going to happen for all the reasons and the infrastructure you just
Pete Mento 21:00
said, Yeah, well, we're going to have rockets anyway. Doug, so no big deal. Yeah,
Doug Draper 21:05
that's super important. I think we should invest all of our money into building rockets. You would be amazed at the science
Pete Mento 21:12
that would come from it, my friend, yeah. All right, well, bring this home. Doug, what's our last topic? All
Doug Draper 21:17
right, so this is, you know, kind of related to today, right? So it's, you know, are US shippers and clients really ready for emergency tariff orders? I think you said right before the show that Trump has a desk, or shortly, a desk close to, literally, he's going to pull a Jimmy Fallon and take his pen and then drop down and just have all of these emergency declarations, right? So that's a big one that you and I've spoke about. I have personally seen it with some clients in the last 4560 days, like we got to get our double RPO or 1.5x our purchase order, get product in here as fast as we can, and we have seen it as a warehouse people building inventories in a reaction to something that may or may not happen. Right? The fact that the Tiktok president was at the inauguration today, the fact that there was a post that you also made that said that Trump is interested in meeting face to face. Is it? In my opinion, this is nothing but posturing. I don't think we're going to see a presidential action to do this. I think there'll be a threat. But you're not making sure Tiktok has an extra 90 days. You're not inviting the CEO of that company to your inauguration, and you're not making statements about meeting with the President of China, and then all of a sudden you're going to swipe a pen, and tariffs going to go through the roof. So I don't think that's going to happen. I think there will be some posturing, which will help expedite some of the communication and meetings that are needed to have the two world's largest powers establish a good trade policy. So anyway, it was a hot topic for a while. I think there's still relevance, but I don't think it's going to happen. It will be posturing towards discussion. Wrong, okay, all right, wrong.
Pete Mento 23:15
I disagree with you. I think that the Chinese were are going to need a great deal of of pushing to get them back to the table to negotiate, and I think that there will be some tariffs, probably that 10% to try to fight fentanyl, until the President gets some momentum going. He's going to push. He came out of the gate with, with his with his butt on fire. And I have every feeling, every indication, every internal conversation I've had, tariffs are coming. They will not be as vicious as we thought they were, but the threat of those will be but I think a long standing tariff on goods coming to America from China is very, very likely, and I'll be surprised if by the time we speak next week, they're not in place. All right, we'll find out, buddy.
Doug Draper 23:57
Yeah, that's the that is it. We will find out real quick, right? That's the good and the bad and what it is, what it is with this administration. Yeah, that'll be fun to see whose perspective is more accurate to what transpired in the next seven days. We'll find
Pete Mento 24:12
out, but if it's happening in global trade, we'll be talking about on global trade this week. Want to thank all of our viewers and listeners and our friends at CAP logistics for all the continued support. If you like, what you hear tell a friend, hit that subscribe button, and we'll be back next week with a brand new episode. Hopefully it's warmer and Doug and I can dress a little less like Nanook of the North. Ish, that would be nice if you got a little warm for No, yeah, it'd be a little nice. I don't think it's gonna happen, but it'd be nice. And we thank you all for joining us. And thanks, Doug, thanks. Keenan, back in the booth, see y'all next week. Okay, take care you.
Transcribed by https://otter.ai