Global Trade This Week – Episode 166
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Keenan Brugh 0:00
You're watching global trade this week with Pete mento and Doug Draper.
Doug Draper 0:08
Good day, everybody. This is global trade this week. My name is Doug Draper. On the other side of the coast is my good friend, Pete mento, and we are stoked about this, about this week's episode. We delayed it one day because of a hot topic that everybody's been talking about. And we're going to have a one topic show. We're still going to have half time. Don't worry about that. But this is too important to pass by. So Pete, here's my question to you, when is this strike going to end?
Pete Mento 0:43
Doug, you had to do it. I have answered that question two dozen times, maybe today, and I've answered it the same way every time. We have no idea. I think the only people who have an idea would be the senior leadership in the union. Who knows how long they're willing to hold out before they'll drop this. And the carriers who have an idea of just how much they're willing to give away before it blows up in their face. This is, this is the fall of our discontent. Man, like, How many times have we talked about this topic on the show? How many times, I don't know, how many times has this come up on the show? Guys, there's a, there's, there's probably going to be a strike. There's a good chance of a strike. Hope it's not a strategy, do something, do something. And there were, like, two types of customers. They're the ones that have been dealing with mostly, which is, they did nothing, they did nothing, or they're the ones that, as you brought up a number of times, they saw something was a possibility, so they've overstocked. That was like my first question. Doug, is our warehouses full from, you know, people just buying a bunch of stuff ahead of the problem. Yeah,
Doug Draper 1:48
yes. I mean, it's not covid fall, right whenever, when everybody pivoted from a, you know, goods environment to a services environment, and the supply chain didn't pivot. So it's not at that level. But yeah, they're starting to get pretty full, and they are going to be more full. The interesting thing about this Pete, and this is not strike related, so we'll get back to that, but because of the shortened week, I made a post about this maybe a week ago, that the time between Thanksgiving and Christmas this year is one week shorter, so you got four weeks to get all your crap done instead of five weeks. And all the retailers realize that, so they're pushing the hey, we need the stuff in house into our DCS to make it on the shelf by, like, mid October. I think Amazon said the 19th of October. Don't hold me to that date. So my point is that's been bringing product in to fill up warehouses, and this will certainly throw things for a loop, but it's not covid crazy, but it could depend on how long the strike goes.
Pete Mento 2:53
Yeah, I, you know, I'm full of rage today, Doug, I think that's the best way to put it, watching watching the news, which I don't know why I do it, because when they bring up a topic that I actually know about, and they're so clearly uneducated on it, it turns me into just a cranky old man, like, what if Christmas has to be canceled now because nothing's in the country, bro, that stuff was already on its way here. All the toys are already here. They're already in warehouses. This is not as big a deal as you think it is. As far as that's concerned. It's after all of that. It's that period of time between now and, say, January, when we're trying to recover from another supply chain crunch. That's where it's miserable. You know, I had a friend of mine today. He's a harbor pilot. He sent me a text and he said, you know, automation is bad, Pete, because when I go to the port to get on the pilot boat to go meet a ship, it just makes me a lot happier that I have a person making a quarter of a million dollars a year to check my Id personally, rather than just going through a machine and having it done that way. You know, you go to a port in China, you go to a port in in Japan, you bring your credentials, they scan it, and then there's one person for every entry, or two people for every entry, who are reviewing it. And if there's a problem, then they send a person. The amount of automation in every other port in the world is staggering compared to this. And I get my Backup Buddy, just get my backup thinking that in order to maintain these jobs, which I believe in, in unions, I do. I believe in unions. I believe in unionized labor. But damn it, Doug, you're slowing down international commerce, you're slowing it down. And every other industry in the world has had to come to grips with the fact it's 2024 this one just doesn't seem to want to Yeah,
Doug Draper 4:39
yeah. This morning on NPR, I don't remember the individual that was being interviewed, but they but he made a comment, and this is a valid comment, right? Certainly, if you're on the striking side is that robots don't pay taxes and robots don't buy products, right? And I kind of chuckled the fact that he said the. Word robots, right? That doesn't necessarily mean that all technology is is robots, but that is a valid point. You know, that's a valid point. It's a it's a hard line between what you just said, supporting jobs, people, livelihoods, and moving in to match what's going on in the rest of the world related to technology. So
Pete Mento 5:23
you know what robots do? Doug, let me tell you what robots do. Robots create export jobs for American manufacturing employees. Robots create opportunities for people to work on the robots. Robots create an incredible opportunity for us to expand our technological base. Robots will pick up for the fact there aren't enough human beings anymore, and America leads the world in robotics technology. It's us, Japan and China. We blow everybody else away. So maybe this is another one of those places where what's good for the bee is good for the hive, and we do what's right for our economy, like when we stop making blue jeans in New York City.
Doug Draper 6:01
Yeah. Yeah. So just a 30,000 foot view, right? So here's the the deal, right? The management has offered a 40% wage increase over six years, and the ILA says, Nope, we want 61.5 now. For a period of time leading up to this, they didn't really say the specific amount, people were speculating 77% but it was called out today, the 61.5% wage increase. And like you said, halt all automation at the ports, which is an interesting topic that we've already covered. So that's the premise behind it. It's pretty small. It's money, money and robots.
Pete Mento 6:40
Well, I think 60 wouldn't say 61.5%
Doug Draper 6:45
is that what it was that that's what I had read this morning. Yes, I
Pete Mento 6:48
wonder if that was some you know, consultant who told them that's the number, or if they just said, let's make it arbitrary. Let's make it something weird, but let's put a one and a half percent in there, so if they drop it to 60, they feel like they won. You know, it just seems like such a weird number to go from, but the the amount of money that so back in the day, a long, long time ago, the long Sherman unions, there was a law about how many long Sherman had to be in every hold. I believe it was 28 people, and that allowed them to perpetuate this. And then as container ships came, they had to back off on that. You didn't need that many people in it. You know, the most people you're gonna see work and hold are six to eight people. That's about it. And they found other jobs to do. These unions do have no show jobs. They have jobs where people are waiting to be called on in case someone's injured or hurt or sick or can't come in. And the upper echelon of people that work for them are making a ridiculous amount of money at the lower end. Longshoring is hard work. No two ways about it. Making sure that containers are properly Lashed to the vessel, managing the mafis, driving containers from one place to another, working the crane, working a crane is an incredible skill. So all of these things are skilled labor, and they deserve to be rewarded however. You're holding up global trade if we were able to use more automation, great. Now here's the counter argument to that I never thought of until someone said it to me today, in a world where we're terrified of cybersecurity, having human beings able to do most of this must be great. I pointed out to them that all the cranes and everything else are networked so you can unless you can get a bunch of longshoremen to pick a container up and heft it off the ship, that's really not going to help you much. But Doug, it's name another industry that has not managed to become more efficient and better because of automation. Name one
Doug Draper 8:37
right off top my head. I can't I cannot, right? We've talked about how disconnected this industry is in the digital freight brokers and how I have this overlay technology, but the bottom line, it's still humans that are pushing the buttons and flipping the levers. I think I said that, right. So, yeah, I mean our industry, trucking, rail, parcel, ports, it's a lot of people. You need. People you know, speaking
Pete Mento 9:04
of people Doug, we have to worry about a sympathy strike from the West Coast and that that would just shut America down to imports. Yeah. So I,
Doug Draper 9:14
until you had brought that up a few minutes ago, I had not, I had not thought about that. I know that the teamsters are fully supportive, right? So, so that's problematic with if it's problematic, but that brings UPS potentially into the situation.
Pete Mento 9:30
Mdhl, too, I think, I think they're unionized too.
Doug Draper 9:33
Yeah, I didn't. Pete, here's the bottom line. I didn't think this was going to happen. And the reason who knew what was going up. But with the hurricane Helene that just came through, and the destruction that that created specifically inland, where people, you wouldn't think a hurricane there, but it just blasted up through the curve. There's some name for the curvature there in Florida, but yeah, the Dev is. There is, is horrific. And there's a lot of brother in arms with the type of folks that are driving trucks and and lumping containers, so to speak. So I truly didn't think this was going to go down because of that, like the final the final hours, they're like, We can't do this to the US economy. But maybe that was the straw that broke the camel's back. To make it a strike to get with, to get what, what they want. So
Pete Mento 10:25
that, I think both of us didn't think it would happen, because there'd be some kind of intervention, you know, but the the White House, I don't know if you saw ramondos comments yesterday the Secretary of Commerce, I haven't really been paying attention to this issue. I'd like to refer you to the White House. Yeah, you guys are that. You are the White House. And then Pete Buttigieg, you know, he's the one who'd have to pull the trigger on the what is it? The heart the Taft Hartley act Hartley Taft act him, or what's called that would force these folks to have a 90 day cooldown period, renegotiate, get back to work. Doing that right now would be political suicide, because that would mean that the Democratic Party told these folks to go back to work, and that would absolutely cost them votes. And you don't want to have people that are sympathetic to the labor movement seeing, you know, seeing someone come out there from the White House and saying, Get back to work. It would not do well for them with regards to voting. And if you think for a minute that a union president saying we're not going to vote, don't vote, wouldn't wouldn't happen, wouldn't have an impact. I think you're wrong. These are folks that are voting like most of us do. They're voting on the pocketbook, and they're voting on how things impact them, and if they feel like they're not being supported, they can't be dependent upon to show up at the ballots and vote for the quote, unquote, right party, for the for the Union,
Doug Draper 11:41
yeah, yeah. Those are the extenuating circumstances or external circumstances that all play in part of this, right? And just thinking right now in the moment on this show, you have Helene, which came through. There's leverage. I mean, this sounds horrible because of the destruction and the despair that's going on in those markets, there's some leverage which makes this more dire, and then the whole the election coming up, and it's a tricky situation to mandate or support or whatever needs to be done, but those are external forces that came into play, which may have predicated and created the reason for the strike. So it's it's crazy. Hey, I want to do a quick halftime, and then I want to come back and talk about some of the commodities that could be impacted. And then what you just said at the beginning is, yeah, you can turn the ports back on. But holy cow, is there going to be a ripple effect, right? So let's come back on the second half and tackle that one. So sure I'll say halftime brought to you by CAP logistics, right? That's when we get to talk about whatever we want and enjoy it and just have some fun. So Pete, tell me what you got going on for this week's halftime.
Pete Mento 13:02
I got two. So the first is, I want to give a massive shout out to both the Journal of Commerce, Peter churchwell's team, as well as G captain for the coverage that they've done on this particular topic. They've been, they've been ahead of everything. They've scooped some stuff, and they've been very good at in a meticulous, thoughtful way, putting out their things without being inflammatory or or trying to cause too much fear. So both of them, excellent publications. If you don't follow them on your social medias, you probably ought to start if you don't have a subscription to both, you should probably get one. So both excellent. And then the second one I wanted to bring up, it is the spooky season officially. Doug, Yeah, apparently we can't call it Halloween anymore. That has some sort of context that bothers people, whatever. But it is the spooky season, Doug, which means that you're going to be inundated with everything Halloween. And I'm wondering, Doug, well, you can answer this in a moment. You know, I was not a horror movie kid. That wasn't my thing. When I was younger, and I was constantly being drugged to dragged to these drugged that's funny, dragged to when I was a kid with all my buddies. You know, my buddies would get together when the new movies would come out, and we go see them together. And I would not admit to the fact that I was in abject terror while I was watching these things, but I do have a couple that I really liked. So I'm wondering, Doug, what your favorite scary movies are, or if you watch scary movies at all.
Doug Draper 14:35
You know, have not watched scary movies in quite a long time, but as far as ones in the past, right? I think, I think we mentioned this on a couple of shows ago, but Poltergeist, the original, not the remake, scared me to death, right? And if you watch it now, it's pretty lame, I guess. But Carrie Anne, I think, was that kid's name. And, man, that that show. Freaked me out. And then obviously, Freddy Krueger, the very first one, that was a whole nother level of horror movies. But I'd say Freddy Krueger, not so much the whole series, but the first one, and then Poltergeist, for sure, freaked me out. Yeah,
Pete Mento 15:14
those are both excellent. My daughter and her friends watch what they call classic 80s horror films, which makes me feel so old, and they don't think they're scary because they grew up with, like, saw, and, you know, all these real scary ones. But for me, my the two that really messed with my head were at the Amityville Horror. I was far too young to have seen that movie, and the exorcist. Those were two that really got to me when I was a kid. And then the remake of The Exorcist, any kind of religious horror. Because, you know, I am a church going person. They really get to me. So, you know, the omen that one got to me as well. But as far as modern ones go, I really like seven with, with Brad Pitt. I thought that was just an excellent movie. But, yeah, yeah, those are the ones for me. Doug, what do you got?
Doug Draper 16:01
So this one is something that you and I are both familiar with, and I wanted to make sure that our audience was aware. So World Trade Center, Denver, they've been a great supporter of both of our careers, and helped us with educational events over the years, and I just have a lot of respect for Karen and and that organization out there. So they are actually having an event that I felt it was relative enough that I wanted to share with it. So on October 8, right from noon to one o'clock, so it's one hour. That's Mountain Time. They're having a very interesting webinar called The Future of trade and foreign policy in 2025 so it's free, it's a webinar. It's over lunch, at least here in in the Mountain Time Zone. And it's going to be a panel, I think there's four speakers, and then four panelists, and then a moderator. And you can learn more about the the event going to WTC denver.com, or there's going to be a lot of LinkedIn posts that you may have seen already. And so I want to give a shout out. They always bring unique perspectives. And the speakers that they have on here are, are good, a good group that will have interesting perspectives on things. And then the last piece on this, Pete is that I have always been a huge fan World Trade Center, redid their website and kind of remarketed and rebranded themselves. I was going to say a couple years ago, but I think it was pre covid. So you know, what is that five years ago? And I love this. I love it because their tagline, if you go to their website, says, from these mountains, you can see the world. And so it loops in Colorado and international trade. And I think that is just a perfect statement. And so from these mountains, Pete, here in Colorado, you can see the world. And I would encourage everybody, on the eighth of August, October, 12 to one mountain time, check out this webinar related to future of trade and foreign policy for next year. Yeah.
Pete Mento 18:04
Huge shout out to Karen Gurwitz and her team at WTC Denver. I can't thank them enough for all the support that they've given me given you. I mean, I think if it weren't for Karen, you and I wouldn't be doing this show, honestly, she kind of got us together, and anytime I've ever needed any support, any of the World Trade Centers, I've always been there, Denver in particular, has been incredibly helpful. I don't know how many times I've spoken at WTC events around the country. They really do live their mission. They really are out there trying to help. And if you're an importer or an exporter, or you're involved in our business at all, and you're not a member of your local WTC, you need to get off the get off your duff and go do something about it. They're absolutely the right types of people to have around
Doug Draper 18:47
you, yeah, for sure. Good. All right, same topic on the second half of the show. So back to the strike that we are in the thick of So Pete, I want to jump in first and just kind of give you a couple of thoughts here, as far as commodities and things are going to be affected, right? There is a lot of food and beverages that come over and hit the East Coast forks. Do you think of all the European unique? I can't think of the right word, but you know, we're not shipping in mac and cheese, right? There's a lot of of interesting foods that come over. So food and beverage are going to be impacted up in New York and down like Savannah and the Gulf or the the ports in Savannah and Georgia, dole, pineapple and Chiquita bananas, right? Those are their main ports of call. They hit it a couple times a week each. And I think that you're going to see an impact in the grocery store. Because of all the perishables, there is quite a bit of vaccines that come in. I didn't realize that I was looking at that this morning, and so there's some. Cars, which are important, right? That's kind of a first world problem with not being able to buy the new car. But I think the the food's going to have an impact. Vaccines and some medical supplies. And when you go to a grocery store Pete and you don't see things on the shelf, that just kind of creates a little bit of a panic, right? I saw the toilet paper situation during covid, and I heard on the radio here in Colorado that you can judge the state of the economy by looking at the Banana area of a grocery store. If there's no bananas, and there could be problems. So I think the food may create a little bit of a of a panic, and then the vaccines and the medical piece could be going on. The last thing I'll say to this, Pete, and I'll get you a read on it, is that, here's the cool thing is the ILA said that if there's any military cargo, will not be effective. So they'll take care of our military if there's things that need to be transported in that capacity. And I didn't realize this, but tankers and LNG liquid natural gas, they go to different ports, and even though they go different ports, they're not going to be affected, as well as bulk commodities, grains and stuff like that. So not 100% of things are shut down. So I wanted to call those two things out. But what's your read? What are you hearing about with commodities that could have a ripple effect?
Pete Mento 21:19
So the the petroleum one's very important, right? So you're going to have raw crude coming in where you've got a problem, or the chemicals necessary for distillation processes, all those folks that are doing the refining, the chemicals that we use for that, those come in through those ports. So yes, we probably will have what we need. As far as you know, crude oil goes, but being able to refine it could absolutely be impacted the banana one is one that really I'll never forget. I used to, you know, work on the ships in the port in Delaware when they would come in, when I was doing Marine Surveying to make money on the side. And the fact that we just don't really grow bananas in this country, you know, you'd see plums and pears and peaches and everything come in and those fruit chips and then go into cold storage there and in Savannah, that will be impacted. I think also, we should spend a little time understanding the automotive industry parts. If you're looking for parts, there's going to end up being a gap now from when parts are coming in via ocean, so getting repairs done to your car will be impacted, and everything else from that. I'm not so deeply concerned, but I am. The longer this goes, the scarier it's going to be on the recovery, particularly in parts of our world like building, construction. Parts for buildings, chemicals is a huge one, and then anything associated with pharmaceuticals and medical devices, it's a messed
Doug Draper 22:40
up, it's a mess. And the the last, last thing I have on this one is that, you know, it's a supply chain, and it rolls down, so, yeah, there'll be a big news blurb whenever it gets resolved and the ports are back to normal and we go about our daily life. But what about the trucks that are backed up? What about the product that is that can't get to the final mile, and, oh, by the way, there's a catastrophic hurricane that just hit a significant area of that. So just because the ports are open doesn't mean everything's back to normal. Like you said, it's a ripple effect that could last weeks, right? And so if you're in the you know, end of October, and you're wondering why there's no bananas, or why it takes a week to get your car fixed. All of those are going to have implications, and it could be leveraged with the election this year as well. So it ain't over. Just because the ports open up doesn't mean the situation is resolved. It's going to go on for weeks after things open up, let alone until they resolve the issue? Yeah,
Pete Mento 23:44
you think about what the cost is going to end up being on on this and then the ripple effect of the availability of equipment. If all the containers are here, they're not over there to get stuff, and there's going to be a lag of getting equipment back over there. And I think capacity is going to be harmed as well as there's a backlog of manufactured products that have to come here, whenever you have those two things, prices go up.
Doug Draper 24:06
Yeah, last point, then I'll let you kind of close the show out with your comments I just read literally 30 minutes before our show time. Here is that Maersk said that it would introduce a port disruption surcharge on all cargo moving to and from the US, East Coast and Gulf ports, beginning on the 21st of October, anywhere between 15 130 $700 so I just thought that is like, hey, they're going to get their money and they're going to take care of themselves, right? So you have a strike, we'll implement a port disruption surcharge, so I thought that was just icing on the cake.
Pete Mento 24:46
Yeah, never let a crisis go to waste. Doug, you know, I say it all the time, Don't hate the player. Hate the game. They've created an environment where they can find ways to profit from chaos, and that's a huge part of our business. Overall, when things are crazy and you need help, that's when folks in the middle are the folks that control the rails. They make the money, buddy, you're, I mean, you hit the nail on the head. It's, it's, uh, it's not just going to be them, you know, if they're successful with it, it'll be everybody else. And, oh, for sure, we don't make more money on that. It's just one more thing of cost we have to pass on to someone else. It's not a financial opportunity for middlemen. It's financial opportunity for the folks in on the rails. Well, with that, Doug, I know that. I don't think we've ever done one topic for the entire show. We even managed to get a good halftime in there. But you know, thanks, as always, to the good people at CAP logistics for just their continued unwavering support of the show. Thanks to all of you that take time out of your week to listen to us, send us questions, reach out to us on social media. Thanks to Keenan Brugh to mention and I've yet to vilify on this podcast. So whatever Keenan and thanks to you, Doug, as always, my intrepid partner on this show. And if it happens in global trade next week, we'll be talking about it on global trade this week. Global trade this week. Have a great
Doug Draper 26:03
week. Bell. All right. You too, buddy. Take care. You.
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