Global Trade This Week – October 27th, 2022
What’s going on in Global Trade this Week? Today Doug Draper of ACME Distribution and Trade Geek Pete Mento of Mento LLC cover:
2:00 -USPS Advantage over UPS/FEDEX Rate Hikes: Auctane Deal
6:50 -LTL World has started adopting digital standards
10:04 -Halftime
20:38 -Mississippi Barges Facing Drought Delays
26:09 -Surging US Dollar Value to Deepen Global Recession
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Keenan Brugh 0:00
You're watching global trade this week with Pete mento and Doug Draper.
Pete Mento 0:10
Hello, everyone, to all of you, you beautiful, beautiful people who come back week after week to watch our show. Global trade this week, brought to you by the good people at CAP logistics. I Pete mento. And with me, as always, is my good friend Doug Draper when the show is working right? Sometimes one of us isn't here. And you have to suffer through Kenan, but not this week. Or this week. You've got the AD team, the varsity division one baby Pete anto and Doug Draper Doug, how are you, pal? Oh,
Doug Draper 0:45
man, Pete, I'm doing awesome. I am doing great. I appreciate you asking that. I'm ready for some global trade. And we're going to talk about it this week.
Pete Mento 0:54
And that's just fantastic. Yes. So did you want to chat about your weekend now? Are we waiting on that for later?
Doug Draper 1:03
You know what I'll the the teaser is I spent a couple of days. Three days in Boston. That's your stomping grounds. I'm trying to get my my accent down at a wonderful experience for multiple reasons. One of them was some success my daughter had in a very important race called the head of the Charles but we'll dive into that at halftime. Great, I'll leave it for that.
Pete Mento 1:30
All right, that's cool. I love it. I'm happy that someone found some joy and excitement here in the Northeast before the weather gets too brutal and awful. So thanks, Doug for for being just a hastily made Taurus video apparently for the Commonwealth. I love that pal. Yeah. So apparently, you're going to go first with our first topic today. So that I can end with probably what will be a really depressing topic for our last
Doug Draper 1:59
Yeah, this week. So yeah. That is what we're doing. So I've been given the USPS and Uncle Sam and their delivery services a little bit of a hard time over the years when I talk about their lack of innovation or forward thinking and, and poke fun of them. But you know, I have to give credit, where credit is due. And and this one is basically I think the USPS has kind of gotten their act together a little bit. And I like it. So here's the gist of it, right? There's this company called octane. And they own seven different reseller brands of postal services. ShipStation. stamps.com, is probably the one most people have heard of ship easy ship works, saw generally the same thing where they can resell services and transportation and make a few bucks. And primarily, what they've done recently is to negotiate a contract that secures rates for all of their enterprises, right enterprise wide agreement, so it covers all of their of their companies. And I think this is a gangster move not only by oktane, but also by the post office, simply because on October 1, the post office said they were no longer going to honor and terminate all reseller agreements. And they wanted to encourage customers to have direct relationships with the post office. But just weeks after that, they just landed this deal with octane. So that's essentially an exclusive use agreement if you will. So let's not worry about all the smaller retailers let's align ourselves with the big boys which is good. And second thing it's a proactive play in my opinion, you got UPS and FedEx FedEx a little challenged financially right now trying to get back on on point and UPS staying true to their core business just had some good earnings today. But both of them are dropping off some pretty sizable increases. So let's align with the post office let's get a good agreement for all of our platforms that we work with third, it's right before the holidays because that agreement is immediate was a good place right now. So great way to capitalize on some of the I wouldn't say negative publicity but the fact that everybody's raising their rates here comes octane and their new relationship with the post office. I think it's it's phenomenal. And the last thing is that I think the consumer Pete is not as obsessed with speed as it used to be with getting their their products to their house right? That the one caveat to that is if if you just tell me where it is I can accept a one or two day delay are not even a delay but just a transit time if you give me a four day transit, okay, I'm cool with that. I can plan for it. I get it. I understand supply chain, just tell me where it is. During those for days, and that's the one thing that post office I think is really challenged, and they do not have the tracking capabilities the other guys do. So I think that could pose a little bit of a problem. But when you're talking about, hey, the tracking is not as robust as the other guys, but we're gonna save you a shitload of money. I think I know which one will will went out. So I'm here to say, the post office. Gangster move. I love it. I love the timing. I love the angle. And I think we're going to see good form, forward momentum with the post office and 2023. So I'll give kudos where kudos are deserved. Pete?
Pete Mento 5:37
Who are you? What have you done a dog? Getting on getting on here? And talking about how you love the post office? All of a sudden, were you Did you suffer some kind of brain injury when you were in Boston over the weekend, Doug?
Doug Draper 5:54
No, I just, you know what the thing about the show P is we're fair, right? We tell we tell it like it isn't in my personal opinion. I like this move. And trust me, there's a lot of things I could bash the post office about. But, you know, they played their cards, right? They played their timing, right. And I think it was a really smart move. And I'll give them some kudos for that.
Pete Mento 6:12
Well, you need to continue those kudos, because for certain levels of USPS service, they have excellent tracking. I'm just gonna, I'm just gonna throw the ball up there for your dog. If, if you if you use certain levels of service, their tracking mechanism is actually quite good.
Doug Draper 6:34
Yeah, I guess I'm either in disbelief, or unaware. And I will say more disbelief. I don't know. I've seen the guys delivering mail in my neighborhood. And I don't believe that comment.
Pete Mento 6:47
I just can't wait for the next show. When you're going to start a love letter to drones, dog. That's probably that's next.
Doug Draper 6:54
Yep. So anyway, interesting stuff. Yeah. So what do you got? Man? Let's jump into it.
Pete Mento 7:02
My first topic has to do with one of my pet peeves about the industry, which is a lack of standards. And some good news that came out yesterday, we were chatting a bit about it before the show started recording the LTL world, a small group of companies inside the LTL world have decided that they're going to start working off of one electronic standard for I think it's bills of lading, I think it was a Tronic bills of lading. And to me, this is just utterly fantastic news. It's very difficult to create any sort of technology that can be used across businesses, when I'm going to use one particular standard for how I fill out documentation. And for how I build certain documentation, you're going to have one and then our customers are going to have who knows how many. One of the things I've often talked about with friends of mine in large government. And then large industry forums like the FCRA is an example for where distribution retailers realize what if there could be the adoption by all those companies have their one invoice CFTR has one footwear commercial invoice, but they don't necessarily adopted across all their platforms. If there could just be one invoice that everybody uses, regardless of industry, regardless of who they are. Could you imagine what that could mean for the Customs House brokerage industry, if we can build our software to take in information from one type of invoice. So this is a great first step. What's unfortunate is it's a relatively small number of carriers. But hey, man, progress is progress. And, you know, I'll take it and I think the industry is gonna sit, sit back a little bit, watch and see how this goes. Take a breath and, and learn from it. It's not, I don't think it's intended or it's meant to be some magic bullet. It's just a first meaningful thoughtful step towards trying to understand how this could possibly affect change in the industry as a whole. So from the mightiest oak, come the planting of tiniest acorns, man, so I'm just happy to see that someone tried.
Doug Draper 9:12
Yeah, I like it. You know, unless you're in the industry, like we are. I think people don't realize how archaic some of the or leave rephrase that how manual some of the processes are that we go to and yes, log tech and technology starting to you know, just in, in golf our industry in a positive way. There's people like really what you I'm not sending stuff with fax machines, but some instances it's it's pretty comparable. So spot on. I agree. 100%. It's, it's moving in the right direction. And I like it.
Pete Mento 9:47
Yeah, there are certain customs jurisdictions, certain taxing authorities that will not accept information via email, but they will accept them via fax
Doug Draper 10:00
For a CNN,
Pete Mento 10:01
I've never understood it, but I never will. But I guess has something to do with security and personal information so well, after I'm done,
Doug Draper 10:11
yeah. All right, so I'll kick this off. So I gotta appreciate first of all, my daughter University of Kansas women's rowing was a invited for the first time since 1997. To attend a head of the Charles It is the largest Regatta, the largest three day regatta in the world. They had 1700 boats and 11,000 participants is up and down the Charles River. It was one of those deals that, you know, it's once in a lifetime. My daughter was selected to be one of the eight rowers, there's about 50 Girls on her team. So she was totally stoked, and, and it was great, great opportunity. They were seated in their grouping. They were seated 29th, and they ended up finishing 10th. So they jumped quite a few levels there. And it's always nice to have your not siblings, your kids. Not only excel at something, but be so happy and engaged with what they're doing with their lives. And I saw that on Sunday and Saturday. So it was awesome. But so thanks for inviting me with that. But here's some observations I have with Boston. I know that's kind of your stomping ground. So here's the deal number one. And I stayed on what's called the Back Bay, and it's right across from MIT, and you go down a little bit, and then there's Boston calm or Boston University, Boston College, Harvard, the whole bit. Everybody runs. We were walking over the Washington Street, everybody running, running, running running, I didn't realize is such a big deal in Boston. So when you see Boston is like one of the healthiest cities, I guess, runnings part of it. But that struck me. The other thing, Boston is really clean. I didn't know what to expect. And the Bostonians are very welcoming. So I don't know if they were eavesdropping, or providing advice. But there was twice when I was talking to my wife and my son. And somebody behind us kind of chimed in and gave us some advice. The advice was on. It was welcome. We didn't ask for it. They just happen to be listening to our conversation. So they gave us good advice. And I appreciate that. This one P cash only in Little Italy. That struck me and it could be for obvious reasons. But yeah, cash only everywhere you go and Little Italy loved it. Cash only. And then there's these two places. One is called Mike's pastries and one is called main streets. They both do cannolis. They always talk about one is better than the other. They're literally across the street from each other. They both have lines out the door. I couldn't tell the difference when I purchased one each. So modern pastry and Mike's pastries with their cannolis are both awesome. And then I'll kind of end with this one. Pete. Is that Cambridge? I didn't think it was all that. You and I were talking before the show. I don't know if you would call them houseless people, homeless people. What were some other terms that you used?
Pete Mento 13:09
The unhappy?
Doug Draper 13:13
Yes, yeah. Boston clean. Not a lot of the unhoused in the general area. But I'll tell you what, you roll up into Cambridge? Oh, my gosh, I would liken it to you know, we talked about a Berkeley or boulder here in Colorado, shocked at how vagrant that town was amongst all the pomp and circumstances with Cambridge. So that's the one I was a little taken aback and you know, Harvard this and Harvard. That little disappointed there. Pete little disappointed. Yeah.
Pete Mento 13:47
Yeah. So you, you you pulled my strings out. So it's just a couple of things. Okay. Okay, first of all, modern can burn down to the king burned and be thrown into the sea. My family. I was the fifth generation of my family to live in the north end. My daughter will someday live there. Mike's to the day I die. Let's just just, let's just get that out of the way. There are two types of of Italian Americans in New England, Mike's Italian Americans and modern Italian Americans. Mike's Italian Americans, your grandfather had like a Lincoln or a caddy or Buick, modern Italian Americans, your dad your grandfather had like a like a Mercedes, you know, like it's like the, you know, the wealthy Italians that had the fitted suits and everything and like the, you know, enough of that. And then the cash only part. We've talked a lot about my family's background in the past. You did cash business to clean money back in the lot on there, but fantastic, fantastic as foods. Shout out to my cousin Anthony, whose place burned down a couple of months ago though. At least it was coming back. And I know he watches the show. So everybody and hopefully, your replays we back up again. Can't wait to reach out there and have another great meal. Bostonians. It's funny how you were like, Oh, we were just talking and they're like, hey, you know what, here's what you want to do. And you're like, Oh, why thank you. It's because Bostonians are rude, opinionated, love to interrupt. They are know it alls and think they know everything. So you're like, I wonder what you do like a lot. I'll tell you what we what you ought to do. What you need to do is you just follow with thanks. Because they are just positive that they know exactly what you should be doing. They will interrupt you, and they will tell you what to do, because it's their business. It's got nothing to do with being friendly. They're the least friendly people on the planet on the surface. So the biggest difference between Midwesterners and New Englanders is on the surface, we're awful. But once you get past that thin veneer, we're very, very nice people. But on the surface of it, it is just a thin sheen on the water of just scum. Just it's we're terrible. So yeah, that's funny, Doug, that you were like, Oh, they just seem so very nice. No, they're not nice at all. They wanted to tell you exactly what you needed to
Doug Draper 16:19
know. I was the tourists guy walking around, you know, I mean, we had tourists run all over us. So
Pete Mento 16:25
it's the Boston quite possibly the least healthy city in America. It is just full of fat drunk people who live on Dunkin Donuts and marble reds. I don't know where you got this idea that it's like full of you know, all these events like you know, Mickey and Patty and it me and like everybody else just like the Horkan down cannolis and drinkin buds, ruin for the Pats. Like, where you got this idea? Very violent, extremely passionate people who will stop you out for drinking the last Bud Light. I don't know. I don't know what part of Boston you were into.
Doug Draper 17:03
was right. There were all the universities or maybe that's part of that. You weren't really a
Pete Mento 17:07
Boston duck, you were in Back Bay, which is where all the rich people who moved into work for the dot coms live. Like the folks I used to work with at Wayfair. None of them are from Boston, none of them. None of them. There. They're all from like, you know, the West Coast and they move there. And it's this little haven where they can all feel safe. You want to see real Boston, you come back next time. And I you will have a great time, Doug, and I will take you out. You'll see guys that paint houses and we'll fill out some football cards and we'll have a really good time. There'll be a lot that you had this last trip. All right,
Doug Draper 17:38
I'll just leave. Once you got my
Pete Mento 17:41
turn my turn halftime brought to you by forensic capital just takes a little bit different than yours. I live in in New Hampshire, as most of you know. And we have one of those contentious races that's coming up for politics. And we don't talk about politics, Doug but I will talk about political ads. So anytime I watch anything on television, almost all the ads are one of the Senate or congressional like the governor here it's got a governor is gonna blow he's gonna win like 99% of the vote. But it's just political ads and then my phone I have a very, very good spam filter on my phone, but it's just just constant phone calls from people either trying to do a like a poll, or or someone saying you know, can we can be counted your vote. And then the text message is done. The number of spam text messages I get telling me who I had to vote for. And here's the point I don't get Doug. I'm not a registered Republican or Democrat. So it's not like they've got my phone number. Because I'm, you know, clearly like, like on the home team for somebody. I'm just getting inundated by stuff by stuff. If I turn on Hulu, Netflix, prime, whatever, in this commercials, I'm just getting punched in the face by people telling me to not forget. And I'm wondering if I should just not vote for some of these people because they've been watching television so miserable for the past.
Doug Draper 19:10
Yeah, well, there's a lot of political ads probably everywhere out here in Colorado as well. And it gets to the point where you don't hear any positive it's all negative. And it's just in the same ones roll over and over and over and you just get like, I'm going to spite you and non vote because of
Pete Mento 19:27
you've you've
Doug Draper 19:29
unsolicited come into my living room multiple times a night when all's I want to do is see the car commercials during the news. But yeah, I agree 100% with you on this time of year.
Pete Mento 19:42
Would it be funny if it was like Pete mento colored Outside the Lines kindergarten? She doesn't like puppies. Pete metto Pete mento once bought a Ford car like you know whatever. Doug Draper this fall like you know, just me get back to it. What ever was or, or just like a, give me an old fashion commercial where it's just a, you know a video of of, of a person with their family and their kids having a picnic just you know, so and so's a good person? Yeah, you think at the same values as you What do you say America? It's like, everyone sucks, but me just seems like we've all kind of lost it. And I don't know. I don't know. I I don't think I've ever wanted the first week of November to come more in my entire life than I wanted to right now.
Doug Draper 20:38
Yeah. So, anyway, anyway, yeah. Yeah, second half. And let's see, this one is about barges, right? You probably have heard a little bit about lack of rain. The Mississippi River is drying up. There's not enough depth in Mississippi River to move the barges blah, blah, blah, blah, blah. And you know, what makes the headline is ports off of LA, it's tangible. You can see them the air freight, a parcel all those kinds of things have made made the headlines for a long time. But what hasn't made the headlines at all? Is the barge traffic that moves up and down the Mississippi River. So the key thing there is commodities, right? The thing with barges is you take a picture of them and you have no idea. Is it moving? Is it not moving? Is it just there. So it's like a steel video when you're trying to create you know, a messaging of how crazy things are. So but when I was doing a little research on this one this morning paint the USDA says that 40% 47% of all grain exports move down the Mississippi on the barge. And with slow down and the fact that barges can't move. Now that's going to impact farmers with delayed sales, crops potentially a spoiling, you know, higher cost to produce everything lower yields, all those kind of things. But yeah, so the thing is, is that the boats are moving or just not moving as fast and you can't put as much stuff on the bow on the barges. And you can't have as many barges and tow. So things are moving. So it's kind of like the the trucking industry, you need more equipment, because it needs to, you need more equipment to move it down down the river because you can't bulk it down and have it and have it bottom out, so to speak. So the statistic I saw this morning Pete as of October 10 185 boats that were waiting to move, and that represented 280 Excuse me, 2888 Arges, because the barge is under the trailers behind it, if you will. And US Army Corps of Engineers is doing emergency dredging and blah, blah, blah. So here's the forward lane on that Pete is obviously capacity, you get it down there. But here's the thing is once the barges are there, and they don't come back empty, they're picking up other stuff that primarily helped farmers. And one of the biggest things they pick up is fertilizers and things to help next year's crop in 2023. So if there's no barges down there, pick that up. Right, they can't bring it back up. So that kind of says the equipment's all out of whack. They're supposed to be positioned here, and they're not again, same concept as the ocean containers that we spoken about. And so I think it's not as sexy people aren't talking about it, I think there's a lot more indirect product that's moved on barges that you and I may not, may not think about. But I think we're gonna see some of that impact in 2023 with some of the product that we can't get back up the river and obviously just let's get some more rain and the problem solve itself. So anyway, I wanted to bring attention to the barge situation that's going on here domestically. It's no better than other other modes that we've talked about.
Pete Mento 24:07
Big we'll keep on turning. Proud Mary keep on burnin. Love it. I
Doug Draper 24:13
knew that was coming,
Pete Mento 24:15
rolling on a river buddy. I have a lot to say about this, but I'm going to try my best to keep it a bridged. The river traffic in America is essential for not only agriculture, but also for the US military. We don't probably pay much attention to that. But in the absence of clear and passable roads. Rivers always going to be there. We don't have to worry about giant potholes. Rivers always going to be there. The Mississippi River is an inter inter state waterway and because it's a US port to US port requires us licenses and So when we can't put as much stuff as we want, then we need more boats, more boats means more American cruise. And that my friend is a conundrum. Because we simply do not have enough American mariners. We don't have enough American mariners because we don't push enough for the American Merchant Marine. So it's like trucking, until we have some sort of an inducement to get more men and women to decide that they want to make a living working on the water for this country. And until the US government understands that's an important part of our forward looking projection of power. We're never going to solve this problem long term, Doug. So this, this goes into food security, that goes into national security, and it goes deeply into our country's ability to be economically secure. So yeah, river traffic might seem on the surface to be something that it's it's not sexy. It's not just sexy, is positively. It's vital. It's critical to our ability as a nation to remain safe, and to remain vital. So it's an important topic, man. And I wish that people pay more attention to it. But with everything else going on in the world right now. And everything else going on the economy. Nobody wants to pay attention to Yeah,
Doug Draper 26:16
agreed. All right, well, Cap logistics enables us to chit chat back and forth. Pete want to remind our audience before we drop in, drop into your final topic, visit cap logistics.com For all your transportation needs. So on that one, Pete.
Pete Mento 26:35
So anyone who's done any traveling overseas, anyone who's been paying attention to particularly International Relations news, so we have another we have yet another very recent new prime minister in the United Kingdom. And a lot of that has to do with economic problems in the UK, has been paying attention to the strength of the US dollar against foreign currencies. As I noted a few weeks ago, my family and I took a trip over to Europe, it was wonderful, thank you for asking. And while we were there, I was I was really shocked that the power of the US dollar against the euro, and the pound in particular, it felt as though I was spending $1 For every euro, just a bit more than $1 for every pound. And that's never been the case in my entire life as someone who's traveled to both of those places a few times every year, for I mean for at least the past 30 years, maybe a little longer. So it's it's strange to me to have that kind of buying power. But what isn't strange, is when you begin to look at how that creeps into the total global economy. The dollar continues to appreciate against many currencies. And we as international traders need Doug and I as people who work in international trade in particular, we think in the terms of Dutch international carriers, we think of them in the terms of Lufthansa, KLM. Air France, we think of Maersk, we think of hapag Lloyd, you know, we think of Chinese ocean carriers, Taiwanese ocean carriers, the list goes on and on. But there's a broader global economy that we also think of, and that's the developing world. And that is beyond the chair of the India's and in Bangladesh is it's the sub Saharan Africa's it's the parts of Central America that are in many instances paired with the US dollar. So they're tied to the strength of the US dollar. And there are ones where they're not. And what's unfortunate right now, Doug, is that in many countries, the growth of the strength of the US dollar is actually so fast and so high, that inflation in the buying power of many foreign currencies is dropping at a rate that it's becoming pretty much you know, the inflation in those countries and their ability to buy things, the buying power of those foreign currencies is becoming, it's becoming really scary that the best word I can use is frightening for people who live in those countries. And the ultimate effect that we're going to see is people in these nations who are probably going to have a much longer recovery from a recession. If you were to poll 100 mid line economists, not too conservative, not too liberal, and ask them how long they thought that this economy of this recession was going to last in America, most of them would say, without a lot of outside forces, you know, like a nuclear exchange or something going on? Probably 12 to 18 months, maybe two years worst case. But for many of these developing economies take Bangladesh as an example. It can be three to four years, to Central American economies, it can be four to five years, and much of that is going to be because of inflation and an inability of people to be able to overcome inflation and to overcome the buying power of the US dollar. So it's unfortunate dog but the you know, the economic games that we play, in our ability to manipulate our currency and for the first world economies to manipulate their economies is going to have a downstream negative effect on He's developing countries. And it's just one of the outcomes of a very scary world.
Doug Draper 30:06
Yeah, if that doesn't give a perspective of how the world is truly interconnected, and global trade is truly that global, I don't know, what is it mean, if you just dissect that down and really understand what you're talking about, it's almost, you know, the haves, a rich get richer, the poor get poor, I mean, just the dichotomy of strength of the dollar that's impacting, you know, these countries that were working to get out of, you know, first world type of type struggles. So yeah, it's a great perspective. And I think, I think you're right on, it's just, it's disappointed, just like anything else, you know, during the pandemic, you know, the rich got richer, the poor got poor, so to speak, it's pretty generalized comment. But you're, you're making that point on a global scale.
Pete Mento 30:54
And Doug will talk more about this in the end of the year show, but with all of the food insecurity, with all the problems that we have, right now, with purchasing power, these are the countries that are facing drought, they're facing famine, they're facing a lot of, you know, food insecurity, food unavailability, this is not the time for them not to have buying power. This is not the time for their their currencies to go to go a shorter distance than ever before and buying what they need to try to recover. They need to buy fertilizer, they need to buy things to repair their equipment to repair their infrastructure to be able to feed their people. But unfortunately, what they have is going to be less than ever before. So it's scary time to be in that position.
Doug Draper 31:39
Well, Pete, I know that's an important topic. And I'm not sure how to transition away for the end of our show, but I'll do my best. Right. And I guess that is it, trying to think of something positive to say, Troy. I love the show he he's a big Sox fan, if you didn't realize that, but yeah, I think that wraps it up for this week, Pete. So I want to thank you. thank our audience for listening today. Another wonderful edition of global trade this week. We'll be back this week's a little bit later. I think we're going to post this midweek but we'll be back on our game and possibly have a Halloween show. I'll tell you what. Nevermind. I'm not going to go down the costume route. But for here and now. I want to thank everybody for joining us, Pete. Thanks again. And we'll see you all on another edition of Voltron this week.
Pete Mento 32:28
Thanks, buddy. See you next All right. Take care.