Global Trade This Week – Episode 171
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Unknown Speaker 0:00
You're watching global trade this week with Pete mento and Doug Draper,
Pete Mento 0:07
Hello everyone, and welcome to a not very special election day global trade this week. I'm Pete mento and with me is Doug and his hat. Doug, I don't know if you remembered you had your hat on before we started, but that's a, that's a very interesting chapeau you're wearing right now. So thank you. To the sides, go down to cover your ears. Is that? Is that how that works? They
Doug Draper 0:30
do. But if I keep it down inside, I can't, can't hear but in the wonderful town of Steamboat Springs, Colorado, it's snowing right now, and I'm in a co working space, and my office, or I shouldn't say my office, the table that I sit at, is like right in the corner and outside walls. So I have a window looking forward and a window to my right, and so it is a cold corner of the office. So when I come in here to this phone booth to do, to do the shows, I kind of forgot my hat was on, but I'm gonna leave it. I'm gonna leave it. It's
Pete Mento 1:09
very Elmer, Fuddy, and that hat of yours, I don't know if that's really an adjective, but I'm gonna go with it. Doug, Yeah, funny.
Doug Draper 1:18
I like it. So I got this crazy hat, but your background, my friend, is awesome. I mean, I think if, if our listeners can, you know, look left and right a little bit, they may be able to figure out the city. But, yeah, what's your story with that? Man,
Pete Mento 1:35
I am on vacation, and you wouldn't know it from the number of calls on my calendar, though, Doug, but I'm on vacation. I'm in Chicago, and I am in a beautiful room at the Marriott Marquis, and I have a ridiculous view of most of the city, so I have probably three quarters of the city from from my hotel room. It's pretty sick,
Doug Draper 1:59
nice, yeah, so I know Chicago a little bit, so we're looking north. Is that right?
Pete Mento 2:04
I believe. So, yeah, there's Soldier Field right behind my shoulder here. And, you know, a whole bunch of gigantic buildings. I don't know, beautiful architecture, but yeah,
Doug Draper 2:15
tell anything is East Coast guys? Yeah, somebody's saying, hey, Draper, you dumb shit. The lake is to the right is to your left, so obviously you're looking north. So anyway, it's a great, it's a great visual for the show. Man,
Pete Mento 2:30
yeah, it's a it's a pretty visual. Don't worry, I'll be back to having some boring ass wall in a windowless conference room next week, probably.
Doug Draper 2:37
Yeah, well, self sacrifice for the betterment of the show, my friend. Hey
Pete Mento 2:43
man, you know, I travel so much when I use my points, they take care of me. That's all I'm going to
Doug Draper 2:48
say. Yeah, yeah, cool.
Pete Mento 2:50
I open the show, which means the first topic goes to you, my friend. So why don't you go ahead and kick us off, pal.
Doug Draper 2:59
Good deal. All right. Well, this one, it's nothing like a good war and chaos for somebody to generate profits and financially benefit from it. So I don't know if you've seen this in the last couple I guess in the last week. So Ocean Network Express, one which some of our listeners may remember, that was steamship line that got sideways in the Suez Canal and created, I don't know how many days was that, like, three? Was it a week? How long was that
Pete Mento 3:27
ship? I think it was longer than a week. Doug, it was ridiculous. Yeah, I
Doug Draper 3:31
think you're right. I think it was long. So anyway, they came out and they just reported a just had a report, and the term used was remarkable. Q2 for this fiscal year, with revenues up 65% and profits up over 1,000% and it's driven by consumer demand, yada yada yada and oh, by the way, the chaos that's going on with Panama Canal. That's not chaos. That's potentially global warming, with the water levels low, absolutely the chaos in the Suez Canal and the amount of money that these steamship lines are generating because of it is just, is just crazy. We talked about that multiple times, and it's very well known during the pandemic, how Rach just skyrocketed. And now everybody you know the bottom line, Pete, you and I pay for it, right? If you got a vessel as to go around the horn of Africa and come around, hey, we're absorbing all those costs. Excuse me, we're absorbing the transit time. We're absorbing the additional fuel. And this is just an example. When they have these, these releases, and you're like, wait, what does that say? 1,000%
Doug Draper 4:49
a year over you, and year over year in q2 I mean it, it's unbelievable. They're raising their profit forecast for this year and and they're just crushing it. And the other. Thing I wanted to make sure I get this right is that Maersk, hold on a second. I want to get this information right. They just released some some they just released 41% revenue gain in q3 over q2 for all of the same reasons. So I think the steamship lines are ancillary with with chaos out there, they just raise the prices and go, go about their business. So I don't know, what do you think? Have you heard about that? And what's your take on steamship lines? It's not a negative thing, it's the reality of it. But they are profiting and making a ton of money as political chaos and war ensues across the globe. What's your take on that?
Pete Mento 5:45
Yeah, Doug, let's just cut to the chase, right? Chaos and Bedlam are good for carriers, and their prices are going to go up and it's going to be harder for everyone whenever things are tough on us, meaning the consumer of transportation and freight forwarders, generally speaking, things are excellent for the ocean carriers. So we've had all of these things you've already mentioned just come to a head right this crossroads of mayhem over the past couple of months, and they're profiting well on it. And hey, here, here's a here's a news flash. It doesn't look like anything's going to get better over the course of the next couple of months. It might even get worse, who knows. So they will take advantage of that. And again, Doug, How many times must I say it hate the game. Don't hate the player. You know, when he's making their money doing this. And so is every other ocean carrier. It's just the way it works. If we don't like it, I guess we can go build our own ships, which I wouldn't mind trying. If I'm being very honest, I wouldn't mind trying at all.
Doug Draper 6:41
Yeah, you're right, and I think the key thing is it's not going to get any better, so we'll see how that plays out. But yeah, all right, let's shift to your topic. So couldn't sleep last
Pete Mento 6:52
night, and I got up a little earlier than I normally do, and was looking for something to listen to while I did my laundry. I have a laundry machine. Can you believe it? Yeah, so I'm doing my laundry. And I listened to the Joe Rogan podcast that popped up yesterday with Elon Musk. And most of it was not anything remarkable. But what got my attention was started talking about ITAR in the middle of a podcast the international Arms Regulations, yet, he was discussing how people that that I that they're being sued right now by the Department of Justice because they won't hire asylum seekers. And he tried to explain that as a manufacturer of one of the most one of the most controlled weapon system types in the world, right? Missile Technology, he's not allowed to. He's not allowed to. You have to be a permanent resident to work there. And it was just fascinating to me that my world collided in this way. I don't think that most Americans realize that particularly very controlled technologies like missile technologies, like weapon systems, high end semiconductors and certain types of microprocessors. They're so controlled that you can't even have foreign nationals observe the production. That's how controlled they are. So it was an interesting way that my two worlds collided on this. You know, my love of podcasts and Elon Musk, they're getting sort of drawn in as well with ITAR, to be very honest, Doug, I didn't need work getting into my head today, and it happened very early. So I'm just I'm a little shocked though, that most Americans don't realize, even people that export, just how controlled some of this technology is the idea of deemed exports. If an individual who is not American learns about a control technology, you may have to get an export license or exception for them to leave the country, because they're not going to go home and forget what they just learned, which means that that type of information, that type of technology, is basically leaving the country, and as such, it could end up being a real problem if it comes back to bite us in the ass.
Doug Draper 8:58
Yeah, talk about dual use technology, Skylink, right? I mean, oh my goodness. Talk about a weapon system that is huge, is ripe for hacking, right? I mean, it's just, it's just insane. So that's kind of cool. He was talking about that, yeah,
Pete Mento 9:17
it's weird. You're talking about Skylink. I have friends that have bought it, and they they sing its praises. Most of them live in really rural areas, you know, places where getting high speed internet isn't very easy to do, and they all love it. I've thought about it, you know, the price of it isn't really that, that bad. And the idea of being able to take it if you wanted to, you know, when I do all of my backwoods camping, Doug, all that time I spend away from civilization seems like a good idea, but you're absolutely right. The Ukrainian army wouldn't be able to function if it weren't for their ability to have access to Skynet. Oh, sorry, Skylink,
Doug Draper 9:58
I love it. Good deal. All right. Right? Well, that brings us to halftime, brought to us by CAP logistics Keenan, pushing the buttons and pulling the levers. Doesn't matter where we are, couped up in a phone booth in a snowy town or what I'm gonna guess, you're probably on. She, I was gonna say 37th floor, but it could be absolutely
Pete Mento 10:16
correct.
Doug Draper 10:18
Are you serious? Yeah, wow. All right,
Pete Mento 10:24
absolutely correct. Yep.
Doug Draper 10:25
I swear to goodness that you did not tell me that. It was just kind of a guess looking at the angle of the of the city. So we'll have Keenan
Pete Mento 10:33
roll the tape. We'll have Keenan. I don't know if I did either, yeah,
Doug Draper 10:36
that's great. So, but that is at least just a half time. So I don't know, why don't why don't you go first, my friend?
Pete Mento 10:46
Okay, scroll through Twitter the other day, and I kept seeing this video of a guy cutting up a pineapple, but what do I care? It's a guy cutting a pineapple. And then I read the caption on one of them, it says, Man breaks Guinness world's record for, for preparing a pineapple like this was a record, right, of cutting the skin into the squares and coring it and then cutting every like it was a record. And here's the thing, Doug, it doesn't seem like he's going that fast, like it seems like, you know, you or I, someone just gave us a chef. And I feel like, okay, like we watched a YouTube video and we just cut it and did it. I think I could beat that record. I think I could beat that record if you gave me, like, a week to practice and a couple of pineapples, have a lot of pina coladas, if I was doing that. But I started looking this morning into all these records. I think it was a couple years ago. We talked about a guy who took a pumpkin the farthest, like he he hollowed out a pumpkin and went down a river. I think you talked about that one. There's some really weird longest fingernails, like, someone's got fingernails that are like, meters long. You know, there's a lot of dumb, dumb Guinness Book of World Record records that I think someone's just like, I'm gonna see if I can break the record. Actually, I'm setting the record, and then other idiots like me decide to follow them. IE, who can prepare a pineapple the fastest? So I don't know. Doug, is there some record that you know about you think you could beat?
Doug Draper 12:10
Not, not that I know about, but I'll make one comment, and I'll give you my two cents here. I remember back in the day when the Guinness Book of World Records was literally a book, and it was kind of small, but it was those two, I was gonna say fat, but I probably can't say that anymore, two large brothers that were on the motorcycles, yep. And then the guy with the fingernails, right? I remember seeing that. And then I think his name was Waldo. Last Name of Waldo, the tallest man in the world. Oh, yeah, 810, or something. Those were like the classic pictures. And doesn't matter if it was like the 1984 version or the 85 or 36 it's the same pictures, right? Those two fat guys on the motorcycle side. That's insane. So anyway, when you were talking about that, that's what I was thinking of when I was a kid, just thumbing through the the actual book. But initially, when you said that, I'm like, Okay, I'm going to try to break the record of holding my breath the longest. And then I'm like, That's too much work that. I mean, you got to prepare for that, right? That's two, two. And then I said, now you need something simple, like the furthest distance of slingshotting a rock underwater, right? Or something like that, where you just just do it right? You just grab something off the Walmart shelf and start chucking rocks underwater. So I think it would be something really obscure, like that.
Pete Mento 13:38
Nobody would want to try to try to beat anyway, right?
Doug Draper 13:41
Yeah? Like, they're like, really, that's a thing. I didn't even know that was a thing. I'm like, Yeah, I'm the world record holder of rock slingshots underwater.
Pete Mento 13:51
Yeah, it's not a bad idea. I did notice the oldest cat ever was 36 years old, all right, so I'm wondering if I could, like, hire a vet to live with me just get like, nine or 10 cats and just treat them with the highest possible care to see if I can get one to live longer than that. That might be something interesting. But there was one for pitting cherries. The number of cherries pitted in a minute. Just silly things like that, man, but I think number of Diet Cokes drank in a 12 month period, I could probably take that one
Doug Draper 14:23
down. That's, are you going? Are you going for that right now, as as this show is going,
Pete Mento 14:28
Marriott has an agreement with Pepsi, so unfortunately, it's diet Pepsis and not Diet Cokes, but I'm working on it. But yeah, I prefer Diet Coke. I'll just be honest. I drink them both with incredible exuberance. But you know, if given a choice, I will generally get out of a freestyle machine Diet Cokes. Yeah, all right. So what you got?
Doug Draper 14:46
So mine's related to vending machines, right? I saw this article that vending machines are making a comeback, obviously with labor shortage and the cost of employees now, and it is. Is way different than when you and I were growing up, right? I remember being in an ops office at airborne Express back in the mid 90s, in the break room, like you don't know, are these candy bars, like, four years old, it was the things you had to pull, right? You know, if there wasn't a code, you put your money and you just pull the thing and it drops down, and half of them were empty. One of them was like a packaged sandwich, and you're like, No way in hell, am I going to eat that? And then the rest of it were like Cheetos and Funyuns, right? And then some, some candy bars. Well, the vending machines now, fresh food, sandwiches, sushi, even gadgets and things of that nature, but the idea of a vending machine now in 2024 is way different than the experience that I had at the break room in the airborne express office in 1997 so yeah, what's your take? Would you pull a knob? And you don't pull a knob anymore, right? It just drops out after you type in your your code. And I don't even think you can put in cash anymore. You gotta, you have to use your credit card. But is there anything that you would not eat out of a vending machine?
Pete Mento 16:16
Probably not. No. Um, I've been eating street food in India, in Asia since I was a kid, so I've got a pretty Cast Iron Stomach. Wow. You mentioned this stuff. There's there's two things that spring to mind. The first is, recently in New Orleans, all over the place, I saw cigarette machines, and I can't remember the last time I saw those, but you have to go to the bar, show them your 18 and then you you pay for them there, and they give you a coin, like, why don't you, why don't you sell them at the bar? Right? And the second thing for if you've ever been to Amsterdam, Doug, have you been to Amsterdam? I have not. Okay, there's a thing there called a fibo, and I think, I think it's spelled F, E, B, O, and they're all over the place, and they're automats, so they're these little glass windows, and you put in your change, and you take out, like a little cheeseburger, or those bitter balls or french fries or chicken or whatever, and there's someone behind there just cooking them, sticking them in the slots. I love going there with, like, all the junkies and guys high that have shown up from England to get stoned for three days and all the rest of the tourists and getting some the food is actually pretty good. It's dirt cheap, and it's all on coins. It seems like a great way to launder money for the Russian mob, if you ask me, yeah, yeah, I
Doug Draper 17:33
saw a fair share in the Italian district of Boston too. As far as
Pete Mento 17:41
pizza, humbertos and the north end of Boston, they sell pizza till they're out. So they sell pizza and rice balls aren't cheating, and they sell it at lunch. Lunch only, I think they open like 1045 and they close on the round of food. So if you're ever in Boston, go the north end. Check out umbertos. It's excellent. Yeah, yeah,
Doug Draper 18:01
I think I've been there. And then you there's Mike's cannolis, and there's some other cannolis and
Pete Mento 18:05
modern street, yes, Mike's in modern and that will start a fist fight amongst Italian Americans in Boston, if your father, if your grandfather, drove, like a Lincoln or a caddy, you know, if you come from like, that real serious North Shore Italian family, you're definitely going to Mike's, because that's more home style, right? But if you want pretty stuff, you go to modern their stuff is much nicer looking. That's if your grandfather drove like a Mercedes, you know, or a Fiat or scarf, smoked cigarettes with a cigarette holder. Said, ciao, I beam all the time, right? So, very different, very different, but they're both incredible. They're both incredible. I am very much a Mike's guy. I'm very much, yeah. Well,
Doug Draper 18:45
the awesome part about this Pete is we just went from Guinness Book of World Records to vending machines to laundering money to cannolis.
Pete Mento 18:53
Yep, that's a half time, baby. If you're going to have a half time, have a half time. Doug, yeah,
Doug Draper 18:57
yeah. Cool. All right.
Pete Mento 18:59
Next topic, buddy, yeah,
Doug Draper 19:01
yeah, yeah. This one, we talk about international trade and and the ocean freight and air freight. The one thing that people forget about often is that the Mississippi River and how it is an artery for moving products for export, primarily for agriculture, right? And I read that this is the third year in a row where they've had low water levels, right? And just like the situation in the Panama Canal that we've spoken about, when the water goes down, you can't have a vessel that is too heavy, so you have less product on it. You can only have so many vessels moving through, because the channels are, are they're not smaller, but the water levels low, so you can't have as many vessels going going back and forth. And it is really a big deal for for the for the American farmer, right? The export competitiveness related to the cost, i. I don't know if it's, you know, per Bucha for certain things. I don't know the unit of measure, but the bottom line is, there's not enough water. You can't move as much stuff down the Mississippi River, so it's going to cost more money. And they were even talking about pulling things off the water and putting it on, you know, trains or even trucks to get it down the Mississippi River for export. And so there's a big concern. I know, pre election, part of this article spoke about everybody was buying, buying, buying, because they didn't know what was going to transpire with with the election. But after that happens and the election is over, what happens to those exports? Are people who's going to look for other other countries, like Brazil was one that was brought up as far as, hey, we can't afford it. And then what that does for the the American farmer. So I think people should take note. I think it's a bigger deal, and it's often overlooked as a significant, you know, revenue stream for America. So I don't know. Well, here
Pete Mento 21:03
at global trade this week, we are pro farm, pro pharma, pro agriculture. We are definitely team agriculture here on the show, the one that this brings to mind Doug, are the seeds, right? So the big seed companies send, send their seeds down to South America, then they send the seeds back up to North America, and a lot of that seed moves down the river. And when you don't have the ability to move it, it becomes very expensive to move that via truck. You know, on ships we have, we have all the safe water marks. They're called plum soil marks on the side of a ship. It's a big circle. It has a line for the middle, and that's as high as the water can go before the load probably isn't safe, and you want, you want your ship to be on that level, because that means it's full of cargo. When you start looking at barge traffic on rivers that are depleted, you'll notice they're way below, like the water lines, way below the plum so Mark trying to keep it safe, which means those carriers are also losing money. So one way or the other, this has a negative effect on number of different types of industries, the transportation providers themselves, the people who work in the in the ports, in and of themselves. It's a danger to everything, and it's an environmental impact. So, yeah, it's a pretty scary thing. Doug on the whole of it. One quick aside. In my freshman cargo class at Maine Maritime Academy, I was one of the questions on a test was, who who invented and manages the Plimsoll mark, and my my answer was Mr. Plimsl, and I did not get that right. And as a matter of fact, Commander weeks wrote down next to it, see me after class. So not my, not my best moment. I did not know. Yeah. Wow,
Doug Draper 22:37
yeah. Was it multiple choice? Did you actually have to write an answer? No,
Pete Mento 22:41
it was a write in Yeah. Commander weeks definitely took his time to read all the read all the all the answers. Yeah,
Doug Draper 22:47
nice, good. All right. Well, bring us home on our final topic for this week's show. Yeah.
Pete Mento 22:53
Final topic has to do with with possible pending chaos, right? So we were talking about chaos. Beginning of the show, I'm going to bring it down to you again at the end. I believe in the past, we've talked about the South South China Sea and the disagreements that that countries have over who controls that area. China maintains that it's all theirs. It's all theirs, like that is their navigable waterway, that is their waterway, and they want to shut it down. That's their right. However, there's a lot of other countries that don't agree, Japan, Taiwan, Vietnam, Brunei, the list goes on and on. They don't agree with this, and it's caused actual physical altercation. So the Chinese Coast Guard has been ramming ships, literally ran in, ships trying to, you know, damage other vessels, cause financial hardship on people. It's getting worse and worse up and if China were to decide to really lock that down, it would end up with the United States, probably Great Britain, and a couple other naval countries having to do something about it. So we all worry about Taiwan, and the invasion of Taiwan being a kick starting point. You would shut down commerce, and you would, you would cripple the petroleum trade if you were to do that, and that would, 100% absolutely bring America into a war. And it hasn't been as as spicy as it is right now, and I'm not seeing enough of this reported in the news. So I think trade professionals should be watching it. We should be watching the escalations, and making people aware of the fact that this is a possible outcome, and it's important to have a plan C, A Plan D, a Plan E and a Plan F, because if we can't get stuff from there, got to get it from somewhere. So hope is not a strategy. Keep in mind that the South China Sea is heavily contested.
Doug Draper 24:33
Yeah, I'd not thought of thought about that. Like you said, the the chaos and steamship lines are like, Hey, we're not going to deal with navigating the potential problems down in that in that region. So blank sailings, we're going to pull pull the frequency in which we navigate that seat could have, could have some serious implications. Like you said, I was not aware of that until. You just brought it up. But yeah, we're so focused on Panama and the Suez Canal. You know what's brewing up down there? And you know that could be a trifecta, with creating log jams, and like we said, the beginning of the show, a chaos and uncertainty could drive prices up, and steamship lines are the beneficiaries? For sure, absolutely,
Pete Mento 25:22
yeah, gotcha never ends. Doug, it never ends. Yeah,
Doug Draper 25:26
yeah. Well, the one thing that does end, Pete and I, it's a pretty
Pete Mento 25:30
good that was a softball for a transition. I'm glad you got it.
Doug Draper 25:34
I love it. One thing that does end every week is this show and global trade. This week, we can't thank you enough for listening, engaging. If you have comments positive or negative about our topics, please let us know. And again, Keenan and cap logistics, thanks for your efforts to put this thing together. And as we've said multiple times, if it's happening in global trade, you'll hear it here first, and we will have a forward leaning perspective. It's easy to talk about what happened. It takes guts Pete to talk about what's going to happen, and that's what we try to focus on. Hell yeah, buddy, yeah. All right. Enjoy Chicago. Everybody go vote,
Pete Mento 26:12
go vote. Everybody vote. I don't care for who. Go vote, go vote.
Doug Draper 26:16
Yeah. Good one. Good one. Enjoy Chicago, and we'll catch you next week, my friend,
Pete Mento 26:20
all right, buddy, see you. All right. Take care. You.
Transcribed by https://otter.ai