Global Trade This Week – Episode 128
What’s going on in Global Trade this Week? As we approach 2024, Doug Draper and Pete Mento make some new logistics predictions for 2024. While these forward facing statements do not constitute financial advice, it's always an interesting and insightful conversation!
2:11 -Issues in the Red Sea
3:41 -Year of Parcel
5:05 -Dealing with COVID / US Avoids Recession
5:43 -Transportation Bloodletting Over
7:44 -Ukraine War Ends
9:18 -Fast Fashion Under a Microscope
11:52 -Halftime
13:55 -Trump Wins Election
15:46 -US Importing Normalizes Back to Old Trends
17:49 -Cargo Theft Continues to Rise
20:40 -Speed of Change Continues to Accelerate
22:52 -Fed Rates End Down to 4.5%, Maybe 3.5%
-
Doug Draper 0:00
You're watching global trade this week with Pete Mento and Doug Draper. All right, hello, everybody. This is I'm jumping into this thing, because this is the show that we've been waiting for. I think this is the third year that we've done it. It's not your traditional global trade this week format. It's all about predict this. Troy's in the mix, and I'm more excited. My partner in crime on the other side of the coast, Mr. Pete mento. Are you ready to lock and load this thing down for predictions? 2024.
Pete Mento 0:36
Ready? I'm so ready. I think it's awesome that you always have to come up with a catchphrase Always. Always. What,
Doug Draper 0:45
which one is the predict this, or
Pete Mento 0:48
whatever the hell they are, you know, it's like, you know, ever since both this you've been, you've had this deep desire to sort of like fetch and Mean Girls, you know, it's just not gonna happen. But, but, but it makes you happy, whatever makes you happy makes me happy. So, yeah.
Doug Draper 1:06
I appreciate that. I appreciate that. Well, I don't think I have any. I'll come up with one while we're talking here. And then go from there. Please
Pete Mento 1:14
don't, Doug. Please don't. Okay.
Doug Draper 1:16
Yeah. All right. So here's the format that we spoke about. We have a lot of predictions to go back and forth and make general comments. could turn this show a little bit lengthier than we wanted to, because we want to come in nail our predictions. Mic drop in bail out of here. So for the audience in the listeners, we're going to pick our shots on commenting on each other's predictions. And we're going to rifle through this thing. What did you call it? Pete? Right. Well, we're gonna get on
Pete Mento 1:43
what we're gonna go speed round. Speed
Doug Draper 1:45
Round. Yep. This bad boy. Yeah, yeah. Or you could put it at 1.5. Just like my kids do when they when they listen to lectures in school.
Pete Mento 1:56
Do that, man, it's distracting? Yeah, yeah. Well,
Doug Draper 1:59
I don't know, you know, kids nowadays, right. That's how they get through it. So alright, man, I opened it up. So I'm going to do a countdown to three, then we're going to fire this prediction, show off three to one letter ramp.
Pete Mento 2:11
Issues in the Red Sea in 2024, are going to persist probably through at least a quarter, quarter and a half, maybe even longer. If you haven't been reading about, I want to make sure I get this right. Because I don't want to. I don't want to say it wrong. Operation. Protect, although I don't want to get it right. I don't see it wrong, because people will tell me I'm wrong. And I gotta hear about in the college operation prosperity garden. Prosperity Guardian is going to be announced today. At some point, the Department of Defense is going to have a conference call. And then they're going to have a press conference to talk about this. We're sending more stuff to the Middle East to the Red Sea to try to deal with it. But until then you're going to keep seeing all these ocean carriers. OCL just announced today, BP is not going to start moving tankers anymore through there. It's a big deal. And as the tanker traffic slows down, this is going to have a negative effect on energy rates. It's actually going to be a problem for us now to be great for ocean carriers, and great for transportation companies. Because whenever you have a problem with shifting volumes, changing volumes are changing schedules. It's good for everybody. You'll see a massive push to the West Coast. You'll start seeing that real soon.
Doug Draper 3:26
Yep. So no comments on that. But I will touch on the West Coast piece coming up, but that's good. And you made mention I think BP just like in the last couple of six hours. Yeah, yeah, they made made mention of that. So good one. All right. My first prediction for 2024 It's going to be the year of parcel. Right? The Y O P and yes, there's a gra and always happens. But you know what it is a buyers market like nobody's business. And even though there are GRS that are coming up, there's going to be deals to have. So you're gonna see FedEx ups, I really got my fingers crossed piece. I hope the post office pulls there, you know what out of there, you know what, and gets involved. But if you are a high volume, parcel shipper selling goods that people may not want or may not need. It's going to be a buyers market. The other piece B that's going to pop up is that regional parcel carriers have always been there. The technology now that we have is finally robust enough that it's off the shelf and you don't have to spend a lot of money so you will be able to enhance your service offerings instead of FedEx or UPS and you got a system that engages in both. I think you're really going to see shippers embrace regional carriers to help supplement their personal needs, which will again create demand and urgency with the big two to get out there and get get market share. So it is a buyers market. It's going to be the year of parse So for 2020, for
Pete Mento 5:01
the greed, the greed, nothing to add there. My prediction number two is that next year the global economy will finally have to deal with the After Effects and the blowback from COVID. I think 24 will be the year that this all comes to roost. But I think it's going to end in that year as well. An interesting caveat to this, I don't think the US is going to go into a recession next year, I think we're still going to manage to keep GDP growth going. I do not think that will be the case in Europe. And I know it will not be the case in China. But the chickens are coming home to roost, Doug, and next year is a year we're gonna have to manage that.
Doug Draper 5:39
Yeah, good point. No comment. So my second prediction is the bloodletting of our industry is coming to an end and you will no longer see this in 2024, yellow convoy, Flexport, sunset logistics meadowlark. There's all kinds of these regional carriers that have either gone out of business or have right sized their operations. Whatever buzzword you want to say that so I believe there may be one or two more of the first of the year. But the craziness of right sizing our industry related to asset based trucking and brokerage is behind us, not in front of us. And there may be some smaller regional. Wow, Pete, let me think here. So here's the big, big picture on that, buddy. So when COVID was crushing it in our industry was was was making money hand over fist, all these drivers were saying, Why do I want to work for Yellow? Why do I want to work for this, I can do it myself, I'm gonna go buy a couple of trucks, and I'm gonna ride the wave. Well, the rave the wave ended 12 months ago, 18 months ago, and in all of the right sizing is coming to an end. And I'm going to talk about the speed in which things move nowadays at a later prediction, but the craziness of workforce reductions and companies going out of business that's more behind us than more in front of us. So good things to come in that aspect for 2024.
Pete Mento 7:11
I'm gonna give a caveat to that, Doug, I think there's going to be some major mergers and acquisitions in our industry, that's probably going to cause some people to be right size out of the position. But I don't think that's so much economically driven, as it is an opportunity for companies to make a big dog move. So I think there will be some folks being taken out of our industry because somebody got bought, but I don't think it's going to be like you said like 2023 was where folks were just, I mean, hell, I went through two layoffs. So yeah, it's gonna it's gonna be a better year for next year. Agreed. Good. Good. Next topic controversial. So trigger warning everyone. I called when Ukraine would be invaded, I'm going to call the war ending. So I believe that after the presidential election, at some point after the presidential election, either one of these sides is going to be forced to the negotiation table. And it's going to require some sort of a managed peace. The reason for that being I do not see the issue in the Middle East slowing down anytime soon. And the United States has far too many financial responsibilities to continue to support to foreign wars. So I believe that whoever is president is going to make it very clear to Putin and his Alinsky. They have to come to the table and negotiate the settled peace. Interesting start to see what happened after the election next
Doug Draper 8:31
year. Now, so if it's after the election, does that mean you so the elections, what the fourth or whatever the second Tuesday is?
Pete Mento 8:38
Yeah, it's gonna happen probably in December, you're gonna see like, it's time for this to happen. You're about to have someone put back in and now they don't have to worry about a reelection and upsetting people who want to see one move or the other. And it'll be on Congress and the Senate to do that in the midterms on the blog,
Doug Draper 8:56
yeah. Well, I'm not going to second guess or have any major comments on that Pete because you call this thing if our audience remembers and goes back to a couple of prediction shows. You called it I was shocked when you made that prediction. And within three months there was a war going on in the Ukraine. So I trust your judgment, my friend on on what's happening there. Okay. Yep, my third prediction is that the fast fashion supply chain world will start to gain a lot of interest the microscope will be placed on it for a couple of reasons she n and k mu z how you pronounce the other big one te m mu two mu Yep. So they're starting to get you know, pop up on the radar but you know, the the forced labor, the crazy labor with some of the supply chain stealing designs. I think she has this PR campaign out called she and one on one, which the best way to get to the root problem of a controversy is really to ask influencer others to weigh in on their perspective. And apparently, recently, there was part of the Shan one on one PR campaign to say, hey, there's nothing to see here, everything's cool. There's no forced labor, we're doing everything right. Because they brought in influencers and they put them in factories that potentially could have just been completely fictitious and setup, and talking about how everything is just fine over here related to the production and manufacturing of the fast fashion world. And I think that they're calling it translucent supply chain, or opacity, opa CIT y logistics, which means it's kind of visible, but it kind of isn't. But I think as time goes on, as the fast fashion continues to grow and gain momentum with younger consumers, that's going to draw more attention. I'm not really sure what's going to happen of it. But the bottom line is that the consumers that deal with fast fashion primarily, are a generation younger than you and I, and I hate to say this, Pete, but some of those folks may not care enough to know where this stuff came from. And as long as they look good, and they can make their their weekend party, and, and their clothes look great. And two months from now, they'll buy the next one and three months, they'll buy the next one. The next one is that the consumer is not going to change their buying habits to affect any change on the supply chain or the manufacturing it's going to be the light. You remember that movie spotlight from five or six years ago. It's going to require something like that to affect any change but it's going to get more attention in the fast fashion industry is going to be a top line news story in 2024
Pete Mento 11:46
Are we doing halftime duck because I do have a halftime I
Doug Draper 11:49
didn't have one but I can comment on yours because you always have a good one so this would be the perfect time for an halftime obviously brought to us by kappa logistics so you rip on your halftime buddy and I'll jump in as
Pete Mento 12:01
you can see behind me my paintings you might be used to seeing or down it's because I'm in the middle of a move. I'm leaving the Granite State and going back to the district. And what I got to say Doug is that moving is not only a pain in the ass, but it's very expensive. The and I'm doing this myself but the cost of buying boxes tape. Thanks for wrapping, renting a truck it's I don't remember it ever being this ridiculous. And I am not a person. I'm a job creator. I like hiring people to deal with this crap for me. But when I reached out to Packers and Movers and they told me that a move for what little I do and I don't own a lot that was gonna cost me somewhere between five to $8,000 I just said I think this is a small Dr. Peak and handle on himself. So I don't know man it's just pretty ridiculous what the cost of moving is these days? Yeah,
Doug Draper 12:53
well it's funny that you say that for your halftime because I am as well in the middle of a move I don't we've alluded to it but you're moving to the district I am moving my world up to Steamboat Springs Colorado. That's a whole nother ballgame kids that graduated. I refer to this as Chapter Three of our lives chapter one dual Income No Kids, chapter two, raise a family chapter three. Here's the best time to buy a house Pete when the interest rates are at a 40 year high and things are bleeping expensive right so the move just a move up the steamboat like six grand for me the box is the this and the that you just start saying geez, what it is expensive. And there's probably listeners that are like, yeah, you dumb shits. Why didn't you think about that first, before you decide to make the move, but 100% You know, grabbing, hey, I got pizza and beer and you call your buddies who has a pickup truck doesn't really exist anymore. And I agree 100% Moving is looking expensive. It's awful.
Pete Mento 13:54
Alright, well, that's it for half cap logistics. And it's time for my next prediction. Again, trigger warning. We're not talking about our ideas in politics, simply what I think is going to happen. I'm beginning to believe that President Trump will win the election in the fall. And here is why I believe that people want some kind of stability. And people do not believe that there will be economic and geopolitical stability with what's going on. Now the argument can be made that there could be just as much political instability, but I think that they're more apt to vote for change than they are to vote for the status quo. We'll see if I'm right about that or not. I'll give you another prediction. Doug, I have a feeling that he will stop all the persecution of his political allies and might even pardon someone like Hunter Biden, and the reason I believe that is he doesn't want to be in the same position what he's done in four years. So two crazy predictions that are associated with each other
Doug Draper 14:59
All right, that is really interesting. So here's a question I have for you on this prediction rather than to make a comment. I have a question for you. Who is going to be the Vice President of the United States? Any thoughts or comments on that? Yeah,
Pete Mento 15:11
a couple. You can either have what looks like is going to happen, which is vet Grom Swanee, being his his second, because unfortunately, the other ones have been too loud about not doing it. That's one second. It could be a governor from one of these states, possibly the governor of Texas. You might see that happen as well. But I believe it'll either be a Republican governor who has not been mouthy about Trump. So that takes the new new out of New Hampshire out a couple others as well. Or be the veteran Ramaswamy. Yeah,
Doug Draper 15:43
yeah. Good. All right. So my fourth prediction is that, and this is kind of like obvious, but I think it's important to call out is that we, as an importing nation are going to kind of get back to the bread and butter, which means you're going to see a resurgence of supply chain domination in the West Coast. Right, for a couple of reasons. It's familiar, like you said, stability is something that people need, and the infrastructure is there, the financing is there with rates still at all time lows, the Panama Canal, which we've talked about a few times isn't getting any better the transit times, and the amount of money and inventory and dollars that's sitting on vessels trying to get from China to the west to the east coast, is just becoming unbearable. So get this stuff off the boat, get it into the market, start selling it as fast as you can. And that infrastructure already exists in Southern California. And so I think what you're gonna see is the second tier ports that got a lot of momentum during COVID, they will still be relevant, more relevant than they were pre COVID. But I think what you're gonna see with the Panama Canal situation, and the fact that the interest rates are so high, and there's inventory and money on boats, they need to get that stuff off, they need to get access to it, and they need to sell it as fast as they can. So if you are providing logistics services in the Southern California markets, if you have a warehousing that will pivot the infrastructures there, it's just a matter of turning things on and ready to rock and roll. So you're gonna see a big resurgence in Southern California related to supply chain support in 2024.
Pete Mento 17:25
I completely agree. I think this is there are too many things working against East Coast right now, not least of which is what's going on in the Red Sea. And the West Coast infrastructure is so well developed for this economy. I think you're going to see folks going back to their old habits and rates will be adjusted because of that.
Doug Draper 17:46
Yeah. Great. All right, man, what you got?
Pete Mento 17:49
All right. Well, this is coming off of our triumphant visit to the folks at Tampa, thank you, again, to Cindy and Alan and Chuck and, and Scott and everyone else over tap up. We want to thank them again, for their incredible hospitality and their opportunity. I thought it was a great, great conference and a wonderful show that we did there. I believe that cargo theft is going to continue to rise a great deal. I think that when we look back on 2024, it's going to be even worse than 2023. A lot of contributing factors will be unemployment, you know, financial instability, but also the criminals are just getting smart at using new methods. And I think until we find a way to respond to those methods, we're just going to be more successful with the theft. I also believe that cyber is going to play a huge part in this in the coming year. Yeah,
Doug Draper 18:33
yeah. agreed on two fronts. One, I can't think tap enough for having us down there. I think there's been some posts on LinkedIn. And we appreciate that. And it really opened my eyes to the depth of what's going on out there. And the one thing that caught my attention that you said is that yeah, there's cool technology to support our industry. And the bad guys are engaging in that technology as well. And the one thing that really resonated with me is that you can be some nerd in a basement and manipulate the system so much that you can Rene remain anonymous. And you can have this thread of who's touching the cargo as you're trying to steal it, that if things go south, as a bad guy, you can just cut the ties, and the dotted line to get back to you is very, very difficult to find. So why not? If I'm going to try to steal 10 trucks and eight of them the gig is going to be up, I don't have to worry about it because I can sever that confusing line of chain of custody from from the time that I quote unquote, take control of the shipment to the time that I need to get delivered to a warehouse or really complete the theft. The technology will enable us to create a wall and a barrier we're not going to be able to see who it was or catch who it was so 100% the technology that's out there available to us to benefit our industry is the same out there that's helping out the bad guys. So Without question, it's going to get to the point where it's going to be more noticeable. And it's going to draw more attention, it's going to be on the headlines, which will really start to affect some change. But we are absolutely on the same page with that.
Pete Mento 20:12
Yeah, I kind of wish that we would have recorded Nathan White's presentation about AI and how it's used and theft. And everyone should see just how well it's already being deployed. And honestly, not I mean, I talk about AI all the time, but we didn't see it in, in the media and all over pop culture, until really this year. So we are just in the infancy of using that type of stuff for bad actors. And I think it's really just going to catapult at all that
Doug Draper 20:38
we have, you know, well, my my last one, prediction is just more of a general statement of the world we live in, and things are going to continue to move at breakneck speeds, things just move quicker, right. And then one example that I give Pete is that whenever after COVID, switch from buying goods and things, switch to services, and you and I wanted to have the experience economy that lasted like 18 months, 15 months, and that was it. And we kept comparing it to the roaring 20s of 1920s. That was an almost an entire decade of, of wealth and enjoyment. And this time, it was like 15 to 18 months, it came in and went so quick, the interest rates shot up so fast that we've never seen it before. And I get we're putting the brakes on tries to slow everything down. Never before we've seen it happen so fast, I think it's going to maybe not drop quite as fast. But that pivot, those shifts are more of a V curve, everything we're talking about. And in life decision making influences on on the on the economy, the V curve is going to be the norm, not the not the exception. So if you can ride out the storm, these peaks and valleys are going to happen so dramatically, that it could be detrimental if you don't pick your your timing on it. But the general consensus is if you think things have moved fast with COVID, and after COVID, and the economy, that, hey, it's going to continue to just be volatile as hell and the V curve is going to be all over our world, and how we engage it moving forward.
Pete Mento 22:22
Chaos is good for the businessman. But it's it's it's rough for us that are into planning and dealing with all of it and guiding our clients. But I agree with Doug, I think next year is going to be a highly chaotic year, highly chaotic year, economically and then in our industry with regards to rates flying up because of what's going on in the least, to blow it back down again when things get quiet. And that's again, chaos is great for the industry.
Doug Draper 22:48
Yeah, yeah.
Pete Mento 22:50
Cool. All right. All right.
Doug Draper 22:51
That's it. Right, you got one or two more. I
Pete Mento 22:54
got one more. All right. So you know, my last one, going back to the interest rates, I think interest rates will go down to at least four and a half, maybe even down to three and a half next year. But I don't think they're going to go to too much farther down than that over the course of the next two years. But you're going to see those adjusted interest rates begin to go back down again, wonderful for consumers. But banks, as powerful as they are, and as politically powerful as they are, they're not going to let them get far too far down. they've enjoyed these interest rates and where they are. And I'm sorry, folks, but it's going to have a very bizarre effect on the home markets, you're gonna see a lot of movement next year, as those rates come down. People think and I'm going to take a shot at this. But at some point the are going to level down. And you're not going to see true relief till the end of 2025. But I think at least four and a half percent duck with all the other cuts probably down to three and a half percent by the time it's all done. Yeah,
Doug Draper 23:49
yeah, I would agree. Especially the interest rate piece that you spoke about, right? I mean, I'm living it right now. Right? And it's shocking, right? It's my it's, anyway, agree 100%, four and a half to me seems a little bit low. I've always thought, from what I've, I've learned a lot. In the last six months on this process. Mid fives to low fives and everything all hell's going to break loose, right, then people are gonna say that's just the new norm. And let's go buy our new house. And oh, by the way, there won't be any inventory. And so the housing market is going to spike again, which may lead to more reaction to interest rates, but I think it's going to come down as fast. Well, let me back that up. It's going to come down. I like your turn your timeline event at 25. I don't think it'll be 4.5. But I think it'll be in the low fives. I
Pete Mento 24:42
think it'll be even lower. And here's the reason why, Doug, I think there's a lot of political pressure to do something about the housing market. And I think that there's folks that are gonna push that. I don't care how separate the central bank is. They feel political pressure like everybody else.
Doug Draper 24:58
Yeah, yeah, good point. All right, that's it. I have no more predictions. I think it was a pretty good show.
Pete Mento 25:04
Yeah. So thanks, everybody for joining us. Listening to our predictions, playing our bit of Carnac for the year. We'll, we'll come and see how well we did with those. But, you know, I think I speak for all of us here on the global trade this week team. When I say happy holidays, we're open for a much better 2024 And we simply can't wait to see you join us again next year. It's Christmas next Monday. We will not be recording. But we'll see you again the following week with another excellent edition of global trade this week. Happy Christmas doesn't seem too keen. And I hope Santa brings you everything you want. You've been a very good boy. Yeah. Next year.
Doug Draper 25:38
All right. Happy New Year, everyone. Take care.
Transcribed by https://otter.ai