Global Trade This Week – Episode 156
What’s going on in Global Trade this Week? Today Trade Geek Pete Mento & Doug Draper of Inland Star Distribution cover:
1:38 -FMC Scrutinizes Maersk-Hapag Alliance
4:37 -50th Anniversary of the Barcode
10:48 -Halftime
16:56 -ILA Strike Threat: Likely or Not?
19:30 -New Chinese Tariffs Kick in August 1st
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Unknown Speaker 0:00
You're watching global trade this week with Pete Mento and Doug Draper.
Doug Draper 0:06
Hello, everybody, and welcome to another edition of global trade this week. My name is Doug Draper. I'm a co host, and on the other side of the country is my good friend. I can't even think of a funny thing to say, Pete. So I'm just gonna say my good friend Pete mento. Pete, I can tell based on the window that you are in the nation's capitol.
Pete Mento 0:29
Mall, buddy, yep, I'm getting ready to fly to beautiful Oak Brook Illinois. You know, not? Not quite not quite Chicago. Yeah. But you know, so, yeah, I'm trying very hard to maintain some sense of wonder, excitement and adventure. Knowing that I'm going there. It's hard, buddy.
Doug Draper 0:55
It's hard. So my, my wife grew up in Arlington Heights. And I think, years ago, we used to go to the I think it was the Oak Brook mall, which was like, not mall, the American size, but it was pretty big and pretty hip, at least in the late 90s. So I think it's Oak Brook Mall. Is that area, it's out by O'Hare. And
Pete Mento 1:15
yeah, it's not that far away. But it is. It's just basically a gigantic mall with a bunch of hotels around it and freight forwarding companies. So you're spot on brother, your spot?
Doug Draper 1:26
Yeah. All right. Well, I know you got to catch a flight. And so our listeners can hit this in 1.5 times as quick to get through it a little bit quicker to help you out Pete. But until that happens, let's get this party started. And what's your first topic?
Pete Mento 1:41
My first topic is one that most people will brush over the gloss over, maybe with good reason. But ocean carriers from time to time will put together partnerships, where they'll take a look at where maybe they've got less than exciting transit lanes, or maybe they're needing some capacity. And they'll get together with another one of these ocean carriers and create a collaboration. So what's recently gotten everybody's attention whether they like it or not, is the fact that MSc and an MSc that Maersk has gotten together with their good friends that have hacklin. Now, on the surface of it, everybody wins. You know, you've got stronger capacity, bigger ships, and it's going to give Maersk just an absolute chokehold on a lot of particular particular to Southeast Asia. But, of course, everyone's also whining and moaning, because when you constrict the amount of capacity, what you're doing is you're you're keeping demand where it is, but supply much lower and giving someone more of an ability to manipulate what's happening. So you want to talk about timing dude, right? About four or five months ago, when you're looking at the ocean contracts people had, these rates were just crap, you know, not the case anymore, but now they're starting to blow up. And again, these two particular carriers have that amazing opportunity to leverage that to gain more of a marvel. So you're you're seeing the entire trade complaining, the FMC is taking a closer look at this as to whether or not it's fair, but I'm, I'm stuck wondering, what's the FMC really going to do about it? You know, where what kind of enforcement angle do they have to stop at? They've never stopped one of these before? Why would they stop it now? So although you're seeing over LinkedIn in particular right now, a lots lots of people complaining and moaning about what's going on with this, honestly, dude, I don't think anything stopping. They can take a look at it and investigate it and run around it all they want. This is happening. Whether the trade likes it or not.
Doug Draper 3:43
Yeah, yeah. When? When I heard this one, I'm like, what can the FMC do these companies are based in the US and the fine print. Yeah,
Pete Mento 3:54
yeah. Read a very stern letter. send you to breakfast send you to your room without dinner. Yeah,
Doug Draper 4:00
yeah. I think there's a strongly worded letter that is in the mail. But anyway, I get it. Everybody needs to take a pause and ask to take a look at it. But like you said, it doesn't matter. It's gonna happen. Right. What other than reviewing it and trying to delay it, slow it down? It's not an emcee can't stop this. Right. It's it's a headline to headline.
Pete Mento 4:25
It's happening. So that was really it on that I just, I don't want people running around thinking that their their distaste for it and their utter, you know, anger about really matters.
Doug Draper 4:37
Got it. Alright, man, I'm jumping into my one. My first topic and it's about the bar code, right? I didn't realize this I had something. This is how crazy and lame it is. This popped up on my feed, which means the type of stuff that I'm looking at online is pretty mundane, or I need to get a life outside of supply chain logistics, but this literally popped up so I guess, I guess it's the 50 year anniversary of the barcode. And people are starting to say, what can we do better? Right? So there's like anything else, there's a group of companies, it's the right companies, Amazon, Walmart, Target, p&g, Pepsi, are all kind of getting together to say, what does it look like we're 50 years old, as it's run its course, is there a two d version, which is the the QR code that you and I are used to that became infamously famous during COVID. And trying to read menus off of your phone, the only not to go on a squirrel moment. But the only good thing about that is when I didn't have my reading glasses, I could use my fingers and make the font exceptionally large. That was the only thing I liked about it. But they're kind of saying, Hey, do we want to go from a linear barcode, which just basically has fixed data and numbers and go to something that's a little bit more dynamic, referred to as a two dimensional one, right? So anyway, they're saying that this will help out with clients that customers that need recall ability, health and safety general information about the products that you're using. So it gives consumers control and power when they interact, and not just seeing a series of numbers. Right, so here's my take on this beat. If it beeps at checkout, I'm all good. And anything above that is gravy. So that's fine, it can be at checkout. And I'm fine, because everybody does self serve or self checkout now. So if it beeps, I'm good. And that way, Sam's Club isn't gonna bust me on the way out when I tried to smuggle up a Clif Bar or something. The one thing they said that this would help reduce food waste during a recall. And it may give the consumer a little bit more information, because you don't have to say how do you read a Julian Date under, you know, on a on on a lot cooler stuff. But basically, if my yogurt says it's going bad, and I bought it from that company, I'm throwing it away. Right? So I don't know if it's really going to affect food waste, because nobody's trying to find at least people that I know, are not trying to find a a number that you can't even read because it's the sweat from the condensation is mushed it in, you're like, I don't know, the these olives, I'm just throwing them away. Right? So I don't think it's going to reduce any food race, food waste. And then my last comment on this point is I wonder if this is just another example of us going to the metric system when you were I were in elementary school. And we all learned about, you know how the US was going to join the world and do metric. And that kind of lasted basically one heartbeat. So I don't know what's your take on the barcode situation? Does anybody care? Is there value in going to a 2d model like a QR code? Well,
Pete Mento 7:54
first of all, shout out to a friend of the show Rick Kinison. PSC scanning, he, he watches us religiously?
Doug Draper 8:03
Yeah, I want him to give some feedback on this topic.
Pete Mento 8:05
That's what he does. So their company manufactures some wild scanning stuff. Like it's not just barcodes, you know, it's just optical technology. It's really cool. They're up in the Oregon area. So I've had some experience working with these types of products and being engaged with them. And I gotta tell you, man, like the amount of information that can be put in one of those, I guess, 2d, 3d, whatever, barcodes is pretty incredible. So that's number one. Number two, whenever I hear barcodes and purchasing, my mind goes back to when HG Bush, the first President Bush had never seen a scanner in a grocery store. Do you remember that? No. He took them to a grocery store to be among the people. And he was like, Oh, what's this contraption? If he hadn't seen it hadn't been in a grocery store, since probably, you know, the 1950s that, that always comes to mind. But here's my take the great anytime I hear this, because I didn't do the reading before we started today. And I hear how it's gonna be better for consumers. There's no way this has everything to do with gaining more technology for the people who are selling it. That's what this is. This, this is about gathering more information and being able to report more information based on the data that's in it, when it was bought, where it was bought, how it was bought, you know, if there's any information that can tie you as a consumer, to that purchasing information to go back to the person who sold to him. So, you know, I've got a rewards number that I use with whole foods, I've got another one that I use at Harris Teeter. And when I when I click that, then you hit telling me that in order for me to get that discount, you know, for being part of the shoppers club, my information is not going back not only to Harris Teeter, but to the actual manufacturers of the goods. You're like, oh, well look at this. You know, Pete buys X, Y and Z which means he probably buys a, b and c we should find ways you know to do frankly, I'm telling you, Doug, I got my tinfoil hat on, and I'm saying it out loud. This has more to do with the companies that are selling to us than it does the consumer buddy pipe and mad about it. It's just more ways for them to collect data to sell. I saw this on a meme. And I don't know if it's true, but that 90% of the data on planet Earth has been generated in the last two years. And I think it's stuff like this. It's just creating more information in order to sell to us more easily. So sure, yeah, I believe this is what's right. For the for the consumer, when I see something that actually helps me out. Yeah. Well,
Doug Draper 10:35
if the if the product is free, you know, if it's free, that means you're the product is what you're being sold like. I'm not I'm not saying that very clearly. But I think you understand what,
Pete Mento 10:44
no, if something is free, the product is you right?
Doug Draper 10:47
Yes. There you go. That's it. Yeah, that's it. That is it. So alright. Well, that brings us to halftime. Like I said, we're at 1.5 speed on this podcast this week, Pete So brought to us by CAP logistics boys ppreciate keen, and behind the scenes, pushing the buttons, pulling the levers. And let's just jump into it. So what's your halftime topic for today?
Pete Mento 11:07
Well, I'm obsessed with these Tesla robots, Doug, you know, these robotics as a whole really gets me going. And the news that Elon Musk thinks this is going to be a multi trillion dollar company, because they're so far ahead in humanoid, truly articulate robots. He has them working in his, you know, in his warehouses now, in his factories. Now, the plan is, at some point this fall, to have them available for sale to guys like me and you. So you start going down the rabbit hole, and the cost is very low. It's probably 10,000 to $15,000 for one of these robots, tops. 20. You're like, wow, so I could have a robot walk around my house for less than a used Hyundai. Matter of fact, you can. Well, how's this so cheap, because you're gonna be buying subscriptions and uploads to software upgrades and that kind of stuff. So, you know, today, your robot can go mow the lawn? Well, now we'll give you an upgrade that says it can also edge the lawn or pull weeds, you know, the robots will be able to put away clothes help you to carry groceries indoors. If you drive a car that's integrated with it, they can drive the car for you. It'll be able to watch your children if you're in another room and alert you if something has happened. Do some simple tasks as far as cooking, putting away dishes, that kind of stuff? Hell, why get married, Doug, you know if you can have another person living with you that handles all the crap you don't want to do. That sounds like a perfect existence. So Doug, my question is, what do you buy a robot to pick up some of the honey do's around the house if it was priced? Right? Yeah,
Doug Draper 12:42
no, no, no, no, I would not write it just seems creepy. And they excuse me say it's a general purpose robot, like, what does that mean? Like, don't robots have a specific purpose. So I get the examples you just gave and talk through it. But nope, I would not buy a robot. But the thing that I had not thought about Pete Is it subscription is service to SAS. And, you know, it's like the razor model, I'll give you the handle, but I make money on the razors. And so I think that's kind of where this is going. But there will be people that go apeshit over a Tesla robot, and just like they did with the cyber truck. It'll get delayed a few more years, but there will be people lined up ready to buy this thing.
Pete Mento 13:30
You know, I had a buddy of mine say he was gonna get it and hack it. He's a coder and teach it how to how to, you know, be ready at a moment's notice with a gun at night. Like, I think you're missing the point. But do we want to cut things? Haven't you seen iRobot? What do you think it dude, right? So part of me? I don't know if I will. I won't. Doug, part of me loves automation, you know, but also, I'm worried that it's going to be constantly collecting data of what's going on in my home and sending that to somebody. I don't trust anyone. You know, it just seems like another way for them to hack into our environment, so probably not. Probably not. Yeah, good for you. Well,
Doug Draper 14:08
speaking of aluminum foil hats and conspiracy theories, mine is related to a 72 year old man who shot down a drone in Florida. This is one of those classic things. My daughter told me this the other day that if you Google like the date, and a Florida man like some crazy story will come up. You no absolutely
Pete Mento 14:30
used to putting your birthdate when they're trying to when they're trying to hack you online. Yeah,
Doug Draper 14:35
exactly. So anyway, this was a company called drone up, they were doing some testing for Walmart, the operative word is testing which means these things are still not operational. Anyway. It was coming down to make a delivery. The old man freaked out, got his handgun out and blew it to shreds and then he got you know, thrown in jail and you know, he got out on bond and all that kind of stuff but they're saying it was a $13,000 drone that he that he that he shot down. And the beauty of this is he said, I'll pay it. But I want the drone. And yes. Good for you.
Pete Mento 15:16
So this store is grown. Do we know if he got the drone?
Doug Draper 15:18
Doug? I was about to say the story was like two weeks ago, so I haven't followed up with it right if the sensationalism of the story has come and gone, but anyway, just what that is exactly what's going to happen more and more, even if it's kids with BB guns or people with rocks or slingshots. That's just the problem with drones you got to come on over my house, you're in my space, you know, make my day law with with drones it I think that's just one of the biggest challenges it's going to happen. So anyway, there you go. There's a Florida man story for you.
Pete Mento 15:50
So Doug, I love the the the situational comedy modern family very much, I think it's very funny. And there is a episode where someone has a drone over their, their swimming pool. And they're taking photographs that people are laying out. And the father and the son take it upon themselves to knock this drone out of the sky. And the drone just beats them at every turn, like a just the person the person running the drone, just outsmarts them over and over again. They finally get it in the end spoiler alert, but I absolutely see people saying, you know, you do I own the air over my home is this an invasion of my privacy? Right, and then some wacko like me walking out there with a 12 gauge and taking shots at it to knock it out of the air. You're gonna have more stuff. When undertaking more of this. It's one thing if it's delivering a pizza. It's another thing if it's, you know, on station over my house right now, because I'll tell you right now, all crazy Uncle Pete is going to take a couple shots at it.
Doug Draper 16:51
All right. Well, that wraps up halftime, brought to us by CAP logistics. And we're doing the second half of the show here. So Pete, what a rip. What's your, what do you got?
Pete Mento 17:00
Well, the ILA came right out and said, we're not happy with what's going on. We think that the negotiations of our next contract, you guys are sandbagging. As you're dragging your feet, things aren't going with as opposed to, you should expect to strike if things don't change real soon. And that I think that's in a script that they do, right? Where months beforehand, they've got to say, We're serious. We mean this we're gonna strike. No kidding, strike, strike strike, right? It's, it's almost as though there's a, there's some sort of a predetermined flowchart of what happens when you see you're not going to do something. Do I believe they're going to strike? No, I think the government's going to step in, it's an election year, it would be positively cataclysmic in an election year for that to happen, I believe that you're going to see the white house get involved in this. And one way or the other carriers and portfolios are going to lose. It's just a question of how bad they're going to lose. So no doubt, I don't think there's going to be a strike. But hope is not a strategy. So I'm telling everyone, I know what to prepare for just in case. But dude, they are fired up. They're fired up right now. And they're just talking all kinds of smack about how they're going to close the world down. So I don't know, Doug, what do you think is the strike going to happen? Or is this just more posturing?
Doug Draper 18:18
100%. posturing, right. It's funny that you made that comment, because when I saw this topic, I'm like, Okay, this is chapter three of the playbook, right chapter one, bring awareness, generate some potential concern, chapter two, talk about the gap and how they're not coming to terms and the potential of what could happen. This is just chapter three, talk openly about it, and talk openly about a strike. But the election year thing, check that box, you're exactly 100%. Correct. And I don't know, 2023 was the year of labor. You know, we could go back and talk about all the different labor negotiations that went through at that time. I don't know if 2024 is going to be the year of labor. But I think this is going to be addressed, managed by the government mitigated and everybody will, will will mostly get what they want. And, and life will go on. Yeah, well,
Pete Mento 19:14
I think done that. I don't know if it's the year of labor anymore. But I think that they're in a pretty good position to get what they're asking for, but they're not going to get everything they asked for. But I think picking this time of year and understanding what's going on in the world around them is a really good chance. They're gonna get a lot of what they want. Yeah. Cool. All right. Don't bring us on, buddy. All right. All right.
Doug Draper 19:36
So my take was is August 1, the straw that breaks the Chinese back related to their economic situation, right so august first is the date that some of these new tariffs that made news a couple of weeks ago, maybe a month ago now that go into effect. Electric vehicles is the one that makes the most news then you got semiconductors lithium battery is solar cells, solar panels is another big one. And then just the other day, maybe over the weekend, they talked about a trade imbalance of $95 billion. Right? So more outbound and inbound, if you will. And then you got, okay, the real estate debt that we've talked about on this show, the consumption in China is just down, which is a direct result of that trade imbalance, political tension, you mix in the fact that it's an elderly populace. So part of me is like, is it really gonna do anything? I don't know, I haven't figured this. I don't have a strong take one way or another. Pete us is not the only market in the world. They can sell their products and other areas of the globe. But I think it'll be interesting to watch to see if there'll be anything that comes out of these new tariffs, not related to the US, but how is it an impact China? So? I don't know. It's only two weeks away? What's your thoughts on that?
Pete Mento 20:59
Well, I love it when you pick one of my topics, Doug, I love this one. When you're like, hey, let's talk about duties. I think it's happened two or three times before now. Yeah. This is 70% of what my day is right now, what's gonna happen, what's going to happen, what's going to happen when you sit back and I see you're going to pay your tariffs or find a way around them, what's going to happen with China, this is going to make them very angry. You know, there's this new round of 301. Tariffs is really focused on areas where the US needs to look elsewhere. Or like syringes and rubber gloves. That's that's, that's on the list. The other side of it is places where the US is trying to create a strategic stepping stone to either expand on an industry or get a foothold in our own country. So electric cars, batteries, beings, Apple permanent magnets being another example. So I believe that China is going to find ways to create export restrictions, to stop certain technology and products coming to America as a way to beat the brains on this thing. But I also believe that from conversations I've personally had, that there's not going to be sort of the immediate effect that people thought there would be, I think it's going to take years for us to overcome some of the deficiencies in our supply chains of being able to get to this stuff, American companies are going to keep buying it, you're gonna keep buying it, they're gonna pay the additional tariffs, until someone has found a way to manufacture this stuff somewhere else. Now, add to that last week, the Mexican government made an announcement that they're going to cooperate with the United States, on helping people to deal with these punitive tariffs, not just three of wands, with the tooth twos and the anti dumping and countervailing. So to that point, you're going to have to prove that steel products were melted and poured for aluminum extrusions for the steel that went into it, in order for you to qualify for that, because so much base metal is coming in, you know, rolled steel, whatever it is from China to the US, and then being used to make this stuff, Doug, it's going to rain, holy hell on the brokerage community having to deal with this crap over the course of the next year, as American companies find out that what they thought was Mexican origin that might have been made there. But the steel that was used for it wasn't poured in wasn't melted in Mexico, and it won't qualify, it's gonna be bad. This is going to be a real problem.
Doug Draper 23:26
Yeah, well, it's all you know, the looking up the supply chain, where did the cotton come from? On the shirt that that, that you're wearing? Right
Pete Mento 23:35
where the yarn forward, buddy? Yeah.
Doug Draper 23:38
It'll be interesting to see. So yeah, well, you know, the semiconductors, we're trying to bring that back just to domestic production, but the lithium and all the precious metals and things that nature, that's all just related to, you know, battery technology and manufacturing. But you're exactly right, that, that those items, and are those, those rocks, so to speak, are in other parts of the world. So let's strengthen a trade agreement with another country that has those resources that we need. So it'll be interesting. All of that does not happen on August 2, by the way, oh, that happens over the course of many, many years. So yeah, I don't think we're going to wake up and anything dramatically, it's going to happen after August 1, but not the first thing that
Pete Mento 24:21
a lot of companies have been importing whatever they can to beat that date.
Doug Draper 24:25
So trust me.
Pete Mento 24:28
Yeah, one of the things that really gets my attention about, you know, all of this with the new tariffs and all the rest of it is a Chinese company is building a new manufacturing facility every week in Mexico. So they're trying to find ways to get around all these tariffs by producing the goods in Mexico and then bringing them in hoping for some type of use usmca avoidance on that, to their credit, right, any, any business any government's going to try to find ways around regulations and So our response to this was cool. We're gonna go after you at the base level that we possibly can. We're going to change the rules in order to benefit us. And what I tell people over and over again in my seminars is as soon as you think you found a way around anti dumping countervailing or punitive tariffs, the government will realize it's happening. And they'll find a way to go after that to it, it won't have to go to Congress. There'll be taken out from the USTR and the president. I think that this is the first shot across the bow at China to tell them, we're not going to let you find ways around these tariffs. We're gonna do everything we can to bring these industries back to more friendly nations. And it's like you said it's not going to happen overnight. It's definitely going to keep happening.
Doug Draper 25:43
Good points, scoring points, my friend.
Pete Mento 25:45
All right. Well, that does it for us at global trade this week. Shout out to our friends at Capital Jetix, who is always find that gets a little a couple extra coins in the cushions or some change in the ashtray to keep the show going. And for their never ending support by lending us. Beautiful Kenan who did what I can only call a passable job last week in your absence, Doug, but what really bothered me was how many people texted me saying, Oh, I'm so happy that Keenan was on the show. I love
Doug Draper 26:18
that did not happen did not happen. I
Pete Mento 26:21
will forward you the tech stuck. I have had people who sent me things on LinkedIn. You sent me text messages. Oh, I always love it when teens on like what is wrong with you? What is wrong with you? It's like being excited understudy is playing on the show you're seeing and Broadway knock it off. There's nothing wrong about that. But thank God he was there. Right. Thank God for Kenan as well thank God for all of our listeners and our viewers and our subscribers. If you love the show, tell somebody and remember if it's happening in global trade, we'll have it on global trade this week. See you next week. See you buddy.
Doug Draper 26:52
All right. Take care.
Transcribed by https://otter.ai