Global Trade This Week – Episode 158
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Speaker 1 0:00
You're watching global trade this week with Pete Minto and Doug Draper.
Doug Draper 0:08
Greetings, and welcome to another edition of global trade this week. I think it's edition 138. We'll double check that one. But anyway, my name is Doug Draper. I'm one of your hosts. And my good pal, my good friend. Mr. Pete mento is coming to us from the wonderful state of Arizona. Pete, what's going on my friend?
Pete Mento 0:28
Hey, buddy. Good morning, Doug. It's nice to be back. Yeah, I'm out here doing some client site work. And I'm melting and melting duck. This is, it's like the opposite of when I lived in Minnesota. In the wintertime in Minnesota, I would go from heated place, I would never be outside, I would avoid it at all cost. And now it's 113 degrees in Phoenix. And I run to the car, which is hysterical to watch, I'm sure where the AC is on. And then I run inside. And then I run back in the car, and I run back to the hotel nine hours later. So I'm doing everything I can to avoid the sun right now. Like a vampire.
Doug Draper 1:10
Yeah, well, it sounds like you're a perfect candidate for the mission to Mars, because that's what you would be is just inside 24/7
Pete Mento 1:17
that go, if they go. That's a whole nother
Doug Draper 1:21
podcast. And I know that we have to hammer this one out today. So let's just get into it. He fires away with your first topic.
Pete Mento 1:30
So in typical Don Draper fashion, Don Draper was right. Again, we have another instance of a major transportation company, a major transportation company, making a move with one of its internal financial assets. To quote unquote, this is the quote, focus on our core business. So ch Robinson has recently sold off part of their business in Europe, I don't know much about the sale, its company called ESP or a portion of its business called ESD, to a German company. And it said right there because, you know, we need to focus on our core focus on what we do what made us all this money, which was truck brokerage, and really take our eyes off of all these other distractions, and get back to doing what it is that made us famous. So Doug, you said this beginning end of last year, was one of your predictions, and it just keeps happening? We keep seeing it over and over again, in the business, these big players who are saying we got to get back to what made us who we are. And this won't be the last one. I mean, it's July, right? There's going to be more of it. It's a shocking financial environment right now for transportation companies, many of whom have over invested with money or during the COVID pandemic. So yeah, Doug, if we were in kindergarten, you'd be getting a gold star on your forehead before you went home today. For pulling it off again. But this trend, like I said, I think it's just gonna keep on going. Yeah,
Doug Draper 2:54
yeah. You know, and quick comment on that is it's all related, I think to COVID backlash, right? And to take a comment from a favorite podcast I listened to, it was all cocaine and champagne during COVID. Our industry was crushing it money was chasing us people were investing and just saying, what's next? What's next? What's next? And we realized that the party was over and, you know, struck midnight, and it took a couple of years to resettle regain, and you're seeing customers, you know, pull back in, you know, what's the C suite? One of the board one of the board of directors do it and let's just cut this thing down to the bones.
Pete Mento 3:36
You know, I'm not gonna let you just walk right past that. What podcast what podcasts Do you listen to this is it's all who is cocaine and champagne. Who says that? Yeah,
Doug Draper 3:46
there's a podcast. I would encourage you to check it out. It's called Prof. G. Professor G. It's Scott Galloway. I don't know if you've seen him. He's on some. Some shows time and again, but it is hilarious. Yeah, I personally think he's got great takes little over the top now and again, but you know, that's it. So Prof. G. Scott Galloway, he says that often in his podcast, actually
Pete Mento 4:09
sounds like something Ric Flair would have said in one of his pre match videos. But it is is true, man. I mean, the money was flowing like a mighty river and people need some wacky decisions. So it's coming back to haunt him now.
Doug Draper 4:23
Yeah, for sure. Cool. All right. Well keep this thing moving minds. Financial related as well. I know you're familiar, and I would assume everybody on our, our listeners, engages lineage logistics, cold storage. And they just did an IPO last week and raised 4.4 billion, which kick their company valuation over to $18 billion. A couple of things. One, it's the largest IPO Regardless of industry in 2024. And they're saying they meaning pundants that this could kick are not specific to our industry just in general, that large level IPOs may be making a comeback. Just a little bit like, you know, in the financial realm things that we just spoke about. But here's the crazy thing is that a couple of guys, a couple of bankers from Morgan Stanley, back in 2018, bought one warehouse in Seattle, Washington and said, Let's try to grow this thing. And they've made 116 acquisitions, they just went out and bought all these Mom and Pop cold storage locations. Specifically in Denver, there was a company called Oneida cold storage, which was a perfect target market for them rebranded lineage and everything else. So 20 countries like 480 warehouses, it's crazy. They said they have 2.8 billion cubic feet. And that's the unit of measure a lot of cold storage facilities use it's kind of the standard. And according to chat, GP TP This is not Doug Draper math. This is robot math, that equates to about 45 million pallet positions. I'm just using the standard pallet. So anyway, I think it's gonna set the stage for a lot of crazy IPOs. It caught my attention. It was kind of cool, because our industry made frontline front page news related to to this IPO. It was big, it's what they expected. And we could see more in multiple industries as things progressed this year, what's your take on IPOs? Well, first off done.
Pete Mento 6:27
Cold storage is where it's at. I mean, the, the the insight, right, somebody had the insight to realize what many of us know, it's hard to find, it's very hard to find, because it's not cheap to operate. But when you have it, man, it flies off the shelves. It's like a Taylor Swift album, it just, I mean, people will love it. And when you have a network like that, you can go to some pretty big companies, and you can provide them some pretty amazing services. So, you know, tip of the cap to a bunch of bankers who saw that in our industry, and realize that no one had really consolidated that need. So there's that. And then with the IPOs, man, you love to hear it, Doug, you love to hear that. And see, I wish it was like a bunch of freight guys that did it. But it's a bunch of bankers, right. But like, you know, you love you love to hear that our business is still cracking new ground, still coming up with ways for because you know that a bunch of people probably had pre IPO stock, and it just made a lot of money in our business. And, you know, I'm competitive. We all know that I have, I have my firms that I don't play nice with in this business. But I want everyone to do well, personally, financially. And I love that this is, you know, this probably some person that was working there, this might have been their first job, and they really crushed it, and they're out, you know, shopping for Lambo stock. So it's it's just, I love to hear it. You love to hear it? Yeah. And I do believe that you're busy.
Doug Draper 7:52
Go ahead, Doug. What? No, no, no, I was gonna make some stupid comments. So you finish and then I'll make my my
Pete Mento 7:58
comment. You also love to see that the street is investing in, I don't want to call it novel. But they're investing in sort of, I guess, these these new pathways that we're seeing in the business, whether it's technology, whether it's, you know, consolidated cold storage, it's just, it's just nice to see. So I hope it continues. It's been a wacky year for us in this business with volume issues and things going on around the world of conflicts. But this is going back to Doug again, in the first one, this is a core business that is never going to go out of style. And they have done an excellent job of giving the market what they wanted, which was something relatively novel in our space, something that sighs I don't know much about their operations, but I hear good things. So it's, it's just nice to see that it happened.
Doug Draper 8:47
Yeah. Yeah. It'd be interesting to see when you're out running from hotel to car. Warehouse industry is exploding down in Phoenix. And I know that there's a lot of cold storage places are popping up down there, which is just completely counterintuitive. But anyway. Cool. Well, that takes us to half. What Go ahead.
Pete Mento 9:07
Well, before we get to halftime, I've got to say right, so this this, this area has become this hotbed for technology, particularly semiconductors. And the the size and scope of these places is in the money that it costs to invest in it is incredible. And to the credit of Arizona. They've they've done everything they can to make it a friendly environment for business here, particularly business that's going to have long term implications on creating technology jobs. So you're just seeing them pop up everywhere. And our business here is absurd. It's huge. We're all over the place. I was building a new facility actually. So it's it's another place where I think you're gonna see a lot more investment in our business. And if you're young person in freight, and you're looking for the right place to move, I think I'd pick Phoenix right now as much as I don't want to live here. I think I'd pick Phoenix. Good.
Doug Draper 9:58
Good luck. Good advice there my friend. So, yeah, so we're buzzing through this one. So halftime brought to us by CAP logistics. They helped make this show possible every single week in and out and we appreciate that so yeah, Pete, what's up? What do you got for halftime?
Pete Mento 10:17
God before I get to my I just want to ask Do you remember when you in the fair Mrs. Draper decided to join yourselves and holy matrimony with the budget was for your wedding?
Doug Draper 10:30
It was pretty small. I mean, I mean, to answer your question, I think we spent 10 grand right. We got a few kickers. Yeah, whatever at dinner, call it 15 grand all in back in 1992? Or what? Holy crap. No. 1999. Anyway, I know what my, what my anniversary date is. Pete? I'm just saying. Don't do it.
Pete Mento 10:54
You just don't know how many years? Yeah, so, you know, I, my, my, my ex wife and I got married in 2001. Right before 911. We had a relatively big wedding. But we got to do it on family and a family, home of my ex father in beautiful gardens where I live. And we probably spent around 25 grand. And at the time, that was a considerable amount of money for me to lay down on a party for most mostly people I didn't know. But the prize for all time silliness, in weddings is going to a couple in India, who spent $600 million on a three day wedding. In India now. They flew most of the people out, they put most of the people up, it was a massive wedding, right and put them up in hotels. If you have a chance to look at the pictures. The gowns that the Bride Wore are incredible. And I guess they were handmade and hand beaded. But they also paid to have celebrities join them. So Kim Kardashian and Khloe Kardashian, I think, got it got a you know, got a little check to show up and dance with everyone on the dance floor and have a couple of drinks at your wedding. But $600 million. So I've told my daughter many, many times, if you just go to the courthouse and knock it out, I'll give you the money you would have spent on a house because that's an investment in your future. Getting everybody else loaded. So you can be a princess for a day is a pretty ridiculous way to spend a bunch of money. So I don't know Doug, are you in or out on the idea of an incredibly over the top lavish wedding
Doug Draper 12:37
100% out? I'm with you, right I mean, what's 100%? I mean, we could go down for five minutes about the nonsense that is so what? Wedding matrimony Yeah, it's all we smell like
Pete Mento 12:52
a couple of people. And right now. We like got guys to go to Denny's for the $2 breakfasts. That's what we sound like right now. Yeah, but I believe that I feel that with you, buddy. Like why would you spend all the money you want? I could do a $600 million. Man. You have any idea?
Doug Draper 13:09
It would be dangerous. One thing for sure. So
Pete Mento 13:14
how rich how rich is her father? Then she's like, Daddy, I want to have it these like, Oh, of course, sweetheart. Yes. Spare no expense.
Doug Draper 13:22
What do you know? Do you know what he what his? How he made his riches or what the guy does or what have you. Let me rephrase it. How many things does he own? Because he doesn't. Yeah, he doesn't do anything. Right. That's,
Pete Mento 13:35
I was so I was so disgusted with the story that reading it, like filled me with rage. So I didn't pay attention to a lot of the details. I just had to stop reading it. Yeah. Right.
Doug Draper 13:47
Well, before we get off matrimony, I want all of our audience to know that I know exactly the date that I was married. It was July 24 1999. And we just celebrated our 25th. So they're
Pete Mento 13:59
all right, good, good undulations buddy.
Doug Draper 14:01
Hey, thank you very much. Thank you very much. I happen to be in the great city of Fresno, California on our date, but we celebrated this past weekend. Anyway, speaking of celebrities, and this one is sweet. I don't know if you've seen. First of all, I love the Olympics. Every night I sit down and watch it. I know that it's eight hours late and I've already seen kind of the results but I love watching the Olympics. And one thing that popped up was Flavor Flav from Public Enemy is sponsoring the women's water polo team. Apparently that their financing I don't know the details, but they've lost some financing. They had to do a lot of this from bootstrapping, and a lot of their players were literally getting gypped second jobs in order to pay for it. So Flavor Flav came in. I don't know how much money is thrown out there. But the women's water polo team three time gold medalists you know they're potentially on I'm trying to win their fourth. And Flavor Flav. How unlikely and unusual of a support mechanism is that but if you've seen any of the pictures, he's got his clock around his neck classic Flavor Flav posing in front of the team and, and I love it. I absolutely love it. So my question to you is if you had to sponsor an Olympic team, and you were you know, the the Indian you just made mention and you've had unlimited cash to support what team summer or winter, would you? Would you support sponsor?
Pete Mento 15:37
100% No question about it. And this will come as a bit of a shock. I would give as much money as I possibly could to the US Women's Rugby Sevens team. They meddled yesterday, they ended up taking the bronze in a stunning upset of Australia. It was an incredible game they want in the final seconds. And these women are not only amazing athletes, they're incredible personalities. So each and every one of them have tick tock channels, I guess. And they do videos on on the Instagram and the bookie faces and all the rest of it, right? And they are they're phenomenally entertaining not only to watch on the pitch, but also in their personal lives. I think I'd make money, you know, on that, but also because of my love of the sport. So I am so proud of the women's rugby team for doing what many people thought was unthinkable. And the next time we come to the Olympics, duck, we're coming for that goal. We're going to whip New Zealand's ass we are going to whip South Africa's ass and we are going to take the gold medal because in four years, the attention and the money and the athletes are just going to get better. You're gonna see this almost this entire team back in four years pitched off looking for that number one spot. Now regarding Flavor Flav, Bud i i Love Public Enemy as I've seen him many many times and the idea that Flavor Flav with his viking helmet on and his you know, giant clock and Yeah, boy, you know, somewhere in Paris right now. I'm all in buddy. I, the more absurd you can make it, the better. And also, I mean, we love the Olympics, you have a daughter who was who was an incredible athlete in college. And she wrote at the highest level, that's not a sport that most people you know, tune in on on the on the Otoe for right like they don't see it rugby for me, you know, rugby, you don't see a lot of it, but to get to watch people row to get them to watch, watch swimming. It's the only time I ever watched swimming. It's the only time I ever watch archery. You know, it's cool that for a couple of weeks a year, I get to see the best of the best in the world compete in something that they truly love. And I love that Doug, so all the silliness, I'm in for it. Snoop Dogg stoned out of his mind making commentary? I'm in for it. Yeah, just give me more.
Doug Draper 17:53
Yeah, is it I think yeah, you know, I grew up swimming, might my kids swim as well, but they don't need my help. Right, I would go to some kind of lower, you know, even some niches sport that you and I didn't even know existed, right? I think the whole winter curling. Remember how that was just the hype last year or the Winter Olympics with currently? The thing it's like it the funny thing is like, I would sponsor it, I would start smoking just because of it. I'd sit behind the the the athletes,
Unknown Speaker 18:29
quote unquote, just
Doug Draper 18:30
far enough out of, you know, in board a little bit with a cooler of beer, some doughnuts and a pack of cigarettes. And there'd be like, Who's that guy back there? What is? Who is that? What is he doing? And I would just start throwing ones because that's about all I could give would be $1 bills. But that is such an unusual and unique, unique sport that just kind of wave at the last Olympics that it would be, it would be fun. So anyway, that'd be the one men men or women's I don't even know if there's a women's currently or not. You don't have to figure out when my sponsor is.
Pete Mento 19:01
There's also they also play mixed games where you know, half and half half women, half men. So you could do that to Doug, that is a brilliant idea. I think that we at global trade this week, should reach out to the American curling team and see if maybe, you know, what would it cost us to maybe get our our logo on their brooms or something. I think that's not a bad idea at all. Curling is fascinating because many overweight middle aged balding gray American men like me would watch it and say I could do this like this is this is what I want. If you want to see how wrong you are. Go watch the videos on YouTube. Of all the celebrities that like hung out with the curling teams in the game a shot at it and just how God awful. It takes a lot of hard work to get good at curling. So but I think that's why a lot of folks looked at and said I could do this. No, no dude, you can't. You can't out it's super hard. So we haven't done we got to do USA Olympic Committee. If you know you're probably listening, because who doesn't listen to this show? Hit us up. You know, Doug, and I'll be more than happy to stroke you a check for what? 2030 bucks. Doug, you think? Maybe?
Doug Draper 20:12
Yeah. Yeah.
Pete Mento 20:14
I'll throw in a ton. You throw in a 10. Maybe Keenan can throw in 10. Right. And then we'll we'll get our we'll get our sticker on the broom.
Doug Draper 20:23
I love it. Yeah, we got a couple of years to plan. So it'll be good. Well, that was halftime brought to you by CAP logistics. We appreciate their support. So we're heading in the second half of the show here. P. I insurance. So you go first on the second one, right. Yeah, you go.
Pete Mento 20:38
I go first. The last week there was an organization came out with their codified rules for E commerce. They've spent all this time working on it. There were there were dozens and dozens of nations involved. They're slapping each other on the back what a great job. And the news reports came out the world has decided on these e commerce guidelines, except the United States. We did not sign off on it. We said that it wasn't it wasn't good enough. It doesn't get deep enough into requirements about trade, public health and human safety. And not only did we not sign it, Doug, we were very vocal in our displeasure with the way that it went out. So it's like the rest of the world all got together and said, Wow, great job. Everyone. Group hug Kumbaya. We're like, nope, taking the kickball and going home. Not me, baby. The biggest market in the world wants to see this change. And I think Doug, it's gonna take a long time for us to sign on to anything about e commerce. Yeah, yeah.
Doug Draper 21:33
It's such a powerful force in our economy, right. I don't even I don't even know if it's politically motivated on that topic. But it's, it's, it's funny what you just said, just like, yeah, it's a big deal for us. We've talked about it a lot. But yet, we're not going to agree to anything so interesting. Yeah, don't care. Well, I'm going to bring us home on that on a similar topic. And I want to give a shout out to two of my friends that brought this to my attention. Not directly, but they speak about a lot Mike Regan would transact and Jerry Hempstead, who I originally met when I was a young tyke getting in this industry with airborne Express, both of them are masters in in parcel analysis. So I want to give a shout out to both of those spreads in mind. But the topic was peak season surcharges. So when the fall you have back to school, then you have the leaves falling and the nightscape cooler, and partial carriers come out with their peak season surcharges. This one is a classic example of data driven ups, just analyzing the hell out of it and confusing the rest of us, right. So I'm not getting into the weeds on it. And I'm not bad mouthing ups because, much like ch Robinson a much like that we spoke on, they're shedding business that is distracting. And they're focusing laser focus on their core business, which is parcel movement. You've seen that with their contract with with USPS. But the gist of it is, is these peak season charges paid start on September 29. And they do not end until January 18. And in that way, window, there's three different tiers between all of their service levels, if you look at it starting in the 29th of September, a lot of those peak seasons has to do with imports. And then during gets closer to the holidays, it obviously has to do with domestic residential deliveries, right. But here's some of the charges. There's a peak season surcharge, there's a demand surcharge. There's an additional handling fee surcharge. There's a large package surcharge. And there's an over maximum limits surcharge. And it's all based on how much volume you're rolling average since October, I think of 2023. And if you ship X number of parcels and data that you need an abacus to figure all this stuff out. Pete So it's awful. It's complicated. And it's a long period of time. So if you part if you handle parcel, whether you use it to import your business, your products and your commodities, or whether you're just handing it in during the you know the true peak season between Thanksgiving and Christmas and the end of the year. Be aware get a plan B I think you're gonna see a lot of people go into alternative carriers. They're gonna go hey, FedEx, I use UPS. I don't understand this. I want to come on board. Wait, because FedEx is going to come out with theirs shortly. And it'll. Yeah, it'll be interesting. And the last thing on this, Pete I didn't realize but Thanksgiving is you know, it's the fourth Thursday of the month. Well, this this year, it's like the 28th of November. So if you look at number of days between Black Friday, and Christmas, that window is super condensed, which I think is also part of While they're getting aggressive on the surcharges, they have less days to handle, probably the most shipments they've ever handled in that time period in the history of the world. So anyway, its peak season is really long. It's really complicated. There's nothing wrong with that UPS is a data driven organization. But if you're new and your company uses it, you better start checking it out and analyzing because it's going to be a different animal this year.
Pete Mento 25:27
Not all I can picture is a roomful of lab coats, lab coat wearing guys, you know, that suffered suffered wedgies through most of middle school. You know, big, big, big, thick bottle glasses, and they've got their bizarre like little well, I believe if we do it at 214 on the 19th of November, you know, like there, and then someone in corporate is like I'm telling you the nerves, the nerves are really good. The nerves are saying, you know, that's how it happened is there was probably a bunch of former McKinsey consultants sitting down there ripping this thing out, but yet it's preposterous, but it's how it is. And with that, my friend, we're gonna bring it to a close. Unfortunately, it's a quick episode this week, but we want to thank all of you for watching and listening. We want to thank our friends at CAP logistics for continuing to support us week after week. We urge you all to check them out of cap logistics.com And if it's happening in global trade, we'll talk about it next week on global trade this week. Thanks, everybody. Thanks
Transcribed by https://otter.ai