Global Trade This Week – Episode 161
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Keenan Brugh 0:00
You're watching global trade this week with Pete mento and Doug Draper.
Doug Draper 0:08
Hello everybody, and welcome to another edition of global trade this week. My name is Doug Draper, and on the other coast, I'm coming from Colorado. But actually, Pete, I'm not sure where you are, so introduce yourself and then tell us where the heck you are this week. Hi, Doug.
Pete Mento 0:25
I'm Pete, I don't know before, yeah. Pete, mental Doug's never ending source of frustration. I am currently in Mendota heights, Minnesota, which is right next to the Minneapolis St Paul airport, and I am here on sales calls tomorrow, and then Chicago, then Milwaukee, then back to Chicago and back. It never ends. Doug, it never ends.
Doug Draper 0:51
Yes, yeah. I came back from Fresno last week, and I flew out on a Saturday morning. And I didn't realize this, but there's something called an air card, at least. That's what the pilot said when we were leaving at 5:30am on Saturday. And apparently they couldn't find the air card, and they had to get another air card. And it took, like, an hour and a half, but essentially, Pete the air cord is like the keys to the airplane, and they went missing, and so we couldn't really start the engines and take off. So something I learned, there's something called an air card that is the equivalent of car keys for the airplane. I wonder where they keep
Pete Mento 1:30
them? Like, is there a is there a little bowl next to the gate where they, like, keep your keys at home?
Doug Draper 1:37
Yeah, I don't know. Maybe somebody's backpack that got lost. I don't know, but they had to call, they had to call ground crew or something. So obviously the pilots do not carry them. But for, for whatever that's worth, I don't even know why I brought that up, Pete, but no travel. Travel interesting.
Pete Mento 1:52
You've never looked in the cockpit and see like a rabbit's foot, key chain on a on a key or something, you know, and
Unknown Speaker 1:57
no accelerator
Pete Mento 2:01
a few times and turns it turns it, you know, yeah,
Doug Draper 2:03
yeah, yeah, exactly. Pump, pop the clutch, and we kind of shot forward a little bit. So, yeah, I'll give United some credit. Those pilots were kept us very informed, informed. You know, when you're in the back of a plane, you're like, What the hell's going on? It's been 15 minutes. Just talk to me. He did a fantastic job of letting us know what's going on, all the way down to the way down to the point of kind of explaining what an air card was so 530 on a Saturday morning, not ideal, but little kudos for United to be transparent on what was going on.
Pete Mento 2:33
Shout out to United.
Unknown Speaker 2:34
There you go.
Unknown Speaker 2:36
Alright, guys,
Doug Draper 2:38
you got it all right? Well, let's shout out. We were not on the air last week because Keenan was on a little vacation. So we dare you. Keenan took a hiatus, so we're back in the saddle, ready to rock and roll.
Pete Mento 2:50
We were mentioning earlier that we're sharing too much personal information, just so everyone knows, Keenan was in the Midwest last week. I believe he was in Illinois and in Minnesota on his vacation. We have pictures. We can send them to anybody who wants them. You can do like a fundraiser, photos of Keenan brughtless in his in his Speedo. He a very active young man. Ladies, by the way, he has taken so unfortunately, he's off the market. But yep, well put together, young man, beard and all. He might look like a like a well fed guru, but with that beard of his Jesus stuck. But yeah, takes good care of himself, unlike me,
Doug Draper 3:32
unlike the crew. So anyway, I kicked it off. So what's your first topic?
Pete Mento 3:37
Yeah, man, kind of really big news. So there's a lot of people in Congress, in the Senate, who want to bring back the generalized system of preferences. And we've talked about GSP before on the show. It's a one way, one direction, just to the US Trade Program. So it's not an agreement that gives duty free treatment to I think it's like 108 it's a crap ton of country stuff, and these are all developing nations around the world, and it's been suspended since, I think 2019 it's been a long time. So they're talking about bringing it back. And one of the first things everyone wanted to know was, will it be retroactive? And it's starting to sound like it will. So for companies who are keeping track of whether or not something was GSP eligible for five years, at this point, they'll be able to go back and get refunds in all those tariffs. So that's the first great piece of news. If you've been importing from GSP eligible nations, you may be able to go and get a bunch of that money back. The second half of it, though, is it is going to be a nightmare for customs house brokers, because people are going to be coming to us and asking us to put together these documents and making the submissions I'm going to I'm probably going to have blood coming out of my ears managing this for a few 100 different companies. But you know, you know my feelings about taxes, Doug, anything we can do to keep them out of the hands. Of the government back in my clients hands a okay with me. So for the listeners, uh, looking ahead, I believe you're going to end up seeing retroactive treatment for GSP, reach out to your brokers now let them know that you believe you have an opportunity and get that process started even before they approve it. Just have everything ready so on day one you can put your refund said? Yeah, yeah,
Doug Draper 5:21
the retroactive nature is the key topic on that one. And I do you think that there'll be companies like, I don't really know if it, if it complies or not, but just go ahead and submit it and see what. Just throw it on the wall and see what sticks. Well,
Pete Mento 5:37
Doug, that would be profoundly stupid. You will get caught also, if you've, if you've, if you've asked for duty drawback on those imports, you can't go back and get the duties you've already done it once, people will make mistakes like that, some, some very well meaning person is going to end up putting all that information together and not doing all the hard work, and they're going to end up getting fines, penalties and forfeitures, knocks on the door from guys and windbreakers and guns you don't want to be that guy. Doug,
Doug Draper 6:05
so the ask for forgiveness, not permission, Mantra would not work in this instant, is what you're saying. Real
Pete Mento 6:12
bad idea. Doug, real bad idea. Yep.
Doug Draper 6:15
Do you think that when I first saw this, I was, well, we talked about it a couple of weeks ago and and the new topic today is really the retroactive nature of it. But do you think that countries with cobalt, lithium nickel, things that make batteries and semiconductors, are going to be frontline there, and the those type of countries are going to kind of drive the discussion related to GSP. I
Pete Mento 6:42
don't think that's what's going to drive it, as much as retail, frankly. But, you know, it's funny. You mentioned that Doug, many of those countries are all those African nations. Yeah, they're going to be on that. So that could be an additional opportunity for those cats, I guess.
Doug Draper 6:58
Yeah, interesting. Cool. All right, so I'll jump in with my first topic here, and we talked about the rail strike last week, or we talked about it today, about the rail strike that happened for barely 24 hours. And so I'm glad we didn't get into that, but this topic could almost be the same, and it's basically like, Wait, what are we in peak season already? And it hasn't gotten a lot of press, but there's a lot of statistics out there which are showing that we are right. So I'm just going to fire through a couple of them here and then give you my two cents on it. First of all, China to North America container volumes spiked in June to the busiest, the top eight. Let me rephrase that so imports from China to North America in June were the eighth busiest in history, right? So that basically means June starting to ramp up. July, largest US, Teus, that exceeded 2 million TEUs for the month of July. And la had the busiest month in two years, and the busiest July ever, right? Ever? Meaning in 116 years, they've never imported that many ocean containers through the port of LA and Long Beach in the month of July. So my point is things are starting to ramp up. If you look at an article I read on Freightways that spot rates have shot up 140% ish, something like that. I don't know the exact number, but I got that from Freightways. So everything's trending. It's happening right now. The other piece that caught my attention Pete is that Amazon just put a new deadline out to their vendors to meet prime delivery commitments. So they're basically saying your stuff better be in in our warehouse by the 19th of October in order for us to to meet the deadlines. And they specifically, kind of said we're not going to be receiving a lot of stuff in November and December, so get it here quickly. And if it's not in our building by the 19th of October, too bad. So sad. And that also goes down to many of our listeners may not realize this, so flip forward on your calendar is that we have a condensed holiday season this year. There was because Thanksgiving is so late in the month of November. There is one week less of the shopping period between Thanksgiving and Christmas this year than it has been in years past. So it's going to be condensed. It's going to be furious. And Amazon is basically saying, Get your stuff to us before the 19th of October, because we're flipping the gears and we're going to be hauling some ass. So I don't know your take on two takes, Pete, that I wanted you to come on and comment on is, one, what's your take on peak season, and do you think we're in it? And then number two, what do you think's going to happen with such a condensed holiday shipping or shopping season?
Pete Mento 9:56
So the first one, yeah, I completely agree with you that everything is is buzzing. Now I've gotten to sit on the last couple of ocean freight updates from our ocean team, and absolutely fascinating stuff, Doug with the volumes and the pricing and availability of capacity, and it's just been a year. I did not think would end this way, ending this way, and now, because of that shortened season, I think that's a big reason for you right where we're just going to see probably a rush to get this stuff. And I would not want, I would not want to be someone who negotiated great rates back in May as a BCo, and now their stuff's not moving because the spot rate stuff's getting it right. They're making more money to put it on a ship and then with the shortened retail season, about 18% of all American consumer spending happens from the day after Thanksgiving until Christmas Eve. It's a lot. And you know, having a week taken away from us is going to have an impact on overall retail numbers. People are probably still going to buy the same amount of stuff, but there's an irrational part of human nature that just shops during the holidays. And when you take away days to just shop during the holidays, you're going to end up impacting those numbers. I don't think that the holiday numbers are going to be like negative against last year. You're probably going to see the same irrational stupidity of people buying crap that they don't have money for, for people they don't like in the first place, which really is essentially what it means to be an American. But we are. We are going to see more and more of it, and I think it's going to be very interesting retail season, the Amazon comments, the one that really got my attention to it, that's fascinating, having it in by October in order to have it properly positioned for things like Black Friday. I mean, it makes sense, right? That need about a month, I suppose. But I hadn't really thought about that before, until you mentioned
Doug Draper 11:43
it. Yeah, it'll be interesting. Lots of variables to impact this year's season. So cool. Well,
Pete Mento 11:50
that brings us to halftime. Brought to you all by our good friends at CAP logistics. To learn more about CAP logistics, the company who does support and produce the show, please check them out@caplogistics.com and as I like to mention, to mention, as often as I can Doug and I don't work for CAP logistics. We work for essentially competitors, and they have steadfastly and courageously allowed us to say whatever the hell's on our mind now for years. And we can't thank them enough. I think we thank them enough for Keenan, honestly, he's like a he's like $1 store version of Jamie from the Rogan experience. But he he'll do and with that, it's halftime. So Doug, I know you love halftime. Yeah, this week.
Doug Draper 12:33
Well, at the beginning of the show, I was telling you that my family actually listened to an episode. I think they've listened to maybe one, and that was last week, which is fine, they're not in the industry, and I take no offense to that, but they did make a comment, Pete, I was all about fix my toaster, and how does that pay my mortgage? And they said you were very eloquent in how you described America's need for space exploration and how that can impact our United States and the vision that we have as a country. So out of that spirit coming back to this topic, I wanted to know, do you know what a billionaire, a retired fighter pilot and two SpaceX employees have in common? Nope, we will find out tomorrow when SpaceX has a new rocket called the Polaris Dawn, D, A, W, N, and it's going to be the first all civilian Mission to Space with a spacewalk, and it's scheduled to leave at like 3:30am Eastern Time tomorrow, right? You're we're never supposed to time stamp a podcast, but I just did so on Tuesday, they are going to be blasting off and they're going to be doing a spacewalk. I think only two of them are going to be doing a spacewalk, but that speaks to the the, you know, the frontier. I can't think of the the USS Enterprise and Star Trek's mantra there, but space exploration and all the things you spoke about last week, here is a tangible example of our friend Elon Musk, another step to get everybody to Mars. But anyway, I caught that in the news today. I'm like, wait what that's happening. So I guess kudos for SpaceX, and a little shout out to you and your mantra last your monolog last week on space exploration.
Pete Mento 14:26
Would you go Doug? Would you go into space if you had the opportunity?
Doug Draper 14:31
What do you think my answer is going to be to that? Probably
Pete Mento 14:33
No,
Doug Draper 14:35
exactly No, no interest in doing that.
Pete Mento 14:39
And I would sell a kidney for a chance to go Doug.
Doug Draper 14:42
Yeah, I was about to say I know exactly what your answer would be. So
Pete Mento 14:46
yeah, I would love to see the Earth from space. Think that would be positively incredible.
Doug Draper 14:51
Yeah, yeah. I saw a picture of Earth from space on my computer, like a couple hours ago, so I'm good,
Pete Mento 14:58
yeah. People say that's arguably. Believe the most important picture that's ever been taken of the earth from the moon, if you've seen that one, it just showed everybody together in this delicate, fragile, little place. And there were so many horrible things that were happening at the time in America and the world Cold War and all of it. And it just gave people pause. That's a great picture. Yeah, good. All right. Well, I'm gonna be very now, ineloquent. Ineloquent, I was telling you that I love to go to a place called the f1 arcade. And the f1 Arcade is a really much cooler version of Dave and Busters. So they have food, they have a bar, but they also have about 50 full size Formula One race car simulators, and you can make it as easy or as realistic as you want. Now, there are guys that go in there. Ladies too, who do the hardest version. They control everything with the car, from the steering wheel, with all the buttons, and it's a lot of fun. But my my reason for bringing it up this week is I used to love to go to the arcade Doug when that was part of just growing up in the 80s, you know, we would go to the arcade having a roll of quarters. You felt like, you know, Elon Musk walking into that place, and I had particular games that I loved. So I was wondering if there were any that you loved Doug when we were kids, were there any arcade games you like playing?
Doug Draper 16:21
Yes, believe it or not, yes. And whenever you made mention of this one, all I can think about so Wichita Kansas in the back of a godfather's pizza. You ever heard of godfathers pizza? Yeah? Godfathers, yeah, they had a sit down Pac Man or miss Pac Man Machine, a defender and, I think, a Donkey Kong machine, and we would get pictures of coke, but the pictures would never have ice in it, because we want to get as much soda as possible, and we would pour and so the sit down Miss Pac Man was just covered with crap grease from pizzas and coke and everything else. And then we took turns going out into the car and doing shooters of like, I don't know, whiskey or something like that. So we'd go outside, take a couple of shooters, come in, get greasy pizza and coke all over the place, and you're with your buddies, and it was the best Friday night ever, right? But you're right, you come in with a roll of quarters, and you're like, This is going to be good. So good night. I guess, to answer your question, it would be those three, because that's where the fondest memories of and I start thinking about godfathers pizza. I like godfathers pizza and hanging out with my high school buddies and drinking inappropriately, and everything else. So yeah, those are my three. Other than that one. What are yours?
Pete Mento 17:40
Well, I have like, two different sets. I had a really good friend of mine in high school that loved games. To his name's Sean Wolford. Shout out to Sean down in Austin, Texas. And we would play the games that were two people games. So we would play like Double Dragon, which was a fighting game you had to go rescue your girlfriends. And you know, we would regularly make it to the end of the game on maybe a quarter, two quarters. You know, it was pretty common. My other favorite was Battle Zone. Do you remember that driving a tank? It was, it was a Atari had made the stand up. You're driving a tank, and you've got the two levers and, you know, you got to do it like a track on a tank. I love that. And I was a hardcore centipede fan, Doug, yeah, with the trackball, I absolutely love that game. It's almost a little embarrassing. Honestly, how much I loved it and I had a ColecoVision, I had a Vectrex, which was not a popular gaming system. It was the TV and the system were all one that I love to play, but my father hated the fact that I loved arcade games so much. He thought it was such a nerdy, dopey thing for me to be into. And you know, everybody our age played them. Most people played them. And at the end of high school, we would go to a place in Manchester, New Hampshire, called the brick house, and we would play mini golf next door, at the hooks at Mini Golf Center, they had Skate or Die, which was a skateboarding game. And I love skateboards, and I play that. And they also had Hang on, which was a motorcycle game, which I really liked a lot, too nice.
Doug Draper 19:14
Did the skateboard thing have rails you would hold on to in case you needed to or not? There was some game I had, whether you were on a board, moving back and forth, but you had rails that you could hold on to. I don't think it did.
Pete Mento 19:26
I don't know. I wasn't sober for much of high school Doug, so I can't really recollect on that very much, but that was just like good clean fun back then, you know, going and playing arcade games. It was, it was good clean fun. And when you saw somebody who was really good at one, you know, you guys would watch them. And now they have twitch. I guess they watch them on Twitch. But for everybody who's into those classic games, there's a place at Weir's beach up near Lake Winnipesaukee, New Hampshire. It's called fun spot. And fun spot has the world's largest collection of classic video games. There are three. 1000s of them, and they're still just a quarter. So if you're, if you're ever up in the mountains region or the lakes region of beautiful New Hampshire, I cannot stress enough how much fun you will have at fun spot playing those old games. Nice. All
Doug Draper 20:13
right, I don't think I'll ever go, but I appreciate the heads up.
Pete Mento 20:16
Never. Nobody you might go to New Hampshire. Very true. I shouldn't
Doug Draper 20:19
they say, You know what, Pete, I've been kind of Debbie Downer the last couple weeks. I got to change my my mindset.
Pete Mento 20:26
Doug, you're the negative one on this show.
Doug Draper 20:27
Yeah, that's, that's, it seems that way. So anyway, that was halftime, brought to us by CAP logistics. We thank them, as Pete indicated, for all their support. All right, so, uh, second half of the show, your second topic. What do you
Pete Mento 20:41
got? Yeah, so last week, big, big news story, the Department of Labor corrected their labor statistics for the past year. And I've been trying to get confirmation on this, there's never been a bigger annual post correction, I believe, than we just had. So it's, it's somewhere between 880,000 and a million less jobs were created than originally thought.
Speaker 1 21:08
And this is bad, like, this is, this isn't
Pete Mento 21:11
like, oh, I, I forgot to carry the two on my checkbook, and I'm a couple dollars less now. This is really, really bad. So first of all, who are they hiring at the Department of Labor to do these statistics? Someone should roll up a newspaper and smack them on the nose and say, bad. Don't do that again, right? But the second half of it is it only leads to leads to more speculation that the economy is in much worse shape than I think anyone realizes, and it has helped to fuel a desire by our central bank to begin the soft lowering of our interest rates. So be very interested next week when they have their meeting and they talk whether or not a quarter point will come down, or if we more than that, it very well could be. So we'll all be watching that very closely, and what that will mean for the broader US economy. Globally, though, the numbers are just as bleak. We're seeing a slowdown of hiring in practically every corner of the world. More and more layoffs as different industries are now coming off of that high of covid and we're entering into what will probably be a prolonged, prolonged season, maybe years, of the global economy corrupting itself.
Doug Draper 22:21
Yeah, the one thing that came to mind that when this topic came up was the market manipulation, right? Maybe this is conspiracy theory in me, and my negative nature as of late is that you make those release and then you say, oh, sorry, it's wrong. And then I did a little research before this, when something similar happened in May of 22 where they released some findings, like 30 minutes before they were supposed to, and all these traders reacted based on that news. But the news actually changed, and everything went went haywire. So market manipulation and then, you know, right before the election? Right? I guess people could tie anything to the election now that we're what, 75 days or 70 days into it. So, yeah, I think out of the gate like labor and statistics, statistics, there's got to be a tons of nerds back there that need to be dotting their eyes and crossing their T's. How does that happen? I
Pete Mento 23:21
don't know. I don't know. Like, that's the part that I'm I'm flabbergasted by man, flabbergasted by the numbers, but I'm just more flabbergasted by the sheer and competency of the people who put them together. Yeah, it's crazy, man. You know when you were talking about the traders running you reminded me of that movie Trading Places. Remember that with anybody macroid And they were waiting on the futures for frozen orange juice concentrate. You know, people just running to the phones and changing all their sell orders?
Doug Draper 23:49
Yeah, yeah. Great movie. You know what we always do a we do a pretty good job of doing a TV or movie reference on this show. So, nice job. We checked that box
Pete Mento 23:59
today. Yep. Love to see if Keenan has seen that fantastic film. Yeah, yeah. I
Doug Draper 24:05
don't know. Maybe you know what he may say something like, it might as well been I Love Lucy or something like
Pete Mento 24:11
that. We're bringing, we're bringing this up right now. So I am meant to go to Albania in the fall and Doug. And I immediately Doug, Doug's saying it. And I immediately joined in Albania. Albania, you border on the Adriatic and your chief export is coal. And we both had a little giggle. And Keenan, of course, was looking at us like a caveman, you know, probably would have looked at a microwave. And I said, you've never watched cheers, because, no, no, when I was a kid, cheers was as old as I Love Lucy, you know, whatever, like, how dare you? How like Greta Thornburg, how
Unknown Speaker 24:47
dare you, sir.
Pete Mento 24:48
Cheers was a positively quintessential 1980s American sitcom, and it's still very funny on its own, we might have to tape them down to a chair, Clockwork Orange style. The eyelids kept open and make them watch the first season.
Doug Draper 25:04
Agreed, yeah, that was funny. I'm glad you brought that up. So.
Unknown Speaker 25:07
Keenan,
Pete Mento 25:08
there you go. What's our last topic? Doug,
Doug Draper 25:11
yeah, well, that show took place in Boston, and this is related to East Coast and kind of blue collar workers, but that whole labor strike keeps, kind of keeping its head above water. I'm not talking about the rail strike in Canada. I'm talking about the port strike out there. And I saw something today Pete that caught my attention. It said, this is a labor strike that would shut down six of the top 10 busiest ports in the United States, and that would happen weeks before the general election for the President of the United States. So I don't know. I mean, it's, it's still happening. As far as happening, as far as negotiations, there started to be some posturing where there could be the contract's over at the 30th of September, september 30. So they're saying there could be a strike on october 1. Is it posturing? Is it not would it turn out to be kind of like the rail situation in Canada? Who knows? But I think we'll see it more, and then I think we'll see it more because of the timing and the implications on the presidential election, but it'd be kind of on the back half of the peak season, because your product probably still needs, or needs to be, pretty much in market. But anyway, do not sleep on this. It's still going to be relevant, and I think we'll see a lot more discussion on it the next couple of weeks to see what transpires at the end of September. So I don't know what's your team and what's your feedback on your side?
Pete Mento 26:39
Well, I have two quick comments up front. First of all, the number of people who look at me and say, What should I do? You know, like, I know what the hell I'm talking about, I say to all time, you should ask somebody who actually understands the problem. That's what you should do. And then, second of all, is it Sean O'Malley? Is he the president of the Teamsters? Anything that gets him in front of a TV camera more often I'm for like, get him out there talking trash, firing everybody up. He's like, Flavor Flav for the for the labor movement. I love that guy. But this is, this is one of those moments where you cut, you kind of see the snowball coming at your face at 100 miles an hour, and you're just sort of like, I think people are stuck, like, What the hell do I do? You know, I don't be the person that leaped too early and reinvested in other ways of getting it here. But as you mentioned at the top of the show, I think there's a big reason why the West Coast is seeing so much freight. You've talked about this all year. It has a lot to do with anxiety regarding these, these possible strikes. I think it's going to continue. And I think that this is ultimately, it could actually tip the scales where, I don't know if the east coast will continue to have that dominance because of fears of this and and folks just feeling like the West Coast is a little more stable, they might lose some of the ground they gained over the past year. So Doug,
Doug Draper 27:55
yeah, well, if your goods are not either at a port, being loaded on a ship or on a ship right now. You know, people need to start redirecting now in order to avoid any any chaos there at the end of this month or end of September.
Pete Mento 28:09
That that stress and that anxiety, I think, is well founded. So, yeah, all right. Well, that's four topics and a half time. And according to my notes, that means it's a show Doug, yeah, so that's going to do it for us in Keenan, back in the booth, and want to thank everybody for joining us. Tell your friends, hit subscribe. Check us out on all podcast all podcast outlets. And as we always say, every week, if it's happening in global trade this week, we'll talk about it next week on global trade this week, take
Doug Draper 28:38
it easy. Don't travel safe, my friend, I'll try you.
Transcribed by https://otter.ai