Global Trade This Week – Episode 249
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Keenan Brugh 0:01
You're watching Global Trade this week with Pete Mento and Doug Draper.
Pete Mento 0:07
Hello, everyone, and welcome to the most exciting 30 minutes in Global Trade. Global Trade this week, I'm Pete Mento. With me is my co-host, my good friend Doug Draper. Doug, how's Colorado?
Doug Draper 0:19
Colorado's good. I appreciate you asking. It's summertime in the mountains, things are going well. There's some folks may know there's some fires happening in Utah, and so some of that smokes been blowing over here in the steamboat, but you know, we'll get that taken care of. Things are good in the mountains. I appreciate you asking,
Pete Mento 0:39
as long as your house isn't on fire, Doug. I'm okay.
Doug Draper 0:42
Yeah, as of right now, it is not. So we were talking beforehand. Every time I see you, it's either a hotel or a new backdrop, whether it's work, a white wall, or I can tell that you're in a place that has the pictures behind you. My point is, they're organized, they're framed. There's a little bit of sequence to them, so obviously you're in somebody's home, not just, you know, a hotel.
Pete Mento 1:10
Temporarily doing my, my, my meetings someplace else in New Orleans. Don't worry, we'll all be back to normal soon. But good, good, good. New Orleans, New Orleans is just crappy right now. It's hot, sticky, not a lot of tourists here, which is nice. But, man, it's a tough, this a tough stretch of the year to be down here.
Doug Draper 1:31
Yeah, for a guy like you who is all times your favorite, you probably can't wait for that calendar to move.
Pete Mento 1:38
Yeah, it'll drop down to 85 that'll be nice, I anyway. All right, show to do, buddy. So, why don't you kick us off with topic numero uno?
Doug Draper 1:48
Okay. Well, this isn't more of an observation, it's a topic as we're talking about it, but it's also an observation, and it's related to waterways, and we've talked about this in the past. We've talked about Panama Canal, the Red Sea, obviously, right now is the Strait of Hormuz, and the implications is that has with ocean freight and the movement of goods across the world, like anything else in life, it is a headline, and the chaos surrounds the headline, and then all of a sudden it just kind of goes away, and everybody's chasing the next Britney Spears song or something, so my take was that the headlines of these chaotic waterways and the problems that we've talked about in the past, right, whether it's the conflicts that close or at sea or whether it's Panama with the droughts that cause boats to be tempered as they move through, the headlines are gone, man, but they're not front page anymore. But global shipping is not back to normal, and I think that that's a common theme that we take a step back on all the topics we've talked about. It's a common theme that there is no back to normal, right? You talk about all the different global trade heartbeat, that's the right word to use, you know. That was somewhat predictable. Specifically, I'm talking about the different quarters, right? Quarter one was kind of people had different words for, but like the quiet quarter, and then q2 was build, and q3 was kind of a peak, and q4 was maybe a month peak, and then two months of peeling back down, and you could budget, you could forecast, you could book your vessels, and time your transit kind of around those sequences, which have been constant our whole career. To be honest with you, you know that I've been involved in this industry for 30 years, it's pretty much you could set your clock by that, and even though these chaotic situations have always happened in the past, I just think we're in a, we're the new norm is uncertainty, right? And even though Panama and the Red Sea are behind us, those implications with rerouting, the higher cost and the higher risk, which means higher cost with insurance. I just don't see those ever settling back down into a predictable trend that can be forecasted and budgeted and managed, and so everybody's kind of in a reactive mode. And what do we do now? And kind of, kind of, you know, they're on their heels, kind of reacting more than than managing a process that's familiar to us, so, but like I said, I'm not bringing up a specific topic, topic, it was just something I was thinking about this morning on my way in, that even though those topics are not headline anymore, this whole industry is is way different than it was when you and I were growing up, and the cadence to help us make decisions, I think, is gone forever.
Pete Mento 4:47
You might be right, Doug. And whether it's hormones, whether it's the Panama Canal, whether it's oil prices, there's a degree of certainty that's necessary for ship owners to put their vessels in harm. Way, and a big part of that is insurance, mariners' willingness to get involved in those scary places. Nope, nobody wants to invest in that right now. Yeah, the streets are open, great. Well, they're still blowing ships up, and it's hard as a ship owner, as an insurance company, to look at that and not, not take a deep breath and say, what the hell are we doing here? You know, and that certainty, unfortunately, with the tariffs, with what's going on in the world, particularly on global trade, mostly America's fault, honestly, has brought a degree of unpredictability that is not going to change for anytime soon. When I say anytime soon, I'm talking years. I don't know if we'll ever get back to that world, Doug, that we had before, at least not in our career.
Doug Draper 5:43
Yeah, agreed. Yeah, the days of managing, you know, a peak season surcharge and a bunker fuel is.. gosh, I think most people would long for those days.
Pete Mento 5:56
You're moving like cargo, but there's a $4,000 bunker charger or peak season or whatever that comes out of nowhere, and you're like, you've got to be kidding me, but if you want your crap to move, you got to make that sacrifice, because of all the uncertainty, it's just madness, dude.
Doug Draper 6:11
Yeah, speaking of madness, let's go to your first topic.
Pete Mento 6:16
Yeah, let's talk about my first topic. So, compliance, compliance is a big word to people in my world. It means import and export compliance regulations that go with it. To a chief compliance officer, it can mean the FDA, it can mean all sorts of other regulatory bodies. But lately, compliance has gotten a little wackier than usual, because of things that we don't normally think of. We much like the simplicity that we used to have in transportation budgeting. There was a predictability about them, but there isn't any more on a couple of big ones. One is the CPSC, the Consumer Product Safety Commission. This particular White House has taken it upon themselves to do something that people have wanted for quite some time, which is to pay more attention to safety of things that we're importing, is it a non-tariff barrier? Possibly, is it a way for us to lessen the amount of imports coming from someplace without using tariffs, possibly. But it's also safety, you know. You put your kid in a crib, you want to make sure they're there when you wake up the next morning. You, you have a fire in your house, you want to make sure the kids have fire, fire retardant pajamas. Yeah, you want to trust that the things that we're importing aren't going to put human beings in danger. Another is lately hazmat, right, hazardous materials. Most of us have dealt with them at some point in our career, either as operators or trying to sell people, trying to get capacity for it. It's a real problem, and hazardous material. It's something that you learn over a very long career how to do correctly. That's also got more attention than normal vessels that don't want to carry certain products. Aircraft pilots are saying no, I will not move that cargo for you. But also the regulatory body is really tamping down on things, and the last one, which is probably the most difficult, slippery one to deal with, states that have their own rules about product safety, their own rules about compliance that are above and beyond what the national requirement would be. I'm talking to you, California, right? So, these have become something that trade professionals and transportation professionals are having to deal with again. We kind of took them for granted that they were going okay, but not anymore. We're seeing an uptick in enforcement, more questions being asked, penalties being handed out, and Doug, again, I think this is going to be part of a very difficult 2027 for importers and exporters to have to manage. Is this heightened expectation when it comes to compliance outside of just customs in the BIS? Yeah, valid point. Now that
Doug Draper 8:36
has two comments. Number one, the hazmat thing very familiar with out in California, and our company, which was founded on managing hazardous materials to support the agriculture industry in Central California. We got out of it as of october 1 of last year. We got out of it because the compliance was just astronomical. It cost us more money to operate than the profit we were making, and it was going nowhere, but, but you know, and it's just insane. I could waste everybody's time talking about the craziness that we had to comply, and what was happening is companies, the companies we were servicing were like, we like you guys, we're getting the hell out of here, because we just can't afford to operate, so they go to Vegas, Reno, and Phoenix, Arizona, and they service California from those markets, and so that's very valid. The other, the second thing, Pete, is that it's going from kind of managing paper, hey, who's the guy in the back that can just check this box and make sure everything's, you know, copacetic, to it is truly an operational issue. You mentioned the compliance officers and stuff like that before. You know, it was pushing paper, and now it's not like that, whether it's California or otherwise. It's just another cost layer that needs to be managed and dealt with, and you know what, it all trickles down to you and me and the cost that we pay for good.
Pete Mento 10:00
Yeah, so for people that are operating under those conditions, hope is not a strategy. Said it a billion times. Get more involved if you haven't been paying attention to it. Maybe this is a good time to reconsider where you are with those areas of compliance and get them, get in front of it, because people are watching with more scrutiny than ever before. Good. All right. Well, we'll segue into halftime, one of our favorite segments of the show, brought to us by Cap Logistics and Kenan, and all the work that they do every single week to keep this show moving forward. One of my favorite spots, because we can talk about whatever we want. This has a very celebratory theme with our july 4 holiday coming up, so Pete, why don't you kick us off? So it's about time the fireworks start. I love, I love fireworks, but I think that's one of the things I wanted to point out, is you can tell a lot about a part of the world based on how they deal with fireworks. So I spent the majority of my life in the great state, the Granite State of New Hampshire, where we have like six rules, I think there's like two laws on the books, that's it. If you want to go and buy fireworks, man, good for you, and you can buy them tax free, but you just go anywhere to the west to Vermont, you can. You go down to Massachusetts, you can, and you better not bring them there, because if they catch you, their fines are penalties, going back to safety, like we were talking about earlier, and the people are different. So, growing up in Texas as a young man in New Hampshire, for me fireworks were just something kids had. I mean, there's something kids had. I can't tell you how many times I would light an M 80 or shoot bottle rockets at my friends. We were idiots. We had fireworks all the time, and lighters as little kids. The weirdest thing is I had uncles that would bring me fireworks. I had people in my life when I was 10 years old, be like, 'Give that kid some bottle rockets, he'll love them, give him a Roman candle, go out there in the field and have a good time with them, right? It was just sort of that fun danger. I was rarely supervised, but when I was, and there were adults watching me, you know. I didn't act any different than if I had them otherwise, but parts of the states, I think that there's a part of the personality that's easily defined by whether or not you can have fireworks, and the people that live there are a little more unhinged when you can. I think so. I didn't know, Doug, is Colorado a state where you can buy fireworks?
Doug Draper 12:20
No way, no, no way. Anything that stays on the ground looks like those black cats, you know, just kind of move up like a marshmallow. But it's taken a while to pivot, but I think most people in Colorado - I made mention at the beginning of the show with the fires in Utah. I mean, it is - it's a big deal, you know. Kenan can attest to it. There's no firework shows, you know. Drone shows are kind of the new thing, but yeah. Now, growing up in Kansas, back in the day, you know, the bottle rockets, when you actually get a bottle of Coke, you know, and you chew them off maybe two or three in the bottle, and then you get, like, what happens if I hold this? Wow, that was fun. What if I pointed at my friend? Oh, that was even, that was even better. And then all of a sudden there's, hey, this is a Roman candle. What if I do, if I point that, it's, you know, like you said, it was nuts, but that day is behind us for sure. I would think almost in every state, but definitely Colorado. Nope, nobody's doing fireworks.
Pete Mento 13:19
Doug, tell me if this happened to you in school. I'm like nine years old, friend of mine, nine, I'm not so my in like third grade, whatever. And a friend of mine said, yeah, let's go blow up the toilet with an MA, so we did, like, we, we put one in the toilet, the bathroom, and we launched that sucker. And then it was, what if we flush it at just the right time? I bet that's even worse. That's what we did. And then it was, why don't we do two of them, you know? It was, it was just this, this cascading danger, which makes me think maybe kids shouldn't have fireworks, man, like maybe there was some real positivity behind that idea, but I was probably 45 years old at, you know, the farm in New Hampshire, and I bought some really good fireworks, like the ones you launch off a mortar. We had everybody over to the farm, and I'm blasting things, and at one point I realized I have no training, I have no idea what I'm doing. I'm in the middle of a five acre field, you know, and people are on the other side of the field watching these things go off. I have a fire extinguisher, not a very big one, but I'm not in any.. I mean, it was all from beginning to end, stupid, but damn, was it fun. It was one of those other things that I've done that I just look back and say, not the best idea. Boy, did I have a good time. So, I guess my final thought on this, Doug, is maybe those rules are pretty good. They're good for a reason, but a lot of the things that are fun in this world, it might float up against whether a good idea or not.
Doug Draper 14:42
Yeah, hey y'all, watch this, watch this.
Pete Mento 14:45
Yeah, hold my beer. Yeah, hey y'all, about to make this fun, y'all. Yeah, with a capital B,
Doug Draper 14:53
yeah. All right, man, I'm jumping into some state history because the United States in the show. Notes
Pete Mento 15:02
in your show notes, you said state trivia, which to me says more opportunities for Doug to show everyone Pete doesn't know shit. So this is the
Doug Draper 15:10
the latter is more in line. I'm not going to make you feel silly at all, right? It's, it's just anyway, let's get started. I think you'll be fine. So, what is the third most populous state after California and Texas?
Pete Mento 15:29
This sounds like a trick question. I'm gonna say Florida.
Doug Draper 15:36
You got it, Florida. Which state has the highest life expectancy?
Pete Mento 15:42
Ut Utah,
Doug Draper 15:44
good guess, but it's Hawaii.
Pete Mento 15:46
Oh, that makes more sense. Yeah, I just think about how stress kills people, and I don't meet a lot of people in Utah that are stressed out, but Hawaii, nobody's stressed out. So, that
Doug Draper 15:55
this one's probably pretty easy. Which state produces the most apples,
Pete Mento 16:05
Washington state,
Doug Draper 16:06
correct. Yes, this is a trick question. Which state has.. well, shit, I just kind of gave it away on that one. Which state produces the. which state has the most lighthouses?
Pete Mento 16:21
I'm gonna say Maine,
Doug Draper 16:24
yeah. No, Michigan.
Pete Mento 16:27
Oh, yeah. All right, okay,
Doug Draper 16:32
yeah, yeah. All right, so what was the first state to join the union after the original 13
Pete Mento 16:42
Wow, Ohio,
Doug Draper 16:49
that's a pretty good guess. It's your neighbor up there in New Hampshire,
Pete Mento 16:52
Maine,
Doug Draper 16:53
Vermont.
Pete Mento 16:54
Oh man, fuck Vermont. Yeah, I don't say that enough. People, we don't like one another, right? So, people from New Hampshire, it's funny too, because we're like the same state, opposite geographically it looks the same way, and we are the opposite of people, like people in Vermont are super chill, they're they're like they're very nice, they have no ocean, they're very liberal, they love their rules, their followers, and people in New Hampshire, just like, again, hey, y'all, watch this, they could not be more different. So, we don't have much affinity for one another, but that's interesting, that it was Vermont. I know that it was Connecticut, right, that they were the nutmeg state, they were the first, I think, the first one to sign, but I didn't know that, I didn't know they were the next one to sign. That's interesting.
Doug Draper 17:40
Yeah, me either. All right, so think of me on this one. Okay, which state has the world's largest ball of twine?
Pete Mento 17:48
Kansas.
Doug Draper 17:49
You got it. You got it. All right, which state has the most national parks?
Pete Mento 17:59
Utah.
Doug Draper 18:01
Good guess, Cal. California,
Pete Mento 18:03
California. Okay,
Doug Draper 18:06
yeah. I couldn't name them other than Yosemite. All right, just a couple more. So this one, this is an easy one. Which state has above ground cemeteries because of a very high water table,
Pete Mento 18:22
Louisiana. There's one across the street. Yeah, yeah, down the street. Yeah,
Doug Draper 18:26
that's that's creepy. That's creepy.
Pete Mento 18:28
No, though, the crypts. There's no difference than crypts you have in California and other places. It's just a bunch of dead people above ground. He used to.. all right. All right. This one is
Doug Draper 18:37
a guess, my friend. Which state did I live in when we had the bicentennial? Which state did little Doug live in in the bicentennial?
Pete Mento 18:48
I want to say Kansas, but I've got a feeling you're telling me that's wrong. Where'd you live for the bicentennial?
Doug Draper 18:52
I lived in Tennessee, lived outside of, yeah, a suburb out of Memphis called Germantown.
Pete Mento 19:00
Doug, all this is bringing it. So, last week I was at AEI for the annual convention in DC Customs Headquarters. It was great, but what made it extra awesome is we were there for the kickoff of America 250 and I know that it's a little bit politically people aren't real happy about what's going on for some things like the UFC fight, etc. Dude, it's awesome. So I'm going back to DC next week. I got meetings at Customs, and I kind of can't wait. And normally I, when I'm driving over the key bridge, I just want to punch somebody in the mouth. Like, I hate having a 14th Street bridge. I hate going into DC because it means I have to go fight with people all day long, but when I'm done with that, I'm going to walk over to the mall, where they have the National State Fair, where every single state has sent things representing them, state their states. There are incredible things that are happening in DC, and it's all free. Well, it's all taxpayer paid, right? It's not, it's not a pocket. Sense, but we were there one night to the President kicked it off last Thursday, and we hear this unbelievable war. We walk out of the bar and the F 30 fives and the b2 spirit bomber that were going to do the flyover when the President finished speech, they timed it just right, they blew over our head, I have 20 twos, probably not, not a 35 and it was just like right, right above the right above the buildings in DC. The window shook like you felt it in your chest, like, damn, you know. The next day at 10 o'clock, B 50 twos, no, no, pardon me, yeah, B 50 twos and F fifteens, F sixteens blasted over DC at 10 o'clock, just because, like, they're sending all of this, this air power to show people from all over the world. The French did one, the English did one, we're doing one. These people are just coming to say, you know, congratulations. So, if you find it possible to take a trip between now and I think it ends in the, like, July 20 or somewhere around there, go to see folks, go to DC, and you can hate your government, but man, it's going to make you love your country. It's, it's awesome. There's some amazing history. One more thing I'll bring up, for the first time in a very long time, I think it's like almost 60 years, Doug, they've opened the basement of the Lincoln Memorial, where they all of this memorabilia about Lincoln down there, and all these things about him and his life. I've never been, so I'm looking forward next week to getting down there and seeing it. And apparently the Jefferson Memorial has a similar thing that they're opening up as well, for the first time in a very long time. So, if you're into history, love this country, get to DC.
Doug Draper 21:40
Love it. All right, there you go. That's a PSA. You got it all right. So this one, this my next topic. It could be one of our sponsors, because I'm calling them out by name. It's a company called Samsara. I know what's Samsara, right? They've come up with this paper thin Bluetooth sticker. Right, you literally slap it on a box, travels with the freight, got a 45 day quote unquote battery life, not hazardous, there's no lithium battery concerns, it complies to everything that we, that we, that we need to comply with something like this, slap it on the label, and you're done. You're done. It's just disposable. So I was like, okay, that seems pretty cool. And really, it's, you know, it's to target the freight theft and the cargo freight, the cargo theft that we've dealt with and talked about many, many, many times, right. So, usually now it's like, okay, it's scanned at this location. It was scanned here because it was transloaded. It was scanned here, it was scanned here. Your checks are scanned, and it's not a GPS type of system. It's run through their own personal network, but it seems, seems pretty interesting, right? So I was like, okay, what is some Sarah cell, right? So it's like vehicle telematics. I'm reading this because I want to make sure it's right. AI dash cams, non-powered asset tracking, industrial site field assessments, all that kind of stuff. So we're selling out all this equipment out there. Everything is tied to their network, it's not going up to a GPS and figuring it out, and so it's pretty amazing of all the things that are going on out there, with you got to vet the carriers, you got to do this, you got to do this, you got to do that, which is easily foiled, if you will, by bad actors. I think this one has some interest. It's different, I think. The adaptability or the adoption rate of this is going to be the telltale sign. The only negatives I can think of is that it's on their network, right? So, it depends on how strong and the number of devices that they have out there, so it's hanging off everything that they already have out in the field the privacy concerns. Imagine if you're shipping something and anybody could figure out where it is that could assist staff. I don't know. And then I think there's range limits with Bluetooth technology, right, as far as where they go, but it's going to be.. I like this. I wanted to talk about it. You know, it's going from reactive reporting. Here's what happened. How do we chase it? This is going to be a little bit more of like proactive detection, if you will, right? So, I like it. I like the step forward. I like the simplicity of it. And we need help with cargo theft, and I think this is, you know, somewhat revolutionary in that attempt.
Pete Mento 24:43
Hell yeah, man. Think it's awesome anytime that you can create a passive way that maybe thieves aren't aware of what's there. I don't know if this is one of them, but if it's small and it doesn't have a power source, it's probably going to be harder to find, because you know, these guys will break into a tractor trailer for. Mind what's paying and throw out the hell out and drive away, but this is cool, you know. And hopefully it's a price point that isn't crazy. Any type of these innovations I want to hear more about. I think this is wonderful. They're probably only going to get better and better as they develop deeper into their technology. You and I are tied into the folks at Tap Aman, so you know that if they probably already know everything about this up one side and down the other, and they've talked about it, but yeah, man, I think it's awesome, and the more we can have innovation around cargo theft to try to keep up with how innovative the thieves are, and better, better. All right, bring us home. All right, buddy, so last week in DC, everybody was was sort of cheering, yay, we're winning, we're winning the trade war. You know, it's like the European Union is close to everything being cool. India and America figured their crap out. USMCA, we broke Mexico and Canada, so now Mexico's coming directly. Us, we have to worry about Canada. We won, like they're all running around like, like a scene out of a movie, like at the end of Rudy with the president on their shoulders, you know. We won, we won. I think that they should probably just, you know, dial it down a couple of notches. I don't think anyone's won anything yet. I think if you look at it as far as people agreeing to certain demands, yeah, we're getting pretty close on a lot of these things. But what is a win, anyway? Have we won by increasing the price of cost of goods to Americans? Can we point out to the fact that we can't point to the fact that more manufacturing is coming to America? We can't point that costs are going down. I mean, most economists now are expecting the prime rate to actually go up, you know, a couple of basis points here. So, I don't, I can't say that we're winning as consumers, I can't say that we're winning as people seeking jobs, not not broadly, but it would appear that people that are tied to the government are seeing what's going on right now, Doug, as momentum in the right direction and winning. I think it's way too soon to say that we've won anything, but dude, you walk around DC, go to the USTR, they're just, they're just, I mean, they're breaking their backs, kissing their own ass about how well things are going, and I'm not sure that that's exactly the best, best attitude right now. I think we're far from done, and I think we won't know either the damage done or the benefits that we've had for a good 10 to 20 years about what's happening.
Doug Draper 27:16
Yeah, when on the show notes, when you sent that over, I'm thinking polished shifting policy. A policy shift is a hell of a lot easier than an execution shift, right? True. So you can throw something on a piece of paper and jump up and down, which I think is what you're speaking to in some degree, but the execution doesn't happen that quick, and the enforcement, the one thing on this that we've seen time and time again in the last year and a half with these tariffs is that the enforcement is happening way faster than the readiness of people, right, and companies, we talked about the predictability q q q that you and I experienced growing up is nobody's ready for all of this, this, this policy shift, and to try to comply takes time, but the enforcement and the policy has happened immediately, and what that does is put everybody somewhat reactive, right? And when you're reactive, you're back on your heels, and you lose, you're in a position of weakness or not a position of strength with your business. So, the reactivity nature of it, the enforcement, which is happening immediately, even though we haven't figured out what this policy means, it's just going to keep the chaos that we've experienced in the last 15 months or so elevated. So, I think you're right when you say, hey, here's a new policy, we won. We won the execution, and the fallout of that execution is years and years away.
Pete Mento 28:48
Agreed, agreed. All
Doug Draper 28:50
right,
Pete Mento 28:50
wrap us up. All
Doug Draper 28:52
right. Well, first and foremost, I hope everybody has a wonderful holiday, july 4, Independence Day. Pete, I would agree with you. This needs to be a week long, because it's on a Saturday, most people are off on Friday. I guess I'll take Thursday off, which means I'll kind of work Wednesday. So, really, this is a two-day week, and I hope everybody has a good time. And I want to appreciate everybody for listening every single week, and week in and week out. Wouldn't happen without Cap and Kenan, and as you say, Pete, it's happening in global trade. You and I are going to be talking about it every single week. We will chat with everybody later. Be safe. No bottle rockets. See
Pete Mento 29:29
happy fourth, buddy. All right, you too.
Transcribed by https://otter.ai