Global Trade This Week – Episode 228
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Keenan Brugh 0:00
You're watching global trade this week with Pete mento and Doug Draper,
Doug Draper 0:07
Hello everyone, and welcome to another edition of global trade this week. My name is Doug Draper coming to you from the great state of California, and on the other coast is my good friend and co host, Mr. Pete mento. Peter, how was your weekend? What's going on? My friend?
Pete Mento 0:26
Well, we were part of the inclement weather snowpocalypse, and it it did snow a great deal, and then that stopped before it was supposed to. So I'm happy, because we still got probably about a foot, which is not normal at all for Virginia, and now it's just warm enough where it's starting to melt a little bit, so at night, it turns to a flat sheet of ice, and the roads are horrible in DC right now. So
Pete Mento 0:54
I know you're gonna hate this Doug, but my daughter and I have started watching the entire Marvel Cinematic Universe from start to finish, and being, being stuck in the house, the other two of us with nothing else to do was, was very conducive to that. That goal that we have, we made. We made it through quite a bit. We're just finished guarding to the galaxy two, which, for those in the know, means that we're through Phase Two now, right in the middle of phase three. Very exciting stuff.
Doug Draper 1:22
Yeah, I don't have any comments to that one last second.
Pete Mento 1:27
Yeah, excuse me. Sorry about that. It's okay. Me and billions of other people just have to disagree with you, Doug. I mean, you know, we can't all just go skiing every weekend. I mean, you know, I'm not that financially blessed, Doug that I live in the middle of, yeah?
Doug Draper 1:44
Well, neither am I it, but, but I was skiing this weekend. It was, it was good, yeah, I think I've come to the to the point and those that maybe live in Colorado, downhill, I enjoy it. Cross country skiing. Love it. You just get out. And I'm not talking about a set a set course, and you're on a golf course, I'm not talking about that. I'm like, get into the trees on a trail. You don't see anybody for hours. It's quiet, the snow is fresh. It's amazing. So we did a little of both this weekend. Had a wonderful
Pete Mento 2:19
time. Feels like a lot of effort.
Doug Draper 2:22
Doug is a lot of effort. It is a lot of effort. Cross country skiing is not easy. It's not always flat. So anyway, we're, we're both, yeah, yeah. Well, I'm out in Fresno this week, so it's like mid 60s and sunny. So I got away from the snow, made it out here, miss my connection, but got another flight four hours later. So anyway, we talked about the weather and we talked about traveling. So I think we've covered it as far as old, old age middle men, a middle aged men
Pete Mento 2:53
for one case, physical ailments. Yeah, pretty much all of them.
Unknown Speaker 2:58
Yeah, get off my yard. Let's
Pete Mento 3:01
get the show started. So you go, you know, half of the literature, the periodicals in our industry, Doug, I'm convinced that they're just really aggressive trolls. There's a lot of things that I read where it's just clickbait. It's like, you know, this particular Forder, this carrier, you know, here's some surprising news about whatever. Then you read it, you're like, Well, that's about, you know, it's not very shocking. It's not as shocking as learning that I wear big pants, right? It's like, it's not, it's, it's irresponsible sometimes. So this morning, I get my usual periodical dump in my inbox and think it was freight watch or, yeah, freight watch or freight waves. One of them had a story about how dsvs management employees are leaving unhappy with bonus structures and such and like, all right, I used to work there. I'll check it out. So I open it and I read it. I'm like, this is about this is not a revelation. This is, you know, this. This should come as no shock to anyone working in global freight forwarding in 2026 that margins are slimming. Technology is beginning to be to become a big part of the day to day, the the people who are working in that industry, all of us, I've never had a job where a portion of my a significant portion of my compensation, was not directly tied was not directly tied to revenue. I mean, what? This is not news to the people who were in it and the people that were writing it, but it really begs the question, are we going to keep seeing these sorts of articles, whether they're clickbait or not, that there are people who are reconsidering this industry given the changes, I well remember Doug. Well remember being in a sales call at a different freight forwarder, who I'm sure everyone can figure out who it was when we went in there to talk about raising rates, and the gentleman that was our customer said, did my did I just have a conversation about raising my rates 20% but. The guy who showed up here in an S class Mercedes Benz, wearing a $50,000 watch and a $4,000 suit. And I've never forgotten that, you know, the the the days of that happening, unless you're an individual owner or pretty significant up the food chain, they're just not as common anymore. But there was a time when this was like a just a bag of money. You know, it was like a blank check to be involved in this business. Technology and the understanding of our clients, many of whom have come from that business, has made it harder to have those sort of unfathomable returns on the investment. I don't know. Doug, what do you think?
Doug Draper 5:35
Well, you know, we're from the same generation, and what you just said was reminiscent back when I started my career, doing the same thing, because you're that's a great point, that our livelihood is tied to what we bring to the table. You know, you eat what you kill, kind of thing in the in the sales, and it is, you know, freight forwarding can be, be pretty cutthroat. I think that one in particular, Pete, I did not see that one freight waves, is one that pops into my inbox like you said. That may have been a slow weekend. Davos may have run its course as far as articles. And maybe that was something that just hey, I got a deadline. I need to generate 500 words on a story, and there we go. But beyond that, I think there is a lot of truth to what you say, the way you know the concept of sitting down and just talking about linear rate increases, nothing's going to change. We're still going to do the same thing, but we're going to raise your rates 20% that doesn't fly anymore. There's a lot of smart kids getting degrees in supply chain and logistics that are taking a fresh perspective on how that operates. And the old guy that says goes to his boss, when I mean old guy, I'm talking about us, and says, Hey, I was able to beat our carrier up to save X percent. That's very linear. And that's just not how things operate nowadays. So the idea of what you described with that sales rep coming in just doesn't wash anymore.
Pete Mento 7:02
Yeah, I can well remember, Doug, probably you two were arguing over, like, four cents a kilo on an air freight rate. Or, you know, someone saying, I know your entry rate is x. Can you knock it down by five bucks? I just need a win. Clients saying that to me, I need to come back with a win on this, guys and crunch, I felt like I was a used car dealer. Let me go back and talk to my manager, right? And then, invariably, we find it made a way, a way to make it work. When you're selling 810, 32, different products to a customer, you make your money up someplace else, but in the in the wash, you know, down the road, you end up being profitable. But as an individual contributor to those businesses, it can feel like this maybe wasn't the best decision that it was in the 90s when, again, I knew sales guys that were making seven figure paychecks because they just got they got latched onto something that blew up. I'm not saying they were the smartest salesperson, saying they were probably the most clever and hard working, but they managed to get a hold of something and grow with it, getting harder and harder to do that now, so I wonder if that's going to affect young people who want to get in that job. Sales is hard. Sales is very, very hard, and managing in a free forwarding environment is extremely hard to do. It takes a skill set that most people have never learned until they've actually been dumped in it and done it. It's not life or death, but it's damn near
Doug Draper 8:21
Yeah, I think every to your point. Then I'll move on to my topic. Is that everybody, in my opinion, needs to have a job as a server or on the wait staff at some point in their lives to understand, you know, everybody's going to go out to eat for the rest of their life. And if you understand what it is on the other side of that, of that ticket, so to speak, it's kind of the same, if that analogy makes any sense. Pete, yeah,
Pete Mento 8:45
it's hard to do. Man, it's really hard to do. Yeah, those people don't realize it. Whenever I go to dinner with someone and I see they leave a bad tip, like, that's it, you're on the list, right? It's you're on the list. There's just some person who's trying to get by right now on tips, and did they do a serviceable job? Yeah, do a great job. Well, then you really have to tip them a lot better tip, like a gangster. Man, that's that's one of my rules to life. All right.
Doug Draper 9:11
Well, that's the theme of the show. Cool. All right, man. Well, it's maybe a little early to talk about Chinese New Year, but there's prep work before it even though the date is out, I think the 17th of February, it seems to me, and you may know this, Pete seems a little later than normal, as as far as Chinese New Year, but the tradition and this kind of speaks a little bit to what we just spoke about, about how it used to be and how things are now. The article that I saw just this morning. I think the term they used was less panic, more precision. And what I mean by that is that, you know, before Chinese, New Year, the old, the old mantra was just 1.5x the PO and get, get the stuff in the US so we're not down for, you know, two to three. Weeks and get stuck with the panic at the front end and the backlog on the back end. And this article spoke about, excuse me, that really managing critical skews is going to be more important than just turn on the spigot and let's just bring everything in as as quick as possible. So it's a little bit related to tariffs. It's a little bit related to trend a transit time, and it's a little bit related to cash flow, to be frank with you, on how things are going now. So my point is that I think air freight leading up to Chinese New Year is going to see a bigger pop than ocean freight this year, and the volumes may not be comparable, but I think you will see more air freight in the next three weeks than than normal. It's going to be, hey, we don't have this. We're not 1.5x in the PO. We're point five being the P the PO to just get in our critical skews, and then we'll wait and see after Chinese New Year. So my question to you, Pete, is, do you think that approach, if you believe in my premise, will catch on and that will be a more strategic way on how people will be managing inventory for the rest of the year? To say, let's just, you know, almost, I don't want to say just in time, but maybe a little bit based on a little bit of the chaos, the uncertainty with tariffs, the banking and if you're financing your inventory and things of that nature, where will this three week blip, where I believe air freight will spike? Will that have success, and will that kind of set the stage of how people will operate for the rest of the year?
Pete Mento 11:38
Well, back to the great Don Draper image of hundreds of guys in front of their adding machines doing the math. It. It's a mathematical question, right? Most of what we do comes down to a question of math. And if having enough inventory but not carrying too much on inventory financially makes sense, and you wait until you can bring it in via air freight and the rates haven't been that awful, then, yeah, absolutely. There's these moments in our industry where someone realizes something, and then everyone starts talking to their friends, and it becomes how we normally do things, the Gerhard freight, augmenting inventories, particularly in a down consumer time like we're experiencing. There's no reason why that can't end up being more common, more repeatable than what we've seen in the past.
Doug Draper 12:24
Yeah. All right. Well, that brings us to halftime, right? We gotta you know, which is always fun. That was a pretty fast first half of the show there. Pete, so anyway, halftime brought to us by CAP logistics. And Keenan and his team appreciate what they do for us every single week. So check them out at cap logistics.com and that's it. I we're going to tag team this this halftime peak, because I saw what you saw over the weekend, and so I like to chime in on it. So I'll let you get this thing started.
Pete Mento 12:55
For those that don't know, over the weekend, a gentleman who is a world famous for recliner, which means someone who climbs things without any safety equipment scaled the largest building in Taipei, which is one of the largest buildings in the world without safety equipment, live on television. So think about the elements of drama that adds to it. This guy could fall at any moment. What was Netflix going to do? Are they going to show him like, you know, precariously dropping from hundreds of feet, splattering on the sidewalk, I certainly hope not, but it also creates tremendous amounts of drama, anticipation, you know, that human story, it's being said that he was paid $500,000 to do it, and from Every indication, it was very successful, so 10s of millions of people have watched it live, and more will probably watch it after the fact in recording. So they definitely got their money's worth on this. I don't even want to think about what it costs to get permission to do it, but I'm sure it wasn't cheap. So a couple of questions come from that Doug. Number one, did they pay him enough? Do you think for what he did. Number two, is there something that you would watch live, like this, that usually, like, I got to watch this live. I can't wait to see what happens next. And the third is, is there something that you're great at, that you think you could get people to watch live on Netflix?
Doug Draper 14:21
All right, let's see if I can remember those questions. Number one, did they pay him enough? Nope, I don't think they did, not in this day and age, but yet, paying somebody to scale a building or do something like that on live TV. I mean, I can't think of, you know, maybe then maybe even evil. Can evil back in the day, right? You just, you know, the uncertainty of it. So I probably think they low balled him a little bit. It seems like Alex. I can't remember his last name, but he seems just, he's passionate about it. I think he did say that if he got permission, he would have scaled the building for free, right? And so I don't think they paid him enough. I think it should have been, you know, seven figures, but it's never. Ever been. There's no baseline for what he did as far as a payment. So I think we'll see more of these on Netflix. What was the second question about? Well, what else would I watch? Probably something of that ilk, right, where I literally was watching it. Pete. My hands were sweating. My feet were sweating. There were times where my when I was had, had to turn away. I'm like, I don't know what's going to happen here. So something of that nature, maybe some sort of race, right? Let's race to the top that'll, you know, because race to the top of something so something similar to that, that would be live. And then, I guess the only thing I can think of that, what would somebody pay me maybe doing like, attempting to do acrobatics off of a diving board, right? I was pretty good back in the day when I was a lifeguard, and we would put sweatshirts on and just jump off the high dive, when they actually had high dives at public pools back in the 80s and 90s. And we would just to be honest with you, it'd be after hours. We'd be cranking some beers, and we would just say, you can't stop turning. You would just jump as high as you can and try to do a three and a half or a two and a half and just spin. And obviously we couldn't do it. We would crash out and burn. So that's about the only thing I could think that people would pay to see some you know, kid from Kansas say, Hey, y'all watch this as he throws a beer in midair and tries to do it two and a half and fall flat on his back.
Pete Mento 16:33
I agree, they did not pay this guy enough money. The It was great. Television really was great. Yeah, it reminded me like when Alex Baum Baumgartner was in his last name, jumped from space and parachuted back to Earth. Pretty badass. And whole time, like, this dude's gonna
Speaker 1 16:52
die land on like a gigantic trampoline or something. I don't remember that,
Pete Mento 16:58
but I do remember that it was like he was screaming, like he was good. He was the fastest man alive at one point. Just falling from space. Gotta be out of your mind. But it was compelling. As far as things that I would watch people do that are equally dangerous. You know, these folks that go caving in scuba gear, like they go into these unknown areas and then they then they show up someplace they're not sure where it's going. I would definitely watch that. I would also watch the free diving stuff, where people take, like, a big breath of air and see how far down they can go and come back up again. What I'm trying to say Doug is anything that would really put someone's life in jeopardy for my own entertainment. I am 100% in as far as stuff that I would do live on TV for money? I would I have a pretty tight, badass 20 minutes set right now. As people know, I was a comedian, I'm pretty confident that I could crush 20 minutes, but if you wanted an hour out of me, I need a little more time, but I'm pretty sure that I could pull off a live hour right now. Might not be all excellent, but 20 minutes of it would be absolutely unbelievable.
Doug Draper 18:03
Yeah, that's that sounds like Sean Payton's opening drive of most football games. It's pretty spot on. And we're not
Pete Mento 18:10
going to start the fight. We're not going to start the fight that. First of all, God bless coach Peyton for what he did for the saints. All right, so I'm going to say, so, I'm going to say he's a hell of a coach. And next year, when you guys have your quarterback back, I think it's going to be, you're going to run it again. They're going to only get better. Same thing with the Patriots, though. I think, I think it might be rolling through those two towns for a while. We'll see.
Doug Draper 18:33
Yeah, good. All right. Well, that's it. That's halftime. We cranked it through.
Pete Mento 18:40
I got, I got to pull up a visual aid for the next one. I sent it to you. I hope you got it. But there is an infrastructure report that comes out from the Society of Civil Engineers, and the latest published report goes into a letter grade for certain portions of American logistics infrastructure. Just want to read a couple of them for you. Done. Shall I please? Aviation, d plus bridges, C broadband internet. C plus rivers, dammed. D plus drinking water, c minus levees, d plus ports. B, it's being very generous rail, B minus roads, d plus solid waste disposal, c plus transit, D wastewater, d plus overall grade, C, the fact that bridges are not an A plus should be enough to keep you all up at night. I've, I've been watching this particular issue for a long, long time, when I was watching 60 minutes, I don't know, like 15 years ago, and they had this engineer go to all these bridges and point out the cracks and how it was falling apart. And they're like, Yeah, you. This is it was after that, that 35 accident in Minnesota when the bridge fell, and all those people remember that, yeah. And he was just like, here's another bridge. You know, we have about 100,000 cars that go over it a day. And you can see here, there's a possible cracker. And they asked someone in Congress, why isn't this addressed? And he said, because it's not sexy. You know, no one's going to get reelected because they made the bridges safer. They should, but that's not something that people want to run on. I read through those and I thought to myself, in some of them, they're being a little generous. Like ports. I don't think our ports are. I've been to other ports around the world. Our ports are not a b minus. They're more like a D plus. But the financial the financial shot in the arm that we would need to really make this better is significant, but it's important, not just for commerce, but for safety, for human lives. Man, why is it that we don't pay more attention to this? I mean, you and I do, but like the normies out there, they don't worry about it all day long. What's going on?
Doug Draper 20:59
Yeah, well, I think part of it is, you nailed it, right? It's not very sexy. That's not a sexy platform to run on, right? It's kind of it's you can touch it, you can feel it and see it, but it's not humans, right? Anything related to platform. Now, we don't get into politics, so I'm not going to go down that road, but I think it's all about, what are you going to run on? And the cost is astronomical, you know, I don't I mean the billions of dollars it would take to take it from a D plus to a D or, let alone, you know, jump a letter grade, so to speak. The one thing that caught my attention when you showed this one to me was the resiliency, right? You know, it's just not, you know, I think was it? Joni Mitchell, pave, you know, pave paradise with a parking lot in a parking lot, you know, just paving, you know, just using roads as an example, like the resiliency of what we're building now. And I hate to say because we just got off this, you know, the storm from this past weekend. But, you know, bridges infrastructure that needs to be able to withstand not only the time, but the elements and things that are continued to be more aggressive. You know, a storm is not a storm. We saw an example that just just now. I mean, they're they're harder, faster, bigger, right? And so not only you just trying to, let's repave the road, because when I drive over it, it's a little bumpy. You need to have something that's really sustainable and long lasting, and that, in and of itself, is additional cost. And so I don't I mean, Pete, you said 15 years ago, on 60 minutes. Let's fast forward 15 years from now. Do you think those grades are
Pete Mento 22:45
going to change? No, no, I don't. And the the so as far as the money goes, right, we're NASA is sending, I guess next Friday we're going to the moon. Did you know that Doug, no, yeah, next Friday, we're sending a manned mission to the moon. We're not landing we're going to orbit it. We're going to deliver some stuff, and then head on back. It's not Elon Musk doing it with his returnable booster rockets. It's NASA. So a lot of it's going to be a one time cost, just to prove that we can do it again. But we're not even talking about that. That is billions and billions and billions of dollars that could be put towards this. There are two, two bridges and tunnels that scare me every time. One of them is down here in Virginia. We've got the Bay Bridge Tunnel. It's very, very long. You take a tunnel for part of it, take a bridge for another part of it, and it's, it's creepy. And the other is a George Washington Bridge between New Jersey and New York to Michael over it. These bridges, these infrastructures. They were built for cars half the size and about half as many cars. And we're we're building and buying heavier and heavier automobiles, and more and more people are driving. So I doubt that we ever put that calculus together in a credible way to understand what the future would bring. We talk about these trucks that move everywhere, constantly, all the time. They weigh a great deal, and they're wearing these things down as well. Hence why I love another reason why I love the rail so much Doug, they're responsible for their own infrastructure. Boy, do they spend on it. So I I I'm waiting whenever I hear about it, like in Providence a few years ago when that bridge wasn't collapsing, but it damn near did, and have to rebuild it. All the disruption to trade, the disruption to people's lives, it's incredible. We have to repair these things, but it's cheaper than the human cost of life. We should be spending more attention to that, because we have to have better infrastructure to compete with the world when it comes to global logistics. Yeah.
Doug Draper 24:41
Good topic. Yeah, these topics this week, Pete, a little, a little off, off key from, you know, we're not talking tariffs or anything like that. We're going with with, with infrastructure and and things that nature. So, yeah, I think I don't have a second topic. Just go around, Pete. We were going to tag team that one. So I hate to say it, but the
Pete Mento 24:59
show may be. Over Doug. I've got such terror fatigue. I am so over talking about tariffs. It's all I do all day long. So if I can come up with things that don't have to do about tariffs, I'm gonna get my weekly webinar every Thursday at 12 o'clock every week for one hour. I'm on I'm like, Hey, look at the clown, right for an hour talking about trade. So I love talking about infrastructure and logistics.
Doug Draper 25:22
Well, next week, work on the the second half of your comedy set.
Pete Mento 25:29
Give it a world to the people. I have such a good bit I'm working on Doug. I wish I could talk about it on public airways, but boy, is it good. But with that everyone, we want to thank all of you, as always, for listening, joining in, subscribing, and for pushing this off to your friends and saying, Hey, listen to these two bald old men talk about trade. We really do appreciate that. We appreciate all the support and help that we get from our sponsor, Cap logistics on wavering support, regardless of what silly things Doug and I say, I guess we want to thank Keenan too, I guess. But we thank Keenan as well for the mediocre work that he does, making this show happen, and like we say every week, what's happening in global trade? We're talking about it next week. Thanks, buddy.
Unknown Speaker 26:09
All right. Take care. You.
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