Global Trade This Week – Episode 178
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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
welcome to the first 2025 episode of global trade this week. I'm Doug Draper, only part of your co host, Dean and on the other side of the coast is my friend, Pete mento. Pete, by the look of your background, I think you're in Washington, DC. Am I correct?
Pete Mento 0:28
No, I'm not. Nope. I am in Chicago, Illinois, and after the show, I'll be driving to Milwaukee.
Keenan Brugh 0:39
Lovely, lovely. What is that? A hotel? No, it's a friend of mine's house.
Doug Draper 0:45
Okay, I was about to say that's pretty dsvs going up or echelon, if that's the kind of Windows that
Pete Mento 0:51
our offices are gorgeous like I don't think I've ever worked anywhere that's had nicer offices than we have. So if it was a deal thing, it would be very stark, Danish, beautiful. You know what I mean, kind of like, very minimalistic, clean lines, lots of steel. It's very pretty, but no, not a lot of, not a lot of cozy charm. You know what I mean?
Doug Draper 1:15
Yeah, yeah. Well, before we get started, my prediction for the entire year is wait. Everything's gonna be okay. We're gonna get through it. Insert whatever chaos that we want to have happen in the next 360 some odd days, everything will be okay. We'll get through it. So that's my prediction.
Pete Mento 1:36
I agree. I agree, buddy. I like to everyone we live through Nixon. We'll live through whatever is going to happen next. It's all going to be fine. Yeah, we live through we live through New Coke. Remember that abomination, right? Literally, a lot of stuff. I think we're going to be just fine, buddy, just
Doug Draper 1:54
we will be just fine. It's the journey that will be fun as we navigate the crazy topics in our supply chain and global trade world. So let's get this party started on the right foot. Pete, why don't you jump in and we'll start off the new year,
Pete Mento 2:09
you bet. So our president elect has been saying some interesting things about expanding American geography. I can't get enough of these stories. Doug, I love how wound up everyone gets about them. But this particular one is about America turning Iceland and Greenland into the 51st and 52nd states. What would it take to purchase it? You know, it's like, hey, I'll just stroke you a check. What's it good? You know, it's like that guy who who's going to build a mall, and just walks into someone's neighborhood and he's like, I need this whole block. What's up? Right? And Greenland is actually a protectorate. I think it's protectorate, or something, to that effect of the Danish, the Danish and they, they haven't said much, other than, come on now, but people in Greenland are not pleased at all with this. You know, they're saying, This is ridiculous. We're not for sale. It would be the largest land purchase, I believe, since Louisiana purchased that America has done it. It would, it would cost a great deal of money. But underneath all the humor for this, there's actually, there's actually some, some pretty big reasons why this topic has come up, and it's twofold. The first is the Arctic passage from Asia to both Europe and North America that could be done taking the Arctic route. Russia has built a number of very powerful icebreakers, some of them actually nuclear that would allow for a number of months out of the year for safe passage. They're also building safety and security areas along the route, in case something were to happen on one of these vessels, where they'd be able to send a helicopter in order to deal with the Mariners and the crew that are involved, try to keep them safe. Also some places where you could get more fuel in a case of an emergency, actually dock the vessel, send out tugboats, send out the icebreakers, and dock the vessel. Why? It would cut off a tremendous amount of time coming from Asia, certain parts of Asia, to the United States. And you know, we don't want Russia to control that route. Second of all, however, it's, it's a it's a military, it's a strategic reason, the one of the first places that would be blown to smithereens, in the case of a war with Russia, would be the airfield in Iceland. That's a NATO airfield, as well as most of America's interests. We have people NATO has people all over Greenland. And there's a, there's a two prong part of this, both commerce as well as strategic. So amongst all of the haha, isn't it funny? There are, there are some very real reasons why we would like to have a stronger relationship. And in reading everything I could about this, that tends to be the general feeling as we're not so much looking to buy it as we are to come up with some way to strategically build a relationship with them. But. Much stronger than we have now in order for us to curb Russian aggression with Chinese support through that particular part of the world. So I've never sent a piece of cargo through that that passage. I've been up around that area on a ship before. Not very pleasant, but I think it's fascinating, Doug, and I wanted to get your two cents on this. And I know I just say I sent you my topic. Super late, bud, so I'm not sure if you had time to look into it. But what do you think? Right? Should we, should we add a couple of stars?
Doug Draper 5:31
Well, I think that would be the 52nd and 53rd because Canada comes first,
Speaker 1 5:35
right? Oh, I forgot about Canada. Yeah. I forgot about Canada. Yeah. First of all,
Doug Draper 5:38
I don't know where we're going to put these extra stars on the flag if we're gonna have to rearrange, rearrange things, but I think that they need to just get a better understanding of geography, because the lens of where we need to focus is not there. It's in all the areas that we've been talking about for the last year, you know, which is in the Middle East, and the Red Sea and all these other things. So I take zero credence in that whole thing. It's just a it's just a story, you know, on some newspaper to get up and running. Now, all the things you say are valid, right? They truly are valid. There's some there's some natural resources there. I think that there's some oil and some rare earth minerals that could be helpful for batteries and and semi semiconductor chips and things of that nature. But really it's just one person making a comment, and then everything else gets blown out. I think that it's, I think it's still comical, right? I think there's some validity there, but it's why like focus on where the challenges are in the world right now, and it certainly is not Greenland or Iceland.
Pete Mento 6:46
Well, mark my words, Doug, I think in the next three years you're going to see some type of an agreement, some sort of an agreement, some sort of some kind of a compromise, where maybe we put a more significant base in that part of the world for economic development. And you know, you bring up rare earth materials. I was going to make this my first topic this week, but I chose not to. I mean, China's talking about banning all exports of lithium to the United States. So anywhere where we could have a stronger, a stronger relationship that had rare earth materials, we should be doing everything we can to get a hold of it at this point. But, you know, Doug, you might be right. We could be laughing about this in a couple I mean, I'm laughing about it now, but we'd be laughing about this in a couple of months. But my, my gut instinct is that this is a negotiation tactic to try to build some sort of a of a port there possibly strengthen our military ties by building a larger
Doug Draper 7:42
base. Yeah. Interesting. I think it'll it'll fade away in the headlines here real quick, but it is
Keenan Brugh 7:48
interesting. We'll see what you got done.
Doug Draper 7:52
All right, man. So there is such a short window between this first show and when things could happen with the longshoremans situation out there on the East Coast, right? All of a sudden it's starting to come up. There were some articles and things about it right before the holidays, and you blink your eye, and we're like, 13 days away from things potentially happening, right? So here's a couple of thoughts on this. Pete. Number one is that what I've read is that there's been some casual conversations that have already happened, right? And that pretty much means they've already been negotiating, right? So it's not like they come to the table again tomorrow, which is, you know, you're never supposed to time date a podcast. But tomorrow's the seventh of January, and so that's when things start up, right? That doesn't mean they haven't been talking. They fully admit that they've had casual conversations. So I think what their plan is is still it's being finalized. In my opinion, it's not being started right, and really, they're either going to kick the can further down the road right, and kind of take a page out of the funding of the government, right? How many times have you heard that in the last two the last three years? Right? It's this deadline. They make a decision clearly within hours, and the government continues to move forward. So they're either going to kick the can, and what I mean by that is they're going to say, let's do another extension. We're not quite there. So I personally think that's what's going to happen. The other option is that not the option. But the interesting thing is that Trump backed the union, right? I don't know if that's just a sexy thing to do or whatever. I don't think that's going to impact things very well. Is it of note? Yeah. Is it going to be a major factor? I don't think so. But people are people and companies are still taking note, you know, I think cm CGM, CMA CGM, they delayed their fees, right? They were talking about some fees with the chaos going into the all the ports, including Texas. But Maersk, I just read this morning that they're kind of encouraging everybody to get the containers out of the port, right? They don't. Be
Keenan Brugh 10:00
locked up or or tied up. So it's
Doug Draper 10:04
interesting to see my general take on it. And I was going to wait till next week on this one, and we may have some news between now and then, but I think they're either going to do one or two things. They're they're going to kick the can, which is what I think is going to happen. Or there's going to be some automation discussions that will be rolled in over time and and keep going from there. So I don't think there's going to be a, oh my gosh, they're on strike in in 13 days, but I don't know. So my my final take is they're going to either kick the can or get resolved because they've already been talking about it for some period of time, whether they say they officially have or unofficially, but that's kind of my take on it.
Pete Mento 10:49
Yeah, I don't know how many people watch the show rather than listen to the show, but if you were watching the show, you saw a lot of head nodding while dog Doug was speaking. I I tend to agree with just about everything you said there, bud, let's be honest, right? The carriers do not want President Trump getting involved. He's made it very clear that he understands the plight of these ports and their their labor unions during his his run for presidency. So I don't think that you want, you know him invoking the act, and then have them having to sit down with a mediator. It's just better if they work this out themselves. You know, I had a boss at expediters. I still, I still adore the man. I respect him so deeply. And he would say, when we had a problem, you two better work this out. Because if I have to get involved. No one's going to be happy. And I have a feeling that if a moderator, a mediator, did get involved, that's exactly what happened. Doug, so I think you're right. I think between now and the 15th, if these folks know what's good for them, they'll find a way to make this work. Yeah, very true.
Doug Draper 11:56
All right. Well, that leads us to one of my favorite parts of the show is halftime. We got a couple of doozies for you this go around. Obviously the halftime is brought to you by CAP logistics. Can't thank them enough for the work they do with the show. And Pete, we convinced them to do it for one more year, 2025 so Thanks for Thanks for that. Our contract has been extended and and they put on a great show. So anyway, that being said, Pete, what do you got?
Pete Mento 12:23
Yeah, this is a great story. Doug, so it's not as good as a guy dressing up in a bear costume and ripping up his own cars. I don't think anything is ever going to make me laugh quite as hard as that one did. But yeah, yeah, a couple there are people. Okay. So my daughter loves all this crap. She loves UFOs and ghosts, and she believes in Bigfoot, she really does, and the Sasquatch and all the rest of it. So I think this is all balderdash. It's all hogwash. It's all humbug, if you will. But there are people out there Doug who spend their free time Squatch hunting. I looked it up. That's what it's called, squatching. So they, they go out into the, you know this, this medieval woods in the Pacific Northwest, looking for Sasquatch. And a couple of people, unfortunately, went up there over Christmas Eve. It didn't come back for a couple of reasons. One of them, they were not prepared. They went out in the deep, dark woods without all the necessary things that they needed to keep themselves, safe, comfortable, warm, deal with an emergency. And every single year, I don't know how many times I read about a story about someone going in the woods unprepared. What the hell is wrong with these people? But they died. They went out looking for Sasquatch, and they perished from exposure. So first things first, Doug, I think I already know what you're gonna say. Do you believe in do you believe that Sasquatch or Bigfoot exists, and is there any of these topics that are out there, UFOs, anything that you would spend your personal time investigating? I think another answer to that as
Keenan Brugh 14:02
well, yeah, no and no, yeah, that's what I thought. Yeah, yeah. It just, I have come on, let's just be pragmatic. NO and NO.
Pete Mento 14:14
Yeah. What I tell my daughter all the time is, we would have found a skeleton or a body or something by now, right? Like somebody would have found a dead one of these things. How many times have you seen a dead squirrel on the side of the road or whatever? It's just ridiculous. And oh, can she justify it? Man, does she have things to say about it, this kid of mine, so same here, Doug. I mean, I will say this. I would probably go out and spend the night looking for UFOs, like, if someone had said there were UFOs that were constantly I, you know, I could be convinced with a bottle of liquor and some and some Cool Ranch Doritos to hang out look for these things for a while. But otherwise, no, I don't really see myself investing time in this foolishness.
Keenan Brugh 14:55
Yeah. Well,
Doug Draper 14:56
it's unfortunate that to to. I'm assuming they're men, both of them, yes, actually,
Pete Mento 15:02
they were family. I believe it was a father and a son. Yeah, that's horrible. It is horrible. Yeah, it is. But Doug, I think we should do a remote show. I think you and Keenan and I should go out squatching for global trade this week, and that could be our halftime, you know, but I think we should go squatching at like a TGI Fridays for happy hour. That's really your time looking
Doug Draper 15:26
for it. That's what I'm talking about. And bring your Bug Out Bag, because mine consists of like a Snickers bar and an extra pair of gloves, and you guys have ammunition, guns and everything else that you need to survive. So I just need to glob onto your Bug Out Bag.
Pete Mento 15:39
Doug, when the, when the balloon goes up, you really can't depend on anyone else. I think Keenan and I are going to build you a bug out back that would be a good gift for you, in which you will forget where you left it at some point. Yeah, yeah. All right,
Doug Draper 15:54
yeah, yeah. I'll, I was gonna go on a tangent, but we'll stick. We'll stick to, stick to script here. So there is this is related to cryptocurrency. And I know Keenan will enjoy this one, and he's probably heard of it. But have you heard of this new cryptocurrency? It's a meme crypto, which I don't even know what that means, but it's called fart coin, F, A, R, T coin. Have you heard of that?
Pete Mento 16:19
Not until you sent me the thing today. Doug, no, and that's one of these things I wish I'd never heard of, but please carry on. I know
Doug Draper 16:29
it's so it was, it's a crypto right? And it was created by this thing called Truth terminal, which is an AI chat bot, right? So basically, robots created a currency that now has a value of $1.4
Keenan Brugh 16:48
billion and it's called fart coin.
Doug Draper 16:53
And I validated that because I went to chat GPT, which is another AI chat bot, which validated all the things I'm talking about with fart coin. So there's a robot out there creating currency that now has a value of over a billion dollars. And I know this for a fact because I talked to an AI chat bot that told me so. But this whole thing went through like it has value and like, if we want to trade fart coin, and we both have some and you want to buy a pizza, or I want to sell you some Star Wars figurines or something. It's crazy. It is just insane. So I think it's got a catchy title, right? The currency value, so I think it kind of draws some attention, but it's just crazy. I mean, listen to what I said one more time. Pete, then I'll be done. A AI chat bot created this cryptocurrency, and now it has a billion dollar valuation. It's insane. I don't I don't get
Pete Mento 17:53
it. Doug fool and his money are soon parted Exactly. Let's start with that. And we all know how I feel about crypto, and now I've never been more confident than I am right now Doug, that you've probably got a couple of years left, anywhere from two to five years, and then it's over. It's over. So anyway, this, this whole idea of the chat bot, of creating a fart coin, of course they did. Is that any more, any less ridiculous than people running around with this, this currency that they made up, that they mined for with their great computers and set a value to it, and other nerds are on the internet trading it like old 1970s Star Wars action figures, Whatever, dude, enjoy your electric Beanie Babies. Your time is coming, and it's coming because of a processor called Willow and another one called Flamingo. And when those things are out there, it's over, Johnny, it's over because the people that own crypto and what it's run on will not be able to afford to create defenses against it. You're done. It's over, Johnny, it's over.
Doug Draper 19:00
Well, Keenan just propped up his stand up desk, and he is livid right now listening to us bash
Pete Mento 19:06
on crypto. Yeah, he's throwing granola at the at the computer screen, and, you know he's he's waving his Road to Serfdom book at the camera as hard as he can. Yeah, I mean, I, I can feel the anger coming through right now.
Doug Draper 19:17
Yeah, yeah, for sure. All right, well, that brings us the first half time of the year, and we'll certainly have more entertaining ones as as the year progresses. But let's get back to the show for our second topic. So Pete,
Pete Mento 19:31
yeah, second topics, interesting one for me, us, steel was on the block to be sold to Nippon steel. It was a Japanese concern, politically aligned country, right? You know, we're we're not, we're not disagreeable when it comes to them in politics and in global affairs. But President Biden stepped in and said, No, it's not going to happen, not on my watch. A lot of reasons you can make excellent arguments for both sides of this. The first being, you know, we really don't have the steel. Making capacity that we need as a country right now. Would this be putting it in the hands of another nation? What would that mean for our ability produce it, if necessary? You know, counter argument is it still resides in the United States. We would benefit from the technology that Nippon steel has to make even better steel more productive, and our ability to make it and then, of course, there's the workers. You know, Nippon steel is famous worldwide for having incredible automation. So what would that mean to American steel workers? Now, President Trump has said a number of times he wouldn't have backed the deal either, but he's also saying that he's going to do everything he can to find direct foreign investment to help prop up American manufacturing, to get us back up and running again, to get us where we're not so dependent on foreign countries. Foreign countries. So is it possible that President Trump would use this as an opportunity to negotiate, quote, unquote, a better deal for the workers of American steel? I don't know, man, us, steel is an iconic Corporation, but they're having a difficult time because of foreign competition. But steel is an important building block for so much of what makes us a nation, whether it's our military industrial complex or the fact that we're about to get back into ship building, which makes my heart sing, makes my heart two times too small, almost get back to normal size when I think about that. So Doug, I don't believe that President Trump will allow it to happen uh, unless, unless there's some incredible compromises that happen. I think that this is a company that will find some way to prop up, or we'll find some way to come with an amazing compromise on but I don't see, I don't see the punch deal, the deal as it is. Now going through any thoughts on that?
Doug Draper 21:37
Yeah, I saw that. One of the main reasons right was national security. And Nippon is a Japanese company, and I'm like, what's our beef with Japan? Right? Yeah. I mean, every there's trading partners, there's always nuances associated with it. But, like, at what time did, like, I haven't seen anything about us being upset with Japan about any, you know, global trade agreements or anything like that. So I don't think, I don't lend any credence to that, that whole comment, I don't know there's just presidents do crazy stuff as you walk out the door, because you can, right? And this could be one of them. But the interesting piece is that, you know, Trump and Biden were somewhat aligned. You could really say that in this thing. But
Keenan Brugh 22:24
the one piece is that Trump
Doug Draper 22:25
says he wants foreign investment into the United States to prop up our economy. Isn't that exactly what this is? Yeah, exactly what this is. So I don't know exactly what to think of this, right? But where's the problem we have at Japan, and isn't this exactly what Trump was saying he wanted, with his foreign investment, to prop up
Pete Mento 22:44
our manufacturing you probably well, remember when we were teenagers, or like tweens and teenagers, Japan was going to take over the world. Remember, like they were buying up half of Hawaii, and the Japanese were just so economically dominant. How'd that work out, right? It didn't. And I've always likened that to the Chinese model as well. They have very similar problems over over, exposure when it comes to exports, lack of ability to maintain their own energy resources. Real problem with human beings, right? People being alive, making more Japanese people, making more Chinese people. It's the same thing. The difference here, of course, is political. Japan has since World War Two, dependent on the United States for its defense. We are incredibly aligned with regards to both intelligence, innovation, military protection, we supply most of the weapons that they use in that country. So I agree with you. I don't fully understand what all the hubbub is on this one. But then again, I don't read everything. I don't know everything, just gut instinct. I don't see how this is so bad for the American public. What do I know?
Keenan Brugh 23:49
All right, Doug, bring us home, buddy.
Doug Draper 23:52
All right. Well, we always say how this this show is non political, but two of our four topics today are related to the new president. This one is another statement that was made about privatizing the United States Postal Service. All right. Have you seen Did you hear anything about that one right before the holidays? Doug,
Pete Mento 24:09
as soon as I heard about it, I know you're going to talk about it because of your deep hate of my friends at the US Postal Service who I love and adore, but go ahead. Go ahead and trash my friends. Go ahead.
Doug Draper 24:18
All right. Well, this I'm not trashing, right? This is truly I'm not, I'm not trashing this one, right? I'm just going to say, let's talk about the pros and the cons, right? I wrote a couple things down. So Pro is the free market will absorb and take up the slack. FedEx, UPS, Amazon, it doesn't say that they'll take up the slack in the exact same form or fashion that it is right now. But if you need to get something from A to B, it'll get a it'll get absorbed. Remember when yellow went out of business? Yep, and there wasn't even a blip in in the in the services, you know, in the LTL service market. Now that is a little different, because there's lots of capacity in the LTL. Market and FedEx ups and Amazon are just strapped with with making deliveries, right? But will the free market absorb it? Yeah, there's regional providers the whole nine yards. The other thing is, like, this could be new service offerings, right? So let's privatize all of the locations where there are postal offices, right? Think of like a FedEx or UPS store, where you can go in there and get all kinds of other stuff done, versus waiting in line for hours and hours to buy some stamps, right? So maybe there's some new service offerings would be more like a UPS store or a FedEx type of store. There's also still, still, but there's still a lot of business that goes through the post office. Right? Think about all here's the bad thing, Pete, I get a lot of mail, and I take it back to my house, I open up the recycling bin, or the trash bin, and I just start sorting in between those two buckets and and there's like, one or two things that have any value that could come out with it, right? Somebody somewhere is acting upon that junk mail, so to speak. So that could really impact some, some companies, you know, the infrastructure cost, if it went private, that would be a big deal. I think that they would blow it up and renegotiate all the union situations. So that could potentially be a con. But the bottom line is, it needs to be an act of Congress. It's not an executive order from the President, right? So again, it's a nice conversation. The post office will continue to lose money. They'll talk about the need for the service, and we'll go on down the road right until something really changes. So last thing I'm going to leave on this, Pete, this is a personal thing, and part of me is like, Gosh darn it, post office. And part of me is like, all right way to go, post office. My daughter was in Europe in June, and she sent me a Father's Day postcard,
Keenan Brugh 26:54
and I got it in October. So part
Doug Draper 26:56
of me is like, Oh my god. How long does it take now, there's other entities in other countries involved to get that thing over here. I get that right, but June, July, August, that took four months. Like, are you kidding me? But it's a postcard. It is a postcard that made it from Greece to the United States, and I actually read it, albeit four months later that that's pretty cool. A single little piece of paper made it halfway across the world. So anyway, my point is the privatization of the post office not going to happen. Could there be some or some value brought to the table? Yes, but that can all be done by thinking of it as a business, getting a postmaster general in there that has a business mindset and move forward. So anyway, that's my take on the privatization of the post office.
Pete Mento 27:46
Doug. Doug, I could fix the post office problems in less than a year. And it goes back to a paper I read from a gentleman at MIT. All the major distribution facilities regional, state, and some of them County, have more room than they need. They're overbuilt. So you go to Amazon, you go to Alibaba, go to Walmart, and you say, we are opening up 20% of our warehouse capacity for pick, pack and sort and you can have people working in this caged area, because it would have to be in a cage, and you can have your fast moving inventory here for same day delivery done. I mean, that would, that would inject 10s of billions of dollars a year into the Postal Service. It would, it would, it would force them to modernize. And it would also be a perfect how, like a perfect push through, right you've got your stuff right there. Post Office is right here. You'd be able to actually manage a great deal of it from that place, and it would require very little infrastructure changes. Require nothing to change with software, and it's just right there in front of everyone, and no one's doing it. So Amazon, listen, I'm sure Jeff Bezos when he's not, you know, pumping iron and going around the world with his beautiful new wife and just living the best life anyone could live. He watches the show. Let's face it, we're industry movers and shakers. Doug, everybody. Everybody watches the show. Let's just be honest, right? So you know, if you're listening, Jeff, give Doug and I a call. We'll knock this thing out for you in a couple of weeks, just asking for a very small percentage, just a time like better than working with private equity. I'll just leave it at that, and we'll we'll broker this deal for you. We'll make it happen. But Doug, I think I'm going to start keeping track this year. How many times you take my beloved post office through the mud? Well,
Doug Draper 29:40
I gave him a compliment, because they got a post a postcard halfway across the world. They were part of the solution, right? It
Pete Mento 29:46
was a bad compliment. He said it took five months in the in the words of Greta Thunberg, how dare you? How dare
Keenan Brugh 29:55
so. Anyway, I think that's it. Yeah,
Pete Mento 29:58
that's an excellent, excellent, super top. And I think actually Doug, we kind of got into politics on all four of them. Yeah, not a good start to the year. We didn't take any sides, though, which is good. But we again want to thank our great friends at at capitalistics for all of their support, their never ending support. If you want to be a sponsor of the show, I'm sure they wouldn't mind, because this is not cheap to put on every week. So hey, give us a call. I still want Zen and Diet Coke, just That's all I'm asking. Zen and Diet Coke, you guys can pay me in product, but we can't thank cap enough for all the hard work that they do to make the show happen and for Keenan mediocre, lackluster attempts at keeping the show going. We thank him as well. Back in the booth. Doug is always a great show. And for all of you out there, if it's happening in global trade, we're talking about a global trade this week. Great week, buddy.
Unknown Speaker 30:49
Excellent. All right. Take care. Pete, you.
Transcribed by https://otter.ai