Global Trade This Week – October 18th, 2022
What’s going on in Global Trade this Week? Today Doug Draper of ACME Distribution and Trade Geek Pete Mento of Mento LLC cover:
5:25 -US Semiconductor Hardball with China...Will It Backfire?
11:10 -Final Mile Delivery Robots Getting Scrapped
18:45 -Halftime
27:51 -China Lockdowns and the iPhone
32:45 -LNG Spot Pricing & Logistics
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Keenan Brugh 0:00
You're watching global trade this week with Pete mento and Doug drink.
Doug Draper 0:08
Global trade this week has landed my friends. I am your co host, Doug Draper. And on the other side for 40 minutes from the ocean is my good friend, Pete mento. How're you doing?
Pete Mento 0:24
I'm doing good. But you know, I live in the eastern standard time zone, not Mountain West. Am I saying? Inner mountain? Inner Mountain West, which I am still convinced is a incredibly elaborate prank that you and Kenan play on me. But um, hey, listen, props to you. For at least trying. I'm doing well. I'm doing good. It's it's starting to get cold here before you were on. I had my I had my old man took on that I wear because I'm bald. And I have no hair on my head. So I have my little scrunchie cap that I wear. But I switched to my Red Sox hat because they're nowhere near the playoffs. And I hate baseball right now because of it. So there you have it, Doug. I'm actually see you in Boston, apparently.
Doug Draper 1:14
Yes. Well, thanks for that. That segue? I have to you know, the beauty of this show Pete is that we go off a little bit and talk about things that are super important to us like family. And I want to let our audience know that my daughter is a rower at the University of Kansas is been selected to go row, one vote, can you as one vote that's been invited eight girls, they're going to head of the Charles this coming weekend, which, if you're in the rowing, is a pretty big deal. And you've been from Boston have kind of talked about some of the craziness that goes on out there.
Pete Mento 1:47
Yeah, not just being for Boston. Dugu being being a Harvard alumni. So there's, there's there's a bizarre, Harvard is not fun. So you with KU Rock Chalk, whatever Hawk, I don't know. And my undergrad? Yeah, I went to both school. And I would say that both of us have a lot of cool stories about fun things that we did, right? Like we went to parties, we had fun, we make lifelong friends. We have stories that we can tell that people be envious, like, oh, that sounds like a really good time. That doesn't happen at Harvard. Harvard is a place where you go, you're broke, you're miserable. You study all the time. There is it is a no fun zone. And the people that go there are drastically boring. So and I went there, so I'll own it right. But a couple of times a year. Really fun stuff happens. So those times it'd be the Harvard Yale game. It's a lot of fun. Hasty putting a lot of fun. B pot, which is a local hockey tournament we have with all the Boston colleges, a lot of fun, but peeking above them all my friend without question, have the chops. And the reason for that is everyone tends to find their I don't know they, they find their groovy shoes man, like they find their party hats, they find they remove the stick from their posterior and decide to have a good time. So there's people de drinkin, the people that write row crew are, they don't get to go and see a lot of it. You know, it's not like, it's not like one of those things where you go someplace. And it's a really big deal a lot from what I understand, like you don't usually go some places. So you have 1000s of people that are coming to watch hundreds of races, with hundreds of boats from all over the world. And it's just this gathering of like minded people who really get excited about it. And then the other 90% of the people are just folks who want an excuse to get hammered on the Charles River. And I fall on the ladder. So it's a whole lot of fun, Doug, I hope. I hope you have a beautiful day I'm looking forward to seeing you. We will be will raise our cups to the Jayhawks.
Doug Draper 4:01
It'll be great. And I think it's 1800 entrance. So if you and I are just kind of, we like to row we can sign up but as far as the Collegian aspect of it, you'd have to be invited. So that's what makes this one super special. And to me personally, my daughter is selected as far as the top eight that are going in the boat. So yeah, let's add another zero to that scholarship money Kansas and then I think we'll be good.
Pete Mento 4:28
Yeah, I gotta, I don't sleep as you know, and I get up early today. And I said, I'm just gonna go to the gym and I finished my walk in. And then I went to go get on the weight machines, because I'm at the point now where I can't do free weights. I'm afraid I'll hurt myself if I'm alone. So I gotta use the machines. And they've got one of those rowing machines that are dug. And I thought, Should I say Christ Christ? No, no, nothing about this. Looks like fun to me. So all the love of the world to your daughter man for having the athleticism And the cardio to want to do something like that. God bless him.
Doug Draper 5:02
Yeah. Cool. Well, thank you. So let's, let's flip from my personal family life over to things that are related to global trade, specifically this week. So, Pete, kick, there you go, that is one hell of a transition. So I'll let you roll with it.
Pete Mento 5:21
Is it? Was it? Yeah, it was it a great transition. Okay, buddy. Got some fun topics this week, the first, my friend Ryan and I were, we were pitching a company that we're thinking about going to work for. And he was talking to me about export controls. And he said, have you read this stuff? about America's attempts to try to keep technology out of the hands of China, for fabricating semiconductors? And I'm like, How long? Have you known me? Do it? Like we've worked together for 28 years or something? I don't have a life have I been reading about the reading about it? I lay awake at night thinking about it. Yes, I've been read about it, right. So for those of you who are not up on this, the United States has taken sort of these, these two direct parallel paths. Number one, we're gonna start making our own fabrication plants to make advanced semiconductors, which everybody knows about. And the second one is, we're going to do everything we can to keep the advanced technology out of the hands of Chinese manufacturers, so that they can catch up with with where we're planning on being and say, eight to 10 years, and we're finally making these chips. So the new regulations that have to do with export controls are very, very stringent duck. And as normally happens, companies that are involved in manufacturing, these products have sort of hit the brakes, they've said until we understand the regulation, until all of us are very comfortable with what's going on. We're just not going to sell anything to China for a little while. And that's, you know, so like my dad, when he taught me how to drive he said, no one ever got into a fiery auto accident driving two miles an hour. Pete. So just, you know, it's okay to go a little slow. It's alright. Right? I mean, I'm sure he's wrong. I'm sure somebody who's going two miles an hour got slammed into by something, but whatever. But that was a very smart man. The, you know, the point trying to make here is that these two parallel things happening at once, from the outside looks like a great way to deter Chinese growth in semiconductors. But I'm wondering if it's possible, if that could backfire. And here's what I'm wondering, tell me what you think, Doug? What What if no one buying Chinese semiconductors, and no one's supporting Chinese semiconductor production. And us not buying it from them, ends up flooding our competitors, with cheaper semiconductors, because if we're not buying them supply and demand would say that they've got to lower the price. So that would allow our competition to have greater access to these things, I would think. And as such, it would allow them to produce at a lower cost. So are we giving our competition our global competition? The opportunity to source the semiconductors at a lower cost? Because of this? And ultimately, are we going to create less of a market for the export of American semiconductors? Because other countries are just going to simply use the semiconductors available to them at a lower price? I don't know. I don't know if I'm right. I think time will tell. But all these political ads, I see about how we're going to take back the semiconductor industry. People need to remember it's going to take a decade in those 10 years, there's gonna be a lot of this political jockeying, and International Relations jockeying going back and forth.
Doug Draper 8:44
Yeah, I don't know what to think about that one. It's interesting. I don't think we're in a position to really play our cards. Until we have the infrastructure, yes, it's been there. And we talked about the chips act, kind of make fun of that acronym couple of shows ago, but it's almost like we're calling their bluff. And it makes me nervous when we call their bluff with China, so I didn't know people were going to consume, what they consume and the things that they consume and want have chips in them. And so calling the bluff and, and having that the parallel reciprocation cut that off? I don't know. I just think that America is not quite there yet. We start playing our hand because it's the midterm elections and yada yada yada, and it's gonna blow up in our faces just go off and nobody's gonna care about it in two months when the election season is over. So I don't know. We always talk about not being political. But that's
Pete Mento 9:43
yeah, Duggar. Is Colorado, like a toss up political state for anything. Do you have any important Congress? Like are there any Congress congressional or senatorial elections that are happening there that are a big deal?
Doug Draper 9:56
Yeah, there's a couple of them. So
Pete Mento 9:59
because I'm My life is hell right now. I like I'm just trying to watch Modern Family reruns with Mrs. Tre geek and down a bottle of wine then every five minutes it's some Senate candidate telling me why they're better than the other Senate candidate and I've had it but I would be happy to just have a dog food commercial at this point like anything but these never ending political ads are making me crazy buddy
Doug Draper 10:23
yeah, no we got them out here. I kind of long for the days and watching the news where car advertisement seems like every thing on the on the nightly news is selling a car I want that back because spot on with the political ads.
Pete Mento 10:38
It's politics pharmaceuticals. And then here to Hampshire right now we have a lot of for whatever reason, like Home Improvement stuff like you know, get your bath redone. Bath fitters and Windows man, people be selling some windows up here in New Hampshire, this in the winter is pretty bad. But yeah, I've had it with with the political stuff. I'll be happy when this election is over with. I'm voting for you, Doug. I'm voting for you for Senate.
Doug Draper 11:03
Thank you. That's interesting, because I'm not running for anything, but I appreciate your vote.
Pete Mento 11:08
Yeah. Well, I think you're gonna do a great job, though. So what do you got for us? What's your first topic, buddy?
Doug Draper 11:14
I think the this is related to robots, not drones. Don't worry about that. It's related to robots and the final mile delivery. Robots are starting to get scrapped. There was an article I read that there's a trend that this final mile delivery in the robots is just kind of not there anymore. So FedEx had this research and development group. roxo I don't even know if I'm pronouncing that right. R O X. O.
Pete Mento 11:42
I will timeout you for a second. You know, where all this happened? Right.
Doug Draper 11:47
Yeah, New Hampshire.
Pete Mento 11:48
Yeah. And like, Do you know what physically where it happened? Like, do you know? Do you have any idea how close were all of it was to my home?
Doug Draper 11:56
Across the street?
Pete Mento 11:58
I can, I can go out onto my balcony overlooking the MSK river right now. And I can see where this was all happening from maybe a quarter of a mile. I can see the buildings from from my from the balcony of my penthouse here in Manchester.
Doug Draper 12:13
Wow. Well, your your input is going to be still I'm just wondering how many of them fell into the water or tipped over on their side like a turtle that couldn't get up? But that's the that's the second half. Go ahead. Go ahead. Yes. Well, since you know, it was a rock. So what's the correct pronunciation?
Pete Mento 12:31
I don't know. I just know that DECA was the company who was involved out of Manchester and there were some creepy like skunk works the sort of government contractor that we all love. We're so happy they're here. Yeah. Like they're, like the coolest company ever. But go ahead and tell tell your side of the story. And I'll tell you my weird side of
Doug Draper 12:47
it. Yeah, for sure. So anyway, the press release that FedEx came out with was although robotics and automation are key pillars of our innovation strategy. Rock so that's the correct pronunciation did not meet the necessary near term value requirements. An answer that is Yeah, no shit because facts is looking to focus on core competency, which is to make money and deliver packages. So it doesn't surprise me that they're kind of dishing some of this peripheral things to really focus on their on their on their business. Forward lane on this one is well, is that Amazon killed their Scout Program, SEIU T. That was automated delivery and delivery robots, they're just years or decades away. I mean, you're I had no clue that it was right across your your street, so to speak. So it'll be good, but I don't know, man, it just, you know, it's a specifically to the FedEx one eight mile radius, up to 100 pounds, that's better than a drone. But mean, that barely gets out of the warehouse area, right, eight miles, you got to get the hell out of there to find the houses that it's going to deliver to so you know, I think robots are best for behind the scenes, get them behind the curtain and let them work the warehouses and the automation to move things through. But not to make that delivery to so move the products through the warehouse. I just thought of this moving through not to scrap the to the delivery and just move the product through the warehouse. So automation, I love it. Robots, bring it on, keep them in the warehouse. Don't worry about trying to drive them down the street and deliver a package to your house.
Pete Mento 14:34
Well, unfortunately, my friend you're a little bit off what how these were supposed to work, then this is going to be fun for me to talk just a little bit about so the guy that this is guy that started a company named Dean Kaman here in New Hampshire, and he's he's kind of our Granite State Elon Musk. No other way to describe him and he's, he's he's a much more much celebrated son of the Granite State, we're all kind of in awe the guy. So when he was a teenager, he invented the auto injector. So for, I think the story goes that he saw his grandmother in the hospital and she was in a lot of pain. And they kept having to give her injections. So he's the one that did the button pushing thing, where you push the button that gives you a little bit more, a little bit more of your drugs. He invented that when he was like, I want to say like 12 or 13, I got a patent on it. And then he, he invented the number of wheelchairs that allowed people that are in various degrees of not having the use of their limbs, to be able to go up stairs and wheelchairs downstairs and wheelchairs, like some of these wheelchairs go 3040 miles an hour, they're able to lift you up so that you're in a standing position there. It's incredible. So He also invented the Segway. And those were built here in Manchester, all those Razor scooters and everything, the underlying component of the patent to them belongs to him. So the idea of a battery powered wheeled conveyance, every time someone builds one of those, he's getting more money. So that that guy's like outrageously wealthy. And he has he has this like I said, it's like a skunkworks here in Manchester and one of the old giant Mills no one's really sure what's going on in there. Like, I don't know if they're practicing the next video of the moon landing or like if if, if they're if they're in their you know, cloning aliens or what but things come out every once in a while. So we'd be driving around Manchester. And you'd see this white R two d two looking thing going up and down the streets. Like what's old Dean working on now like is this some sort of robotic assassin when it what you eventually learn is it was this FedEx program, where they were going to solve what they saw was a huge problem. So the FedEx truck drives up to one house. One FedEx driver gets out sometimes to during the holidays or UPS, what have you. What if, what if the FedEx truck drove someplace and this army of drones gets out, they all late, they're stacked on top of each other. And they roll out. And they're able to go and deliver these packages. Because they can go upstairs, they can come downstairs, they can go around. And then when they're done, they come back to the mothership. And then that mothership goes right. The idea was, could you do that, but from what I understand from reading all the articles, it wasn't cost effective. There was there were too many problems with consistency of getting the package into the home. Like every home is different. Where the package goes in every home is different. It was hard to get consistency. And then through years and years of putting money into the program, they just weren't seeing the outcome that they want. I don't think it's dead though. I just think it's not the right time. And I know you're feeling about autonomous things done. You've got a real problem. I don't know. I don't know if you got into a fistfight with some robot somewhere or drone or something. And you just never really recovered. But you got some deep, deep hate for robotics.
Doug Draper 18:08
It's not hey, it's called reality. And yeah, fine. You can play around with it. But the likelihood anyway, I want to keep the show moving forward.
Pete Mento 18:18
And I like it when you get angry about
Doug Draper 18:21
not to get angry. It's just come on. Seriously. Really? Let's just move on and make some deliveries. Get out of your truck, check the box and let's move on. Right. All right. Let's speak in
Pete Mento 18:37
the future. The future is coming for you. She just come for you.
Doug Draper 18:40
Yeah, it is. Let's I have time. What am I trying to say here? So I brought
Pete Mento 18:48
to you by our friends at CAP logistics. As always, we're very excited to bring you this show. We couldn't do it without our friends at CAP logistics. We couldn't produce it. We couldn't bring it to you. We couldn't bring you this content week after week. We want to thank them. We hope that if you have the opportunity, you'll check them out at Capital GISTIC stock calm. And this is the part of the show where Doug and I talk about whatever we want to talk about. And I don't know who's going first this week.
Doug Draper 19:13
I'll go first because I think your your topic is I'm fully expecting some visuals of stuff you're gonna pull out from your back. But anyway, so this goes along with the theme of the US News and World Report's This is a collegiate thing. I got two kids in college as you have one there and one coming up. So it struck me as odd that I that I read. It struck me as odd it caught my attention that the school with the greatest endowment has traditionally been Harvard, your alma mater and the latest numbers like $53 billion in their endowment, making sure things move in the right direction. But there is a school out there in in the great state of Texas, that has surpassed for this year, and it is, in fact, the University of Texas. How the heck do they have more of an endowment than an Ivy League institution, like Harvard, and it all has to do with oil and land. So basically, what I had done some research on 2.1 million acres that the university owns, there's 250 Different companies that are pulling oil out of their 2.1 million. So when oil is expensive, and as it is right now, they're just basically printing money. So as of I don't know if it's right this very second, but the the university out there that has the largest endowment, they did an old school Texas style with an oil business. And University of Texas has surpassed Harvard because of that unique aspect of how they manage their endowment. So anyway, it's the oil business.
Pete Mento 21:07
When I was a boy, Doug, the University of Texas was not a good school. I'm gonna say it out loud, right? It was, it was just not a good school. And my family, the men all went to a&m, which was an engineering school. And they used to have jokes about guys that went to a&m, like, how stupid they were, you know. But Texas was not, was not a good school all I said it out loud. It just wasn't like you didn't hope and pray your kids went to UT. That all changed when they started a rule about how you had to have a particularly high GPA to get in. And that came along with with a heck of a large amount of money to go to school there. So the higher the higher echelons of GPA, not only were they going to get in, but they were going to get a real significant amount of that tuition and paid for as well. And it suddenly became real competitive to go to UT. So it was pretty hard to get in. That happened after I was a young man. But now, it's it's tough to go to UT. And they've got a lot of great graduate programs. It's a great school. And because of that, you've got a lot of very wealthy people that have graduated from UT that live in Austin that have worked in the tech sector worked in energy, that have left them a lot of money, as well as a lot of people who died and left what at the time felt like completely worthless land because you couldn't drill for oil on it, but guess what you can frack it. And there's plenty oil underneath it now. And like you said, they're making that money. So that's amazing, then utterly amazing, the kind of money they're making out of that. So
Doug Draper 22:53
your comment about so my I lived in Lubbock, Texas. My dad was a professor, that's where I was born. Yeah,
Pete Mento 23:00
my mom, my mom is Texas Tech. I was born in Lubbock.
Doug Draper 23:04
And he would come home with would say 101 Aggie jokes. And that was a book that basically just, you know, ripped on Aggies, and I think you could not publish that book today. Still have a job, or the publishing company would be pretty much out of business. I probably have one somewhere. But anyway, when you said a&m, I'm thinking 101 Aggie jokes. And let's just say thank God that was printed in the in the late 70s and early 80s Because that that book went flying 2022
Pete Mento 23:33
Oh, yeah, my mom was a proud Red Raider man. And she went to high school in Lubbock the whole bit so when I was born there, so I would I would rather I would rather take a beating from the University of Texas football team armed with baseball bats that ever have to go back to Lubbock, Texas. There's a fabulous song by Mack Davis called happiness is Lubbock, Texas and my rear view mirror and I detest West Texas and I never want to go back so anyway, my halftime the my halftime i I broke my my pact with Apple. This last go around, I got one of them fancy Samsung flipping phones, and I'm having fun with it. But like everybody else, you know, when you you live on platform, you have to get used to doing everything differently. And one of the things that I had to get used to is the stupid chargers. I have a box dog of all of the electronics that I have bought. Going back what feels like eons now, Amy. Amy doesn't really collect things like I do, right? She has lots of shoes, she has clothes, and clothes she has never worn right. But that's not nearly as desperate and sad is the fact that I still have the charger for my first Palm Pilot. But I don't have the palm pilot. I have chargers for Nokia phone ones from like, 1998. And I don't know why I have more electronic crap laying around my house phones and charging this much in plastic bags. Why do I still keep them dug? Why do I have them around? What is the whole point of this? And what's really funny is the box that they're in. It's like an archeological dig. You know, over time, the farther down you go, the earlier in the years it goes the stuff on top of silly you know, pre lightning, Apple chargers, and then you go a little farther and from a Motorola Razor stuff, Palm Pilot things. A couple of busted palm pilots go down a little further. I got some iPods in there. I've got my I river mp3 players gold but farther down like it is the saddest collection of crap that I have ever seen. And I don't know what to do with all that. I'm sure Keenan is back there. munching on Gorp drinkin is his camp Bucha said, Well, you should probably go and hand this off to somebody so they can recycle it shut up, Keenan. I'm not doing it. Because I'm convinced that at some point, this stuff will have some kind of collector's value, which I'm sure is wrong. But you know, I just can't seem to part with this crap dog. Do you find yourself in a similar situation? Are you better man than I am?
Doug Draper 26:21
Well, no, it's in bags. And it's funny you said bags because it's the small bag to say this is the individual charger with the phone. You got Thrift, then you put it in a big bag, or box. And I bet 80% of our listeners maybe not the younger generation, but if they're our age or whatever, they have the same thing. It's a box full of shit that you're never going to get rid of. But you think maybe you think maybe there'll be a purpose for it. So you might as well just keep it because it's really small. You just put it under your bed or in that drawer that you never open. And everything's good. And it's out of sight out of mind. So I love it.
Pete Mento 26:54
I have remote controls for TVs that I haven't owned for a dozen years. Hmm, what's wrong with the duck?
Unknown Speaker 27:00
That one is with me?
Pete Mento 27:02
That one's wizard wrong with me. Yeah, I was gonna open my I was going to open my my my my desk here and plus stuff. But so why do I have Apple headphones that still have this thing on the end? When was the last time I had an Apple phone that you still plugged into headphones for? I think it's been a very long time. I have a Suunto watch, right, an old center watch. And here's the charger for it. I haven't worn this watch for 10 years, man.
Doug Draper 27:34
It's right there at your desk like literally an arm's length away.
Pete Mento 27:39
Yeah, oh, this whole desk is full of crap that I don't. I should probably just let somebody come in here while I'm at work one day and just get rid of everything. Except for my passport and my guns. Sleeve everything the way it is. Alright, Doug. So that leads us off to the second half. Thank you again for everyone. Kept logistics given us an opportunity to chat about things that we see that are going on and what we think is going to happen. And guess what? That is the first one. Is that right, Doug?
Doug Draper 28:06
That's cool. Yep. Yeah, I did the intro. So yeah, that's right. Yep.
Pete Mento 28:10
So we're, we're facing down another COVID lockdown right now in China. And this one is for about a million people. So to me, I look at everything through the scope of my little sad world. So I live in New Hampshire. And New Hampshire has about 1.2 million people in the whole state. And the idea that, that there will be a lockdown of all of us, we're we're not allowed to leave our house. We have to have food delivered. One person can leave every three days and go and buy food. That I think about that level of lockdown on like we would be shooting people like you you would have to in this state you would have to there would be a revolution like that would not happen here. In China, they're going through it again. Because the zero COVID policy, and this time it's happening in a city where a significant number of iPhones are made. So why does that get my attention? It gets my attention because it goes back to the supply chain issues. Around the same time last year, Doug, if you remember, we were having major port cities shut down because of zero COVID. A few months later, around Christmas time, same thing, major port cities, Shanghai at that point being shut down. And its effect on supply chains. Now, we're seeing its effect on major consumer production. Now a lot of iPhones are going to be made in India, which is wonderful. But Apple is a company that really drives markets, drives GDP growth. And it drives Dare I say fashion and not being able to have that innovation in that fashion out in the marketplace. It will have a long term effect not just on GDP but on the growth of that industry and what happens next. And it's happening in the country that everything is being made in. I keep saying it does. You can't have all your eggs in one basket, you need to have a resilient supply chain, just in time cannot be overcome without some just in case. And if people don't start realizing that this isn't going away, that the zero COVID attitude in China is here to stay. We're gonna all be dealing with these long term supply chain issues for decades to come. You've got to find ways to make your supply chain more resilient. And that's going to mean finding alternatives to where you produce your goods. Yeah.
Doug Draper 30:29
Well, heck we've been talking about that. What you just said was the fundamental reason that you and I got together in 2020. To talk about, you better have a plan B right before COVID. So it's funny that two and a half years later, it's still relevant. And we're still talking about the thing that just listening now with a Communist Party, that's all about manipulation and control, and manipulating people to maintain control. So here's my take on this, maybe my conspiracy theory, but the leadership is reestablished itself over there. Let's manipulate our people and throw them in lockdown with our No COVID Zero policy, in order to control slowdown, and impact the supply chain over to the consumer base that needs to eat and consume and the fashion mongers. So I was just thinking about that when you were talking. Yeah, that's going to impact is it by design in a very unusual way? Maybe a little doom and gloom on my part, but I think there is some realization that manipulate the people to maintain control. That's, I don't think it's the fundamental communistic way, but it sure sounds like it.
Pete Mento 31:45
Now, that's also doesn't hurt that when you have periods of scary political change, or reasserting things, politically, if you're able to control people's movements in the selection doesn't hurt. But again, we always try to avoid politics, geo or otherwise, but this is one where, you know, the, the impacts of the supply chain is happening again. You know, what's happening again, man, I, I drove across the northern border to Canada on Friday, no one asked me for COVID card. It was great. And I felt, I felt like it was 1988 Man, like, Hey, I'm going to come back and no one's asked me for it on my passport. Okay, so to that, but, you know, it was it was great. But here we are, we're still in a reality where America's largest, you know, exporter, to our to our economy, for production goods, is still dealing with shutting down whole cities, over a virus that the rest of the world appears to be moving on from, I think that's something we should be paying a lot of attention to duck. Yeah. Yeah. All right, but take us home.
Doug Draper 32:47
Yeah, so supply chain and energy, those have been common themes in the last couple of weeks, for the last couple of months, to be honest with you. So this one is about liquefied natural gas and natural gas state. Natural gas in general. So the spot market for natural gas has just been on a rollercoaster ride. And there's the, I'm gonna call it the unit of measure, right, but it's X dollars when talks about X dollars per barrel, as far as the cost of oil, and natural gas is per million British thermal units, right? It's like an NB T Hu something or other, but let's just call it the unit of measure. In August, it was $84 per million British thermal unit. And just today, it was down to 42 weeks ago is about 57. It's going up and down. And they're saying that part of it is that the warmer weather in Europe is keeping it a little bit lower. But you know what, warmer weather isn't gonna last forever in the winter, and then it's gonna spike back up. So my whole point with this thing is that the uncertainty favors the supplier. So two months ago was at 84. Today, it's at 40, because Europe is a little warmer than normal, and they're not consuming as much. You got to warn refrain, you get the pipelines coming in, that are being affected and impacted. And so when things get scarce, and when natural gas is needed, you're gonna see the spot market just explode. The piece that really this is honed in on is that whenever the the cost of the commodity is expensive, you can charge whatever you want related to the transportation of those goods, and I'm afraid what's gonna happen is because it's a spot market, there's uncertainty, if I own a vessel, and there's not that many of them out there that can actually transport liquefied natural gas. And I'm wondering what's going to happen, I'm just gonna sit idle, because I'm gonna wait until see who needs it the most and who's gonna pay the most. So that's kind of taken inventory out of the market. And while I just wait and see who can pay me the most, I'm going to turn it left or right. So I think natural gas prices, my whole point in this beat, they're going to continue to be volatile, because it is a spot market. And the ones that control the transportation are the ones that are going to get rich on. And they're going to withhold that delivery of these items to try to find or delivery of this product to try to find the highest bidder and who's going to pay the most money. And it's going to get pretty wonky here as the winner, the winner continues to evolve. So look out, it's not going to get any cheaper, it's going to get volatile, scarce and expensive.
Pete Mento 35:37
You're right, Doug, when we when we look at these sorts of markets, we're always looking, we're speculating. So we're not looking at how things are today, we're looking at where they're going to be in 3060 90 120 days. And right now we're on the cusp of the cold winter months. So moving this stuff, in what are just gigantic hydrogen bombs, that's that's what an LNG tanker is it's the most dangerous floating thing on the water. It's it's a very expensive means of conveyance that you're going to take your time. If you think there's going to be a market that's open to you. You can we can let it sit idle. And you can wait, no, what you're not going to do is use it as a floating warehouse. But you will let it sit idle and then buy it and sell it while it's underway on the water. And someone's going to make a crap ton of money on it. No, a lot of these vessels are owned by the people that are selling it, but a lot aren't. And a lot of the infrastructure that is necessary to move it from the port to where it's actually gonna be distributed. It's scarce. It's not a lot of it, man, we've talked about this in the US there was one major port, they had a fire, and it slowed down exports of natural gas over the world into Europe. You've got Germany, basically parts of Poland, there's not a lot of major natural gas LNG ports where we can move this stuff through the entire infrastructure is is not ready for the demand. The ships are going to be in a similar situation to what you had for container ships. Once that price begins to go up. And the people that own those vessels are going to make a lot of money. You're 100% right, Doug, you're absolutely. Spot on.
Doug Draper 37:17
Yeah, yeah. That's all I got,
Pete Mento 37:20
man. Yeah. All right. So thank you dug as always for your gripping insights into global trade this week. I had a lot of fun. Sorry, I couldn't be here again. Last week, right. It was last week. I couldn't be on Yeah. Yeah, it was last week. Yeah. And everybody had to suffer through another teen in it input on it. So I swear it's like the NFL right now with all these third and second string quarterbacks being on every Sunday and Doug's got to play twice as hard. You know, you're talking about a Hall of Famer out there on the field. It's got to compensate for the lack of talent behind bind center. But Doug, you always do it, man. I really appreciate it. And, you know, thank you for stepping in Keenan. You know, we always do appreciate it always frustrates me that so many people say kind things about your input, whatever. But we do appreciate that and all the hard work that you do and we appreciate all of our friends a cap logistics for making this happen. So I look forward to seeing ya. Okay, you and again, we'll see you all again next week. Have a great day.