Global Trade This Week – Episode 122
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Keenan Brugh 0:00
You're watching Global Trade this Week with Pete Mento and Doug Draper.
Doug Draper 0:10
All right, we are here another edition of global trade this week. This is the Halloween edition. Right? We we pushed it back one day. So we have it's all Halloween all the time today. I'm excited to talk about our four great topics. But before we get into that, I'm Doug Draper. I'm only half of the show. The other half is my good friend, Mr. Pete mento. Pete, I'm not 100% sure where you are today. So give us our audience. You got a nice whiteboard behind? Yeah. So yeah. Where does this podcast bind you on this glorious day?
Pete Mento 0:43
In my office in Washington, DC. So I am I am. This is my new base of operations here in the beautiful district and couldn't be happier amongst all this built file scum and villainy. And right here and knee deep in the swamp.
Doug Draper 1:01
Nice. I don't know what to say about that vile in the swamp, I think then somebody say you got to drain the swamp? Is that what we're trying to accomplish?
Pete Mento 1:11
When you find the dream? Tell me good luck.
Doug Draper 1:16
Nice. Go, man. Well, let's just jump into this thing. Like I said, we got some great topics, we cover a wide spectrum, but I like both of yours. So hit us with number one, Pete, what you got?
Pete Mento 1:28
Yep. So a good friend of mine last night reminded me of a great saying early, early to bed early to rise work really hard and advertise, I guess that was Ted. Ted Turner was was a big fan of saying that, you know, it's one thing to get up early and work really hard. But if no one realizes you're working really hard. What's the point of it? You know, it it, it reminded me a lot of how the government does a very bad job of advertising the things that they're great at. Now, to be fair. We don't always say the kindest things about government agencies here on global trade this week. And by we I mean, I, this is this is going to be a bit of a turn for us. My first topic is the ridiculous amount of help that's available to importers and exporters, that they really just don't know about. There are so many just customs alone, so many free programs that allow you to be well educated to really understand compliance, you can get your products classified online now by using very simple, very simple form format, that's available on the website, getting scheduled B numbers and ECC ns, for for exports from the folks at the BIS report writing and report generation for the automated commercial environment. All of these things have been paid for by your tax dollars. And I hate paying taxes. No, we all do. But it's ridiculous to think that they just don't talk about them. They don't. And when they do talk about them, they don't do it in a way that really highlights how very helpful and important that they are. So I know it's only October. But at this point, we're kind of all you know, in the in the boot, the brake bootleg moved the power slide into 2024. At this point, as people are putting together their plans for the next year, I think something that they really ought to think about is I'm going to better use all of these different types of assets and things that are available to me that really could help to superpower, my compliance program for 2024. And they're all available right there on the website. Reach out to us if you want to learn more about it, of course, but it's just ridiculous that people struggle so hard to try to maintain a compliance program when there's so much support that's available based on taxpayer dollars.
Doug Draper 3:52
Yeah, kind of like the USPS. I admit, I'll bash those guys time and again, but there's so much potential there that is untapped or unaware. Like you said, I forget what you I forget the terminology used. But you know, nobody's promoting that. Right? Nobody's nobody's promoting that. And the one thing, so I was like, Yeah, that's great, but I'm not in. I'm not in a swamp. I'm not in DC. But you know, for our audience, you know, I'm in Denver. Right. So the question is, well, what's available to me in Denver, and, you know, a shameless plug for the World Trade Center, Denver, if you go to their site, and this is common for World Trade Centers, but I know the group here in Colorado is just phenomenal. Right? I mean, I just I'm just looking here at some of the, you know, import logistics. How do you deal with a free trade agreement, international contracting, you know, ITAR, trade, finance, you know, Incoterms ethics and international trade, all that stuff is available for either free or very minimal cost. So, for you in Colorado, or There are major markets across the country, there is a World Trade Center in your city, all of which provides phenomenal resources. And I can speak from firsthand experience with the team in Denver. And the amount of training that is available. And some of it goes untapped. You know, some of these classes that are available, like you and I, we have a widget and we want to sell it in the UK. What are the rules? How do I do it? Is it a good idea in the first place? who's done it already? Like, all of that is at their fingertips? That that is just untapped? So I don't know, how do we get the word out more?
Pete Mento 5:38
You just did it. Right. So there's a great example. And to be super fair, Doug, I don't know of many World Trade Centers that are anywhere near as good as active as well supported. And as aggressive. Carragher was in our team at the World Trade Center, Denver are absolutely I mean, superlative. There, it's, in my opinion, probably the best one in the country, when it comes to supporting the trade. They're incredible. What that's not to say that the other ones around the country aren't great, either. But that's a great example, how many people that watch this show that listen to us understand that they have organizations in their state, that that's what they're there for to advocate for you. You want nothing in return, maybe a small, annual, you know, a relatively small annual membership fee. But what you get in return is amazing. And then the federal agencies, you know, everyone at Commerce, the people at the State Department, folks at customs, there are so many things out there for outreach. And I'm telling you, it's probably like one of those jokes, where you've got some career politician sitting there doing Sudoku, waiting for the phone to ring, because people don't use them enough. So yeah, you know, we've got to get the word out. We've got to get the word out. And, you know, let your fellow trade geeks and transportation nerds know, there's help out there that you should use.
Doug Draper 6:57
Yeah, yeah, for sure. Big fan and World Trade Center, Denver, great, great people over there, they'll get you in the right direction. So all of our audience members reach out. And even if you're not in Colorado, I know they'll give you some some direction and some advice. So there we go. I'm gonna wait for the for the check in the mail to help with that promo PM. Hopefully, it's coming.
Pete Mento 7:15
We'll be waiting a long time, Doug. I don't think that they're awash with extra cash at the World Trade Center. So and if they have extra cash, I'm sure that they would, they would try really hard to get a raise for all those hardworking people over there. Yeah. Good group,
Doug Draper 7:29
solid group. So cool. All right. So I saw something the other day, written about this, and it actually was a comment made from DHL. We were talking about different freight forwarders and specific to DSP before we jumped on. But the rumor is that inventories in a general sense are now balanced, as we head into into the holiday. So basically, you know, the, the economies developed on goods and services. And during COVID goods were king, everybody wanted their stuff. And we use peloton, as as the example, right? They wanted tangible things. And so that was big during COVID. And companies were like, We need to feed the beast, we need more stuff, bigger POS, let's go let's go. And then as COVID was able to come under terms, and we were able to manage it as a as a globe, right as the international community. People switch to services and they wanted the experience economy, I'm going to go on a vacation that got postponed, I'm going to go out to dinner, I'm gonna go experience. So goods, were during COVID experiences and services were post COVID. Excuse me, but buyers and and CPG companies didn't see that pivot coming as quickly as it did. We've talked about the roaring 20s Many, many times. And so all these POS just came in, and there was so much inventory and so much stuff that they couldn't put the brakes on fast enough. And that's whenever the warehouse industry expanded and, and it's very beneficial time to be in the warehousing business. So what happened for this year is smaller purchase orders. We saw that in a minimal peak season that we had this year. And it's starting to balance out. So the right product is in the right locations. There's not overstock. And we've saw that reflected in in the fact that peak season was pretty, pretty minimal or non existent this year. So question is now that everything is kind of right size, what are the consumers going to do? And then what is the financial reports going to say in q1 with these companies that have finally right sized and balanced their inventories? And it'll be interesting to say, is there going to be success in q1 where people are going to stand up and companies like, Hey, we got our act together, we balanced our inventories, everything was where it was supposed to be. And the consumer got their product when they wanted it. Is that going to be? What I would refer to here in Colorado was a false summit related to the economy, right? Hey, look at this great stuff. We made extra money and we fixed all the issues we had with 2023. So is that going to be a blip? Or is it going to be a true bellwether of what the economy is doing? So I'm not really sure, but I think that the consumer, Pete is going to have a pretty good experience this year, if they're interested in buying goods, instead of services where the inventory is right where it's supposed to be, it's going to get to you quickly, the prices are going to be very fair. And we'll see how things look in q1, when all of that is said and done. And I think it's gonna look pretty favorable. I just don't know if that's going to be a true gauge of where we are in the economy as a whole. So I don't know what's your take on all that?
Pete Mento 10:46
Kind of mixed, you know, I've been reading a lot of similar articles. And we don't give, we don't give investment advice here. So please do your own research. But whenever I hear logistics companies or anyone saying, hey, it's all better now. Everything's fine. Things are balanced. You know, I'm immediately a little bit skeptical. What are we trying to do here? We're trying to make investors in the street, feel confident that better days are ahead. So come by the stock. So that's one of the things that I you know, immediately I'm skeptical. And the second is, are we really balanced? Or are we just saying that we have more orders coming in? It's closer to the 2019 numbers. warehouses are, you know, better than I do? Doug warehousing space, it's still very expensive. It's hard to find, particularly if you need something that's customized, but there's still a lot of unsold crap laying around this country. We have not seen the fire sale and retail. So when they say, inventories are balanced, I just want to say, are they really? Are they really balanced? Or is there still a lot of unused unconsumed inventory that's laying around this country that people don't know what to do with? And whether that's everything from fashion and clothing, all the way down to piles and piles of PPE that never sold, never sold. And the federal government's waiting for hit rock bottom to buying, you know, putting some warehouse somewhere in Salt Lake City? I don't know. But the the indication of of looking at orders coming out of China. In orders coming out of most of Asia. I don't know that it fully supports that kind of of positivity at this point, that exuberance. I'm just not feeling it, man. I'm not feeling it at all.
Doug Draper 12:27
We'll see how it shakes out. I have a little bit better feel for it with my personal experience in my industry. In warehousing, I have seen with our clients the rebalancing. And I think it's going to be a good a good holiday season. And I think we'll see a blip whether that's true is ongoing, or like I said, whether it's a false summit will will will be determined. So yeah, well, it is halftime, and it is Halloween. So obviously, we need to speak to that a little bit. Capital just Logistics is the one that are bringing the holiday treats to us today. So please visit cap logistics.com. And we want to thank them for giving us the soapbox every single week. It's much appreciated. So now that we put the plug in for cap, Pete, I'm gonna let you rip with with your time.
Pete Mento 13:21
Yeah, and but before we do that we want to mention our Tampa parents. So we will be down in Boca Raton, Florida, Tampa to conference. And we'll be recording the show live. And we're excited for that we take in crowd questions will will. There'll be all kinds of high jinks tomfoolery and other silliness. I'm short. But we want to thank everyone city, Rose, and now gear and everyone else at tap up for extending the invitation. We're very excited to get the opportunity to do it. And for those of you who have not registered, please do hit a tap America's and let them know. It is the premier cargo security and wash management for supply chain conference in the country. I would argue the world and we're excited to be a part of that. So just wanted to mention that again. Halftime, it is October 31, which to me has a dual meaning when it today would have been my mom's 77th birthday. You know, she she left us quite a while ago. But I asked you to what did Halloween mean to you? When you were younger and your life you know, led me first of all it was it was the veneration of my mother. You know, it was her birthday, which meant everything else was off until we made sure that Sony was happy. So there was that part of it but for me, I remember it wasn't even like a real school day. You know, everybody came dressed up in their costumes and and it was kind of hard to keep control of people's learning because we were so fired up but getting home waiting for it to get dark hanging out with my friends and going on trick or treating. But then as we got older, it getting part of the chaos of of just being little snots and you know, toilet paper and people to me I was that guy duck. So we, we were little hoodlums. I hate to admit that and then getting older just the parties that we would have in our 20s where I thought I really enjoyed going to costume parties and the amount of fun that we had. But for Halloween for me now, I don't even really think about it anymore. It doesn't, doesn't register. You know, my daughter is a teenager, she's in her last year of high school. She She loves loves Halloween. For it's still fun, but I don't know that at some point in my life. Halloween just became another day in my calendar. I like the other holidays. But this apparently is next to the Super Bowl. More beer and alcohol be consumed tonight than any other night in the calendar. So apparently someone out there still having fun dog. It's just not me.
Doug Draper 15:50
Yeah. So my thread of Halloween is very similar to yours, right. So when I think of Halloween, I think of two things. One, being in high school, partying pretty hard. And zipping through the neighborhoods with toilet paper and creating destruction. Whether you fork somebody's yard or grab for sale signs or slight property destruction, I can't believe that I did some of that stuff. And then I was kind of an asshole a little bit related to midnight when I was a teenager. And then fast forward in college, all the things that you just spoke about parties and getting dressed up. So I feel the same way. But I will do a public service announcement, or any of our listeners that have kids in elementary school. So again, my wife's a first grade teacher. And here's two things that you do not bring to a kid's Halloween party at school, glitter, and popcorn. Because it just gets destroyed, and the cleanup is off the boat. So when you're like what are these kids going to do? Oh, let's bring some popcorn and we can have some glitter. Do not bring popcorn or glitter to your elementary school's Halloween party and your teachers will be much great. We'll be very grateful.
Pete Mento 17:15
Do you have a Do you have a favorite Halloween costume that you wore one year like one that you remember that you really loved?
Doug Draper 17:22
You know, the one I'm thinking of? Yes, it was a Jimmy Buffett. You know, parrot shirt. And I was a swimmer growing up. So I had goggles. And I stuck three beer cans off to the side and one in the back. And as I drank beer, I would pull one off and put the other one on and off the oftentimes that beer was in completely empty. So I was just covered with beer at a fraternity party probably getting a little bit out of hand but yeah, that's the one I for some reason always comes back to me my beer goggles dressed up as Jimmy.
Pete Mento 18:00
Okay, yeah. My my personal favorite one is represent me are you I was blue. She's you know, I remember her used to do like Samurai, delicatessen and Samurai. So I had the full getup, you know, I did the full Belushi and I had the fake samurai sword the whole bit and nobody got it. Nobody got it. And then I found anytime you have to explain your Halloween costume over and over again, that's a great indication that you missed the mark. So nobody, nobody really got it. Maybe one or two of my friends. You know, but maybe they're just being nice. Like, okay, Pete. Oh, that's really great. Yeah, great costume. Moron. Right. So yeah, it wasn't really good one. One year, my friends and I and in Baltimore. We all went as the Super Friends. Remember the 1970s cartoon? Superfriends. Oh, yeah, I was Batman. And that was an absolutely fantastic costume. It was one of my favorites. And I met a girl at a party who was dressed as Catwoman. And I will. I will say that worked out well, for young Mr. Pete. So yeah, that was that was great. But yeah, most of my most of most of my Halloween costumes are kind of DIY, like you're talking about beer.
Doug Draper 19:19
Yeah, yeah. That's the best guy. So cool. Well, Pete might have to I'm gonna keep this one short, because it is not focused around Halloween, but it is focused around travel, you're doing a insane amount of it. And I'm doing it more in my career now than I ever have. But it's related to the airport. And the concept of how do you properly load an airplane and this popped up because on the 26th of October, United came up with a new loading plan where it was window middle aisle, which makes total sense before it was back to front which people think is awesome. is the best. So back to front window middle aisle, and I was doing some some legwork. And there's actually a guy, I forget his first name, but its last name is Stefan Ste FF e n. And it's called the Stefan method of how to load a plane, like I don't even know how this came to be or why this guy is studying this. But the ideal scenario to load based on his analysis is back to front, alternating rows, and alternating sides. So people don't stop in the middle of the aisle and wait while somebody puts their bags up, there's a little space in between. So that process is a little bit faster, and then you go left to right and alternate. So that's just something that I brought up is I've been loading and unloading planes, or I've been, you know, getting on and off planes. And just how challenging you just shake your head about how people people operate. But the one thing Pete that that struck me is that they said the second fastest way to load load a plane is a free for all, just like just like Southwest does, you get in line and you just pick your seat and you go, that is actually faster from what, what I read than doing a scheduled organized back to front. So so we'll see, I'm sure everybody on the plane is like God, if I was in charge, we'd load it this way or that way. But the Stephen method, check it out. It's got I saw a video where it has these great little people in widgets that are kind of moving through to see how the plane will go. But the bottom line, Pete is that the incentives and the status that will always be present, to to have people commit to an airline will always create problems, right? That you can have a loading of a plane, scripted as well as you want. But if you have status in Premiere, it's going to screw it all up. So anyway, that's my take on loading and unloading plane passengers on planes.
Pete Mento 22:01
My quick response to that, Doug, is I've read apparently, it's gonna save three minutes.
Doug Draper 22:09
That's obviously the United thing.
Pete Mento 22:11
Yeah, it's gonna save three minutes. And if you if you know, you progress that over time, how much time that saves them over the course of a year. And like, will it really, I like, I want someone with a stopwatch to tell us if it really saved them three minutes. And then secondly, much like you I'm a business traveler, I fly United almost exclusively because of where I fly to. And from. And I hate people that are not full time business. I hate them. I hate them. Like I have. Sorry, my lights went out here. I have a I have so much angst and anxiety in my heart for these people that that get on planes, and make it impossible for the rest of us. And it's just one of those things I've had to learn to just accept. People lose 3040 IQ points as soon as they enter an airport. And maybe it's because I'm just used to being there. But y'all don't act right. Once you get on an airplane, or, or an airport and you need to, if you don't if you can't figure out how to be part of the Great Machine, take the bus. So I'm making it harder on the rest of us have had it.
Doug Draper 23:18
Yeah, I'm sure everybody's thinking of stories. Listen to this show. Like I remember the time when dot dot dot when they were loading and unloading a plane. So anyway, all right, brother, what you got on? I think he goes
Pete Mento 23:33
to get one second one's kind of freaky. So Apple has found themselves in a really difficult position their Apple Watch, which is, really surprisingly, to me, at least, taking the world by storm, people love these wearables. And it has been determined by the International Trade Commission, that a suit brought against them by another technology firm about how their watches, gauge the what alcohol content, but sorry, oxygen level content of your blood. The technology that they use, based on the light was an infringement on the IP of this company. And the President's office is going to take the next 60 days to review it. But the President has never no president has ever vetoed an ITC ban before. And if that's the case, Apple has a choice to either stop putting that technology in their watches, which are already in production and in the software and all the rest of it are the only banned from importing them. This is the biggest company in the world, biggest company in the world. And they're facing an outright ban on one of their most important products. Right around the holidays. I think that's incredible. So that's the power of taking one of these arguments to the government and the fact that this little company that could got something out of it. I guess it says a lot about the fact that you never know. And they're you know, they're good be some support there for it. I believe in Apple, I think that there, they'll find some way to make it work. They're just too big of a company with too many resources not to find some way to make this work and to save the day.
Doug Draper 25:12
Well, I think you nailed it. You nailed it. When are you said it's the biggest company in the world sell either come to some sort of agreement to use the technology and, and pay the company some money. I think it's Masimo is the name of the company about that. So anyway, scratch a check, have the problem go away, or give them some residual revenue for using the IP. But you've seen this commercials, the latest, the latest one is whenever they just clap their fingers? And I mean, that's all related to that technology. So that's where it's going. So Apple's not going to not going to let that go away, in my opinion, and they'll solve it with the stroke of a pen. And
Pete Mento 25:56
I can't wait. I want one. I want the new Apple Watch. I want the new Apple 15. So we'll see I don't think I don't think it's still important because you know, Big Daddy wants his toys. So I guess we'll see.
Doug Draper 26:09
Yeah, yeah, yeah. Yeah. So why my last topic, and Pete, I'm going to this one is we can have an entire show about this one, right? Because it's, it's, we're always talking about being forward thinking, and what's coming down the road. And, and this one is related to Africa, right. And I saw an article. And I'm going to give you some statistics on the on the New York Times, but Africa is on the rise. And it's going to have impact on sourcing international trade and supply chain. However, and I'll get to that, however, in a minute. So I want to throw some statistics out there that I got from the New York Times that the population so here they are number one, the population of Africa is going to reach 2.5 billion in the next 25 years. And the rest of the income nations or first world countries are actually on the decline. Right? So Africa's skyrocketing up in 1950, only 8% of the world's population was in Africa. And by 2050 to 050, it's going to represent 25%. But of that statistic beat, the most important one is that 33% of the world's population is going to be in Africa, that's the ages of 15 to 24. So they're entering their prime work years, if you will, while the other countries, the US and China, their average is around 38 years old, as far as the median age. Africa is 19. Us and China's 38, you can kind of put those things together and see where the trajectory is, is heading. And by 2100, right, I kind of laugh at some of these projections that are 80 years out, but 40% of the world's population is going to be African. And that's what they're saying. So all that is great deed. And we've talked about this way back when you when I first started the show a couple years ago. On our industry, you chase labor, where's the cheapest labor to make the next widget or the next piece of clothing or the next, you know, whatever it may be. But the infrastructure in Africa is so rudimentary, I don't know if the investment is going to be if the juice is going to be worth the screen squeezed, because not only just talk about the ports, right, we could get into this in the port infrastructure and how do you move something from a manufacturing place to make it set up to the port to get into fashion effectively out? And then just the infrastructure of a factories and the organization of people, it just does not exist? The infrastructure is so basic right now that it would be billions and billions of dollars to upgrade to make any level of manufacturing and Africa of beneficial. So I don't know man, it. It's primed. It's ready. The workforce is there. It's growing. It has all of the it's dotting the I's and crossing the t's. But the infrastructure? I don't know. I don't I don't know if it's going to happen or not. Oh, and then by the way, the political aspect of those countries and the fraud that is wrought through all those countries. I don't know. I don't see anything dramatically happening, raw materials and things of that nature. Sure. I think that's going to continue to grow with the with the Eevee explosion. But I don't know what's your take on Africa, based on those demographics, the political situations, and it'd be in the next, the next great bastion of cheap labor to divert manufacturing.
Pete Mento 29:54
I agree with the demographic side of it, and also to piggyback what you're saying regarding the infrastructure, it's a real problem, but a lot of China's Belt and Road, and a lot of what China has been doing to dump money into building ports and building infrastructure, it really was all throughout Africa. Now, I wonder with China's current economic problems, if they'll be able to maintain it and keep it, keep it going well, and if these African nations will also be able to maintain it, keep it good, these are massive projects, it takes a lot of money to keep them, you know, up to date and working. So they're, they're in a dangerous situation, if their benefactors unable to continue to financially support it. You know, when you talk about why people don't have as much confidence in supporting exports out of Africa, it sounds a lot to me, like China in the 70s. You know, we don't, we don't really trust the infrastructure, we worry about geopolitical unrest, we have concerns about, you know, our ability to be able to control our IP, all those things. And I think that we're in a position now where we've probably learned about global expansion where it can be better there. But Africa, unlike a lot of these other parts of the world, has not embraced one political ideology over another. If anything, they've really been more in the orbit of China than the United States. So I think it's going to be harder for them to bring that kind of comfort to American manufacturers, that they're making an investment in the part of the world that's politically aligned with the West. I think, ultimately, that's going to be a real speed bump for Africa's growth.
Doug Draper 31:30
Yeah, yeah. I think the political alignment and the geopolitical nature of many countries versus China being one and you get some, the communist nature of it, you just dump print money and dump it in there to make the to make it work. It doesn't.
Pete Mento 31:46
We're done that, Doug, you know? Absolutely. Right.
Doug Draper 31:50
Yeah. Yeah, that could be. Anyway, that topic I just brushed over at Pete, we can have several shows specifically about about Africa. But it struck my attention the other day, and I want to bring it up.
Pete Mento 32:02
And we just, maybe we will Doug, maybe shows about it. But for this week, that's going to be our last topic. And as always, we appreciate all of you that listen, watch, share the show and support us. We want to thank the folks at CAP logistics who make this possible. I want to thank Keenan back at the ranch putting all this together for us. You all missed it. But Keenan didn't look you look a little unkempt today. He's got a uniform. You know, his hair was a little messy. It's uncomfortable for me. But yeah, we want to thank him as well. And thank all of you. And thanks, Doug for another great show. Happy Halloween, everyone. And we'll see you again next week for another great edition of global trade this week.
Doug Draper 32:40
Take it easy. Excellent. Thanks, Pete. Hey guys.
Transcribed by https://otter.ai