Global Trade This Week – Episode 174
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Keenan Brugh 0:00
You're watching global trade this week with Pete mento and Doug Draper,
Pete Mento 0:09
Hello everyone, and welcome to Global Trade this week. I'm Pete mento, and with me is my co host, CO, star, CO, you name it. Doug Draper, how are you pal?
Doug Draper 0:21
Good man, I'm doing really well. It's Thanksgiving week, so hey, it slows down. People kind of work. Thursday, Tuesday, they start peeling off. Wednesday, nobody's working. And then, you know, Friday's, most people don't even work. But in our industry, Pete, the freight keeps moving. So there are plenty of folks that are pushing boxes and doing entries to get things moving.
Pete Mento 0:48
It does. The problem with you and I is, you know, we're in client development, business development, sales gets harder and harder to get people to meet with you this time of year as they take vacations. And you know, so hopefully you put the work in in the first 10 months and try to close what you can the last two but yeah, hey, I'm not here to complain, Doug. I'm here to put on a show. Yeah. So we do it is your first topic. You have places to be. So why don't we go ahead and get started with topic numero uno?
Doug Draper 1:18
Numero uno. Yeah. So this is about Walmart and Amazon, both of them together, right? And two press releases that caught my attention that I wanted to bring together and kind of meld them together and give you my two cents on it. So Walmart, we'll start there. So they were able to slash delivery costs on a per order basis, by 40% in q3 so the way I read that is, if it costs $1 to move an order through the system, to pick it, to pack it, make the delivery the whole nine yards, they're able to pull that down by 40% that is a significant number that caught my attention, 8% 7% I could see people getting excited about that. 40% the first thing I thought about Pete was, damn, they're screwing me over with the pricing that they're charging, right? But before I get to that, because that's the second part of it. So really it was, they had automation. I think 50% in this article said that they are really turning their their warehouses focused on automation. Second piece was delivery drivers and making things more efficient with AI technology density of routes. So when our driver goes out there. Let's make sure he's efficient as possible. When I read that one, Pete, I remember from my days back at airborne Express, some of our listeners are probably old enough to remember that company. I remember they came out with an internal press release that said they are going to save so much time and effort because their routes are set up where drivers only make right turns. And people were like, That's amazing. Yeah, it makes sense, perfect. So we've come a long way with with how we define driver efficiencies, right? So that's pretty cool that they're that they're taking technology and being able to quantify it. The second piece with Amazon shifting gears is that this one's really unique. It says that they're doing no fulfillment increases for 2025 right? So FBA Fulfillment by Amazon. So if you just want to send your stuff to their DCS and they and they do the fulfillment, they're not going to raise any of those fees, and they're going to simplify them. Now, they've not said exactly what that means, but we have plenty of clients that we work with that use FBA to some degree. We may assist with cross dock and unloading, but the complexity of their structure Pete is just astronomical. It's like if you bring in a package that's under seven pounds a Wednesday after a full moon, and you know, whatever, right, the girth is, you know, bigger than this, but can't exceed that. It's super complicated. And I think what's happened is that people or companies are like, I don't get it. I don't even know if I'm making money, because it's so complicated. And in this day and age, there's plenty of resources out there that I can find other avenues in which to sell, other marketplaces in which I can sell my product. So I think Amazon, in my opinion, is kind of feeling that a little bit and let's just make it simplistic. So putting these together, Pete, and then I'll then I'll be done with this topic is that Walmart saved a ton of money their efficiencies with what they're doing, I'm hoping that the end consumer is going to see some of that benefit, right? Walmart's a Smart Company. They've done amazing things, so I would assume that there's going to be some give back to the consumer, because the first thing I thought of when I saw 40% what about me? I'm the consumer. Help me out, right? You just saved 40. Which is a staggering number, and then Amazon is really doing it right. They're not going to have any increases for 25 and they're going to make things a lot, a lot more simple. So kudos to both of these companies for you know, realizing what's what's going on out there. I just hope Walmart provides some value to their end customer with the savings that they realize.
Unknown Speaker 5:22
Doug, I am team profit,
Pete Mento 5:26
I am team profit, I am team shareholder value. I am team automation. And if they don't give us a penny back, good for them, but now they have the ability to make reductions in the face of their competition. So if they are facing heavy competition from other parts of the business, this allows them to dig take deductions in order to capture more of the market. I don't know, Doug, you don't have to give me a discount. You know, bring more value to the shareholders. That makes me a horrible person, right for thinking that way, but I am team profit, man. Anything that you can do to increase efficiency, make more money for your shareholders, and allow you to offer things at a price that's going to make it difficult for your competitors. I'm in so you know, bless them for pulling this off on the Amazon thing. I don't know how much of this is. Maybe they found the sweet spot in the market. Maybe, like, maybe they're not making any additions to the price because they figured out where it works for them. I don't know like I would have to actually talk to someone, but this could actually be a result of years of pulling the levers, years of playing around with things and realizing it's about where we need to be and we're going to be competitive and profitable based on that for a little while, either way, like you said, Doug, those numbers are staggering on the Walmart side, and I have a feeling that there's some executives and some consultants who definitely earn their bonus based on that kind of result. It's pretty amazing.
Doug Draper 6:53
It's not all about right turns anymore.
Pete Mento 6:55
No, no, isn't that one of the things about like, automated cars had a hard time taking left turns. I seem to remember read that like that was one of the things they had to work on, is it was easier to make right turns and left turns, whatever.
Doug Draper 7:07
Yeah, yeah, cool. All right, let's keep it rolling. What do you got? You got some good topics, so pick your first one, gloom
Pete Mento 7:14
and doom, Doug. That's what I have the we're starting to see the possible response from our friends in China based on the proposed changes to American trade policy and tariffs. And they come as no surprise. The first is, they're telling everyone they can in China, remain calm. All is well, nothing to worry about here. It's all going to be fine, business as usual. And the second one, I guess, is also one that probably shouldn't shock us. They're saying, you know, we have enough money and enough leverage internally and enough things that we're able to manipulate that if this becomes a real problem, we'll be able to keep domestic manufacturing going, and we'll find other parts of the world that will buy our goods, other than the United States. I don't know how confident I am in that second one, but those are the first two. The third is they're going to start limiting the ability of American companies to have access to certain products, technologies, raw materials, that can't be found anywhere else, by putting export restrictions on those goods. But one way or the other, you know, you have this mounting rhetoric coming out of the White House or the future White House, and it's being met by mounting rhetoric coming out of China, and that tells me that the Intercontinental Champion is going to get in the ring with the number one contender, and there's going to be a smackdown when you see the when you see the Chinese say you don't scare us, we're ready. It leads, leads me to believe that there's more likely going to be at least a period of these elevated tariffs than none at all. So any any hope, I had, any glimmering hope that these tariffs weren't going to go in place because the US and China were going to come to the table and negotiate, it fizzled away, my friend, like Pop Rocks on your tongue. They're all gone. So I think this is a good indication of the fact that we're going to end up going through with these
Doug Draper 8:59
tariffs. Yeah, it's funny. You said that making the analogy of a couple of a boxing match or a prize fighter.
Pete Mento 9:08
Wrestling. WWE. WWE, yeah. Worldwide entertainment, World Wrestling, entertainment. WWF, Doug, don't tell me you're not a wrestling guy. Come on, back
Doug Draper 9:17
in the day, you know, I remember the what Andre the Giant and can
Pete Mento 9:22
you super first? Flair, Cogan, ric, flair, oh, yeah, yeah. I could talk all day about this. Yeah,
Doug Draper 9:27
yeah. But I, when I, when I saw that, I was like, immediately, strength versus strength, power versus power. They're going to meet. What's going to happen? Who's going to back down? I think both of them are going to be hey, let's sit down. I respect what you're doing in the world. You respect us. Let's have a meaningful conversation, and very quickly, like after one conversation, we'll be able to determine, is it going to be a grudge match and mono and you know, two men enter, one man leaves in the octagon. Thunderbird thing. Thunderbird baby.
Pete Mento 10:01
Yeah, yeah, yeah. Well, I think we're going to see some tariffs Doug. And I think it's going to be, it's going to get, it's going to be, get a lot of negative political publicity for people in in DC. It's going to be a fascinating year for us. Dog, a fascinating Yeah,
Doug Draper 10:16
and all that, all that's going to happen quick, because it's been, been, you know, discussed and and campaigned on so you know this is going to go down first quarter as far as how this relationship's going to
Unknown Speaker 10:30
forge for the rest of the year.
Doug Draper 10:33
Yeah, cool. All right. That brings us to halftime, brought to us by CAP logistics. We appreciate everything that they do. Keenan jumped on a little bit early for this show. He's a rock star, so check out cap logistics.com and with that, Pete, we're going to tag team this one. So I'll let you go first.
Pete Mento 10:50
We are Thanksgiving is Thursday, and you know, we've talked about holidays in the past, but today I want to talk about must haves on the Thanksgiving Day holiday table. Now, for many of us, there are regional things that you will see on your Thanksgiving Day table. There are cultural things because of your family's heritage that you might see, and then there's just, you know, things that your family has always had. So for me, Doug, I don't get this kind of Thanksgiving anymore, since my mother passed away, and when I try to recreate it, I try, I don't do as good a job, but there are a number of redneck trailer park white trash things that I am used to having on my on my Thanksgiving Day table. And one of them is the Pillsbury rolls, you know, the crescent rolls and the biscuits you pop the can, right? I we're, I'm going for Thanksgiving. I am quite sure that fresh, beautiful bread made by hand. This is like a serious foodie house, right? She'll be up all all night, working the dough, making it perfect. You know, there won't be any Pillsbury crescent rolls. And that was something that that, you know, we fought over who got the last ones? And there were never enough. I'd always be like, Mom, why don't you just buy more? So, because we're not what we're not what are we? The Rockefellers? Just 12. Okay, figure it out amongst yourselves. That was one of them. The second is the green bean casserole that my mom would make. It was it's very simple. It's just like mushroom soup, some Worcestershire sauce, green beans, and then those fabulous French's onions that went on top. That was something that was very much my in my family. And then the other two were, my family was a cranberry in the can, like, like, chop it up with a knife. You know what I mean? Like, it wasn't the nice, chunky kind that I would have future. And I would say, this is, this is pretty bougie. And the other was my mom's quote, unquote fruit salad, which I don't think was, was was mostly fruit nor salad. It was cans of canned fruit cocktail with the with the juices drained, mixed with coconuts, like the dried coconut flakes, you know, whipped cream, maraschino cherries and chocolate chips. And this passed for salad at Thanksgiving, my friend. So I don't you know, there were cultural things on my dad's side of the family. There was always pasta, you know, there was always all the Italian stuff. And then for my mom's side of the family, at anyone's house, it was meat. Okay, we're cattle family. Meat can be rib roast, you know, filet mignon, whatever, but there was meat. But, yeah, I missed the white, trashy stuff my mom would make. I think about it, longing. How about you Doug,
Doug Draper 13:30
yeah, it's funny. A couple of those are when you were talking about, I'm like, yep, nailed it. First of all, green bean. Green Bean. Green bean casserole. For all the things that you just said, the more French's onion topping, the better. And the big debate is cut or French green beans. French cut, green beans or regular, you know, traditional cut, I guess, for lack of a better term. So that was a big debate in
Pete Mento 13:55
my family, French green beans, like they would have thought we were, we were European, you know, we were Continental. If we did something like that, it was frozen or canned, cut green beans from Walmart. That's what we put in our green bean casserole. And it was magnificent. Yeah,
Doug Draper 14:10
it was magnificent. And then the other thing is the cranberry. I'm not a cranberry guy, but I started laughing because we would do the same thing. You just take the can and you dump it. I mean literally, it would be in a somewhat nice bowl, but you could still see the ring, the markings of the can, the lining of the can, right on the cranberries. And nobody, that's just how it was. Nobody laughed about it. It's like, oh, okay, cranberries, let's just kind of cut off the section that we want with our with our spoon, and whip it in there. So those are a couple of those. Ambrosia salad, I think is what your mom put together, right? Yeah, it's just fluff and sugar and processed fruit.
Pete Mento 14:54
Yeah, you're getting diabetes if you have a serving of that. Absolutely, you know, on the crab Ray, some. I remember asking my mom when I was maybe seven or eight, how is this a sauce? This is just like, cranberry jello. At what? What point of this took you supposed to put it on your on your other parts of your meal? I'm like, Okay. And then I tried it, and I remember putting cranberry sauce on my turkey myself. I was like, this is this is fantastic. And my whole family look at him like, that's not how you're supposed to eat it. I'm like, Well, it's a sauce. I'm putting it on my food the day after Thanksgiving Day sandwich. Doug is one of the greatest of all American Culinary achievements. You know, you get that toasted piece of Wonder Bread, you slap on some cranberry sauce, some stuffing, little bit of mashed potatoes, some gravy, and some of that leftover turkey meat. Oh, I'm ready to go fight the Russians after eight one of those things. Let's do it. Let's, let's go, like, that's about as American as it gets. Up.
Doug Draper 15:46
Did you ever heard of this sauce called turkeys? No, I don't think so. D, u, r, k, p,
Pete Mento 15:53
oh. The company that makes like, turkeys, yeah, there's, they're like, a spice and flavorings company, right? Yeah.
Doug Draper 15:57
It's like a mustard mayo, spicy type of thing. We bought that once a year. My dad loved it. Just threw turkeys on everything. So I was looking for that one time, and I think it was in the condiment aisle, like on the very lower shelf, which nobody shops. But I mentioned that to somebody could be a year ago. I'm like, Oh yeah, Dirk is on your sandwich, you know, not during the meal. Those are the sandwiches post, post Thanksgiving. And they're like, What is dirkies? I've never heard of that. Yeah.
Pete Mento 16:25
Can I give you a New England tradition, Doug, fire away, probably a Colorado one too. Do you know where all the leftovers for Thanksgiving went?
Unknown Speaker 16:33
On the porch? There
Pete Mento 16:35
wasn't enough room in the refrigerator, so we put them out on the porch and Tupperware. Then you go out there and get them to bring it back in. Until, you know, until, you know, there was still so little left you could put in the refrigerator. Yeah. When I moved to Virginia from New England, I was, I was all bummed out, you know, luckily, I had a beer fridge in the in the garage. But I was, like, that was a big part of my my Thanksgiving traditions back then that my family would never, you know, the Black Friday deal shopper types. That was not something we did Friday after was a day of consuming all the leftovers and playing football out in the backyard and being together. It was very much a family thing, because most of my family had the day off on Friday. We didn't go out to the malls and stuff, given my propensity for hating large groups of people, if not people altogether done. You know, it should come as no surprise. I don't like to go to those things.
Doug Draper 17:26
Love it, all right. Well, that's it. Halftime is over. Let me jump into mine. Oh, who's this? Who's halftime? Brought to us by, I
Pete Mento 17:33
think it was by our friends at CAP logistics. Is that correct? Doug, good friends at CAP logistics. Are fantastic. Friends at CAP logistics. I'm pretty sure it was, yeah, yeah. How many times can we say cap logistics before we move on? We want to thank them again. We are thankful for CAP logistics. Doug at the Thanksgiving Day table, we should be thankful for CAP logistics, for allowing us to keep this program on the air. If you don't ask us to say their name over and over again, we are just truly thankful for their support. Yeah, agreed.
Doug Draper 17:59
Cap logistics, I think that was probably 17 times in the last
Pete Mento 18:05
Yeah. Cap logistics.com, check them out.
Doug Draper 18:07
Everybody. Yeah, yep. All right, so two weeks in a row, Pete, I'm talking about the rail industry. And this one is amazing, because you and I have talked about this, what to set the stage you and I have talked about the efficiencies and the ESG nature of railroads and how they can move. You know, there I've seen things. CSX used to have a campaign where they could move a ton of freight this distance using this amount of petrol to get it. And it was just insignificant. You're like, that is such a small amount of of energy that's being used to move that. And we were saying, like they need to market that in this day and age and understanding sustainability and environmental protection, the railroad is queued up to take advantage of that, that marketing piece. So this one kind of goes along with that. So there was a Jerry Maguire manifesto moment at this event called rail trends, and it was done by the CEO, Michael Miller of the Genesee Wyoming railroad, and that's a Short Line Railroad, and they own a lot of other short lines. So I'm going to dumb it down for our listeners, right? Not because our listeners aren't well educated and adapt supply chain professionals, but you hear short line railroads, and you're like, Okay, I don't really get it right. So the analogy I have Pete is that the highways, I'm going to make it a road analogy, so the highways that are out there would be the class ones, right? The BNSF up, CS or folks Southern and then when you get off the highway, you have all these side streets right that that would be the equivalent of the short line railroads. And then as you drive into the neighborhood to get to your home or your destination, that's another level of of short line railroads. So the class ones are the highways. And the short lines are the side streets to get you your final destination, so the first mile and the last mile, so to speak. So anyway, this CEO came in there and said, Listen, we need to adapt, take an Uber like mindset, engage technology. And he literally said, it's time to get off our asses and and get something done. So I love it, because there's so much opportunity and potential, right with the railroad industry. A couple of quick things, and I'll turn it over to you, right? So technology advancements, collaborative approach, you know, that's kind of fluffy, a little bit. Need to embrace the technology. That's a little bit fluffy, but here's the challenge with that, right? You got one guy, a very large, short line that has the right message, in my opinion, right? You need to empower people. You need to take the control into the user's hands and really adapt, similar how Uber was just a trans transcending. I can't think of the right word here,
Pete Mento 21:04
disrupting.
Doug Draper 21:05
Disruptive. Thank you. That was it a technology, you know, a decade ago. But here's the challenge. Is that there has to be collaboration and multiple company engagement, right? So I love the fact that this statement was made. I love the fact that the mindset is there, but there is a lot of short lines out there. There's a lot of people involved with connectivity that all need to be pushing in the same direction for it to make meaningful impact. But the beauty with short lines, Pete, is they're more agile. They can move more quickly. And so I really hope that this comment and the Jerry Maguire manifesto comes to fruition, and we see some changes and some creativity in that part of the supply chain in the future,
Pete Mento 21:52
you know, I'm a big fan of empowerment and accountability, you know, and this is somebody who said, I'm empowering my people. I'm empowering the consumer to make better decisions, and I'm going to hold us accountable for making sure it happens. This is an opportunity moment here, and what you've just said is it goes across our entire industry, right? You can lead a horse to water, but the consumer of the transportation has to make the decision about whether or not they're going to adopt this and use it. And the I wonder how many hours of this show, if you put them all together, we've used about the the lesser impact on the ecology, on the environment of this service, on the the scalability of it when properly done, on the efficiency of it, on the timeliness of it, the effectiveness of it, dependability of it, of rail, and then how many hours along with it, we would say. But we really wish the federal government would put more money into infrastructure. It seems like they're, you know, this guy's greatest wishes and desires are really hamstrung by what little they have to work with and the amount of services they can provide given the type of equipment and infrastructure they have. Imagine what we could do if we had even more so the the consumers that are into rail, the consumers that are intermodal, they see the impact. May see the effect pretty quickly, and they also see the fact that it's limited based on gaging and on infrastructure. It's a two edged sword Doug, which is, got all the luck in the world, which is company all the luck in the world, because I believe in it, but I think it's going to take a lot more support from the people with the checkbooks in DC than we're giving them right now. Yeah,
Unknown Speaker 23:26
good point,
Doug Draper 23:27
good perspective. Was
Pete Mento 23:28
that progressing again? Doug, did I just double Glooms? I think I'm going to double gloomed at that point. You know? Yeah, and
Unknown Speaker 23:33
it's just,
Doug Draper 23:34
it's a it's contrary, because right behind you is this beautiful white home with these stairs that have like, more than a 45 degree angle
Speaker 1 23:43
pitch, right? That we basically a ladder, yeah, yeah, yeah. So
Doug Draper 23:47
you're bringing all this doom and gloom, but right behind you is just this white, shining, beautiful, calming nature, so it's coming off not quite as aggressively as normal
Pete Mento 23:59
to the guilty, sometimes the truth feel it feels like an accusation. Doug, let's never forget that. You know, sometimes when people feel like crap and you're telling them the truth, what can I say that brings us to my last topic today. I don't know if this is so much Doom and gloomy. I think it's kind of hopeful. The President of Mexico, who's sort of been into it with Trump lately, she's doing some very pro America thing. So behind all of this in 2025 2026 the United States, Canada and Mexico will be renegotiating their their regional trade pact, usmca, which used to be called NAFTA, and the renegotiation of that is going to create a pretty fabulous opportunity, in my opinion, for some underlying changes in the way that we look at these regions and what they produce and provide. America has always been the consumer, right? Mexico has always been the producer of materials, and Canada has been an exporter and and a resource for natural resources and energy. And that's the way it's sort of always been. But over the last usmca in. Where we are now, there's been some significant changes, and those changes really have to do with not only is Mexico this big, beautiful manufacturer of goods, they're also a significant consumer of them as well, and they're taking their place in the global pantheon of low cost producers of product. They're moving up a notch, though, because the the United States government has really been working closely with Mexico to identify areas where more Mexican content can be used in the production of goods, or American or Canadian in order to make these even more NAFTA, right, like even more more NAFTA than NAFTA, you know, put put as much Mexican stuff as we can in there. And now the Mexican president is saying, we need to find ways to limit the incursion of Chinese parts into these products that are eventually turned into assemblies that qualify under the usmca. But what really got my attention Doug, she said, it's not just steel and aluminum. It's not just wires. Mexico sees itself as a country that will be producing microprocessors, semiconductors and chips. And that got my attention. At first, was like, whatever, like, I've actually made that face as I was reading it. And then I started to think, Well, why wouldn't they, they have the people, they have the capital, they absolutely would have the support of the United States. Why wouldn't we make less advanced microprocessors, and someday, possibly even advanced microprocessors in Mexico for all these industries that depend on Mexico, then I had to kind of check myself and go, that's not as wild as it sounds. And I don't think it would take as long as it sounds either, particularly with American companies investing. It would also give them a platform to export this technology and becoming a real competitor with China in a market that they're doing a fantastic job of trying to get a hold of so advanced processors, the ones that are really hard to make. You're not getting those anywhere from here. Sorry, hate to bust everybody's bubble, but we're the we're the King Kong of that entire industry. But when it comes to that next level of them, Mexico is in the catbird seat to put themselves in a position to be a global leader. And I'm here for it. Doug,
Speaker 1 26:57
I can't wait to watch it happen. Yeah, good point.
Doug Draper 27:01
My only concern with that, Pete, so I'll end this thing with a Little Debbie downer, right, the proximity, the cheap the proximity and cheap labor, check, check, right, the security, aka cartels, the challenges at the border, the infrastructure and those things impact of political and economical stability of the region. And you need stability in order to have additional investment, right? So they are queued up with everything that's pending with China that we spoke about on the first topic, fact that things are happening in Mexico that we've seen in the last year, 18 20% increases with imports the whole nine yards, they are primed and ready to go right the infrastructure, security and stability would be the three things that are going to really just catastrophically take those guys off, take that country into the next level. So those are my concerns. Those are not quick fixes, right? And some of them are perception, which does have an impact on investment. So those, that's the three things that come to mind whenever you talk
Pete Mento 28:10
about the growth down there, time will tell buddy, I think we're in for a couple of interesting years with the cartel in the United States. Topic for beer is not for the show.
Unknown Speaker 28:21
Yeah. Right,
Doug Draper 28:23
bring us home for sure. All right. Well, that wraps it, man, two topics each. So four plus a half time that we tag team, some great references to wrestling, some movies, right? We got Jerry Maguire in there. We got World Wrestling Federation. It's great. We cover it all. Pete, and it wouldn't brought to us by CAP logistics. We appreciate all of their efforts every single week. Pete, I appreciate you the ying to the Yang, as you said, and I wish you the best for this Thanksgiving season that kicks kicks off the holiday season, and we'll do it again next week. So Happy Thanksgiving. Pete. I appreciate you and the show that we do every week. All
Pete Mento 29:05
the best to you and your family. Please be safe on all your travels. I I'm thankful for you, Doug. I'm thankful for the show. Not so thankful for Keenan. What are you going to do right at this point? He's just kind of inserted himself as as as essential personnel. So I guess whatever, I'm thankful there is a Keenan, not necessarily this particular one. I'll get over it, but yeah, I appreciate you, man. I love the show. Love all of our listeners. We're very thankful for you, and look forward to seeing you again soon for another edition of global freedom. Awesome.
Doug Draper 29:34
All right. See everybody later. Take care. You.
Transcribed by https://otter.ai
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