Global Trade This Week – Episode 217
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0:00
You're watching global trade this week with Pete mento and Doug Draper. Welcome to Global Trade this week. My name is Doug Draper. I'm only one of the CO hosts of this show. The other gentleman is a world traveler, and he's like adventures in babysitting, if you remember that movie, and I can't believe I even watched it, but Pete, I say that because you've had a lot of adventures since the last time we were together on the show. I'll give you the platform and tell us what the heck is going on in your world. Yeah.
0:36
So I was in Norway for one of those. I don't know if I was on for that particular one. And then I did a West Coast just a rip. I did a seminar in Phoenix, one in San Diego. And then I had a presentation for the healthcare folks last week. Again, I was everywhere. I did a huge presentation for our luxury clients at DSV. But the word is out, I have left DSV, and before anybody asks, I have nothing but positive things to say about that company, and there is absolutely no bad blood between us. If anything, it's the best kind of relationship. When someone leaves, they were wonderful to me. I loved working there. I love the people I worked with. I love what we built, but with the tariffs changing the way that they have the skill set that I have got people like me have is is in demand, and I really want to focus on that for what's left of my career. So I've taken a position with Baker Tilly, which is a enormous tax firm, and I will be leading up their new customs and foreign trade practice. I'll be working out of DC. Still no plans on moving, and good news is, I work from home Doug, and they don't want me traveling a lot, so I'll be doing most of my work from my beautiful office that I'm never in, in my awesome apartment that I'm never in, and I'm pretty excited for that Doug. So yeah, new adventure, new excitement. Those are looking for a great job, and we'll, we'll talk about building new practice. So Doug, hopefully that warmed you up a little bit. You it did you look miserable? Miserable. First of
2:10
all. First of all, congratulations, Pete, that's amazing stuff you have. You have a skill set, a skill set that is second to none, and you obviously see that in your following on LinkedIn. So congrats, man. I don't think they know what they got themselves into, but you're going to show them. You're going to show them.
2:30
Yeah. Lucky for them, they're excited to have me. I don't know what they're thinking, but we'll Yeah, we'll see. But yeah, all right,
2:36
well, we won't be anything disparaging or make any funny comments about your new employer, at least yet. So there we go. Yeah, it's a little chilly up in Steamboat today, Pete, so, you know, guys with minimal hair, my I just, I feel warmer with the skull cap, so I'm just going to roll with it.
2:53
I tell everyone, that's something you don't realize, is all the heat escapes the top of your head when you go bald, and then, second of all, if you're working out, you sweat so much it just pours into your eyes. And so I've gotten to the point where I always get on the treadmill with a hat on so I can stop cleaning my glasses every 10 minutes from the sweat. It's pretty revolting. Yeah, yep,
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yep. All right. Well, hey, it's, it's good to have you back on camera, and we got to get this show started, so I'll just let you kick it off.
3:22
Yeah, everyone's so fired up, right? We had a big week last week, Xi Jinping and Mr. Trump met, you know, they probably swapped some baseball cards, had a long chat about their favorite music, I don't know, but the good thing that came out of that meeting was an understanding that we are pausing any further escalations in the trade war this, this might be where Keenan should put maybe like a sound thing of cheering and great adulation. So we have a positive trade war. China has agreed to start sending us rare earth minerals, refined earth minerals. Again, they're there. They're going to buy 25 metric tons of soybeans from the US, which I understand is a great deal. Never farm soybeans, I don't know, but I guess that's a great deal, as well as sorghum, corn and wheat. Great news. And the US is going to make the tariff a 10% across the board reciprocal tariff with a 10% across the board fentanyl tariff, and that may that may go down even lower. So that's great news. I mean, we've gone from essentially 35% to 20% now, before everyone gets way too excited, there's every opportunity for this to completely implode on itself over the course of the next 12 months, and here's why, starting on Wednesday, we have the Supreme Court case, the oral arguments, which now the President has said he's not going to attend. He said that that's he doesn't want to doesn't want to mess with the process. So thank you for that, Mr. President, you're helping us out a lot here. That court process could say that all these Chinese tariffs are. Are illegal. And if that's the case, that gives China a tremendous amount of leverage, because the President is going to have to set up 232, and 301, investigations. It means that we really don't have that stick to go along with the carrot that we've depended on, also any number of things. The Chinese send too many ships to Taiwan for a military exercise. The President goes to Panda Express and gets an upset stomach from the orange chicken. I don't know, but any number of things can have this all fall into total chaos. So as we're planning and as our bosses are all so excited about this, you need to end every single sentence with but this could all end very quickly. I just want you all to know that this could all go to hell very quickly before we do a 12 month plan for our supply chain. I'm begging all of you, all of my trade nerd friends, please keep that in mind. You. Steve,
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over to you. Doug, All right, thanks. You froze up there for a second. Pete, I wasn't sure what the high sign was. So anyway, interesting topic, for sure. I love the soybeans again. I say, you know, taking care of the American farmer is important if there's a mandate for that purchase, that's great. Otherwise, the purchase orders, so to speak, they have already happened, right? And so I want to make sure that that, and I don't know the details of it, but if that transpires that it's kind of a mandate, and I don't have anything else to say, because the highs and the lows, the peaks and the valleys of this whole year have been so dramatic, and once we thought things had calmed down, there's a spike. And once we thought the spike couldn't be any more crazy, there's a level of calm. And so I don't know if this is just one of those ebbs and flows or not. Certainly hope it's not and that there is some stability, because you're right. Pete, the big thing is, like, what are we doing to budget in 2026 people have already done that in some instances, and another year of, oh, well, we threw our budget out the window because of this craziness. That's not going to fly anymore. So I really hope that there is some stability as we go into the new year and continue in 26
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I gotta tell you, Doug. I met with two friends, slash clients slash Friends of the show last week, and they both said the same thing, you guys really are Pro Farmer. Here. You're pro agriculture. You're pro railroad. They're like, I don't think I know two guys that are more pro railroad than you two are. And the third 1/3, thing he said was, why does Doug hate technology so much? And I said, I don't know. I don't think it's fair to say that Doug hates technology. I think it's probably more accurate to say Doug is dubious of what technology promises. And he's very much a show me, kind of a guy, until I see it working. It's all just speculation and Star Wars until I see it in person. So I thought that two people brought that up to me last week. I thought I'd mention
8:09
that nice. Well, thanks for having my back always, if anybody's if anybody says I hate drones for Big Mac delivery, that's 110% true.
8:19
Anyway, I'm gonna flip mine over. Get off my Get off my lawn. Shake your Keenan.
8:28
Very true, very true. All right, I gotta change my mojo then, because what you just said with your peers and friends, that's all like Debbie Downer stuff. So I gotta change my I gotta turn my look around a little bit, so I will make a better effort to our listeners to be more open minded on the technology that's wrapped around our world in every capacity in which we live. So anyway, hey, I want to talk my mind's kind of domestic focus, and it's global trade, but we are part of the world, right? And so things that happen in the US that are domestic focus are still part of global trade. But this just happened over the weekend that the transportation secretary, Sean Duffy, he announced a significant expansion in the Department of Transportation's English language proficiency enforcement. Now you may have heard that. You know, they're stopping drivers, and you you need to have the English language proficiency test on the on the road. And if you're out of compliant, you're like, dead in the water, so to speak. They literally will shut you down there in the moment. So the onus is on the driver. So what's transpired over this weekend is the department secretary of transportation, Sean Duffy said, Hey, we're going to go beyond that, and we're going to extend the compliance responsibilities to include brokers and shippers, right? So this definitely marks a new phase in kind of the CDL crackdown now. Well, the two things Pete one is what's been called CDL Mills, right? M, I, L, L, S, where they're just cranking out CDL licenses all over the country, and there's certain geographic areas, shocker, California being the main one, where, you know, it's kind of like when Lee weed was legal in Colorado, you literally would just show up and say, Hey, Doc, My shoulder hurts, and you get a prescription for marijuana. Kind of the same concept. So they're cracking down on that, and then they're expanding the liability to brokers and shippers, right? So again, there's not a lot of details around it. I wanted to pull up a couple things to make sure I get it right here. And so the industry reaction is going to be a little bit of initial panic. I've already received emails from a couple customers like, Hey, did you see this? Just this morning? There could potentially be an overcorrection. So we got a little bit of panic, a little bit of overcorrection. And logistic teams are going to be scrambling to try to figure out, how do you interpret the rule? Because there's a lot of uncertainties there, right? There's going to be additional compliance costs, but we're not sure exactly what, what they're going to be looking for. They mean in the Department of Transportation, substantial fines and are are, are anticipated for violation. So what does that mean, right? So it's interesting. And then, if you're like shipper, so we're in the, you know, have, I'm in the three po world, and you have history of it. So is the third party warehouse the quote, unquote shipper, or is it the client in which you're performing those services, right? So who is defined as the shipper? So there's a tremendous amount of ambiguity on this one. And then my question for you, Pete, is, is this regulatory overreach, we just going too far, or is this kind of like a new shared compliance responsibility, for lack of a better term. So regulatory or regulatory overreach, or is this just, hey, all together, let's solve this problem. I don't know. What do
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you think? We don't talk about politics, Doug. We never do, and it's hard to address this topic without doing so there, there is, again, without talking about politics, there's really a number of overreaching agendas here. The first is the idea of recent immigrants getting into what are high paying, demanding jobs, and I think that there are a number of people on the over the road transportation side who've made their voices heard that they're unhappy with this because it drives down in their opinion, allegedly, it drives down wages. Another part of this is a lot of people who are concerned about the safety of these newly minted CDL drivers and their ability to do the job safely. So you definitely have a question about the immigration side of it. There's another big piece of it, which is about, are we doing this in a safe way? Are we getting people prepared to drive these massive, moving battering rams, in some cases, bombs, all over the country in a safe fashion? We've had a lot of media reports, very, very big national media reports of accidents, some that have actually been that have been pretty bad. You've had a number of at the same time. We've been inundated for years now about how they just aren't enough enough drivers, right? And trying to get them in there, they're butting up against one another. Then there's another part of it, which I think is reasonable, where people in our industry are having a hard time communicating with this very important part of the rails trademark, Doug Draper, 2018 of how we how we move things from place to place. It's very hard for us to do our job if we're unable to communicate. I have been traveling all over Europe now for what 12 weeks I've just been everywhere, and my ability to communicate with people who don't speak English by simply using a Google Translate on speaker has blown me away. That's not always available on a phone. Et cetera, et cetera. I think that this is all of those things being addressed by a very vocal group of people who are well organized, well funded and have their interests in mind. I think the people who are being impacted by it don't have that level of organization and finance and access to lawmakers. I don't think this is going away. Doug, I think this is going to be the first of many things where English is going to be the expected language.
14:44
Yeah, yeah. It'll be interesting to see the whole, the whole extended reach of compliance. That's a tough one. I'm sure there'll be some lawsuits, and some of the big brokers are going to come out and make their position
14:56
heard. You know, the big question is freedom of speech, right? It? Do we have a national language, and can people communicate the way they want to communicate? Are you going to tell people in their home how they have to speak? It's a it's a huge question, which, you know, at a bar in DC over a couple of Manhattans. I'm sure I could have but I just don't know this is the appropriate place.
15:18
No, it's not. We could go down a wormhole. So we'll pivot to halftime. That's our, at least my,
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Doug's favorite. Doug's favorite part.
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I like to spit the truth about global trade to my friend, but it is a pretty fun part, and it's brought to us by CAP logistics. Check out. Cap logistics. Calm. We wouldn't be here without them, and it is greatly appreciated. All right, Pete, your topic took me by surprise until I read the last word.
15:49
Okay, so I have become addicted. I'm going to say it. I probably spend a good 30 minutes a day of Pete mentor free time, which is not a lot of by the way, watching AI generated videos of cats acting violently. So the cats aren't, in fact, real and what they're doing is not happening in real life. But there's one that started them all for me, and it's a cat that's on the front porch of their owner's home with a assault rifle in his hand. It makes a number of mistakes, and unfortunately for everyone, discharges the weapon all over the place, and the cat's owner comes out and says, fluffy, no stop. And then he puts off a couple more rounds, just in case there's another one where fluffy has made his way into a tank and is sending artillery downrange, and is again stopped by by his and there's a third where a cat attacks a roving religious person knocking on doors, and the cat is playing with butterfly knives. I think these are hysterical, and part of the reason why it's not really happening, the absurdity cracks me up, and it's got me thinking about how far these AI videos can take it. There's a famous one right now of a man who says, This is what a real death star from logo would look Lego would look like, and it's this massive, like, takes up a quarter of the room, and he opens it up. And people thought it was real. I mean, I thought it was real, you know, I commented on one of them go outside, nerd, right? Like there, but it's not. It was generated by artificial intelligence. Doug, in the very near future, you and I won't even have to come on the show. We're just gonna put our topics in and an avatar AI of Petey and Doug, he's going to come up there and just knock this thing out. So I'm all about them for the entertainment value and also scare me a little bit. You seen any?
17:52
Yeah? No, I've not seen any of those that you refer to, not even those specific ones, but just violent cats when I saw the the show notes, I was thinking, I'm a tick tock guy, right? I just scroll and scroll and scroll. I don't. I'm not. I don't make any comments or whatever. And there's lots of videos of cats that are just slapping other animals and stuff like that. I think that's really, I don't know, but that's, that's, to me, that's pretty funny. So I'll have to reach out and try to find these my favorite
18:22
Instagram video ever done, and it's real. It's not AI, a guy walks past his cat, who's on the corner of the couch, puts his hand up, and the cat gives him a high five as he walks by, he taught his cat to high five him. I think this is magnificent. And for those of you that are anti cat, I love cats. I love dogs. I love cats because cats have to decide to love you. A well raised dog loves everybody, right? Cat makes, the cat makes the decision that he's going to dig you or she's going to dig you. That's not the case with a dog. Dogs love everybody. So I don't want to, I don't want any anti cat stuff in the comments. Okay, you're just going to get me all riled up, and I don't have time for that.
19:03
Yeah, nice, nice. Well, cool. So before I jump into my topic, I wanted to add, How many lives do cats have? Pete, I thought it was 967, yes. The dictionary.com word of the year, and I don't even know if I used it correctly, but you, I know you've seen it. I know you've seen tons of videos. It's dwindling down into the elementary school level, including a class that my wife teaches a first grade. She's like, first graders don't do that, and then they just cut it off. But anyway, it doesn't mean anything, right? And I'm you and I are the age like I don't get it right. But apparently, how can the word of the year not even have a definition? Meaning by definition, that's not a
19:57
word. Yes, I.
20:00
So it's funny. But here's the good thing about this, this will die off very quickly, because old people and moms and dads are talking and saying it so frequently and doing things like we're doing right now, that it's going to be so unhip that I would think that this is going to be a flash in the pan, and nobody will even talk about 6767,
20:23
pretty much from your mouth to God's ears. Made this stop. Doug, may it please stop. I well remember back in the 90s, there was the guys on Budweiser. Remember those? Yeah, yeah. So I would say it constantly with my friends. We thought it was hysterical. And my mom was visiting my dearly departed mother, and I said it as I walked into a room, my mother put her hand back as if to begin to slap me, and said, do it again. Do it again. Do it again, and I will smack those sounds out of your mouth. Do it again. So I thought it was so over the top and unnecessary. I'm 55 years old now, Doug, I completely get it. Now, there are silly things that my daughter says, slay, yes, Queen. Many of them are theater, you know, related. You better work. Clearly, my daughter's watching way too much RuPaul, which I don't think you can do. I love RuPaul, but when she does it, I get my mom's sensation to just want to smack those words out of her mouth. Six Seven. Yeah, now there's a did I send you guys a clip from from South Park? Because our lives are ruled by South Park. Have you seen there? No, I have not. We're gonna need to watch that one. I think we could watch it together or alone, but I think we need to watch the six seven episode, because it really encapsulates my hatred of this stupid, stupid term, yeah, yeah.
21:50
Anyway, had to get in a six seven before it
21:54
makes my skin crawl every time I hear it, yeah. When the directors won, they asked, I think was yasaki. Which games did we win? He goes six, seven. I just wanted to take my oh
22:04
my gosh, he did.
22:07
Congrats the Dodgers too. That was a hell of a series. Well, played by both teams. I'm sorry for my brothers and sisters in Canada, you know, but, but I, I love Shohei. Ohtani, so much. I was so happy to see him again. But, yeah, what a series. What a great, great, great series. It was good for baseball, yeah,
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for sure. All right, that wraps up halftime. Cap logistics.com. Brings it to us every week, second half of the show. Letter.
22:33
Rep, yeah, cyber, okay, we talk a lot about cyber, but wow, there is an alarming rise in attacks across every industry, and it is being mostly credited to AI, mostly being credited to the ability for artificial intelligence to be used to make very resilient very strong viruses and to be able to place them where they want them to go. So we're seeing a bit of a renaissance now in cyber attacks based on viruses, based on programs that have been built resiliently through AI understanding what could probably stop them from happening. In particular though Doug, they're hitting our industry. They're coming after our industry. So the top industries that are hit are healthcare, transportation and retail. Those are the three biggest why, because of the amount of data that we collect and the sensitivity to it. If you want to understand how a business works and you want to cripple it, you can break down how they sell it, break down how they move it, and that would have an incredible effect of the American economy. Healthcare is pretty clear information that nobody wants shared with anyone about individuals being in the hands of the world. But as we see the rise of these also the interconnectivity of our industry. I worked for the world's largest transportation firm, the number of third parties that we had connections to, where data flowed on every second, back and forth in order to speed the global commerce. It's shocking. There's a lot of money being spent on cyber. There's a lot of awareness being spent on cyber, but in nearly each and every one of these instances, the reason the failure happened it's us, it's people, it's people not changing their passwords. It's people not using VPNs. It's people making mistakes and giving people access that they shouldn't have. The human part of cybersecurity really is the biggest part of all the errors Doug, and I'm very concerned that as these escalate and get stronger, we're going to be we're due, we're due for a big one. We're due for a big one that affects support, that affects air traffic control, that affects some part of our business that we just can't live without. And I'm very, very concerned.
24:49
Yeah, valid. Two things on that. One is the you nailed it on the interconnectivity, because, you know, there are some supply chains. Are vertically integrated. But we were talking about global trade from A to B, even the monsters, like a DSV monsters in meaning size, they're not bad people. You know, these multi billion dollar companies. They're using third parties. They're using Dray Dick companies. It's not vertically integrated. So all these interconnections identify as weak links, and it's a low hanging fruit. I mean, think to your point, how many different data sources are being collected from different individual companies to give visibility of a shipment, literally, from the factory floor to the consumer's door, right? I don't even that sounds pretty cool. We can. I just made that up factory floor, consumer door. We'll insert that in some other topics. It's not quite as good as bopus, but I like it. So it's it, it's crazy. And the other thing so the interconnectivity, the second thing is the availability of data, right? I mean, you can because of what needs to be documented to make sure we understand country of origin and what's coming into the US before it gets to the US. It's crazy. I mean, Pete, you can go to like, import genius, right? There's tons of different services. You could basically say who's importing peril into the port of LA in the last 30 days, whose company has $100 million of revenue, just going to show you, and it doesn't Black it out like you got to do a paywall. I mean, I guess you have to do a paywall because it's a subscription based service, but the level of detail that you can pull into and then you can, like you said, figure out how they're selling it. So it's not surprising. I'm glad you brought this up as a topic. But that interconnectivity highlights weak links, and the amount of data that we capture for security purposes is some of the same data that's using against us. For people that want to see what's coming in, where's it coming from. Where's it going and what company is doing the import, yeah.
27:03
Mean, for those that don't know, someone like Doug and I can go on import Yeti or panjiva, import genius peers, we can walk in there, and we can see all of your unless you asked it to be held confidential. See all your container traffic, all of your suppliers, your supplier suppliers, other people that your suppliers are importing to in some of them, we can actually see your bills of lading, and we can see what you're paying. We can see what the anko terms are. So before we go into a sales call, we have all that information. Is it everything? No. Is it a hell of a head start? Absolutely. And if I were going to target a company to try to look for ways to break that supply chain. That's how I do it. I'd look for these suppliers and I would attack them. One of the first things I'll do is I'll look at a supplier and say, Wow, 95% of your supply chain is coming from two factories in the same country, in the same region. Are you really thinking this through? I mean, is that a resilient supply chain, or is that just you being convenient over 20 years of buying it from the same people. So it's scary. Doug, there I just, I just told a bunch of our listeners how sales people are targeting them. I don't know if, if I just broke the bro code for for sales, went out of logistics for one day. And look at me, man, look at what I'm doing. Yeah,
28:15
all you tax guys are the same. Geez. All right, I'm going to wind it up again. I said mine was domestic focused. And maybe I'm a little maybe I like that topic, because I started in the parcel business, you know, 30 years ago, but ups and the Postal Service are now talking again about preliminary agreement to have the post office do final mile for the new UPS service called Ground saver. So I think it used to be called Sure Post. I always get the two versions of FedEx and UPS confused, but Sure Post where, hey, let's just have the final mile, which is one of the most expensive segments of this, of the delivery flow, who has the most density out there. And I know I've given the post office a hard time in the past, but it is,
29:05
yes, look at you crawling back to our beloved Postal Service.
29:11
Fair enough, fair enough. But the fact is, and I've never anyway, the fact is, they deliver more density than anybody else. So just give it to them. Let them make that final mile. Now, UPS brought that back in house and said, Hey, we just got rid of all this Amazon business. This is me talking, right? This is my interpretation of the transactions that have happened. Hey, we're ditching ups. Or, excuse me, we're getting rid of Amazon. It's too large in our portfolio, and we'll handle all these deliveries ourselves. And what they realized is the density you need on a residential delivery, even at scale that UPS is is not there. It is incredibly difficult. So they pulled away from the post office. Office. They ditched the UPS contract. I'm sorry, ditched the Amazon contract, and now they're coming back and saying, Well, maybe we need these guys to help us with the final mile. So it's interesting. Now, what does that mean for you and I Pete, in my opinion, really nothing, right? I mean, how many shipments have you gotten over the course of the last 15 years, and I that you ordered from ups that were probably delivered by the post office, right, right? And I think if you're looking for the cheapest way to get your product right, what you want is predictability and visibility, and just tell me where it is right. If it's going to deliver today or tomorrow, I don't really care, but I got some stuff going on, so it would be helpful if I knew it's delivering tomorrow afternoon, or maybe I can change it, make that delivery Wednesday morning. So the predictability and the visibility through technology is, I think, what's more important to the consumer than hey, I need this in two days or four days. It doesn't really matter, because I only want to pay $5.50 to get it here. So it's an interesting pivot that I wanted to call out, and I'm sure we'll do a little bit more. Oh, the last thing on this one Pete is that the new Postmaster General came from waste management, but he was on the board of directors from with FedEx since 2009 like a long time, so he really knows the nuances of the parcel business. So it's interesting that right after he came on board and these these challenges that UPS had with that final mile, that they're coming with a solution again.
31:33
God bless them. Doug, I I'm just in shock, like I've comments I can say to what you just said, but the fact that you're speaking so positively about my beloved USPS, my the cornerstone of American logistics, the ability to go everywhere and anywhere on a daily basis with dedicated mail carriers, I'm just I'm touched. Doug, it's nice to have you back in the fold of sanity. I really do appreciate that. Oh, hold on.
32:04
I simply said that they delivered to the most residential delivery on a local addresses on a daily basis. Right? Some of the things I've said in the past do not reflect that, and I still believe that to be true. But hopefully the folks that you spoke to at the beginning of this show that talked about how I'm anti technology. Just wrap more tech around that final mile delivery with predictability and visibility. Whoever got, whoever has that, let's party and let's make it happen so
32:34
I get it. You know, you're you're uncomfortable with this newfound love of our friends at the Postal Service. You're still desperately clawing at your negativity. It's okay. Open your heart to it, buddy, open your heart to it. Love will find a way. Just let him in. Let him in. I think you'll be happy you did Fair enough. All right, well, that's going to do it for our show this week. Big thanks to our friends at CAP logistics, and thanks for our friend, our friend, our friend, Keenan, who's back there in the control room with the bobbles and the buttons, pressing all the levers and doing whatever the hell is, is make this this silly contraption work. We do appreciate it. And like we always say, folks, what's happening in global trade? We talking about it here on global trade this week. Thanks, buddy. Stay warm. All right.
33:18
Take care. Pete, again. Congratulations. You.
Transcribed by https://otter.ai