Global Trade This Week – Episode 266
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Pete Mento 0:01
You're watching Global Trade this week with Pete Mento and Doug Draper.
Doug Draper 0:10
Welcome to another edition of Global Trade this week. My name is Doug Draper. I am one of your hosts, but only one of them because we have two on this show, and my good friend, mr. Pete Mento. Pete, I can see a live TV behind you. So tell us, where are you?
Pete Mento 0:27
I am in Houston, Texas. I'm on a panel today for HIMC, and I think it's my fourth year in a row that I've come here. It's it's a great it's a great conference. So I I'm not at a Marriott, I live in Marriotts, and when I call to the Marriott and I say I need an extra hour, is that cool? They will say, "Yeah, of course it is." I called down today and they said, "No, get out of your room. 11 o'clock. That's that's that's the number, buddy." So I found a quiet spot to record the show today. So I apologize, everybody. It was a little too much background noise.
Doug Draper 1:01
Do you feel comfortable naming the hotel that kicked you out?
Speaker 1 1:04
Yeah, the Hilton Americas. I'll name them all day long. No problem. It's a nice hotel. It's not bad. It's just I don't have any status with Hilton, so thick rocks. What they told me.
Doug Draper 1:17
Yeah. Well, I've never been a big fan of Paris, so I guess that's part of it. All right, my friend, that was a horrible joke to get the party started. So let's talk about global trade. What's your first topic?
Pete Mento 1:29
My first topic is about the elections that are going on right now. And first of all, we asked all of you to vote, and I hope that you did, that you got out there and you you did your your part for democracy, but what I've been really enjoying is the financial analysis and the the prognostications of a number of big banks. You know, not least of which Morgan Stanley did some really cool stuff. The Big Four published a lot of stuff. There's been a lot of great insight, I guess, and predictions that are being made on what would happen if. So, what really tickled my funny bone, Douglas, are the number of people who know nothing about trade policy that have been making announcements about how trade policy is going to be impacted by this election. I think I think the the best one I saw was was the folks at Merrill Lynch thought that was pretty good, but for the most part, I think they they've forgotten that there's a guy named Donald Trump who was president, who has no intention of signing anything that this Congress does that limits his power to put tariffs in place. One of the things that really got a kick out of was the the data center stuff, and data centers are really propping up logistics right now. If you really start to drive and drill down on what's being moved in the current state of global commerce, a lot of the freight, a lot of the weight is stuff that's going into building and maintaining data centers and working on AI, particularly air freight. And I think they might be onto something here. If if legislation is moved to try to limit data centers or do something about data centers, either at the state level or at the federal level, you're probably going to see an impact on freight, an impact on freight rates, and an impact on the volume that's going through them. So that has been interesting, but I think it's a misnomer to think that this president's going to be swayed one way or the other for the next two years by Congress on things that are going on with trade. You can pass whatever you want. You can have a major majority, a small majority. You go ahead and tell that the president's going to have a limited tariff authority and put it on his desk. Watch him sign it with his big sharpie. Hell no, it's not going to happen. He ain't going to do it. He's going to reach into it, reach into his drawer, take out his veto, and say, "Not on my watch," and slam that thing right down. So, yeah, I'll be I'll be watching the the returns tonight. I'll be back home. I'm flying back home tonight, going to Detroit tomorrow. But I'll be glued in front of my TV, going through the news channels, watching all the updates, drinking protein shakes and Diet Coke and ripping Zens until the news comes in.
Doug Draper 4:04
That's one hell of a trifecta.
Speaker 1 4:08
Yeah, I
Pete Mento 4:09
say I run. I run a classy joint, Doug. I run a classy joint.
Doug Draper 4:13
You do, you do. Yeah, I think I literally went into chat like maybe last week, and I'm like, what happens if Democrats win the House and the Senate? And it basically said Trump retains voting veto authority and executive trade powers. Right? I mean, look at what what's transpired without the House or the Senate in the last two years. So I think it's going to be my my take, and this is political, which we say we're never going to talk about. But lots of investigations. If this, if the Democrats lean over, lots of investigations, lots of hearings, lots of look at all these things that were done. But attempts to roll back tariffs are not going to happen. The veto power. Going to come in, and the executive trade power does not change. And so, if those banks, I didn't see any of those reports. But if the banks or the procrastinators, no, it's not the right word.
Pete Mento 5:14
Prognosticators.
Doug Draper 5:15
Thank you, thank you. I think anything major is going to happen with global trade. I think that's not correct. It could be. This is a bold statement, and I'm not a political guy, but I don't know if it's going to be the greatest gridlock in history, meaning nothing's going to get done in the next two years, or maybe the biggest lame duck presidency. But if both parties are like, I don't care, I'm going to have my own agenda, they're both going to you know cancel each other out, and not not much is going to transpire, so I don't know. I agree.
Pete Mento 5:44
I agree. I agree. You know, maybe I'll go on Kalshi and vote for a government shutdown. I think that's probably just as likely. I think you're going to see some more of those. Yeah.
Doug Draper 5:54
Yeah. Yeah. That's a good point. Good point. So, all right, man. Well, my mine's more tangible in the sense that we've spoken about how L.A. and Long Beach Long Beach ports are just booming, right? September especially just crushed it. People are like, I want my stuff, get it off the water. I want to control my own destiny when my products hit the U.S. as fast as possible. So there has been an insane amount of inbound flow into L.A. and Long Beach, and as we talk about, this is a supply chain, meaning everything is connected, and so what's transpired is the boats are getting unloaded, but what happens when it hits the rail? There's major congestion, major congestion in the sense that all of this equipment is now not positioned correctly, right? So you got all this inbound, you got all these trains moving stuff into inland the into the U.S. And they're like, "Hey, where where are the trains? We we need to put this stuff on trains and get this stuff moved inland." And they're not there. So the incredible influx into LA has been great. They're unloading the contain. They're unloading the ships. Everything's going well. If you're putting your container over the road, no problems. It's just that there's the steel wheels are not turning right, and it's causing a lot of congestion. So I've heard from some of the customers is like, "Hey, my stuff's in America, but I can't get access to it, and it's not moving. What's going on?" So that's not really. I guess it's an infrastructure deal, but you can't change infrastructure overnight. And so I think it's still going to be problematic for for a little while until everything kind of bleeds out, and the supply chain takes its next step in the journey of freight, my friend. So I don't know if you heard about that or have any take on it.
Pete Mento 7:52
I do, Doug. Doug, you and I are very pro rail. I think at the beginning of this show, we've always said positive things. And if I were, if I were president of the United States, boy, would that be interesting? But if I were president of the United States, I would do the unsexy thing, right? It's not sexy to build infrastructure. No one, no one gets excited about that, but it's necessary. I would be the president that rebuilt infrastructure. I would say we're going to have a 30-year plan to make America the the single greatest country in the world when it comes to logistics infrastructure. We're going to revamp ports. We're going to revamp railheads. We're going to revamp rail. We're going to sink lots of money into research and development on rail, into you know ocean-going vessels. We're going to get better at this again, because in the long run, that's an investment that pays off 20, thirtyfold when you have it. You actually do it right, instead of what we're doing now, it feels like we're just constantly repairing what's already there. And I'm a big believer that the intermodal part of our business is crucial, truly crucial.
Doug Draper 8:53
Yeah, yeah. I don't know if that's going to happen in the next two years, right? As far as pen to paper and saying here, here's what we're going to do, but you know we've talked about infrastructure, the crumbling infrastructure of the roads, or the lack of infrastructure related to to movement when we see these spikes. So, yeah, point well taken. Point well taken. All right, so that brings us to halftime, brought to us by Cap Logistics. We love those guys; they do a great job. Keenan is behind the scenes every week, and we appreciate him pulling levels and and turning buttons, pushing buttons. Anyway, this will be a fun halftime because it is, as I said in my text, a dichotomy of two worlds. Right, so I'm going to let you go first.
Pete Mento 9:40
There is a man who went to 3.3 movies a day for a whole year, and that came out to I think it was over 1,200 movies, right? And he broke the Guinness World Record for the most number of films seen in a day. I'm not talking the guy sat on his couch and watched flicks on Netflix and Amazon. No, no, no. He went to the theater. And watched over three movies a day for 365 days. And before anybody who's listening to this says, "Wow, what a waste! This sounds like the perfect year of retirement for me." I would go to the movies every day if I had the time. I would sit there and I would watch classic films. I would watch new stuff. I would watch art, experimental stuff. I would watch everything, and I am deeply jealous of this. I I know that I have friends that do triathlons. I have friends that climb mountains. You know, they do endurance running. My idea of an endurance sport is is sitting through you know both of the Pee Wee Herman films, followed by you know Ford Fairlane with with with Andrew Dice Clay going home writing my notes down about the films, Doug. This to me sounds like heaven. I know to you it sounds like hell, but to me it sounds like hell.
Doug Draper 10:50
Yeah, agreed. Meaning your take on me is sounds like hell. Hopefully this guy's retired and he's just he's like 90.
Speaker 1 11:00
He's like an old man. Okay, good.
Doug Draper 11:02
I can appreciate that. I was about to say, if if you said this guy's like 38 years old, I'd be like, oh my god, what is the world coming to? If there
Pete Mento 11:10
was a Guinness World Record that you could, you think you could challenge, what do you think it would be?
Doug Draper 11:15
Oh, jeez. Oh, I don't know. That's that's a big question that I can't think of off top my head right now. I don't know. What about you?
Pete Mento 11:25
The Guinness World Record for continuous stand up apparently is 26 hours. I would like to tell jokes for 27 hours. I think I have enough in here. I could do it.
Doug Draper 11:38
Yeah. All right. Good. That's a good answer. Well, Pete, as I said, my comment is completely opposite of that, and I saw this pop up on my feed. I think it was yesterday. Anyway, there's this guy named Carl Bushby from the UK that just finished a 30,000 mile walk across the world. Right, he started 30,000 miles, 75 million steps. It took him fricking 28 years to get this done. He started in I think in November of 1998, when he was 29 years old, and the dude just got home yesterday, or the November 1st, one of those two days. He's 57. He's been walking around for like 28 years. So I'm not going to go into the the details, but he started in Chile, basically went up all the way to Canada, cut over into to Russia, and then you know eventually worked his way across and ended up in in the UK. So this this is kind of cool. I was like, how did this guy cross the like the Bering Sea, right? So this dude he swam on his back, and it took him 30 days to cross, or it wasn't the the Bering Strait, which is the connection between Alaska and Russia. Yeah, he was on ice, so he walked on ice, and he had a guide with him, so he wasn't out there solo. Slept on the ice the whole nine yards, and then what was the other? The Caspian Crossing, the sea. That's where he was swimming, and he swam for 30 days. And a boat followed him, right? And he basically got out of the water at night and slept on the boat, but he got back in the water right in the same spot where he finished, and he swam, and he was on his back, and he had all this gear with him. It was crazy. He made money by odd jobs, speaking engagements, people donated, and it was kind of crazy. And then there was a point where 16 years ago, there's a film crew that followed him and helped pay for it. So there's going to be a documentary on this sometime in the near future. He basically just relied on strangers for food and shelter, and he had two rules that he followed. One was no motorized transportation to advance his journey was his exact words, and he wouldn't return home until he was finished, regardless of what happened in his family, whether it was an emergency, a death, anything like that. He literally did not come home for 28 years, and and he completed his journey on november 1. So, anyway, you got some 90-year-old dude watching films all day, and you got this young guy that started when he was 29 or 28. When he finished when he was 57. So those are about polar opposites, as as you can imagine. So, since you asked me a question, Pete, I'll ask you one. What would be the one part? Of that journey, that would be the most difficult for you.
Speaker 1 15:04
Oh, the walking, yeah.
Doug Draper 15:07
That's like 99% of the journey.
Pete Mento 15:11
No, I I love to walk, and when I was younger, I really did. I think for me, you know, this dude basically roamed the earth like Cain from Kung Fu for 30 years, and that's pretty awesome.
Speaker 1 15:23
Yeah,
Pete Mento 15:23
I think I think I would become pretty lonely and bored, not having enough human interaction. There had to be parts where he just walked for days. And I'm I'm a planner. I really like to have my life sorted out, my stuff sorted out. I think I'd have a hard time with the spontaneity of all, and I think that would drive me crazy. You know, where are we stopping tonight? Wherever we stop. Where are we going tomorrow? Wherever we go. No, no, no. I want an itinerary. Like we are going to hit the following things. That would drive me absolutely crazy, Doug.
Doug Draper 15:54
Yeah, agreed. And he pushed like like a gigantic shopping cart, for lack of a better term, right? So he pushed all of his crap. So he wasn't walking alone with a backpack. He was literally pushing all of his stuff. I don't know, man. That's insane. I don't know how anybody could do it, but what a feat! What an accomplishment! You got to give that guy a little bit of thumbs up.
Pete Mento 16:14
Absolutely.
Doug Draper 16:16
Yeah. All right. Let's get to the second half. Thank you, Cap Logistics, week in and week out, we appreciate you supporting the show. All right, Pete. Topic number two.
Pete Mento 16:24
Topic number two. Update on trade negotiations. So apparently things are moving super slow with Canada. We did get some good news this week on agriculture. It's being held up on cheese imports. If you can believe that, like this reduction is being held up by cheese imports into Canada. Things with Mexico are going extremely well, which I still can't get my head around. And with Australia, we're apparently making some headway as well on our expectations about agriculture and their expectations about agriculture. What's not going well, my friend? China, it's dead. It's still there's been no progress whatsoever, even with the forward trade, and a lot of that is because China is just going to wait it out. They're just going to wait it out, see what happens with these elections, wait it out, see what happens with the next president. They have absolutely no rush on them. Their economy, although failing, is finding ways to expand exports outside the United States, like a lot of other countries, and their intention is just to, you know, try to try to get the tie out of this by waiting out the the late rounds and not getting knocked out. So far, that strategy is working.
Doug Draper 17:33
Yeah, yeah, the Canadian thing and the whole dairy made a lot of headlines in the last handful of days, and and China, I think you got that 110% right. Right, zero interest. Let's hold it out. It's kind of their strategy over a long term. If you look at other negotiations, regardless of administration, and I think after the elections, it'll the gridlock that's going to happen. They're just going to sit tight and see what see what rolls out till the next president, and we'll keep kicking the can down the road. Right? Say, oh, we're just going to put a no additional tariffs and negotiations. We'll kick it out another six months, another six months, another six months. They just do that two more times, and there's no need to move until the next president comes into play, so I think you're spot on with with China. Yeah, it's interesting. The other two, you said Mexico, that's always been going pretty well. Canada, we kind of picked a war, you know, picked a war with those guys, and I think you'd mentioned Australia is kind of coming around. But precious metals are a topic on all of those, and rare earth metals. So, anyway, good. All right, but who bring us
Doug Draper 18:44
home? Yep, the FMCSA. Big problems. They have an enforcement type of challenge, right? You and I have spoke multiple times. You and I actually spoke at an event down in Fort Lauderdale years ago, related to fraud carriers, chameleon carriers, and just the explosion of freight fraud and theft, right? And so, what we've seen with the C.H. Robinsons, most recently, we spoke about, and all these carriers are saying, "Vet the government's saying, vet your carriers, make sure you're picking the right people, and double check your work to make sure your stuff doesn't get get stolen, for lack of a better term. And do the best job you can. Right? It's incredibly ambiguous. So there's been a pushback to say, okay, FMCSA, set the guideline, define the rules, so when we use our best judgment. We're not penalized with these nuclear verdicts that are coming out time and time again. But the problem is, FMCSA doesn't have a whole lot of people, right? The I think they have like 1,100 employees to regulate 8 million. Drivers, so it's one employee for every like 7000 trucking carriers out there, and so the challenge is: hey, you got to follow these rules. Use your best judgment, but if you don't use your best judgment, which is very ambiguous, you're going to get taken down. And so, it's such a huge topic. It's so important. It's disappointing that there's not this standard that's been defined. So you can benchmark and say we did what you said, therefore we are protected in this process, right? I mean, we're not regulating lemonade stands here, right? It's 80,000 pound missiles driving down the street and the roads of our highways to have safety on so many different levels that it's it's interesting to see the I don't use this word again the dichotomy to what what's happening here I don't know it it caught my attention because the assistance that is needed is just not there. They're understaffed. They're under supported. The technology isn't there, and there's just going to be this quagmire. And I don't think there's going to be a lot of movement on this in the near term.
Pete Mento 21:14
Yeah, Doug. In typical government fashion, a need was identified, a policy was created, and no thought about practical enforcement was put into it, and that has been the hallmark of of trade policy, trade enforcement, transportation enforcement. Probably going back 20 years, they they make a big splashy headline, and then over the course of the next five to 10 years, they'll figure out how they're actually going to enforce it. Somehow AI is going to get turned into this one way or the other, but even then, the The amount of people they have to enforce is far too many, given the amount of enforcement resources they have. Hit the nail on the head. Hit the nail on the head. This is just another great indication of a big splashy headline and a government not being ready yet to enforce the outcome.
Doug Draper 21:55
Yeah, yeah. I mean, that's just been what you just summed up as tariffs and your whole world, right? Let's just throw it out there, see what sticks, and we'll deal with it after the fact.
Pete Mento 22:05
Tariffs, maritime administration, practically anything with the FDA, fish and wildlife, CPSC list goes on and on. Everyone gets to feel real good about themselves about making a change, and then realizes how much of a mess that they've created with trying to enforce it. What are you going to do? I think ultimately the you know the trade will end up being on the right side of this because they'll have an opportunity to change some people's minds and show how much that should be put into it. Well, that's going to do it for us this week. Want to thank Keenan and the folks at Cap Logistics for their unwavering support. Thank my co-host Doug for always being there and putting up with my silliness, and thank all of you, the listeners and the watchers. Tell your friends, and like we always say, if it's happening in Global Trade, we'll be talking about it next week on Global Trade this week. Thanks, everybody. All
Doug Draper 22:51
right, travel safe, my friend.