Global Trade This Week – Episode 223
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Keenan Brugh 0:00
You're watching global trade this week with Pete mento and Doug Draper.
Doug Draper 0:07
Hello everyone, and welcome to a holiday edition of global trade this week. I am one of your hosts. My name is Doug Draper, and our my partner in crime is tied up on another continent right now, and so we have Keenan, the man pushing the buttons behind the scene, joining us today. Keenan, I see that both of us have jackets on today. So this is going to be an amazing show. How are you doing? Doing?
Keenan Brugh 0:36
Well, it is the the Christmas season, and we are here celebrating with our attire. Happy to fill in. I hope Pete's okay. You know, London is one of those countries where we should be on good terms, but you never know with those British folks. So hopefully he's having a good time at dinner or show or something, and not anything. Caught up with the bobbies, as they call them. I believe
Doug Draper 1:00
I've never heard that term before. Caught up with the what the
Keenan Brugh 1:03
Bobby is. It's the British slang for police.
Doug Draper 1:07
Okay, good, all right, hopefully he's staying out of trouble. I'm writing that one down. That's awesome. Good. Well, we have a tight schedule. It seems like we've had tight schedules the last couple of weeks, but tight schedule or not, we're always here for our listeners, and we're talking gold trade, so why don't you just jump into it? Keenan, we'll get started with you.
Keenan Brugh 1:30
Yeah, sounds good. Well, speaking of the other continent, not necessarily the UK, but the EU is updating its carbon border tax. So they're realizing they're having some challenges with some of the implementation, whether it's fairness for their own manufacturers amid global trade such as you know, I saw other news this week, within the last week of Volkswagen shutting down its first plant operation ever. It's one of the ones they've had for a long time. And I think that's kind of related to this story of the challenges of trying to have more environmentally friendly regulations, which we know EU is often early on in making new regulations. It seems like in this case, they're learning some lessons from the red tape, and it's not quite working the way they had hoped. So they're trying to maybe streamline it a little bit, make it a little bit more fair, a little bit of taking care of manufacturers and customers in the EU while also advancing their sustainability goals. So always interesting to see. You know, sometimes what happens over in Europe sometimes goes to other countries, and so I'll definitely be keeping an eye on how they are managing the costs and the local industries, with automobiles as one example, but the overall balance of fair trade, along with general goals and sustainability,
Doug Draper 2:55
yeah, yeah, yeah. I briefly saw that one as well Keenan, and it is of note, but I'm not sure what that means for you know, the day to day blocking and tackling of supply chain logistics and global trade. Other than to your point, they always seem to be a leader with environmental regulations and and, like you said, absolutely things transition over here to North America, they're kind of the leader in that aspect of it. So the Volkswagen plant shutting down, I know that that'll be a surprise to lots. I think they said it was the first time in 88 years, or the only time, yep, this has ever transpired, which is something to take note of, for sure.
Keenan Brugh 3:41
Absolutely, yeah. What happens in auto could be symbolic of other industries as well.
Doug Draper 3:47
Yeah, yeah, for sure. Well, speaking of symbolic for other industries, I'm going to jump into my topic straight away, a name that you're probably familiar with, Brad Jacobs. He was the brain trust behind XPO and GX O and rxo and everything else, he is going to step aside in the leadership roles in those companies and really focus on QX O. I jump back a little bit on why this thing is important. So Brad Jacobs came in, started XPO grew by acquisition, grew this thing to a powerhouse, LTL brand, and then he just peeled it apart, right? I'm not a, don't pretend to be an economist, but the gist of it, from my perspective, is he built this, you know, multi billion dollar entity, and then he killed it off. He made money in the acquisitions, and he made money in the when he divested all of those. So, you know, you got XBO, which is pure LTL. You got the gxo, which is contract warehousing, and then rxo is freight forwarding on asset based entity of it. And his new venture is qxo, which, if you. Don't know that it is building products distribution, right? And he has had an amazing run prior to XPO, right, which was united waste systems, which he rolled up waste haulers and then sold it off to USA waste, right? So, kind of an unsexy industry. He did the same thing with United rentals. I didn't know that one, but it's the largest rental equipment company, I believe, in the entire world, right? So, again, kind of mundane businesses that are not very glamorous in cocktail party discussions, but he's doing the same for building products. The thing that I caught my attention, specific to the topic of the show, is, is he going to spin off? So my take is, he's going big. He's going to buy bigger entities, and then as that network starts to develop, he's going to backfill it in with smaller regional players, right to try to develop footprint. The question is, all of those people and all of those companies have their own assets. They're making final mile deliveries in the metro areas. You've seen companies around ABC material is a big one in Denver, and so they all have fleets. They all have their own trucks. So the question is, is he going to keep those assets like an XPO play, or is he going to sell them off and divest kind of in an rxo type of play? So it'll be interesting to see. But the bottom line on this one Keenan is that this guy knows what he's doing. It seems like whatever he has a vision of in non sexy industries, for lack of a better term, seems to have success, so I think it's important to make it have some awareness here on the show this week to say that qxo, if you haven't heard of that, take notice, because you're going to see a lot of acquisitions in the upcoming year, and it'll be interesting to see how he evolves that organization, and how similar it may Be to his other acquisitions with with United waste, United rentals, and then XPO. So I don't know if you've heard of qxo, or were aware of this new venture that Brad Jacobs was involved with.
Keenan Brugh 7:15
So definitely have been aware of XPO and rxo. I did not know about the qxo kind of supply business. Really interesting points you brought up. So I'm glad you brought this story about money inefficiencies to be made, both on the merging and acquisition, strategic acquisition of different regional players, competitors, whatever it is, make some of those economies of scale, type gains or synergies, even if they are different companies, perhaps they're still working with the LTL and other transport business that they have, besides the warehousing or locally storing of the building supplies where they need to be. So definitely one to keep an eye on. To your point. When someone has a track record like that and they're making some interesting moves, it's good to pay attention. So I was not aware of that, but I will be following that from now on. You also mentioned the boring industries. There's definitely good economic opportunity in the boring industries, though it is interesting to see that it's not a blue ocean. There are many other competitors within supply. So it'll be interesting to see what they all do, in addition to merging and acquiring other companies, of how they're going to add value to that already pretty, I don't want to say crowded space, but there's other players in there, so they'll, they'll have to be doing something new. So it'll be interesting to watch.
Doug Draper 8:35
Yeah, yeah. You'll see how the industry grows with housing and you know, people using building materials, right? Is that going to be a northeast trajectory, as far as on the growth line, so to speak? And will he have difficulty? Will he get into bidding wars with companies that he's trying to acquire, or folks that's going to say, hey, the market's not that strong, and this is a good exit strategy, so it'll be interesting to see how that economic impact has with his acquisition strategy. Crazy good. All right. Well, since you are with the organization Keenan, you can't hype your own company on this show. So I will do that for you as we roll into halftime, obviously it's brought to us. Keenan, thank you very much for you your organization to put the show on the air every single week. And we're excited about, I think this is going to be like episode 222, something like that. So divide by 52 and we've been running this thing for for about four years. You guys are pivotal in making that happen. So thank you very much.
Keenan Brugh 9:44
My pleasure. Let's go ahead and jump into it. So a little bit of the holiday type topic, but it is also still focused on global trade. My halftime news is that the forecast for global trade for 2025 is. Is on track to hit a record of $35 trillion so that's a growth of 7% despite all the geopolitical tensions, higher costs, disruptions between on individual supply chains. It does kind of show and point to resilient flows overall, that the supply and demand, all the businesses, all the professionals, even the consumers, will get creative and find ways and so new rules. Things are changing, you know, uncertainty, but at the same time, there's been growth. So I guess it's a metaphor for Santa bringing presence all around the world. It looks like it's a record 35 trillion for the global trade forecast for 2025 crazy.
Doug Draper 10:46
That's absolutely crazy with all you know, it's kind of like people are so in the moment, right? I refer to it as looking 15 feet in front of you or 50 feet ahead of you. And I think all of the press and the things that we see day in and day out are just 15 feet and taking a step back to understand what's going on on the long term, at least long term, meaning one year, you got to take that 50 foot perspective to get a real understanding of what you just said. Pretty crazy. Pretty crazy. All right, so I'm going, this is, I'm going to pose a question to you, Keenan, this is related to gift cards, right? So it's in the holiday season. To your point, you know, bringing gifts and the whole not My take is, what are your thoughts on gift cards as Christmas presents and holiday gifts? I should say, are they appropriate? Are they inappropriate? Are there is there a place for them? I have my take on it that I'll share with you real quick, but I want your take first gift cards or no gift cards or holiday gifts.
Keenan Brugh 11:54
If someone gave me a gift card, I would not be offended or disappointed. It is not something I usually go to unless someone has specifically asked, you know, like, that's more so, like, with a young family, hey, we need some DoorDash or whatever. Then, then, like, absolutely otherwise, it's not usually something I reach for, but I'm always happy to get it. However, I will say there have definitely been gift cards given to me that I never use and so it's one of those. I wonder, what percentage of you know restaurant meals or things just never get used, either, because it doesn't, I don't know. I don't go to that restaurant, or the car gets lost, things like that. But overall, I think they can be good, especially if it's like either with an intention of, hey, I know you guys have been looking to go out for a date, here's dinner, or let's all do a group Top Golf thing, absolutely, especially if it's a good experience. I think sometimes they get a critique. For one, yeah, maybe they don't get used. Or two, if they're a little generic, like, Hey, I got you a Starbucks gift card or something, you know, are you going to think of that person? I don't know. I don't get them, but I'm never upset when I get them. What are the takes? I haven't really been hearing discussions online, or what are your personal opinions on the matter?
Doug Draper 13:09
Yeah, well, you know me, I'm kind of like Debbie downer on this. I'm anti gift card in some aspects. Okay, so to me, a gift card is more of a thank you that comes in a handwritten note that you open up and it says, Oh, they thought of me. Here's a 15, $20 $10 gift card to Starbucks. But to have it genuine, like a family member to a family member or somebody that there's a personal connection to, I think it's lazy, right? And especially if you don't even have a gift card put in an envelope or have something genuine to write, and you just get an E gift card like, Hey, you're you are so important to me, Keenan, that I filled out a form online and sent it to you online. There you go. Smoke up, Johnny, right? I mean, come on, I'm not a big fan of that. You gotta you can't do it a holiday gift from a corporation, possibly, I could see that. But as far as a peer to peer, I think it's a little bit lazy, but if you're going to do it, make sure it includes a handwritten gift card. I think they're more appropriate for thank yous, not necessarily for gifts. And so I'm kind of on the opposite spectrum as you so I'm kind of the Debbie Downer guy on gift cards, even though they're pretty easy to give. I don't think they're appropriate with somebody that you're close to and you want to have a genuine expression as Yeah,
Keenan Brugh 14:30
you bring up great points. I think that it does make more sense for a thank you type of deal. But yeah, good, good insights. Often for gifts, it's less about the money spent and more about the thoughtfulness. Of you mentioned this, and I wanted to think about that so there could be some thoughtfulness connections or thinking of you type gifts that involved a gift card. But I think yeah, for the most part, if it's just a random company to a random person, it doesn't feel as intimate as something that maybe. Even cost as much, but was a little bit more custom,
Doug Draper 15:03
yeah, yeah. And then people get pissed off on the amount. What do you mean? I'm only worth $10 this is, this is bull, you know. So anyway, there's the fun. That's the holiday halftime for everybody. And again, I want to thank you, Keenan and cap logistics for supporting the show caplogistics.com go ahead and check them out. So all right, my brother, I'll let you go with your second topic.
Keenan Brugh 15:27
Yeah, let's kick it off. So for Topic number two, it was a newer topic to me. I mean, kind of filling in here for Pete. It was a little bit of an impromptu but I love learning things, whether it's from you guys or in a quick research session beforehand, but the UN adopted a groundbreaking convention on flexible, multimodal trade. And so apparently this has been three years in the works, negotiations led by United Nations Citral, C, i, t, r, a, l, and so it's supposed to make a little bit more common rules of financing, routing, selling, disruptions, extreme weather, geopolitical issues. You know, in the past, things like inco terms are done by the International Commercial Chamber of Commerce, and so it's other more industry led groups coming up with these frameworks. It'll be interesting to see what benefits or what costs are being imposed from the UN as a non governmental, sort of governmental body of different nations. So I don't know if you had heard of this. This was something that was a little bit below the radar. I know they're always working on stuff, but I hadn't really heard of this negotiation sometimes, you know the big trade deals in the past, you know, Trans Pacific Partnership, there's reporting on every stage of the negotiations. I hadn't really been hearing about this until now. It looks like it's adopted. So it's suddenly kind of a catch up, where they just passed the supporting resolution on December 15. So just recently, I guess they're going to be signing it in 2026 but since it's been kind of adopted, I think we're now needing to learn what is it that they passed, and how will this help us with, you know, optimistically, maybe some common terms or common rules that can allow companies, people and countries to work within similar frameworks, reduce some of the unnecessary emails back and forth or different jurisdictional issues in this region, but not this region and yeah, also interested to see what they have in mind for tariffs and extreme weather and other geopolitical issues. So I don't know if you had heard about this, but it's something that we may want to learn about. Yeah, I
Doug Draper 17:39
had not heard of it, but when you started talking, I was just thinking, are these guidelines, or are these mandates that are like auditable, for lack of a better term, and does that mean there's going to be more oversight and more layers and more more, more, which could just impact trade? It would seem to me that there is enough regulation and guidelines and things of that nature to help the trade right? Let it, let it. Let global trade happen freely, right? And is this another guideline that somebody says, I'm not really interested in it and I'm not going to follow it, or are they going to be penalized or held accountable with some sort of financial penalty or disincentive to not follow so I'd not heard of it, but literally within 10 seconds after you started saying that, that's what came to mind. Are these guidelines, is it auditable? And you know, is it going to impede free trade, or is it going to be just overlooked? I don't, I don't know. That would be the question that I would have
Keenan Brugh 18:53
open to insights from any of the listeners, or we can grab Pete's perspective if he knows more and has heard more within DC or within any of his customers or friend colleague conversations. But in quickly skimming, it doesn't seem to be a large amount of regulations. It seems to be more of a proposed document framework to make less pieces of paper necessary to facilitate global trade, ideally making it easier for some countries who have had trouble getting into important export markets, kind of smoothing the way with more common documentation. So we'll see if it starts out for free, and then once people start using it, it changes. But it seems to be more of a guideline so far. So that's kind of how I'm interpreting it, as opposed to different types of regulations that are being imposed. So if there's some gains to be had by standardization, you know, as a physical example, we've all seen the gains had by containerization of standard type of containers that can move from one mode of transportation to another. I think this is. Supposed to be sort of a standardization next generation of documentation to make it a little easier for multimodal type transportation with the documentation side. So definitely, would defer to Pete and or some of our listeners, but that's something that seems to be newly agreed upon, and I'm interested in learning more.
Doug Draper 20:19
Yeah, yeah. Good one. Good one. All right, I'm going to bring it home and talk about everybody's favorite company during the holidays, and that is Amazon, right? I know that Amazon air cargo, as you know they have maybe 10 years ago, they started handling some of their own air cargo, which was really groundbreaking back then. And then, like, a year ago, ish, they started selling that to the open market, where you as a freight forwarder or whomever, could book cargo on there, and they would move it on your behalf, right? The traditional model, the the one thing that was just rolled out that caught my attention, and then there's a subset to that. Number one is that to try to generate some business, I would assume, is that they are offering a money back guarantee if Amazon air cargo decides to move your shipment. Right. So what does that mean? They had indicated that there is a $10,000 refund per flight, right? So, yes, there's a refund, it's per flight. And the way that I read this Keenan is that it's kind of like general average insurance on a vessel and an ocean container, right? So if there are, and I'm just using this for easy math, right, if there's 10,000 customers on the airline, on the air, on the airplane and there's delay, then every customer will get $1 right? So it's not 10,000 per shipment, it's 10,000 per flight. It's still enough where people are going to be like, hey, what? What's that all about? So as far as, like, exclusions, or things of that nature, I didn't get into that. I didn't see anything written about it. Written about it. But this is for us and Puerto Rico customers, and you have to be new, and it's only guaranteed for a year. So the incentive is, hey, sign up with us. Let's move your cargo and exchange for that a $10,000 per flight guarantee for one year. So it'll certainly drive some interest. And go from there. The other piece, which I thought was even more interesting, is that they're also launching like a self service, digital booking and visibility platform, for lack of a better term, where they're pushing control to the end user, right? So you could log on and say how much space is available on this plane that's leaving on this date, basically check out their schedule and see the capacity of those planes, and then you can book it now. The one piece, and I would encourage our listeners to provide some feedback on this, is I'm not sure if booking directly like you and I had something that we wanted to to ship right what type of nuances, compliance or licenses would we need as individuals to make that happen, where you would bypass a freight forwarder, right? If you do have to use a freight forwarder to make that booking, those tools are beneficial as well. But I think the key thing here is that they've created a self service platform that you can go in and check out availability, and kind of kind of go from there. So they're pushing control further down to the individual user, which I think is pretty interesting. So money back, guarantee. And if you want to go online like anything else and just book your own cargo, there's an option for that. So interesting to see how that plays out, if they'll see a huge spike in their in their in their in their business, but it's worthy to take note. That's why I wanted to bring it on the show.
Keenan Brugh 23:50
Absolutely anytime a large players making new moves, and it kind of seems like they're trying to use this new digital platform to kind of fill in some of the other empty space, so trying to make better use of the assets they currently own or are currently partnered with. But it seems like this is kind of hand in hand also with trying to scale for next year, so that'll be interesting to see with some of the talk about certain software demand for areas. But it seems like they're trying to expand their partnerships with reading, sun, country, airlines and different things. And so they're both trying to grow their capacity and then fill up the capacity, so could pay off for them if there is higher than expected demand. But yeah, things are softer. We'll see if the digitalization is enough to get and is it for end users, or is it more for like, three PL type forwarders to use that cargo space. And then that 10,000 sounds nice, but yeah, I guess you have to read the details. Is it 10,000 per flight, per customer, or is that for all the customers on the on the flight? Then all of a sudden, 10,000 doesn't seem as high, but it does get people talking about it or paying attention to their new offer.
Doug Draper 25:00
It's, yeah, yeah, yeah, the way, because that was a big question for me to Keenan, I believe it's 10,000 per flight. So any type of payout for that guarantee would be disseminated to all the, all the cargo that's on that, on that plane. So should be interesting. You know, they started, you know, Amazon, they started selling books. Then they became the world's largest marketplace, and they're evolving into a logistics company, right? And obviously that's not rocket science or anything, any epiphany or whatever. That's been the transition over the course of the last probably 10 years, when they started getting into the airline. So they are just continuing to expand their offerings that they've created internally to sell the open market. So they are absolutely a dominant player in the logistics field.
Keenan Brugh 25:48
And again, another interesting aspect of watching them Amazon from the get go with the famous Jeff Bezos letter to investors there, they've always been investing for the long term value. So unlike a lot of other large publicly traded stocks and capital pools, they may be trying to make these strategic moves now, gain market share, get customers onboarded with longer terms in mind than a lot of publicly traded players, which have more pressure on profit or earnings per share on a quarter to quarter basis. So definitely like seeing what long term minded players have in minds.
Doug Draper 26:25
Yeah, yeah. They definitely have the 50 feet ahead of you mindset. So anyway, well, that's it. Keenan, thanks for filling in. I know, literally, it was like five minutes Pete was planning to be on the show. Then he's like, I can't make it and and you filled in, you know, five minutes before the show. So I appreciate it. You always do a fabulous job. You always keep the Mojo moving forward. And again, can't thank you enough and cap logistics for making this thing happen. So Happy Holidays. I hope everybody enjoys. I don't believe we're going to be doing a show next week, but we'll be back in the new year, got some great topics, some great ideas, and we look forward to sharing global trade to all of our listeners, once again in 2026 so Keenan, happy holidays, my friend. Thank you so much.
Keenan Brugh 27:13
Merry Christmas. Happy New Year. Thanks all. Take care. You. Thank.
Transcribed by https://otter.ai