Global Trade This Week – February 23rd, 2023
What’s going on in Global Trade this Week? Today Doug Draper of Inland Star Distribution and Trade Geek Pete Mento of Mento LLC cover:
2:27 -TPM in Long Beach This Week
8:10 -Greenwashing of the Supply Chain
13:00 -Halftime
17:57 -Air Freight Wait Times are Bananas
22:14 -FMSCA Proposed Changes to "Emergency" Declarations
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Keenan Brugh 0:00
You're watching Global Trade This Week with Pete Mento and Doug Draper.
Doug Draper 0:09
All right, 321 global trade this week is coming at you. We want to thank you for listening and being part of our show. I am one of your hosts, Doug Draper, a man in Denver, Colorado and my partner in crime. who just came back from a lovely stint in New Orleans is recuperating. Lovely in the great state of New Hampshire. Mr. Pete mento. What's up, buddy?
Pete Mento 0:34
I don't know where the hell I am, Doug. I think we should just be fair to everybody watching today. But I've often wondered how to people on on TV on Fox and stuff. They just get them like, Hey, everybody, it's 3am. And we're the guys on CNN or BBC or whatever. I think it's because you probably go to bed at like, four in the afternoon. But I just got back from Mardi Gras. And I'm tired. And I'm tired. Because I'm old. And I think it's, I think it's okay for me to own that, buddy. Yeah. So
Doug Draper 1:03
Well, I would say that that painting behind you over your right shoulder of people are dancing. And then one guy's flat on his back and the other guy's squinting. That's the evolution of you in the course of your time in New Orleans.
Pete Mento 1:15
You can laugh pow. But that is that is generally accurate. I I got down there. And we had one night to ourselves before, you know, her youngest son showed up and we had fun but we didn't do anything nuts. I went out with a buddy of mine I played rugby with and you know, there's this stupid decision where you're like, hey, let's let's start doing shots. A Jager. And you're like, Yeah, that sounds like a perfectly reasonable decision to make. And then you know, you're arguing with the hotel security, because you can't remember what flow your hotel rooms on getting into fistfights people just trying to sell a general idea. Not at all. And then you know, you don't sleep in late because you got all kinds of stuff. You got to be at things you got to do. And it just stays on top of itself. So when I was even just 40 just you know, 40 This is a walk in the park. Now the park walks on me. So it's just kind of how it is man.
Doug Draper 2:15
Yeah, yeah. Perpetual. All right. Well, that being said, we have a couple or a couple of each. So four good topics to hammer through. So let's get this party started. Pete, why don't you jump in?
Pete Mento 2:27
Yeah, speaking of out of town parties, so the biggest out of town party for? I guess I'd say the ocean side of our industry is happening right now. beautiful, pristine, pristine, just gorgeous. Long Beach, California. And I'm starting to wonder why they still do it in Long Beach. Because you know, the East Coast has all the freight and I'm done. So shouldn't we shouldn't we do this somewhere in New Jersey? Like should they all be in Hoboken? At this point. But TPM is this week, it's brought to us by the wonderful people Journal of Commerce who do an incredible job aggregating all that information. But what's what's bumming me out is I didn't go this year. And I love going to TPM. Because it it's the rumor mill Powell, it's every little thing that you hear about it's who's doing what, who's positioning themselves Did you hear so and so was talking to someone this CEO side of the CEO, I'm telling you, right now someone's gonna someone's buying them, you know, it's, it's just, it's like a, like a seventh grade lunch room for four or five days filled, just alcohol fueled stupidity, on top of it, and I know, that's probably not going to be very, very, very popular with our good friends to JLC. But let's just call it what it is. If you get 1000s of people in logistics industry together, in an area surrounded by bars, going to be a bit of drinking dog, it's just kind of how it works. So, you know, I'm wondering what kind of things we're going to hear at a TPM this year. One thing is, I think we're gonna hear that the rates, the, the ocean carriers are beginning to break away from one another, on maintaining certain costs. I think we're gonna hear that first. I think that's probably the first and most likely thing here, I think, second of all, the mad rush for merge, mergers and acquisitions, has greatly slowed down. And I think that what I would love to have seen was the kind of partying we saw at TPM. Last year, when everybody was just rolling in cash. I don't think we're gonna see it this year as it'll still be there. But, you know, freight forwarders, taking entire roof bars and, and you know, hiring like, I think someone hired to shorter someone or Snoop Dogg or whatever, I don't know. It's just not going to happen this year, as shareholders are going to be a little bit more observant about what's going on with these logistics firms. So I cannot wait to actually just put something on LinkedIn. That said, as you start to hear rumors, please let us all know. And that's just where I'm at. Now. I'm fired up to hear more about TPM.
Doug Draper 4:55
Yeah. Yeah, it's interesting because like you said, it's one extreme last Yeah, it was just, you know, parties left and right. And, and lots of money. And, and it was crazy. You know, I was thinking that this year, just in general, you know, the whole concept of negotiating the ocean freight, the one thing that the craziness of the last two and a half years with the supply chain is COVID exploited the volatility. You know, I talked about how COVID was an accelerator for different things we've talked, we've all heard about that. But I think that it was it was an accelerator of how volatile the ocean freight business can be, and how dramatic the pricing fluctuations are. And it's almost I think it's been my take is the baseline has been set. And we're going to see more maybe not quite as wild swings, from what we saw on the pandemic, with the cost of ocean containers coming into west coast. But I don't think it's going to be ever as stable as it used to be, it's going to be more like playing, you know, the stock market a little bit more, and you as a purchaser of the services, not you peach specifically, but just as a purchaser, you got to really almost think of this, as you know, Tom, you know, Tony to shoes, or somebody some traders in the pit, that need to have their act together and really understand that this is, you know, no pun intended, an ocean that never stops moving, the complexity of the cost and the structures of how that happens. And just the nuances of how the economy and the global trade network can just exasperate these the these fees and these charges. So I would agree with you, I could see, we saw skyrocketing charges for containers last year, I can see something similar on the complete opposite in the spectrum, to the point where it's like, what, I can't even believe that that that just happened. So my point in this one fee is I think the volatility is here to stay. And you need to know how to play the game, or you're gonna get burned, probably more so than ever
Pete Mento 7:03
agreed wholeheartedly. Friend of mine, who's from Boston, I was talking to earlier a different conversation altogether about this. And he said, Everyone rode this big, massive wave, you know, it's just come crashing in. And you didn't have to work that hard. Just all that momentum just made money for everyone. But then when that wave goes back, what happens? It's like, all the little birds come in and start picking it the water until the wave comes back again, it's like, the crabs will come out and try to find a piece of fish that was left on the shore. It's gonna be like that, again. There's global trade is at a point now where yes, the volumes are growing. But a lot of that volume is captured. So people who are trying to get what's left, it's going to be pretty ugly. fighting one another to try to get some of that volume. But but like I said, I gotta feel next week, we'll be talking about rumors out of Long Beach. That might be number one on Pete's list. So we'll see about that. But I'm just excited to hear what comes out of it. Out there, everybody. Careful? Yeah. At your age.
Doug Draper 8:05
Yeah, not your shoe size. So, Pete, here's mine. We're shifting the beauty of the show is that our topics are so just different. It really allows a broad audience to jump in. So mine that caught my attention the other day, I can't remember what I was reading. But it was related to greenwashing. And it greenwashing in the supply chain in general and greenwashing basically involves, you know, making an N substantiated claim of how your E S and G approach or things that you're doing are benefiting the environment. And in actuality, you may be spending more money promoting it and actually doing it. So I think that there is quite a bit as me personal. I think there are companies out there that are doing an excellent job of embracing SMG, which is important in the supply chain from point A to point B. And I think there's a lot of companies that are just kind of throwing up a big spotlight and trying to tell a good story, and may not be really doing a whole lot, but will be other than drawing a lot of attention to their efforts. So I think the greenwashing is happening a little bit as we speak right now, but you know, it's gonna, it's gonna get, it'll shake itself out, you know. So greenwashing examples, Pete and then I'll kind of wrap this one up. You remember when VW had the whole cheating emission standards and when they said that diesel was was I forget that the emissions were phenomenal and it was impacting and helping out. And that was kind of a bust and then when I was doing research on that, I didn't realize this one but the McDonald's paper straws that they hyped up couldn't even be recycled because of the type of paper it was. Was wouldn't break down correctly. So that was kind of unintentional. I'm sure McDonald's want to do the right thing, but didn't really think that one through. So here's the deal. ESG is becoming more commonplace. As vendors and services, our vendors and service providers, and companies are requiring it, demanding it. And I think some of the providers will continue to spin for a while. But eventually it's all based on numbers and statistics, and what are you doing to improve, you know, your your carbon footprint. So it'll all shake out eventually, you know, the carbon footprint is very quantifiable, if that's what you want to go at how much solar you use, and how many offsets there are. So there's kind of some fuzzy math going on out there. And I think that there may be some bad press that the supply chain is getting related to their green initiatives. But we'll all shake out, give it another year. And, and people will validate the numbers and go from there, and you will see some honest to goodness, companies engaging and doing the right thing for our environment and moving forward. But my point in this one, Pete, is it's kind of this gray area, and what's called this, you know, ESG, and we're doing the right thing, but maybe we aren't, but let's just promote it anyway. All that will shake out in the next year, and we'll really see who the players are in this industry that support, you know, sustainability within our industry.
Pete Mento 11:16
Well, yeah, but I'll be very frank, when I say greenwashing of our industry, I had to take a minute and really think about thinking through, you know, I had to you got me on that one, I had to do a little research to understand the term. But once I reading it, and you know, you've done an excellent job of pointing out that it's just too easy to let's just let's just call shape statistics. In order to give you the outcome that you want, in this particular area, there is no international standard. There's no international standard. So a great thing that we're already being warned about is companies who are going to claim that their carbon footprint is being worked on and doing better, because they're not moving as much truckload ocean and air freight. Well, of course, you're not, your volumes are half of what they were a year ago. So you can't claim that that's your company, doing incredible things for the environment, when in reality, it's just your businesses now. So I'm very weary of any claims like that. The second thing that I'm going to add along to that is any little thing now make someone look like a hero. In the supply chain, any little any little tiny thing that we do to green it up, it's about consumption, man. It's about consumption. It's about the piles and piles of worthless, important crap that all of us just feel the need to consume. And until that model changes, this is kind of a pointless exercise. The problem is consumption. It's not how much fuel we push through the supply chain. It's a fact the supply chain has to back up and cover all of this consumption. And that's scary. But
Doug Draper 12:54
yeah, yeah. All right. Well, that brings us to halftime, as our audience knows, it's brought to this whole show brought to you not only Kenan who's pushing the buttons up at 10,000 feet today, up in the mountains of Breckenridge, Colorado, but cap logistics, we wouldn't be here talking to you without their support. So visit cap logistics.com for your supply chain and transportation needs. Pete, this isn't my favorite time because we can just talk about whatever the heck we want. So
Pete Mento 13:24
you start you start. So we haven't we have a new airport in New Orleans, right. And I woke up and I, I'm going through the news in the morning. And one of the news stories that said to me is some somebody tried to get through New Orleans airport, I think it was on Sunday, or Saturday, Saturday, with a fully loaded ar 15 and 162 rounds of ammunition and the carry on. Not like hey, hey, I'm gonna check this and take it boar hunting none enough. Somebody said, You know what I'm gonna do with my gun. I'm gonna go through TSA with it. And I'm gonna put it in the overhead bin. Because that seems like the smart thing to do. And then you get to that airport. And there are pictures everywhere of guns that TSA has found in people's carry on. And the amount of guns and hammers and knives and you name it and you know, I mean, honest to God, weaponry, that people find the bags because someone just forgot is alarming. So I've got pretty old weak mind, buddy, but I've never forgotten where I happen to have a gun. Now watch me forget, but I've never forgotten you know that I had a gun in my laptop bag. But my God, man. Just stupid. Just stupid.
Doug Draper 14:40
Yeah, yeah. Well, I think I heard or I don't think I did hear that 2022 That. TSA confiscated the most guns ever, which it's either fright. So here's the deal. There are guns getting through. There are people on airplanes that have gone through TSA that have a weapon in the cabin of an airplane gear. And to
Pete Mento 15:01
somebody that screening you're absolutely right.
Doug Draper 15:04
Yeah, not so. Anyway. So my Yeah, yeah, for sure. So I was trying to think of a funny title, you know how I like to come up with these things. But so this one is says, balloon smashing is not just a G thing p, and A G thing means a government thing. So I read that there was this art show in Miami over the weekend, super high society art that you and I would look at and be like, how much did that guy get paid to throw paint on a wall? Well, there is this gentleman that created an exhibit of a balloon dog. It was like a 15 foot dog made of balloons. And it was valued at $42,000. And you know what happened? A patron touched the balloon, it broke into 1000s of pieces, and was completely demolished. So it turns out that that piece of art had insurance on it. So I think they're going to be an okay shape. And here's the better thing is this artist makes balloon dogs all over the world. And oh, by the way, balloon dog, that's the name of our new band that we can start. But here's the good news. There's one less balloon dog in the world. So really, the value of all balloon dogs across across this guy's portfolio have just increased in value. So so maybe smashing a balloon dog piece of artwork is a good thing. At least that's what the government tells us.
Pete Mento 16:36
So now you started a conspiracy theory that this guy did all this in order to get the insurance money, satisfied with yourself. I gotta talk more about spy balloons. I put something up on LinkedIn a couple of days ago, an entire government server an entire government server that held all the applications for anyone trying to get in the military for like the past five years. All the emails were so calm to the DoD was all completely open. Completely open, no password to it. And it took somebody in depressed to point that out to the Department of Defense. So you don't have to put a balloon over us. You can just look into our emails to figure stuff out. Ya know? Talk about you know, the what's going to happen is this this Halloween, there's going to be people go as Chinese spy balloons.
Doug Draper 17:22
If you're right, yeah, it You're right. I don't know if it'll be too far down. Because Halloween, what is that? That's still like, eight months
Pete Mento 17:30
away. It's a while now. But still, you'd laugh be like, Oh, I get it. You're turning spiraling. Oh, look, another one. Okay, this isn't fun anymore. There's night out. You know, it's like all the people saw in New Orleans, their costume was being dressed as George Santos. That was funny, like the first half the time I saw it. And I just say I'm just a lazy costume guy. Go post something smarter you knucklehead?
Doug Draper 17:50
Yeah. Yeah, for sure. All right, who's that? You are me,
Pete Mento 17:54
me. I'm up. My mom read a couple of great articles this morning about how wait times and delivery times from the time the aircraft lands at US airports, until it's made available continued to go up. And they They speculated on a bunch of different reasons. One was lack of people, you know, it's it's not easy to find luggage handlers, baggage handlers, cargo handlers. That was a big part of it. And the second is that you've just got so much volume, going through places where people weren't trained, and that the technology has not kept up with cargo volumes. So that was really interesting. So I started deep diving on this and start to really, you know, think even more about it. This is a great example of what is right and what is wrong with cooperation in international logistics and give you a great example of that. Your cargo is managed and handled by the carrier. And there is very little that's done about data sharing across air carriers. And there's very little done about sharing the load and the work. So you and I dug great example of cooperation at the New Orleans, Louis Armstrong airport, right? You show up or any airport pretty much doesn't matter who we're flying on. We all go through the same security, same security line, and it's managed by the government or by local contractors. Doesn't matter who it is. If you go to Dulles Airport, because that thing was pretty sure designed by somebody on peyote, you go from gate to gate by these huge trams that are like up in the air. It's absolutely ridiculous, right? But it's operated by the airport to go from carrier to carrier, and they all share the cost moving their people around. But when it comes to cargo, for the most part, that's the last thing anybody wants to do. There isn't. There's not a lot of of trust amongst the carriers, because let's face it, there's money to be made by sticking it to one of the other ones, and having better infrastructure supposedly, is going to make you better off than other people. A great bad example of this would be London Heathrow Airport, which has yet to really overcome All the great automation and expensive automation that went into cargo operations, that still, you know, just for BA and nobody else. It's just absolutely nuts. It's bananas, how poorly operated that thing is. But there are other air carriers outside of BA who do just fine in other parts of the airport, because they're not beholden to that particular type of cargo machinations. It's just a great example of how cooperation could do so much for us how infrastructure ailing old infrastructure is breaking down, and how we should probably be able to come up with some way to use better technology and better processes built on working with one another, rather than trying to make it some secret sauce for the white carrier.
Doug Draper 20:40
Yeah, well, the two things there that jumped out at me is one we've talked about, it's a microcosm of connectors, right? Our logistics and supply chain has a lot of little pieces that need to collect together. And if you're an integrated service provider, like FedEx, UPS, and, and others, you can control that technology a little bit easier. But whenever you have all these different components at the airport, does that guy worked for the airline? Does he work for the airport? Is it a third party contractor? It's so just just disconnected. Yeah, having technology to overlay it. So there's clear visibility, it is a challenge. And the other thing, which is just more, I don't know if a seasonal but just happen is that with all of the craziness with the airlines over the holidays and and delays that makes national news. And that means that they're going to prioritize humans, baggage, you know, my suitcase that has my present from my grandmother, and it's going to get priority over, you know, a box, it's in the back and easy to get to a hospital that nobody's going to hear about if it doesn't make it their time. Both are very important. I'm not trying to diminish one or the other. But the news media has dominated, you know, the baggage handling. And I think this is my personal opinion I've been flying more recently than I have in the past is that, make sure my bag gets out and I can pick it up on the carousel ASAP. And so that's where the focus has been on the on the ground so to speak.
Pete Mento 22:07
We can't forget male to dog. You know, that's a it always takes takes priority. All right. Take us home, buddy.
Doug Draper 22:17
All right. So I wanted to know, so I was just trying to come up with funny saying so the FMS see a, I think it's finally starting to take an approach that's not like Oprah, The Oprah Winfrey Show, whenever she says you get a car and you get a car and you get a car. Seems like there was a time where the FM SCA was throwing out waivers to hours of service, like Oprah Chuck's out cars in her into her audience. But there's some proposed changes, right? It's out there, which I pretty much agree with all of them, one of which is redefining the term emergency, right? So this whole thing is like when can can the FM F MSCA be able to designate an emergency to pull hours of service? Because I've made a comment before and it says rules are important to follow until they're no longer convenient. And so they're redefining what the term of emergency means. And one of the big ones is it doesn't apply to economic conditions naturally caused by market fluctuations, right? It's going to be defined more as direct assistance, which I don't know the wording sounds a little less catastrophic, direct assistance versus emergency. Who knows. The one thing that is interesting to me is that if the Feds declare a direct assistance requirement where hours of service can be extended, that's for a duration of 30 days. But if a governor does it, it only extends for five days. Now, mostly governors are doing it from for catastrophic floods, fires, hurricanes, earthquakes, things of that nature. And five days doesn't really do it because the aid is needed after the event is over. And, and that can take weeks. Right. So I think it's a little bit naive to say, well, the state is now five days the government's now 30 days. So it's interesting. So I applaud the FM SCA for taking a changing their Oprah Winfrey approach to throwing out hours of service waivers. Except for that five day one, I think they need to revisit that or empower the states to be able to extend those longer than five days. But anyway, I like it. And I applaud him for for making those proposed changes.
Pete Mento 24:45
So Doug, this was one of the few instances that I could point to post pandemic or someone look at how looked at how things were during the pandemic and said we can do so much better. And we need to look at the the rules and the self imposed restrictions that we have on ourselves and say, Is this really the right direction for us? And a lot and a lot of it, as you said, was based on the fact that COVID was such a hammer blow to, to our industry, and the truckers and all the rest of it. I couldn't come up with really any other place in logistics where they've codified anything, put it in regulation, you know, change something specific. This may be the only one. So that being said, I, I applaud a golfclap decision. And I think that maybe their cousins and other federal regulatory agencies should take a look at this and say, What can we do, as a bit of self analysis to say, We can do this better than next time problems come? Because we're better set up to react to it, we're better set up to deal with it before becomes a bigger problem. So gotta give him credit. They've done something pretty important right here, and hopefully it sets the tone for other agencies.
Doug Draper 25:53
Yeah. Great. Great.
Pete Mento 25:57
Well, that's gonna do it for us on this post Mardi Gras. Pete clearly needs a nap edition of global trade this week, brought to you as always by our good friends at global trade, account logistics. And we thank them again, not only for their financial support, but for constantly supporting us with this show. Please tell your friends. Please subscribe. We are both on podcasts and on YouTube now. So you there's really no excuse not to just really embrace the Doug and Pete experience. And thank you as always to Keenan back in the booth conditioning is here eating Gorp we love kid and we we love all you too. And we'll see you again, another great edition of gold trade this week. Thanks, doc. That's right. That's right.
Doug Draper 26:37
Thanks, Pete. Take care everybody.