Global Trade This Week – Episode 230
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Pete Mento 0:00
You're watching global trade this week with Pete mento and Doug Draper, Hello everyone, and welcome to another edition of global trade this week. I'm Pete mento. With me is my co host, Mr. Doug Draper, Doug, how are you buddy?
Doug Draper 0:16
Pete, it's great. I got a great week ahead for work. A lot of good prospects out there and some good meetings. So I'm excited about this week.
Pete Mento 0:26
Yeah, me too, buddy. I've got, I've got a big speaking event tomorrow here in Miami. I've got prep with the people tonight for it. It's, it's for a pretty big investment bank, so I don't want to screw that up. I was just telling Doug that I've got to wear a tie tomorrow, and we're not sure if I should worry about the knot, because, you know, you can't see anything underneath this beard of mine. But then on Wednesday, I am speaking at the South Carolina automotive summit for all the automotive manufacturers in the southeast, and that's one of my favorite things to speak at every year, just amazing importers and incredible companies, and then I'm heading to New Orleans. Doug. My Mardi Gras starts, I guess Thursday night, pretty late for me this year, I'm not going to be it's usually a couple of weeks of me being an idiot. But not this year. So I've got, I've got my ride on Saturday. For those of you who are, who are in New Orleans, I know some of you do listen, float 20 4b I'll be, I'll be on the neutral ground side and on the bottom row. And then we have our Endymion ball on Saturday night. We've got Gwen Stefani and Luke Bryant playing. I am excited to hear Gwen Stefani because I loved her when she was in no doubt, but I don't think I know a single Luke Bryant song. I'm sure, I'm sure I'll realize I do once I hear the music. And then Sunday in Lundy, Grah, and then I'm not staying for Fat Tuesday, Doug. It's kind of my new tradition. I don't, I don't stick around for the craziest day. I just don't have it in me anymore, buddy, I'll be back to work on Tuesday.
Doug Draper 1:58
Well, good for you. You're getting it's like when you spend a weekend with your buddies or go to a wedding. I'm like, first flight out on on Sunday morning. Just get the hell out of there. You may be feeling a little rough on that early morning flight, but I like your style before it turns really chaotic. Just get out of there. You got, you got a handful of days to enjoy.
Pete Mento 2:19
I don't know if you've got friends going to manifest in this industry?
Doug Draper 2:22
Manifest is pretty big. Oh yeah, tons, yeah.
Pete Mento 2:26
I tend to turn my phone off at around eight o'clock because everyone gets hammered in the lake. Have you seen Pete? Oh, let's call him, you know. And then, before you know it, I've never been to manifest. Have you gone?
Doug Draper 2:37
Doug, yeah, I went last year. Pretty, pretty good show. Here's my two you know, we, we don't have many filters here, right on this show, which is good. So manifest is amazing. You know, it started as a tech show, kind of like right after, you know, covid and the the log tech. So here's my two cents. This is just my two cents, right? Just, you have to spend a lot of money to get access to talk to the people you want to talk to. So think of it like bottle service in the back room, right? You got to rent the room. You have to pay a lot for the booze, but if you can do it, you're going to get access to a lot of people you need to communicate with. So a Joe Blow Mike like me walking the floor and saying hello to people is great, because there's lots of folks that I know there, but to really from a smaller company like myself to conduct any business, it would be half half happenstance, that's right word. But if you want to get it dialed in, there's big bucks going on with private dinners and things afterwards and parties and stuff. But I think that's just how trade shows are nowadays. You know, you need to, you need to pay to get access, and the access is where the big deals are taking place.
Pete Mento 3:46
You know, TPM doesn't feel that way. We got to pay to go. TPM is not cheap. It's big money. But once you're there, everyone's got free parties. And, you know, everyone's inviting you to this after event, and that after event, if you really put your time in, you'll meet a lot of amazing people there. I mean, face it, man, all the bcos are there, all the big, you know, contract owners, they're all, they're all going to be there, and they're big importers. So for me, it's an exhausting couple of days. Just try to meet with as many people as I can, and then I always leave like, you know, there were four people I really wanted to see and I I just couldn't. They didn't want to see me, which happens, right? Or I couldn't get an appointment with them, and I just feel like such a loser. It seems that happens every single year. Maybe I see him next year, or whatever, but it's when something gets that big, like manifest or even icpa, which is big for my industry. There's just so many people there, it's hard to get time with everyone, and I get it, but I don't know, man, it's we spend a lot of money on trade shows in this industry, a whole lot of money.
Doug Draper 4:47
Yeah, yeah. Anyway, maybe, maybe nobody's invited me to these things, and that's why I have that perspective on it. So anybody for next year, I'll go next year for sure. I guess it's where all the cool kids hang out on the first weekend after Super Bowl. Or the first week after Super Bowl.
Pete Mento 5:01
So is it? No, it's not in Vegas. Where's Super Bowl next year?
Doug Draper 5:06
I don't know. Oh no, no. I'm just saying that manifest. I went last year, and I caught the second half of the chiefs Eagles game in the hotel room. So yeah, anyway, it's always the Monday, Tuesday, I think Wednesday after Super Bowl weekend. It seems like that's when, yeah, so look at that. Manifest didn't even know they were getting a promo on the show. And there we go.
Pete Mento 5:31
They got lucky. Look at that. They can send us a check. You can make it out to get to cash and just send it to Doug and I, or Doug or I, and we'll work it out between the two. What you got for Doug this week? What's your first topic?
Doug Draper 5:43
All right? Well, TP, my first topics a little bit TPM, ish, and it's related to imports into the United States. I know 25 as a whole was a good year, but if you look at what transpired in the last quarter of 25 imports were down. You know, basically, companies were stocking up early with the uncertainty in April and what's happening this month or this week or this day related to tariffs, everybody kind of went a little crazy. Then they hit the brakes over the summer, and then they brought in what they needed to bring in for fourth quarter, which was, which was less. You know, the purchase orders were smaller because they still needed to control things. So anyway, the tail end of the of the the year was not good. Import traffic was down, and I don't see that changing at all in 2026, a couple things on that one, right? There's going to be soft ocean rates, right? It's going to be a buyer's market. We talked about that. But here's the thing, everybody's like, Oh, specific to ocean freight. Pete, we're dealing with the cartel. They're going to get their money, right? They're going to manipulate the system, the flow of goods. Like, hey, we're doing a lot of global trade, but we're doing it in this part of the world now. So sorry, the vessel that used to come to you three times a week is now only going to come once a week, and because of that, it's going to be a little bit more expensive. So I think the steamship lines, they're going to be okay. The spot market for the individual, I think, is going to be good versus the contract market. So Pete, you love this one. So the spot market is spelled s, p O T, and that concept is going to be tops in 2026 which is spot market spelled backwards, T O P S and S P O T. So what do you think of that one? So the spot market is going to rule. I can't wait until you get back from TPM to see what's going on. The last two things Pete is, I think near shoring. It's a lot of talk. It's been a lot of talk over the years. May sprinkled in some some sugar on top. But I wonder, are we going to start getting really serious in 26 or is there going to be political implications about trying to do the near sourcing? So that's something I think we need to look at and less inventory. I think companies are going to try to manage their supply chain with less, which inevitably, inevitably means more voluntary, more volatility. So last thing, if we're if you're a service provider, you know, like I am, and you have spent most of your time in your career, flexibility is going to win the day, right? How flexible you can be, because what's planned may not be reality. But more importantly, Pete, I was thinking like, how is that going to be rewarded in the future? And I don't think it will be at all, because business is about money. And you know, what have you done for me lately? So anyway, I think less inventory because of the tariff, uncertainty will continue into 2026 which means service providers are gonna have to be incredibly flexible to stand above the crowd and provide their value.
Pete Mento 8:50
Yeah, man, I don't disagree. You know, well, first of all, when you're on the chairlift, you just sit there and say, I gotta come up with an acronym for this. This is, that's when you think of this stuff, when you're getting ready to your Saturday runs.
Doug Draper 9:03
No, not on the chair left.
Pete Mento 9:06
Okay, all right. I was just assuming, you know, I was in a meeting one time where one of the importers was saying, I feel bad for the shipping companies and for the ocean carriers and what's going on right now. And I'm like, Don't you dare shed a tear form like you know, it's hard for me to feel bad for them. When they were they were really just gutting us during covid, gutting us. Don't forget that when they had all the leverage, they used it. They used it to the point where it was it was preposterous. And everyone was saying, I can't wait till it's my turn to stick it to them. I'm not seeing that, though I'm not really seeing people buying hard against it. I'm seeing them doing what you're talking about. They're they're leveraging against them by not signing their contracts and giving them the stability that we wanted back during covid. That seems to be the big difference right now. So I think TPM will be similar to that. I wanted to talk about your near showing comment. I think it's. A pretty good day to be a guy who brings trucks in for Mexico. I think if you're, if you're a company that is really focused on the Mexico us, south border trade, it's only going to keep getting better, because where we can't near shore or onshore, we're going to front shore, near shore. And Mexico still seems to be where the big winner in all of this. So, but that will, that will too affect ocean rates. You'd mentioned in the pre show notes, how the rest of the world seems to be getting a lot of this cargo, and that just means capacity is going in different directions and not towards the US. Maybe that's how the shipping companies find a way to tighten up those margins and make a little more money.
Doug Draper 10:39
All excellent points, for sure. All right, man, what's your first topic for this week?
Pete Mento 10:46
So you know, you wake up on a Saturday and you're feeling pretty good about things, and then the White House is saying there's no weekend for you fat boy, I don't think so. No, they drop a pair of executive orders, one of them about Iran and how they're going to start going after companies, possibly that are buying things from countries that do business with Iran. And the second was about India, which is really the one I want to talk about here. It would appear, from what was dropped last week, that the additional tariff that India was was paying that brought them up to 50% is going to be dropped. That's great news, but what they don't say is, when we're still waiting for a federal register notice and the CSMs. But I think it's very interesting play, both from the Indian side and the US side. It would effectively drop their tariff rate, I believe, to 18% with it decreasing over time, possibly, you know, down to zero. Who knows, but this is a great relief for people who had moved so much production into India. It did a lot of damage in the meantime. But really, what I want to ever to walk away from is, if there was any question that geopolitical policy is now being driven by trade decisions or vice versa, this was certainly a great indication of it. We were in a position as a country to try to hammer something out with India, which would have been great for American importers and wonderful for Indian exporters. We instead used it to make a point about geopolitical issues, mostly in Ukraine, and what India could do to help us solve that. And there's questions as to whether or not that was their problem to solve. That's how India feels. So is there enough oil around the world for India to buy now that they're not going to be buying it from Russia, I don't know the Venezuela issue. Do we have enough crude coming out of Venezuela? Is it the right type of crude to help to make up the difference for our friends in India? I don't know that either. But I don't believe in con and I don't believe in coincidences. So the fact that we are suddenly sitting on a giant pile of oil would certainly help what we're trying to do with India right now. And I would imagine that all this is predicated on them buying more energy from the United States.
Doug Draper 12:53
Yeah, well, the flat out answer to your question, in my opinion, is, yeah, there's plenty of oil to be purchased across the world. It's a matter of how expensive is it going to be and what's the cost to get it there, right? I checked before we jumped on that most of the oil that comes from Russia is through tankers, so it's not like the infrastructure is going to be overloaded. That was one thing I was thinking of. So the delivery means is going to be the same, regardless of where you're purchasing it, but that crude could be coming from a further, a farther distance, right? And obviously there's costs involved with that, so I'm not worried. You know, not me personally, but there's plenty of oil to be had, right? It's just going to be more expensive. It's like driving down the street, and like this gas station on the right has unleaded for 329 and this one over here has it for 349 what's the deal? Well, they're out, so I guess I got to go pay 349 so that's, that's kind of the gist. So there's plenty of oil to be had. It's going to be more expensive. And, oh gosh, by the way, there's a ton of it right outside of Venezuela that we now control. Imagine that will take us to halftime, buddy. All right. Well, obviously it's brought to us by CAP logistics. We wouldn't be sitting here with you right now without them and Keenan and their hard work, so please check them out at cap logistics.com so I'll keep mine short, because I kind of like yours. It's very topical, right? But here in Steamboat, there was an event this weekend called carnival, and I won't go into the whole history. It was gentleman named Carl howellson who came to Steamboat, and his big thing when he came here 100 and some odd years ago was to teach kids how to ski. And there is a ski jump steam out, literally downtown. It's probably a block and a half from where I work in my co working space. So there was a big festival and a carnival that started all kinds of stuff. So this weekend they put snow down on Main Street. They had ski joining where they were pulling kids on horses, classic Western. And then on Saturday they have all the kids are learning how to. Skiing. You know, the guys that are doing bumps, they put a neon lights on at night, and they'd ski down, and they do all these kind of stuff. And the one there's a lighted man, the two things Pete and I said I was going to keep this short. So lighted man is a tradition. This dude skis down with a backpack full of Roman candles, I'm not a backpack. It is so heavy that people have to put it on him, and he's skiing down the front of the hill, and they're cranking music, and he's got Roman candles blasting off his back, and there's a dude skiing maybe, like 20 yards behind him with a fire extinguisher in case this guy goes up. So it's kind of like, like, there's no real rules here. And then the last thing Pete is they have a ring of fire on one of the ski jumps. And some of the ski jumpers in ski patrol jump through a ring of fire down a ski jump. And then the last guy that goes, they put a sled like you would see if somebody got hurt on the mountain, and they put them on there and see them. They pack that thing full of hay, they light it on fire, and the dude jumps through the ring of fire with a sled full of fire behind him. And the crowd there was probably, I don't know, 4000 people down there at the base area going absolutely crazy. So that was my Saturday night enjoying some wonderful steamboat hospitality. So if anybody is ever wanting to come out the steamboat and doesn't want to deal with presidents or MLK weekend, that would be a great weekend to come up.
Pete Mento 16:28
Yeah, you might see one catch fire and die. I mean,
Doug Draper 16:33
exactly, exactly. So it was good. It was good. So anyway, I like yours pizza. Let's jump over yours. Yeah.
Pete Mento 16:41
So the the Super Bowl commercials, I wasn't real impressed with with many of them. I was downright upset with the Dunkin Donuts one. It made me, made me agitated, made me want to throw something at the television. And as a New Englander, Dunkin Donuts is very important to me, so I was, I was unsettled by that one. I thought for the most part, the commercials were not very entertaining, and for the amount of money that people paid for them, I think that that's a dying shame. But what I did notice was that most of the commercials were for weight loss, drugs, cryptocurrency and gambling. And that's an interesting perspective, because normally Super Bowl commercials are an excellent indicator of where investment is going and where money is going, if you've been watching the last couple of years. So where's the money going? Cryptocurrencies in the markets, gambling and weight loss, drugs. It was all right there in front of me, and it frustrated me and shocked me. It's a it's a pretty scary world right now. If you're an investor, much of the stock market is being propped up by crypto, which is a big part of data centers, data management and AI and weight loss, drugs as well, and gambling. I mean, it's the fastest growing sectors in our investment class. I don't know, Doug, it felt like like a harbinger of doom. Watching these commercials yesterday, I walked away from it feeling really uncomfortable.
Doug Draper 17:57
Man, yeah, yeah, there was, you're right. Just making that comment just now. Of those three categories, absolutely. I like the Duncan commercial I did, you know, there was a lot of celebrities in there. I'm like, wow, there's this thing is packed full. It made me laugh. It's great. I love the movie that they parodied and all the other folks. So I love the Duncan commercial that was one of my favorites, and then the one where it was the horse that raised an eagle. I don't remember that one. Bud Budweiser classic. I like that one, but yeah, your point, more importantly to this topic right now is those are the three big ones that came through. And you're like, Man, this is this. Is this who we are right now, society?
Pete Mento 18:41
Yeah, fat gamblers that want to that don't just gamble on sports, but on the economy at the same time. I think I just described myself as a matter of fact. Wow, good deal. All right, Doug, what's your next topic, buddy?
Doug Draper 18:55
All right, so mine is not 100% global trade related, but it's a it's a perspective that popped up. It's logistics related, which has global perspective. So Tiktok, right? Is going to they're taking a page out of the Amazon playbook, and I would say it would be like the 2000s playbook, right? So they officially announced last week that starting February 25 I believe, and by the end of March. So that's like 30 days you have to be compliant. Is that they are going to be controlling the shipping for us merchants, um, and they're going to have this thing called fulfillment by tick tock. Shocker, Fulfillment by Amazon, fulfillment by Tiktok. So basically, if you're if you're selling on Tiktok, Tiktok shop, send your stuff to their DCS. I know one's in LA. I don't know where the other ones are, to be honest with you, they'll do the fulfillment. And if you don't want to do that, that's cool, but you have to use our carriers. Right? So then you have to go in and download one of their labels, FedEx ups, or other type of carriers they use. So now they're going to control the transportation, or you can use something called Tiktok collect, which means they're using some consolidated service that they'll come in and pick it up. So they're trying to control the platform that you sell on, and they're trying to control the logistics and transportation around it. So, Mike, okay, well, how many people do you know that sell on tick tock shop? And how sophisticated are there are those sellers? So the statistics that I got from influencer marketing hub, right? Sometimes we don't reference where we found this stuff. But so most tick tock, they're like basic influencer base. They don't really have any understanding of it. They're the first time folks selling stuff online. And I kind of thought, I was thinking it's like Groupon meets six seven, where things come in so quickly and then, and then they're done, right? So it's not a very sophisticated market to horse your or tie your wagons to, so to speak, less control means there's going to be more cost. If I was somewhat of a sophisticated Tiktok seller, where do I put my inventory? Maybe these are concepts that people that sell on tick tock solely is is irrelevant, right? I know a lot of established brands that is one channel in which they sell their product, and maybe they'll pull back and say, You know what? We're just gonna wait till this thing shakes out. We're gonna pull back and no longer sell on tick tock until we kind of shake all this out. But my whole point is, tick tock seems to be morphing to the Amazon playbook. It's not the 2006 playbook of Amazon that we've talked about with their depth of services, but interesting to see how this impacts sellers. Oh, the last thing Pete, there's only about 275 active sellers on Tiktok shop. They have like a million people that have signed up. It's kind of like being a real estate agent in your neighborhood, right? There's 10,000 real estate agents, and there's like 1% that actually sell real estate. So I don't know how much of an impact it's going to be, but more importantly, the topic to follow is, what is Tiktok doing with their supply chain, their management and their demands, with how you interface with their platform?
Pete Mento 22:21
I been thinking a lot about this since I saw the show notes. So Doug, when you and I were kids, many, many years ago, the big day for us as far as television viewing was probably Saturday morning. Was it the same for you with cartoons? And on Saturday mornings, that is when most of the toy commercials were on as well, and things that were geared towards people of that age. And it was a decision made in the 70s. We're going to have them all here. This is going to be we can charge the most for it, because this is when the kids will see it. And the world has changed. It's 2026, now, and kids are really consuming most of their content on YouTube, Instagram, Tiktok. They're not watching television. So to me, this is just another way to vertically integrate the consumer to the brand name, but also control the rails, control the actual supply chain of how it gets to them. Tiktok is not just showing people what they want to buy. They're making it available to them, and in many ways, they're influencing what they want to buy. And this goes back to my halftime. Are these the end days? Is this a harbinger of the end days? I mean, the fact that content provider is incentivizing the content creator, and then the products available in its advertising are being controlled by the actual content provider, that is crazy. I watch stuff on Amazon, you know, on prime and now they have commercials because, you know, stick it to the man right. So now, in the middle of watching a TV show, I get a commercial, and in the bottom corner it'll say, Click here to order on your Amazon. They're they're that integrated. So in a person's downtime, we're being endlessly marketed to. And now they're saying, Hey, make it real easy for you to get it. And if you've got something and want to get it in front of people, in front of people's eyeballs, young people, at least, that's probably the most dynamic way to do it. So hats off to all these companies that are doing it. I just makes me, makes me lament for the days when the only time I was being marketed to was between Super Friends and Hannah Barbera
Doug Draper 24:20
and a bowl of trick cereal,
Pete Mento 24:23
yeah, man, oh, Fruit Loops or Apple Jacks. That was my favorite.
Doug Draper 24:25
All right. All good, all good. All right, my friend bring us home. Last topic of the show.
Pete Mento 24:32
Oh, this is a tough one. So I've been auditing a lot in 30 something years of being a customs guy. And what? 2519 96 so 30 years of being a custom sales broker, I really didn't spend large amounts of time past 15 years auditing. It wasn't something I did. A lot of other people were doing that, but I've been auditing a lot and reviewing entries. I just I'm seeing so many. Mistakes, and the mistakes that I'm seeing are due to broker error. So the brokers have been in an awful situation going back to last April where the information they were putting into entries was being put into a free form data point they were having to come up with the information that information was changing constantly. And now that I'm reviewing how it was done, I'm finding it was done incorrectly. A lot most importers don't bother to audit their entries, and many of them don't understand what's going on in there. I think it's extremely important, as we're waiting to find out what goes on with IEEPA, that we begin to first of all, keep our brokers honest by auditing them as well. They're auditing themselves. We need to audit them as well, and then also realize that these are the reasons that customs will deny a refund if they find mistakes in the entry, then you could end up paying pretty big fines and other issues down the road. So it's never been more important, because there's so much money on the line, start auditing those entries. Folks, brokers do make mistakes.
Doug Draper 26:01
Yeah, it'll be it'll be interesting. I was thinking that it's like, you need to hire a consultant, right? I mean, I would say the vast majority of the brokers 99.9% right. For my opinion, from what I've seen in my freight boarding days, good people, hard work, and they're doing the right thing, right? But this to peel the onion back, this is a consulting gig, right, not classifying and pushing entries and dealing with the nuances of an established process, right? This is interpreting vaguely written documents that were issued really quickly, that are incredibly open to interpretation and not understanding the nuances of what that means, the repercussions if you interpret incorrectly, or how you could go down one road, because the the ruling is somewhat vague, but you think this is the direction, and then the next day It changes. So if you're a big importer, and, you know, there's a lot tied around to it. You need to get somebody beyond, in my opinion, beyond just your entry, enter her your broker, and turn this into a consulting gig, because there are incredible nuances and interpretations that could create a lot of problems.
Pete Mento 27:19
I want to thank you for that unrequested plug dot mento at Baker, tilly.com No, I don't disagree. They're so complicated that the refund process, if we get to have one, is going to be rough. But beyond all of that, I just think it's time that importers begin to realize they're responsible for what a broker puts in that entry. And I think for a lot of them, I believe for a lot of them, they're about to learn that they put a little too much faith into some of these brokers. And it's everybody I haven't gone through a major broker yet where I haven't found some sort of a IEEPA related mistake that in an audit, when customs audits them, when they get their focused assessment, it's going to come back to bite them.
Doug Draper 28:00
Yeah, interesting. Well, we shall see Pete That wraps up our show for this week. Good luck tomorrow with with your activities down there in Miami Beach. And that's it for the show. What? So I got distracted. There was a crazy bird that just flew out my window and hit it. So I apologize, Pete, if it's happening in global trade every single week, we're going to be talking about it right here on the show. We can't thank our listeners enough for participating. Please comment. Give us your feedback on these topics. If you have topics that you want us to cover, kick them over there and in LinkedIn and the places where this is hosted. And thanks for listening to us again on global trade this week, Pete, we'll catch you next week.
Unknown Speaker 28:44
See you buddy next week. All right, take care, everybody you you.
Transcribed by https://otter.ai