Global Trade This Week – Episode 234
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Keenan Brugh 0:00
You're watching global trade this week with Pete mento and Doug Draper,
Pete Mento 0:07
Hello everyone, and welcome to Global Trade this week. I'm Pete mento calling calling in from my helmet studded office in beautiful Virginia, and with me is my co host, Mr. Doug Draper, who appears to not be in California. Am I correct? You are correct?
Doug Draper 0:23
Yes, I'm in the great city of Steamboat Springs, Colorado.
Pete Mento 0:27
Excellent, excellent. Well, we've, we've got a fun show this week. We got some great topics and a fun halftime. So Doug, why don't you kick us off, buddy? All right.
Doug Draper 0:36
Well, you know, we always try to say, we try to not be political in this thing, but in this day and age, it is gosh darn hard, right? So we'll just say geopolitical instability, right? That's kind of the new buzz word. That's not a chat GPT term, that's a Doug Draper term, right? But I was thinking with the little bit of chaos and the Strait of homoos and the things that are happening the Suez Canal and the Panama Canal is that Panama is not geopolitical instability, but that is helping the steamship line industry right now, in the sense that it is helping to control the overcapacity problem that is about to hit in the next couple of years. And what I mean by that is that coming out of covid Right? With everybody consuming things that they didn't need, I love the terms that you use. Pete is buying stuff with the money they don't have for stuff that they don't need. The steamship industry and whole went and procured a whole bunch of new assets, right? New vessels, and those are starting to come online now that that a surge of volume that was the predicated it back in covid is has waned, right? So you had all this, this capacity coming into market. What's that going to do for rates? Is it going to be a buyer's market versus a seller's market, all that kind of stuff. Well, insert geopolitical instability, ie straits that are being closed, and that reflects vessels being not moving, vessels having to do longer transit and to keep the schedule and the flow, right? You need more vessels, and so just the uncertainty and the instability, what's happening on happening across the globe nowadays, all of this capacity that was coming into market that was going to turn it into a buyer's market related to rates, is now maybe it's a short term fix, right? But the longer the ships have to sail around Africa instead of go through the Suez Canal or straight Hormuz, it's helping delay kind of this looming over supply crisis right now. Is it a blip? Probably, but it's an interesting point that I was thinking about just in the last week, is that there was this over capacity that's coming to market, and oh my gosh, geopolitical instability is is helping the steamship lines without having to manage crisis pricing to make sure Things are moving forward. I'm not explaining this well, Pete, I'm trying to put this together, but hopefully that makes sense. I don't know if you have any comments on it, plenty.
Pete Mento 3:29
I don't know where the term originated, but never let a good crisis go to waste, right? And the steamship lines sure are good at making sure that they don't. And when you're in a situation like they are now, where volumes are down, it just makes sense to monetize your struggle, and that's what they're doing. And you know, you talk about steaming, longer steaming price of Bunker is going to probably go up. We have a, we have a, you know, crisis in the Straits of Hormuz, which means it's going to probably mess with the bunker costs. We'll take advantage of that too. They're not idiots, you know. So my hat is off to them. My hat is off to them. Doug, they have found yet another way to turn everyone else's misery into cash. Hate the game. Don't hate the player, buddy. They've done it again.
Doug Draper 4:14
Yeah, exactly. I love it. Very succinct comment to end that one. So, good deal. All right, what you got?
Pete Mento 4:22
Well, you know what I got, right? We got to talk about tariffs. So the the CIT and customs continue their internal struggle over how we're going to give this money back. And Customs has said, well, we'll build a system that attaches to ace. We're going to call it K, and it will allow for the upload of CSV files. We'll review them. We'll make sure the information is correct, and then we'll, we'll, we'll, we'll process refunds when the entry actually liquidates, but we reserve the right to review everything so much like with drawback, we're expected that they're probably going to check maybe two out of every 10 entries after the fact to make sure that the claim was actually valid and. Brugh, well, this doesn't answer the bigger problem from a labor perspective, which is protests. So using cape to do things that haven't liquidated yet, great. It's still wrought with opportunities for failure. What about protests? Roughly half of the entries that are currently available for refund are in the protest period, which is only 180 days. So every day that we wait, they could fall out of the protest period. And if that's the case, they'd have to go to court. You'd have to join the suit and go to court. Customs wants it this way, because the commissioner wants it this way, because the head of DHS wants it this way, and their boss, the president, wants it this way. So there's a very real problem here that we could end up seeing a significant number of these refund opportunities fall into litigation, which is not good, man, it could take three to five years before we see that money come back, and it's gonna be a whole lot of work. So I haven't heard anything from anyone saying that customs is looking for way to make this easier. I'm just hearing they're just looking for a way to make the ones that are hard even harder.
Doug Draper 5:58
Yeah, the cape thing. When I started diving into that. I mean, it's like, okay, the government saw a problem, and they're doing the best they can to expedite the process and make it as simple as possible. But, but to your point, that's kind of like window dressing to some degree, and the easy ones will get cleaned up. It's kind of like a 1040 easy form, right? Hey, it's super it's good. We could do this. I just did my taxes this weekend, and the 1040 easy, it's no problem. Well, when you start getting to the nuances of things, and when you start talking about, you know, big refunds and everything else, then it just gets sucked back into the process, which is not refined. It's still the old blocking and tackling that you're used to, and so on surface, when I first read it, I'm like, Cape, cool. All right. Everybody's trying to do the right thing. Make it easier to to get this illegal tax money back. But to your point, the big guys, the big money, the protests, there's smart people out there that are working for these companies that outlaid or, you know, that paid millions of dollars in taxes. Those are the ones are going to get caught up. And to your point, litigation seems to be the solution for everything nowadays, and then that's just more lawyers making money and more delays in the the end result, when people were like, Hey, I'm, when do I get my check?
Pete Mento 7:22
Why can't I have it now?
Doug Draper 7:24
Yeah, yeah, yeah. So it'll be, it'll be interesting to see.
Pete Mento 7:31
All right, you go and bring us into halftime, buddy,
Doug Draper 7:33
yeah, yeah. It's brought to us by CAP logistics, as we know, we wouldn't be here without them and Keenan and the support of that, that organization. So check out cap logistics.com. Pete, why don't you go first on your halftime my friend,
Unknown Speaker 7:48
okay, so
Pete Mento 7:50
I gotta pull it up. That's why I'm not looking up right now. There is a show that I listen to on NPR practically every week called Wait, wait,
Unknown Speaker 7:58
don't tell me. You ever listen to it?
Doug Draper 8:00
Doug, would you say, wait, wait, don't tell me, wait, wait, don't tell me. Yeah, it's on Saturdays, isn't it?
Pete Mento 8:05
Yep. So I usually listen to it on Sunday after I drop my daughter back off at school. And one of the great things that they do is they have a they have a segment where they have each of the three co hosts tell a new story. Two of them are fake. One of them is real,
Unknown Speaker 8:23
all right, so I thought it would be fun for you and I
Pete Mento 8:27
play that game. So it's spot the new the real news story. And you ready to go? So I'm gonna give you three. Yep, you gotta tell me which one is real, do it? So the first news story is a gentleman in North Dakota woke up one morning to find a bear in his car. The bear in the car had trashed it from the inside. When the people came to get the bear out of the car, jumped out of the car into the man's house and ruined his house as well. When all was said and done, the bear did approximately $30,000 of damage between the car
Speaker 1 9:03
and the house. So we're calling that bear story
Pete Mento 9:09
number two. Recently, a flight from Dubai to JFK had to be diverted because a member of the passengers that was in coach had gas so bad that it was impossible for the people in that section of the aircraft to breathe. It was so revolting, so disgusting. So we're going to call that one emergency gas passing.
Speaker 1 9:32
You're you're still good? Yeah, I'm following you of
Pete Mento 9:35
those two. Which one do you think is
Doug Draper 9:36
real so far? Oh, I thought you're going to do a third. I am I think the airline. The airline is fake. I can see the bear thing that seems very realistic to me. So the airline is the fake story.
Pete Mento 9:50
Third scientists believe that they have found a way to keep humans alive practically forever by using the gene sequence of a particular whale in the Arctic. I. According to them, they would be able to inject this into human beings, probably at birth, and they can let us live as long as 2000 years. So we've got whale of a whale of a tail. We have emergency gas passing, and we have the bear story. Which one do you think is correct?
Doug Draper 10:19
Yeah, that the guy. That third one seems kind of hokey, but I'm still going to go with the gas pass on the airline.
Pete Mento 10:28
You're incorrect, although that has happened in the past, it has not happened recently. In the news, scientists have discovered a particular gene sequence in a particular type of oil that they believe that they can give to human beings that will allow us to live as 2000 years REAL science, not just science fiction. I'm sorry, Doug, you don't win today's quiz, you will not be able to pick mine or or keenan's voice on your answering machine as your prize.
Speaker 1 10:52
Better luck next time. Yeah, all right, yeah.
Doug Draper 10:56
I like that. I like that. Good deal. Well, mine is related, because I'm the only one in this show that happens to give you know what about Saint Patty's Day? And that's the day that we're taping. This is I'm wearing green, my friend, right? My wife went to school today with a shamrock shake shirt. Says, do the shamrock shake, and it's got a picture of grimace doing some sort of dance, which, which is great. So I had to throw on some green and wanted to talk a little bit about Saint Patty's Day. So a couple of fun facts about Saint Patrick's Day, right? So I'm going to read these as well to make sure I don't say them incorrectly. So originally, Saint Patty's Day. And you may know some of this stuff, right, because you're the Boston there's big, big Saint Patty's Day Irish contingency out there. But it was originally a religious fest, festival day, and going in pubs was illegal. Pubs were closed, wow, until the 1970s when drunken Americans kind of entered themselves into the picture and turned it into a booze fest. But initially it was a religious holiday, and pubs were actually closed, St Patrick's. So that was the first one. The second one, St Patrick was actually British, if you knew that, he was kidnapped by Irish pirates, he escaped, and then he came back as a missionary to Ireland. And so Saint Patty was British, not Irish. The original color for St Patrick's Day, Pete was blue, wasn't green, and it was later changed. And I don't know what later means, like a year later, a decade later, but it got flipped the green for Irish pride and the Shamrock. And the first st Patty's Day Parade was actually in New York City in 19, excuse me, 1762, and it was Irish soldiers who were serving in the British Army that wanted to march in solidarity through the streets of New York City, and the last one here, Pete is, do you know how many million pints of Guinness, Dear God, are consumed today across the world?
Unknown Speaker 13:17
I can't even begin to venture guess.
Doug Draper 13:21
It's not as it's not as much as I would have thought. 13 million pints of Guinness is consumed today, and they and the the information I saw is that's double from what is normally consumed in an average day.
Unknown Speaker 13:34
Damn. Wow. Yeah,
Pete Mento 13:37
I got to go. One year I was in Dublin on St Patrick's Day, and what's difficult for me Doug is I don't drink during Lent so I've never gotten wasted on St Patrick's Day. But it was not what at all, what I expected. It's I'm used to Boston, which, you know, when anyone says to me, I'm going to Boston for St Patrick's Day, I say, here's some quick advice. Okay, keep your hands in front of you. Tuck your elbows in. Okay, don't get mixed up in a clinch and just a lot of jabs, because St Patrick's Day in Boston is just the largest collection of core meaning people out getting boozed up for the most part, and I can already hear my friends back home. No, it's a it's an absolute shame you say something like that Pete all the age years. It's a celebration of No, it is not. There are very few people who are Irish or Irish heritage out that day. It is everybody. It is the entire city of Boston on a rump spring, just going nuts, right? So I don't have a lot of love for the day of celebration of St Patrick's Ireland. It wasn't like that, like people went to church in the morning. Yeah, there were parades, but and there was celebration, but it wasn't the the embarrassing situation that say Boston, New York or Chicago. Chicago's got a great one too. Are, you know, you mentioned that that St Patrick was British, which is true, but he was born in Roman controlled Brittany at the time. So there is, there's an argument to be made that he was, in fact, Italian, and. If you're from a town like New York, Chicago or Boston, you know that the Irish and the Italians don't necessarily get along. We love pointing that out. And then, of course, you know the whole Did he really drive all the snakes out of Ireland?
Doug Draper 15:11
That's, I don't know, hell. Don't even think there's snakes in Ireland. Are there?
Pete Mento 15:17
We've never seen one. Yeah. Ireland is absolutely, like, just breathtakingly beautiful country. And I, I've spent a lot of time there. I love it there. I've yet to see a snake. I don't think I've ever met anyone who's seen a snake, but you don't need an excuse like St Patrick's Day to go and get a load on. In Ireland, you just walk in any pub on a random Monday, they'll oblige you. It's a very fun place to go hang out and wonderful, wonderful, wonderful people. So yeah, got me got me thinking, I need to go back soon. Doug, Happy St Patrick's Day. For those of you who celebrate, you've taken Columbus Day away from my people, both sides, by the way, the Indians and the Italians, both sides of my genealogy. So I got nothing there. But days like this were important. Doug, they were important, because in those big cities, these were marginalized groups. The Irish were really beaten on there was a time in this country when people who are Irish, there were signs in front of places that said, No, Irish Need Apply, and that's very real. And they were, they were treated as second class citizens. So something like Columbus Day, certainly something like St Patrick's Day is a remembrance of how far they've come and the incredible heritage of Irish Americans in this country and what they've done Italian Americans. And it's why things like, in my opinion, the Pride Parade, is so important. Yes, the attitudes towards people who have that type of a lifestyle has changed dramatically, but we should never forget where it came from. So whether you're any of those groups, I congratulate you on your parades and your day. I hope you enjoy every second of it. I will do anything but get in the car tonight. So this in New Year's Eve or amateur night, right? Just get an Uber kids. Don't get behind the wheel. Yeah.
Doug Draper 16:56
Well, I didn't expect your commentary to be that, to go that that direction. So it was very heartfelt.
Pete Mento 17:03
Are you? Are you of Irish heritage? Doug is Draper an Irish name?
Doug Draper 17:07
You know it's No, I don't think so. I'm not. I don't know a whole lot about my lineage.
Pete Mento 17:12
So well today, everybody's Irish a little bit, right? And that's exactly right. Enjoy the day. Shamrock shake. Now, it's all I can think about.
Doug Draper 17:23
Doug had one of those. Yeah, they are good. They're good, all right, brother, that was half time cap logistics.com. Check them out. We appreciate their support every single week. So absolutely, yeah, yeah, alright, I'm going to jump in, man, so we can end this thing on the right cadence. But I was never a big insurance guy, and never really got the concept of why it's so important. But holy cow. Yeah, holy cow is insurance come to the forefront of
Pete Mento 17:52
I gotta tell you, when I saw this is one of your topics, I got excited about this, and they need to
Doug Draper 18:00
Yeah, no, it's, it's crazy. It's, you know, it's, you got the insurance for the vessel, like I got my car insurance, right? And, holy cow, is that paramount, right now, right? What happens with the VOC? The vessel gets hit. Things are happening. You got to insure the physical property, right? And then you got the cargo insurance that's on the vessel, right? Like, oh my god, I have, you know, I'm not talking just fuel that's made the news recently, but what happens with my stuff if the vessel gets destroyed or delayed? What if I miss a purchase order deadline? Right? There's in the straight right now. There's a lot of vessels that have fuel and and petrochemicals on there. But you know what? There's a lot of stuff that has shirts and consumables and things that you and I want to purchase that's just sitting idle. What's going on? Right? You kidding me? If you didn't have insurance for that stuff or insurance against your business loss, you're in major trouble, right? So, longer routes. So talking about insurance, longer routes that are coming that increases exposure, it's like, hey, if I'm going to drive my car and I drive five miles to work every day, or I drive 35 miles to work every day, your insurance rates are going to change if you're honest about how much you drive your car, right? So the exposure of longer routes, for steamship lines, more insurance. Geopolitical nature of everything is now influencing the freight rates. It's changing how ships are deployed and where they're moving, and insurance and maritime insurance is really affecting the price simultaneously with the fuel, the insurance and all those kind of things. It is crazy. The impact that insurance is having, not necessarily right now, because people are like, Oh my God, I didn't even realize. You know, they. They think the carrier is, you know, oh, the carrier's got it. I'm covered the whole night. You need to look at your contracts. You need to assess your your supply chain strategy, where you're sourcing from, what is the route the vessel is taking, and what is your exposure for true loss of product or loss of contracts. It's a big deal. And so just like the steamship lines are making sure they're beneficial with the chaos, I bet, if you're an insurance guy or insurance gal, and you know what you're doing, you're going to have a pretty good year, because people need insurance, and it's going to be more and more and more expensive. Yeah, it's a big factor that people need to look at and really understand, versus, like, ah, you know what? The freight forwarders got it covered and everything else, you need to open your eyes and really understand what's going on with your cargo and how it's being transported.
Pete Mento 20:57
Look at it from the perspective of the carrier,
Unknown Speaker 21:01
right? So the
Pete Mento 21:03
carrier probably just had like, hundreds of percent increases to their operating insurance on their vessel in a time when they're already struggling to make money. And then consider the the mariners that are on that vessel, right? We have to ensure their safety, so now that insurance on them has gone up dramatically. And then there are the the fees for being in a dangerous zone that knocks it up. On top of that, there's a video out there. I maybe Keenan can find it, but it was done. I saw it on YouTube about how insurance might win the war in Iran from both perspectives. One of them was, you know, Iranian oil is here. Come get it, bring it to China or Russia. But we can't get ships to go in there, because either they can't get the insurance, it's being blockaded by the US Navy, whatever the case may be. So now we can't move the oil out, which really cuts off their lifeline financially. Or it could be how Iran wins the war by saying we can't get through the streets of Hormuz. It's causing all this additional cost in the time of already terrible inflationary pressures. It's bad on both sides. So, you know this idea of the US paying for premiums so that vessels can go through and then keeping them safe with the US Navy? That's not a real cheap way to manage it, but it might be the way that they go. This is a big, big, big deal, you know, and it brings back to the forefront risk. It's a scary world out there when you're talking about ships and moving cargo. And I don't think people really put that into their calculus when they consider a supply
Unknown Speaker 22:31
chain, yeah. Well,
Doug Draper 22:32
hopefully they'll listen to this show and realize it needs to take a serious look at it, get some professionals in there and and see what your exposure is.
Speaker 1 22:40
Great, great topic and timely. I'm not seeing enough about it in the news.
Pete Mento 22:47
My last one is a bit uplifting for me. These are rare. I am generally Dr Doom on the show. I'm the one that talks about all the negativity. I'm not today. If you are a trade professional in 2026 and you have some experience. You're dealing with customs, you're dealing with duties protests, if you've been an entry writer, even there are an unbelievable number of jobs in the marketplace, good jobs with good stable companies who are looking for people to get in there and help them to manage this issue, this crisis, of either limiting their tariff exposure or getting their money back while establishing a more compliant workplace. And the names of the companies are incredible. There isn't a day that goes by on LinkedIn where I'm not putting up a couple of companies that are hiring either mid level or high level leaders for their company to address trade compliance and duty recovery. It's a great time to be involved in this business, and honestly, Doug, I don't see the opportunity going away for quite some time, as these tariffs linger, and as the opportunity to use that language and monetize that experience, you've got to try to help a company out. So for people that are listening, the folks that are struggling day in and day out, it could be a better job out there. For you might want to look and for people who love the industry but are looking for maybe a way to pivot into something a little more stable, maybe a little more profitable. I think it might be time for you to consider, realistically, consider getting a job involved with trade.
Unknown Speaker 24:11
I like that. Pete, you're right, not.
Doug Draper 24:15
Dr, Doom on it, I saw something on LinkedIn just a couple of days ago. I meant to go back to it or do a screenshot of it, but they were talking about how difficult it is to get your broker's license, in comparison to the GMAT or the LSAT or any of these, you know, your series seven, all the different types of things out there. And they were talking about the first pass completion rate whenever you take the test, it was like 15% of the people that take the test pass the first go around. And it is, I mean, you would know this more than I would, but on this post, it said it's an open book, but you got to know the book, because you got a certain amount of time to go and figure it out, right? So you really have to understand it. Oh. Open Book, you say, Oh, that'll be easy. I just flip to page 72 and get my answer. They were talking about it. My point is that if you've passed that test and you're a licensed Customs broker, you know your stuff, right? You you really understand it. You know the nuances of the government out there and the regulations that are, that are out. So if you're a licensed custom broker, good on you, because that apparently is a very difficult test to pass. And if you're out there and you have that knowledge set to your point, you're in a good spot in this day and age to be a valuable resource to any organization that you would be part of.
Pete Mento 25:40
Let me double click on that. So here's the reality. We get about 70 brokers a year. Man give out 35 a test that get through the background check and pass in the exam. That's it. 70. We lose at least 100 a year to either death, retirement or just moving out of the business. So we're losing many more than we're gaining. And that math doesn't end well over time, even people that stay in the business. I mean, I may, I may have, like, 10 years left to me, if I could live that long to do this. Who's going to replace me? You know, who's going to pick up, who's going to pick up the job that I'm doing when, when I retire, and then personally pick up their job and their job and their job. We haven't done a very good succession plan of dealing with brokers. So you usually get two responses to that, well, good. Let's just get rid of custom soft brokerage. Let ai do it doesn't work that way. Or the second one, which is, why can't we get more people to pass? You bring up the LSAT. Let's talk about the bar exam. About half the people who take the bar exam pass it. Why easy? They just went to school for three years to learn how to pass the exam, and most of them took a prep course for like, six months. They walked into those exams ready to rock and roll. You know what I mean? Like they invested in themselves to prepare for that exam. The broker's test isn't like that. Most of the people that take it are working full time jobs in the industry. Many of them have families. They have kids. They don't have the time to put toward it, and most people don't study for more than four to six months. So no wonder we don't have people pass. I think it's really incumbent on our industry to sit young people down that are interested and say, we are going to invest in you. We are going to put our money where our mouth is, and we're going to make it financially beneficial for you to pass that exam. We're going to give you the time. We're going to pay for your prep courses, and we're going to, we're going to give you some cash if you pass that test kit. Now, you got to stick around for a while. That seems fair, and give them a, you know, a real motivation to go out there and do it. Do for what you know, what you do in transportation? Yeah, there, there's, there are different things that you could do to get yourself a certification, accreditation, when it comes to customs, even the CCS compares, just doesn't even compare what being a broker means. So we have to start investing in young people, or anyone, for that matter, who wants to become a broker by putting our money where our mouth is.
Doug Draper 27:58
Well, Pete, I would say that there's nobody that's going to replace you as you move on down your journey of life. And the second thing is, I love your use of double click to underscore. I've heard my kids say, I'm going to read to underscore the point. I've heard retweet. I'm going to retweet that. And then they go into it. I've never heard the double click. So I like that.
Pete Mento 28:21
You know, I do work for a very large consulting firm, so I'm getting back up on my consulting. I haven't said synergy lately, and I haven't said, you know, we'll circle back. I haven't done either of those yet,
Unknown Speaker 28:32
but, but I'm sure they're coming.
Doug Draper 28:35
Well, double click gives you some street cred. I'll give you that.
Pete Mento 28:38
Yeah, I'll tell you. Doug, one of the hardest things about this new job is we have our own language. In transportation, we have we have a vocabulary where if I say something to you, you're like, TEU, whatever, like HTS, right? Accountants have their own and I am clueless to it. So when I'm in conversations with them, I'm the guy who just keeps raising my hand on the on the teams meeting. Excuse me. Could you say what that means? Please. This guy's such a moron. But I'm used to it. You know, if you don't ask questions, you don't learn anything, I don't mind looking like an idiot.
Doug Draper 29:07
That's right, all right. Well, that brings us to a close of global trade this week. It is our Saint Patty's Day edition. It's always good to see. I know you had some issues yesterday with some really bad weather. So I'm glad that we were able to reconvene. Looks like there's some sun outside over your shoulder. So glad that you were safe. The power didn't go out.
Pete Mento 29:29
The tornado warnings were followed by me having a fire alarm at 133 3530
Speaker 1 29:35
and nine o'clock. Wolf, yeah, yeah, yeah. Crazy.
Doug Draper 29:41
So anyway, thanks everybody for listening, for joining us every week. If it's happening in global trade, we're going to talk about it on this show every single week, which is why it's called global trade this week. Pete, I will see you for the next the next round.
Pete Mento 29:56
Thanks buddy. See you next week. All right. Catch you. You.
Transcribed by https://otter.ai