Global Trade This Week – Episode 145
What’s going on in Global Trade this Week? Today Trade Geek Pete Mento & Doug Draper of Inland Star Distribution cover:
2:15 -General System of Preferences Coming Back?
4:34 -ELDs & Loopholes
9:50 -Baltimore Update
11:57 -Halftime
18:21 -Inflation Taking Longer Than the Fed Thought
20:55 -China Shock 2.0
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Keenan Brugh 0:00
You're watching global trade this week with Pete Mento and Doug Draper.
Doug Draper 0:10Welcome, everybody to a another edition of global trade this week. My name is Doug Draper. I am only one of the hosts of the show. That's why we have the banter back and forth. And my good friend who always seems to be in a hotel somewhere in North America, is Mr. Pete mento. Pete, what's going on? And where does this podcast find you?
Pete Mento 0:32
Doug, I am in the positively picturesque Burg of Islam, New Jersey. It's where our corporate headquarters is. And yeah, it's not the most exciting place to hang out. But it's better than Plymouth. Plymouth, where was at Michigan? I'm going to give you a heads up for that. Yeah. Yeah, it's better. It's better, more stuff to do. But I, I really like going to our corporate office, it's very pretty. It's very nice. I get to see all these people I never get to see that I work with. So I'm looking forward to that. And I have a seminar on Thursday. Get this done. This is crazy. I'm gonna put this on LinkedIn. This is my 500th full day trade seminar coming up on Thursday.
Doug Draper 1:17
Wow. In your whole career. That's crazy.
Pete Mento 1:19
I've been keeping track. I also keep track of how many speeches I've given and webinars. But just just full day trade seminars. This is number 500, which I think is it's sad like that I've been out on the road that much in 24 years doing this. Yeah,
Doug Draper 1:34
well, that's impressive. If you had five, then that means you ever don't doing something wrong. The fact that you have 500 means that you are very talented in global trade. So congratulations, Pete. That's pretty cool.
Pete Mento 1:47
Well, anybody can be a clown, Doug, you know, to be a clown. My grandfather always said bad news should be delivered by a pretty woman or a clown. So, you know, bad news. And Pete meant to go together that way. Yeah, not at all.
Doug Draper 2:03
Yeah, well, I think we probably have some bad news, because we always bring some on the show. But it's all related to global trade. It's all forward thinking as you and I always try to make happen. And with that, let's just get our first topic on. Yeah,
Pete Mento 2:15
buddy. So the first topic just happened today. And it's good news for people who import from a lot of places for quite a while now for about four years, the generalized system of preferences, or GSP, has been suspended. And GSP is a it's a one way trade program. So it's not a trade agreement. We don't give the countries on the other side of it, preferential treatment, we don't get it for our goods, we give it to them in order to be able to sell things in the United States. And it runs the gamut of all sorts of developing nations. India used to be in it. So it was Brazil, but they've gotten big enough where we've we've popped him out of that. But there's a lot of countries in GSP, that really do get a lot out of being a part of this, and its suspension really was because nobody just wanted to push it. But it appears that Congress is going to the Ways and Means is going to take a look at it to see about opening it again. The next questions everyone everyone's going to have is will it be retroactive? And will they be able to go back, you know, five years and try to get some of this money back? I really doubt it. But it's great news all around there at least looking at it again. And for a dork like me. I'm excited to see how the process goes. If they add countries if they subtract countries. So for those of us that do importing and people who are focused on what used to be GSP countries, that news? Yeah,
Doug Draper 3:36
well, I guarantee right, then I don't, well, we make some guarantees around here. Any country that has rare earth minerals, or precious metals is going to get that preferential treatment, because those are the building blocks of electric vehicles and all the things that we're trying to nearshore. So I think that there's going to be some Wait, what country is this kind of questions, they're gonna pop out. And you just look at what they're preferential treatment is I think it's going to be related to some of those raw materials to help produce a batteries and electric vehicles, from
Pete Mento 4:14
your mouth to God's ears, you know, anything we can do to make the supply chain more sustainable but more resilient, I think is well sustainable too. But resilient. It's a great thing for far too dependent on a small number of company countries for very important things. So I agree to copyright.
Doug Draper 4:31
Yeah, yep. So cool. Well, my first topic is related to domestic transportation and primarily full truckload moves right. Years ago, I to be frankly, I think it was pre COVID. And then it was, you know, slowly implemented and regulated. The electronic logs, right, which truckers are out there. You know, back in the smoking the bandit days, they'd have three or four books and just cook the books and and try to run 24/7. And then obviously technology came into play and, and made everything electronic and you you're pushing what service that you're doing as you're driving your truck? Are you on site somewhere? Are you moving? Are you backing up that kind of stuff in the yard? And it looks like people are finding loopholes in the ELD logs right? Now these aren't monumental type of of workarounds. But if there's a will, there's a way, right. And so even though we've overlaid all this technology with electronic logs, that has been beneficial, it has helped with safety and compliance and regulation, which is very important in the full truckload industry, in any industry that it you know, in our industry, in general, I should say. But here's to the two things that are popping up Pete and I want to get these rights. So I'm gonna look down here. So one is called Personal conveyance. And the other one is called yard movements. So here's what personal conveyance is. And I'm just going to give you some examples rather than try to explain, you know, give some definition. But if you're commuting from your home, to the drivers terminal, that's considered personal conveyance, commuting from to a worksite, where you may be going there traveling to a rest location after loading or unloading, right, so it's the end of the day, you've met your hours of service, and you're going to drive somewhere to park for the night. And then moving a vehicle when requested by safety or safety requirements, right. So those are very small increments of time. But people are kind of falsifying the logs and using those small increments of time to go a few extra miles on their routes for the pickup and delivery in their in their transit. And so they're discovering that, hey, you're saying that you were driving to and from work, but you live 500 miles away, and you've added this on your log, which then exempts them from some of the rules and the hours of service. So the other one is yard moves, right. So if you're operating a vehicle within a large drop yard, or a large warehouse, and you're just physically in a small space, and they can track the speed at which you're moving, and I think it's, you know, under 20 miles an hour or something like that. But it does count towards the drivers on duty, non driving time. So there's a lot of nuances with this, Pete. But the bottom line is that these are two loopholes that are not clearly defined, that people are now taking advantage of to try to get that extra mile, so to speak, to keep it on moving down the road. So hey, I get it. It may not be that big of a deal when you look on it from paper, but the trucking industry needs to be safe and compliant. And I think the FMCSA has done an excellent job of understanding the rules. And being fair within drivers as we go along. But it just, it caught my attention. Hey, when there's a way to push an answer, grab them, you know, not grab a mile, but grab a little bit of time. It's happening, and it's starting to get noticed and documented and discussed.
Pete Mento 8:22
Well, like you said, Where there's a will there's a way and I'm gonna, I'm going to quote the brilliant poets from the 19, late 1980s, early 90s hairband. Faster pussycat, when I say well, there's a whip, there's a way, if there is some type of negative outcome financially for for a company, I don't care what it is, I don't care if it's logistics, or manufacturing or service, they're going to find a way to try to manage the risk, manage the liability and manage the possible loss. And if the rules have been written in such a way that they're incomplete, you know, we can't be too upset about it, that the rule doesn't actually speak to the problem. Where we can get upset is if legislators don't find a way to tighten up that loophole and make it actually do with the spirit of the rule is supposed to do. So. I mean, I understand you know, all of us have pushed 55, I'm sure on the highway and done something here and there that was within the spirit of the rules, but not the rule itself. But now it's really up to legislators to find a way to correct that gaping hole in the regulation.
Doug Draper 9:30
Yeah. And we'll see how fast they act. If they act swiftly, then it is a true concern. If they just don't define the ambiguity, then that'll speak to the level of concern with that loophole,
Pete Mento 9:44
those two holes. Before we go to halftime, can I bring up a fifth topic for us to talk about? Yeah, go for it. Yeah, we chatted about this earlier today. But report came out today that the Port of Baltimore so you can say the state of Maryland is going to be pursuing the ship owners of the ship that crashed into the Key Bridge. And they're saying that it's the ship owners fault for putting a non seaworthy vessel, out to sea. And because of that, putting these folks in a situation where the port is essentially still closed or crawled to a halt. And, you know, I've talked a lot about what's possible alcovy I'll let you keep your thunder on that one. But it's, it's starting to happen, man, it's starting to be everything from general average being claimed, right? Force Majeure being claimed, now they're gonna go after the FBI is investigating everything because of criminal activity. You know, nobody wants to end up holding the flaming bag of crap on this one.
Doug Draper 10:39
Yeah, it's interesting. And you know, every Steamship Line and every port out there is like, double, triple, quadruple check if there's any doubt in your mind whatsoever, do not move this vessel. Which I don't know if it'll create the laser or not. But yeah, it's just too bad, right? I mean, I get it. Somebody has to be blamed for this. We've talked about that in the past. And simply like it was an accident is not acceptable in this day and age. That comment is relevant to everything. In life, right. You have an accident, and. And that's it. So anyway, it's inevitable that this was going to happen. Yeah,
Pete Mento 11:21
yeah. I forget how you pointed out, you're like, someone's going to take the blame for this. Someone's going to end up being the one who's blamed for all of this. And everybody knows that. So whatever they can do to limit the cash out of the bank account once the blame gets passed around. These cats are going to do it. Yeah.
Doug Draper 11:38
Yeah. Yep. Yep. So cool. All right. We got halftime buddy. This is a great part of the show. It's brought to us by CAP logistics. We appreciate them every week given us the soapbox and facilitating our muses to the general public. So this is the fun part. What do you got when you got this week?
Pete Mento 11:57
I'm going feel good this week, Doug. So I got to feel good stories. One's a little more specific than another. A gentleman named cam Boozer, which is maybe one of the best baseball names ever got to make his debut last week at the age of 31. He was he was drafted and played for the twins for a little while, but all the way through high school, all the way through college when he was at Oregon. And then in the minor leagues, he was plagued by really bad injuries. And he had a lot of things personally to him that happened, you know, hardships that happened throughout his whole career, financial hardships, personal hardships, but he never quit. And at 31, he is he's finally made his major league debut playing for the Red Sox. And he actually got a couple outs. So don't give up on your dreams, I guess is kind of where I'm going with that one. And then the second one is speaking of dreams. I talked about it last year, I've probably talked about it every year. This week, to me is one of my favorite weeks in all sport, buddy. It's the NFL Draft, where not only do we get to see some of the worst fashions that young men wear in America. I don't know what these guys are thinking. But we also get to see people's dreams come true. You and I played sports, we were kids we played I played sports called you, I'm pretty sure you to do. And even now, when you're out there doing whatever it is physically, you have ideas in your head of making the Olympics or whatever very few of us ever do. So to get to watch television and see some young man go up on the podium. And you know, hopefully have his family with him and get to really enjoy that moment where his dream has come true. And it's really the first step and the next process is of that dream, may not go where He wants it to go. But he made the show and I absolutely love the NFL Draft.
Doug Draper 13:44
Nice. Yeah, it's a fun time. And the NFL has done a great job in the last couple of years to really hype it up and make it a true event. I think it's in Detroit this year. So that should be interesting. Yeah.
Pete Mento 13:56
What do you got? But what's your halftime?
Doug Draper 13:58
Alright, I'm super stoked about this one because one of our listeners sent me a message on LinkedIn after our last show and said, Hey, this could be an excellent topic for halftime. And so I did some research. So Dan Peterson, works for Kintetsu up in Toronto. He's an avid listener and listener. And I just want to say thanks, if anybody has any topic suggestions, please reach out to us whether it's halftime banter or whether it's topics to discuss, but Dan, super cool. I appreciate you sending this our way. So anyway, you may remember this Pete This started way back in April of 23, where there was a gold heist in Canada, to 22 and a half million dollars of gold bars were stolen. Did you hear about that? I
Pete Mento 14:41
heard about it when it was on the news last week. I didn't hear about it originally. Yeah.
Doug Draper 14:46
So here's the original and there's some videos out there and maybe I'll put a link on this one so people can read. It's about a nine minute summary of it. But here's the gist there was 6600 gold bars that were moving from Switzerland. They flew went to to Toronto to a bank via Air Canada and Brinks was supposed to pick it up. Well, after it landed 45 minutes later, a box truck shows up and says, Hey, I have a shipment to pick up for seafood. Well that seafood was picked up the day before. The guys on the Air Canada dock rolled out this container of gold gave it to him. And the truck left. Toronto went to the boonies. And apparently they melted all the gold down and turn it into other things, bracelets and things of that nature. And so they've been doing all this work and research and investigations. And they finally broke the case, because the driver of that van back in April of 23 was pulled over in Pennsylvania, because he was driving another van that was a little bit shady and needed, you know, the cops pulled him over. There was like 65 guns in there. Some of them had serial numbers moved off, and they think that he was trying to smuggle them into Canada. And so that's where everything on riot unraveled. And it was a total of nine people involved. It was an inside job. So there were two people from Air Canada. And the crazy thing Pete is they still do not know where the gold is. And they pretty much said, as soon as this stuff gets melted down and turns into other forms, there is no gold DNA, it just disappears. And so it has just been absorbed into the world. They think it was you know, not necessarily the mafia, but organized crime and everything else. So like you said it popped up last week and that's when Dan shot it over to us but kind of cool story if they're gonna make a movie out of it or, or what but anyway, I'm glad that Dan sent it to us. Thank you, sir. And interesting topic for sure.
Pete Mento 16:46
Yeah, yeah, I love high stuck. I don't know why they get my attention like they do. Maybe it's because I lacked the creativity and mental acuity to ever do anything that sinister, you know, whether it's a great train bank robbery that happened in the UK, or, you know, the the Swiss Air that happened, that was real, they talked about in Goodfellas. I just they blown me away. And this one in particular, it's like, what were you going to do with that much gold swimming it like Scrooge McDuck? Like, what are you gonna? What are you going to do with that much gold? It just seems like the they were smarter to figure out how to steal it. But they probably weren't smart enough to figure out how to kind of get the rest of its I'll be fascinated to see in the coming years. How much of it they actually find? And I'm sure we'll find a lot of it. Yeah,
Doug Draper 17:32
well, if they turn it into bracelets, and it's all over the world, I don't know if they will mean that one of the cops specifically said there is no DNA with gold. They melt it down and turn it into other things. It's gone. It's been absorbed into the world and, and everything. So now someone's
Pete Mento 17:48
gonna flip someone's gonna say, I turned them into bracelets and I sold to this guy and that guy sold it to this guy and it's too much money, man. And of course it was an inside job. No kidding. Really? Like.
Doug Draper 18:01
I'm here to pick up seafood. Oh, by the way, throw $22 million with a gold in the back of my truck. Yeah,
Pete Mento 18:06
okay. No problem. Yeah, this this smells like squid germs. Put it in there form no problem.
Doug Draper 18:10
Yeah, yep, yep. Cool. All right. So that's half time brought to us by CAP logistics, please check them out at cap logistics.com We're flipping to the second half of the program. So what's your next topic beat
Pete Mento 18:21
inflation. So enough of my feel good topics, let's get back to something miserable. If you are alive and buying anything, you've been feeling the crunch of the loss of the the value of what you make for what you buy. And it seems that that dollar is just not stretching as far anymore? Well, the Fed didn't expect it to take this long. And they came out last week. And they were very clear. They're just not ready to do any more doubt, you know, downward pressure on the interest rates, which I believe I'd said when we did our predictions. The scary thing is, we're kind of we're kind of running out of stuff we can do. To deal with this. The economy is going to well, too many people are employed, Oh heavens, how terrible is all this right? Too many people are employed, and the US export economy. And what we're doing is businesses is going to well, so how do they fight inflation? Right. You know, you've, you've heard about certain people running for president, you've talked about just lopping off the zero from the debt or something ridiculous like that. There's always minting the coin, which we've talked about, right, but that will probably just increase inflation. So what are they going to do about it? Well, the bad news is duck, there's not a lot they can do. And this inflation is going to be sticking around for quite some time until there's a major change to the way that America's economic undertones are going. So nothing but bad news, probably for the next couple of quarters. And that's going to mean a continued slowdown in the American house selling Mark
Doug Draper 19:52
Yeah, it's it's the when when Jay Powell kept raising it, you know, he kind of controlled it, but you're right like Like the consumption, the purchasing of the average American, and maybe I'm naive on this, Pete. But the signs that I see all around, there are four houses in my neighborhood that I live in all sold within one week. I'm not even kidding, like, people, and this is the time to sell your home, right? Your kids get out of school and you move in the summer, and all that kind of stuff. But, you know, a 7% interest rate on a home loan doesn't seem to be turning anybody and people are still exporting and people are importing and people were consuming. So you're right. I had not thought about that. Like, what are the other levers to be pulled to help control things? I don't know. It's a good point.
Pete Mento 20:41
Not much left, though. There's not much left. So I think we're gonna be having a pretty sticky inflation here for a little while. And it's not a good thing for those of us who want to buy a house. So yeah,
Doug Draper 20:52
yeah. Yeah. All right. Well, hey, my my last topic. Is China related, right? Shocker. We've talked about that, that country quite a bit. But I heard a term the other day called China shock. 2.0. Right, you got to have a big headline to draw people in. And that's certainly what it did for me. And before I tell you what China's shock 2.0 is, I'll tell you what China's shock, shock 1.0 was. And they're saying it went back to 1978, when China started opening up markets and allowing private enterprise to come in the industrialization of China turned into the world's factory, kind of what we've seen over the last several decades, right. With, with China being you know, the epicenter of the world when it's related to manufacturing, that's been slipping. That's not the point of this topic. We've talked about how people are near showing and looking for alternatives. But that's 1.0 2.0 is what what writers have referred to as the big three electric vehicles, solar cells, and lithium batteries. And we've seen that with the Eevee. auto industry in China taken over I think there's I can't remember the remember the name of the company, Pete, but it's the world's largest electric vehicle. manufacturers in China. What's that? Yeah, we
Pete Mento 22:19
talked about them on the show. Yeah,
Doug Draper 22:21
yeah. So they're basically saying that, hey, this could be the next the next big thing, right. And I know EVs have slowed down a little bit here in the US, but this is a global market. Right. And so Evie, solar lithium batteries and ion batteries. You know, that's kind of the big three that they're referring to. So there's a little bit of worry about flooding the world market with these, we've seen that a little bit with solar panels, right? And some of the tariffs that are queued up ready for that along with the steel and the aluminum. But yeah, everybody's saying, hey, now we're aware of it, we really weren't aware of 1.0. And its potential impacts, short term and long term. Now we're aware of China shock 2.0, we won't let this happen. Again, the fact that it's three specific big verticals, I think it will not be so impactful, but everybody is aware. And they don't want to duplicate history, with China being the epicenter of that, but who knows, Evie, everybody wants it solar. That's still a big deal. And then lithium batteries obviously are huge for everything that you and I are doing. So I don't know. Have you heard China shock? 2.0? Have you heard anything about this?
Pete Mento 23:40
I've never called that I've I know that those were three industries that China intended to have a really tight grasp on, as they began to reinvent their economy. But no, lithium batteries, yes, I see that as just, you know, inescapable, and they have all the tools in the science to make it EVs are not having the renaissance that people expected them to have. So I think that there's still an opportunity, at least for other nations to overcome them. But solar is one, I don't really understand how China's going to continue to manage President Biden for Earth Day came out. And, you know, that was his big speech said, we're going to do a $7 billion grant for solar in America. And I read that and it was a cool, you know, I did on solar. I think it's pretty awesome. But then my next thought to myself was, aren't all those solar panels going to come from China? And how much of this technology that we're talking about was basically just an export grant to people that were having a hard time right now with trade? Was that part of it, you know, was that sort of sort of a quiet deal to maybe lessen tensions between the two countries? I don't know. But all those three things you just talked about? Solar, lithium batteries, which a lot of people are into because of the reasonableness of them, and then EVs. They're all an important part of of greening the economy. But two of them really have not had the launch that I expected them to. And some of that technology really hasn't changed in so long. They're running out of people to adapt them. So I'm not quite sure that it's going to be as fruitful and enterprise as our friends in China thought,
Doug Draper 25:16
yeah, well, you nailed it. Two of the three, at least in America are kind of on the downward. Not a slide, but they're on the downward side of the hill. But it is a global market they're targeting. So it'll be interesting to see. But yeah, two of the three here in the US losing a little momentum
Pete Mento 25:33
in technology, you know, early adopters, and then something really has to change to get people to truly embrace it. And for two of those things, they're actually having a hard time getting it, but I guess time will tell Doug. So that's all of our topics. You got a bonus topic this week, everybody, you know, Happy Earth Day. It's, it's always a pleasure to have you with me, Doug. Keenan back in the booth doing his voodoo and witchcraft to make this thing work. And our great friends at CAP logistics who always find a way to support us so that we can keep our old man blathering is coming at you every single week. But thanks a lot. Doug is always great job. Great topics. If it's happening in global trade. We'll talk about it next week and global trade this week. See everybody.
Doug Draper 26:14
Excellent. Thanks, Pete.
Transcribed by https://otter.ai