Global Trade This Week – Episode 199
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Keenan Brugh 0:00
Foreign you're watching global trade this week with Pete mento and Doug Draper.
Pete Mento 0:08
Hello everyone, and welcome back to another exciting edition of global trade this week. I'm Pete mento, and with me is my the CO hostess with the mostest Doug Draper, my friend Doug. Doug, looking fabulous, as always, buddy.
Doug Draper 0:22
Thank you. I appreciate it. It actually was a little, see, this is normal. You know, my people make fun of me because I'm like, quarter zip Johnny, right? I always wear the quarter zips. Got up this morning. It's like 48 degrees this morning when I walk up, says little chill. Needed to get a little warmth going. So, yeah, I had to pull out the old quarter zips from from wintertime.
Pete Mento 0:46
So I am up in northeastern Maryland, and it is hotter than the surface of the sun right now. Doug, so I would, I would absolutely, this is one of those times I would gladly swap with you for the kind of weather you've got. Man, it's just it is so hot I have to put a tie back on after this call. And yeah, I'm just sweating like a pig.
Doug Draper 1:09
So before you put the tie on, do you actually put a collared shirt, or you just rocking the ninja Mutant Ninja Turtle shirt with a tie? Nice, a grateful,
Pete Mento 1:17
dead t shirt buddy. But I would, I would do that if I can get away with it.
Unknown Speaker 1:21
But no, I can't do that.
Pete Mento 1:24
The good news is I don't have to do my hair before I leave. You know, you just put your shirt back on and get after it.
Doug Draper 1:31
Yeah, I love it. Well, it's good to have you back, my friend. I know we were, we were both you and Keenan were out of the country last week, and so and I was in the great state of California, and we just couldn't make it happen. So it's good to be back, bringing the listeners what they're asking for, which is global trade discussion. I mean, they're
Pete Mento 1:50
just clamoring at the door, at the gate, just beating on the gate, saying, where's my global trade this week? And who can blame them? Doug, who can blame them? I know. Yeah. Well, your first topic, Johnny, so why don't you tell us we're talking about this week?
Doug Draper 2:04
Yeah? Well, in classic global trade this week standards, this one's going to be a Debbie Downer, right? Yeah, some news that we just poke, poke holes in, right? But I normally, I would say last week, but I think it was the week before there was this article about a new freight corridor that's being proposed that would go from nowhere Leone up into away
Unknown Speaker 2:30
from Laredo. Yeah, yeah.
Doug Draper 2:34
And here's the here's the deal with this one. It's an elevated guideway that's going to be parallel to the existing bridge. This guideway is going to be only for trucks. It's going to be autonomous and electric, right? They might as well say they're going to be serving ice cream sandwiches on there as well, because that's a lot of stuff they're trying to build on this
Speaker 1 2:56
bridge, right? So 24 here's some
Doug Draper 3:01
bullet points. 24/7 operational nonstop. I love the fact that it's freight only, right? They're going to be scanning and technology along the way, so you know where your cargo is. Like, I said, it's autonomous. I couldn't tell if they were going to, like, click on a track, or how that thing was gonna, was gonna move. So, you know, yeah, the congestion, security, environment, efficiencies, all that kind of good stuff. There's two things people on this. This one specifically is they said, hey, it's gonna be a privately funded program. And I read two articles about this, and both said privately held. Nobody said who the company was that was going to, you know, fund this thing. You know, they were saying eight to $10 billion right? When we toss it around, we toss around billions, like, like, It's millions anymore, so that's a ton of money, but they said private. And maybe I didn't see the fine print, maybe I didn't read the third article that spoke about it, but they said, Hey, don't worry about it. It's privately funded. It's all good, but they didn't really elaborate on that. So I don't know. My take is it's great for a news headline, yeah, check some of the boxes on some of the problems with that crossing. But I don't know. It's just been green lighted. They still need to do a study to see if it's feasible and the environmental impacts. And then they have to start construction, I think by 2029 2027 something like that. So it's a couple years out, but it's like, Hey, you're okay to explore this and study it. It's not a guarantee, and I have no clue who the privately funded entity is going to be to do this, so I don't know. I think it was just a cool little article to sprinkle out there for people like me to read and talk about on global trade. But I don't think anything's going to come. To fruition of it, in my opinion. So we had to start off with the Debbie Downer story. So I don't know, Pete, have you heard about this thing? You have any take on it?
Pete Mento 5:08
I looked into it after you sent it this morning in the show notes. And I have so much to say about this. Doug. So first of all, why the hell isn't it the tunnel?
Unknown Speaker 5:18
Wouldn't that make more sense?
Pete Mento 5:20
Right, to put something underground if you're going to make it autonomous, second, are you going to move these tractor trailers back and forth? Is it, like you said, like a electric rail system, and you put them all together, and then there's another truck on the other side waiting for this thing? It just seems, that seems a little bit strange. You bring up the fact that it's, it's a private company in Virginia. And, okay, before I crap all over this thing, I love it, right? But there's, there's a there's a number of high
Speaker 1 5:49
speed private, uh, HOV lanes, where, if you, if you pay, you can use them during rush hour. So
Pete Mento 6:00
the distance from my place to my my my office
Speaker 1 6:03
and Herndon is is with traffic
Pete Mento 6:09
probably about 45 minutes to an hour, and it's only 16 miles. But if I take the speed lane, I'm going to get there in under 20 minutes. I'm also going to pay about 20 bucks to do it. So you've really got to ask yourself, like, do I really want that extra hour of sleep? Is it worth 20 bucks? And on the way back, it can actually be even worse, but it's publicly owned, and the reason they charge so much is they can so private, privately, privately privately owned. Yeah, they can. So is it gonna be the same thing? You know? Is it gonna cost you, like, $500 to use this autonomous system, and now the government has an investment in it, so they gotta have to use it, and it's gonna be lowering your global, your carbon footprint, so you're gonna be urged to use it. It just seems, it seems like the fix is in buddy. You know, it seems like enough people have talked to enough people to get this done. On the one hand, I think it's wonderful because it is so congested down there. On the other it just seems like yet another giant pile of of government backslapping and chaos that we're all gonna end up having to pay for. So 100%
Doug Draper 7:28
aligned on that one, so we'll see how it takes. I, you know, the toll, you know, that's an excellent point, but it's going to be a shitload of money,
Pete Mento 7:38
yeah? And, you know, it'll be the shippers that pay for it, right? So, yeah, just be like, what if it is done on congestion? So what if it's $100 on days where there's no congestion, but then it's like 1000 on days where it's super congested, you can't control that at the border. I don't know, dude, you're right. It's one of those things I really hope happens. And hey, selling ice cream sandwiches would be great, let's just be honest. But I'm not quite sure it's going to happen. If it does, it'll happen that
Doug Draper 8:07
way. Yeah, yeah, good, good, good topic to kick off. All right, what do you got first? So we spoke
Pete Mento 8:14
a while ago about how much I enjoyed the the Tesla rollout, what they did for their big production of the new Tesla taxis, the they're calling something, I forget what they're calling the something tax, something cab, Tesla cab, whatever. Well, they're out now, so they're going to be out on the streets, I believe, starting today, in Austin, Texas, very close to where I assume these are built they have no pedals, so there's no gas pedal, there's no brake pedal. They have no steering wheel, buddy, you just sort of sit. It's like being at Disney World getting to the monorail. You just sit in this thing and it moves. Apparently, for the first couple of years, there will be a person inside of the Uber with you, or probably the Tesla cab with you, and they're there to ask questions, answer questions, and from a safety perspective, but eventually they won't be in there, so it'll just be like you and robocap taking you wherever you gotta go. There's things about this that I love. The idea that I can go spend $35,000 on a car and when I'm not using it, anybody else can, which as a car guy, that's a little creepy, but you can make money on your car, rather than your car just bleeding you dry. The second thing I like about it is the parking aspect. Don't have to park it. Just drives around until it finds someone else to take it, so parking lots will become less important. But you and I have talked a lot over the years, buddy, about whether or not we trust automated and autonomous vehicles, and I know your position is generally pretty negative. I'm feeling good about this. Sincerely, I'm feeling I'm feeling good about it, and I'm hopeful that it works. Yes, now it's your turn to completely crap all over this. Well,
Doug Draper 10:06
yeah, so a couple things. Tesla is kind of late to the game. On this one, they've been hyping their Robo taxi. I mean, dare I say, a decade, I think hyping it, yeah, like pre COVID, right? So, but it's still Tesla, right? Everybody loves Tesla, like that. People are Die Hard Apple, you know, apple, the apple heads just love the product. And so Tesla has the same kind of drive behind it with people. And so the fact that Tesla is rolling it out, Oh, it must be better than all the others and things that nature. So I think by far and large, the tech to be able to navigate these things, regardless of the manufacturer, is pretty similar. But because it's Tesla, it's going to get a lot of attention. I love the idea of, when I'm not driving my car, I can use it to make money, and the autonomous nature is still something I need to personally get over to get into a cab with nobody there, right? I know that there'll be a human in there for a period of time, but I think just over time. You know, I'm not even drones. Forget about it. I could talk about drones all day long, and my position hasn't changed on that and this whole autonomous keep talking about it, showing some progress kind of go from there, I get it, but I still think it's a long way out. Yeah, they're in there in I think San Francisco is another hot market for this type of thing. So I'm not here to crap all over it. I'm just being a little cynical with where this thing is go. But I love the fact that you could use your car if this happens. I'm going to park my car. I'm going to go over to London for a business trip, and then my car is going to make me a few bucks on the side. So I think that's really cool, if it comes to comes to pass, instead of the
Pete Mento 11:50
130 bucks I paid for parking last week while I was in Great Britain, my card, but could have been making you some money. So so you're saying, Doug, that that if it's next week, that you could take one to dia from, from, from, I always
Speaker 1 12:05
forget the name of your town, steamboat. You're not doing it. No, no, not doing it.
Pete Mento 12:12
I'm doing it today. If I could, I'm doing it right now. If I could, buddy, I'm telling you, I would. I took an Uber to a bar on on Saturday, like there's no excuse to get behind the wheel of a car if you've been drinking, there's none. There's none. So for, I think, it was $17 I got a ride to the bar I was meeting my friends at, and on the way back, because it was so late and there were so few cars, it cost me 40 bucks to get home. You know, I spent more money on my Uber than I did on beer, which, trust me, should be shocking. But again, it felt great enough to worry about how much I drank or or driving or parking, or any of that stuff. That was very nice, and if I could do it and not have to actually talk to the person driving. Oh, even better, because we all know how I how I feel about strangers. Doug,
Unknown Speaker 13:01
yeah, yeah.
Doug Draper 13:02
Well, to your point on the on Uber right, when I first saw an article about it in the Denver Post years and years and years ago, I was like, wait, what you're gonna call a stranger and get in a stranger's car and hope they take you to the right place, and hope they don't attack you or do whatever. So the concept of engaging with the stranger in the car and and, you know, the gig worker and all that kind of stuff. So I don't know. You know, that was years and years ago, and Uber is the best thing since sliced bread. Now, I guess so it I will need more time. Pete, I will need more time.
Pete Mento 13:37
When they first came out, they were all limousine drivers in towns like New York, and I loved it. I loved using them. And the point I wanted to make before we get off this topic is, what does this mean for delivery?
Speaker 1 13:48
If you've got an Uber and there's nobody in it, and you can't find a person
Pete Mento 13:53
to go for a ride, why can't you drop off small packages with it? Why couldn't someone like Amazon say, Yeah, we got your thing. We'll bring it to you right now. It's going to cost you 25 you $25 to have it delivered right now. You're like, Okay, I really need it, so you get it, and then you walk outside when the when the driverless taxi shows up, and you pick up your stuff out of the trunk. I don't know, Doug, it's a compelling, compelling argument.
Unknown Speaker 14:16
Yeah, I think
Doug Draper 14:20
last comment. I know we said last comment, but that means somebody has to get out of their slippers and underneath their blanket while they're binging. You know, some show to walk outside to open up a trunk to get their stuff. That's the whole point. No, I'll just take DoorDash or Uber Eats. Just have the guy bring it to my door.
Unknown Speaker 14:41
Yeah, yeah. All right, man, take us to halftime. All
Doug Draper 14:44
right. All right, I'll jump into it. So halftime brought us, brought to all of us by CAP logistics. We appreciate their support, and Keenan does a bang up job. So Pete, I don't know if you realize this, but Joey Chestnut, competitive. Food champion was not involved with the Nathan hot dog eating contest last year at the Fourth of July, but he is making a return this year, and the world is abuzz. If you're into competitive eating, the world is abuzz about Joey Chestnut. It's awesome. I love it the competitive eating, you know, I think it's pretty cool, you know, at least on Nathan's hot dogs. I don't know, but when you look at the competitive eating, the guy that kind of sparked it for me, and this is when I was, I don't even know how many years ago, but takero Kobayashi. I think I know it's Kobayashi, T, A, k, e, r, u, I think to Caro, that dude is money, right? I mean, that dude was like, I mean, he looks like your buddy's roommate, who eats like quinoa and rides his bike, but he gets up there and just pounds the food down. I looked up. The guy's five foot, 840 pounds, and he just pounds it right. I don't know if he's still involved with the with the contest. I know he kind of took a hiatus, and he came back and His thing was eating, like, brains and really weird stuff that that we wouldn't be interested in, but competitive eating, like I wouldn't seek it out. But if it's right there, and I'm watching a whole bunch of people just Mao hot dogs. Freaking love it, right? They just got to get Kobayashi back up there again, because that guy, he's the OG of competitive eating as far as I'm concerned. So I love it. It's so America, right? It's America. It's an apostrophe America, right? You're out there screaming for these guys to eat like 70 hot dogs or something in 10 minutes, something insane. So I don't
Unknown Speaker 16:45
know. Which Have you heard about joey buddy? Yeah, right. Yeah,
Pete Mento 16:53
like competitive eating is a sport on ESPN. Why was it? One thing I don't know is, why was he out of the contest for so long. I think
Doug Draper 17:03
it was a contract dispute, right? Like anything else he was. I don't know if he was holding out or if his contract prevented him from doing it, but I think it had something to do. He wanted to hound the dogs. Man, he just couldn't do it from his contract.
Pete Mento 17:16
How many could you eat? Like, don't even worry about time. If you're at a barbecue and like, you haven't eaten all day, maybe you had an early dinner the day before, and you it's just like the perfect hot dog setup. How many do you think you could eat without just wanting to throw up in a parking lot? You could do five? Yeah, that's pretty I don't know if I could probably push myself to five, but that's, that's a lot of hot that's a bread, the bread would get to me after a while.
Speaker 1 17:43
I don't know. I'll tell you. This weekend, I'm going to a barbecue. I'll see what I can pull off. Yeah, yeah.
Doug Draper 17:50
I know when your brain, because there's a little mechanism that's that your brain doesn't say you're full yet. So you keep eating, and then you finish that mega burrito, and you just feel horrible, so you would have to just eat them all at once as fast as you could.
Unknown Speaker 18:06
Yeah, buddy. Well, go, Joey.
Doug Draper 18:09
Go, Joey. All right, what you got for your halftime? My friend,
Pete Mento 18:12
well over the last couple weeks on my social media feeds, which I try really hard not to pay attention to, people have been sending me these hysterical AI videos. So viewers actually sent one to the boys today, of a Yeti, a Sasquatch, like an abominable snow monster who's out there drinking and growing out and like taking a zip line and going skiing. And they look fantastic, and they sound fantastic. One of a of a gorilla out in the jungle. And he has coffee for the first time, and he's just like, everything's so wonderful. He's losing his mind about how excited he is and and then he has to go to the bathroom, really bad. Like, you know, a little bit into it. He's never had coffee before, and I was inside to gurgling. And then he has the come down. It's like, how do people drink this? And you see more and more and more and more of them. The entertainment part of it is fascinating. You know, the idea that we'll be able to make these, at some point, longer films without actual actors. And then the other side of it is, what are you going to be able to tell as they keep getting better and better. If that's somebody real, or
Unknown Speaker 19:21
if it's not, it's pretty crazy. Man,
Doug Draper 19:26
yeah, yeah. The one I sent to you guys, a buddy of mine, sent that, like, a week ago, and when you told me about your halftime topic, I'm like, this is exactly the two things on the video. Is one it he's not really drinking beer, like he chugs it back, but you don't see any beer come out, but everything else, man, is pretty spot on. I was just cracking up. It's
Unknown Speaker 19:51
yeah, when does,
Doug Draper 19:56
when does reality become? AI, and I don't know why. Just thought of this Pete, but there's a song. I can't remember this song, but Boston, the rock band, maybe it's long time that song and that one of these notes, they hold it for so long. I always try to gage. I try to gage at one point, does Brad Delph, who is the lead singer, God, rest his soul. Stop singing his note, and then the guitar takes it over from there. And I'm always like, it's got to be right there. It just happened. So my point is, it will be difficult to know, when is it AI generated, and when is it a real a real guy in a gorilla suit,
Pete Mento 20:31
dude? It's not long time still when I close my eyes and I drift away, and then he just keeps going. I drift over. He goes higher and higher and higher. Then the guitar takes over. I have no idea if that's really him singing the song, but it's badass. You think even heard of Boston? Then I
Speaker 1 20:50
hope so. I hope so, awesome band. Yeah, yeah, yeah, for sure. All right, but what's our next topic? All right,
Doug Draper 21:01
so this is about trade deals, right? This kind of up in your, your neck of the woods, but the UK and US had a trade deal that came to fruition maybe a week and a half ago. And I was like, Okay, I gotta dumb it down. Dumb it down for Doug, right? The d3 version of this whole thing. And the the things that caught my attention, one UK is going to get some relief on cars and aerospace, US is going to benefit on some ag exports, right? So there's the benefit. But the one thing that wasn't buttoned up and is still a little ambiguous is what about steel and aluminum, not clearly defined. And what's the deal with pharma, right? Not clearly defined. So I was thinking like, Hey, your kid comes to you and says, I'm done with my homework, and you check it out, and you're like, yeah, maybe, like, 70% of it you're done. You got 30 more percent to fill this out. What about questions? 789, those are the hard ones. So I kind of feel like I hope all these trade deals are going to be coming back, aren't hyped up, and then there's all of these, what if scenarios are very important commodities and discussions that need to take place that are just still not addressed, right? I feel that's what happened with the UK and the US. So I don't know. Homework.
Unknown Speaker 22:25
Yeah, fire away. Okay,
Pete Mento 22:27
so what the President signed last week outside at the g7 Summit, which is hysterical papers flying everywhere, is the essential framework, the essential frameworks to build stabilizes tariffs between the two nations and hits the high points that were both sort of the no like, can't cross this red line. Here's what they are, bam, bam, bam, bam, bam. And then there's a number of other things that they're going to continue to negotiate, but are considered such big deals that it should slow down the main part of the agreement. One of the ones is for steel and aluminum. For steel and aluminum, we've agreed to to, you know, bypass tariffs on British steel and aluminum, but the President just raised the tariff on aluminum 25% to 50 So now everybody else is paying 50% except for the UK, who's paying 25 and Okay, that's better than nothing, but a few days after they made this deal, is like, we're gonna be hitting everybody with additional 25% and that got that that pops England too. So these frameworks are just that. It's where we've we've agreed on the big stuff, and we'll work out the little stuff at a later date. I agree with you, Doug, it doesn't feel done when you do it that way. It feels like you're signing a an agreement to agree to agree some point in time, rather than we've got it all hashed out. But I think that there are some political optics that are good for both sides by having something signed and most, most consumers, other than the people who watch the show, you probably don't think about it that far deep, and they really ought to,
Doug Draper 24:08
yeah, no, I think you nailed it right. There's a big headline. You got a handshake and some cigs. And everybody says it must be done. But yeah, general framework to me, that says you didn't finish your homework
Pete Mento 24:20
when you said cigs, I thought you meant cigars, but you mean signatures. When's the last time? When's the last time you actually had a cigar Doug?
Doug Draper 24:32
Probably on a vacation about 10 years ago with my father in law, so I felt obligated. And yeah, so call it 10 years ago on a lake in Wisconsin.
Pete Mento 24:43
I had one at my reunion probably two and a half years ago because a friend of mine bought some really nice ones with him, and again, I felt obligated. I don't know if I liked them anymore. I don't know if I like how I stink for two days no matter how hard I shower. I. I just don't know if I'm down with cigars. I feel like this is a special halftime, additional halftime topic, but I'm just not as into cigars as I used to be.
Doug Draper 25:08
Yeah, yeah. I don't think I ever was. So all right, well, let's get back on on track. You have one more topic to go over, so let it
Pete Mento 25:16
rip. Yeah, yeah. So overnight, we woke up to the news that the parliament in Iran, in response to our bombing of their nuclear facilities, has agreed to
Unknown Speaker 25:29
shut down the Straits of Hormuz
Pete Mento 25:30
now that just gives the mullahs and the Ayatollah the right to do it if they feel like it. I don't think they were going to tell them no if you know what I'm saying, and while we were recording this, I know we're not supposed to talk about time stamping, but literally, as we were recording this, the Iranians have attacked a US base in Qatar. So that is a retaliation for what happened. And there are, in international parlance, there are retaliation steps that you're supposed to take on what's considered to be an appropriate retaliation, the Straits of Hormuz. To put it in financial perspective, 90% of the oil that Iran produces goes to China, and that makes up ending on the year between 16 to 17 and a half percent of all of their energy. And if they were to shut down the straits, that likely would cripple the ability for that energy to go there. Now there are other ways that Iran could do it
Unknown Speaker 26:28
that'd be a little more complicated,
Pete Mento 26:31
but it also means that American energy isn't able to use it as well. It's going to cause, it could cause a 90 day expansion. So if it went on for 90 days, the average, the average cost of gasoline in America would go from about $3.15 today it's up around six and a half dollars in about 90 days for ships bunker, pardon me, out of Singapore, we're probably looking from $400 a metric ton to about 900 if it goes On for 90 days, this is going to have a profound impact on transportation costs, because that's a that's a major cost of transportation, you know, personnel, equipment, but fuel is a huge one. So I'm watching this one very closely to see how they do it and how it's really going to impact those costs. Because, you know, China's have a hard enough time right now living up to their manufacturing expectations, and if you more than double the cost of their energy consumption, that's not good for keeping stuff inexpensive for America. Yeah,
Doug Draper 27:32
yeah. Two things on that. One, if you're listening or know somebody like, Hey, I've locked in my fuel surcharge. I don't have to worry about it. Go to the section that says force majeure. This is kind of a war, and nobody's going to be exempt from this, right? So that was the one. What's that great point? Yeah. And then the other one is insurance, right? I just had my premiums renew at the end of May. And you don't think that insurance is going to go skyrocketing to have any vessel that comes anywhere near there to move and transact, move through the straits. So is it going to have a substantial impact, or is it going to be as substantial as what you just outlined, I don't think so, but it is going to be somewhat significant, and those premiums will need to be passed along. So don't think that you've negotiated a flat fuel surcharge, because go to your force majeure, and then insurance premiums will have an impact, for sure to
Pete Mento 28:41
piggyback that insurance. Comment, Doug, remember, they're not in a vacuum. They're not just insuring that ship that's that's close to that conflict. They're spreading out their their liability across all the vessels. So the the increased likelihood of a casualty is going to get paid by all the premiums. It's not just going to be the ones that are transiting that part of the world. So, yeah, you're absolutely right. Doug, people should be
Doug Draper 29:04
paying attention. Yeah, that's an excellent point. Insurance piece of it. So, all right, well, well,
Pete Mento 29:11
that's going to do it. Sorry, you want to close out instead of me? Oh, hold on. I open you. Close.
Doug Draper 29:17
You open. So I'll close it out. And first of all, Pete, it's good. It's good to have you back stateside. I'm glad we could make it happen this week, and you're still in a hotel, but at least you're here in America. And like you said, the fourth is coming up, and I am in more in agreement with you, Pete, we, couple of weeks ago, we talked at halftime. I think Fourth of July needs to be a week, right? It's on a Friday this week. Nobody's doing anything. Wednesday, Thursday, like, definitely Thursday, nobody's doing anything. No, I agree. I don't even know if we're gonna do a show tomorrow or not, but or next week, I don't know. We'll figure it out and let our team know, but the 200th episodes coming up, Pete, we got to figure that out. I think it's kind. Of a ask us anything. It could be business and trade related, or it could just be any random thing. So if you have thoughts, please send us, send us some notes, but for the here and the now, thanks for listening. For this edition of global trade this week wouldn't be possible without cap logistics. And Keenan, we appreciate that. And Pete, it wouldn't be possible without you. And I'm so glad that you're part of this, this podcast, and I love working with you, so I think that's it. Guys, appreciate everybody listening to the show and Pete, have a great week. My friend.
Unknown Speaker 30:30
You too, buddy. See you next
Unknown Speaker 30:32
week. All right. Catch you later. You
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