Global Trade This Week – June 28th, 2022
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Keenan Brugh 0:00
You're watching Global Trade This Week with Pete Mento and Doug Draper.
Doug Draper 0:11
Good day everybody to another edition of Global Trade This Week. My name is Doug Draper on the coast actually coming not from New Hampshire but from the great state of Massachusetts. Pete, how you doing out there?
Pete Mento 0:31
I'm doing great, Doug. And it's not a state. What did I say? It's, it's a Commonwealth.
Doug Draper 0:37
Oh, Jesus Christ. Okay, fine.
Pete Mento 0:41
I don't know the difference. I do notice that whoever did the the art theft of Troy brought him back.
Doug Draper 0:51
Oh, yes. While he's on vacation. You got a little haircut. Can you tell?
Pete Mento 0:56
I can. Yeah. It's nice. It's nice to see him back though, buddy.
Doug Draper 1:01
Yes, it is. And yeah, that's about it. So you can have vacations Pete I know this to our audience and listeners. We're gonna hyperspeed this one today. Got to crank through some stuff, but just a little recharge and Steamboat Springs, Colorado over the long weekend. Pete loved it. It's green, blue skies. fast moving water. checked all the boxes. I needed to recharge. That's awesome, man. I'd love to hear Yeah. Yeah. Yeah. So nice. Well, I'll flip it over to you. Do you have anything to share for the weekend? Or just jump into it?
Pete Mento 1:38
No, I'm gonna jump right into it. Because it's a it's a check shirt and glasses with no hats kind of edition of global trade this week. I don't have on a t shirt. And I don't have on a hat. Because I have our suppliers conference for Wayfair this week. So I am in Boston. I am not in New Hampshire. You know, I feel I feel drained and sad when I'm away from the Live Free or Die state. But here I am. You know, I do have some exciting topics this week. Yeah, everyone, everyone stare at my bald head. Look like private Joker. Donate right now. And the private private pile. I'm gonna do that. So hey, everybody. Great first topic this week, I want to talk to you about and that's that it would appear that Russia has gone full on into default on their debt. There are saying to everyone Hey, not paying Yeah. Sort of like, you know, sort of like the deadbeat Uncle, you've got where when the phone rings? And they look at that number that just like, Yeah, I'm not answering that one. Like, what is it? You know, that one guy in your family that you just know, has never paid a single credit card bill. They're always at your house for football on Sunday, because their cable has not worked in forever. Don't bother asking for the Wi Fi password because there ain't no Wi Fi. Russia is now on that list. They were severely in debt. Prior to like every major country, we're no different. But the difference here is is they're just not paying it. Now they would pay it is what they're saying they'd be more than happy to pay for their their debt cycle, but they can't. Because the international means for doing so has been taken away from them. Because the opposite foreign asset control is said to anybody. If you try to take a payment from Russia, we're going to seize your assets. So they can't do it. So Russia saying we would love to pay for our debt, but we can't because anybody who would try to take it from us would run themselves afoul of OFAC so it's sort of this catch 22 However, Russia has made no attempt to pay for it in any other way. So now people are wondering, was all of this really just an attempt to put Russia in a position where they wouldn't need to pay their foreign debt? Was all of this just a was this part of you know, was was this one big awful evil bloody terrible move to sit them in a situation with become not only international pariahs but also free of debt? It sounds crazy Doug but so does invading your neighbor you know it's it's not as nuts as it sounds if you begin to look at it. And I'm at the point now man where I'm pretty much listening to any theory
Doug Draper 4:36
Yeah, yeah, I've not even thought of that part of it. It's a little conspiracy theory stuff but I have mine on on on China as well. But absolutely. One thing I will agree on your with 100% is it's all part of the narrative as part of the script in my opinion, that's being written out. Hey, speaking of your uncle, I would pay you Hey, I was gonna bring you know the extra large pieces but You know, the car broke down, or the guys wouldn't take out $100 bill and it broke it a whole nine yards. So I think it's part of the narrative that we could pay. We want to pay, but you collectively, the world are preventing us from pain. And so they flip the script a little bit. So I think that's more on that line. But yeah, I don't know what a great first of all your uncle analogies on I love it, right. And one of the better cop out to say we want to pay because nobody can validate if they have or have the money. Right? We got the money right here. We want to push it, we want to pay the world, you're preventing us from paying you and then see where that grenade drops. Yeah.
Pete Mento 5:40
You know, when they eventually if they find hopefully it soon, when they find an opportunity to negotiate some kind of peace. I'm sure that part of this is going to be you know, and we're not going to come back and pay anything we defaulted over the past however many months, so sorry. That's gonna get harder this man, it's gonna be part of this. Interesting forest, buddy.
Doug Draper 6:02
All right. I don't know, are we allowed to cuss during the show? I know, I've dropped some stuff before and everything, but I don't we're not. This isn't primetime. Anyway, I it's not a bad thing. I'm here to talk about one of the best days of the year, which is prime days. 12 and 13. Love it. Love Fridays baby. But a couple of items on this year's prime that I wanted to call out. Yeah, there'll be good deals and all that kind of stuff. But there were three things that caught my attention. And the customer I was gonna say is spin that shit. So I'm just gonna say the STS right. So here's prime days, here's some stuff they're promoting, but a reality, they're just spinning it. Right. So one of the things that I read about is that they're really hyping the use of third party sellers. And they're saying, Listen, we want to support local, we want to support straw, small. And in exchange for you to support smaller local and our third party providers, we're going to raffle off or giveaway tickets to the Super Bowl. So that's awesome. Basically, what that means is they have the same labor shortages as everybody else, they don't have enough robots to get everything done. And so let's distribute the weight and distribute the load and push it out to all of our our third party sellers. That's my take on that one. The second one is there's going to be lots of specialty buys. And the SDS on that is holy crap, we got a bunch of are stuck, or a bunch of our stuff stuck in some level of the supply chain. And we only have like 20 skews when we should have 40 skews. So we're not going to tell you about the 20 we don't have we're going to hype the shit out of the 20 that we do. And I put those up, we're going to turn them quickly. And we're going to get some immediate cash because a lot of our cash is tied up in our inventory, which is stuck somewhere between yonder and hoe. Right? So I think this special bisection is really just a spin on we don't have our full product offering. And then the other thing, which is neither here nor Brad, and maybe it's not spinning, but I think you're gonna see these point of sale installment loans, which is basically buy now pay later. I think a lower a ll cure is a big one to do this. But I think that you're going to see quite a few of that being promoted alongside some of these, these special special discounts. So anyway, I think those are three things to keep out. Keep a lookout for and I love prime days, I think it's great. But that's my take got a couple of weeks now. What do you think? Well,
Pete Mento 8:39
I don't know if you're aware of this, Doug. But I work for a sizable competitor to Amazon. And while I was giving a speech for the Economist magazine, recently, you know, we talked about how all ecommerce really is is just the implementation of a very well put together supply chain. And Amazon is the king of the size, you know, size matters. And they're like any other retailer right now that they have got a tremendous amount of their cash wrapped up as you just said, inventory. And this is the granddaddy of all primes for them. Let's just be honest, they've got to liquidate, to liquidate a lot inventory. And we all know that Amazon is famous for burning inventory. Like literally, if they can't sell it, they get rid of it. So there's going to have to be some incredible just added control deals, right? I mean, you would imagine they got to get rid of some stuff. And if that means doing stuff on, you know, no interest loans where they're knocking stuff out over quarters, if that means just just pushing things. Maybe putting together ways to do, you know, point of interest where people just looking stuff up and they're giving, you know, just just blitz blitz sales where they didn't intend on putting things for sale. But if someone comes up with interest on slow moving inventory way, they knock it out. So be it. But they're gonna have to come up with something soon here, because there are going to be people who are buying over the course of the next couple of months on real physical brick and mortar, retail. And we already know that target Walmart, The Best Buy's of the world, they are actively talking about, you know, sales in the 50 to 60% off range, when I can't recall the last time that we have actively heard about sales that significant from that size of a retailer. And you know, in the furniture game in the home wares game in the world that I'm in, we have massive sales that are going on, on all the major holidays, and people just assume now, that's the thing, people just assume that whenever you have a major significant holiday, you're going to have some kind of even commerce thing that goes along with it. But Prime Day, way day, you know, these are the things that people wait for to get that big pump. So I hope Amazon does it this time. Because if I go online, and it's more big TVs, if it's by another robot, if it's the same crap, and as every year, I'm not going to be impressed. They need to really bring stuff that all of us want to buy. But
Doug Draper 11:11
yeah, hopefully those third party sellers will bring that to the table. So it'll be interesting. We'll have to have a conversation post prime days,
Pete Mento 11:19
we'll be buying things on Wayfair. Because you know, to superior platform. So
Doug Draper 11:23
yeah, well, you're in the office, you got the salmon background, what is way days? I'm assuming that's comfortable. Give us the
Pete Mento 11:32
dog? How dare you? Okay, how dare you that you don't know. Wait days is something we spring on people that happened about a month and a half ago. And it's you know, same general idea, we don't tell you what's up, we just tell you that it's coming. And we have Posterous deals on things that we have in inventory, and we sell a ton of it. And it is all hands on deck to get everything out. I mean, all hands on deck to get everything out. Make sure that the platform is working, make sure that everybody across the entire supply chain is able to make it happen. minutes. It is things here get crazy. So it's good. Good.
Doug Draper 12:15
Well, let's jump from there into our halftime. So I don't want to go I go first. You always forget me and everything
Pete Mento 12:23
you go for except that you go first system.
Doug Draper 12:26
All right, I love it. So here's the deal. Something that I've heard about before, and this is getting me fired up. And I'm glad I'm going first because your your topic is a little bit more positive. But Newt so this is June 30, right or two days see the second quarter, which means we're halfway through the year. And I'm getting a lot of stuff that I've seen in about Mid Year resolutions are kind of now a thing, right, like a mid year resolution. And that, hey, you may not have finished your New Year's resolution, but that's okay. Now it's time to reset goals and you can tell by the tone of my voice. Now things are really worth now it's really important. So you can, you know, really focus on your mid year goals. And, you know, the six month goals are the ones that really set you apart, blah, blah, blah, blah, blah, blah. How about this? How about you decide to take an inventory of your life, make a change that that idea and create a SMART goal. That's something I learned like in middle school or high school Specific, Measurable, Attainable, Relevant, trackable, you implemented all that stuff, you are going to hit your goal, right? There's No participation ribbon in changing your life and trying to get goals and New Year's resolution. So I saw that I just get irritated. And I'm trying to mellow out and I get that some people or whatever, but I'm just disappointed that we've come to the fact that New Year's resolutions are now a thing that's like, you know, death of hope you use a quote from you, my man, it's just come on. We're better than that. Everybody here collectively is better than that. And I'm disappointed in seeing it. I'm disappointed in people talking about it.
Pete Mento 14:04
I think that every day in every sunrise is a new opportunity for a new beginning. I feel like Instagram models you know that I'm just sitting there and like my Speedo bare chested with one of those beautiful quotes above my head you know like every sunrise is a new opportunity to be your best self you know? Yeah, I think they were mid media resolution is once we get off here is to have Kenan text you an address of the closest dispensary and after work you need to get a whole bunch of edibles and go home and listen to the Allman Brothers eat a peach album and calm down. You are you're wanting to fire it up, man like aren't we all in the business of improvement as supply chain professionals? Like isn't that what we do? It's just trying to make things better, buddy. I mean
Doug Draper 14:59
come on. But making an improvement means you have to see it to the end and make the improvement. Right. You can't just give up midway through and be like, I'll just do a new bunch of of goals, you're gonna get fired in life, if all you do is abandon goals that you set up for yourself. That's how you move forward and progress. My personal opinion
Pete Mento 15:18
of being nimble. And Agile is also an important part of being human and understanding when you have to change course and direction. Now, I'm not justifying this ridiculous idea, because I also agree with you that an important part of setting goals is following through. But you know, we live in a kind New World, buddy. And not everyone's a hard ass like you. So yeah.
Doug Draper 15:40
All right, well, I like your topic better. So we're just gonna pivot off that one thing about pivoting, we're pivoting towards
Pete Mento 15:45
yours. Yeah, but so, you know, I'm a big fan of history. And I'm a huge fan of American history, in particular in the Revolutionary War. And it's July 4 Next week, and what better time to talk about the founding fathers, who recently have not been given a whole lot of love, Hey, you want to get a group of people really fired up, start talking about it, we should keep statues up. But whether you like them or not, whether you consider them men of their contemporary time, they're all fascinating individuals. And for the most part, they are misunderstood. We have either given them sort of this idle statue status, we really haven't looked at them as human beings. And we haven't spent a lot of time thinking about, you know, their individual contributions. And I love them. So as a as a young guy, I read a lot about them. And not all that long ago actually made 24 individual videos that I posted on social media 24 individual Founding Fathers and I because I find all of them fascinating. I'm a Mason, as I've talked about in past past couple trades this weeks, and most of the founding fathers were Masons. And my my favorite Founding Fathers I have to were Benjamin Franklin, who I can't get enough of I think he's he was fascinating, in a lot of good ways, in a lot of bad ways. And I'm also a positively huge fan of John Adams. So those are my two favorites. The reasons I like both of them are very different. I think that that John Adams was amazing. Were things he's not really known all that much for was he was deeply in love with his wife, Abigail, he wrote her practically every single day, he was incredibly devoted to her. And he considered her to be one of his closest confidants and advisors. So throughout his entire life, even when he was president, he would seek her counsel constantly. It's a beautiful bromance story between two people. And he was a bit of a prick, Doug, like he, he, he was, he was really unliked. But he was, he was really, really unliked by most of the other founding fathers. He had very few friends amongst them. And it it's shocking that he was successful as he was. The reason I like Benjamin Franklin, is the exact opposite. That guy was a lunatic. He really was a lunatic. He was old as hell. He was abandoned by most of his family, his brother, who took them on as an apprentice used to beat the hell out of him. So he ran away, and started his own thing, mostly with stuff that he stole and learned from his brother and kind of stole his business. He, he was a crazy inventor. He used to air bathe, he get up in the morning, completely naked and open all the windows to his rooms, and just walk around bare ass. And then he demanded to be served breakfast, completely nude. And when he lived in France, he would ask that the female servers that brought him breakfast were nude as well, because there was nothing wrong with the human body. He was just this crazy man. And he was very good at playing a character. He very rarely acted like himself. But he was a great mentor, and a wonderful salesman, and also an incredible academic. He also disagreed with his son who was a Tory, and, in fact, the English and because of that, he left his son nothing. So he was one of the richest men in America. And when he died, he left his son absolutely nothing. So his son died like destitute is he gave his money to like, Penn State, strangers and people they barely know. And it sounds like Hey, where's my money? He's like, Yeah, yeah, nowhere. That's where it is your trader. I mean, he was. He was brutal. And so if you have a chance to read about John Jay read about Dr. Joseph Warren. Definitely read about Paul Revere. He was he was a traitor. You know, in the end, he was a coward. Read about Sam Adams. Sam Adams was not a brewer. He was a Malta guy was like a ruthless businessman, anyone anywhere. John Hancock, John Hancock was was like the Paris Hilton of his day. He was not the vain wealthy jerk of a person. Read about them because they're fascinating people that had the courage reach to found this country. And they're very, very interesting human beings. So Happy Fourth, everybody. I know our country is certainly divided these days, but it's based on some interesting fundamentals. And it's a hell of an experiment. And regardless of how you feel about where we are, I think you should be proud of how far we've come. So Happy Fourth.
Doug Draper 20:21
Yeah, I think we shipped there's Drunk History out there. Changes, Enzo. mento history and, and POC all of those amazing things you have.
Pete Mento 20:32
Yeah, I could talk about it all day. But
Doug Draper 20:35
yeah, I could tell the passion. Alright, man, let's flip
Pete Mento 20:39
over third quarter. Yes, yeah, no, no, you're going up. I was like, at the end, I can't remember. Now. I mean, it's just going on with your short term memory, buddy.
Doug Draper 20:49
I just got to get the fog out of my. I got two kids from college back home. And sometimes I'm very proud of them. And sometimes I'm like, What are you doing? And so I'm fired up about time. They are wonderful children. I love them to death. They're very successful, and I'm proud of them. But sometimes I'm like, What are you doing? It's time that that so anyway, not only my decompressing from my halftime topic, but the reason I brought it up was an experience I had, you know, over the weekend. So anyway, Alright, I'm done. We're going to shift over, you know, the best thing to go from being fired up is to talk about trains. And that's what I'm here to do. So, yes, I haven't talked about trains in a while. So I thought about that today. And something popped up that BNSF is has a July embargo on westbound freight going into the wild places, shocker, Southern California, and a couple of different reasons. One of it is just general congestion. But one of the ways that I thought was a little bit of not truth, but I did some more research is that there's a lot of weather delays out in California, specifically to track infrastructure. There's been some monsoons down in Mexico that have Washington track out there trying to kind of realign our assets, which the ocean container world has been talking about for for two plus years. And they're essentially saying, Hey, we just got to slow slow our roll, and we're not going to take stuff into into California. The exemption is intermodal. So that's going to be the ocean freight exports, things of that nature. And the commodities that they're targeting is automotive ag and some industrial commodities. So here's the other piece is that apparently, you have until July 5, to basically apply for a permit that says, Hey, I know you're doing an embargo west bound, but here's why my stuff still needs to move. Now, I don't know if every application is approved sandwiches approved willy nilly, by whomever at the at the BNSF. But anyway, you know, I'll commend them a little bit, maybe a lot to say they're doing something, instead of complaining about it and pushing it back on to the consumer. Yeah, it's gonna suck if you're trying to get stuff out that the short term pain, maybe the long term gain, so you know, what, they're doing something they're trying to move the needle forward. And, you know, I'll give him some credit for that. The last piece on this piece, and we've talked about the ebbs and the flows, and the truck market, it's not static, it's like an ocean and it goes up and down and it reacts to different things is that some of the key markets that are being embargoed, you got to watch out for truck rates, because if you're on the spot market, and you're trying to move stuff westbound, like there's 14 or 15 P states, a lot of them in the Midwest. And you're gonna flip your cargo from rail to truck, just be wary, it's gonna spike in the month of July, I suppose. Right. So that's the other thing that I didn't read anything about that, but I'm assuming that's the case now in the volatility of the spot market trucking industry. So there you go. There's my train update for the week.
Pete Mento 23:57
Yeah, man, anytime I hear about applying for exceptions, you know, like applying for a voucher for an exception, you know, where my head immediately goes, and that's to regulatory capture corruption. You know, like, I'm big enough, I move enough cargo, you know, who I am my stuffs moving. And then there's somebody who's, who's small enough your stuffs not this. It's just, it's wrought with opportunities for peril. And then, you know, this, this idea that someone can arbitrarily make some decision that makes the determination about how such an important part of the commercial success of this country is determined. It's just preposterous, man. You're putting way too much power into the hands of and treating it as a commercial decision, when in fact, I can make an argument that it has a lot more to do about the strategic infrastructure of our country. And I don't I don't like that it's being put in the hands of someone who's making a commercial decision. And I think that we should Have a little more insight into that Then something that seems or sounds like it was done in spur the moment. Yeah, I don't do something about this just doesn't smell right duck. Good points. Good points. Alright, bring us home. Go hippo wise. That's what you're getting out of that one, buddy. Skeptical hippo. I almost did a drone story this week just to send you off into the long weekend. Annoyed, but I didn't. I did the next best thing, which is electric vehicles. So I got a, I got a statistic here. I don't want to get it right. So the Asia Pacific market right now are saying it's estimated 625 billion with a B is the current scooter market based on 260 million units between 222 and 29 being sold. That's like a ridiculous number, right. So a quarter over quarter of a billion units being sold between now and 2029. And a lot of that being driven by delivery services. So when they say scooters, they mean everything from a sit down version to just those regular stand up ones that you and I would raise somewhere in Denver and kill ourselves on after one too many beers. And the when you begin to read in the investor stuff about this, they're saying that a great deal. This has to do everything from food deliveries, to small small parts of deliveries over small amounts of space. A lot of the people are saying, you know, parts deliveries for, for small businesses, and Courier deliveries, but also, the Amazons, the Alibaba is of the world getting stuff sent via deliveries next door next day deliveries. And that because the price of fossil fuels, the unavailability of cars to get from place to place, congestion, etc, etc, etc, that this type of investment is making more sense. Also, unlike cars, they charge faster, they're easier to charge, and they can be stored generally inside. So someone can make a relatively small investment by one of these and take their investment indoors at night. And there's less of a chance of it being stolen. Is this the code cracker duck? Is this the code cracker for Asia Pacific that could eventually become the code cracker for the West. Are we about to have these two wheeled nats blasted around all over the place? Because I see them in a lot of population sites. I'm seeing more and more of them here to Boston, where there's zipping around traffic just you know, wait for him to go splat holding someone's five guy burger to bring to some guy at lunch. You know? Is this it? Is this what's going to solve the Amazon same day delivery problem? Hipsters with beanie hats in August on scooters? No. No, thanks for coming, everybody. We'll see you again next week with another trade this week. Yeah, so you don't you don't think this what's gonna do it? Oh,
Doug Draper 28:16
yeah. So here's it's so funny that you said drone, because when I was thinking about your topic, when he kicked him over, I literally wrote down drone on the ground, right? Because, first of all, is it going to have some niche application? Sure. Yeah. It'll I think couriers moving. If people even shuttle documents around or small little widgets that need, you know, urgency and a commercial application. Yeah, I could see that. But I still don't see somebody throw in a sack like say, like Santa Claus over their back and make another round of deliveries, you know, up and down Main Street. You know, here's your here's your five guys burger. And here's your pin. And here's the duct tape that you forgot. You know, so I don't miss application. Yes, solve the ultimate problem that we've talked about. Now. It's in my opinion, it's a drone on the ground and has some application, but it's not the mover and shaker are the linchpin to get us out of
Pete Mento 29:15
this. You're not going to be happy until the world's just being dismissed trucks everywhere. It's not going to be happy. Yeah, I don't know, man. I think so. This raises a lot of great applications for this. And I think that the market will embrace the concept. I think that this could be it but
Doug Draper 29:40
I don't know I picture those pictures you see on Reddit or whatever, where there's somebody in India driving a scooter and they have kept, you know, 20 things stack 15 feet up in the air and they are navigating through traffic on a dirt road with success. You know, I just kind of envision that aspect. But niche applications in a commercial environment. Yeah, I think that there's something there, but not residential ecommerce type of
Pete Mento 30:11
negative one. I love it when we go through a whole positive guy this week. Yeah, yeah. I'm gonna end up positively. So I want to thank everyone, especially our friends at CAP logistics for yet another positive week of global trade this positive week. And as always, we want to thank cap logistics for supporting us and supporting the show for lending as Keenan for getting him off that work release from the fifth grade class. This is Baker's fifth grade class in Colorado. We hope that he gets enough credits to get the sixth grade this year. Good luck, Keenan, hope your macaroni painting came out. Okay. We'll be off next week for the holiday and we'll be seeing you again the week after Doug is always you are the wind beneath my wings, buddy. I'm glad Troy's back. And I hope you have a great holiday weekend. God bless America. And we'll see everybody again real soon. Thanks cap logistics. Thanks, Doug. Thanks. Take care.