Global Trade This Week – June 5th, 2023
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Keenan Brugh 0:00
You're watching Global Trade This Week with Pete Mento and Doug Draper.
Doug Draper 0:10
All right, welcome, everybody to a another edition of global trade this week. I am Doug Draper one of your hosts. I'm joining you on this episode from lovely Fresno, California. And literally on the other side of the country is my partner in crime and co host, Pete mento Pete mento, who has his chair flipped around so both of us have different backgrounds on the show, just keeping it keepin it real. How you doing?
Pete Mento 0:38
I'm good, buddy. It's gonna freak folks out there. They're gonna wonder what's going on with the show. Yeah. But we're, we're bicoastal this week, not bipolar. So I'm glad we gave him a different view. I told you. I like I liked you with the the nice internet and the professional office. It's a good yes.
Doug Draper 0:56
My office in Denver is like a 10 by 10 Q and here. It's got a little echo. So if there's an echo to that to our listeners, I apologize about that. But But yeah. So Pete, when I come in to California, especially the Central Valley, huge ag industry. And it's not making news as it was in the atmospheric rivers. But there's still a big concern about the amount of water that's coming down from the Sierras and farmland and everything else. And I flew over Yes, I came in like eight o'clock last night. There is so much snow still in the mountains to unbel. It looks like it's the middle of winter. It's unbelievable. So I think that there's going to be a water situation out here for the entire summer. It's just I was blown away at how much snow was still up in the mountains.
Pete Mento 1:43
Yeah, it's pretty cold here. You know, we went to the White Mountains last week. I didn't see any up in the peaks. I know there is some still I know they're still they're actually still skiing up in Vermont, and northern New Hampshire, and the higher elevations and like it documents and stuff. They're still skiing, but I didn't see any. However I it has, as I've seen you and Keenan before the show, it's been in the 40s and lower 50s. The last couple days been the 40s upper 30s overnight, and a Hampshire last couple of days. But it's been ridiculous whether 90s for a couple days 30s It's miserable. And then on top of that I suffer from seasonal allergies like all American nerds. I think it's it's actually part of part of the deal. So these past couple of days with that low pressure, man I have been I mean just blowing snot in season and it's been bad. I've before the show, I had to blow some Flonase up my nose and take take some pills like an hour ago. So hopefully I make it through without sneezing so hard. I blow my laptop across the room. We'll see how I do.
Doug Draper 2:55
Well, it's a good start with a bunch of old guys left we checked the box I'm talking about whether in personal ailments Yep. So we're definitely not showing our age on on this one.
Pete Mento 3:05
So did you did you you must have seen what I put on LinkedIn last week.
Doug Draper 3:10
I posted a couple different things which one I said
Pete Mento 3:13
about the show we should change the name to two old guys complaining about things global trade this week because we we just basically we just like to cranky curmudgeonly and I remember when we I was young. Yeah, it was it was bad. We decided like the two guys in the balcony on The Muppet Show.
Doug Draper 3:31
Oh, love it. Yeah, more. What were their names? I don't remember. Yeah, remember? Anyway, that'll be somebody listening will know.
Pete Mento 3:40
It won't better and no, because I don't think he'd The Muppet Show. Yeah, God, there's no way that we stopped
Doug Draper 3:45
them with some old school Chicago Transit Authority and Robert Lamm back in the day we'd have them on.
Pete Mento 3:52
I was shocked. He knew that the Doobie Brothers were, that that blew me away, and that he had actually been to the Doobie Brothers show that that freaked me out a little bit.
Doug Draper 4:02
entrepreneurial spirit, he's selling glow sticks to a drunk college kids. So I'll give him credit for that.
Pete Mento 4:07
God bless you can.
Doug Draper 4:08
Anyway, let's do this. We're going to start with we're going to tag team a topic because it is very relevant, very important to our industry. So we're gonna do three topics this week. And we'll start with the with the one that we'll share. So kick it off, Pete.
Pete Mento 4:23
Yeah, we'd be remiss if we didn't spend a little bit of time together talking about the work stoppage on the West Coast last week, and you could call it whatever you'd like. I don't. I don't think that we could. I don't think that we could accurately call it a strike or work stoppage because I don't think that they call it a strike or work stoppage. But boy did it feel like one on the West Coast last week. Everything you know, it felt ominous. It felt like something almost out of a horror film. Everything was going perfectly fine. And then suddenly people weren't showing up for work. They weren't showing up for their shifts. They were, they were slowing down. People were. Half of them were showing up for the shifts. But long story short, the ports were unable to work at full staff. And it was big news, big, big news. So on Friday, and over the weekend, if anybody was reading the trades, if you were on LinkedIn, if you were on Twitter, it was everywhere. And what's, I guess a little ironic is, we've been shoving so much freight onto the East Coast, because we've all been sort of tenuously waiting for something like this to happen. And it finally has, but volumes have been so low on the east coast on the West Coast. I don't know. I mean, they didn't really feel like it. It happened, you know, it was it. If you, if you were gonna pick a time, it is before peak season, if there's such a thing this year, but it did get a lot of attention. What's unfortunate is there's there hasn't been a slower period, there hasn't been as precipitous, a downturn of freight rates and and volumes that we've seen in a long time. And I think that the the ship owners and the carriers and the ports have got the port workers in a bit of a pickle and a bit of a bind, because I don't know how much leverage the unions really have right now. They had a whole lot more years ago. And they still got plenty of leverage. Don't get me wrong, but they don't have as much as they used to. And it's unfortunate, because we've gone a year now that a contract, and they probably picked the wrong time to really push the leverage, Doug.
Doug Draper 6:40
Yeah, yeah. The two things that caught my attention on this as the headline for this one, Pete was LA and Long Beach, Oakland and Seattle. So it was a West Coast, not just not just la which which jives to your point is that, alright, where's the leverage? The volumes are down? How much interruption? Can they cause? Well, let's get our brothers and arms together. And let's talk about all of the ports on the West Coast. And then that got me thinking about okay, well, there's got to be an alternative motive. motive here as well. And I'm just going to read it verbatim that I that I found this is specific to the memorandum of agreement between the Port of Seattle and the Longshoremen up there. Yada, yada, yada. It's like 45 pages long, but it says the Memorandum of Agreement shall remain in effect through the duration of the collective bargaining agreement, which is December 31 2023. So I think the play here, Pete is that, well, let's brothers and arms, let's try to get this thing together. And let's stand tall for the entire west coast. So that struck me as this one is that you know, what we can't do as much damage and in impact the economy as we may have in the past, we still need to be visible and heard. So let's get everybody on the west coast to do it. And oh, by the way, a longshoreman agreement up in Seattle Tacoma ends in six months. So anyway, that was kind of the things that caught my attention on this one.
Pete Mento 8:20
Yeah, the word comrades comes to mind duck. Yeah, comrades, you know. And it's, it's effective. And you can talk about the lowered volume. And that was brought up a lot. When you read the articles that have been posted in the conversations in the trade. The timing, because of low volumes, doesn't matter. But West Coast ports are still taking in plenty of volume. And there's still plenty of shipping and plenty of supply chains that come in to the west coast. So talking about as low volume as you want, still plenty of ships is still gets plenty of intention. And nobody wants to see this. And it's just going to make more, more pain for the East Coast and for shippers who are going to just end up saying, Well, I guess the long national nightmare isn't over on the West Coast. Hey, guys, what do you got for me on the East Coast, and it's just going to bring more pressure on rates on the East Coast, and on the ports on the East Coast. And as a guy on the East Coast, who loves him some port of New York, New Jersey, you know, in Boston and and Norfolk and Savannah and Charleston and the list goes on and on Jacksonville, and you know, I am happy for him. I'm really happy for him and I hope they keep some of this this freight. SO HARD WORK imports, Norfolk this goes on. Yeah, but it's, it's better for the country as a whole that we have that diversity of connectors, and that we're able to use all of them. And this has been going on long enough man. I think that both both of these connected parties need to sit down and realize that their leverage has deteriorated. That this is getting to the point where it's it's dire follicle while at the same time being childish, and they need to find some way to bring some degree of of finality to their agreement.
Doug Draper 10:09
Yeah, yeah, it's interesting. You know, we spoke I want one of the episodes during, during the pandemic, when we talked about the secondary and tertiary reports, ports, being the beneficiaries of the congestion out there. And once you give something away, it's hard to give it back or whether you give something in hard to get it back. So it continues to validate that all the ports that you just referenced on the east coast, the infrastructure, the opportunity was not a blip. It's real, it's sustainable, and it diversifying the way that we enter into the United States. And the way we manage our imports, I think, is overall beneficial by having it spread out more than it was just pre COVID.
Pete Mento 10:52
And when they learned that it wasn't so bad, when they rip that band aid off, and they use an alternate port, with different Draiman in different over the road carriers, different bonded facilities. And when that importer says, You know what, this, this works. Service was good. These two providers were good, I think we'll be okay. It demystifies the idea that the supply chain partners that they had were infallible, and now it changes their mind about about defecting to other providers down the road. So it's dangerous. It's dangerous for the incumbents is really what it is.
Doug Draper 11:29
Yeah, that's it. You're right. You nailed that. So all right, well, I'm gonna shift to my first topic, which is another timely headline, blurb from the last handful of days, which is the US and the Chinese warships become dangerously close in the history of Taiwan Strait. And he they almost collided, basically Chinese warship 150 yards or something. And apparently, the way I understand it, he is the ship sped up this is the Chinese ship sped up, change course, radio to the US destroyer and said, Hey, you're going to change your course, or we're going to collide. The US set back down, what are you doing back and forth. And ultimately, US did slow down and change their course. So there wasn't any type of collision. So obviously, it doesn't take a rocket scientist to understand the posturing that's still going on, and continues to validate the importance of Taiwan from both entities. And although we were agnostic for many, many years on our support, and wartime efforts for Taiwan, obviously, that's changing with the politicians and the meetings that we've had over in Taiwan. And the fact that we're doing joint missions, this one was actually a joint mission with Canada. So we're bringing in some of our allies to kind of cruise around the island. And and make sure there's no funny business going on, so to speak. But yeah, it was pretty bold, pretty pretty out there. And I don't know, it's just another tangible example of of what's going on and the cat and the mouse. So it'll be interesting to see how this progresses, I guess is my my take on it. So power moved by China? Yep. Yep. Is there going to be more cans follow up? Yes. I wouldn't say World War Three is going to be played out on on YouTube and Tiktok. But you've probably seen the videos that that have popped up just in the last couple of days. So just another tangible example of the tensions that are continuing to evolve between US China relations. I don't know Do you have any take on that.
Pete Mento 13:51
So I got plenty. So been fortunate enough to hang around with a lot of real dangerous guys in my life, whether it's Special Warfare guys, or professional fighters, and they have a couple of things in common and one of them is they don't get mixed up in fights. They don't need to be mixed up and, and it's something that I have a lot of respect for. And a very memorable moment in my life was being out with an honest to god UFC fighter, not just an MMA fighter, but a guy who's a UFC fighter guy that you've seen fight and drinking with him one night. And that evening, there was a scuffle that went on and someone started with him and got in his face and knew who he was and wanted to get him going. And he was like, Hey, man, I don't know where you got a problem with but it's not with me. And just the escalated it and said I think we should probably get going. And we all left. And there's there's there's certainly a lot of ego driven comfort that can come from having someone start with you and finishing it for them. But there's also a lot of bad things that come from that as well. And China knew we weren't going to do anything. It gives them all kinds of propaganda that makes them be able to beat their chests in front of a lot of people. But if there's one thing that China doesn't want to do is fuck with the US Navy. And sooner or later, they're gonna find that out. So, let them cross bows, let them you know, make starboard deport passages and do all kinds of dumb things underway. But all they're doing is proving to the world that they're telling dangerous games at sea with both people's lives and their vessels. And eventually, they're gonna learn the hard way. This isn't the Navy to mess with. Yeah, I'm very confident with that. Very, very confident with that. Yeah, so I get it, I get it. What's scary is though, is that when you do dangerous things in close proximity with people that are dangerous, sooner or later, something bad can happen. So I just I just hope cooler heads prevailed in? Yeah, no, that was I forget what the acronym is, but f around and find out kind of moment. And if people don't start backing down, it could get pretty ugly.
Doug Draper 16:16
Yeah. Or there'll be a misstep. There'll be an honest to goodness, just human error on either side, or Mechanica. You can pull back from that's kind of what begins really,
Pete Mento 16:26
yeah, I don't think people understand just how often things break underway. And you're, you're farting around in a way like that. And you have a problem with a pump, you have a problem with who knows what, and your secondary system fails. And then before you know it, you can't turn one way or the other. And now, you know, you're playing cute games, and you got a real problem. So stupid.
Doug Draper 16:50
Yeah, well, fun. Part of the show now is halftime, obviously brought to us by Kenan, the crew at CAP logistics. Check out their site cap logistics.com, they can take care of your transportation logistics need, we wouldn't be here Pete without those guys. So we always want to make sure we can give them a shout out. But halftime, the beauty of is we can talk about whatever we want doesn't have anything to do with with logistics. So I don't know. You want to kick it off? You want me to jump? Yeah,
Pete Mento 17:19
sure. Sure. Yeah. I've been really fascinated by this story about legitimate cannabis companies, apparently having some real financial problems. And reading about a lot of them. I guess over the course of the past year, a lot of these companies have been closing, a lot of them have been merging. Many of the ones that were hoping to get themselves started up and take that next big step. If they haven't been started, a lot of ones that had bought real estate purchase licenses have been returning them and states where it's legal. There's been an overabundance of them. That's why I mean, you think right, this was something that everybody had been running toward? Well, a couple of reasons. One, during the pandemic, when people were home, smoking a lot of weed. I guess, you know, once they started going back to work and getting their lives back together, again, just didn't really fit with their lifestyle, to people are buying the necessary, I guess, accoutrements to grow their own. So you have a lot of folks that are growing their own marijuana, and I guess it's a thing to share it. So let's say I grew it at my house, and you're like, hey, you have like a dog. I've got a whole bunch here. You want some and you're like, chirpy. It's sort of like if I grew too many zucchinis, I guess, and they're just give it to their friends. I wish I had a friend that grew too many zucchinis. So I read about this in Massachusetts, you can have up to 10 plants. And as long as you don't charge your friends for it. It's perfectly legal. Yeah, as long as you friends over 21. And then third, because it's so heavily taxed in most of these states. There's apparently still an incredible underground market for the cultivation and sale of marijuana, because it's just so much cheaper when the taxes aren't involved, that it's been really undercutting the legal sale. So there's a huge black market for it all over the place. And as they've been able to, I guess, grow it sometimes right with the legal stuff and sell it underneath the nose of the state. It's, it's only made them able to sell it at an even more admirable price. So it's been a real problem, man. And we're about to have legal weed here in New Hampshire, and we're not going to tax it. So there's not going to be any sales tax on marijuana. They're just going to sell it through the State liquor stores and give the profits back to the state. So I'm wondering what that's gonna mean for us here. Probably gonna mean everybody from Vermont, Maine and Massachusetts is going to drive here Buy it, do and then go back to where you came from because we don't want you in our state. But
Doug Draper 20:07
well, the barrier to entry was worth it. Like you said back in a pandemic here in Colorado, I don't even know how long it's been legal a decade or so. And it was novel, people jumped into it. But if you didn't get into the weed business in Colorado, within the first year, 18 months, it went corporate, you couldn't get back in. So a couple of Yahoo's like you and I tried to open up some Weed Shop, and miss the opportunity if you didn't do it in the first 18 months from what I've seen, but all those things, I'm not going to rehash what you just said that all of those things are happening here in Colorado. And it's starting to get a lot of a lot of attention, because it is a pain in the ass to get up and running taxes the whole nine yards. So let's hit the brown market. It's called a side hustle now. And, and, and go from there. So
Pete Mento 20:56
I gotta believe it's a lot of work, Doug, like it seems like a real pain in the ass to be involved in that business. You know, so.
Doug Draper 21:05
All right. Well, mine is talk a little bit about everybody's favorite company. Actually, it's not everybody's favorite company right now. Chat GP GPT. And the whole AI thing would probably fit that category. But Apple stock price, just this morning hit an all time high $183 or so putting a market cap at 2.6 trillion. Last week, we talked about how a million just isn't what it used to be. So Apple is one a handful 2.6 trillion, I think they're 400 billion bigger than the next company, which is Microsoft. So anyway, two things. Number one, there's always some statistic out there that just validates how stupid people are, or how much we missed the boat. If you invested $1,000. At the IPO of Apple back in 1980, you would be worth 1.8 million. So that's a you're a complete moron. Why didn't you invest in this company? Hindsight is 2020. But one of the things that it's on the on the that that's coming out, the people are thinking there's some speculation is they're coming out with a mixed reality headset in the next couple of days, watching it $1,500. But the bottom line, Pete Is it still like goggles you have to put on and I think that, you know, maybe Apple glasses were probably a little bit ahead of their time. People like you and I are both wearing right now I think glasses are a little bit more acceptable. Like I'm not putting a headset on right? I'm not a gamer. So if I was a gamer, maybe. But I'm not putting the headset on to do this show. I'm not putting a headset on to do a zoom call with or a team's call with, with with a customer or a vendor or anybody. So I don't get it. It's cool that Apple's is $2.6 trillion company, I just don't see how the headset is going to continue that trajectory. And I think in a couple of months, it's going to fizzle out a little bit. And it's just not going to be what it is not that the product is inferior. It's the fact that people have not adapted. The simple fact that you're putting these massive goggles on to go in an alternative world. You know, I don't think we're ready for Ready Player One. So anyway, that just caught my attention.
Pete Mento 23:20
I'm waiting for the virtual reality thing to all the business uses. I see for it repaired experimentation, I think I think when that happens, it's really gonna
Doug Draper 23:30
Yeah, yeah, you're right. We talked about once I think, like the road checks of a truck, right? You put on these goggles, you walk around? I don't know, are my brakes legal? Or not? How? How many millimeters? Or is this light operating? And the system will tell you, right, just right there on your glasses. So the commercial application for sure. So hey, I just almost forgot Castlevania update. So here's the deal. It's not open yet. There's going to be a series of this is what's going to happen with the opening a series of soft openings, not just one, but several. We got to get tickets. It's going to be limited time. It's like just weekends only. And then it's going to be five days and then seven days. And it's going to pretty much be six to eight weeks before muggles like you and I can even get in there to to see the new menu. So I'm sure there'll be some backlash on that. But that's how it's gonna roll out. They gave the menu last week gonna be a slow rollout. But you and IP, were not saddling up and going to Castle Vinita anytime soon.
Pete Mento 24:37
Doug, we've got to know somebody who knows somebody who's got I mean, there's got to be we have to know someone who can get us into that place. Yeah, this is like a South Park episode. Between the people that we know we've got to know someone that can get us into Castle bonita. I got a few weeks off, bro. I mean, I've got a project I'm working on right now. But I've done most of the like The onsite works and I'm just writing stuff telling you I'm telling ya that will fly out if you can if we can get in there.
Doug Draper 25:08
That's right. We got to somebody's got to know a guy. And you're exactly right. It is a South Park episode. And I will bet that Parker and Matt Stone will do a parody of it if things get kind of crazy and, and the opening comes out. So
Pete Mento 25:23
my authority Yeah, asses, man, I got the mirrored sunglasses. I got the whole thing.
Doug Draper 25:33
Yeah. That's awesome. All right, what's number two?
Pete Mento 25:38
Number two for me is non surprising news from OPEC. And they've actually ratcheted it up today. They are they're ratcheting back output. OPEC is just like, whoa, whoa, whoa, crude oil prices are way down, we cannot have this. This is bad. For us. It's particularly bad for this, this new relationship that we're trying to build with our good friends in Russia. Yeah, close that pipe drain here. They've absolutely slowed down drilling. And they've they've slowed down output. And then on top of that, they've increased prices pretty much everywhere. So that news came out today. And what that means in the macro world, is you're going to see the price of crude, it's going to react everywhere, right? So you want to see crude go up, you're also going to see exploration increase. So you're going to see drilling happening in places where now it's going to be more financially rewarding for them to go after it probably see an increase in fracking, people working in the oil sands in Canada, more exploration in Canada. So probably attitudes being a little more open in the United States for oil exploration and drilling and extraction, right? Macro wise, also, it's going to mean that fuel prices are probably going to remain where they are. Right now you're starting to see some easing around the US, which is it was it was nice, particularly the summer when everyone's driving everywhere, sad trombone won't won't walk near the end of the summer, now, it's probably going to be stable. When we started, this would probably would have affected us like August, September, it's probably gonna be flat, you know, when those months begin to end, those those numbers are probably going to continue on, which really sucks. And also, it's going to end up being on a micro level for us as people in logistics, it's going to affect transportation costs. So as we head into our negotiation phases, for the coming fall, you're gonna see this actually hitting up our logistics costs. Another thing to keep in mind is diesel prices are probably going to increase, because these barrels of oil are going to go toward gasoline first, then jet fuel, then they hit bunker C, then they hit diesel, which means those are also going to increase. It's sad news all around my friend. It's also gonna be a political issue. Because as crude oil continues to go up, and gas prices stay high, everyone's going to promise it and get them to go down. Not a lot of President can do about this other than letting everybody frack their backyards, which probably not the most popular way of dealing with it.
Doug Draper 28:21
That's, you know, if you just if you take out the word oil, and insert the word garbage, and talk about the mafia in New York City, everything you've talked about could pretty much be the same. It just baffles me. What doesn't baffled me. It's amazing that it's so transparent that the OPEC and these these countries are literally a cartel. Like, they literally say, we're going to do this because we are not making enough money. Right. It's, it's insane. So I saw when you kick this over to me, I went and looked at a couple of headlines, and even the headlines are kind of confusing, right? This was not a public this wasn't USA Today, or Wall Street Journal. But this is crazy. This I'm gonna read two headlines. OPEC has pledged an extra million dollar or an extra million barrels a day supply cut. Like how confusing is that? It's like does that they just pledged a million dollars to cut? Right. It's a very confusing statement. And then the next one I saw was that OPEC will make an extra million barrels a day oil supply cut. I'm not I'm not I'm not reading these as clear, but they'll make an extra million million barrels a day of oil pipeline cut. Right so like,
Pete Mento 29:40
after releasing more because that's what it seems like in the beginning, but then there's that word at the end. That's that's sort of like a shocker, right? Yeah. No, no, no, it's a cut. We're not making more it's actually less Yeah, well, you know, I there was a news report that came out last week that these American engineers did you hear about the the air electricity Did you read about this done
Doug Draper 29:59
your No errors.
Pete Mento 30:02
Yeah, yeah, I had to make sure that I wasn't having an acid flashback. They, these scientists have built a machine. And I'm sure Keane is all over this because it's this is like a team and story and a half. So they've they've got this technology where you can take any material, any organic material. And it draw, it creates electricity from it. So really, you make a machine that's about the size of a refrigerator. And you put it in a house. And it creates electricity by pulling moisture from the air. And one of these machines, it's about the size of a refrigerator could create enough electricity to power a house, and it's completely carbon neutral. I do not at all understand how it works. I barely understand, you know, fire. But, but I've watched a bunch of videos about it, and I'll learn more. But it works on a very small scale right now, but they're, you know, somewhere down the road. So we'll have to we'll look into this and one of our future episodes. Yeah, yeah. Oh, pet knows it's just a matter of I don't know, a century or so before we overcome them. Yeah, we'll see
Doug Draper 31:28
a long time. And this whole scenario that whole thing you just said reminds me of Mike TV on Willy Wonka and the Chocolate Factory. And everything
Keenan Brugh 31:37
we can it's
Pete Mento 31:39
so we can we can move electrons we can move like one individual electron to some other place. We just can't move a person yet. Someday.
Doug Draper 31:47
Crazy. White Dude, I gotta shut her down. I got my boss.
Pete Mento 31:52
So that's it for another edition of global trade this week. We want to thank our friends at CAP logistics. Kenan back at the booth. We want to thank you, our loyal listeners and loyal viewers for coming back week after week. And the good folks at CAP logistics who support us. And we'll be back next week with another incredible edition of global trade this week. Thanks, dad. Thanks, everybody. We'll see you soon.
Doug Draper 32:13
Awesome. Thanks. Take care.
Transcribed by https://otter.ai