Global Trade This Week – Episode 252
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Pete Mento 0:01
You're watching Global Trade this week with Pete Mento and Doug Draper. Hello, everyone, and welcome to Global Trade this week. I'm Pete Mento, and with me is my co-host Doug Draper. Doug, how's it going, buddy?
Doug Draper 0:16
It's going well, Pete. I appreciate. We're our audience doesn't know this, but this is an afternoon filming, so we gotta chug down the the Monster Energy drinks and and keep this party rolling as if it's early a.m.
Pete Mento 0:30
I'm not allowed to have energy drinks. My daughter has said that I'm already amped up enough. She just wants to think about what would happen if I got into the Monster Can. So never done it. I'm sure there'll come a time when I do, but diet coke and coffee, buddy. Diet coke and coffee.
Doug Draper 0:47
All right, good old one-two punch.
Pete Mento 0:49
Yes, sir.
Doug Draper 0:50
Yeah. All right. Well, let's just get this party started. How about that?
Pete Mento 0:55
Let's do it, bud.
Doug Draper 0:56
All right. So, by now, people in our industry probably heard about the the Dallas jury that hit C. H. Robinson with a 604 million dollar verdict related to negligent carrier selection. Horrible situation a couple years ago, fatalities and the whole bit. But it's interesting for the brokerage industry, right? Other than you know some of the obvious, but I wanted to kind of give a couple of talking points, right? So number one, compliance of as we've heard is going to be going through the roof, right? And if it's not obvious, the big guys with the big pocketbooks can absorb that a little bit easier than the smaller mom and pops. I know a lot of folks. Pete, I don't even know. Did you know I started a truck brokerage company like 10 years ago?
Pete Mento 1:48
I did not.
Doug Draper 1:49
Yeah, truck brokerage company. That's a whole different podcast. We started it, and anyway, it's a whole thing. I won't even go down. But my point is that it was me and a couple of guys. It was a side hustle. The guys had a full-time job, and it was okay. We made some okay money, and we were vetting carriers, kind of the old-school way, which I'm afraid is still how a lot of brokers are doing it. Right? They're using the tools out there that are getting the job done. But when you hear of judgments like this that are just you know nuclear verdicts, so to speak, a little guy is like I don't know if I want to play in this in this arena anymore. Maybe I want to get out of it. So I think basically what this means is that the smaller guys are going to get hurt. The big companies are going to get bigger. I think we'll see some acquisitions out of this, and some consolidation in the industry, but at this point, it's almost like you have to have. I know the big guys have had this, but like the amount of money you have to pour into compliance and vetting carriers at the same time, there's so much fraud and nefarious business going on. It's just you know whack a mole out there. There's always going to be some new creative, crazy thing that comes up to commit fraud and crime. That I just think the big, the large brokers are going to continue to get larger, and the smaller ones, like the one I started 10 years ago, are just going to fall to the wayside. The one thing, Pete, and I'll ask you this question. Then you then you can reply. Do you ever think it's going to get to the point where shippers are going to be held liable because they chose a broker that wasn't properly vetted, and that broker in turn picked a carry to move a load that wasn't properly vetted, and then a horrific accident happened? Do you ever think that the shippers are going to be the next ones to get hit with liability.
Pete Mento 3:42
I never, I never underestimate the litigious nature of the American economy, and I'm sure that there's probably an attorney out there that's just waiting for their chance to do it, and that's a good lead into my comment about this. Right? Why do you go after C. H. Robinson? They have deep pockets and they're big, and you know, I don't think this is going to be the last lawsuit, but I mean, how many other fact patterns match what just happened here? I took a quick look online right now, and you know, the stock is down almost 20% over the last five days. And they're not the only one. There are a ton of other companies that are in a similar situation. So, is this is this some cataclysmic shift? I don't know enough about it to comment on it, and I'm certainly not a lawyer. But my gosh, this is is a real gut check to that whole industry, and I wonder what the statute limitations is on going after people where this stuff is happening. So I think that this is the first pulling of the major yarn that's going to rip apart the sweater on a lot of people with regards to these lawsuits, and yeah, when you're done with a broker, why don't those attorneys go after the shipper as well, asking why they didn't do a better job of vetting it? I don't know. I think that's a great question for an attorney to answer on the question, and we know a couple to bring on the show, so maybe we should bring someone in here to talk about it. But this is this is a. Real, what's the word? Disruptor for that industry, and I think the money you're about to see spent on compliance is going to be epic.
Doug Draper 5:08
Yeah, yeah, good, good point. I even thought about that. That I think RXO's stock took a tumble and Landstar took a tumble as far as stock price. It had nothing to do with this situation, but they're aligned in the same industry, and so you know, they were impacted as well. So, and on the international trade front, when everything's more expensive in the supply chain, whether it's ocean freight, the warehouse handling, or the or the trucking, it all impacts the overall cost to get our goods to market.
Pete Mento 5:36
That's madness, dude. It's utter madness.
Doug Draper 5:38
Yeah, yeah. Good. All right, man. What do you got?
Pete Mento 5:41
Well, last Friday the 122s came and went, and they were replaced by the suck, sucky, suck, suck new tariffs of 301. And these 301 tariffs are based on forced labor, slave labor, and the way that they were created was if a country has a slave labor program, but America doesn't think they're doing enough about it. Well, then you're going to get a hit with 12 and 1012, and a half percent. But if you're just not doing a good enough job, according to Washington, here's your 15% Two things I want to say about that. One, the United States has been brought up on investigations of our own for using people in prisons as labor and other issues like that. So before anyone starts looking down their nose too much at the rest of the world, we have guilt a burden of guilt as well. And the second piece is we're not done. There are more 301s coming. So today Jamison Greer announced that any day now they expect to have the review done for the 301s for excess capacity. So we're not done. There are more 301 tariffs coming, probably to the same countries, probably for a lot of the same products. I imagine they're going to be between 10 and 15 percent as well. So imagine getting double dosed on these things, right? I'm going to be hitting with 30 percent on certain products, and let's just be realistic. A lot of this is focused on China. It's about economically finding ways to to isolate China for the rest of the world, and damn it, something like this is probably going to do a pretty fair job at doing it. But at the same time, these tariffs are ultimately paid by the consumer; they're not paid by a foreign government. So the the the final price of these at the cash register is going to end up in our pockets.
Doug Draper 7:17
It's
Pete Mento 7:17
important, always important, that we do what we can to try to eliminate slave labor, eliminate forced labor, but a big part of that starts at the checkbook. We want to see this change. Americans have to change the way they buy goods. And honestly, dude, I ask this all the time in my seminars. Tell me where your clothes are made, right? That car that was assembled in the U.S. Where all the parts come from? You might not know. It could be it's not a problem at all, but unless you do the investigations, you're never going to know. Doug, I got a sneaking suspicion that the next couple of years are going to be absolutely horrible with these tariffs, and I feel real bad for companies like Nike, right? Like Nike is an example, who does so much work on their own with their own dollars to try to root out this stuff, and put so much effort into trying to make sure that they're doing everything they can to eliminate their supply chain. Why aren't they being rewarded for this? Why aren't they somehow having a lower tariff? Why are they paying like everyone else when they're doing so much more?
Doug Draper 8:16
Yeah, it's crazy. You know that the you almost have to prove a negative, right? That's the right worst of that. It is right, you know. Hey, you have to prove that forced labor didn't happen, right? And then the other piece is that the the one thing is whole, wholly or in part of, right? To to your point, this this button on this shirt could have been made with slave labor. Then the whole garment is is affected, right? So, holy or in part, and I can't believe how many of your people, Pete, have been in a sea level suite that didn't even know where it was because they were in the basement a year ago, and then all of a sudden everybody is interested on what is this guy and what is this gal doing? Get them up here in the boardroom because I need to figure out what the hell's happening. Yeah, it's it's crazy. I mean, truly don't know what's going to happen next, and and you would have the insight on on additional 300 ones coming down and what those represent at some point. And I'm not talking Nike, but if I owned a company and I'm like, how much money do I have to invest to justify This situation and my duty rate is not 12 and a half percent. It should be seven. At some point, I'm like, screw it, just pay it, and you know, and I'll move on, right? I would think there's going to be some companies that just are going to cry uncle and just be done with it.
Pete Mento 9:36
There's a lot of companies that will do that. They'll find other supplier bases and then increase the cost, which increases to us, which hopefully changes behavior of consumers. There'll be other ones that are going to demand of the USTR and of the president that they're not under the same tariffs. Plain and simple, we're doing the work. You don't need to put us in the same bucket as people who aren't.
Doug Draper 9:56
Yeah, interesting. All right, well that brings us to halftime. I. Brought to us by Cap Logistics. Please check them out at CapLogistics.com. We wouldn't be here without them, and they are greatly appreciated. So that takes us to the. Do we want to tell everyone
Pete Mento 10:10
our big secret for next week?
Doug Draper 10:12
I'll let you do that. I was going to say end of the show, but let's do it. We'll do it both now and at the end of the show.
Pete Mento 10:17
Doug and I will be in the same city next week. Well, Doug will be in the city he's the state he's normally in, and Keenan never goes anywhere. He's on work release, you know, so he's got the he's got the ankle monitor on and everything. He's going. I'm kidding. Kidding. It's not through. We're all going to be in Colorado, so we're all going to meet in Colorado next week. And in between client calls, I will be sitting down with mr. Douglas, and we will have a live version of the show, I simply cannot wait. I think it's going to be wonderful, though.
Doug Draper 10:44
Yeah, yeah, we've done it one other time in the front of Casabonita,
Pete Mento 10:48
and I tried to get into a fight with a DJ at a bar. Yes, I was about
Doug Draper 10:52
to say we we were kind of there illegally, and they would not turn the music down, and you and I were kind of like an NFL play-by-play where we're sitting this close together, whenever and trying to make it happen. So I think we'll be in better shape this go around.
Pete Mento 11:08
I don't mind, you know. I don't mind beating up some dirty DJ for not turning down the music. That would have been great. Who's going first, dude?
Doug Draper 11:16
Oh, I'll do mine. Mine. I'm. I'm. Mine's pretty quick. I just saw a thing pop up in the mornings. I don't know why, but Forbes magazine. I just get like five or six pop-ups every morning, and they're interesting. I click on it, and then it's a paywall. I'm like, I'm not paying for Forbes, and I delete them all, right? But there was one that I was able to kind of check out, and then cut and pasted the title and put it in Chat GPT, and was able to access the article in a different way. So anyway, it was all about bulletproof cars are kind of the rage now, right? Because of, and first of all, it's not you and me. It's incredibly high net worth individuals with bees in front of their bank accounts, and you know they're saying carjackings, road rage, general paranoia.
Pete Mento 12:00
So you know it's the 1% of the 1% but they're retrofitting cars for 50 to $350,000 is what the article indicated. Bulletproof glass is the most popular one, and then run flat tires, right? And then kind of general body armor if you need to ram somebody to get out in in a pinch. But I don't know, Pete. If you had unlimited cash, would you want to bulletproof your car and have all these add-ons? You bet your ass I would, Doug. When I when I win the lottery, what tomorrow night I think for $800 million, and they get my $220 million cash payout after taxes. First thing I'm doing is I'm calling Engelhardt and Hess in Kentucky, and I'm getting a completely armored out Cadillac Escalade, everything, with a souped up engine and all of it, so it can carry all that weight. Then I'm going to hire a very thick necked former Marine, like you know the kind of guy that he does. He can't buy a shirt that buttons it. The neck is so thick, you know. Maybe a give me a scar over his eye from some combat in Kandahar, right? And I'm gonna have a security guy, and I'm never gonna drive myself ever again anywhere. Like I would not go out and buy a Bugatti or some Rolls Royce, uh-uh, armored SUV with a cat who drives me everywhere that's armed to the teeth, and when it's time to go, it's time to go. When it's time to get there, it's time to get there, and I will sit in the back drinking Diet Cokes, Rippin Zins. That's how that's one of those there'll be signs moments. I won't tell everyone to win lottery, but there will be signs. So that's the first sign, and second of all, Doug, I think security is paramount, right? And you've got that kind of money, and someone wants to hurt you or kidnap you or do something dumb. Why not? Right? Joe Rogan famously has a whole bunch of former Navy SEALs and Delta Force guys everywhere he goes. You go to the mothership; they're everywhere. Right? That I think one of the greatest things in life would be having an umbrella policy for like $20 million and a guy that will punch someone in the nose if I've just had enough of them. I think those two things together would work out really, really well. It's like Mark Wahlberg said. There was a guy trying to start a fight with him, and he said, "I got an insurance policy for this. You better make it count because I'm going to make sure I get every penny's worth when I beat the hell out of
Doug Draper 14:16
you. So
Pete Mento 14:16
that's a sad state of affairs, Doug. But it's where I'm at. I would 100% absolutely have an armored car. What about you?
Doug Draper 14:24
Yeah, I mean, unlimited cash. I guess I would, right? I mean, yeah, I guess it would. I don't have. I'm not. My passion is isn't doesn't have a conviction like yours. But yeah, I think I would. So you trying to
Pete Mento 14:38
say that you're not an argumentative, angry, grumpy old man, Doug.
Doug Draper 14:42
No, not not too often. Just every once in a while the topics of this show. But
Pete Mento 14:47
roll the tape back for the past couple of years. You might change your mind about that. Harumph,
Doug Draper 14:52
haromp, harumph.
Doug Draper 14:54
So, all right, what do you got? This
Pete Mento 14:56
is the last weekend that we will have to suffer through not having. Football to watch in some form or fashion after this weekend. There will be some kind of football on television, whether it's preseason games, a Hall of Fame game, you name it. Football is back. As much as I love baseball, there's just something about the NFL that I absolutely love. So we've done this many times. I've never, not once, been right. But it's time again for the the the global trade this week NFL predictions got some fun ones this year, so we'll start with the obvious. I believe that the the Super Bowl this year will have the Patriots in it again. I believe the New England Patriots will make it again to the Super Bowl. I think they've retooled that team very very well, and I think that they will, you know. I don't know who that we play. Probably, probably the Rams. I think. I think that will be the Super Bowl showdown this year. If not the Rams, then we'll have a remake of last year. I think that the offensive MVP is going to be Patrick Mahomes, which might not seem like a stretch, but he he is not himself right now. Patrick has been hitting the all-you-can-eat Chinese buffet a couple too many times through the line. I think he needs to get on the shot. All right, and defensive player of the year will be Jalen Hurts, who just signed a massive contract. Now some fun ones. We will probably not see Miss Swift, or is she going by Miss Kelsey? I don't know. A single game this year, I don't think you're going to see her in the crowd one time. I think that's over. I think that's over. So I don't imagine we're going to see her. So there's an over under bet on DraftKings that you can get on actually of how many times that she'll be on live television during an NFL game. It's currently at 20. I took the under. Wow. Surprise football team of 2027 will be the hometown Denver Broncos. Oh, Denver Broncos will probably make it to the AFC finals, and if there's any team that I think is going to surprise folks this year, not that it shouldn't have last year, it's going to be them. They're healthy. Defense is nasty. Got a really good team. So that's those are my predictions. There'll be at least one head coach firing before Christmas. Kind of excited for that. And the worst team in football in 2026 27 will be the Miami Dolphins, who will win one game.
Doug Draper 17:11
Wow. Okay. Yeah, I don't really have any predictions other than, and I actually did a little research when you sent over the show notes. At least what I read, Washington Redskins are going to be pretty decent this year. I'm not a big Jayden Daniels fan, right?
Pete Mento 17:26
Got chicken legs. No,
Doug Draper 17:28
I'm not a big fan, but there's a lot of hype around the team in general. And and then the one thing was that the Cowboys are going to cowboy, and that there's going to be just some major implosion and a lot of restructuring of that team. As a
Pete Mento 17:47
Saints fan, Doug, nothing would make me happier than to see the Falcons and the Cowboys just suck.
Doug Draper 17:53
Yeah, yeah. So there you go. So I don't know. I'm not a fan of QB, but Washington's going to be a breakout team, and I think Dallas is going to tank, and it's just going to be pandemonium down in the Big D come end the end of this year.
Pete Mento 18:08
Have you ever looked at Jayden Daniels' legs? They are they're like pigeon legs.
Doug Draper 18:11
I've not.
Pete Mento 18:12
You can't. You got to. You can't skip leg day when you're an NFL quarterback, Doug.
Doug Draper 18:16
You cannot skip it. Very true. All right. Well, that was brought to us by Cap Logistics. Check them out, CapLogistics.com. It takes us to the second half. I think it's me, right? All right. This is a little bit obvious, but it keeps popping up with so so much turmoil going on in the world. Is that insurance, right? War risk insurance, however you want to refer to it? I think that is going to be kind of the new tariff, if you will. Carriers have suspended sailings. They've realigned, you know, their routes. They simply said we're not going to go in this area, even if they wanted to or give it a shot. It's just too too risky. And if you want to be insured, you're going to be paying a hell of a lot of money, right? So the premiums, those can change rapidly. They can they can change quickly, you know, force majeure and all the craziness that goes on there. So insurance is going to be a bigger deal, right? Everybody's watching what the price of oil is, which affects you and me in our day to day life. When you fill up a tank here in Steamboat Springs, Colorado, the gas is $4.84. I paid that much this morning, which is an indicator. But I think the hidden truth is that insurance companies are just not going to play around. And if you want a sale, here's the number. If you want your product insured, and it's here if you go this direction. It's here if you go that direction, and it's here if you decide to make a U-turn. And I think that we're going to see that a lot of delays with with freight. I don't think we're going to see delays to the stuff you and I buy during during the holiday season because we talked about it. Where I think the pink is flat, or potentially have already already has happened, right? Talk a couple weeks ago about how we were in the middle of it, so we may not we may not see it in the shoes that we buy for this year. But I'll tell you what I mean: insurance on all levels. We talked about the trucking and the cargo and the ocean freight. It's everywhere, and I think it's going to really start being talked about a little bit more and really dissect the impacts it has in the supply chain.
Pete Mento 20:23
So I was trying to find this article that my boy Alex sent me this week. Captain Oxuhanoff, friend of the show, he doesn't miss an episode. There is apparently a five nations or five parties clause, where there are five countries: Great Britain, England, France, the United States, no, it's six maybe. Great Britain, France, the United States, China, and Russia, where they have a they have a rule in in the in the coverage that actually precludes if there's if there's war coverage changes the war coverage because it's so likely that they would be on top of whatever that up because all this arcane maritime insurance crap is about to become really really important and if companies aren't reading the bottom line and looking at those details, man, I'm telling you the the marine insurance companies are the sureties are so this is a great time for exactly what you said to go back and completely revisit all this information and make sure you understand what you're responsible for, who's responsible for what, and what might end up you in the hurt locker for not doing something.
Doug Draper 21:30
Yeah, yeah. All right, good deal. Well, bring us home, my friend. What's your final topic for the show?
Pete Mento 21:36
Well, call me Captain Obvious, but I've I'm currently utterly obsessed with USMCA, with the free trading agreement between Canada, Mexico, and the United States, and it's it's turning into a little soap opera, which so much of this does. The personalities that are involved. I put a post up on LinkedIn last week that it reminds me of the Three Stooges. You know, there's Mo poking everybody in the eyes and calling it leadership and smacking people around-that's us. There's Larry, who every once in a while, when no one's looking, will hit somebody else in the hammer with a hammer in the head. Right? That's Mexico. And there's poor Curly. Curly's just constantly being beat up and abused, but he's everyone's favorite, right? And when he gets his revenge, we're also happy for him. That's kind of what this is turning into. Mexico and the U.S. have, for lack of a better term, aligned on a lot of things, and they're working with one another. Canada's on the outside looking in. Mo hasn't stopped beating up on Larry, but he's beating up on Curly even worse. And eventually, Curly's going to get sick of it and do the and do the whole thing and start like fighting back. You know, when they put on Turkey in the straw, he's going to start punching people. Canada is fed up, and I'm wondering how much longer this is going to go before we see even nastier, uglier things coming out of Canada towards the U.S. It is not cool the way that that relationship has gone. I think that there's a better chance than ever, probably more than 50% that the United States, Canada, and Mexico go to bilateral agreements, and the UMCA is completely disintegrated. I'm at that point. I think it is more likely than not that USMCA does not exist by the end of this particular president.
Doug Draper 23:14
Yeah, I think that's very valid. I'm I'm not surprised that you said that, but you verbalized it, which is big because you know Mexico's like at the table. Yeah, stuff's going a little bit nuts, but they're sitting down. They're working through it. Canada's starting to push back. To your point, like we're we're kind of done with this, and so the separation of negotiations are going to happen. There's no three people in the room anymore. It's here's what we're doing over here, leveraging one against the other. Here's the successes that we had. Here's the failure that you do not want to have, so you better negotiate with us on this this this aspect. But yeah, now that you said it, I could see this whole thing imploding, and things move so fast now in this administration. I mean, this thing could just topple in weeks or months, right? I mean, I don't want to be too dramatic, but nobody's talking to each other. It's one one nation talking to both people, setting their own terms, and you got to have three parties, you know, to to make it work.
Pete Mento 24:11
And the next question is, will the next executive in the White House try to bring it all back together again? And that's not easy to do, folks. Once you unwind something like this, bringing it back requires Congress. It gets ugly, so I'm not. I'm not sure how this is going to go, but I think it's going to go poorly.
Doug Draper 24:27
Unfortunately, well, I guess that's on a down note. We got to end this show, but the positive note, as Pete said, is we're going to be in person, face to face next week. I'm excited for that. I swear to God, it's the first time I've seen you since we were Casa Bonita in person. So, so thanks for making the the road trip, and we can explain later why you're coming out. So, for all our listeners and viewers, we appreciate you engaging with us every single week on Global Trade. This week, next week will be a bang up episode, I guarantee it. And until then, and. He so eloquently says, if it's happening in global trade, we will be talking about it on this show, Global Trade, this week. Peter, we'll see in person.
Pete Mento 25:09
Douglas, see you next week. All
Doug Draper 25:11
right, catch you later.