Global Trade This Week – Episode 155
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Keenan Brugh 0:00
You're watching global trade this week with Pete mento and Doug Draper. Hello everyone
Pete Mento 0:06
and welcome to a another mad cap exciting edition of global trade this week. Doug is on assignment and is not joining us today so that means that our ever patient engineer slash AV nerds slash glue that holds it all together. Keenan is with us. Keenan, is it a law in Colorado, that if you have a beard, your entire wardrobe has to consist almost entirely of Henley shirts.
Keenan Brugh 0:37
It's not causation but there may be correlation. Yes, yeah, yes.
Pete Mento 0:40
Yeah, just a three button Henley's lots of plaid and layers lots of layers. Feel thanks.
Keenan Brugh 0:49
I mean plaid, maybe stylistic layers that's just practical. You know, it gets hot and cold. Up in the mountains are here in the front range to can vary from night or shade and wind to sun. High temperature swings. So waiters.
Pete Mento 1:04
I'm happy that the young guy brought up weather.
Keenan Brugh 1:09
I told myself I wasn't gonna bring up Bitcoin and then I ended up bringing up the weather.
Pete Mento 1:15
I think you and I should get done to grow a beard. You have a very wonderful beard. Yeah. Old Man beard. I think we should get done to just let it go for a winter and see what happens. You should
Keenan Brugh 1:26
try it. You might like it. I know. Yeah, growing up, I wasn't allowed to have one that's just strict schooling. And so now it's a freedom of choice that I get to make. And yeah,
Pete Mento 1:37
they're coming in. And like fifth grade Kenan said about yeah,
Keenan Brugh 1:39
pretty early, I don't know, fifth grade, but pretty early. And it was not allowed. It was one of those things that I had to, I had to shave, or they would send me to the principal's office to shave. And that was not a good situation. No,
Pete Mento 1:50
no, not at all. We had a nun at my high school named sister Jeanette, and she would have you dry, dry shave in the sink in her office. Yeah. Oh, my stories.
Keenan Brugh 2:03
Remember that? At our high school, they used to make the students do it with like an old rusty razor. By the time I went there, that was no longer allowed. But it was also dry, or like maybe water but no soap or no nothing else, you know? Well, you comfort of your home, you graduate
Pete Mento 2:20
from high school, right in the middle of the pandemic raking was that you had just
Keenan Brugh 2:24
recently, you know, I had to finish out online schooling. No, in actuality, I am very grateful that that was not my high school or college experience that would have really interrupted education and other extracurricular activities that go along with school. You
Pete Mento 2:39
poor thing. People are always very curious about you kidding when I talk about the show. And I like to tell them that you're, you're a junior high intern. And you're, you know, just have a lot of hair for your age. So it's nice to have this moment to let folks know about you. But I think we've done enough, frankly, not only some interesting, Kenan. So why don't we go on to that first topic for this week. And let's, let's see what's going on? Absolutely.
Keenan Brugh 3:04
So many of you may have already heard, many others may not have heard, but hurricane barrel has hit land. And so that is impacting the ports down in Texas. And I learned a new term today, you may have been aware of Zulu port situations, Zulu ships are not going in or out, things are down. Lots of people without power. So it's kind of to be expected, didn't seem like it was the highest category, it's only category one. But you can still get a lot of damage with that powerful of a storm, especially when it's a pretty direct hit. You may be more familiar than I with Texas. But I've been down to this region of Texas. And there's a lot of not only shipping with the ports. But there's also a lot of the production goods that go on to ships, Dow Chemicals, and Exxon and Chevron, all the refineries, everything is all right here in this area that's being hit. So one fuel for individuals, households, families that are losing power, but it's also impacting businesses, it's impacting manufacturing, and then that kind of could cause backlogs or increase in costs. So it didn't seem like too many people are dying. It's only category one, maybe a person or two has been found with some tree falling in situations, not catastrophic weather speaking of whether this is shipping related weather, but it is impacting port operations. So curious what you've heard or what you're thinking about as we're going into what NIST had predicted to be a pretty rough hurricane season. So this may just be the beginning of more of these situations.
Pete Mento 4:38
Yeah, well, a friend of the show Sean pollster, who's the Director for the Homeland Security and Emergency Response for the Commonwealth of Virginia has been posting a lot about this on LinkedIn, and talking about what you need for disaster recovery plan. And what a lot of companies don't consider is disaster recovery where Logistics is concerned the last time a bit A hurricane went through Texas wasn't all that long ago. And it was pretty awful what happened in the city of Houston. And I can well remember being on calls with friends of mine who were contracting bakery trucks that were delivering hot dog buns to try to get pharmaceuticals to places. I mean, there were there was no one that was able to actually move goods. logistics firms, ours included have pretty robust recovery plans with regards to how we're going to move for our clients. But clients generally don't have the disaster recovery plan. And they ought to, in any instance, whether it's hurricanes, you know, whether it could be cybersecurity incident, who knows. But this tends to not be an area where people focus, hurricanes as a whole can be so incredibly detrimental to that one industry, oil, gas and the refining industry because generally in our country, a lot of that infrastructure is on the coast, in places like New Orleans, Galveston, Texas City, not places that in Texas, I would recommend you go for a vacation, but they are hit pretty hard this time of year and disaster recovery is something that every company should be focused on.
Keenan Brugh 6:07
Absolutely. Quick aside with that, speaking of cybersecurity things, there was some news that the largest password compilation has been leaked now or leaked publish with 10 billion leaked passwords. And so not all of these are new, as previous hacks and some new hacks but all kinds of combined together for more passwords than humans exist on planet Earth. So it's a good wake up call to make sure you have a bug out bag. I know we just introduced that concept to Doug recently. Hopefully he's made some progress over the holiday weekend on his plans there for whatever societal situations or weather obviously tornadoes, hurricanes, different flash floods here in Colorado, different things. But also for your cybersecurity stuff. Just tighten up your security, make sure you have backups and good to FA your recoveries plans and systems because it's a little bit too late to try to fix things once you've been ransoms and all that sort of stuff. So backup your private data, make sure your stuff is secure, have a bug out bag and be safe out there as looks like 2.6 million users are out of power in Texas, which I monitor power outages pretty regularly. This is a big power outage. They're normally not not this big. This is a big power outage. So
Pete Mento 7:22
Caden, you're the tech nerd, I have recently embraced my, my iOS giving me robust passwords. Okay. And these are crazy, I would never be able to remember them. But of course, you know, the technology does. And I'm wondering if Apple and you know, Samsung, and all the rest of them are going to release a statement. They will they automatically change your password for you. If it's been if it's been released? That'll be an interesting thing to see.
Keenan Brugh 7:50
Yeah, that will be interesting. Because they, whether or not it's their fault, technically, they sort of have like a responsibility to their users, right. And so they may end up making some of those things. And I mean, that kind of, for better or worse, that kind of reminds me of how Microsoft and other things are like, hey, it's been 30 days, you got to change your password type prompts. But then you end up like, I know, people that will just write it on paper, because it changes every month, so they don't remember it. So then they write it on their desk. It's like, oh, well, someone gained access to your desk. They have your password now. So that's not safe. So yeah, I think we're going to keep learning but we're going to make mistakes along the way for cybersecurity. Everyone do your best out there. Take it seriously. Godspeed, Godspeed.
Pete Mento 8:36
I may have the king of all nerdy topics this week. But I've got to do it. Kenan it's going to be me. In the in the world of importing, an importer will generally have to open up a bond. And that bond is done so that we can release cargo early, they'll release cargo at all, and that that bond is going to be based on the typical amount of tariffs and entered value that an importer is going to have, okay. Well, we're currently in this cycle of using anti dumping and countervailing duties in order to punish the punitive tariffs against foreign countries and foreign suppliers. And the latest round of that has really heavily hit aluminum and steel extrusions and aluminum and steel extrusions not just from China, but from all over the place. Taiwan, Mexico, I mean, it's all over the place. And these, these anti dumping duties can be massive multiples of the value of the goods 234 Or five 600% Depending on the anti dumping duty. And what it requires an importer to do is open a second bond. And that second bond will remain open until all the entries are liquidated and that can take years. So imagine you've you've put out a half a million dollar bond or a $50,000 bond for that matter. And you're told you have to open another one up for 100,000 On top of that, and you can't get that money back which becomes a cash flow crunch issue. So I wanted to bring this up today, because I think it's very important that every importer understand what their their bond liabilities are right now, if anti dumping and countervailing duties are going to be an issue for them in the near future, and to have the conversation now with their financial leadership, that this might be something they need to focus on.
Keenan Brugh 10:19
There very interesting, especially as we're in an election year, not to bring up too much politics, though, what we've seen in the past from Trump and what we're currently seeing now with Biden's administration, I mean, you mentioned some percentages even higher, I thought the whole Evie battery, solar panel 100% was high. But apparently there are anti dumping duties even higher than that. It's important to be aware of those and have plans for that. And you brought up a really good point we're seeing out in whether it's our customers are out in the market, money's more expensive with higher rates. And so you really have to pay attention to cashflow issues, because that can make or break whether a business model is profitable and successful and keeps growing or is closed down and gone. So definitely can't have any surprises. Just talking with people over the weekend about how peloton a few weeks back and had all those like millions 10s of millions of dollars of like unnecessary fees, through some dropping of the balls on the porch situation. So don't be surprised. Good call there. Any other advice on how to learn or take a plan for things like that? Yes,
Pete Mento 11:23
yeah. Well call your broker, call your customs broker, whomever they are, this is a topic that we all spend a lot of time talking about. And really do a do a realistic estimate of what these duties could be, and what it could mean to you and always err towards paying more than paying less, because then you don't have to open up a third bond on top of that, and have that one take years to close as well. It's not a position you want to be in but no.
Keenan Brugh 11:49
Yeah, good. Good advice. Good advice. Does that bring us to halftime?
Pete Mento 11:54
It does. Keenan, you want to do the honors, because you want to get your own company a pleasure.
Keenan Brugh 11:59
Thanks to a cap logistics and cap worldwide for providing us the opportunity to talk about our core transportation topics as well as any of these extra halftime fun topics. I'm sure this will be the favorite part of Doug as he's listening out on assignments. So let's go ahead and kick off. I know I'm passionate about this. And I think you are to my halftime is about nuclear power. I had missed a story. Apparently, a month ago or so the House and Senate have passed a bill and advance act, that all these acts have great acronyms. But to try to help move forward different ways of making the next generations of nuclear power happen. I'm not an expert, I'm sure these bills are very long, seems like it's been kind of cobbled together from different attempted legislation in the past. But this one's actually been put together and made it through congressional leadership and is now I believe on Biden's desk or going to Biden's desk but people are expecting that he would sign it. I don't know all the details in the handouts are different things of how this specifically helps people like Bill Gates and tear power. Or if this helps all sorts of companies. I'm generally a fan, I know that I'm pretty sure you've mentioned your pro nuclear too. So you're happy to see things moving on nuclear, I think that's going to be our best way to get consistent, reliable, clean power. That also is economical. So I'm happy to see it. I don't know all the details. If you've heard anything about this act or anything else on the nuclear front,
Pete Mento 13:33
there is a growing understanding that as we begin to transition to more renewable power sources, and try to wean ourselves off more on fossil fuels, that our current technology just isn't going to be able to span that gap. And I'm a big believer of in my life in the use of nuclear technology to generate power, it doesn't create carbon emissions. And the rest of the world has made a huge leap into embracing this. We've all but created the concept here in the United States. And over the course of probably the late 90s, we began to walk away from it, mostly because of the cost of entering the market. Getting involved in nuclear power is not a cheap decision. And, you know, being close to nuclear power is good for businesses because of the drain that it can take on power. So I'll give you a couple of examples why I'm a big believer in this. Kenan The first is, you know, Amazon is going to be purchasing a data center and expanding on it the huge one like 600 and something million dollars worth. That's right, literally right next to a nuclear facility. And they're doing that in order to be able to draw off the energy of that because of the incredible energy needs that modern computing uses. So having their own deal, being close to it being next to is going to actually save them a lot of money. And as we begin to create more and more data, store that data and make it available on clouds. It's going to be an increased drain on energy. I saw this online the other day And I haven't done enough research to see if it's true. But 90% of the data in the world has been generated in the past three years, as we continue to make more and more data and you distort someplace, and then as we move to artificial intelligence and quantum computing, it's going to be even bigger drain on it. So the government, understanding all of this, and understanding also that people are going to be a little bit cautious in making large investments is going to put money up in order to help this to happen. Now the standards will go down, or the expectations of engineering will go down, they'll simply be more money to help subsidize this going into the future. I think it's a great thing.
Keenan Brugh 15:40
Definitely a fan, it ties into another piece of research I was doing while preparing for the show. China has deployed quite a bit of renewable energy, but they're now facing a problem where, you know, sun and wind aren't there all the time. And so sometimes these rural areas that now have massive amounts of wind and solar have too much energy and no industry, or no local population to use them and no long distance trends with transmission infrastructure to send it to some other industrial or populated center to use. So they're just actively like shutting down these assets, which is expensive to not fully utilize expensive infrastructure producing electricity. So just thinking, you know, like, oh, is this a good solution for crypto mining? And not really because you want cheap, consistent power for crypto like oh, we have too much power, just mind some bitcoin. Okay, well, when when what happens when you don't have too much power, then all those ASIC miners just sit there not doing anything. And really, it just goes back to like nuclear would be a much better approach where it's cheaper, it's consistent, you can use it for making your aluminum extrusion devices or mining your crypto for sound money. Something else more on the fun side of it. But to your point earlier about America really leading the way on designing a lot of this stuff. I've mentioned thorium nuclear power before, I would encourage you Pete and any one of our listeners to keep checking it out. China is moving ahead with this American invention of molten salt reactors. Thorium nuclear power, has less of a meltdown Chernobyl scary Fukushima type risk, as well as less nuclear proliferation, weapons proliferation type risk, and something I had not seen. But was announced earlier this year, China's unveiling plans for the largest ever containership powered by thorium reactor nuclear. So it's supposed to have a capacity of 24,000 standard containers. I don't know the timeline on this. But China's looking to create new nuclear transportation type systems. And although I wish it was done in America, I'd still be happy to see China do it. Yeah.
Pete Mento 17:41
You know, there was a one of my professors was on the Savannah, at Maine Maritime Academy, and it was America's first nuclear powered container vessel. I thought it was a container ship. It was a cargo ship. And he just talked about how fast it was. And efficient it was. And we always wondered why we don't do more of it. When I was at my reunion in the fall. The President has since been been whacked, by the way but the President gave a speech where he said we have to start preparing American engineers to be prepared to work on nuclear powered vessels. And we always had in the past, because you had to have a steam certificate, the ships weren't all diesel electric. And we've walked away more from that steam power. And that's really all nuclear is for people who aren't aware of that. It's, it's creating steam. So it's going to definitely make a new a new opportunity for marine engineers. And secondly, as far as the, you know, the salt based reactions go, I mean, the Russians were powering their submarines with that there most of the Cold War. And it was technology that they learned about from us, they just were able to do a much better job with it. So I'm also excited about fusion always happen. We're always 40 years away from being available as a natural resource. So we'll see all this time. Yeah, I mean, if I were Bezos and in, and Alan, I think I'll just get together, you know, get some sausage chips to local Mexican place, have a cup of margaritas and write a check collectively to get us there. It's really a question of funding at this point. So you want to leave the world a better place, give them completely renewable energy, and an abundant boundless source in the area of fusion?
Keenan Brugh 19:16
Absolutely, that stuff gets lost in a lot of people's conversations about climate change, or different things of that. But like, we're gonna need cheap, clean energy, it can't be cheap and can't be expensive and clean. That can't be like cheap and dirty, it needs to be clean and nuclear seems to be footing the bill for that. Interesting, I did not know about the Russians and their nuclear subs, I will have to look into that.
Pete Mento 19:36
So one more thing, I'll say this is what happens. We're nerding out here cannon, but, you know, populations continue to decline at an alarming rate. And there's nothing, nothing that we can point to that says that that will not continue the human species is choosing to not, you know, perpetuate itself, or the health situations that we're in with medical situations is causing it to be harder and harder. And you'll read all kinds of learning studies, for very smart people saying this is going to have an immediate impact on housing costs. In the value of homes, if you look in Japan right now, outside of major cities, home prices are just demolished at this point, they can't get people to move to these rural areas. You'll also hear about it when it comes to manufacturing, you know, co2 emissions as their view of your people. But an interesting study is recently pointed out that the need to consume data, and the need to use technology is going to be replacing a lot of the human beings in our workforce, whether it's robotics, you know, autonomous robotics, so we're going to need more and more energy. And just because there'll be fewer people doesn't mean we won't need more electricity to in order to manage it. And then as we move from fossil fuel cars into electric cars, it's just going to be another area. So the need to generate electricity is not dissipating with the district, just dissipating populations around the world.
Keenan Brugh 20:59
True. I mean, even just having like a micro example, think about people no longer flipping burgers in California. Now you have robots. Okay, well, that robot now needs to be powered in order for it. So looking at a country like Japan, which I imagine in my daydreams is going to be a very robot Central or centralized society, just with their demographic challenges and the need, we may be seeing more robots, they're primed to make them and they're going to need power to power them. If
Pete Mento 21:25
we just had done on right now to complain about robot drones, and artificial intelligence, it would make this the perfect moment but he's not. So my halftime is not nearly as cerebral. Keenan. All right. I have gotten full Clint Eastwood, in which movie was it? Where he was like, Get off my lawn. Three grand Torino, grand Torino. Yes. Where fireworks are fun to watch. I enjoy it. I love it when I go to Asia and like every every I think it was every was every Friday night. There's a fireworks display in Hong Kong like it was you know, it was it was fabulous. It's fine. But when you live in a suburb, or when you live in a town, and every little knucklehead with five bucks is gone out and bought meds and sets them off in a neighborhood at seven o'clock, my inner Karen will emerge king will it will emerge from my skin. And I find myself calling the non emergency number for the local police department and saying get these damn kids inside reading the Bible. Because I'm trying to sleep. And it's not the Fourth of July. It's the sixth or the seventh. And we've gone too far. So I don't know when it happened. Kenan but my transformation into what's the word I'm looking for here like the curmudgeon. Yeah, it's finally happened. I'm gonna get these damn kids inside and you're gonna lose a finger. Whatever, right? But the fireworks on days are not the Fourth of July.
Keenan Brugh 22:59
I'm right there with you with the curmudgeon vacation so to speak. I loved fireworks growing up fireworks are great to watch and fun to play with. It has gotten a little ridiculous. Maybe some places are always like this, especially during the pandemic. It just became all summer. My neighborhood slides off fireworks. It's illegal here. But they do it all the time. And it's one of those where my dog, just as you know, constantly freaked out by like the random Warzone attacks. It's not just on the fourth, it's the whole six weeks, eight weeks leading up to the fourth and it's the whole eight weeks leading off of it. I mean, yeah, we're on the eighth so yesterday was the seventh. There were a lot of fireworks going off last night and I expect more all week. So I'm right there with you. I like freedom. I like fireworks maybe the big ones in the cities can be put on by the shows like at the Rockies games and as they do. I'm also curious about drone shows I've never seen one have you seen a drone light show? Yes. The videos look cool. I don't know. That may be the future cool.
Pete Mento 24:01
So yeah, so I went to China cool as hell. They're fascinating. But you know, our, our old German Shepherd who passed away last year. You can she could tell they were coming. Like she just knew and it drove her crazy. So yeah, I'm a fuddy duddy. I'll admit it. I'm I have a stick in my posterior about these things that I wanted. I wanted to stop and never thought it would happen. Kenan but it's happened. I'm right there with ya. I'm getting super Denny's at four o'clock for the early bird special next thing before I go home to watch Matlock, if this keeps up
Keenan Brugh 24:35
one day at a time one day at a time. I watch that show
Pete Mento 24:38
too. If you don't know it one day at a time, that was Valley personalities. That was fabulous. Yeah. Schneider the see this is what I wish Doug was on he would understand. But you've been streaming shows your whole life probably so you wouldn't understand.
Keenan Brugh 24:51
I mean, I'm old enough. I remember I used to you know, burn CDs and do different things. I was pre streaming but yeah, I don't know all the references you And Doug get into.
Pete Mento 25:01
I'm assuming Keenan that you've never operated in a track or have you for worse.
Keenan Brugh 25:05
No, I have not. We have a record player. So we have vinyl vinyls back. It's never really gone away. I don't have any track. I've never touched a track.
Pete Mento 25:15
I was I was I like to tease myself by shopping for a 1978 1976 Pontiac Firebird like Burt Reynolds had. And the other day I saw one that said includes original eight track player, I got so excited, thinking I'd have to go out buy a bunch of eight tracks, you know, to play in my TransAm as I tooled around town. That's
Keenan Brugh 25:35
awesome. What do you think there's something nice about the not only the nostalgia, but the analog sounds of that you can get out of some of those, those older media.
Pete Mento 25:44
But I'm much happier Kenan having I think quite possibly every song ever produced at my fingertips if I want to listen to it
Keenan Brugh 25:51
takes power. But yes, we do. We do have the blessings of the largest Library's ever assembled.
Pete Mento 25:59
Alright, kita. What's your next topic, buddy?
Keenan Brugh 26:00
All right, next topic is the rising cost of using pee fast chemicals. So unbeknownst to me, Colorado apparently had passed some law and is now going into effect. Banning everyday products that intentionally contain these toxic forever chemicals. They're used for all sorts of things. Sometimes flame retardants, a lot of times you know, anti stick, anti water type things. So they're in everything from your outdoor equipment, that's rain proof to your, I don't know your paper pack milk, or almond milk or whatever your persuasion that keeps that paper from absorbing liquid. That's all pee fast type stuff. But people aren't as aware of it, though, it seems that this environmental issue is sort of speed running what had taken longer time periods in the past, you know, now all sorts of products have BPA free and different things on them. But that took a really long time for the awareness to be around. Hey, BPA is not good for men or women's endocrine systems. It has birth defects. And speaking of population, things, things like this aren't helping people who are trying to become pregnant, have kids or have healthy kids if they do manage to succeed. So I generally like limited or smaller government actions. But I must admit, I do get excited when I see government banning things that are just straight up toxic that people don't know about. It's one of these things where even if it's not totally banned right now, or in the next four years, having that consumer awareness of this product contains pee fast chemicals may help with the information asymmetry out there, and consumers may make choices of oh, I'm going to opt to pay 10 cents more for this glass container of milk as opposed to this pee fast laid in milk container. So I'm excited to see that sort of stuff. I think it's been a rising awareness as there's more lawsuits. I don't know all the details, but you know, your three M's your dad's Dupont, like they're involved in these things. There's local and national regulations going on. And I've been hearing people talk about film. I think it's a few years old now. But it just got put on Netflix dark waters with Mark Ruffalo, I haven't watched it yet. It came highly recommended, and I plan to, but it kind of seems like a modern Erin Brockovich type story about some of these people involved with some of the health impacts of these high P fast polluting type environments, and the victory over it. So it's something looking into it is multibillion dollar industry, but it's relatively small compared to the other chemicals. So I'm hoping people can find substitutes, now that people are aware and demand will shift, that won't ruin the economies, there's gonna be other alternatives to Teflon type nonstick pans, but people have to become aware of it in order for that to get priced in otherwise, it just becomes a negative externality that no one's paying for and is not being optimized for economically, it's just an invisible cost that all of humanity could bear the price of if all of a sudden we're not able to have kids children a man style, I mean, pee fast. From what I hear, they don't clear the environment, they don't break down. They don't leave your body very easily, if at all. So it is a really important one. What is your take on you probably don't know the Colorado law. But have you been hearing about pee fast people, lawsuits or personal choices? Anything on those topics?
Pete Mento 29:17
Well, first of all, shout out to Monroe dairy East Providence, Rhode Island. My daughter's employer doesn't hurt that it's her grandfather that owns it. The to this day, glass bottle of milk delivered to your front door. All the other dairy stuff. So if you live on the cape or the islands, here's my plug for Monroe dairy. I've, I see this from the perspective of a customs broker. So we are we are endlessly being queried by either federal agencies wondering what it is we're bringing in, or we're being asked by existing customers. How do I deal with the regulations on whether it's restrictions on or it's To complete sanctions against the implications of these goods, and there are individual state requirements as well, California, probably the one that's the most complicated to manage, where the state will now say, not only Can't you sell them here, you can't import them. We don't want any business here importing them as part of what they produce. And the typical American consumer doesn't understand the depth of the types of chemicals and additives, etc, etc, that go into everyday things that are managed by the FDA by the EPA, if you have a dinner plate, the FDA cares because you're gonna put food on it, and that's gonna go on your mouth. So because of that, the flatware and all the rest of it, it can actually be reviewed. I had a fascinating conversation this morning with with our team, on the custom side of things about wipes about the different so, you know, World of wipes had me come speak out there, and I was blown away at how many companies are engaged in wipes. But, you know, if you're wiping something that's going to be used as either a medical instrument, or wiping something that's going to be used to clean something someone eats, that becomes an FDA concern, it can also become an EPA concern, based on what's actually inside of it. There's so many regulations that are around chemicals that most people don't understand. And I think that Colorado will be the first of many states that end up enacting similar legislation. And as brokers and as importers, we should understand if there's a local issue with importing a particular product for consumption, not just one that's international or national,
Keenan Brugh 31:26
local, for sure, especially if it's even the importing and not destination for California, I feel like Colorado is a little bit like California, not as big. But sometimes the legislation regulations that start here then end up spreading elsewhere and become kind of standard was there trialed in California or Colorado, other states like that. So we may be seeing more and more of these things. So producers are probably wise to be questioning if their current ingredients or models are going to be viable 510 years from now, and if they want to get ahead of it, or if they're going to try to bury their heads in the sand and pay lawsuits about it. So yeah, interesting stuff for sure.
Pete Mento 32:05
You know, Kenan people are always surprised when they find out that I'm not a tree hugging, dirt chewing, Dolphin petting, hippie about this kind of stuff. But I'm yeah, I'm very, I get very preachy about the environment, not the least of which is because I'm a duck hunter, and I don't, I don't want wetlands going away. You know, I'm a big fan of being outdoors. And I don't want to see our national parks decimated, right. But as a consumer, I'll be the first to admit that I'm, I'm not necessarily as observant as to where the things I'm buying have come from. And that's changed a lot over the course of probably the past five years. But as you know, again, a customs broker, I see how much stuff is imported. I look at what's coming into the country, a tremendous amount of that is made from plastics that may never go away. And, you know, renew, what does it reduce, reuse, recycle baby, even when it comes to things that we import.
Keenan Brugh 33:00
Very true. So maybe there'll be some decision switching over to better reusable and I know aluminum can be infinitely recycled, but it's often coated in BPA type plastics, if it's going to be in a cat or something like that. Glass, I think is pretty doable to recycle plastic may need some work on if that's going to be viable and clean. But one step forward.
Pete Mento 33:21
He didn't one of the coolest damn things I've ever seen in this job is going to a plant that actually manufactures soda, soda bottles, plastic, yeah, it's just this little tiny pebble of plastic and they hit it with this puff of air becomes like a soda bottle, I don't know where it was pretty amazing. And then the amount of work that they're doing to use reusable, recycle the plastic and I have had a call recently with a water company who puts their water in cans. And they said that, you know, the cans are even less expensive for them to recycle and reuse. And you should be trying to drink whatever you candidate cans instead of bottles. That always stuck with me. But it's just fascinating how the technology has created so many opportunities, but we also have to be aware of what it does to the world. I can hear half the people I know turning off this podcast as you and I sit here preaching about the lien even even Doug is like hitting the fast forward right now.
Keenan Brugh 34:14
I've been but the regulations matter. And I appreciate your kind of broker approach because I mean, not being an operations but seeing a lot of shipments with cap, there's always issues of hazmat and it's tougher to move. And so these, these regulations do matter and ultimately will impact costs or what's possible or feasible to move.
Pete Mento 34:31
And we're having changes of the Lacey Act pretty soon. Kenan which is, you know what that's important to America. And I'll tell you, it's complicated. And you're trying to keep certain wood that's endangered or dangerous, you know, are in danger of being endangered from being used things like plywood in furniture, making sure that companies know where stuff comes from. So this is a big part of my job job with anybody involved in importing. So I think it's timely. But I will bring us to our fourth and rather controversial topic. So during the Great COVID meltdown of the supply chain that we all got to live through, I always ask this at my seminars, Keynote, I always say so anyone in this room start their career in logistics in the middle of COVID. That's always a couple of hands that go up and I say, trust me, it's not always like this, I promise you, it's gonna get better, it gets better. But promise, I'm promising you gets better. Could you imagine starting your job in the middle of all that crap? Well, during that, we had a lot of demurrage and detention issues, where people were trying to either obtain a container or bring a container back. And because of the port congestion, the unavailability of being able to find chassis user drivers, they ended up having pretty significant penalties that were thrust upon them by the ocean carriers, because they wanted their equipment back. And regardless of the environment that we were working inside of, legally, they had a right to say, if you cannot get us back our equipment, or if you can't come and get your equipment, we're going to hit you with a fine, it's in your contract. And some of these were outrageous, I can speak from personal experience of dealing with companies that had seven figure demurrage and detentions over the course of quarters, not a year, because of their inability to get these things back. Well, a number of companies went to the federal Maritime Commission and said, we have to do something about this. And when I served on my committee for the Federal Maritime Commission, it was the number one topic that came up. How do we deal with the issue of getting this stuff back. And what ended up happening was the FMC put their foot down, and they signed a new act. And that new act put a tremendous amount of responsibility on an ocean carrier. And then the freight forwarding companies and nvoccs that they work with to be able to prove that these these penalties were actually something that should have been implied that they weren't unfair to back it up with all the information that was necessary. And many of the ocean carriers felt that they had been victimized. So to that end, Evergreen appealed this policy with the federal Maritime Commission, and the appeals court agreed with Evergreen saying that it was arbitrary the way that the rules were put in place and, and the expectations on the ocean carriers, this is all happening in the middle of what's becoming a possible new ocean freight crisis, where we could have an East Coast strike, we staved off a Canadian strike pick up but that could happen as well. And as we begin to be more and more concerned about what's happening in the Red Sea, cargo is going into one direction, it's creating, to some degree, a lot of congestion. And with that congestion, we could be seeing this again, in just in time for that the FMC is kind of being pointed in another direction saying, I don't think you've made a good enough case for this. So I'm concerned again about how demurrage and detention charges will be passed out. And how we're really right now in a in a somewhat undiluted state of being told how it ought to be applied. So I think that this is just opening a can of worms again, and the decision isn't over.
Keenan Brugh 37:57
Fascinating. So there's going to be a little bit more uncertainty or how would you describe this impacting shippers,
Pete Mento 38:03
when you don't have straight instruction. And when the FMC is being overturned, rightly or wrongly, you know, we'll have our own opinions, it's going to create more ambiguity on when a final penalty should be put into place. If it was fair, and not just going to open up another morass of dealing with these fines and penalties.
Keenan Brugh 38:24
Uncertainty is expensive and unnecessary. Uncertainty is the most expensive, so Yeah, buddy, work with your brokers to get a good plan in place as things are changing. Call
Pete Mento 38:35
your freight forwarder. If you're a VCO, contact your ocean carriers try to get this all set up and watch it pay attention to it have contingency plans. If I got a nickel for every time I say hope is not a strategy here. But it's not. So have an idea about it that you're speaking to that beginning. Maybe maybe the next time you and I do a show together, we'll do the inventory of our bug out bags just to freak everybody out
Keenan Brugh 38:56
there. Yeah, there we go. That's a good idea. I do. I do look forward to asking Doug, if he's made any progress on his. I'm
Pete Mento 39:02
sure he has. That's all I got this weekend to let you close it out for us, buddy. Sounds
Keenan Brugh 39:07
good. Well, thank you for joining us, everyone in the audience. Thank you, Pete for another fascinating discussion. It's always a good opportunity for us to check out what's going on in the world of global trade, economics, policy, transportation, and even sometimes the weather when it impacts it. So thanks to cap logistics for providing us this opportunity. And everyone that go forth. Have a great week and we'll see you again next time on global trade this week. So you can see okay, bye everybody.
Transcribed by https://otter.ai