Global Trade This Week – Episode 208
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Speaker 1 0:00
Doug, you're watching global trade this week with Pete mento and Doug Draper,
Pete Mento 0:07
Hello everyone, and welcome to apparently, an all hats edition of global trade this week. I'm Pete mento and is my good friend and co host, Doug Draper, also with his chapeau today. So Doug, I don't recognize the logo. Is that something I should know on your hat?
Doug Draper 0:27
Yeah, it's a brand called Genteel. You know, because I am like the scratch golfer. Oh, okay, no, no, I think I played golf five times in my life, my son's a big time golfer, and he's like, Hey, Dad, check out this hat. I like the color and I like the bird, right? So I'm sure there's somebody in our audience that has heard of this brand. He got it when you look when he was working up at the Yellowstone club. So I'm sure this hat is worth like, $500 or something crazy.
Pete Mento 1:02
I was convinced you to tell me it was some ski area. But that's wrong.
Doug Draper 1:07
Now it's a bird, like, those are the wings and, you know, yeah, thanks. And I can tell that you got, what is that? The socks?
Pete Mento 1:19
Yeah, yeah, they're gonna they're doing well, just to break my heart yet again. Doug, so they always play just well enough to make me care at the end of the season and then wreck my life. Yeah, so one of these days, I'll learn not to love them. But I just can't help
Doug Draper 1:34
myself. Well, it is.
Pete Mento 1:38
You kick us off this week. We got some fun topics. Yeah, we do.
Doug Draper 1:44
Why? I read something the other day. Because people are like, where do you come up with your topics? Do you chat GPT stuff? And I'm like, No, I don't. I like, read stuff that comes out. I probably have, like, I don't know, this seems like a lot to me, but maybe not. I have maybe eight daily newsletters that come at me from all different sources in our industry, from rail to ocean, and that's where I pull my topics. And there was one the other day that talked about Walmart Cross Border Services. They just opened up another origin, or two origins in Vietnam. So I started looking into like, what's this? What's this all about I know that Amazon has something similar, called Amazon global logistics and Walmart's. It's called cross border, and a lot of their acronyms are kind of like McDowell's versus McDonald's, if you remember that and coming to America. But it caught my attention because these big boys are really rolling out some aggressive supply chain services, and they're super nichey. So I just wanted to compare and contrast them with you a little bit. Pete and our audience here, so Walmart cross border. It's a port to door service for full container loads only. They have to go into Walmart fulfillment centers in the United States, right? And it's specific to customers that are selling stuff on, selling products on on Walmart, which I think is amazing. It Walmart's nichey. Well, they're not niche because they sell everything under the sun. But as far as their their supply chain strategy on here, with this service, they're being very deliberate and diligent, right? There's only five origins in China. Two in Vietnam has to be full container load has to go to their DC. They handle a lot of the stuff, you know, the logistics of it, the stuff, meaning point A to point B, and everything that you and I talk about every single week. So minimize charge backs. You don't have to go into their web port of a schedule, some type of crazy domestic LTL or truckload, consolidated shipment. So I think we're going to see that continue to expand and Amazon Global Services. Here's their difference, right? It's port to Amazon DC, but they cover the US, UK and European Union. They do full truck, or, excuse me, full container load and LCL, they have a lot more origin points. And the only thing is, it seems like the seller has to navigate a little bit more of the of the customs brokerage piece and things of that nature. So it's interesting. I think these services are going to grow, and if you're a customer, when I was in Denver, there was a customer that made thermometers, specifically baby thermometers. They had one customer. It was Amazon, and they brought in full container loads, and they would bring them into our warehouse, and we'd have to relabel them and do all this crap. And, you know, the traditional compliance and if they would just stick that. And I haven't worked with them for for years and years and years. I don't even know if they're still in existence, but my whole point is that you dump that into a Walmart cross border. How many customers like that? Full container nodes direct to Walmart? The hassle factor of working with them on a domestic level just disappears. And so I think that these two services are going to continue to grow. Um. And I wanted to to call out. I had to pull this up, so I didn't, I didn't forget this. Anyway, it's like Walmart seller center, and then it's Amazon Seller services. It's just crazy. If you look at the acronyms they use, they're almost identical, but anyway, the big boys are getting bigger. They're making it easier to do business with them, which is what they want. And I'm anxious to see how these service offerings continue to grow.
Pete Mento 5:32
Yeah, man, I I love these discussions, you know. So when I was at Wayfair, we had our own freight forwarding service. That's what I worked in but when I look at these two particular situations, first of all, with Walmart, friend of the show, Scott humanick, he is sort of their customs and software guru. He's been there for a while, building the infrastructure, you know, the IT infrastructure for what's necessary to do this same thing at Amazon, a friend, Joe, who's who's over there, same thing. Building the infrastructure. These are, I think people are sleep. Part of you sleeping on Doug. I don't think folks are realizing, when you have that kind of money, got those sorts of people, but you've got that kind of volume, you can build something from scratch that's not only impactful, but cost efficient. The number of containers these guys are buying, and then they're able to bring that savings to to their their suppliers. You know, the the fan of my friends in these businesses, of me loves it, but the guy that works for freight forwarder hates it, taking away all this business of what we would normally have an opportunity to grab a hold of So, yeah, mixed emotions, man, I'm proud of my friends, but wow, that's, that's a whole lot of freight that's out of the system.
Doug Draper 6:48
Yeah, yeah. I think it was just accelerated during covid. Remember how those guys were just like, forget this. We're going to book our own truck, our own our own containers and getting in there. So I think that accelerated things. But agree with you, it's kind of interesting to see
Pete Mento 7:02
Doug. When your owner has enough money to build rocket ships and send his girlfriend into space, you probably have the money to put together your own supply chain services company. So I think there's a lot more to come on this. I think we'll be talking about it for years into the future and the impact it has on the greater industry. But yeah, great. Call
Doug Draper 7:19
out, Doug. Yeah. Thank you. What's your first topic?
Pete Mento 7:22
Well, my first topic is one, again, used to work at Wayfair the last Friday. President Trump. You know it always, why does it happen on Fridays? Man, like every Friday this crap happened, he comes out and says he's, he's going after furniture with these 232, tariffs. And everyone freaks out, right? It's all over the place. It's all over LinkedIn, it's everywhere. And there's two reasons why this drove me crazy. First of all, the the reasoning that was put out there. You know, we need to bring back the sustainability of this. We need to bring back the fact that these were important jobs in the central part of the Atlantic, East Coast, we need to do something about this. And the second was the outcry from my industry, the trade and trade professionals, the 232, tariffs are there, and they're being put in place to deal with issues of national security. So steel, aluminum, copper. You know, these are issues where America has decided these are in our best interest to have our own industry. How does furniture fall into that? And is this going to be I understand pharmaceuticals, I understand microprocessors, but just because I can't get myself, you know, a reasonably priced new dining set, I don't think that's going to wreck America's ability to project power. So where? Where's the emergency? Where's all this coming from? I don't have an answer for that, Doug, and I'm wondering if this is going to hold up in court when some of these larger companies that deal in furniture all day realize that there's a gaping hole in the logic.
Doug Draper 8:57
Yeah, I did notice that we have a couple clients that are furniture related, and I had some conversations with them, the with them the other day. They're opted option. I can't think of the right word I'm trying to say, but you know, they're concerned. They're not overly panicked, but you're right. Like it 501, or 459, this thing came out on a Friday. That's when you always bring bad news, and you let the weekend simmer, and then everything you know is is pending to go into, into implementation. So I don't know with you. I was like, what's the deal with furniture? Why is that? You know that that big of a deal? And I can't figure it out. We could go down a political shit storm on this, on this podcast, which we've made a commitment never to do, but the reasoning just doesn't seem very clear. I'm not really sure, but it's something to keep, keep note of it. And I agree there's gonna be enough backlash and enough folks, but there is a decent. An amount of furniture, at least. That's what I'm seeing on TV from manufacturers in Denver that, you know, maybe it'll be but if you're talking the IKEA's of the world and stuff you can purchase at Wayfair, you know, vast majority not made in the US,
Pete Mento 10:15
yeah. Well, it's funny from your first topic, your second topic, those are two companies that really have it tied together with transportation, Wayfair and IKEA. Guys at IKEA, man, it's like clockwork. They're incredible. Their supply chain is amazing. And, you know, forethought they put into it and how they get things done all the way down to the manufacturing and the supply chain for the raw materials. You just start throwing in a 50% tariff on stuff. Oh my gosh, the number of Americans that probably have something from one of those two companies in their home right now. I bet the statistics are alarming. How many of us have something in their home? IKEA?
Doug Draper 10:50
Yeah, you know, it's also alarming all the little bolts and and and screws that, like I don't even know where this goes, that are in the the junk report. That's probably alarming as
Pete Mento 11:02
well. I have a terrible confession to make. I love putting together furniture. Oh, I love it. I get my tools out. I get my power tools out. I read the instructions before I do it. I lay everything out in order, and then put it all together like for me, that's a lot of fun. And I know that's strange, but I have had neighbors that have asked me to come over, because they know, and I get a grin on my face, you know, I grab my toolbox and I'm over there like I get all fired up for it. So that's another great, weird thing about Pete,
Doug Draper 11:33
yeah, and there are quite a few halftime brought to you by CAP logistics, our friends over there and Keenan pushes the buttons, turns the levers every single week, and we appreciate them. Cap logistics.com, get getting her done. So, yeah, you want to go first on your halftime? My friend,
Pete Mento 11:53
sure, sure. So this is my birthday season. Doug, it is a lot of birthday related things happened to me in July and August. I have a number of friends that I've grown up with. All of us have our birthdays. It feels like between June and the end of August. It's weird, and I I've reached a certain age where I don't want to celebrate it anymore. I don't want it even brought up. I don't want a text message. I want nothing, right? I'm old. Now Get over it. Okay? So the thing that's getting to me, though, is between offices and going to dinner, birthday cakes. Okay? Birthday cakes. Now this is a multi part question. Doug, all right, so is there a birthday cake that you love? Okay? Is there a birthday cake you want to have every year for your birthday. And second part is, there an acceptable replacement for a birthday cake, rather than the cake, if you could pick it, if you could say to the people who do your birthday celebrations, right? And the third is, at our age, is it still wise to put that many candles on a cake?
Doug Draper 13:01
All right, see if I can remember all those. Number one is chocolate cake. I used to be chocolate, chocolate, and now I'm chocolate, vanilla, whatever. The middle part the yellow cake, I guess, is what they refer to it. A suitable alternative would be a fruit pie, right? Drop me a cherry, blueberry, or Apple. I'm good with that. And then, then, yeah, you know, I think too many candles. It's just put the ones that that have the two numbers, right? Whatever it is, 2027 28 something like that. I won't say exactly the number that would be on my cake, but yeah, I think individual candles? Nope, just put the numbers on there, two candles, and away you go. So obviously we have to know what yours are. Pete, so let her rip.
Pete Mento 13:52
My mom used to make me a German chocolate cake the Duncan Hines out of the box. Nothing about this was fresh, but I loved it back then. Now I'm really not into sweet stuff. I would, I would rather not like I'm not into cakes, cakes, cookies, pies, any of that stuff. I would prefer that everyone just, you know, give me a hearty handshake. Maybe let's get a steak. Okay, let's have a steak. I don't want candles on anything I don't need the attention brought to how many trips around the Sun I've had. I think that's preposterous. And, you know, truth be told, if I were going to pick a cake. Now I'm thinking ice cream cake. I'm thinking like, like, Carvel, get me a cookie push from Carvel. And, you know, let's get after it. But no man, I'm out. I'm out on birthday cakes,
Doug Draper 14:43
all right? Well, this, my halftime is kind of jives into that right cake is family gatherings and celebrations. Right that I saw the other day that as far as new homes and how things are being designed, that dining room. Things. I think the headline said dining rooms are dead, right? That younger homeowners are just not interested in a dining room. It could be, you know, they're kind of being replaced with like emerging flex spaces. You know, housing prices are so astronomical nowadays that let's use every single square foot of that of your home as productivity. Because I know when you grew up as well as I that the dining room was used very infrequently, except when you had school projects as a elementary or middle school kid, you had to spread all the crap out or you were or the other thing is that it was time to wrap Christmas presents and holiday gifts. So that's multi use rooms. But here's my old Midwestern value thing, like, you know, it the dining room table, right? I'm not going to go on a ranch or anything, but what a great way, because we did this growing up, and I think there was tremendous value. It's one time during the day that you can sit with all of your loved ones in your family and see what's going on, what are concerns? What are your kids doing? What's what's important to your family, your wife and your kids. So I get it. You could do that, you know, around a kitchen island or something like that. But I'm a big fan of sitting down and recapping the day, talk to your family, and that's best done in a dining room. So I'm kind of sad to see this trend happening, and it's interesting. The one thing on the article Pete, then I'll be done, is that home buyers in the south still think that's a priority, so, which doesn't surprise me at all, right, but dining rooms, they say are dead. I wish they weren't. I had a lot of value my dining room, even if we didn't dine there. You bring your friends over, and you do that project that's due tomorrow at eight o'clock, and you start at eight o'clock the night before, and you just kind of wing it together with with duct tape and glue.
Pete Mento 16:55
Doug, I'm gonna I couldn't agree with you more here the in my home, I was raised by very strict parents, one of whom was Southern and one of whom was, you know, the son of Italian immigrants, and the dining room table was the only place you ate. You didn't eat in the kitchen. You didn't take things in the living room. You sure as hell didn't bring it to your room. You ate the table. And it didn't matter if you're having a bowl of cereal, or if you were having a snack after school, that's where the hell you ate. And dinner time was very important. Now, I was not as over scheduled as our children and, you know, subsequent generations, I had school, I had practice, I had work, but if I was able to be home, something was cooked and we ate it at the table. If we ordered out, we ate it at the table. That was pretty rare, but we always ate at the table. And you're absolutely right. You know, some of the conversations that I had with my parents at that table were so important. What am I doing? Who am I out with? What are my parents doing? I really didn't care. You know, I didn't care to ask my mom and dad, hey, what's going on, but I heard about it at the dining room table. So I think it's interesting that you brought up then in the south it's still it's still happening there. I think it's so important, and I think it's also maybe a bit of a casualty from covid, right? When we weren't entertaining with people at our homes, as much, my mom and dad would often have friends over, and dinner would turn into sitting around the table having drinks, playing board games, playing cards, listening to music. It was just sort of this communal space where we all got together. I feel like we're becoming more insular as a society and a little more selfish as well, and we're not taking time to include each other. So this pisses me off. Doug, I want, I want to see the dining room table be just as important as it was when we were kids, but I've got a long list of things I wish were as important as we as they were when we were kids. I could go over So Doug, I'm with you. I think we should sign a petition. Let's get something done about this.
Doug Draper 18:53
Yeah, I think we should write a strongly worded letter somewhere that nobody will read or care about, but I'll feel better about it.
Pete Mento 19:05
Yeah, I'm in, man. We'll get all the listeners on the show to do it with us.
Doug Draper 19:08
Yeah, very cool, very cool. All right, let me jump into my topic. It's short, sweet, and then you can end the show. So she in right team, you and Sheehan. We know all about them, and she has been moving around recently and pitching their IPO services. Or, excuse me, their their IPO plans to different markets across the world, right? They move their operation from China to Singapore mid 2021, 2022, something like that. And they've been pitching their deck, so to speak, in the US and in the UK, nobody wants to play. There's a lot of concern about sourcing strategies child labor, and that's, you know, keep that away with a 10 foot pole, so to speak, which is very valid, very true, and we've spoken about that here on the. Show multiple times. Well, it seems like they're moving their operation back to China. They're looking to IPO in that country and and we'll see they're trying to get some some traction on that. So she in trying to find a home. And the other piece to this story Pete is that the de minimis thing that transpired, you know, China was the first one to be hit, and there was a blip right where people could not, or didn't want to pay four bucks for a cell phone case. And it seems, over time, in a very short period of time, that a $4 case that's now $8 doesn't seem to bat an eye with the consumer, and both of those companies are seeing volumes increase to their websites, right? I'm not saying it directly transitions to a number of shipments, but as far as eyeballs on their websites, that is back up to levels that were pre de minimis levels. And Sherwood media is the company that I got that information from, so I think we should probably mention some of our sources at time, but it was interesting. So Sheen's trying to find a home to IPO, and looks like the changes with de minimis are not impacting at least the inquiry that people have across the world related to their services.
Pete Mento 21:28
Yeah, I got a lot to say about this one. So the first was news this week that India post will no longer be sending parcels to the United States, just like another of other countries, postal services are saying the same because of the change to de minimis, and how the the onus, the work is really ending up on these postal services because of the massive tariffs. Now, when one of these e commerce companies, like Shein, like temu, the list goes on and on, when they bring something in the country, they have to declare for tariffs, and it makes for very complicated entries. But I think the the takeaway from this is they're still doing it right. The the hunger that America has for reasonably priced, if not inexpensive, goods and getting them relatively quickly is not going away. So you mentioned how the eyeballs are back on the site. I think as the American economy continues to struggle with things like inflation, and, you know, we have less money to spend on crap we don't need. We're going to be focused on where we can get it at the lowest possible cost. And those are two, you know, two things in your head that aren't going aren't going away. Last part I wanted to bring to this is, you know, I bought a shirt from Shannon about a week ago, I bought a a Hawaiian shirt, very nice, very thick, you know, silk Hawaiian shirt, white with lobsters on it. Yeah, I saw it. I saw it on an Instagram reel, and I just had to have it took about a week to get to me. What I paid for, it was a fraction of what I expected to fits nice, looks nice, everything's great. I don't know that if I needed a shirt to go to a party, I would have bothered to go to the tall and fat guy store find myself something to wear. The relative ease of just taking up my phone and buying something and having it show up, what I've been recently doing is looking at the things I have regularly delivered to my home by these e commerce companies, cleaning supplies, my protein drinks, right? All those things. And then I look when I go to Target or other places to buy groceries to see if the prices are different. There's really no consistency to it. Some things are dramatically cheaper. Some things I'm actually paying more for just because I want it all delivered to my house because I'm old and lazy. But I think Doug that that the combination of trying to find the best possible deal with the combination of being old and lazy or young and lazy is going to keep the volume of this stuff moving.
Doug Draper 23:56
Yeah, it's like, everybody bitches about gasoline when they're pumping it, and then a Taylor Swift song comes on, and they're like, I guess I need to pay for it, because I need to finish. I need to go about my life.
Pete Mento 24:08
Yeah, man. I mean, hey, think about how much cardboard you throw away a month. Like, I I'm my daughter. About that all the time. Like, you need to think about sustainability with all the crap you're buying. She's like, Dad, just shut up. Just shut up. You know, I want these spider web leggings on chance. Shut up. Just pay for it. Old man, go back to work so you can buy me more crap. She has never watched this show, by the way, Doug and I doubt she ever a
Doug Draper 24:35
bunch of old, middle aged guys talking about a pretty niche topic. I don't blame her. Yeah,
Pete Mento 24:39
I don't blame her. I wouldn't watch one that she if she did one on musical theater, I don't think I'd watch that one either. So Jake,
Doug Draper 24:46
we're good. Yeah, that goes back to the dining room table.
Pete Mento 24:50
Oh man, the dining room table. Global trade. This week, the dining room table of international trade. So my last, my last topic is one that I think is alarm. Happening. I keep track of the math of tariffs. I keep track of it pretty closely, and I like to think pretty well. There are people who disagree with me with my math, but it is entirely possible that if these tariffs at the current level stay where they are, and American consumption volumes stay where they are, we're going to hit over a trillion dollars. So the number that gets bandied about right now in the press is about $690 billion I think that number is wrong, because I don't think they're taking into account all the derivatives that we're talking about and the tariffs that are coming on chips, pharmaceuticals, and I think more metals. I think metals like nickel, tungsten, titanium, these are all going to get wrapped up into it, right? And I believe that these tariffs could hit a level of a trillion dollars. So the the lead that's being buried here is all this money. But I think the more important question is, will we hit those numbers because people stop buying as much? Are people going to stop importing as much because they just can't sell it because of the price? I don't know, you know, I don't know that there are some things that will stop buying, and I certainly don't believe that we're going to start making it in the United States, but at least in the near term, we can't get a lot of this stuff. So it's a bit of a quandary for me, bud, like, are we going to start buying less things? Are we going to become less of an importer than we already are because of the increased prices on these things? Are we just going to eat it and it's going to be part of inflation, and Americans aren't going to stop the way that we consume? So I don't know, Doug, if you get an opinion on that, but it's something that's been banging around my head now for a couple of weeks.
Doug Draper 26:40
Yeah, well, I think it's too early to tell. I mean, as you indicated, it's too early to tell. Are the buying habits of the American consumer going to change? There's so many things that are happening, literally from a Friday to a Monday, right? And we're not going to see, in my opinion, the direct net result probably until 2026 right? Because it's going to take a while to settle down. It's going to take a while for companies to see how they're going to respond and react to it. So I just like you, I don't know the numbers are there, right? If you do the analytics and you're a good numbers guy, and your posts on LinkedIn are brilliant, right? I wanted to, and I'm not kissing up because you're my co host, but the things you bring to the table on LinkedIn are very informative. So I want to make sure our folks follow you with your with your content. It looks good on paper. Let's see what transpires in 2026 Will this really impact buying habits, or will be bitching about the gas price, and then a Taylor Swift song comes on and you just go about your day. But it'll be interesting to see. There's just too much chaos going on right now to really see if those numbers are going to hold
Pete Mento 27:55
true. Doug, that's two Taylor Swift references. Are you a closet Swifty, like, were you glued to the news yesterday about her and Travis Kelsey? Are you? Are you okay, man? Like, are is the metal head turning into a pop kind of a guy?
Doug Draper 28:09
No, no. The reason it's brought up is that we have a text chain with a bunch of college buddies. There's 22 of us on this text chain, and it it all reverts back to college, right? I mean, I have very successful friends from college on this group chain, and the banter back and forth. So this all got started because I took a picture. Did you see the pictures of them? There are engagement pictures where they're around all these flowers and stuff. And I took a picture and I sent it to the group, because most of them live in the Kansas City area, and I'm like, aren't you guys embarrassed? Like, when did, when did real men stop playing football for Kansas City?
Pete Mento 28:50
Yeah, yeah. Hey, listen, man, you want to talk about moving the needle, that lady makes a lot of money just breathing, right? And so just imagine now, everyone's going to want to get engaged like her and wear the same clothes, and her wedding is going to be like a national event. I sent this to you and Keenan last night. I think Travis Kelsey is, you know, about to get a prenup longer than any book he's ever read in his entire life. This is going to be really happy for him. Big believer in the institution of being in love and all that, you know, good for them, but the fact that I have to care about the life of these two people never ceases to infuriate me. So incredible business woman, one hell of a songwriter, great tight end, he'll never be better than Gronkowski. Don't even get me started on that. But yeah, an absolutely miserable thing to have to talk about with friends and
Doug Draper 29:42
family. Yeah, well, the fact that you and
Pete Mento 29:48
I are talking about it, yep, it's right there.
Doug Draper 29:53
Yeah. So anyway, that brings us to the end of the show. We appreciate our listeners, as always. We appreciate your comments when we post. Us on all the platforms out there. You can find us, and Pete can't. Thank you enough for your worldly travels now and spending a few minutes regardless of what hotel chain you're staying in. And I want to thank all of our listeners for engaging as well. And as Pete says, if it's happening in global trade, we will be talking about on the show global trade this week. Pete, my friend, enjoy your time. I think you got a couple days off at the end of this week. We'll chat with you next week.
Pete Mento 30:28
All right, buddy, good talking to you. Doug, thanks, everyone. All right.
Transcribed by https://otter.ai