Global Trade This Week – Episode 257
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Pete Mento 0:01
You're watching Global Trade this week with Pete Mento and Doug Draper. Hello, everyone. Welcome to Global Trade this week. I'm Pete Mento. With me as normal, as last week wasn't normal, but with me as normal is my co-host and friend Doug Draper. Doug, how are you, pal?
Doug Draper 0:20
Doing, Pete, or I'm doing good, Pete. Thank you for asking. It's a Monday before Labor Day, so couldn't be better.
Pete Mento 0:27
Yeah, well, it could be better. We could have taken this week off. Very true. Three days off last week, and unfortunately, I I worked for most of all three of them, put me in a hell of a mood. But you know, life is hard, Doug, and nobody cares.
Doug Draper 0:43
Yeah, yeah, yeah. Cool. All right. Well, I know we got a tight show, so I'm just going to jump into it. You cool with that?
Pete Mento 0:50
Let's go.
Doug Draper 0:52
All right. So I'm trying to stay away from tariffs in Canada and all that kind of stuff. So I intentionally are going a different direction, and what I've seen it goes on Keenan's topic from last week with the EU South American deal that's being developed, and then there's this India South Africa deal going on, and I started thinking the bigger picture is that it seems like there's this quiet like explosion. If that may that may be too aggressive of a word, but there's all these regional deals that are starting to pop up that have nothing to do with America. You know, I think globalization is still happening, which is obviously the topic of our show, but it's growing, kind of like in in neighborhoods, not necessarily global things. So here's my analogy, right? You got Walmart and Kroger, these massive big box, and then you got like a farmers market, right? And I think there's a lot of farmers markets going on out there where people are working deals. Hey, your tomatoes may be a little bit more expensive, but I'll give you a great deal on potatoes if you come down a little bit on your tomatoes, and let's work something out because we don't want to drive down the street and fight with traffic and deal with everything to to get a cheaper tomato. Now, hopefully that analogy makes sense, but I think what we're seeing is a lot of global trade is continuing, but it's continuing without the United States of America. And as we said, there's a China Plus strategy that's going on with sourcing. I think there is an America Plus strategy related to trade deals and things of that nature. And then the last thing I'll say about this, Pete, is that India and Africa seem to be a common thread. So don't sleep on India, and and I think we're going to see more deals with with Africa. So I think U.S. is kind of losing some of their influence in the sense that everything has to go through us before it goes to the world. I think that's starting to pivot a little bit.
Pete Mento 3:04
So, as Americans, we're rather myopic. We think that everything about trade, everything about commerce, everything about logistics is about us. Some of us in this industry also consider China as well, right? But we don't really think about the entirety of global commerce, and I think what you're describing right now, Doug, is the world realizing their power. First of all, that there are other markets, there are other sources, but second of all, that they need to be less dependent on us as a market, and maybe consider, yes, that the whole world is there, but deals like this were always happening; they just weren't happening at the clip that they're happening now. So I think it's a combination of that realization that we can't just depend on the U.S. anymore, but also they're trying to diversify as well. Ultimately, these trade deals that America is so focused on have a lot to do with diversification, not being so tied into one particular economy, and what we're seeing in the inverse is the same thing. They're looking for more diversity in their supply chains, not for a year from now, but for the next 10 to 20 to 30, as America becomes a less and less important market.
Doug Draper 4:14
Yeah, yeah, good point. Good point. All right, what you got? Bring it to the table, my friend.
Pete Mento 4:22
Yes. so for me, man, we're going to talk about something a little weird. We're going to talk about payments. We're going to talk about how people pay for things across borders. So, as you all know, anyone that's watched the show for any amount of time, I detest crypto, and I also really hate Bitcoin. And what I'm beginning to see now is the further humiliation of me and my opinions. While people now are using Bitcoin for international transactions, particularly ones between countries that have had some sort of a sanction on them from the United States. So we're seeing more and more use of Bitcoin for the purchasing of energy, purchasing of goods from one country that maybe we shouldn't be buying from, and keeps it off the banks. But at the same time, we're seeing it used for very legitimate purposes. Freight forwarders, transportation companies, certainly foreign suppliers are asking to be paid in cryptocurrency, keeping it away from the banks. The strength of American sanctions comes from our ability to control this thing called the Swift Bank, and right now countries are looking for ways to prod the defenses of that, to look for different ways to pay for things. I hate to admit this, but it's actually a pretty smart move. And what I think we're going to see, Doug, is a greater adoption of the use of these bankless transactions, as part of how we not only get around sanctions, but consider how we can lower fees and lower costs with regards to transportation of goods across the board. So I hate to admit it, Doug, but there might be something to this whole crypto silliness that Keenan loves so much.
Doug Draper 5:57
Yeah, yeah. I think the the only comment I have on that one, Pete. Is it keeps it away from the banks, right? And you can have some more flexibility, in in my opinion, and the implications that could come out with positively and negatively. So I think the key phrase, from my perspective, that you just said, is keeping it keeping it away from the banks.
Pete Mento 6:20
You know, a quick follow up on that, Doug. There is a movie coming out based on a book called "Everyone's Lying to You for Money, and it is written by the book was written by one of the stars of the old 1990s, I guess teen drama, The OC. He he's pretty incredible, Ben Ben McKenzie. Ben is an economist. He is not just someone who lost the Teen Choice Awards six times in a row. He is also an economist. He's a pretty gifted one, and he points out the folly of everything about crypto. It's been turned into a documentary, and the documentary, if it's anything like the book, will truly be amazing.
Doug Draper 7:00
I suggest everyone wrapped up in crypto take a look at it, and even if the stuff is adopted, it's going to explain how there are still dangers to it and how unlikely it is to endure. Interesting, interesting. All right, well that brings us to halftime. We're motoring through this. I don't know if we've gotten to a halftime in under seven minutes or not, but we're going to get it done because we have a tight show today. Brought to us by Cap Logistics. Keenan is running the show from a deck in Breckenridge, Colorado. That's how good he operates and is a true player for the for the show. So we want to thank Keenan for doing that, and we want to thank Cap Logistics for making all this happen. So anyway, halftime. You want to go? You want me to jump in?
Pete Mento 7:42
Yeah, man, I can start. I didn't read what your halftime was, so I hope I'm not stepping on it. But Labor Day, Labor Day, Labor Day is upon us, and it is you know a big barbecue and and and fun weekend for people. But I think it's sort of a lost bank holiday. I don't think people really see it anymore as the end of summer. I don't think they see it as the last weekend before the kids go to school because kids have been back in school for weeks in some places, right? What's the point, Doug? What's the point of this silly holiday? Why don't we just give people a random Monday off somewhere in October, or I mean, why do we do this? Why is this the last gasp of commerce? So probably unpopular opinion, Doug, out on Labor Day.
Doug Draper 8:30
Well, let's take this holiday and add it to the the Fourth of July. You mentioned it either this year or last year. Fourth of July should be a week, and I thought you were crazy when you said that, but the more maybe I get older, or more I enjoy that holiday. Let's just take Monday this year, the seventh of September, and let's just add that to july 3 and push this Fourth of July holiday to a week. I'm with you on that.
Pete Mento 8:58
So do we agree here? We need to just dump Labor Day. I mean, it had a very real purpose, right? We were, we were celebrating labor and safe labor in America and all that stuff, and I just don't think I'm in anymore, bro.
Doug Draper 9:13
Yeah, yeah. Good point. Good point. All right. So my halftime is, yeah, yeah. And I'm sure you can appreciate this, right? So NASA, you're gonna love this. You're gonna love my comment, I'm sure about this, right? So NASA just launched the Nancy Grace Roman telescope, right? It's going on a SpaceX rocket. I don't. I think it already went up, but it's like a giant panoramic camera because I was like, dumb this down for me. What what is this all about? Before I jump into it, Pete, I was like, why is it called Nancy Grace Roman Telescope? Well, she was, I think, NASA's first director or the chief astrologer. Of NASA, she helped a lot with developing the Hubble telescope. So I'm really cool that this telescope is honoring her name. So the easiest way that it was describing it is: it think of it like a panoramic camera, and it can survey the universe 10 or 100x, 100 times faster than the the Hubble Telescope and its mission, Pete, is to. I'm reading this so I don't get it wrong. Map dark matter, investigate dark energy, and find 1000s of exoplanets. And the thing changing, you know, the universe as we see it. So here's the thing: dark matter. That's really important for me to help pay my mortgage. So I'm glad that they're looking at that, right? Investigating dark energy. I don't even know what that means, but I'm glad it's more important than me enjoying time with my family, right? And then the exoplanets. You know, how about just happiness in in in life? That obviously is more important than me here now, enjoying my life and having a purpose on this planet. So, hey, Nancy Grace Roman, get it. You you are an amazing individual, and I'm not being flippant about that. But I don't really care about dark dark matter. I don't care about dark energy, and I don't really care how many planets that we find out there. I just don't see the point of all that. But I know you have a strong opinion, so I want to get your read.
Pete Mento 11:31
I am a nerd when it comes to space, and I have always said that the amount of money that we spend on space exploration and understanding science pays us back in spades, pays us back, you know, multiple. And I'm telling you, man, it is. I see where you're coming from, right? There are people living under bridges, and folks can't pay their mortgage. But this is the science that takes us to the next level. It's what creates the hope for humanity and does those beautiful things that I know you just don't care about. I and I love the pictures, dude. I just love them. I love the pictures. Is it worth that much money? I don't know. I think we're burying the lead though, here, Doug. I think the important thing is that they name this after Nancy Grace, like the Nancy Grace that did the whole. What was her name? The little girl that got kidnapped in Colorado or Utah? I don't
Doug Draper 12:32
remember. I don't.
Pete Mento 12:33
Is it the same Nancy Grace?
Doug Draper 12:37
I don't know. I no. You know, I have no idea. I'm bound with you.
Pete Mento 12:43
Wow. Okay. Well, I'm in, Doug. I don't know why you're so negative all the time with this stuff, but I think it's actually a pretty cool thing.
Doug Draper 12:53
Yeah. Well, whatever. I can look at some pictures. I'll have AI doctor up some pictures of a panoramic view of space. What happens
Pete Mento 13:02
if dark matter becomes the most important thing we ever discovered, and we're teleporting stuff all over the place now, and it's like we're living in Star Trek? You're gonna feel like an idiot, aren't you?
Doug Draper 13:13
I don't care.
Pete Mento 13:14
No. Okay. All right.
Doug Draper 13:17
Don't care. Don't care.
Pete Mento 13:19
That's that's halftime. A very negative halftime for both of us. Getting rid of holidays and yelling about the space program. Good job, guys. We'd be very, very positive.
Doug Draper 13:30
You got it. You got it. Well, we so Pete, we walked into this thing. It was a busy morning, and we got a tight window. So I had one topic. That's it. That my topics are over, so I want to comment on yours. I have zero idea what you're about to say, so we'll just wing
Pete Mento 13:46
it. All right. Well, we're going to talk about the wow. My my cut my nose there. We're going to talk about the madness, in my opinion, of what's going on in the forwarding world right now. There have been an outrageous number of layoffs and people being fired, or folks having their position reallocated, or moving them to something new in the business. And I got to tell you, Doug, I mean, we were expecting something like this to happen, but to the degree of layoffs at places like Expediters, the folks that are being reallocated or or simply losing their job at places like C.H. Robinson, I think that we are seeing the beginning of a massive correction in the labor market for freight forward. And when I say massive, I'm talking about the adoption of AI and shareholder pressure. This is all happening at the same time when these large forwarders are recording massive profits and massive growth. Is this the end of our industry, Doug? Are we are we seeing nothing of our industry, but the end of the importance of people in our industry? Is everything finally going sideways? I know that you have your your friends all over the place. So do I. But I spent time with a friend of mine at a major freight forwarder on Saturday, just having breakfast. I spoke to two other. People last week, they said it's just been a bloodbath at these major freight foyers. I'm thinking, Doug, 2027 could be the year of the Great Correction.
Doug Draper 15:08
Yeah. Well, other than being slightly distracted with your left hand on your nose, I'm not sure. I'm bleeding, buddy.
Pete Mento 15:15
I'm bleeding.
Doug Draper 15:16
Oh, do you need to? Do you need to jump off? I'll
Pete Mento 15:19
be okay. Okay.
Doug Draper 15:20
How about this? Here's my comment. Publicly traded companies, in my opinion, need to embrace AI. There's so much hype about around it, right? So they have to be showing what are you doing? What is AI bringing to the table? Because it was all nebulous, and and it could do this, it could do that. So there, I think there's a lot of pressure to find tangible examples of it, and I will give C. H. Robinson a lot of credit because they have absorbed, embraced it. You know, a lot of with the the day-to-day blocking and tackling that you and I dealt with and our friends dealt with 30 years ago when they were getting into the industry, banging the phones, getting relationships with people, so I think there is some pressure for publicly traded companies to say, "What are you doing with AI? And maybe there are just going pushing the envelope in one direction. I think it'll re-correct itself, and I think there's a good hybrid of humans talking to humans and robots doing some of the mundane activity, I think it may have swung because what I just said of the pressure with a publicly traded company to say what are you doing to embrace AI, and more importantly, what are you doing to embrace AI to help the bottom line? It is shocking to me. That being said, shocking to be that our peers that have been in this industry as long as we have, are seeing implications and getting impacted with layoffs and things of that nature. So, I I don't know. It it'll be it'll will be an interesting 2027, as you say. I
Pete Mento 16:52
think everyone needs to start embracing the tools. They need to embrace the tools, learn how to use them, learn how to be proficient in them. If not, here comes the future, and you can't run from it, man. Just the way it's going to be. All right, dude, bring us home.
Doug Draper 17:07
All right, that's it. We're hammered through this thing. I know you got a tight schedule, and you got a nosebleed, and who else knows what's going on behind your camera? So we'll wrap it up. That's another edition of Global Trade this week. I think it's episode 257. It's amazing. I appreciate you. I appreciate Keenan. I appreciate Cap Logistics for making this happen every single week. So get better, my friend. Looks like the nosebleed has stopped. And as you always say, if it's happening in global trade, we will be talking about it here every single week on global trade this week. Take care, my friend.
Pete Mento 17:41
Thanks, everybody.