Global Trade This Week – Episode 212
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Speaker 1 0:00
Doug, you're watching global trade this week with Pete mento and Doug Draper, Hey,
Doug Draper 0:09
everybody. Global trade this week is happening right now, right now, and we gotta hammer this show out. Everybody's busy. And for once, my co host, Mr. Pete mento. I forgot to mention my name is Doug Draper, but Mr. Mento is on American soil, really bizarre location. But Pete, you never cease to amaze me on your travel schedule,
Pete Mento 0:33
thanks, man, yeah, my travel schedule has me down too, so does the cocoa. I've got the vid right now, everybody. But unlike a few, unlike a couple of years ago, it's not a, you know, it's not a death sentence. I just can't interact with human beings at the moment. So, which is unfortunate, because I need to be in front of some human beings in a few days. So I'm testing regularly. I had a think, I think I had a negative test this morning. I'm gonna take another one. We'll see how I am in a couple hours. But, yeah, Doug, you know, fat men should not get covid.
Doug Draper 1:09
Doug, I've been pretty fortunate. I didn't get it during during covid. I think anyway, it's gonna say my wife, my wife's a teacher, and she her immune system is like, through the roof because she's, she rarely gets sick, and she's around six year old monkeys all day.
Pete Mento 1:28
Yeah, they're like, plague rats. These kids, they come home and they just, they bring everything with them. But Doug, you're, you're a hearty, healthy guy, you know, you're active, healthy cat in good shape. Like, I can't imagine that covid would do much to a guy like you?
Doug Draper 1:41
Yeah, yeah. Well, I eat my spinach
Unknown Speaker 1:45
on a regular basis.
Pete Mento 1:47
Love spinach like I'll go, I know no one cares, but I'm gonna say it anyway. I'll go to, like, Whole Foods or Wegmans, and I'll get the whole the giant bag of spinach, and I'll saute it up with some olive oil, some salt and pepper. I like the whole damn thing. I love it.
Doug Draper 2:02
I thought you were gonna say, you open it up and eat it like popcorn,
Pete Mento 2:05
or like Popeye. Remember? He'd like, crush the can, and he Oh, man, I love Popeye. Nice. All right, we're on a show to do. Yeah, yeah. So let's get this party started. My friend, what's your first one? So the other day, I have this text, text thread, string with the three favorite people I work with, two people that are with me on our team, and then a friend of mine I work with in Canada, Nelson, Carol Robert Nelson, I should, I should shout out all three of them, because I'm pretty sure all three watch the show. They're wonderful, wonderful, wonderful people. So whenever something pops up on it, my heart immediately sinks, because lately it's been like, oh God, you know, have you seen this? Like, what fresh hell is suddenly happened? So they're all watching the President's announcement, and I'm on a call with a client, and they're like, Trump gold card. And don't worry, folks, I'm not talking about politics here, but the the White House is issuing these golden visas. So it's like Willy Wonka, I got a golden visa, right? So the idea is, there's, there's three tiers to this. The first one is for a million dollars, Doug, which you know, you and I probably have in the ashtray of our cars, for a million dollars, you will go through a vetted process, an accelerated process, through DHS, and as long as you're not some sort of, I don't know, drug dealer, gun runner, who knows, you will have an expedited residential card, so you'll get your green card, like, now, like, no problems. And I've been reading a lot about it. They're saying, like, seven days, man, like seven days to have, wow. Now, hold on, that's tier number one. But wait, there's more done for Tier number two, for just, just a measly five mil. I mean, you know, I probably have to sell a couple of Renoir's at my third home to come up with that money. You know, for just a measly $5 million they'll have, you'll be a you'll be an actual citizen. They're selling citizenship for five now. They haven't rolled that second one out yet, but that's and then the third thing is, if this is the one that's probably the most important done, if you want an HB one visa for one of your employees, you got to shell out 100 grand for it now. So we've all worked for big multinationals. I've, you know, I've worked for tech companies. You've worked for big and multinationals. You get all kinds of people that come over from all over the place. I work for a Danish company, you know? I mean, we have a lot of people in Denmark, but not only that, we have people over the world that will come someplace and have a work visa because we need this particular type of programmer or whatever the case is, right? Like, there's legitimate reasons why we have these visas. So now the rationale behind this, dear Douglas, is, why would you import technological help, stem help, right, when it's going to cost you 100 grand more? Why not just pay the American version of that, which admittedly is more expensive, because it's probably going to save you money or cost just as much as importing this talent. I live in Virginia and where I live, over the course of the past three years, Doug, three years in my little County, we've put up 13 million square feet of data centers. And in the area that I live, there is a notable, notable immigrant population of people that are working on their HP, ones that came over with their families. They're lovely people, all of them. I run into them constantly because I eat at their restaurants, but the folks are very nice, but imagine if those people had to be replaced by American stem folks. So the argument here is, we're going to make you pay for that. Long story short, Doug, I have a feeling that this could end up being a difficulty for our innovation companies in America. I understand the concept of it. You know, I applaud it. Let's get American folks working. But the issue here is there's just not enough. We don't have enough people that are engaged in that. So will this induce young people to go to school for those kinds of jobs, and maybe in 10 years, we can make up the difference? Hell, I don't know, Doug, but this will have an impact on our industry, and it will have an impact on innovation and technology. Just want to know what you thought, bud. Hmm, bud,
Doug Draper 6:23
yeah, it's interesting that the speed of that happening is shocking, right? And to your point, just now, you said, well, will, will it have more kids go to school to fit those, those jobs, and that doesn't happen in seven days. That happened, depends on what school you go to, but that doesn't happen. So the alignment, as far as time goes, is just, is just not there. The one thing, so that's one, one piece of it. The other thing is that I, when I read about this one, when we when we spoke earlier, there's a little bit of concern that some of the new citizens are coming in to do passive financial investment. So you're talking real estate, general investment. So the intent is job creation, which may be the lead, which may be the reason say, hey, I want to expedite this. But the reality is, there's some concern that it's not going to employ humans. It's going to be additional capital in what's referred to in the articles about passive investments that I said, real estate, financial type of investment. So it'll be interesting. I don't know if it's just, you know, a flash in the pan, another headline that just splashes around for a while. But one thing's for sure is I love the visual, the gold card that was over his shoulder when it was announced.
Pete Mento 7:49
So Doug, last thing I'll say about this i i was in my building, and I was in the elevator, and one of my one of my neighbors, was getting in the elevator, getting off the Hey, we think about this visa stuff. So, so so he's from India, wonderful man, and he's there with his two kids and his wife, and he said, You know what, I think we'd pay that 100 grand if it was going towards more people to process these things, because it took him forever to get it done. And they said, We don't have enough people. He's like, I'm pretty sure they would have paid the extra 100 grand to get this thing expedited. So if they spend the money on that. I, you know, maybe I don't know what they're gonna spend the money on. Probably, who knows? You know, UFC fights on the White House lawn, but they're, and I'm absolutely going if they do it. So, you know, they that's something. They said, we'd be cool that if it was an extradited fee. But it doesn't appear to be the case. Yeah, you gonna find me seeing go the fight with me. Doug, no, no, I'm not what you got for us. But with your
Doug Draper 8:50
second topic, I'll fly to see you, my friend, but I'll skip the fight, right? Speaking of golden tickets, that's going to be one. I can't even imagine the price it's going to cost to get into that thing.
Speaker 2 9:01
Yeah, it's going to be an expensive ticket. Yeah, cool. All right.
Doug Draper 9:04
Well, I'm doing a big pivot from that one, the ying and the yang of the global trade. A lot of times I bring a domestic transportation angle to it. And I saw an article the other day that said truckload. So we're switching gears to truckload and brokerage, right? I know you have some history of that with some of the companies that you work for. And then as far as the truckload calls and the mileage that each load moves, right like so how many miles, or is the average truckload moving? It's down to 522 miles on average for truckload, which it's never been that low before, right? So what? What does that mean? Number one, and it speaks a little bit of the topic we spoke about with the up Norfolk Southern merger, is it shows more people are throwing long haul on intermodal and rail right on. Again, I think that that merger speaks to that generally, right, 15% cheaper. I've always heard that you can fit two and a half truckloads of product into each rail car or box truck. So let the trains, let the intermodal service take care of the long haul, focus rubber wheels, so to speak, on the short haul. Number two might open the door to the EV discussions electric vehicles and getting the electric semis up and running, the shorter the mileage you know, the better that that is, that equation can come to play. And I bring that up because Uber freight, if you may have read in Tesla have come up with a deal in a partnership, that if they subsidize the purchase of electric vehicles and electric trucks, or excuse me, they will subsidize it for regular contract freight for carriers. So if you and I own trucking company, and we do a regular route from Washington, DC to, I don't know, Baltimore, Maryland, right? That would be underneath that that 500 mile radius will be subsidized for the for the purchase of that electric vehicle and that electric truck. Now, it's not free, but we're going to subsidize it. The weird thing I saw about that Pete is that it's a little unclear of who's subsidizing it, whether it's Tesla or a combination thereof. But the shorter the miles, the shorter the haul, the more viable. That is. The last thing I'll say on this is this I think, is going to negatively impact brokers, truck brokers, which hasn't already been in chaos for the last couple of years, right? Shorter hauls mean shorter revenue. And those shorter hauls mean that there's more people. Because if I'm a trucker and I can do this haul and come back in two days and see my family, that there's going to be a lot of people there, there's going to be a lot of demand for that. And so those those costs are going to go down, and the margins are going to go down. And so if this gets some legs on, on the EV and that hall mileage continues to hover around the $500 or, excuse me, 500 mile range, I think brokers are really going to be impacted. So it'll be interesting to see how this thing pivots.
Pete Mento 12:21
Does this have to do any with anything with, like the shifts in distribution, with the miles going down, you know, we've got probably better, more saturated distribution than ever before. Does that have anything to do with you think, or is it just, if it does, it's pretty marginal.
Doug Draper 12:36
Yeah, I think it's a great point. Pete, my personal take on that is that with the tariff uncertainty and the fact that some people do finance their inventory, right, the faster I can get it on the ground in America, the faster I can start selling it, which means I can start paying back my loans, and I can turn my investment in my inventory into, you know, turn it liquid. So, yeah, that should be interesting. So let's get it on the ground. Let's get it in LA, let's get it off the vessel, and then let's try to do that distribution from LA, so I think that has something to do with
Pete Mento 13:09
it. Your point exactly? That makes sense? Yeah, yeah. Well, that that brings us to Doug's favorite part of the show. He loves to say our whenever he announces it, but it's not my favorite part of the show. I mean, I enjoy it, but it's time for halftime from our friends, Cap logistics. Cap Logistics is the sponsor of the show long I mean, they've just been so good to us. And all we ask from you, we don't ask, we don't have a Patreon, Doug. We should think about it. But you know, all we ask is that you check them out@caplogistics.com and with that, Doug, who's going first this week, why don't you run with it? Okay, so very passionate topic for old Pete here. I'm a collector. I collect comic books, some of which are worth more than your homes, and I'm not exaggerating. I collect autographed sports memorabilia. I buy these things because I see an opportunity for them to increase in value over time, and because I am a nerd now, the latest trend of collectible imported junk is something called a laboo Doug. Now it's no secret that Keenan and Doug and I are massive fans of the show South Park. We are unapologetically big time boosters of the show. And last week they had a labou episode, which was hysterical from start to finish. But my daughter was with me this weekend, and I said, What's with these stupid things? And she said, I think it's more of a younger generation thing. I don't really see them on campus, but the buy me blind boxes. You don't know which one you're going to get. You're going to get, and some of them are really, really rare, and they're worth a lot. But also, there's a lot of fakes. There's nothing about them that's really that difficult to produce. So you see a lot of counterfeit ones. And you just assume when you see somebody walking around with the one that's worth, you know, four or 500 bucks. Pogs. There's no way that it's real. And it made me think about Doug, all the crap that's been collected, right? So the most obvious one, of course, are Beanie Babies. We all remember that Pogs. Pogs was a big thing, you know, when we were young, Star Wars collectibles, which are now worth a tremendous amount of money, if you've got them in good shape. But there's always been that, that that junk, right? That thing that captures the imagination of young people, and now suddenly we've all got to go out and get them, and as a purveyor of services for importing inexpensive, stupid things, I can tell you this one in particular drives me crazy. So I'm letting everyone know if I'm at the airport and you're a grown person, so it means you got a fully formed frontal lobe, and I see you walk around with a boo boo. I'm ripping that thing off and I'm throwing in the garbage.
Unknown Speaker 15:47
You've been warned. You've been warned. Yeah, yeah,
Doug Draper 15:50
no. It's funny. I was right when you said this. I was thinking Beanie Babies, right? So my question to you is, where's your princess, Diana beat Beanie Baby? Is it in a box in the attic? Right? I mean, this is the closest comparison to that. And that was craziness, right? It was, it was Cabbage Patch dolls. I was that comes to mind as well. But we're gonna,
Pete Mento 16:14
what's that Doug, I tell everybody, look up the tulip craze, the tulip bulb craze in the Netherlands, back in like, 1650 or something, folks were going crazy, you know, selling these rare tulip bulbs, and then one day, the market just dropped. Don't put your money in stupid things, like, I don't know. I don't know, like Bitcoin, whatever. Yeah, there you go. Doug, did you ever, did you ever collect something like that when you were younger?
Unknown Speaker 16:41
On No,
Pete Mento 16:44
I don't think so. For me, it was comic books and baseball cards.
Doug Draper 16:49
Yeah, no, not, not a big, not a big collector. It doesn't surprise me that your comic books,
Pete Mento 16:54
oh, yeah, I'm sure it doesn't. All right, what's your topic?
Doug Draper 16:58
Kel All right. Pete, you've heard of Shark Week, haven't you? I sure have, yeah. Well, here's a new one, right? It's now called fat Bear Week, and it has nothing to do with me being in Colorado, and some of the stories I've mentioned, think maybe offline about some of the bears I've seen around here, but this is a single elimination tournament that's being held in Alaska, and it's happening this week, where you can go online, and you know, picture a bracket like the NCAA Tournament, where they have all these different bears, some of them have real names, and some of them are Like constellations or stars, where it's like n2 85x right? But the idea is, can you pick the fattest bear that's about ready to go into hibernation? And the one thing about this Pete is, all the comments up there is that the salmon season has been top notch, and so lots of fish out there, lots of bears eating salmon. And so they're saying that this year's fat bear contest to be epic one for the ages. And yeah, that you can go back and see who is the winner from last year. You know, of course, you know, some of these bears are just gigantic, right? So I think it may be too late to voice vote, but it's no longer Shark Week. It's big fat Bear Week. That's the new hip thing up in Alaska.
Pete Mento 18:31
Doug, you son of a bitch. All right, now you do this to me all the time. I kind of low key. Hate you for it. You bring up something in the show notes, and then I get in a rabbit hole where I become obsessed with the idea like that idiot that broke into his car dressed as a bear that was probably like two weeks the morons that chase the wheel of cheese down the hill like this ends up consuming weeks of my free time. I don't have a lot of free time. I am a lover of the live webcams during the salmon season of the bears, they just grab the salmon. I think it's fascinating. I can watch it forever. But this, this is worse, Doug, this is worse because I am made of questions, how are we weighing the bears? Are we doing it from like an eyeball test? What if one bears furrier than the other? And then, yeah, people in the comment sections like, go to Reddit, go to Reddit and put this in there. It's like, there was a bad salmon season. Well, this one lives in a part where there's berries. Berries have a higher caloric content. Like, geez, it was not good for me. Doug. It was not good for me. I had to walk away from it. So for all the listeners out there, before you look this up, if you are interested at all in wildlife, I'm telling you, you're going to get sucked into a rabbit hole for the fat bear competition, and you can blame Draper for it. It wasn't my fault.
Doug Draper 19:48
No, yeah, I think it's just for fun. Based on pictures, the fact that you went down a wormhole and talked about, how are they being weighed? And I'm the only one. I'm the
Pete Mento 19:58
only one. Yeah, I'm the only guy. That thinks that way? Yeah, you caught me, right? No, I've got a feeling that there are hundreds of 1000s of people in a similar mental state because of this stupid contest. I'm blaming you. I'm blaming you because you always bring up these things that make me wonder, you know, just the depravity of human beings that we will spend our time thinking of this. So it's all Draper's fault, dear listener, it's all Draper's fault if you would have caring about these fat bears.
Doug Draper 20:22
Yeah, yeah. Well, we'll leave it. We'll leave it at that. And thank cap logistics for for supporting the show and being part of it. So cap logistics.com go check them out. So that means we're on the second half of the show. Pete, we'll let you get your second topic underway.
Pete Mento 20:39
So it's no secret that Doug and I are big fans of the environment. We're big fans of environmental furtherment, but at the same time, we can be at times, skeptical of regulation that comes out. We're not just wholesale accepting things. There's been a mandate by the International Maritime Organization for years to try to get to net zero, to do everything that they can to eliminate the incredible amounts of waste that ocean going vessels spew into the air, you know that comes from relatively inefficient fuel types like bunker Sea, which burn off a lot of sulfur and all kinds of other crap into the air. If you've never been around stacks when they're blown on a steamship or on a diesel on a steamship, when they blow stacks, the crap that comes out of those stacks, it would terrify you, like, I'm sure that I've got some type of of rare cancer from being on ships for years. But this, this net zero thing, has driven a lot of innovation. It's pushed a lot of people to come up with great ideas, but we really haven't gotten there yet. So there are alternative fuel vessels. There are much more efficient vessels, but we're slowly getting to the technology necessary to do this and Doug the ocean carriers. They've come out, they've they've said the quiet part out loud. This could end up costing them $300 billion to get done in time, and they're running scared, man. So I'm wondering they have the political stroke to get out there and maybe push this out a little bit. But if you keep kicking the can down the road, it never gets fixed. So this is a big issue. I think that eventually it will have an impact on pricing. I don't know enough of it to be able to tell you, but Doug, I think this is going to slip against a brick wall eventually.
Doug Draper 22:13
Yeah, it's, it was hot all over the news years ago, right? And I think it's, it's shininess has worn off, but the fact that it's not us specific, right, and there still has some priority and some legs with the passion that the EU has with sustainability. So it'll be interesting. You know, I kept thinking like, when you roll up to the gas station and they got three choices of fuel, I bet 95% of the people push 85 octane, which is just I went to one and a gas pump, and the only option they had was premium, and it was like 90 cents more expensive, and I was parked, and all the other pumps were full, and I'm like, God Doggett, I'm going to have to suck it up and pay this. My whole point is that those costs are going to get passed through in some form or fashion, right? It's, it's going to be, you know, the economic burden. Who's it going to fall on you and me and the beanie babies and whatever the name of that thing is that you just spoke about. And then the other piece I was thinking of is that just the general economic stress with trade right now is it? Is it the right time to roll this thing out? I think that economic stress will wane before all these regulations go into effect, because this is a, you know, 510, year type of, type of time frame, and then the enforcement and verification, that's the other piece I was thinking about that could be problematic, just to your bear point, you know, how do we know these bears are actually what they weigh? Who's verifying it? What's the agency? How are they verifying it? So I think there could be a slippery slope, or potentially some fudge numbers as this thing starts to roll out, yeah?
Pete Mento 24:03
Doug, I'm just the inner data me. Is gonna say it right? Put the better gas in. Your gonna get better mileage. Engines gonna go better, you know, let's say you gotta go high grade all the time. Doug, you know, maybe go mid grade, you know, do do the right thing for your for your car, you know? Yeah, yeah. All right, Doug, bring us the last topic,
Doug Draper 24:24
though. All right. Well, this is about the Panama Canal and the Panama pipeline that I had heard about really, really interesting. And so the Panama Canal Authority and the entities that own different aspects of the Panama Canal are building a natural gas pipeline across the Isthmus of Panama to move propane, LNG, butane and things of that nature. And the concept is to free up congestion. In the port. You know, last year we spoke about how the water levels have gone down, and so there's only so many vessels that can go through the canal during the day, and things get backed up. There's a lot of energy that passes through there. Most people think of these Beanie Babies that you mentioned, and what's the stuff I want to buy that I don't need, but there's a lot of energy that moves through that port. So let's just get it off the water and let's just move it pipes. So for our audience, here's the visual. You have a tanker or a vessel pull up on one side of the Panama Canal, and they basically unload their cargo and move it across this pipeline, there's another vessel on the other side that receives it and then continues on its journey. So it's pretty interesting to play, and I get the fact that they're trying to eliminate and reduce some of the congestion in the port, but to me, what I just described means there's two vessels that need to be positioned in the right place in order to continue the journey. So it'll be interesting how this plays out. But I did hear that like Exxon Mobil and shell are listening and kind and engaged with this, so kind of like it, right? There's pipelines all over the country that go way longer. I think it was like 50 miles, 40 miles, or something in that. So I mean, it's, it's not excessively long. So I kind of like it. I just want to see the practicality of it. Building a pipe doesn't take that much time in the big picture. So I don't know if you heard about this, and what's your take, and I'd like to know your your your take on, like the repositioning or the management of the asset, which is the vessel, because they never cross. They stay on each side of their of their respective ports. So I don't know what's your take on this one.
Pete Mento 26:51
So I hadn't heard of this until the show notes, and I a couple of things I got to say. Right off the bat, we have a number of Panama Canal harbor pilots that watch the show classmates of mine, they they watch it religiously. So, you know, I do get to hear a lot about what's going on down there. But the the idea, first of all, of pipelines, pipelines are shockingly efficient and shockingly good at keeping the oil in the pipeline. You know, the amount that gets from place without, without any, any shortages, any loss, it's incredible just how much actually moves. So they are very efficient. They're good at what they do. The idea of lowering congestion by only having the ships pull up to the port. Well, now you're going to have congestion at the ports. You just going to have, like, it's like, you're, you're moving it to a different place, which is great for the people that are moving container ships. But now you're going to have to stage these vessels somewhere, and you're going to have to build and have vessel traffic on that other side, on both sides of the canal as well. So you're still creating a type of congestion and inefficiency. I would love to know the numbers. So this seems like it's again, Doug draperism, people with the green visors and the adding machines in a basement, these oil companies understand their business at an absolutely incredible level, and for them to even consider this means that the numbers must work out. So I would love to know how much they would be saving on this, even with two different ships positioned on two different sides of the canal. But the logistics of it, Doug, seems like it could be complicated. It's not like, we don't bring goods to Panama already. So the ports that we're talking about, you'd have to build the port. You have to create another vessel traffic for it. You still need a pilot to bring it in. So who are the pilots? Who's going to do it? Yeah, it's like, you know, in New Hampshire, we had too many porcupines. So they went out and they, they went out and they, they got Badgers, and there were too many Badgers, so they brought in Fisher cats, and then there were too many Fisher cats, they brought in stupid mountain lions, for God's sakes, like, I understand that there's an end to this, but are we creating a bigger problem on the other side of it? Time will tell. But I think the efficiency will end up driving cost savings. Yeah, yeah.
Doug Draper 29:01
I like it. I like it. And if there's, like you said, there's folks out there that have expertise in this field, we'd love to hear your thoughts and comments on this
Pete Mento 29:08
one. Well, Doug was Yeah. Doug, would I, you know, I, I don't know if I want to hear him, but Doug, certainly you're
Unknown Speaker 29:13
more concerned about comic books. I am. Yeah, well,
Pete Mento 29:17
that's going to do it for the show this week on we want to thank everyone again at global pardon me when I think around again at CAP logistics, and we're looking forward to bringing you to the show next week. Please subscribe. Tell your friends and if it's happening in global trade, talking about trade this week. Thanks, buddy.
Unknown Speaker 29:35
All right, be safe and well.
Unknown Speaker 29:37
You
Transcribed by https://otter.ai