1
00:00:10,920 --> 00:00:14,480
Speaker 1: Hello, and welcome to another episode of the Odd Thoughts Podcast.

2
00:00:14,560 --> 00:00:19,840
Speaker 1: I'm Tracy Hallaway and I'm Joe. Wasn't Joe remember that

3
00:00:19,920 --> 00:00:22,840
Speaker 1: ever Given? Yeah? That was. That was a great story.

4
00:00:23,520 --> 00:00:27,800
Speaker 1: It's not over yet, is it? So? Possibly my favorite

5
00:00:27,800 --> 00:00:32,040
Speaker 1: sort of finance eco story of all time. It's still going.

6
00:00:32,520 --> 00:00:35,800
Speaker 1: Uh So, there's still this legal thing over what's going

7
00:00:35,840 --> 00:00:38,360
Speaker 1: to happen to all the actual things that were on

8
00:00:38,479 --> 00:00:40,520
Speaker 1: the ever Given after it was stuck in the canal,

9
00:00:41,360 --> 00:00:44,040
Speaker 1: and people are still trying to clear the backlog of

10
00:00:44,080 --> 00:00:47,840
Speaker 1: container ships the sort of logjam that came from the blockage,

11
00:00:48,400 --> 00:00:51,080
Speaker 1: you know, months at this point after the thing was

12
00:00:51,120 --> 00:00:56,240
Speaker 1: actually stuck, right, So it wasn't actually stuck like sort

13
00:00:56,280 --> 00:00:58,880
Speaker 1: of blocking the canal for that long. I think it

14
00:00:58,960 --> 00:01:02,279
Speaker 1: was like about a week maybe or something wrong that,

15
00:01:02,600 --> 00:01:06,560
Speaker 1: but it caused all kinds of issues obviously, and they

16
00:01:06,560 --> 00:01:08,680
Speaker 1: had to have this huge rescue effort and that cost

17
00:01:08,760 --> 00:01:11,200
Speaker 1: all kinds of money. And then the last I heard

18
00:01:11,200 --> 00:01:12,800
Speaker 1: about it, and I probably read an article like a

19
00:01:12,800 --> 00:01:14,720
Speaker 1: week or two ago, there was some sort of like

20
00:01:15,560 --> 00:01:17,880
Speaker 1: some issue with like the boat, the vessel not being

21
00:01:17,880 --> 00:01:21,320
Speaker 1: allowed to actually continue on its journey until the owners

22
00:01:21,400 --> 00:01:25,160
Speaker 1: paid up for the the rescue operation, and then I

23
00:01:25,160 --> 00:01:28,480
Speaker 1: started lost track of it after that. Yeah, that's exactly right.

24
00:01:28,920 --> 00:01:32,039
Speaker 1: And of course the ever Given it's sort of, I

25
00:01:32,120 --> 00:01:35,840
Speaker 1: guess symbolic of all these logistics snarls that we've had

26
00:01:35,880 --> 00:01:39,880
Speaker 1: recently during the coronavirus crisis. And you know, we talked

27
00:01:39,920 --> 00:01:44,000
Speaker 1: about it before in various episodes. We've talked about basically

28
00:01:44,240 --> 00:01:48,440
Speaker 1: the surging traffic and shipping container rates going up, but

29
00:01:48,520 --> 00:01:51,120
Speaker 1: we've also talked about this idea that there's a shortage

30
00:01:51,160 --> 00:01:55,280
Speaker 1: of lots of different things, including lumber, including semi conductors,

31
00:01:55,320 --> 00:01:58,760
Speaker 1: and the logistics snarls really play into that because if

32
00:01:58,800 --> 00:02:02,640
Speaker 1: you already have a short things like semiconductors, plus you

33
00:02:02,640 --> 00:02:04,520
Speaker 1: can't actually move them to where they need to be,

34
00:02:04,840 --> 00:02:08,200
Speaker 1: then everything just gets compounded, right. I was just about

35
00:02:08,200 --> 00:02:10,680
Speaker 1: to use that word compounding, because that's really what it

36
00:02:10,720 --> 00:02:13,000
Speaker 1: feels like that Like the ever Given story was like

37
00:02:13,080 --> 00:02:15,839
Speaker 1: kind of wild. The ship like got turned and went

38
00:02:15,880 --> 00:02:17,720
Speaker 1: into the bank, and it was kind of weird, but

39
00:02:17,800 --> 00:02:20,959
Speaker 1: it really was sort of like the perfect emblem of

40
00:02:20,960 --> 00:02:24,760
Speaker 1: this moment because they are just so many issues recently.

41
00:02:24,800 --> 00:02:27,639
Speaker 1: Did that episode about with the lumber trader, and so

42
00:02:27,680 --> 00:02:30,640
Speaker 1: that after that episode, I was like reading about or

43
00:02:30,680 --> 00:02:33,280
Speaker 1: I was like following like one of the big sawmill companies.

44
00:02:33,680 --> 00:02:37,079
Speaker 1: I read their earnings report and they missed a man

45
00:02:37,160 --> 00:02:40,160
Speaker 1: about this. Oh you did, Joe. You've read this from

46
00:02:40,200 --> 00:02:43,919
Speaker 1: my post, Yes, you published it. That was the thing

47
00:02:44,000 --> 00:02:47,640
Speaker 1: about the sawmill company. Yeah, yeah, they couldn't get enough

48
00:02:47,639 --> 00:02:52,200
Speaker 1: truckey right, should have been minting money, but it wasn't. Sorry,

49
00:02:52,600 --> 00:02:56,040
Speaker 1: of course, because they couldn't actually move the wood. Okay,

50
00:02:56,160 --> 00:02:57,800
Speaker 1: so we're all on the same page. So anyway, all

51
00:02:57,840 --> 00:02:59,799
Speaker 1: these things are piling up on top of each other,

52
00:03:00,080 --> 00:03:04,040
Speaker 1: chips and trucks and boats, and it doesn't feel like

53
00:03:04,040 --> 00:03:06,560
Speaker 1: we're getting any closer to some sort of equilibrium. Of course,

54
00:03:06,560 --> 00:03:08,200
Speaker 1: you beat me to that story, Tracy. I don't know

55
00:03:08,200 --> 00:03:09,960
Speaker 1: why I would have ever suggested on the way, but look,

56
00:03:10,040 --> 00:03:13,200
Speaker 1: what's really interesting. Well, I'll tell you one thing. I've

57
00:03:13,200 --> 00:03:16,079
Speaker 1: been trying to ship something on a container from Hong

58
00:03:16,120 --> 00:03:18,840
Speaker 1: Kong to l A for months now, and I cannot

59
00:03:18,880 --> 00:03:22,280
Speaker 1: get room on a ship for lover money. So you know,

60
00:03:22,360 --> 00:03:24,360
Speaker 1: I've been trying to do this for the purposes of

61
00:03:24,440 --> 00:03:29,320
Speaker 1: journalism slash science, so I personally know how bad it is,

62
00:03:30,000 --> 00:03:32,200
Speaker 1: and the guests that we're about to speak to on

63
00:03:32,240 --> 00:03:34,639
Speaker 1: all thoughts. Is someone that I got in touch with

64
00:03:34,800 --> 00:03:38,200
Speaker 1: to try to give me some logistics advice and figure

65
00:03:38,200 --> 00:03:41,600
Speaker 1: out what was going on with my own container shipping woes.

66
00:03:41,720 --> 00:03:44,520
Speaker 1: And he's really the perfect person to talk to about

67
00:03:44,560 --> 00:03:47,320
Speaker 1: this because not only is he the head of a

68
00:03:47,400 --> 00:03:51,000
Speaker 1: tech platform for global logistics, so this is what he

69
00:03:51,040 --> 00:03:53,960
Speaker 1: does day in and day out, but he also has

70
00:03:54,000 --> 00:03:57,920
Speaker 1: about forty containers still stuck on the ever given so

71
00:03:57,960 --> 00:04:01,119
Speaker 1: he can talk about that situation as well. Well. I'm

72
00:04:01,120 --> 00:04:03,240
Speaker 1: really looking forward to this. I'm hoping to learn something

73
00:04:03,280 --> 00:04:06,440
Speaker 1: and hopefully you get some some advice on making your

74
00:04:06,680 --> 00:04:10,240
Speaker 1: making your ship all right. Our guest for today is

75
00:04:10,360 --> 00:04:14,480
Speaker 1: Ryan Peterson. He's the CEO of Flex Support. Ryan, thanks

76
00:04:14,480 --> 00:04:17,800
Speaker 1: so much for coming on. Great to have great to

77
00:04:17,800 --> 00:04:20,320
Speaker 1: be here. Thank you for having me so Ryan. Hopefully,

78
00:04:20,480 --> 00:04:24,560
Speaker 1: Joe and I kind of described the extremity of the

79
00:04:24,720 --> 00:04:28,960
Speaker 1: logistics log jam correctly in the intro. How bad is

80
00:04:29,000 --> 00:04:31,839
Speaker 1: it right now? Um? And it depends where you sit.

81
00:04:31,920 --> 00:04:34,240
Speaker 1: If you if you own a ship or an airplane

82
00:04:35,080 --> 00:04:36,839
Speaker 1: or a fleet of those, you're making a lot of

83
00:04:36,880 --> 00:04:39,599
Speaker 1: money right now. Prices have gone through the roof. The

84
00:04:39,680 --> 00:04:42,560
Speaker 1: reason is because people are shipping more things than ever

85
00:04:42,640 --> 00:04:46,080
Speaker 1: before in human history, and all the ships and planes

86
00:04:46,080 --> 00:04:49,320
Speaker 1: are full. But all the companies in every industry, I

87
00:04:49,320 --> 00:04:51,919
Speaker 1: think lumber, the lumber one you describe super interesting. But

88
00:04:52,200 --> 00:04:54,640
Speaker 1: everybody's having trouble getting anything delivered. And it's not just

89
00:04:54,680 --> 00:04:56,640
Speaker 1: you with your little container. It's some of the best

90
00:04:56,640 --> 00:04:58,760
Speaker 1: companies in the world are struggling right now. So my

91
00:04:58,880 --> 00:05:01,440
Speaker 1: little container is when you feet long for the record,

92
00:05:01,760 --> 00:05:05,160
Speaker 1: but it only has one thing in it. How does

93
00:05:05,200 --> 00:05:09,360
Speaker 1: a flex port sit within the logistics ecosystem? And who

94
00:05:09,360 --> 00:05:11,920
Speaker 1: are your clients and all this? Yeah, so we work

95
00:05:12,000 --> 00:05:15,680
Speaker 1: with about six thousand great companies around the world that

96
00:05:15,920 --> 00:05:18,400
Speaker 1: regularly ship. We actually have more than ten thousand customers,

97
00:05:18,400 --> 00:05:20,800
Speaker 1: but six thousands of them are shipping constantly like every day,

98
00:05:20,839 --> 00:05:24,680
Speaker 1: like medium sized, big, big companies, household names, some of

99
00:05:25,080 --> 00:05:28,000
Speaker 1: the most important brands in the world as well as

100
00:05:28,040 --> 00:05:30,279
Speaker 1: like we have almost all of the directed consumer e

101
00:05:30,320 --> 00:05:33,800
Speaker 1: commerce businesses that are these up and coming companies, So

102
00:05:33,839 --> 00:05:37,000
Speaker 1: we have all of those customers. They contract Flexport to

103
00:05:37,120 --> 00:05:39,719
Speaker 1: manage the full end to end from shipping everything once

104
00:05:39,760 --> 00:05:42,520
Speaker 1: it leaves a factory loading dock all the way into

105
00:05:42,560 --> 00:05:45,359
Speaker 1: their downstream network for distribution into the u S and

106
00:05:45,400 --> 00:05:50,240
Speaker 1: we handle air ocean freight, UH customs and the delivery

107
00:05:50,360 --> 00:05:53,320
Speaker 1: both pickup and delivery for trucking. So talk to us

108
00:05:53,320 --> 00:05:57,279
Speaker 1: a little bit about the containers on the ever given

109
00:05:57,320 --> 00:06:00,839
Speaker 1: then what was your role there in the logistics and

110
00:06:01,080 --> 00:06:03,880
Speaker 1: what's their current status. Yeah, we do have we have

111
00:06:03,920 --> 00:06:06,640
Speaker 1: forty three containers sitting on that ship still, that's our

112
00:06:06,680 --> 00:06:10,000
Speaker 1: European customer base. Obviously they contracted us to ship containers

113
00:06:10,000 --> 00:06:12,039
Speaker 1: out of mostly out of those ones left from China.

114
00:06:12,839 --> 00:06:15,120
Speaker 1: You've seen you've seen the pictures of the ship. They're stuck.

115
00:06:16,040 --> 00:06:17,960
Speaker 1: The name of the game here is second order effects,

116
00:06:18,520 --> 00:06:20,400
Speaker 1: Like you just couldn't predict what was going to happen.

117
00:06:20,920 --> 00:06:22,599
Speaker 1: So you've got the forty three that are stuck on

118
00:06:22,640 --> 00:06:25,480
Speaker 1: that ship, but actually a hundred and twenty other ships

119
00:06:25,480 --> 00:06:29,720
Speaker 1: containing twelve hundred flex sport containers were stuck behind that

120
00:06:29,760 --> 00:06:33,000
Speaker 1: ship or ahead of it which way they're going, and

121
00:06:33,040 --> 00:06:35,840
Speaker 1: also couldn't be delivered. How to get delayed. And that's

122
00:06:35,880 --> 00:06:38,560
Speaker 1: the biggest cost that's going to come about through litigation

123
00:06:38,600 --> 00:06:41,000
Speaker 1: and everything else that flows through here is all of

124
00:06:41,040 --> 00:06:43,640
Speaker 1: these people feel like, hey, you owe me money, you

125
00:06:43,760 --> 00:06:46,880
Speaker 1: blocked my delivery, and all of that that's gonna be

126
00:06:46,960 --> 00:06:48,880
Speaker 1: a lot of lawsuits. It's not just the cost of

127
00:06:48,880 --> 00:06:52,880
Speaker 1: the rescue operation, the dredging of the canal and everything else.

128
00:06:52,920 --> 00:06:55,480
Speaker 1: It's like all these people who had their cargo delayed,

129
00:06:55,520 --> 00:06:57,720
Speaker 1: and what's the how do you quantify that? It's like,

130
00:06:58,320 --> 00:07:00,240
Speaker 1: is it the lost profits that they would have aid

131
00:07:00,800 --> 00:07:03,599
Speaker 1: from delivering those goods. It starts to be a really

132
00:07:03,680 --> 00:07:05,560
Speaker 1: hard exercise that we'll get settled in the court of

133
00:07:05,640 --> 00:07:09,160
Speaker 1: law or or many um and it's gonna take a

134
00:07:09,200 --> 00:07:11,520
Speaker 1: long time to shake out. I don't know if there's

135
00:07:11,560 --> 00:07:14,520
Speaker 1: like client confidentiality, but can you tell us some of

136
00:07:14,520 --> 00:07:16,640
Speaker 1: the items that are stuck on the what types of

137
00:07:16,680 --> 00:07:19,120
Speaker 1: items are stuck on that boat? Yeah, there is a

138
00:07:19,120 --> 00:07:20,840
Speaker 1: lot of confidentiality. But I know that one of our

139
00:07:20,880 --> 00:07:24,240
Speaker 1: customers has is a relatively famous company that make and

140
00:07:24,280 --> 00:07:27,360
Speaker 1: I can't show that, but make keyboards, keyboards and mice, uh,

141
00:07:27,600 --> 00:07:32,400
Speaker 1: the entire like many container loads of that. Um. By

142
00:07:32,400 --> 00:07:34,360
Speaker 1: the way of the forty three containers, we have all

143
00:07:34,400 --> 00:07:38,920
Speaker 1: of the customers except for three, opted into cargo insurance,

144
00:07:39,560 --> 00:07:43,440
Speaker 1: which will cover the damages in the eventual lawsuits that

145
00:07:43,520 --> 00:07:46,000
Speaker 1: come out of this. Those three we're gonna have to

146
00:07:46,000 --> 00:07:47,840
Speaker 1: work through and make sure it doesn't bankrupt them. But

147
00:07:48,160 --> 00:07:51,800
Speaker 1: one of the little known facts about global shipping is,

148
00:07:51,880 --> 00:07:56,840
Speaker 1: under ancient maritime law, the company shipping the cargo, not

149
00:07:56,920 --> 00:07:59,480
Speaker 1: the owner of the ship, but the company that whose

150
00:07:59,520 --> 00:08:03,280
Speaker 1: cargo owns the cargo the products on there is liable

151
00:08:03,640 --> 00:08:07,200
Speaker 1: when something like this happens. Yeah, and and the real

152
00:08:07,440 --> 00:08:10,920
Speaker 1: that's a law called general average. It's a fascinating Wikipedia article.

153
00:08:11,280 --> 00:08:15,000
Speaker 1: And the reason that that's true under ancient sort of

154
00:08:15,080 --> 00:08:17,040
Speaker 1: not I mean ancient, Yeah, it goes back I think

155
00:08:17,120 --> 00:08:19,760
Speaker 1: hundreds of years. And the reason that that was true

156
00:08:20,040 --> 00:08:24,640
Speaker 1: is that in a in a storm or an accident

157
00:08:24,720 --> 00:08:28,280
Speaker 1: at sea, you don't want people to stop and argue

158
00:08:28,320 --> 00:08:32,440
Speaker 1: about whose cargo they're gonna throw overboard, and do you

159
00:08:32,480 --> 00:08:34,640
Speaker 1: want the mariners. You don't want these arguments. You don't

160
00:08:34,640 --> 00:08:37,200
Speaker 1: want the mariners like worrying about that. Just throw the

161
00:08:37,200 --> 00:08:40,640
Speaker 1: cargo over and save the ship, is the principle, and

162
00:08:40,679 --> 00:08:42,400
Speaker 1: you'll sort it out later. And the way you sort

163
00:08:42,440 --> 00:08:44,800
Speaker 1: it out later is everybody agrees that we will share

164
00:08:44,840 --> 00:08:47,920
Speaker 1: equally and whoever's cargo got thrown over the rest of

165
00:08:47,960 --> 00:08:50,680
Speaker 1: the people will make them whole. And that's a principle

166
00:08:50,760 --> 00:08:56,200
Speaker 1: called general average. And the ocean carrier under the law

167
00:08:56,480 --> 00:08:59,360
Speaker 1: has the right to invoke general average and declare it

168
00:09:00,000 --> 00:09:02,240
Speaker 1: and say okay. And so that's what Evergreen has done.

169
00:09:02,240 --> 00:09:05,760
Speaker 1: They have declared general average, which means all of the

170
00:09:05,800 --> 00:09:08,120
Speaker 1: customers who have cargo on that ship are going to

171
00:09:08,200 --> 00:09:11,280
Speaker 1: be liable for the damages that come through um and

172
00:09:11,360 --> 00:09:14,760
Speaker 1: it could be billions of dollars in aggregate and it

173
00:09:14,800 --> 00:09:17,440
Speaker 1: and it gets divided pro rata based on the commercial

174
00:09:17,480 --> 00:09:20,320
Speaker 1: invoice value of your goods. That when you do get

175
00:09:20,320 --> 00:09:22,120
Speaker 1: this your goods put on that ship, you should pay

176
00:09:22,160 --> 00:09:26,000
Speaker 1: for cargo insurance because if that ship gets something terrible

177
00:09:26,040 --> 00:09:28,480
Speaker 1: happens all of a sudden, You're little Bloomberg research project,

178
00:09:28,480 --> 00:09:31,520
Speaker 1: could you know, bring bring you all. You've got to

179
00:09:31,520 --> 00:09:34,680
Speaker 1: make sure that you don't get a bankrupted Oh man,

180
00:09:35,040 --> 00:09:37,840
Speaker 1: that's actually a really good point. And now I'm worried

181
00:09:37,880 --> 00:09:42,280
Speaker 1: about like bringing all of Bloomberg down with this one shipment.

182
00:09:42,559 --> 00:09:45,080
Speaker 1: It's not that expensive. This is actually something that I

183
00:09:45,120 --> 00:09:47,760
Speaker 1: wanted to ask you about. So I'm hoping you can

184
00:09:47,840 --> 00:09:52,080
Speaker 1: expound on that point. Who is actually liable for the

185
00:09:52,120 --> 00:09:55,840
Speaker 1: snarls that we're getting in global shipping traffic, Like when

186
00:09:55,880 --> 00:10:00,480
Speaker 1: stuff goes wrong, Who bears responsibility not just in terms

187
00:10:00,520 --> 00:10:04,200
Speaker 1: of I guess insurance for lost or delayed cargo, but

188
00:10:04,280 --> 00:10:08,560
Speaker 1: also who bears responsibility for solving the problem, Like who

189
00:10:08,640 --> 00:10:11,360
Speaker 1: do your clients go to and say, I can't get

190
00:10:11,400 --> 00:10:15,000
Speaker 1: my stuff shipped on time. Someone needs to fix this. Um,

191
00:10:15,040 --> 00:10:17,600
Speaker 1: that's all on us as as a logistics industry. That

192
00:10:17,960 --> 00:10:20,200
Speaker 1: it's really tough. The analogy I've been using with my

193
00:10:20,240 --> 00:10:24,440
Speaker 1: teams is that we're doing wedding planning outdoors and all

194
00:10:24,440 --> 00:10:26,560
Speaker 1: of a sudden we've been moved to Seattle, you know,

195
00:10:26,640 --> 00:10:28,880
Speaker 1: and it's like, well, every you better be warning your

196
00:10:28,880 --> 00:10:32,240
Speaker 1: customers about what's going on. Tell them that, hey, we're

197
00:10:32,480 --> 00:10:35,640
Speaker 1: not able. The thirty percent of ships are being are

198
00:10:35,720 --> 00:10:39,720
Speaker 1: not making their schedule right now, seven percent of containers

199
00:10:40,320 --> 00:10:42,880
Speaker 1: are getting rolled, which is like what it calls when

200
00:10:42,880 --> 00:10:45,679
Speaker 1: you get bumped in an airline, when you get when

201
00:10:45,720 --> 00:10:48,120
Speaker 1: you get bumped to the next plane that's getting rolled.

202
00:10:48,160 --> 00:10:53,360
Speaker 1: In ocean containership industry standard industry average before the pandemic

203
00:10:53,440 --> 00:10:55,880
Speaker 1: was eight percent. So it's just like a huge spike

204
00:10:55,960 --> 00:10:59,520
Speaker 1: in in failure, service delivery failure, and it's a ton

205
00:10:59,559 --> 00:11:02,040
Speaker 1: of second order effects because right when when that and

206
00:11:02,080 --> 00:11:04,440
Speaker 1: then this was the ever Given is a really good example.

207
00:11:04,520 --> 00:11:07,640
Speaker 1: Like that ship. Okay, it's six days late, the ships

208
00:11:07,679 --> 00:11:09,600
Speaker 1: behind it were six days late. I mean they ever

209
00:11:09,640 --> 00:11:11,200
Speaker 1: given is gonna be months late, but the ones behind

210
00:11:11,240 --> 00:11:14,000
Speaker 1: it were six days late. We're arriving, but now they

211
00:11:14,000 --> 00:11:15,760
Speaker 1: were supposed to go to the next port and the

212
00:11:15,760 --> 00:11:18,040
Speaker 1: next sport, they're gonna be delayed there and there, and

213
00:11:18,200 --> 00:11:20,680
Speaker 1: all those other bookings that were supposed to get put

214
00:11:20,720 --> 00:11:23,600
Speaker 1: on get rolled and have to find a new you

215
00:11:23,600 --> 00:11:25,200
Speaker 1: know what, what ship do they go on? It's a

216
00:11:25,240 --> 00:11:28,760
Speaker 1: mad scramble. That was just like adding you know, insult

217
00:11:28,800 --> 00:11:32,080
Speaker 1: to injury. After a year of this, well at least

218
00:11:32,120 --> 00:11:35,439
Speaker 1: six months of really excess capacity and not enough ships

219
00:11:35,440 --> 00:11:37,520
Speaker 1: to move all the cargo that's trying to move. See,

220
00:11:37,520 --> 00:11:41,440
Speaker 1: I explained that, like ever given a side, what have

221
00:11:41,600 --> 00:11:47,200
Speaker 1: been the main factors that explain why the system is

222
00:11:47,240 --> 00:11:50,240
Speaker 1: basically buckling? Like where where are the big pain points

223
00:11:50,280 --> 00:11:53,320
Speaker 1: coming from? The first thing and the most the easiest

224
00:11:53,320 --> 00:11:55,680
Speaker 1: thing to point to is just like way more demand,

225
00:11:55,760 --> 00:11:59,880
Speaker 1: way more volume is being shipped, and my own working

226
00:12:00,000 --> 00:12:02,160
Speaker 1: I thought this is for this, and I didn't predict

227
00:12:02,160 --> 00:12:03,960
Speaker 1: this in advance, so I'm not claiming to be smart

228
00:12:04,000 --> 00:12:05,560
Speaker 1: and I just sort of looked at the data x

229
00:12:05,600 --> 00:12:07,600
Speaker 1: post and rationalize it, which we're all capable of doing.

230
00:12:07,600 --> 00:12:09,400
Speaker 1: I don't know if it's true or not, but ex

231
00:12:09,480 --> 00:12:11,920
Speaker 1: post we can look backwards and say, well, all of

232
00:12:11,960 --> 00:12:14,240
Speaker 1: these consumers who got locked in their homes and couldn't

233
00:12:14,280 --> 00:12:16,720
Speaker 1: go out, You've got to get your dopamine somewhere. And

234
00:12:16,760 --> 00:12:19,160
Speaker 1: so you just buy stuff on the internet, and and

235
00:12:19,200 --> 00:12:22,839
Speaker 1: people have bought way more things than they were buying before.

236
00:12:22,880 --> 00:12:25,120
Speaker 1: And you've had this like big shift, and the data

237
00:12:25,160 --> 00:12:26,839
Speaker 1: does bear this out. You've had a big shift from

238
00:12:26,840 --> 00:12:30,080
Speaker 1: services which are way down double digit percent down, onto

239
00:12:30,240 --> 00:12:34,480
Speaker 1: durable goods, onto home goods, upgrading your furniture building, um.

240
00:12:34,559 --> 00:12:36,520
Speaker 1: And so that's that's the first thing. It's just like

241
00:12:36,640 --> 00:12:39,719
Speaker 1: way more cargo getting shipped, and you have the same

242
00:12:39,800 --> 00:12:43,760
Speaker 1: number of ships, in some cases less because of actually

243
00:12:43,800 --> 00:12:46,960
Speaker 1: the ocean carriers cut back. We all predicted as an

244
00:12:47,000 --> 00:12:49,400
Speaker 1: industry and as a world, as like economists around the world,

245
00:12:49,400 --> 00:12:52,840
Speaker 1: everyone predicted that goods purchases would fall off a cliff,

246
00:12:53,720 --> 00:12:56,000
Speaker 1: and the opposite happened, which I think is a lesson

247
00:12:56,200 --> 00:12:57,760
Speaker 1: that we should all take from this, is like, maybe

248
00:12:57,840 --> 00:13:00,200
Speaker 1: don't be so certain in predictions of the future. But

249
00:13:00,280 --> 00:13:02,920
Speaker 1: we all predicted that, and the ocean carriers actually pulled

250
00:13:02,920 --> 00:13:08,120
Speaker 1: back capacity. Um. A lot of companies pulled back orders

251
00:13:08,160 --> 00:13:11,360
Speaker 1: and their factories made other plans and then all of

252
00:13:11,400 --> 00:13:13,439
Speaker 1: a sudden goot new orders. So you've got a log

253
00:13:13,520 --> 00:13:16,640
Speaker 1: jam at the factory where right now it's taking I

254
00:13:16,920 --> 00:13:20,719
Speaker 1: talked to one bicycle producer, pretty big brand, last two

255
00:13:20,720 --> 00:13:23,800
Speaker 1: weeks ago, and it's taking them three hundred days when

256
00:13:23,800 --> 00:13:26,720
Speaker 1: they place a purchase order with their factory, three days

257
00:13:26,760 --> 00:13:29,280
Speaker 1: before it's ready to get picked up, which normally this

258
00:13:29,320 --> 00:13:31,760
Speaker 1: is like a thirty day process. Um, So you've got

259
00:13:31,760 --> 00:13:35,000
Speaker 1: delays at the factory. Ships there wasn't enough capacity. Well,

260
00:13:35,160 --> 00:13:37,600
Speaker 1: we also ran out of containers, and this is a

261
00:13:37,600 --> 00:13:41,880
Speaker 1: really interesting second order effect. Imports have surged. US exports

262
00:13:41,880 --> 00:13:46,800
Speaker 1: are down of containers. If you don't have containers being exported,

263
00:13:47,360 --> 00:13:50,400
Speaker 1: you don't have empty containers to put those imports in

264
00:13:50,480 --> 00:13:52,760
Speaker 1: coming back, and it needs to run in a loop.

265
00:13:53,240 --> 00:13:58,560
Speaker 1: So normal days pre pandemic of US of containers leaving

266
00:13:58,559 --> 00:14:01,960
Speaker 1: the United States are empty. Uh, it's it's running around

267
00:14:02,600 --> 00:14:05,720
Speaker 1: right now. But for a while they didn't, the ocean

268
00:14:05,760 --> 00:14:08,440
Speaker 1: carriers weren't on top of this and just shipping back

269
00:14:08,480 --> 00:14:11,599
Speaker 1: extra empties to make sure that they have enough capacity.

270
00:14:11,920 --> 00:14:13,719
Speaker 1: So there was a moment a couple of months ago

271
00:14:13,760 --> 00:14:16,319
Speaker 1: where we were as a as an industry, as a society,

272
00:14:16,679 --> 00:14:20,960
Speaker 1: five hundred thousand shipping containers short in China. Sorry sorry,

273
00:14:21,000 --> 00:14:25,000
Speaker 1: could you just explain that. Why is the shipment back

274
00:14:25,080 --> 00:14:29,800
Speaker 1: of empty containers a problem? Because normally you have you

275
00:14:29,840 --> 00:14:32,840
Speaker 1: have full stuff going. Yeah, but US exports fell off

276
00:14:32,840 --> 00:14:35,640
Speaker 1: a cliff, right, and nobody thought, hey, I still need

277
00:14:35,680 --> 00:14:37,720
Speaker 1: the container even if I'm not exporting the goods. So

278
00:14:38,520 --> 00:14:42,640
Speaker 1: the ships were going back to China but leaving empty containers,

279
00:14:42,640 --> 00:14:44,520
Speaker 1: and the empties were staying here because they would get

280
00:14:44,560 --> 00:14:47,520
Speaker 1: imported and usually they get exported automatically. And that's like

281
00:14:48,040 --> 00:14:50,480
Speaker 1: just a really quick reaction. You know, the industry is

282
00:14:50,520 --> 00:14:53,400
Speaker 1: not made to like change this fast, this physical goods

283
00:14:53,880 --> 00:14:56,080
Speaker 1: type of stuff happening in the real world that it's

284
00:14:56,120 --> 00:14:59,280
Speaker 1: not software. Can you go into that in detail, because

285
00:14:59,480 --> 00:15:01,920
Speaker 1: this is something that we spoke about with a previous

286
00:15:01,960 --> 00:15:06,480
Speaker 1: gust on shipping. But how flexible is the industry? I

287
00:15:06,560 --> 00:15:09,880
Speaker 1: get the sense that it isn't very And you're dealing

288
00:15:09,920 --> 00:15:13,560
Speaker 1: with you know, massive ships and huge ports that take

289
00:15:13,680 --> 00:15:17,200
Speaker 1: a lot of coordination and big lead times. But why

290
00:15:17,320 --> 00:15:21,000
Speaker 1: can't it respond to you know, at this point, it's

291
00:15:21,000 --> 00:15:22,680
Speaker 1: a change in the world that's sort of been going

292
00:15:22,720 --> 00:15:25,320
Speaker 1: on for more than a year, So why does it

293
00:15:25,360 --> 00:15:28,080
Speaker 1: take so long to respond to it? Yeah, I mean

294
00:15:28,120 --> 00:15:30,840
Speaker 1: it's it's my personal obsession is to try to make

295
00:15:30,840 --> 00:15:33,720
Speaker 1: this industry more agile and and bring technology to bear.

296
00:15:33,720 --> 00:15:35,200
Speaker 1: And a lot of it is a lack of technology.

297
00:15:35,240 --> 00:15:38,280
Speaker 1: A lot of these companies are running old systems. I've

298
00:15:38,280 --> 00:15:40,320
Speaker 1: heard the word as four hundred more times than I

299
00:15:40,320 --> 00:15:41,720
Speaker 1: ever want to hear again in my life. That's like

300
00:15:41,720 --> 00:15:45,840
Speaker 1: an an operating system built by IBM as a predecessor

301
00:15:45,880 --> 00:15:48,960
Speaker 1: to OS two. Like we're talking about early early eighties

302
00:15:49,000 --> 00:15:51,720
Speaker 1: technology that's still running and and it's hard to switch

303
00:15:51,720 --> 00:15:54,680
Speaker 1: out a system that runs such vital systems and your

304
00:15:54,720 --> 00:15:57,080
Speaker 1: you know, running your company. And so some of it

305
00:15:57,160 --> 00:15:59,760
Speaker 1: is technology and lack of tech to be agile. Some

306
00:16:00,160 --> 00:16:02,840
Speaker 1: process I don't know, like I send some bureaucracy. So

307
00:16:02,880 --> 00:16:05,440
Speaker 1: for example, with these empty containers, we saw this problem

308
00:16:05,480 --> 00:16:08,720
Speaker 1: coming like six months ago. We're like, hey, the exports

309
00:16:08,720 --> 00:16:12,440
Speaker 1: aren't happening, there's gonna be a lack of empty containers

310
00:16:12,440 --> 00:16:15,520
Speaker 1: in China. We went to a couple of ocean carrier

311
00:16:15,560 --> 00:16:18,080
Speaker 1: partners of ours and said, we want to ship empty containers,

312
00:16:18,120 --> 00:16:20,880
Speaker 1: will pay you to ship them. We want to make

313
00:16:20,920 --> 00:16:24,040
Speaker 1: sure we have empties available, and they told us sure,

314
00:16:24,480 --> 00:16:26,280
Speaker 1: but once it arrives there, we're taking it back in.

315
00:16:26,320 --> 00:16:28,360
Speaker 1: It's our container and we're like, okay, well I'm not

316
00:16:28,360 --> 00:16:30,840
Speaker 1: gonna pay you to ship an empty like so we

317
00:16:30,880 --> 00:16:33,480
Speaker 1: didn't do it, and then fast forward a couple of

318
00:16:33,480 --> 00:16:35,160
Speaker 1: months and they didn't have the empties. Were like, ah,

319
00:16:35,200 --> 00:16:37,920
Speaker 1: we were offering to pay you to do this, and

320
00:16:37,960 --> 00:16:39,840
Speaker 1: you'd be making more money right now. So some of

321
00:16:39,880 --> 00:16:42,479
Speaker 1: it is just like, hey, how do you get older

322
00:16:42,520 --> 00:16:45,800
Speaker 1: companies to be less bureaucratic and be agile and respond

323
00:16:45,840 --> 00:16:49,080
Speaker 1: to change, which is not something they've really had to learn.

324
00:16:49,160 --> 00:16:50,680
Speaker 1: I think we've seen this with a lot of institutions.

325
00:16:50,680 --> 00:16:53,120
Speaker 1: I don't need to just pick on any particular industry.

326
00:16:53,120 --> 00:16:56,200
Speaker 1: We've seen this with healthcare distribution, We've seen it across

327
00:16:56,240 --> 00:16:57,920
Speaker 1: the board of the Pandemics really exposed a lot of

328
00:16:57,920 --> 00:17:00,400
Speaker 1: our institutions, and I think it's a wake up callegs.

329
00:17:00,440 --> 00:17:02,480
Speaker 1: You're not stupid people. They're like, oh wow, okay, we

330
00:17:02,520 --> 00:17:05,159
Speaker 1: really have to invest in upgrade our technology systems. So

331
00:17:05,200 --> 00:17:08,680
Speaker 1: we're seeing um, good partnership there, but in the midst

332
00:17:08,680 --> 00:17:11,040
Speaker 1: of a pandemic, it's hard and mistakes are made, for

333
00:17:11,080 --> 00:17:29,840
Speaker 1: sure from the companies that you work with. Obviously I

334
00:17:29,920 --> 00:17:33,480
Speaker 1: assume in normal times has already complicated stuff, but you know,

335
00:17:33,520 --> 00:17:35,800
Speaker 1: like what's sort of going on inside at the corporate

336
00:17:35,880 --> 00:17:39,160
Speaker 1: level as they sort of have to like pivot too,

337
00:17:39,800 --> 00:17:41,919
Speaker 1: this kind of thing that I don't know, maybe I

338
00:17:41,920 --> 00:17:44,040
Speaker 1: don't know if it normally runs an autopilot, but it's

339
00:17:44,040 --> 00:17:48,760
Speaker 1: sort of smooth to this becoming a major strategic focus

340
00:17:48,800 --> 00:17:51,600
Speaker 1: for their ability to conduct business. We're talking about brands

341
00:17:51,600 --> 00:17:53,760
Speaker 1: like companies that need to get their products in stock,

342
00:17:53,800 --> 00:17:57,080
Speaker 1: and yeah, it is logistics team has been I sometimes

343
00:17:57,080 --> 00:18:00,119
Speaker 1: call it like the offensive lineman of business, Like you

344
00:18:00,160 --> 00:18:03,119
Speaker 1: don't really get noticed until you commit a penalty. Every

345
00:18:03,280 --> 00:18:04,879
Speaker 1: everybody's piste off with you, and the rest of the

346
00:18:04,920 --> 00:18:07,200
Speaker 1: time you just say, yeah, he blocked somebody. That's his job.

347
00:18:08,040 --> 00:18:10,719
Speaker 1: And I think we're finally seeing the opportunity for for

348
00:18:10,760 --> 00:18:13,679
Speaker 1: these people, these teams to become much more strategic and

349
00:18:13,680 --> 00:18:15,800
Speaker 1: get a seat at the table and talk with the CFO,

350
00:18:16,320 --> 00:18:18,520
Speaker 1: talk with the head of marketing and sales, and the

351
00:18:18,560 --> 00:18:21,520
Speaker 1: e commerce team about hey, where's the stuff? I mean,

352
00:18:21,520 --> 00:18:23,520
Speaker 1: the dirty little secret is that the best brands in

353
00:18:23,560 --> 00:18:25,720
Speaker 1: the world have no idea where their products are. And

354
00:18:25,760 --> 00:18:29,840
Speaker 1: that's in normal times and now really they have no

355
00:18:29,880 --> 00:18:31,520
Speaker 1: idea where it is or when it's going to get there.

356
00:18:31,520 --> 00:18:35,000
Speaker 1: And it's all the previous models have stopped working. Um.

357
00:18:35,040 --> 00:18:37,000
Speaker 1: And they need they need technology, they need answers. They

358
00:18:37,040 --> 00:18:39,480
Speaker 1: can show them, Hey, show me on a satellite where

359
00:18:39,480 --> 00:18:41,800
Speaker 1: this ship is, and show me used machine learning to

360
00:18:41,800 --> 00:18:44,159
Speaker 1: predict when is it actually going to clear customs and

361
00:18:44,160 --> 00:18:48,280
Speaker 1: get delivered to me? So I can communicate that downstream

362
00:18:48,400 --> 00:18:51,800
Speaker 1: to the end consumer, all the way to the end consumer,

363
00:18:52,040 --> 00:18:55,120
Speaker 1: who cares when's there? When's their couch going to arrive? Um?

364
00:18:55,160 --> 00:18:56,840
Speaker 1: And that's an age old problem. No one can tell

365
00:18:56,840 --> 00:18:58,480
Speaker 1: you when your couch is gonna arrive. But it's been

366
00:18:58,880 --> 00:19:01,000
Speaker 1: compounded in a lot a couple of months, and we're

367
00:19:01,000 --> 00:19:03,480
Speaker 1: trying to at least be able to give people visibility

368
00:19:03,480 --> 00:19:05,879
Speaker 1: even if you can't run it faster. And I can't

369
00:19:06,160 --> 00:19:08,119
Speaker 1: make the ships not be stuck at the port waiting,

370
00:19:08,359 --> 00:19:11,080
Speaker 1: but I can tell you what the estimated weight time is,

371
00:19:11,119 --> 00:19:13,040
Speaker 1: and I can tell you what current throughput levels at

372
00:19:13,040 --> 00:19:15,640
Speaker 1: that port terminal are etcetera. Uh, and that's what that's

373
00:19:15,640 --> 00:19:17,600
Speaker 1: what the Flex Moore technology platform is built for. So

374
00:19:17,880 --> 00:19:19,520
Speaker 1: we've we've found this whole thing. You know. The silver

375
00:19:19,560 --> 00:19:21,000
Speaker 1: lining in US is like we're all of a sudden.

376
00:19:21,240 --> 00:19:24,280
Speaker 1: Normally we just ship cardboard boxes through our platform and

377
00:19:24,280 --> 00:19:25,800
Speaker 1: no one thinks it's that interesting. All of a sudden,

378
00:19:25,840 --> 00:19:27,280
Speaker 1: here I am talking to you all and trying to

379
00:19:27,440 --> 00:19:29,720
Speaker 1: talking to board levels and really getting in there and

380
00:19:29,720 --> 00:19:33,080
Speaker 1: trying to solve real problems for people. So this actually

381
00:19:33,160 --> 00:19:34,840
Speaker 1: leads to a question that I wanted to ask you

382
00:19:34,880 --> 00:19:37,119
Speaker 1: as well. Can you talk to us a little bit

383
00:19:37,160 --> 00:19:41,120
Speaker 1: about how the economics or the process of actually loading

384
00:19:41,240 --> 00:19:45,199
Speaker 1: container ships work. So you just mentioned that, you know,

385
00:19:45,240 --> 00:19:48,720
Speaker 1: you have technology and machine learning that help you estimate

386
00:19:48,760 --> 00:19:53,120
Speaker 1: that process. It seems to be really complicated. And again

387
00:19:53,960 --> 00:19:56,800
Speaker 1: I'm speaking a little bit from personal experience here, but

388
00:19:57,000 --> 00:19:59,600
Speaker 1: I keep getting rolled from ship to ship to ship,

389
00:20:00,000 --> 00:20:02,720
Speaker 1: which means there's someone else who is taking my space

390
00:20:04,040 --> 00:20:05,879
Speaker 1: on the ship that I was supposed to get and

391
00:20:06,080 --> 00:20:10,280
Speaker 1: either they're paying higher rates or I don't know, maybe

392
00:20:10,280 --> 00:20:14,040
Speaker 1: they're a bigger client for the company. But explain exactly

393
00:20:14,040 --> 00:20:19,120
Speaker 1: how that works. Who gets preference on these extremely crowded ships. Yeah,

394
00:20:19,280 --> 00:20:21,439
Speaker 1: and I'll tell the way it's worked traditionally in the industry,

395
00:20:21,440 --> 00:20:23,119
Speaker 1: and then I'll tell you what where I think innovations,

396
00:20:23,320 --> 00:20:26,119
Speaker 1: but there are opportunities are for innovation on top of that.

397
00:20:26,200 --> 00:20:28,200
Speaker 1: It's like traditionally it works by who has the best

398
00:20:28,200 --> 00:20:32,720
Speaker 1: relationship with this person probably named large sitting in Copenhagen

399
00:20:32,800 --> 00:20:35,600
Speaker 1: or something, who's making these decisions, and it is like

400
00:20:35,680 --> 00:20:38,520
Speaker 1: pretty human driven. They're going to look at factors like

401
00:20:38,560 --> 00:20:40,359
Speaker 1: how long have you been a customer, do you ship

402
00:20:40,359 --> 00:20:42,359
Speaker 1: a lot with them? How much money are you paying them?

403
00:20:42,400 --> 00:20:46,040
Speaker 1: Obviously and things like that, But they're not really they

404
00:20:46,119 --> 00:20:48,720
Speaker 1: don't have a lot of systems to try to build

405
00:20:48,760 --> 00:20:51,439
Speaker 1: this in terms of actual algorithms. It's people kind of

406
00:20:51,480 --> 00:20:55,920
Speaker 1: horse trading and communicating by email and prioritizing things. So

407
00:20:55,960 --> 00:20:58,240
Speaker 1: a lot of favor trading and taking care of people.

408
00:20:58,640 --> 00:21:00,920
Speaker 1: In fact, I have an imp of mine who used

409
00:21:00,920 --> 00:21:03,520
Speaker 1: to work at another company in this industry, and he

410
00:21:03,600 --> 00:21:06,560
Speaker 1: said that he spent seven years trying to sell this

411
00:21:06,720 --> 00:21:11,199
Speaker 1: like household name is retailer and they finally agreed to

412
00:21:11,240 --> 00:21:15,679
Speaker 1: give him twenty containers and the because the company and

413
00:21:15,680 --> 00:21:18,400
Speaker 1: they paid extra to make sure that they got loaded,

414
00:21:18,920 --> 00:21:21,560
Speaker 1: and then his company just rolled all twenty containers and

415
00:21:21,600 --> 00:21:23,600
Speaker 1: after seven years of work trying to close this account,

416
00:21:23,640 --> 00:21:24,879
Speaker 1: he just lost it on the first day. And it

417
00:21:25,000 --> 00:21:27,280
Speaker 1: was just like disaster. It was just a lack of systems.

418
00:21:27,280 --> 00:21:30,120
Speaker 1: Everybody wanted to support him, but there was no place

419
00:21:30,160 --> 00:21:33,159
Speaker 1: to like star that those containers and be like, we

420
00:21:33,200 --> 00:21:35,680
Speaker 1: need to prioritize these. Look, at some point, if the

421
00:21:35,680 --> 00:21:37,480
Speaker 1: ship is well, you do have to decide who gets

422
00:21:37,480 --> 00:21:39,760
Speaker 1: on and who doesn't. And what we're building towards is

423
00:21:39,760 --> 00:21:42,400
Speaker 1: the world where you prioritize people based on their own

424
00:21:42,440 --> 00:21:47,480
Speaker 1: past reliability of because it goes two ways in that

425
00:21:48,640 --> 00:21:52,280
Speaker 1: of all ocean containers that are booked with carriers get canceled,

426
00:21:53,320 --> 00:21:55,920
Speaker 1: and that was pre pandemic numbers. And so the reason

427
00:21:55,960 --> 00:21:58,600
Speaker 1: that you have an eight percent roll rate in a

428
00:21:58,640 --> 00:22:02,359
Speaker 1: world where ships were only at capacity or so before

429
00:22:02,400 --> 00:22:05,520
Speaker 1: the pandemic. So how are you at percent, Well, they

430
00:22:05,520 --> 00:22:08,760
Speaker 1: have to overbook. Uh, if you have a seventy percent

431
00:22:08,880 --> 00:22:12,640
Speaker 1: book to show ratio or at PC cancelation ratio, you're

432
00:22:12,640 --> 00:22:15,119
Speaker 1: gonna you can't. You can't make money selling a seventy

433
00:22:15,119 --> 00:22:18,919
Speaker 1: percent full ship. So you overbooked your container ship, and

434
00:22:18,960 --> 00:22:20,959
Speaker 1: then people cancel on you and you sort it out,

435
00:22:21,040 --> 00:22:23,560
Speaker 1: and on the average people are getting rolled. So it's

436
00:22:23,640 --> 00:22:26,359
Speaker 1: kind of like a commercial flight that way, a pass

437
00:22:26,600 --> 00:22:29,160
Speaker 1: where they might over they just assume some people aren't

438
00:22:29,160 --> 00:22:31,320
Speaker 1: going to show up, and then if everyone does show up,

439
00:22:31,320 --> 00:22:32,960
Speaker 1: then they have to bump. It's exactly like that. But

440
00:22:33,040 --> 00:22:36,400
Speaker 1: the airline industry on the passenger side has like been

441
00:22:36,520 --> 00:22:39,600
Speaker 1: really early adopters of technology and computer you know, and

442
00:22:39,760 --> 00:22:42,040
Speaker 1: data science, and they've done pretty I mean, I don't

443
00:22:42,040 --> 00:22:44,480
Speaker 1: get bumped very like almost ever. Anyone to hear those

444
00:22:44,480 --> 00:22:47,480
Speaker 1: announcements on the loudspeakers anymore. Wait, so is a book

445
00:22:47,560 --> 00:22:49,679
Speaker 1: to show? Is that like a term that you got

446
00:22:49,920 --> 00:22:52,479
Speaker 1: work to show? Is it's the opposite of cancelation. So

447
00:22:52,560 --> 00:22:55,040
Speaker 1: we learned in terms of book to show what was

448
00:22:55,080 --> 00:22:58,760
Speaker 1: the other one? General? General average your roll rate, I've

449
00:22:58,760 --> 00:23:00,600
Speaker 1: already learned. If we stopped it here, I would have

450
00:23:00,640 --> 00:23:02,800
Speaker 1: already learned plenty of I haven't even gotten into all

451
00:23:02,800 --> 00:23:05,520
Speaker 1: the Viking English that still predominates in global trade. There's

452
00:23:05,560 --> 00:23:08,600
Speaker 1: a lot of there's us. The word for chucking is

453
00:23:08,600 --> 00:23:11,760
Speaker 1: called drege, which is I guess too is as an

454
00:23:11,800 --> 00:23:15,040
Speaker 1: old word for dragging. Something like when you add horses dragging,

455
00:23:15,560 --> 00:23:18,560
Speaker 1: you have a bill of lading. Yeah, well that lading

456
00:23:18,680 --> 00:23:22,080
Speaker 1: is an old English word for loading, and the bill

457
00:23:22,119 --> 00:23:24,159
Speaker 1: of lading. This is to show you how ancient this

458
00:23:24,240 --> 00:23:26,240
Speaker 1: industry is. Like the bill of lading is a is

459
00:23:26,280 --> 00:23:29,119
Speaker 1: a piece of paper that serves as title to the

460
00:23:29,119 --> 00:23:35,120
Speaker 1: merchandise by default in global trade in this today, by default,

461
00:23:35,200 --> 00:23:37,119
Speaker 1: that piece of paper needs to be flown across the

462
00:23:37,119 --> 00:23:40,120
Speaker 1: ocean to be given to the new owner. So your

463
00:23:40,160 --> 00:23:43,639
Speaker 1: containers going along slowly like this, your piece of paper

464
00:23:43,680 --> 00:23:45,639
Speaker 1: gets flown around and then you need to present that

465
00:23:45,680 --> 00:23:47,359
Speaker 1: at the port to be able to pick up your container.

466
00:23:47,440 --> 00:23:50,359
Speaker 1: It's not it's crazy. I just realized I've been pronouncing

467
00:23:50,400 --> 00:23:52,480
Speaker 1: all of these words wrong. In my head. I always

468
00:23:52,480 --> 00:23:55,840
Speaker 1: thought it was bill of latting and dryedge. So thank

469
00:23:55,880 --> 00:23:59,680
Speaker 1: you for clarifying that. Thanks for having me on. Look,

470
00:23:59,720 --> 00:24:02,080
Speaker 1: if some one has to get rolled from your ship,

471
00:24:02,280 --> 00:24:04,359
Speaker 1: you know your ship is overpooked, and you have to

472
00:24:04,440 --> 00:24:07,040
Speaker 1: choose who gets rolled. You should be able to look

473
00:24:07,119 --> 00:24:10,399
Speaker 1: at past performance and go, hey, look, give me your

474
00:24:10,400 --> 00:24:13,080
Speaker 1: forecast of how much you're gonna ship and what you ship,

475
00:24:13,119 --> 00:24:15,639
Speaker 1: and and then I'm gonna look at how accurate you

476
00:24:15,640 --> 00:24:18,240
Speaker 1: are in your forecast and how good you are at

477
00:24:18,280 --> 00:24:21,240
Speaker 1: maintaining that book to show ratio that you actually ship

478
00:24:21,320 --> 00:24:24,440
Speaker 1: what you booked, and then I will reward you. When

479
00:24:24,480 --> 00:24:26,360
Speaker 1: when someone needs to get rolled, it won't be you,

480
00:24:26,480 --> 00:24:29,760
Speaker 1: It will be someone else who's way in unpredictable, and

481
00:24:29,800 --> 00:24:32,120
Speaker 1: I can give that person an opportunity to pay more

482
00:24:32,760 --> 00:24:35,520
Speaker 1: to be treated like a more predictable client. And I

483
00:24:35,600 --> 00:24:37,840
Speaker 1: think you can bring some sanity to this industry, which

484
00:24:37,880 --> 00:24:39,600
Speaker 1: is like and one of my dreams is to like

485
00:24:39,640 --> 00:24:42,080
Speaker 1: send the person who makes the company that makes the

486
00:24:42,119 --> 00:24:43,600
Speaker 1: best forecast. I want to send them one of those

487
00:24:43,600 --> 00:24:46,679
Speaker 1: big golf sweepstakes checks that they have to go and

488
00:24:46,720 --> 00:24:49,119
Speaker 1: try to cash in because no one, no one that

489
00:24:49,240 --> 00:24:51,359
Speaker 1: the guy who makes the forecast in the back office

490
00:24:51,400 --> 00:24:53,479
Speaker 1: of one of these companies, Like really, no one has

491
00:24:53,520 --> 00:24:56,480
Speaker 1: ever recognized that person for doing anything like an industry

492
00:24:56,480 --> 00:24:58,600
Speaker 1: award show is what you're near. Yeah, I don't know

493
00:24:58,600 --> 00:25:00,280
Speaker 1: that anyone would care, but I think their finance apartment

494
00:25:00,320 --> 00:25:01,960
Speaker 1: would celebrate him for an after him or her for

495
00:25:02,000 --> 00:25:05,119
Speaker 1: an afternoon. That leads to another thing actually that I

496
00:25:05,119 --> 00:25:07,200
Speaker 1: wanted to ask you, And I'm sorry we have such

497
00:25:07,200 --> 00:25:09,800
Speaker 1: a long list here, but can you talk a bit

498
00:25:09,840 --> 00:25:12,840
Speaker 1: more about the situation at the ports and the actual

499
00:25:12,960 --> 00:25:16,960
Speaker 1: unloading of containers, because you know, on the one end,

500
00:25:17,040 --> 00:25:19,959
Speaker 1: it's difficult to get on a ship, and then at

501
00:25:20,000 --> 00:25:22,680
Speaker 1: the other end, it seems to be difficult to actually

502
00:25:22,760 --> 00:25:28,040
Speaker 1: get unloaded at your destination port. So what's going on there? Yeah,

503
00:25:28,080 --> 00:25:30,199
Speaker 1: and and similar problem. I mean, you have all the

504
00:25:30,200 --> 00:25:33,480
Speaker 1: ships are sailing, all of them are sailing completely full.

505
00:25:33,920 --> 00:25:37,120
Speaker 1: We still use like nineteen seventies technology to unload these ships.

506
00:25:37,160 --> 00:25:38,800
Speaker 1: I mean we all like look at those containers and

507
00:25:38,840 --> 00:25:40,560
Speaker 1: think they're kind of cool, but like that's the nineteen

508
00:25:40,560 --> 00:25:43,840
Speaker 1: seventies innovation, and we still unload them one or maximum

509
00:25:43,840 --> 00:25:46,240
Speaker 1: two at a time. So it takes you eight hours

510
00:25:46,280 --> 00:25:48,720
Speaker 1: to unload a ship when it arrives. And that's if

511
00:25:48,720 --> 00:25:51,119
Speaker 1: you have a full crew, full work crew, full a

512
00:25:51,200 --> 00:25:54,760
Speaker 1: group of longshoreman um stevendors. They're called the warehouse, the

513
00:25:54,800 --> 00:25:57,879
Speaker 1: workers on the at the port. Obviously, COVID has had

514
00:25:57,880 --> 00:26:01,680
Speaker 1: impacts on work, on staffing, and the union has told them,

515
00:26:01,720 --> 00:26:04,160
Speaker 1: I understand that they don't if they don't feel safe,

516
00:26:04,200 --> 00:26:05,679
Speaker 1: they cannot come to work. So they've had a lot

517
00:26:05,720 --> 00:26:08,639
Speaker 1: of time getting enough people. There are brave people going

518
00:26:08,680 --> 00:26:11,040
Speaker 1: to work throughout the pandemic um and they have been

519
00:26:11,119 --> 00:26:13,199
Speaker 1: hit pretty hard by COVID in these in various poor

520
00:26:13,320 --> 00:26:15,399
Speaker 1: terminals around the world, so they haven't been able to

521
00:26:15,400 --> 00:26:17,719
Speaker 1: be fully staffed, and even when they are, it just

522
00:26:17,760 --> 00:26:21,400
Speaker 1: takes so long to unload these ships that that's one backlog.

523
00:26:21,840 --> 00:26:24,200
Speaker 1: Second is the truckers, and you need to be able

524
00:26:24,200 --> 00:26:27,200
Speaker 1: to find a chassis. The chassis is like the trailer

525
00:26:27,280 --> 00:26:29,560
Speaker 1: that you put a container onto that so that it

526
00:26:29,600 --> 00:26:32,320
Speaker 1: can be dragged around by a truck. And we haven't

527
00:26:32,320 --> 00:26:35,119
Speaker 1: had enough chassis. You know, all these second order efacts

528
00:26:35,119 --> 00:26:37,600
Speaker 1: that are really hard to predict. Bullwhip effect. It's called

529
00:26:37,640 --> 00:26:41,080
Speaker 1: in supply change. One thing I noticed, so by the

530
00:26:41,119 --> 00:26:44,680
Speaker 1: way recording this may third. So the latest I s

531
00:26:44,800 --> 00:26:47,199
Speaker 1: M manufacturing reports came out and I was reading the

532
00:26:47,200 --> 00:26:49,800
Speaker 1: ones for Europe this morning, and one of the things

533
00:26:49,880 --> 00:26:53,600
Speaker 1: that it said was that manufacturers, we all know they're

534
00:26:53,640 --> 00:26:57,680
Speaker 1: facing backlogs and delays and supply issues, and that because

535
00:26:57,720 --> 00:27:03,359
Speaker 1: of the uncertainty about their ability to get supplies, that

536
00:27:03,480 --> 00:27:08,280
Speaker 1: they're increasing their orders. And so because they're compensating for

537
00:27:08,600 --> 00:27:12,160
Speaker 1: supply uncertainty by actually amping up their orders, because then

538
00:27:12,280 --> 00:27:15,680
Speaker 1: presumably that they view that as increasing the chance that

539
00:27:15,720 --> 00:27:18,040
Speaker 1: they're actually going to get uh. But then I have

540
00:27:18,080 --> 00:27:22,160
Speaker 1: to imagine that that only further exacerbates the shortages, because

541
00:27:22,160 --> 00:27:26,400
Speaker 1: if everybody is fear of shortages, and everybody increases their orders,

542
00:27:26,720 --> 00:27:29,960
Speaker 1: and then you actually sort of manifest shorter shortages. So

543
00:27:30,000 --> 00:27:32,840
Speaker 1: I'm curious about how that sort of second order effect,

544
00:27:32,960 --> 00:27:37,760
Speaker 1: where this sort of the compensation for expected delays creates

545
00:27:37,760 --> 00:27:40,160
Speaker 1: more problems. Yeah, and then what happens when you actually

546
00:27:40,240 --> 00:27:41,880
Speaker 1: get all your order and you realize, oh, I ordered

547
00:27:41,880 --> 00:27:43,720
Speaker 1: too much stuff. Then you cancel and you cut all

548
00:27:43,760 --> 00:27:45,600
Speaker 1: your orders back to zero, and it's just all this

549
00:27:46,119 --> 00:27:48,919
Speaker 1: volatility in the system. And that is actually a lot

550
00:27:48,960 --> 00:27:51,160
Speaker 1: of what happened. So because when we first started into

551
00:27:51,200 --> 00:27:55,280
Speaker 1: the pandemic, a lot of almost every business was staring

552
00:27:55,320 --> 00:27:56,879
Speaker 1: at the abyss and said, hey, we gotta cut all

553
00:27:56,920 --> 00:27:59,000
Speaker 1: of it. They didn't order anything. I mean, you probably

554
00:27:59,040 --> 00:28:00,600
Speaker 1: heard that from your I didn't have to listen yet

555
00:28:00,600 --> 00:28:02,920
Speaker 1: to your lumber podcast pack yeaheah, it's the same thing.

556
00:28:03,040 --> 00:28:05,280
Speaker 1: They sold everything to the yeah, exactly. And then that's

557
00:28:05,280 --> 00:28:06,520
Speaker 1: had to happen with a lot of industries. And then

558
00:28:06,520 --> 00:28:08,359
Speaker 1: all of a sudden and the one that was the

559
00:28:08,359 --> 00:28:10,040
Speaker 1: worst that I'm aware of was well, I don't know,

560
00:28:10,119 --> 00:28:11,560
Speaker 1: I don't know how to compare it with the lumber.

561
00:28:11,600 --> 00:28:14,159
Speaker 1: But the furniture industry had a really hard problem because

562
00:28:14,440 --> 00:28:17,760
Speaker 1: as what's happened with price of ocean freight, it's gone

563
00:28:17,760 --> 00:28:19,480
Speaker 1: through the roof, right because it's at capacity, and now

564
00:28:19,480 --> 00:28:20,960
Speaker 1: it's whoever is going to pay the most gets on

565
00:28:21,000 --> 00:28:25,040
Speaker 1: the ship, and the furniture people will have like kind

566
00:28:25,080 --> 00:28:28,120
Speaker 1: of low margins. We're sitting this out and they're going, hey,

567
00:28:28,119 --> 00:28:29,720
Speaker 1: I'm not gonna ship when the price is that high.

568
00:28:29,760 --> 00:28:32,280
Speaker 1: I'll just wait and I'll sell down my inventory in

569
00:28:32,320 --> 00:28:34,800
Speaker 1: the US. And so now all of a sudden they're going,

570
00:28:34,800 --> 00:28:37,200
Speaker 1: wait a minute, I'm like out of inventory and I'm

571
00:28:37,200 --> 00:28:39,120
Speaker 1: just gonna have to pay this price. And so they're

572
00:28:39,400 --> 00:28:44,080
Speaker 1: the furniture imports are only up year over year, but

573
00:28:44,400 --> 00:28:47,560
Speaker 1: volumes in Q one are up to x year over

574
00:28:47,640 --> 00:28:51,200
Speaker 1: year because volumes had gone to zero in previous quarters.

575
00:28:51,680 --> 00:28:54,200
Speaker 1: So you get these crazy oscillations like that, and yeah,

576
00:28:54,200 --> 00:28:55,720
Speaker 1: it can it can lead to all these second order

577
00:28:55,760 --> 00:28:58,200
Speaker 1: effects that are really hard to predict. I don't know,

578
00:28:58,600 --> 00:28:59,920
Speaker 1: it's it's hard to see how we get through this

579
00:29:00,000 --> 00:29:02,320
Speaker 1: other than just time. It takes time to play it

580
00:29:02,320 --> 00:29:04,360
Speaker 1: out and let things come back to what. I don't

581
00:29:04,400 --> 00:29:06,440
Speaker 1: know if that there's a concept of equilibrium, but it's

582
00:29:06,440 --> 00:29:10,720
Speaker 1: a something along those lines. Here's a dumb question on

583
00:29:10,800 --> 00:29:14,000
Speaker 1: that point. But do you see the logistics narls as

584
00:29:14,080 --> 00:29:17,840
Speaker 1: good or bad for the global economy? And maybe that's

585
00:29:17,840 --> 00:29:20,640
Speaker 1: a weird question, but I can kind of see people

586
00:29:20,800 --> 00:29:25,760
Speaker 1: arguing it both ways. So on the one hand, if

587
00:29:25,800 --> 00:29:29,400
Speaker 1: you know you're short now, then you're boosting orders, you

588
00:29:29,520 --> 00:29:31,600
Speaker 1: kind of assume that there's going to be demand for

589
00:29:31,640 --> 00:29:36,160
Speaker 1: the foreseeable future and eventually people start adding capacity, which

590
00:29:36,160 --> 00:29:39,640
Speaker 1: would be a good thing for the economy. But on

591
00:29:39,680 --> 00:29:43,400
Speaker 1: the other hand, it does create this volatility. As you

592
00:29:43,520 --> 00:29:47,280
Speaker 1: just described, people can't get things. There's a lot of

593
00:29:47,360 --> 00:29:51,240
Speaker 1: uncertainty built into the system. And even if prices for

594
00:29:51,720 --> 00:29:55,080
Speaker 1: you know, say furniture or lumber are soaring, you can't

595
00:29:55,080 --> 00:29:57,360
Speaker 1: actually deliver the goods and make money off of it.

596
00:29:57,520 --> 00:30:02,080
Speaker 1: So net net is this good are bad? I don't know.

597
00:30:02,200 --> 00:30:05,040
Speaker 1: I don't know if there's a judgment, like a moral

598
00:30:05,200 --> 00:30:08,400
Speaker 1: judgment or a good bad judgment there, because it's it

599
00:30:08,440 --> 00:30:10,400
Speaker 1: depends where you sit, you know, And like I do

600
00:30:10,480 --> 00:30:12,960
Speaker 1: think it's kind of good that we're shipping more stuff.

601
00:30:13,000 --> 00:30:15,560
Speaker 1: That seems like a positive economic indicator that people are

602
00:30:15,560 --> 00:30:18,520
Speaker 1: feeling comfortable and right if if if shipping it collapsed,

603
00:30:18,560 --> 00:30:20,920
Speaker 1: we'd be having a different conversation about the Great Depression

604
00:30:21,000 --> 00:30:23,720
Speaker 1: or something. So on that sense, it's good. Is it

605
00:30:23,880 --> 00:30:27,520
Speaker 1: good that we shift spending from services onto goods? Like

606
00:30:28,240 --> 00:30:29,720
Speaker 1: really hard for me to say. I don't. I don't

607
00:30:29,720 --> 00:30:32,560
Speaker 1: have a judgment on that. Like I think enjoying life

608
00:30:32,600 --> 00:30:35,400
Speaker 1: and having some nice experiences might be better than buying stuff,

609
00:30:35,680 --> 00:30:39,640
Speaker 1: right sometimes, So hopefully all those people in service jobs

610
00:30:39,680 --> 00:30:41,400
Speaker 1: get a chance to get back to work and and

611
00:30:41,440 --> 00:30:43,000
Speaker 1: that you know that it's kind of like you're just

612
00:30:43,040 --> 00:30:46,040
Speaker 1: seeing this mix shift now. You will see it if

613
00:30:46,080 --> 00:30:49,360
Speaker 1: it stays high long term. If like goods stay high,

614
00:30:49,600 --> 00:30:52,920
Speaker 1: that seems good and you will see assets. People will

615
00:30:52,960 --> 00:30:55,800
Speaker 1: invest in ships. I'm sure people are doing it right now.

616
00:30:55,880 --> 00:30:57,760
Speaker 1: Is if they had certainty that that was gonna happen,

617
00:30:58,160 --> 00:31:00,400
Speaker 1: they'd be placing orders for more ships. But it's years

618
00:31:00,400 --> 00:31:02,120
Speaker 1: for a new ship to come online. Went from that

619
00:31:02,160 --> 00:31:05,160
Speaker 1: the moment you order it from where I said, it's entertaining.

620
00:31:05,320 --> 00:31:08,280
Speaker 1: I mean, I like to just see what happens in

621
00:31:08,320 --> 00:31:12,120
Speaker 1: the world. And it's also really challenging. We have to

622
00:31:12,160 --> 00:31:15,520
Speaker 1: solve problems for our customers, so that part is what

623
00:31:15,560 --> 00:31:17,720
Speaker 1: we live for. Like we we're here to solve problems,

624
00:31:17,720 --> 00:31:19,280
Speaker 1: So I don't think we're not complaining about it. A

625
00:31:19,320 --> 00:31:22,200
Speaker 1: flexport we become more useful than we were in the past.

626
00:31:37,120 --> 00:31:39,120
Speaker 1: I want to go back to the point you made

627
00:31:39,160 --> 00:31:43,240
Speaker 1: about the furniture importers and the low margins that they have.

628
00:31:44,240 --> 00:31:46,800
Speaker 1: I mean, this was again very similar themes to our

629
00:31:46,880 --> 00:31:50,880
Speaker 1: discussion about lumber. But you know, there's the sawmills were

630
00:31:50,920 --> 00:31:53,520
Speaker 1: sort of shocked by it. Didn't really believe that the

631
00:31:53,600 --> 00:31:55,760
Speaker 1: lumber prices we're gonna stay high, so like no one

632
00:31:55,800 --> 00:31:59,280
Speaker 1: really ever invested to increase the capacity. How much are

633
00:31:59,280 --> 00:32:02,680
Speaker 1: the issue? You know, we've just seen the steady worsening worsening.

634
00:32:03,120 --> 00:32:05,520
Speaker 1: Just today, I saw, you know, shipping rates on average

635
00:32:05,560 --> 00:32:07,920
Speaker 1: hit a new high. How much has there been this

636
00:32:07,960 --> 00:32:11,840
Speaker 1: effect of companies essentially thinking that, oh, it must be

637
00:32:11,880 --> 00:32:14,120
Speaker 1: the peak, so I'll wait and I'll wait, and then

638
00:32:14,200 --> 00:32:17,240
Speaker 1: of course and then having to scramble further to pay

639
00:32:17,320 --> 00:32:19,719
Speaker 1: up more because they've delayed so long in they're shipping.

640
00:32:20,240 --> 00:32:22,560
Speaker 1: I think that's I think that's pretty common and so

641
00:32:22,640 --> 00:32:25,600
Speaker 1: right now, the world's ocean freight industry about I think

642
00:32:25,600 --> 00:32:27,880
Speaker 1: it's sixty or seventy percent of the world's ocean freight

643
00:32:28,080 --> 00:32:33,080
Speaker 1: is contracted on an annual basis versus spot market where

644
00:32:33,080 --> 00:32:35,200
Speaker 1: they're signing like an annual rate and saying this is

645
00:32:35,200 --> 00:32:36,720
Speaker 1: gonna be I'm gonna pay this rate for the year,

646
00:32:36,760 --> 00:32:38,960
Speaker 1: and they go and contract that with ocean carriers or

647
00:32:39,040 --> 00:32:41,960
Speaker 1: with Freight forward and Company, or a platform like Flex Sports.

648
00:32:42,000 --> 00:32:44,560
Speaker 1: And right now is the season when that happens. It's

649
00:32:44,600 --> 00:32:48,000
Speaker 1: like April and May is when these decisions get made,

650
00:32:48,040 --> 00:32:51,000
Speaker 1: these contracts get negotiated, and so it is like the

651
00:32:51,040 --> 00:32:55,920
Speaker 1: worst possible timing. And these companies are struggling to get capacity.

652
00:32:55,960 --> 00:32:59,800
Speaker 1: And imagine being that logistics manager at a major corporation

653
00:33:00,160 --> 00:33:04,160
Speaker 1: who you are told by every company you talked to, sorry,

654
00:33:04,320 --> 00:33:07,280
Speaker 1: I can't give you capacity. Your company is not going

655
00:33:07,320 --> 00:33:09,720
Speaker 1: to grow, you're not gonna hit through sales goals like

656
00:33:09,960 --> 00:33:11,720
Speaker 1: I can only ship half of what you want to ship.

657
00:33:12,200 --> 00:33:14,160
Speaker 1: That is a really difficult position to be in, and

658
00:33:14,240 --> 00:33:17,360
Speaker 1: yet it's a brand new position. So these companies a

659
00:33:17,440 --> 00:33:20,280
Speaker 1: month ago might have been able to negotiate and get space,

660
00:33:20,560 --> 00:33:23,160
Speaker 1: but they didn't want to pay the rates, and it's

661
00:33:23,200 --> 00:33:25,160
Speaker 1: sort of a wake up call like, oh my goodness,

662
00:33:25,520 --> 00:33:27,760
Speaker 1: I'm not gonna get any space unless I pay the rates.

663
00:33:28,400 --> 00:33:31,040
Speaker 1: Companies are sort of having that moment of opening their

664
00:33:31,040 --> 00:33:32,840
Speaker 1: eyes and go, Okay, I guess we have to make

665
00:33:32,840 --> 00:33:36,880
Speaker 1: a decision. We're gonna do this or not. In your experience,

666
00:33:36,920 --> 00:33:41,440
Speaker 1: our companies absorbing the costs of higher shipping rates themselves

667
00:33:41,560 --> 00:33:46,280
Speaker 1: or are those costs getting passed onto consumers. I think

668
00:33:46,280 --> 00:33:49,400
Speaker 1: it's going to get passed through by good. Good companies

669
00:33:49,400 --> 00:33:52,000
Speaker 1: can raise their prices and um and people will pay

670
00:33:52,000 --> 00:33:54,200
Speaker 1: for the product if if that's because it's happening to

671
00:33:54,200 --> 00:33:56,880
Speaker 1: all the competitors equally, right, So you're just going to

672
00:33:56,960 --> 00:33:59,160
Speaker 1: see it come through in the form of more inflation.

673
00:34:00,720 --> 00:34:04,720
Speaker 1: Are we gonna see some of these like once? I mean,

674
00:34:04,960 --> 00:34:08,600
Speaker 1: some of these uh DTC companies that were probably growing

675
00:34:08,640 --> 00:34:12,560
Speaker 1: really fast and have huge demand face the situation which

676
00:34:12,600 --> 00:34:17,239
Speaker 1: they could have grown really fast and one but their

677
00:34:17,280 --> 00:34:20,680
Speaker 1: top line just didn't grow by that much because they

678
00:34:20,719 --> 00:34:23,799
Speaker 1: just couldn't move product. I think you'll see that they

679
00:34:23,800 --> 00:34:25,440
Speaker 1: still grew, I mean sort of like the market has

680
00:34:25,480 --> 00:34:27,400
Speaker 1: grown and that's what's happened. But but you won't be

681
00:34:27,400 --> 00:34:28,719
Speaker 1: able to see that. Hey, they might have been able

682
00:34:28,719 --> 00:34:30,520
Speaker 1: to grow even faster if they could have got more

683
00:34:30,520 --> 00:34:33,200
Speaker 1: product to market. And some of the ones that are

684
00:34:33,239 --> 00:34:35,839
Speaker 1: really good businesses with good margins are shifting to air

685
00:34:36,440 --> 00:34:38,680
Speaker 1: or that really care about the customer experience and demand

686
00:34:38,719 --> 00:34:40,759
Speaker 1: that growth and know they need to keep growing and

687
00:34:41,120 --> 00:34:42,800
Speaker 1: need to get to the next level of their business.

688
00:34:42,800 --> 00:34:45,799
Speaker 1: So they're doing there. They're shifting some capacity over the

689
00:34:45,840 --> 00:34:48,160
Speaker 1: air freight and getting creative. You know. One of the

690
00:34:48,200 --> 00:34:51,440
Speaker 1: things that you can do, you can pay more to

691
00:34:51,600 --> 00:34:54,840
Speaker 1: guarantee your space on the ship, and it costs a

692
00:34:54,880 --> 00:34:57,080
Speaker 1: couple thousand blucks extra, but guarantee it. And so you're

693
00:34:57,080 --> 00:34:59,960
Speaker 1: seeing a lot of people like pre pandemic flexport Abo

694
00:35:00,120 --> 00:35:03,000
Speaker 1: eleven of the containers that we shipped, we're on these

695
00:35:03,040 --> 00:35:06,160
Speaker 1: premium products and now it's uh I think it passed.

696
00:35:06,160 --> 00:35:07,799
Speaker 1: It was eight percent a couple of weeks ago. It's

697
00:35:07,800 --> 00:35:09,880
Speaker 1: got to be above by now. We've been getting more

698
00:35:09,880 --> 00:35:12,280
Speaker 1: and more demand for that. Yeah, this was an option

699
00:35:12,280 --> 00:35:15,000
Speaker 1: that was offered to me, but Bloomberg's budget does not

700
00:35:15,200 --> 00:35:19,359
Speaker 1: extend that far to premium shipping rates. You mentioned air

701
00:35:19,480 --> 00:35:23,799
Speaker 1: cargo just then. How nimble is that industry, because I imagine,

702
00:35:25,000 --> 00:35:29,200
Speaker 1: you know, maybe repurposing some old passenger planes is probably

703
00:35:29,280 --> 00:35:34,320
Speaker 1: a lot easier than trying to source new ships. Of

704
00:35:34,360 --> 00:35:37,520
Speaker 1: the world's air cargo lies in the belly of passenger planes,

705
00:35:37,719 --> 00:35:40,279
Speaker 1: by the way, which is a horrifying thought for you

706
00:35:40,360 --> 00:35:42,399
Speaker 1: as you leave Hong Kong to imagine what's down there.

707
00:35:43,400 --> 00:35:46,760
Speaker 1: Don't think about it next time you're flying Cafe. Those

708
00:35:46,840 --> 00:35:50,399
Speaker 1: planes are all grounded, which is uh to cut off

709
00:35:50,520 --> 00:35:53,760
Speaker 1: fifty percent of capacity on the airside from the start

710
00:35:53,800 --> 00:35:56,560
Speaker 1: of the pandemic and hasn't come basically hasn't come back online.

711
00:35:57,000 --> 00:36:00,839
Speaker 1: So that's the first thing we exper this first hand.

712
00:36:00,880 --> 00:36:04,839
Speaker 1: So last year, at the start of the pandemic, we

713
00:36:04,920 --> 00:36:08,480
Speaker 1: recognized pretty early on that their hospitals didn't have enough

714
00:36:08,520 --> 00:36:12,480
Speaker 1: PPE to get enough mass for their front line healthcare workers.

715
00:36:12,480 --> 00:36:14,479
Speaker 1: And that was true all over the world. UM, and

716
00:36:14,880 --> 00:36:17,720
Speaker 1: we I just sort of our flexpoort team just stepped

717
00:36:17,800 --> 00:36:22,400
Speaker 1: up and we actually chartered seventy seven passenger planes and

718
00:36:22,560 --> 00:36:25,680
Speaker 1: filled the cargo holds but also the seats and the

719
00:36:25,760 --> 00:36:29,400
Speaker 1: overhead compartments. We just stuffed mass everywhere. UM ended up

720
00:36:29,400 --> 00:36:33,799
Speaker 1: shipping about five million units of pp FO units of

721
00:36:33,880 --> 00:36:37,919
Speaker 1: PPE two to five continents healthcare workers, so we were

722
00:36:37,960 --> 00:36:41,279
Speaker 1: able to do it, but the break even price um

723
00:36:41,440 --> 00:36:45,080
Speaker 1: was pretty high. So passenger planes only make money, I

724
00:36:45,120 --> 00:36:48,399
Speaker 1: want to say, above ten bucks a quilo, and air

725
00:36:48,400 --> 00:36:51,520
Speaker 1: freight prices are normally about that's asia to us. Air

726
00:36:51,520 --> 00:36:54,880
Speaker 1: freight prices are normally like four bucks a quilo U.

727
00:36:55,400 --> 00:36:58,160
Speaker 1: Right now they've gone back up above ten. So we

728
00:36:58,160 --> 00:37:00,640
Speaker 1: were in the range where you might see some passenger

729
00:37:00,680 --> 00:37:02,560
Speaker 1: planes come back on and be used. They don't need

730
00:37:02,600 --> 00:37:06,359
Speaker 1: to be fully retrofitted. Like that's a longer term thing,

731
00:37:06,360 --> 00:37:08,480
Speaker 1: and I don't think the airline, the passenger airlines are

732
00:37:08,680 --> 00:37:11,760
Speaker 1: have reached that state very much yet. Um old seven

733
00:37:11,800 --> 00:37:14,719
Speaker 1: forty sevens are mostly gonna end up keep flying now

734
00:37:14,719 --> 00:37:16,480
Speaker 1: that they've retired the seven forty seven. You'll see those

735
00:37:16,480 --> 00:37:17,960
Speaker 1: live on as cargo planes for a long time and

736
00:37:18,000 --> 00:37:20,520
Speaker 1: they will get retrofitted. But you can actually use them

737
00:37:20,520 --> 00:37:22,560
Speaker 1: as a passenger plane and just ship cargo in the

738
00:37:22,600 --> 00:37:25,400
Speaker 1: luggage holds and in the overhead compartments. If you, if

739
00:37:25,440 --> 00:37:27,840
Speaker 1: you are so desperate as we were last year, what

740
00:37:28,040 --> 00:37:30,319
Speaker 1: is the state of the trucking market right now, and

741
00:37:30,360 --> 00:37:33,160
Speaker 1: how much of a bottleneck or how much is uh

742
00:37:33,320 --> 00:37:35,920
Speaker 1: for your clients. How much are the sort of after

743
00:37:36,000 --> 00:37:38,840
Speaker 1: get after the uh the container has taken off the

744
00:37:38,880 --> 00:37:41,600
Speaker 1: port and goes on to a truck. How jammed up

745
00:37:41,640 --> 00:37:43,520
Speaker 1: is that? Yeah? And there says there's a few different

746
00:37:43,600 --> 00:37:46,760
Speaker 1: chucking markets that are yeah, loosely related with someone independent.

747
00:37:46,800 --> 00:37:49,360
Speaker 1: And so the one that we play in is called dredge.

748
00:37:50,080 --> 00:37:53,399
Speaker 1: That's ocean port trucking where you're hauling a container out

749
00:37:53,400 --> 00:37:56,200
Speaker 1: of a port. UH. And then we call it cartage.

750
00:37:56,520 --> 00:37:58,120
Speaker 1: I don't know what that term came from Old English.

751
00:37:58,120 --> 00:38:01,080
Speaker 1: I'm sure cartagees airport shark when you're picking up a

752
00:38:02,239 --> 00:38:05,240
Speaker 1: shipment at an airport. UM. And that's where Flexiboard operates,

753
00:38:05,400 --> 00:38:07,680
Speaker 1: and I have the most inside of expertise there. Rather

754
00:38:07,719 --> 00:38:10,719
Speaker 1: than full truck load domestic trucking like point to point

755
00:38:10,719 --> 00:38:13,120
Speaker 1: within the country or or the other one is called

756
00:38:13,200 --> 00:38:15,479
Speaker 1: less than truck load shipping a palette point to point

757
00:38:15,760 --> 00:38:18,840
Speaker 1: on the ocean trucking, you have seen definitely shortages of

758
00:38:18,920 --> 00:38:22,360
Speaker 1: drivers and chassis. So that's the equipment shortage I mentioned

759
00:38:22,400 --> 00:38:24,680
Speaker 1: a little earlier. Flexbord has a big advantage. We build

760
00:38:24,680 --> 00:38:27,880
Speaker 1: technology for these truckers. So we have a suite that

761
00:38:27,920 --> 00:38:30,040
Speaker 1: we've had about a hundred and forty trucking companies that

762
00:38:30,080 --> 00:38:32,960
Speaker 1: run our software and mope with a mobile app and

763
00:38:33,000 --> 00:38:35,719
Speaker 1: a hardware device that plugs into the engine. And so

764
00:38:35,760 --> 00:38:38,239
Speaker 1: about thirty five percent of all the dreades trucks in

765
00:38:38,280 --> 00:38:41,600
Speaker 1: America have flexiboard software on them. And so we're able

766
00:38:41,640 --> 00:38:44,399
Speaker 1: to get access to trucks and find the closest truck

767
00:38:44,480 --> 00:38:47,000
Speaker 1: to the port and assign them a load, assigned that

768
00:38:47,120 --> 00:38:51,480
Speaker 1: driver aload, and we're now doing it of our shipments,

769
00:38:51,480 --> 00:38:53,600
Speaker 1: no human intervention. We just assigned the load and the

770
00:38:53,680 --> 00:38:55,960
Speaker 1: driver goes and picks it up. UM. So it's running

771
00:38:55,960 --> 00:38:59,040
Speaker 1: fairly smoothly for us. But we've seen the trucking companies

772
00:38:59,040 --> 00:39:01,600
Speaker 1: that come on board use flexport are struggling to get

773
00:39:01,880 --> 00:39:04,200
Speaker 1: enough drivers. And and that's a long term trend. You've

774
00:39:04,200 --> 00:39:06,600
Speaker 1: got a driver shortage. Turns out young people don't really

775
00:39:06,600 --> 00:39:09,040
Speaker 1: want to drive trucks. UM. So the average age of

776
00:39:09,040 --> 00:39:11,040
Speaker 1: truck drivers in this country keeps getting older and older

777
00:39:11,040 --> 00:39:15,600
Speaker 1: every single year. So here's the big question, what's your

778
00:39:15,640 --> 00:39:18,560
Speaker 1: instinct on how long this will actually go on for

779
00:39:19,280 --> 00:39:25,080
Speaker 1: and what's going to eventually hopefully solve the problem. Well,

780
00:39:25,120 --> 00:39:26,960
Speaker 1: I think this problem is going to get solved with

781
00:39:27,040 --> 00:39:30,160
Speaker 1: vaccines and a return to normalcy is our best hope

782
00:39:30,280 --> 00:39:33,560
Speaker 1: is that people start spending money in bars and restaurants

783
00:39:33,560 --> 00:39:36,160
Speaker 1: and hotels and travel plane tickets and don't have as

784
00:39:36,200 --> 00:39:39,040
Speaker 1: much money to buy stuff online and buy goods, and

785
00:39:40,160 --> 00:39:42,600
Speaker 1: that will sort of be that. That's what a literal

786
00:39:42,640 --> 00:39:45,480
Speaker 1: return to normalcy is. We used to economy used to

787
00:39:45,480 --> 00:39:48,080
Speaker 1: look more like that. On what timeline does that happen?

788
00:39:48,120 --> 00:39:50,600
Speaker 1: It's your because it is much better than mine. I

789
00:39:50,640 --> 00:39:54,399
Speaker 1: don't know. But are you seeing any easing yet? No,

790
00:39:54,480 --> 00:39:57,440
Speaker 1: not really. We're still still seeing similar levels of ordering

791
00:39:57,560 --> 00:39:59,920
Speaker 1: and and like to your point earlier, like if I

792
00:40:00,000 --> 00:40:01,719
Speaker 1: can't get my stuff, maybe I should order twice as

793
00:40:01,800 --> 00:40:04,799
Speaker 1: much stuff and um, And you're seeing that kind of

794
00:40:04,800 --> 00:40:07,920
Speaker 1: behavior more than more than a return to normalcy. At

795
00:40:08,000 --> 00:40:11,080
Speaker 1: some point, are people going to have massive inventories and

796
00:40:11,080 --> 00:40:14,879
Speaker 1: then maybe they'll stop shipping things so much? That's possible, Yeah,

797
00:40:14,920 --> 00:40:17,000
Speaker 1: And I think that's that's the downside of all of this,

798
00:40:17,120 --> 00:40:18,719
Speaker 1: is like we're all trying to predict the future, and

799
00:40:18,719 --> 00:40:20,920
Speaker 1: like we've just proven we're pretty bad at that, and

800
00:40:20,960 --> 00:40:23,480
Speaker 1: so right now everyone's predicting the future is going to

801
00:40:23,560 --> 00:40:25,600
Speaker 1: look more like what we see today. And you just

802
00:40:25,680 --> 00:40:27,839
Speaker 1: keep on ordering, ordering, ordering, and then at some point

803
00:40:27,880 --> 00:40:30,719
Speaker 1: your customers have shifted and they stop buying your cool

804
00:40:30,760 --> 00:40:32,600
Speaker 1: new products and they started spending money in the bar

805
00:40:32,719 --> 00:40:35,520
Speaker 1: like they used to, and you're stuck with all this inventory.

806
00:40:35,600 --> 00:40:37,480
Speaker 1: So yeah, that can that's the bull whip effect where

807
00:40:37,480 --> 00:40:40,640
Speaker 1: it just oscillates back and forth. Flex Port is a

808
00:40:40,680 --> 00:40:44,400
Speaker 1: technology company, and I feel like, you know, in in

809
00:40:44,560 --> 00:40:49,600
Speaker 1: normal times, everybody wants to I assume wants to optimize

810
00:40:49,600 --> 00:40:53,640
Speaker 1: their inventory and having you know, extra days of inventory

811
00:40:53,719 --> 00:40:56,160
Speaker 1: that they're not selling is a liability. And you want

812
00:40:56,200 --> 00:40:59,879
Speaker 1: to just into the dream scenario, get the ship right,

813
00:41:00,080 --> 00:41:01,760
Speaker 1: you know, a minute before you're gonna sell it. Everything

814
00:41:01,840 --> 00:41:05,359
Speaker 1: is just in time? And A is that a fair

815
00:41:05,440 --> 00:41:08,600
Speaker 1: characterization of how a lot of your clients operate? And

816
00:41:08,680 --> 00:41:11,880
Speaker 1: B is there a sort of a risk to this

817
00:41:12,000 --> 00:41:14,000
Speaker 1: sort of like just in time thinking? Will there be

818
00:41:14,160 --> 00:41:19,319
Speaker 1: a sort of rethink post pandemic, post crisis about the

819
00:41:19,600 --> 00:41:23,200
Speaker 1: costs of perfect optimization? And how are you thinking about

820
00:41:23,600 --> 00:41:27,960
Speaker 1: when things normalize whatever that means change? Will there be

821
00:41:28,000 --> 00:41:31,960
Speaker 1: any changes to uh behavior? Yeah, and it's got to

822
00:41:31,960 --> 00:41:35,000
Speaker 1: be cased by industry by industry, like some industry insteadives

823
00:41:35,040 --> 00:41:37,920
Speaker 1: absurd to have no inventory of ppe and stock like

824
00:41:37,960 --> 00:41:41,080
Speaker 1: that is almost criminally negligent. It's like, how we do

825
00:41:41,239 --> 00:41:43,959
Speaker 1: you know we can't have life saving equipment with no inventory.

826
00:41:44,160 --> 00:41:46,400
Speaker 1: It will be a decision for each company based on

827
00:41:46,440 --> 00:41:48,160
Speaker 1: the margins and how much it costs them to sit

828
00:41:48,200 --> 00:41:52,040
Speaker 1: on product, and is this product going bad fashion fast fashion?

829
00:41:52,320 --> 00:41:54,800
Speaker 1: Like is it going out of style in two weeks,

830
00:41:54,840 --> 00:41:56,719
Speaker 1: maybe you get maybe you revisit, maybe it could last

831
00:41:56,760 --> 00:41:58,839
Speaker 1: a month or something. I do think you're definitely gonna

832
00:41:58,840 --> 00:42:01,040
Speaker 1: see a reconciling there. And this is, by the way,

833
00:42:01,040 --> 00:42:03,440
Speaker 1: a longer term trend. It's like in the old world,

834
00:42:04,200 --> 00:42:07,080
Speaker 1: but I grew up in my mom bottle are closing

835
00:42:07,120 --> 00:42:10,760
Speaker 1: the series catalog and you just have one distribution center

836
00:42:11,480 --> 00:42:13,440
Speaker 1: in the middle of the country, and you could provide

837
00:42:13,440 --> 00:42:16,680
Speaker 1: a three week or seven days shipping time from one site.

838
00:42:17,480 --> 00:42:18,960
Speaker 1: But if you want to get to an e commerce

839
00:42:19,000 --> 00:42:21,759
Speaker 1: world where it's two hour delivery, you've got to have

840
00:42:22,480 --> 00:42:26,520
Speaker 1: inventory cash sort of the Internet term would be edge cashing,

841
00:42:26,560 --> 00:42:29,760
Speaker 1: your edge cashing your inventory, keeping it close to the customer,

842
00:42:30,239 --> 00:42:32,040
Speaker 1: and you've gotta have inventory and every single zip code

843
00:42:32,080 --> 00:42:34,560
Speaker 1: almost and that's a lot more inventory. So now you

844
00:42:34,600 --> 00:42:36,480
Speaker 1: need to really be smart, like how much inventory do

845
00:42:36,560 --> 00:42:40,360
Speaker 1: I want? What's the value of that customer proposition of

846
00:42:40,480 --> 00:42:43,359
Speaker 1: saying two hour versus two days, versus two week versus

847
00:42:43,400 --> 00:42:45,959
Speaker 1: two months. And that's the trade off that every brand

848
00:42:46,040 --> 00:42:48,640
Speaker 1: has to make, is between the customer experience they want

849
00:42:48,640 --> 00:42:50,840
Speaker 1: to create and the lost sales if they don't have

850
00:42:50,880 --> 00:42:54,200
Speaker 1: goods in stock, versus the cost of working capital. And

851
00:42:54,280 --> 00:42:56,919
Speaker 1: these are old models, like in business school, you'll see

852
00:42:56,920 --> 00:42:59,839
Speaker 1: this model in an Xcel operations class. You'll sell most

853
00:43:00,000 --> 00:43:02,959
Speaker 1: those busines school crowds like saved that Excel filand still

854
00:43:02,960 --> 00:43:05,239
Speaker 1: have it from their professor. But no one's ever been

855
00:43:05,280 --> 00:43:07,520
Speaker 1: really good at feeding real time data into that model.

856
00:43:08,120 --> 00:43:10,600
Speaker 1: And that's that's what technology enables today, is like we

857
00:43:10,640 --> 00:43:13,000
Speaker 1: can show you what our actual lead times when you

858
00:43:13,000 --> 00:43:16,120
Speaker 1: place the order with your factory, what's the actual transit time?

859
00:43:16,200 --> 00:43:19,240
Speaker 1: Not like your fudge your fudge factor thirty day number

860
00:43:19,719 --> 00:43:21,400
Speaker 1: that you put in your Excel model, but like, what

861
00:43:21,440 --> 00:43:25,480
Speaker 1: are we seeing trailing ninety days? What's the distribution curve? Data?

862
00:43:25,560 --> 00:43:28,400
Speaker 1: Data will help with these problems, um but at the

863
00:43:28,440 --> 00:43:29,640
Speaker 1: end of day, it's a trade off they have to

864
00:43:29,640 --> 00:43:32,719
Speaker 1: make between growth and the cost of capital. So what

865
00:43:32,800 --> 00:43:35,160
Speaker 1: should Tracy do to like get her. I don't even

866
00:43:35,200 --> 00:43:37,719
Speaker 1: know what she's shipping, but like, what is she doing wrong?

867
00:43:37,960 --> 00:43:41,160
Speaker 1: I do think it's I'm protecting yourself. You gotta you

868
00:43:41,239 --> 00:43:43,200
Speaker 1: gotta make that company that's trying to shoot your cargo

869
00:43:43,239 --> 00:43:46,280
Speaker 1: believe you're gonna be like this important long term customer

870
00:43:46,840 --> 00:43:49,680
Speaker 1: that's gonna be there for them in the future. Maybe

871
00:43:49,719 --> 00:43:52,960
Speaker 1: maybe call the guys, call the team at Bloomberg that

872
00:43:53,040 --> 00:43:56,200
Speaker 1: ships all your umbrellas and schwag and everything. Maybe maybe

873
00:43:56,200 --> 00:43:58,719
Speaker 1: they got some hookups for you. And uh, all right,

874
00:43:59,080 --> 00:44:01,879
Speaker 1: I'll give it a go with with Lars and cop again.

875
00:44:02,000 --> 00:44:04,239
Speaker 1: But yeah, I mean, I think they have to prioritize

876
00:44:04,280 --> 00:44:06,440
Speaker 1: and if and if I probably do the same thing.

877
00:44:06,480 --> 00:44:10,080
Speaker 1: No offense to you, but I gotta, I gotta who's

878
00:44:10,120 --> 00:44:12,200
Speaker 1: gonna be there for me next year in the year after.

879
00:44:12,280 --> 00:44:14,719
Speaker 1: If I'm if, I'm gonna choose which customer gets on

880
00:44:14,719 --> 00:44:16,000
Speaker 1: the boat. And it was like a sort of a

881
00:44:16,000 --> 00:44:18,640
Speaker 1: two way exchange that goes on in these in these

882
00:44:18,680 --> 00:44:21,000
Speaker 1: negotiations of who gets on the boat and who doesn't.

883
00:44:21,200 --> 00:44:24,359
Speaker 1: I can't believe my mostly empty container being shipped for

884
00:44:24,440 --> 00:44:27,719
Speaker 1: the purposes of stunt journalism is not a priority for

885
00:44:27,760 --> 00:44:32,600
Speaker 1: these companies. Amazing. All right, well, Ryan, it was lovely

886
00:44:32,640 --> 00:44:35,680
Speaker 1: talking to you. Thank you so much. Great guys, thank

887
00:44:35,680 --> 00:44:51,120
Speaker 1: you all. It's great, Joe. I love that conversation. So

888
00:44:51,239 --> 00:44:54,680
Speaker 1: nice to be talking. You know. I like talking about markets,

889
00:44:54,719 --> 00:44:57,680
Speaker 1: and I like talking about economic and financial theory, but

890
00:44:57,880 --> 00:45:01,080
Speaker 1: sometimes it's nice to talk about actual things and the

891
00:45:01,120 --> 00:45:04,000
Speaker 1: way they move around the world. And I think I

892
00:45:04,080 --> 00:45:06,440
Speaker 1: mentioned this before, but it kind of gets to one

893
00:45:06,480 --> 00:45:08,960
Speaker 1: of my pet themes for the year, which is this

894
00:45:09,120 --> 00:45:14,000
Speaker 1: idea that economics actually does a terrible job of incorporating

895
00:45:14,080 --> 00:45:17,359
Speaker 1: and thinking about logistics, and this is the year that's

896
00:45:17,440 --> 00:45:20,279
Speaker 1: kind of proven that. But the other thing I liked

897
00:45:20,280 --> 00:45:23,240
Speaker 1: in that conversation was Ryan's point that this whole problem

898
00:45:23,320 --> 00:45:27,200
Speaker 1: started from expectations and an incorrect view of what the

899
00:45:27,239 --> 00:45:30,879
Speaker 1: future actually turned out to be, and now we're trying

900
00:45:30,920 --> 00:45:35,200
Speaker 1: to solve it with expectations yet again, ramping up inventories

901
00:45:35,280 --> 00:45:38,400
Speaker 1: and orders, and the big question is whether or not

902
00:45:38,600 --> 00:45:42,239
Speaker 1: it's actually going to materialize the way we think it is.

903
00:45:43,040 --> 00:45:45,359
Speaker 1: You took the words right out of my mouth, and

904
00:45:45,800 --> 00:45:50,600
Speaker 1: I think that's exactly right. Like everything is expectations and everything,

905
00:45:50,760 --> 00:45:56,799
Speaker 1: like so many conversations like expectations about the future end

906
00:45:56,880 --> 00:46:00,600
Speaker 1: up affecting the right now, and uh in all different

907
00:46:00,640 --> 00:46:03,800
Speaker 1: kinds of ways. So whether it's expectations like, oh, shipping

908
00:46:03,840 --> 00:46:05,919
Speaker 1: costs are gonna come down, so we're gonna like hold

909
00:46:05,920 --> 00:46:08,560
Speaker 1: off and then we have to pay more, or even

910
00:46:09,160 --> 00:46:12,600
Speaker 1: uh Ryan's points like, well, maybe you'll get greater investment

911
00:46:12,680 --> 00:46:16,080
Speaker 1: in shipping capacity, but only if there is the expectation

912
00:46:16,200 --> 00:46:19,120
Speaker 1: that global shipping remains very high. And of course, as

913
00:46:19,160 --> 00:46:22,400
Speaker 1: we talked about in um Levinson and this sort of

914
00:46:22,440 --> 00:46:29,759
Speaker 1: like the decline of globalization that leading to consolidation of capacity,

915
00:46:29,840 --> 00:46:34,880
Speaker 1: Like everything about expectations ends up having an effect right now.

916
00:46:34,880 --> 00:46:36,640
Speaker 1: And I just think that's such a fascinating thing that

917
00:46:36,960 --> 00:46:39,560
Speaker 1: turns up like over and over again in our conversation.

918
00:46:40,600 --> 00:46:43,160
Speaker 1: And I gotta say the bonus of all these episodes

919
00:46:43,200 --> 00:46:46,120
Speaker 1: about logistics and lumber and actual things is that we're

920
00:46:46,120 --> 00:46:51,279
Speaker 1: really learning great new terms like stumpage, fees, bill of

921
00:46:51,400 --> 00:46:54,880
Speaker 1: lading and dray edge, which I always I said it before,

922
00:46:54,880 --> 00:46:57,120
Speaker 1: but I always thought it was ladding and dry edge.

923
00:46:57,239 --> 00:47:01,200
Speaker 1: So the more you know and the general what was it?

924
00:47:01,280 --> 00:47:04,960
Speaker 1: I can't remember general something liability, but actually I need

925
00:47:05,000 --> 00:47:07,400
Speaker 1: to look it up for this container. Now I'm worried

926
00:47:07,600 --> 00:47:10,319
Speaker 1: what was the one ship to show was that we're

927
00:47:10,320 --> 00:47:13,400
Speaker 1: going to have to start uh an All Thoughts glossary.

928
00:47:13,480 --> 00:47:15,239
Speaker 1: I think, no, oh yeah, that's a good idea. But

929
00:47:15,280 --> 00:47:17,960
Speaker 1: also I thought that was like super interesting again because

930
00:47:18,000 --> 00:47:21,439
Speaker 1: it's like, you know, how much of these businesses it's

931
00:47:21,480 --> 00:47:24,280
Speaker 1: not just you know we think of like, oh, everything

932
00:47:24,400 --> 00:47:26,319
Speaker 1: is just like a pure auction, right, It's like there's

933
00:47:26,360 --> 00:47:29,560
Speaker 1: capacity and who pays the most, But of course from

934
00:47:29,560 --> 00:47:33,040
Speaker 1: the perspective of the shipper, like they want to reward

935
00:47:33,040 --> 00:47:35,680
Speaker 1: their good customers, and who's going to be the customer

936
00:47:35,719 --> 00:47:37,879
Speaker 1: a year from now? And who is the best ship

937
00:47:37,880 --> 00:47:40,319
Speaker 1: to show, like who actually shows up? Like all of

938
00:47:40,360 --> 00:47:44,360
Speaker 1: these things that are beyond just like pure pure price.

939
00:47:44,800 --> 00:47:48,840
Speaker 1: I guess I would say end up determining somebody. Fascinating thing. Again,

940
00:47:48,880 --> 00:47:51,680
Speaker 1: it kind of gets back to expectations, right, who do

941
00:47:51,760 --> 00:47:56,239
Speaker 1: you expect will be a better customer over time? Totally? All? Right?

942
00:47:56,520 --> 00:47:59,560
Speaker 1: Should we leave it there? Let's leave it there. This

943
00:47:59,640 --> 00:48:02,600
Speaker 1: has been in another episode of the All Thoughts podcast.

944
00:48:02,760 --> 00:48:05,680
Speaker 1: I'm Tracy Alloway. You can follow me on Twitter at

945
00:48:05,719 --> 00:48:09,319
Speaker 1: Tracy Alloway and I'm Joe Wisn'tal. You can follow me

946
00:48:09,480 --> 00:48:13,160
Speaker 1: on Twitter at the Stalwart. Follow our guest Ryan Peterson.

947
00:48:13,239 --> 00:48:16,560
Speaker 1: Here's the CEO flex Port. His handle on Twitter is

948
00:48:16,719 --> 00:48:21,080
Speaker 1: at types Fast. Follow our producer Laura Carlson. She's at

949
00:48:21,160 --> 00:48:24,839
Speaker 1: Laura M. Carlson. Follow the Bloomberg head of podcast, Francesca

950
00:48:24,920 --> 00:48:28,239
Speaker 1: Levi at Francesca Today, and check out all of our

951
00:48:28,280 --> 00:48:32,840
Speaker 1: podcasts at Bloomberg under the handle at podcasts. Thanks for listening.