1 00:00:10,320 --> 00:00:14,000 Speaker 1: Hello, and welcome to another episode of the Odd Loves Podcast. 2 00:00:14,040 --> 00:00:17,320 Speaker 1: I'm Joe wasn't All and I'm Tracy Alloway. So, Tracy, 3 00:00:17,520 --> 00:00:21,960 Speaker 1: it seems it seems you're going to jinx it. Know, 4 00:00:22,400 --> 00:00:27,320 Speaker 1: it seems like the supply chain. It seems like the 5 00:00:27,360 --> 00:00:30,080 Speaker 1: supply chain, the crisis that people it kind of feels 6 00:00:30,080 --> 00:00:32,280 Speaker 1: like that's over in my opinion. I mean, I definitely 7 00:00:32,280 --> 00:00:34,440 Speaker 1: think we're seeing some of the bottlenecks that we spent 8 00:00:34,560 --> 00:00:38,839 Speaker 1: the better part of one talking about those are starting 9 00:00:38,880 --> 00:00:42,320 Speaker 1: to ease. Some of the import boom into the US 10 00:00:42,440 --> 00:00:44,919 Speaker 1: seems to be easing. There is this general shift from 11 00:00:44,960 --> 00:00:50,440 Speaker 1: consumer goods to services. But things are still relatively busy. 12 00:00:50,479 --> 00:00:52,919 Speaker 1: But I think I think they've settled down enough that 13 00:00:52,960 --> 00:00:56,080 Speaker 1: we can start to talk about what we have learned 14 00:00:56,440 --> 00:00:59,600 Speaker 1: from this whole saga. Absolutely, I think so too. I mean, 15 00:00:59,600 --> 00:01:03,160 Speaker 1: they're really you know, you still see like occasionally specific 16 00:01:03,200 --> 00:01:06,560 Speaker 1: products will be in shortage. UM, there are certain types 17 00:01:06,600 --> 00:01:09,600 Speaker 1: of equipment and if you read the surveys of like 18 00:01:09,640 --> 00:01:11,839 Speaker 1: the s M or p m I surveys, you still 19 00:01:11,880 --> 00:01:16,479 Speaker 1: see manufacturers talk about difficulty getting certain things. Electrical equipment 20 00:01:16,600 --> 00:01:18,440 Speaker 1: seems to be up there, but there's sort of like 21 00:01:18,760 --> 00:01:22,720 Speaker 1: generalized shortage of everything, those like crazy lines we were 22 00:01:22,720 --> 00:01:25,520 Speaker 1: seeing a boat the ports and trucks at the ports 23 00:01:25,520 --> 00:01:27,640 Speaker 1: and all that stuff. I kind of think that story 24 00:01:27,720 --> 00:01:31,040 Speaker 1: is over right. And one of the few good things 25 00:01:31,080 --> 00:01:33,720 Speaker 1: that that tends to come out of crises in general 26 00:01:33,959 --> 00:01:38,000 Speaker 1: is that they offer you this opportunity to look at 27 00:01:38,120 --> 00:01:42,640 Speaker 1: what exactly went wrong and why we're things designed poorly? 28 00:01:42,840 --> 00:01:45,280 Speaker 1: Is there stuff that we can do better in the future, 29 00:01:45,640 --> 00:01:47,960 Speaker 1: And so now that some of these supply chain issues 30 00:01:48,000 --> 00:01:53,200 Speaker 1: and transportation and shipping and logistical issues are starting to ease, 31 00:01:53,880 --> 00:01:57,280 Speaker 1: we can go back and and think about what we've learned, 32 00:01:57,400 --> 00:01:59,280 Speaker 1: what we can do differently. And you raise a really 33 00:01:59,280 --> 00:02:01,560 Speaker 1: good point, which is that you know, you have some crisis, 34 00:02:01,600 --> 00:02:03,560 Speaker 1: and there's always like, Okay, what should we fix? What 35 00:02:03,600 --> 00:02:05,720 Speaker 1: could be done better? But on the other hand, you know, 36 00:02:05,760 --> 00:02:08,399 Speaker 1: what about maybe not fix anything because you know, once 37 00:02:08,440 --> 00:02:11,320 Speaker 1: in a century pandemic. Is that a good reason to 38 00:02:11,400 --> 00:02:14,400 Speaker 1: completely up end the way the world does business? To me, 39 00:02:14,480 --> 00:02:17,320 Speaker 1: it's like, let's just put this way. It's not obvious 40 00:02:17,360 --> 00:02:21,079 Speaker 1: to me that like we won't eventually just return to Well, 41 00:02:21,120 --> 00:02:24,040 Speaker 1: this is the other question I have, because the industry 42 00:02:24,040 --> 00:02:27,200 Speaker 1: that we've been talking about the shipping and logistical industry. 43 00:02:27,360 --> 00:02:30,560 Speaker 1: This is already incredibly cyclical, right, so do they just 44 00:02:30,639 --> 00:02:33,480 Speaker 1: look at one and say like, well that was a 45 00:02:33,520 --> 00:02:36,200 Speaker 1: crazy cycle. Now we can get back to our normal 46 00:02:36,280 --> 00:02:38,880 Speaker 1: cycles and just do what we were doing before. And well, 47 00:02:38,919 --> 00:02:40,519 Speaker 1: you know, we most of talk about the pandemic and 48 00:02:40,560 --> 00:02:43,840 Speaker 1: the COVID disruptions. You know, there are other developments globally. 49 00:02:43,960 --> 00:02:47,600 Speaker 1: There's the ongoing war in Europe. There's a heightening tensions 50 00:02:47,639 --> 00:02:52,120 Speaker 1: between US and China politically. Um, there's the energy cost 51 00:02:52,200 --> 00:02:55,120 Speaker 1: surge in Europe which may not you know, ease for 52 00:02:55,160 --> 00:02:57,880 Speaker 1: a long time. So there are other things going on anyway, 53 00:02:58,040 --> 00:03:01,160 Speaker 1: throughout the crazies. We've talked to Guess multiple times, so 54 00:03:01,320 --> 00:03:03,760 Speaker 1: perfect time to get him back in. We're gonna be 55 00:03:03,840 --> 00:03:06,680 Speaker 1: speaking with Ryan Peterson. He is the founder and co 56 00:03:06,880 --> 00:03:10,600 Speaker 1: CEO of Flex Sports. So Ryan, thanks for coming back 57 00:03:10,600 --> 00:03:14,120 Speaker 1: on odd lots and also are we right, Like, is 58 00:03:14,200 --> 00:03:17,880 Speaker 1: the crisis phase of this over? Well, it depends who 59 00:03:17,919 --> 00:03:20,519 Speaker 1: you are, I think for the average consumer and business, yeah, 60 00:03:20,880 --> 00:03:23,880 Speaker 1: more or less past now. If you own ships or planes, 61 00:03:24,000 --> 00:03:28,080 Speaker 1: the crisis might just be started. Right, the crisis of 62 00:03:29,080 --> 00:03:30,760 Speaker 1: downy Sand. They were all making a lot of money, 63 00:03:30,760 --> 00:03:33,079 Speaker 1: and now we're gonna speed ran through one of those 64 00:03:33,080 --> 00:03:35,240 Speaker 1: cycles that you're talking about. They usually take twenty years, 65 00:03:35,280 --> 00:03:38,000 Speaker 1: and we did it in too um two or three, 66 00:03:38,000 --> 00:03:40,040 Speaker 1: and so right now I think we're looking at the 67 00:03:40,040 --> 00:03:44,440 Speaker 1: opposite problem of excess capacity. There's too many there's gonna 68 00:03:44,440 --> 00:03:46,920 Speaker 1: be too many ships and and perhaps too many planes 69 00:03:47,880 --> 00:03:51,120 Speaker 1: relative to the demand to ship things. And so Tracy 70 00:03:51,160 --> 00:03:53,720 Speaker 1: and I have been joking that maybe our odd losses 71 00:03:53,800 --> 00:03:57,280 Speaker 1: for three, it's just gonna take all the episodes we 72 00:03:57,320 --> 00:04:01,160 Speaker 1: did in two about how there's a shortage is and 73 00:04:01,200 --> 00:04:04,560 Speaker 1: then just flip the signal to negative so plunging prices 74 00:04:04,640 --> 00:04:07,400 Speaker 1: over capacity, We'll just do all the episodes over again 75 00:04:07,480 --> 00:04:11,000 Speaker 1: and change the direction. Era. I've seeing glass that don't 76 00:04:11,040 --> 00:04:12,920 Speaker 1: lead to a shortage, but I've never seen a shortage 77 00:04:13,000 --> 00:04:16,360 Speaker 1: that doesn't lead to it. So so Ryan, you mentioned 78 00:04:16,520 --> 00:04:19,520 Speaker 1: um that the crisis might just be beginning if you 79 00:04:19,560 --> 00:04:22,200 Speaker 1: are actually, you know, a shipping company and you see 80 00:04:22,200 --> 00:04:25,440 Speaker 1: your freight rates start to plunge. And this kind of 81 00:04:25,760 --> 00:04:27,920 Speaker 1: brings me to something I wanted to ask you, which is, 82 00:04:28,000 --> 00:04:31,760 Speaker 1: we have seen a lot of these shippers make absolutely 83 00:04:31,839 --> 00:04:34,880 Speaker 1: insane amounts of profit for the past two or three years. 84 00:04:34,920 --> 00:04:38,440 Speaker 1: I think the last number I saw was for the 85 00:04:38,440 --> 00:04:41,000 Speaker 1: the third quarter of this year. It was net income 86 00:04:41,080 --> 00:04:44,279 Speaker 1: of fifty nine billion dollars for the global shipping industry, 87 00:04:44,320 --> 00:04:47,160 Speaker 1: which is more than the forty eight billion they made 88 00:04:47,160 --> 00:04:50,760 Speaker 1: the year before, and up from like a fraction of 89 00:04:50,800 --> 00:04:57,520 Speaker 1: that pre crisis. Yeah, from zero or negative. So, I mean, 90 00:04:58,000 --> 00:05:00,159 Speaker 1: what what do they do with all that money? Is 91 00:05:00,200 --> 00:05:02,680 Speaker 1: my first question? Do they just buy a bunch of 92 00:05:02,680 --> 00:05:06,520 Speaker 1: new ships, do they start to put in like efficiency 93 00:05:06,560 --> 00:05:08,799 Speaker 1: improvements or right do they return it all to their 94 00:05:08,880 --> 00:05:12,200 Speaker 1: long suffering shareholders? Um, I think you've seen a little 95 00:05:12,200 --> 00:05:13,880 Speaker 1: bit of each of those things, and it depends on 96 00:05:13,880 --> 00:05:17,080 Speaker 1: the company which ones emphasized the most. So some have 97 00:05:18,000 --> 00:05:20,479 Speaker 1: a few of the ocean carriers have gone been pretty 98 00:05:20,480 --> 00:05:25,520 Speaker 1: aggressive in buying freight forwarding businesses or e commerce kind 99 00:05:25,520 --> 00:05:28,200 Speaker 1: of fulfillment, trying to go more end to end owned 100 00:05:28,520 --> 00:05:30,880 Speaker 1: assets on land that can kind of connect their ships 101 00:05:30,880 --> 00:05:33,760 Speaker 1: and be able to really provide that full factory to 102 00:05:33,960 --> 00:05:36,920 Speaker 1: consumers door experience. So you see that from h C, 103 00:05:37,200 --> 00:05:39,280 Speaker 1: M A and MERSK in particular. Cima is the big 104 00:05:39,279 --> 00:05:44,240 Speaker 1: French ocean carrier, um them is the large actually they're 105 00:05:44,279 --> 00:05:46,920 Speaker 1: kind of small, but all these companies are big. That's 106 00:05:46,920 --> 00:05:49,719 Speaker 1: an Israeli carrier, and they've been pretty aggressive in doing 107 00:05:49,800 --> 00:05:52,719 Speaker 1: uh dividends, returning cash to the share out to the owners. 108 00:05:53,360 --> 00:05:57,000 Speaker 1: UM and MSc, which is now the world's largest carrier, 109 00:05:57,120 --> 00:05:58,720 Speaker 1: has that a little bit of all these things as well. 110 00:05:58,760 --> 00:06:01,880 Speaker 1: But they also invested a lot in ships, and so 111 00:06:01,920 --> 00:06:05,000 Speaker 1: they've become the largest carrier in the world by really 112 00:06:05,040 --> 00:06:08,440 Speaker 1: investing in the fleet. So UM, all those strategies are 113 00:06:08,480 --> 00:06:10,000 Speaker 1: being done. A lot of these companies are private, so 114 00:06:10,040 --> 00:06:13,560 Speaker 1: you don't really get to see everything that's happening. UM. 115 00:06:13,760 --> 00:06:16,680 Speaker 1: But and I think it's by nature because Wall Street 116 00:06:16,680 --> 00:06:20,360 Speaker 1: really can't handle the sickly coal. They want quarterly consistency, 117 00:06:20,440 --> 00:06:22,800 Speaker 1: they don't. They're just kind of they can't handle these 118 00:06:22,800 --> 00:06:25,000 Speaker 1: ten years of losing money and then two years of 119 00:06:25,200 --> 00:06:28,120 Speaker 1: printing money. It's just UM not something that sits well 120 00:06:28,160 --> 00:06:31,000 Speaker 1: with public investors. So they tend to be private companies 121 00:06:31,120 --> 00:06:33,600 Speaker 1: or in some cases stayed owned or kind of quasi 122 00:06:33,640 --> 00:06:36,880 Speaker 1: stay owned UM and where there's sort of sort of 123 00:06:36,880 --> 00:06:42,640 Speaker 1: some national interest in having ocean carrier capacity. So you know, 124 00:06:43,040 --> 00:06:47,839 Speaker 1: obviously the big story, you know, the pandemic disruptions, the 125 00:06:47,920 --> 00:06:52,040 Speaker 1: insane amount of demand for sort of like pure goods 126 00:06:52,120 --> 00:06:55,720 Speaker 1: and the filling warehouses and filling ports, etcetera. But as 127 00:06:55,760 --> 00:06:58,279 Speaker 1: I mentioned in the intro, there are some other pretty 128 00:06:58,279 --> 00:07:01,159 Speaker 1: big things that have happened in the last two years, 129 00:07:01,360 --> 00:07:05,480 Speaker 1: particularly the war in Ukraine which remains ongoing, and just 130 00:07:05,520 --> 00:07:08,520 Speaker 1: like the clear ratcheting up of tensions with China, and 131 00:07:08,560 --> 00:07:10,840 Speaker 1: you see these companies start to wonder like, well, what 132 00:07:11,000 --> 00:07:13,680 Speaker 1: is the long term future of trading between China and 133 00:07:13,680 --> 00:07:16,280 Speaker 1: the US. And also you know related I guess too, 134 00:07:16,400 --> 00:07:19,160 Speaker 1: but all of this is the surgeon cost of energy 135 00:07:19,280 --> 00:07:21,640 Speaker 1: in Europe. Can you talk a little bit more about 136 00:07:21,680 --> 00:07:27,160 Speaker 1: these other sort of like non pandemic macro factors and 137 00:07:27,280 --> 00:07:29,480 Speaker 1: like how much you see them like staying with us 138 00:07:29,560 --> 00:07:31,800 Speaker 1: right now? Like how much are like businesses that you 139 00:07:31,840 --> 00:07:34,679 Speaker 1: speak with every day? Sort of like thinking about whether 140 00:07:34,920 --> 00:07:40,160 Speaker 1: these are sort of deeper long term trends. Well, the 141 00:07:40,160 --> 00:07:43,800 Speaker 1: the manufacturing in China has been a long term trend. 142 00:07:43,880 --> 00:07:46,880 Speaker 1: As China has gotten richer, their labor costs have gone up. 143 00:07:46,960 --> 00:07:49,920 Speaker 1: It's probably a good thing for the Chinese people, um, 144 00:07:50,040 --> 00:07:53,040 Speaker 1: but manufacturers are kind of always seeking out that lower 145 00:07:53,040 --> 00:07:55,400 Speaker 1: cost labor. So that's a that's a trend's gone for 146 00:07:55,760 --> 00:07:58,360 Speaker 1: a decade or more, and the trade wars sort of 147 00:07:58,400 --> 00:08:00,680 Speaker 1: brought more attention to it, and uh, you know, the 148 00:08:00,840 --> 00:08:04,280 Speaker 1: increasing terrorists probably caused some companies to re evaluate, and 149 00:08:04,320 --> 00:08:08,280 Speaker 1: then the inconsistency of skipping and then kind of COVID 150 00:08:08,640 --> 00:08:10,680 Speaker 1: where there's different If your factory is closing down, it 151 00:08:10,720 --> 00:08:13,400 Speaker 1: makes a little bit less reliable. So that's probably probably 152 00:08:13,400 --> 00:08:15,400 Speaker 1: had some marginal acceleration, but I think it's a long 153 00:08:15,480 --> 00:08:19,560 Speaker 1: term trend driven mostly by labor costs. Um. Now it's uh, 154 00:08:20,080 --> 00:08:23,160 Speaker 1: it's really the most important where labor is the limiting 155 00:08:23,200 --> 00:08:26,040 Speaker 1: reagent or the hardest thing to find to execute these 156 00:08:26,440 --> 00:08:29,080 Speaker 1: manufacturing jobs. So that tends to be kind of lower skilled, 157 00:08:29,520 --> 00:08:32,560 Speaker 1: simpler stuff like a peril which is largely shifted out 158 00:08:32,640 --> 00:08:37,160 Speaker 1: towards Southeast Asia and Sri Lanka. But some of the 159 00:08:37,160 --> 00:08:40,120 Speaker 1: stuff like consumer electronics, it's just this this whole ecosystem 160 00:08:40,160 --> 00:08:42,800 Speaker 1: there that's in change in and around that's very hard 161 00:08:42,840 --> 00:08:46,120 Speaker 1: to move those factories. So I think, um, it's kind 162 00:08:46,120 --> 00:08:48,240 Speaker 1: of overblown some of the heat on the sholf. Like 163 00:08:48,280 --> 00:08:51,160 Speaker 1: we've traded traded more with China the last couple of 164 00:08:51,240 --> 00:08:54,679 Speaker 1: years than ever. Um, So it's like a nice narrative, 165 00:08:54,679 --> 00:09:05,400 Speaker 1: but I don't know that it bears out of the data. 166 00:09:08,080 --> 00:09:10,440 Speaker 1: Can I ask a really basic question before we go 167 00:09:10,480 --> 00:09:13,240 Speaker 1: any further, But when when we talk about spot rates 168 00:09:13,360 --> 00:09:15,400 Speaker 1: in shipping, and you know, we mentioned that they went 169 00:09:15,480 --> 00:09:17,839 Speaker 1: up a lot during the pandemic and now they're starting 170 00:09:17,880 --> 00:09:20,960 Speaker 1: to come back down, how much do those actually matter 171 00:09:21,360 --> 00:09:24,079 Speaker 1: for global trade? Because my understanding is that if you're 172 00:09:24,120 --> 00:09:27,640 Speaker 1: a big, you know, manufacturer, which is someone who ships 173 00:09:27,679 --> 00:09:29,760 Speaker 1: a lot of goods, you're probably going to have a 174 00:09:29,800 --> 00:09:33,480 Speaker 1: contract in place that might be different to the spot rate, 175 00:09:33,720 --> 00:09:36,679 Speaker 1: and you're also going to be renewing that that contract 176 00:09:36,720 --> 00:09:39,360 Speaker 1: on maybe maybe a yearly basis. So it seems like 177 00:09:39,360 --> 00:09:42,400 Speaker 1: there's perhaps a lag in how long it takes the 178 00:09:43,040 --> 00:09:47,760 Speaker 1: decrease in spot rates to feed through to actual shipping rates. Yeah, 179 00:09:47,760 --> 00:09:49,680 Speaker 1: that's exactly right. I don't have to stand in front 180 00:09:49,720 --> 00:09:51,400 Speaker 1: of me, but I want to say it's like about 181 00:09:51,880 --> 00:09:55,400 Speaker 1: sixty or seventy freight container ice rate moves on annual 182 00:09:55,440 --> 00:09:59,120 Speaker 1: contracts and thirty or forty on the spot market. I'm 183 00:09:59,120 --> 00:10:00,840 Speaker 1: not I'm not a hund su sure, but that's like 184 00:10:00,880 --> 00:10:03,880 Speaker 1: where my brain settles in on it um and so 185 00:10:04,200 --> 00:10:08,600 Speaker 1: that that spot rate isn't Yeah, it doesn't float through 186 00:10:08,600 --> 00:10:11,080 Speaker 1: immediately to the p and L of the carriers. Sometimes 187 00:10:11,080 --> 00:10:14,120 Speaker 1: people don't honor to the contract um and a lot 188 00:10:14,120 --> 00:10:16,319 Speaker 1: of people if they you know, if they see these 189 00:10:16,360 --> 00:10:23,080 Speaker 1: contracts are kind of gentlemen's agreements handshake. It's a repeat game. 190 00:10:23,360 --> 00:10:25,959 Speaker 1: So if you if you don't honor your contract this year, 191 00:10:26,679 --> 00:10:28,559 Speaker 1: people are going to really hesitate to sign a good 192 00:10:28,559 --> 00:10:30,600 Speaker 1: contract with you next year or you know, so it's 193 00:10:30,640 --> 00:10:33,920 Speaker 1: it's it's not something that is not necessarily legally enforced. 194 00:10:33,920 --> 00:10:35,960 Speaker 1: People aren't really seeing each other very often over these things. 195 00:10:36,000 --> 00:10:38,440 Speaker 1: Although with the with the level of price, you know, 196 00:10:38,440 --> 00:10:41,560 Speaker 1: you've seen more probably lawsuits against carriers and freight forwarders 197 00:10:41,559 --> 00:10:43,320 Speaker 1: in the last couple of years than than ever because 198 00:10:43,360 --> 00:10:46,080 Speaker 1: people are upset about how things played out. Um. But 199 00:10:46,160 --> 00:10:48,559 Speaker 1: in general, people do onto their contracts even when the 200 00:10:48,600 --> 00:10:51,760 Speaker 1: spot market drops below but not always, and in any 201 00:10:51,760 --> 00:10:53,400 Speaker 1: case it is a lag, so it's putting a lot 202 00:10:53,400 --> 00:10:56,319 Speaker 1: of pressure. Contract renewal season and ocean freight for the 203 00:10:56,400 --> 00:10:58,640 Speaker 1: United States is going to be in April or May 204 00:10:59,080 --> 00:11:02,760 Speaker 1: each year kind of marks through May, and that's coming 205 00:11:02,800 --> 00:11:05,080 Speaker 1: around the corner. And people are looking at these spot 206 00:11:05,120 --> 00:11:07,319 Speaker 1: markets and say, you know, that's clearly going to be 207 00:11:07,400 --> 00:11:10,240 Speaker 1: the driving price of where the where the contract market 208 00:11:10,280 --> 00:11:13,720 Speaker 1: settles in. So the pain for the carriers probably comes 209 00:11:13,760 --> 00:11:17,280 Speaker 1: after this contract season, and it's gonna be there's really 210 00:11:17,320 --> 00:11:20,960 Speaker 1: interesting kind of economic theory in practice to get to 211 00:11:20,960 --> 00:11:24,080 Speaker 1: watch and see what plays out. Yeah, I believe. You know. 212 00:11:24,120 --> 00:11:26,720 Speaker 1: We've talked to Craig Fuller from Freight Waves a few times. 213 00:11:26,760 --> 00:11:28,839 Speaker 1: I think he at least in trucking specifically. He sort 214 00:11:28,840 --> 00:11:31,160 Speaker 1: of likened it to, uh, you know, the deal you 215 00:11:31,200 --> 00:11:33,160 Speaker 1: have with your babysitter where it's like, Okay, i'll pay 216 00:11:33,200 --> 00:11:36,040 Speaker 1: you this every you know, a hundred and fifty every 217 00:11:36,040 --> 00:11:38,280 Speaker 1: Friday or whatever, but if you change, it's not like 218 00:11:38,280 --> 00:11:40,600 Speaker 1: anyone's gonna sue. You just sort of like expect that 219 00:11:40,600 --> 00:11:43,280 Speaker 1: that it's like the arrangement and so you just yeah, 220 00:11:43,280 --> 00:11:45,400 Speaker 1: I'll keep it. But it doesn't necessarily mean that's some 221 00:11:45,600 --> 00:11:47,720 Speaker 1: you know, the babysitter doesn't show up one day and 222 00:11:47,880 --> 00:11:49,760 Speaker 1: she says, oh, it doesn't mean you're gonna like see 223 00:11:49,760 --> 00:11:53,400 Speaker 1: your babysitter. Yeah, there's there's just a lot more babysitters 224 00:11:53,400 --> 00:11:55,440 Speaker 1: in the world than there are ocean carriers. So you 225 00:11:55,760 --> 00:11:59,959 Speaker 1: don't want to burn bridges, you know. The Tanner Tanner Cross. 226 00:12:00,000 --> 00:12:02,599 Speaker 1: Don't know, you know, there aren't you know, even babysitters 227 00:12:02,720 --> 00:12:06,400 Speaker 1: right now, at least as a former babysitter, are not 228 00:12:06,960 --> 00:12:09,840 Speaker 1: of breaking contract. There are a lot of parents in 229 00:12:09,880 --> 00:12:11,560 Speaker 1: New York City who have a hard time finding a 230 00:12:11,559 --> 00:12:13,640 Speaker 1: babysitter right now, I think you really want to be 231 00:12:13,640 --> 00:12:16,560 Speaker 1: careful about burning that relationship with Yeah, okay, okay, maybe 232 00:12:16,559 --> 00:12:19,840 Speaker 1: there's more similarity there, but yeah, it is. There's only 233 00:12:19,840 --> 00:12:21,959 Speaker 1: ten or twelve motion carriers that matter that have any 234 00:12:21,960 --> 00:12:24,840 Speaker 1: real scale and to represent containers moved in the world. 235 00:12:24,840 --> 00:12:26,600 Speaker 1: And so it's you know, you don't want to be 236 00:12:26,600 --> 00:12:29,120 Speaker 1: breaking your contract because you do that once and yeah, 237 00:12:29,280 --> 00:12:30,920 Speaker 1: you know you're not. You're down to nine and there 238 00:12:30,960 --> 00:12:32,880 Speaker 1: are there are a number of these big companies that 239 00:12:32,920 --> 00:12:35,400 Speaker 1: come around and basically, when when you get to be 240 00:12:35,760 --> 00:12:38,440 Speaker 1: above about five thousand containers a year that you're shipping, 241 00:12:38,800 --> 00:12:41,040 Speaker 1: it makes sense for a company to contract directly with 242 00:12:41,040 --> 00:12:43,840 Speaker 1: that ocean carrier rather than working with the freight forwarder 243 00:12:43,920 --> 00:12:46,880 Speaker 1: to buy the freight. Uh. And but there are some 244 00:12:46,960 --> 00:12:49,079 Speaker 1: big companies that buy from freight boarders and when you 245 00:12:49,120 --> 00:12:51,360 Speaker 1: dig in, you find out it's because they like dishonored 246 00:12:51,400 --> 00:12:53,240 Speaker 1: all their contracts and don't carry a lot to work 247 00:12:53,240 --> 00:12:56,199 Speaker 1: with them anymore. Well, I mean, this is something I 248 00:12:56,240 --> 00:12:58,120 Speaker 1: want to ask you because I think, UM, one of 249 00:12:58,120 --> 00:13:01,040 Speaker 1: the things we learned from our very first episode with you, 250 00:13:01,120 --> 00:13:03,880 Speaker 1: which was you were basically walking us through why I 251 00:13:03,920 --> 00:13:06,800 Speaker 1: was having so much trouble getting half a container from 252 00:13:06,840 --> 00:13:10,520 Speaker 1: Hong Kong um to Los Angeles as an EXPERIMENTUM in 253 00:13:10,559 --> 00:13:13,199 Speaker 1: shipping congestion. But one of the things we learned was 254 00:13:13,280 --> 00:13:17,640 Speaker 1: that a lot of this business is relationship driven, UM. 255 00:13:17,679 --> 00:13:20,440 Speaker 1: And we used to joke about like Sven in Sweden, right, 256 00:13:20,559 --> 00:13:23,400 Speaker 1: you know, the Sven who like operates sports somewhere and 257 00:13:23,440 --> 00:13:26,600 Speaker 1: you can maybe cut some extra room. But for the 258 00:13:26,640 --> 00:13:30,959 Speaker 1: past couple of years, has the industry become more relationship driven? 259 00:13:31,040 --> 00:13:34,040 Speaker 1: Is it more important to have these direct relationships with 260 00:13:34,160 --> 00:13:37,480 Speaker 1: the shippers themselves, or has the crisis sort of opened 261 00:13:37,559 --> 00:13:42,959 Speaker 1: up opportunity for that behavior to begin to change. I 262 00:13:43,000 --> 00:13:45,160 Speaker 1: think the last two years, relationships will probably matter more 263 00:13:45,160 --> 00:13:48,200 Speaker 1: than ever because when capacity is tight and there's no 264 00:13:48,240 --> 00:13:50,600 Speaker 1: space on the ship, it's who who's been the best 265 00:13:50,640 --> 00:13:53,680 Speaker 1: customer for these people over the long term, who plays 266 00:13:53,720 --> 00:13:56,480 Speaker 1: golf with It's not Spann in Sweden, by the way, 267 00:13:56,480 --> 00:14:02,880 Speaker 1: It's it's lar. Sorry, sorry, I'm getting my nory up. 268 00:14:03,640 --> 00:14:06,800 Speaker 1: I'm just okay. You know, So I think the when 269 00:14:07,080 --> 00:14:11,760 Speaker 1: in capacity is tight, very little else matters in the world. 270 00:14:11,760 --> 00:14:14,280 Speaker 1: Then what's your relationship? How are you a profitable customer? 271 00:14:14,320 --> 00:14:17,080 Speaker 1: How long have you been a profitable customer? What's your consistency? 272 00:14:17,559 --> 00:14:19,520 Speaker 1: So being being able to bring freight every single week 273 00:14:19,560 --> 00:14:23,040 Speaker 1: and not cancel. Um that those things start to matter 274 00:14:23,080 --> 00:14:25,080 Speaker 1: a lot more when when space is wide open, if 275 00:14:25,080 --> 00:14:28,640 Speaker 1: there's excess capacity, sort of like, hey, you know, you 276 00:14:28,680 --> 00:14:30,960 Speaker 1: don't need a relationship, We need to sell some more cargo. 277 00:14:31,080 --> 00:14:33,560 Speaker 1: So I think, um that that that dynamic is going 278 00:14:33,600 --> 00:14:35,760 Speaker 1: to shift. And then you know, we went through a 279 00:14:35,840 --> 00:14:42,920 Speaker 1: real long period from until twenty nine, really at the 280 00:14:42,920 --> 00:14:46,480 Speaker 1: beginning of pandemic when it kicked in, of just excess 281 00:14:46,480 --> 00:14:48,960 Speaker 1: capacity and ocean freight, and then we had two years 282 00:14:49,000 --> 00:14:53,040 Speaker 1: of extremely tight capacity. And it looks like we're right 283 00:14:53,080 --> 00:14:56,720 Speaker 1: in the midst of a real um a great recession 284 00:14:56,760 --> 00:15:00,480 Speaker 1: call it um where there's less less containership being than 285 00:15:00,760 --> 00:15:04,720 Speaker 1: really even before the Oh wow, okay, that's there. There's 286 00:15:04,720 --> 00:15:08,480 Speaker 1: our title this episode, the Great Recession that's coming to containership. 287 00:15:08,640 --> 00:15:10,800 Speaker 1: Thank you container ship, And yeah, now it might be 288 00:15:10,800 --> 00:15:12,800 Speaker 1: great news for people who have to ship containers, Like 289 00:15:12,840 --> 00:15:14,160 Speaker 1: all of a sudden, the prices way down and you 290 00:15:14,160 --> 00:15:16,040 Speaker 1: can get space and you can you know, have some 291 00:15:16,200 --> 00:15:18,840 Speaker 1: sanity about it. All that. Okay, So we went from 292 00:15:19,040 --> 00:15:22,640 Speaker 1: glut to extreme scarcity to glut again and not just 293 00:15:22,960 --> 00:15:25,320 Speaker 1: glood but also like a sort of like very like 294 00:15:25,440 --> 00:15:29,080 Speaker 1: poor demand. Can you talk about the energy component like 295 00:15:29,120 --> 00:15:31,520 Speaker 1: this is like a fascinating thing, like the gaps, say 296 00:15:31,600 --> 00:15:34,560 Speaker 1: between how much it costs to manufacture goods in Europe 297 00:15:34,560 --> 00:15:37,560 Speaker 1: for the US due to the gap in electricity prices. 298 00:15:37,720 --> 00:15:41,560 Speaker 1: Do you see that reshaping trade flows or has this 299 00:15:41,600 --> 00:15:43,840 Speaker 1: become another one of these things where it's like it's 300 00:15:43,880 --> 00:15:45,520 Speaker 1: kind of a fun story and we talked about it 301 00:15:45,520 --> 00:15:48,120 Speaker 1: in the media, but in the end, like it's hard, 302 00:15:48,320 --> 00:15:51,200 Speaker 1: you know, kind of like a the world doesn't reorient 303 00:15:51,320 --> 00:15:53,720 Speaker 1: that fast and ultimately finds a way to sort of 304 00:15:53,760 --> 00:15:56,160 Speaker 1: go back to the old normal. Yeah, I mean, I 305 00:15:56,160 --> 00:15:58,200 Speaker 1: think it's a little too early to say. It seems 306 00:15:58,240 --> 00:16:01,880 Speaker 1: obvious just looking at the numbers that like manufacturing in 307 00:16:01,880 --> 00:16:06,000 Speaker 1: Germany doesn't make sense at these energy prices. Does the 308 00:16:06,040 --> 00:16:08,840 Speaker 1: government come in and subsidize the energy to allow them 309 00:16:08,840 --> 00:16:12,640 Speaker 1: to maintain the manufacturing which has employed so many people 310 00:16:12,680 --> 00:16:15,200 Speaker 1: and kind of been the the engine of the European 311 00:16:15,240 --> 00:16:17,480 Speaker 1: Union as a whole, Like I think they probably will, 312 00:16:17,560 --> 00:16:19,120 Speaker 1: and so then it starts to be really hard to 313 00:16:19,160 --> 00:16:21,760 Speaker 1: predict how things play out, because once you have government 314 00:16:21,760 --> 00:16:23,920 Speaker 1: coming in and intervening in the market, then you know 315 00:16:23,920 --> 00:16:26,920 Speaker 1: a lot of the market um theory that kind of 316 00:16:26,960 --> 00:16:28,880 Speaker 1: breaks down. And I don't really know what will happen. 317 00:16:30,440 --> 00:16:33,520 Speaker 1: But with those prices, like manufacturing in Germany just doesn't 318 00:16:34,000 --> 00:16:36,240 Speaker 1: make kind of sense. The US has such an advantage 319 00:16:36,240 --> 00:16:39,440 Speaker 1: on energy right now. So just going back to the 320 00:16:39,480 --> 00:16:42,920 Speaker 1: past couple of years, I'm curious whether or not you 321 00:16:43,120 --> 00:16:47,520 Speaker 1: saw either shippers or people related to the shipping industry 322 00:16:47,520 --> 00:16:50,960 Speaker 1: and transportation and logistics more generally, whether you saw them 323 00:16:51,160 --> 00:16:55,080 Speaker 1: do things that made the whole process more efficient. And 324 00:16:55,120 --> 00:16:58,920 Speaker 1: I remember in our various discussions on this topic, there 325 00:16:59,120 --> 00:17:01,360 Speaker 1: there seemed to be a lot of low hanging fruit 326 00:17:01,480 --> 00:17:04,080 Speaker 1: for the industry. And I think you had one um 327 00:17:04,640 --> 00:17:06,640 Speaker 1: one figure when we first talked to you, talking about 328 00:17:06,680 --> 00:17:10,280 Speaker 1: how most container ships on average are only se full, 329 00:17:10,720 --> 00:17:13,639 Speaker 1: so it would seem like just put more containers on 330 00:17:13,680 --> 00:17:16,480 Speaker 1: the ship and we could maybe fix some of the backlog, 331 00:17:17,000 --> 00:17:20,240 Speaker 1: But did stuff like that actually happen? Because all of 332 00:17:20,280 --> 00:17:22,520 Speaker 1: these things they seem so simple, but then when when 333 00:17:22,600 --> 00:17:24,760 Speaker 1: you actually go and try to fix them, it often 334 00:17:24,880 --> 00:17:27,360 Speaker 1: ends up My impression is it often ends up being 335 00:17:27,359 --> 00:17:30,920 Speaker 1: more complicated than you expected. Right. Well, actually that stad 336 00:17:31,000 --> 00:17:34,959 Speaker 1: is that the containers themselves are only ships are full, 337 00:17:35,240 --> 00:17:38,120 Speaker 1: but the inside of the containers are not optimized. Did 338 00:17:38,160 --> 00:17:40,680 Speaker 1: the containers get more full? Did they? Did they get 339 00:17:40,680 --> 00:17:43,760 Speaker 1: better at talking them? Surprisingly? No, and if anything, you 340 00:17:43,840 --> 00:17:46,240 Speaker 1: might have gotten worse because which is a really interesting 341 00:17:46,280 --> 00:17:49,359 Speaker 1: counterintuitive thing, but but it sort of makes sense when 342 00:17:49,359 --> 00:17:51,520 Speaker 1: you think about the psychology of it. Always like, Okay, 343 00:17:51,560 --> 00:17:53,760 Speaker 1: you're having a hard time getting a space on a ship. 344 00:17:54,640 --> 00:17:57,720 Speaker 1: You finally get one, just you're not going to sit 345 00:17:57,760 --> 00:18:00,159 Speaker 1: there and try to optimize the inside of entertainer. Just 346 00:18:00,240 --> 00:18:02,399 Speaker 1: like just whatever you got now, just throw it in 347 00:18:02,400 --> 00:18:05,000 Speaker 1: there and let's go. Um, Which you know, it's sort 348 00:18:05,000 --> 00:18:06,600 Speaker 1: of kind of intuitive because you think like, oh, this 349 00:18:06,720 --> 00:18:09,879 Speaker 1: thing is really scarce, We've got to really optimize our capacity. 350 00:18:09,960 --> 00:18:11,879 Speaker 1: But you may not have that luxury because you're you know, 351 00:18:11,920 --> 00:18:15,200 Speaker 1: you're just scrambling to get space on a ship. Um. 352 00:18:15,240 --> 00:18:17,000 Speaker 1: So no, we haven't seen a lot of progress on 353 00:18:17,040 --> 00:18:22,880 Speaker 1: that metric. Um, it's we're not seeing I can't say 354 00:18:22,880 --> 00:18:25,879 Speaker 1: that I saw material changes in the infrastructure in our 355 00:18:26,000 --> 00:18:29,159 Speaker 1: ports to enable them to like handle a surge and 356 00:18:29,200 --> 00:18:33,440 Speaker 1: capacity if that ever happens again. Um, the appointment systems 357 00:18:33,480 --> 00:18:37,200 Speaker 1: haven't improved. The technology for getting um for for picking 358 00:18:37,280 --> 00:18:39,600 Speaker 1: up trucks, you know, for for picking up containers, for 359 00:18:39,600 --> 00:18:42,440 Speaker 1: getting trucks in and out of there hasn't improved. Um. 360 00:18:42,480 --> 00:18:45,879 Speaker 1: We've got the West Coast Union, it's called the i 361 00:18:46,119 --> 00:18:51,200 Speaker 1: l WU International Ngenterment Warehousing Unions. UM, they're operating without 362 00:18:51,200 --> 00:18:55,120 Speaker 1: a contract right now. So their contract expired the summer. Uh, 363 00:18:55,200 --> 00:18:57,840 Speaker 1: those negotiations are ongoing, and how many Intel was happening there. 364 00:18:57,880 --> 00:19:01,520 Speaker 1: But but I have heard that they're main Um, the 365 00:19:01,560 --> 00:19:04,520 Speaker 1: main thing that they want is to not have more 366 00:19:04,520 --> 00:19:07,360 Speaker 1: automation in the ports. So I don't see that kind 367 00:19:07,400 --> 00:19:10,040 Speaker 1: of like upcoming that we're going to get a lot 368 00:19:10,080 --> 00:19:12,280 Speaker 1: more automation to be able to handle a surge in 369 00:19:12,320 --> 00:19:15,280 Speaker 1: these in the area. UM. So in general, I would 370 00:19:15,280 --> 00:19:20,359 Speaker 1: say the infrastructure is the same, it's not gotten any better. Wait, 371 00:19:20,400 --> 00:19:23,879 Speaker 1: didn't you You famously went to Long Beach and I 372 00:19:23,880 --> 00:19:26,120 Speaker 1: think you rented like a boat so that you could 373 00:19:26,119 --> 00:19:29,280 Speaker 1: observe how things were actually being loaded and unloaded at 374 00:19:29,280 --> 00:19:32,359 Speaker 1: the port. And wasn't there a change as a result 375 00:19:32,440 --> 00:19:35,800 Speaker 1: of that trip. Weren't they like stacking I think two 376 00:19:35,920 --> 00:19:38,400 Speaker 1: containers on top of each other and you you made 377 00:19:38,440 --> 00:19:40,760 Speaker 1: it or you suggested that they start stacking them higher 378 00:19:40,760 --> 00:19:43,360 Speaker 1: and they ended up doing that. Yeah. Yeah, So, um, 379 00:19:43,440 --> 00:19:46,800 Speaker 1: we I went down there to explore, like, what's really 380 00:19:46,800 --> 00:19:49,440 Speaker 1: happening here in the ports? Why is this backlog of 381 00:19:49,480 --> 00:19:52,320 Speaker 1: a hundred chips going out here? People are like, oh 382 00:19:52,400 --> 00:19:54,840 Speaker 1: you so, you know, like so, I don't know what 383 00:19:54,840 --> 00:19:57,200 Speaker 1: the words they use, but really in creative or something, 384 00:19:57,280 --> 00:19:58,960 Speaker 1: go down there and like do them, Like it's kind 385 00:19:58,960 --> 00:20:01,040 Speaker 1: of my job. I got all my summers cargo stuff there. 386 00:20:01,080 --> 00:20:03,520 Speaker 1: I got throughout the happening, you know. Um. And so 387 00:20:03,560 --> 00:20:07,840 Speaker 1: what we figured out was that the the trucking yards 388 00:20:07,880 --> 00:20:10,800 Speaker 1: around the port were only allowed to stack containers too high, 389 00:20:11,240 --> 00:20:14,679 Speaker 1: and then after that they had to just leave the 390 00:20:14,680 --> 00:20:17,600 Speaker 1: containers on the chassis that's the trailer that holds the 391 00:20:17,600 --> 00:20:19,560 Speaker 1: containers around. So then we ran out of trailers, ran 392 00:20:19,600 --> 00:20:21,960 Speaker 1: out of chassis to go pick up more containers, and 393 00:20:22,000 --> 00:20:24,240 Speaker 1: so you have to change backlog that that created so 394 00:20:24,440 --> 00:20:26,320 Speaker 1: the City of Long Beach I tweet, I did a 395 00:20:26,320 --> 00:20:29,199 Speaker 1: tweet storm about that. At six am, three pm, the 396 00:20:29,240 --> 00:20:31,040 Speaker 1: City of Long Beach changed the z owning law to 397 00:20:31,080 --> 00:20:35,760 Speaker 1: allow stacking up to four high. That's pretty impactful. It's 398 00:20:36,040 --> 00:20:39,280 Speaker 1: I'm told it's the fastest response to a citizen action 399 00:20:39,280 --> 00:20:45,720 Speaker 1: in the history of government on all human civilization. That was. Yeah. 400 00:20:45,720 --> 00:20:48,160 Speaker 1: The week prior, we brought the labor union Tacos to 401 00:20:48,160 --> 00:20:50,159 Speaker 1: try to interview these guys and learn what was happening. 402 00:20:50,160 --> 00:20:52,280 Speaker 1: That's where we found out that the truckers are missing 403 00:20:52,320 --> 00:20:54,760 Speaker 1: their appointments. And then we found out the reason the 404 00:20:54,760 --> 00:20:57,200 Speaker 1: truckers are missing the appointments is because they don't have 405 00:20:57,200 --> 00:20:59,080 Speaker 1: any chassis. They don't have the trailers to go pick 406 00:20:59,119 --> 00:21:02,080 Speaker 1: them up. So that that zone wall did have an impact. However, 407 00:21:03,040 --> 00:21:05,920 Speaker 1: it was only the city of Long Beach and Los 408 00:21:05,920 --> 00:21:09,240 Speaker 1: Angeles didn't follow suit, right, All the other southern California 409 00:21:09,280 --> 00:21:11,600 Speaker 1: cities didn't follow suit, and and Long bag doesn't have 410 00:21:11,640 --> 00:21:13,879 Speaker 1: that many trucking yards in it, so it kind of 411 00:21:13,880 --> 00:21:18,080 Speaker 1: had a marginal benefit but not not dramatic um And 412 00:21:18,119 --> 00:21:19,680 Speaker 1: I think it was kind of around the edges in 413 00:21:19,720 --> 00:21:22,000 Speaker 1: the first place, Like what we really need is why 414 00:21:22,040 --> 00:21:23,840 Speaker 1: does it Why do these truckers need appointments in the 415 00:21:23,880 --> 00:21:26,399 Speaker 1: first place, like they should There should be a system 416 00:21:26,400 --> 00:21:27,720 Speaker 1: where they just show up and we give them the 417 00:21:27,720 --> 00:21:29,720 Speaker 1: container and then the mobile app tells them where to go. 418 00:21:30,600 --> 00:21:32,680 Speaker 1: Um So Flexport has implemented that in a couple of 419 00:21:32,760 --> 00:21:36,160 Speaker 1: terminals for our own cargo, but for the wider industry 420 00:21:36,160 --> 00:21:38,320 Speaker 1: they haven't done anything like that. All right, I'm not 421 00:21:38,480 --> 00:21:43,000 Speaker 1: trying to blow up any future Ryan Peterson presidential ambitions 422 00:21:43,160 --> 00:21:45,760 Speaker 1: with this question. You know, down there at the ports, 423 00:21:45,760 --> 00:21:49,280 Speaker 1: giving tacos to the workers, all things of a future. 424 00:21:49,280 --> 00:21:52,159 Speaker 1: You know, it could be a career in public service 425 00:21:52,240 --> 00:21:56,240 Speaker 1: one day. But you're honest, take in terms of the 426 00:21:56,280 --> 00:22:00,600 Speaker 1: difference between unionized first automated ports, what you've seen around 427 00:22:00,640 --> 00:22:05,400 Speaker 1: the world, Uh, how in your view, like, how costly 428 00:22:05,640 --> 00:22:08,800 Speaker 1: is it from a sort of economic perspective, if at all, 429 00:22:09,240 --> 00:22:12,439 Speaker 1: to have this sort of level of unionization that we 430 00:22:12,520 --> 00:22:15,800 Speaker 1: have at the u S Ports versus what I believe 431 00:22:15,840 --> 00:22:18,960 Speaker 1: are more automated ports elsewhere. You know, it's it's hard 432 00:22:19,000 --> 00:22:22,919 Speaker 1: to unpack the effect of the union, whether it's automation 433 00:22:23,160 --> 00:22:27,800 Speaker 1: or just like management style and the adversarial relationship between 434 00:22:27,840 --> 00:22:30,600 Speaker 1: the union and the and the employers UM, and the 435 00:22:30,640 --> 00:22:34,119 Speaker 1: managers like it's it's a very strange. Um. You know, 436 00:22:34,160 --> 00:22:36,359 Speaker 1: my company is not unionized, and it wouldn't work if 437 00:22:36,400 --> 00:22:39,000 Speaker 1: it was, because this idea that a person who manages 438 00:22:39,040 --> 00:22:42,680 Speaker 1: people is like a different person. It's like you can't 439 00:22:42,880 --> 00:22:46,240 Speaker 1: can't relate to each other and um. And so very specifically, 440 00:22:46,280 --> 00:22:48,160 Speaker 1: what happens at the ports in the when the West 441 00:22:48,200 --> 00:22:52,000 Speaker 1: Coast at least, is that UM, the management the companies 442 00:22:52,320 --> 00:22:56,040 Speaker 1: have to say, the terminals say every day how many employees? 443 00:22:56,040 --> 00:22:58,679 Speaker 1: How many workers do they need the next day? And 444 00:22:58,680 --> 00:23:01,240 Speaker 1: then the union furnished is that many workers? But there's 445 00:23:01,280 --> 00:23:04,639 Speaker 1: different people every time. UM, they move around between the 446 00:23:04,680 --> 00:23:07,000 Speaker 1: different terminals, so there's not And then the team has 447 00:23:07,040 --> 00:23:10,639 Speaker 1: to reform every day and you're operating heavy equipment with 448 00:23:10,720 --> 00:23:15,280 Speaker 1: new people doing new jobs without adequate training in many cases. UM. 449 00:23:15,359 --> 00:23:17,080 Speaker 1: And it's just kind of a crazy way to work 450 00:23:17,119 --> 00:23:19,720 Speaker 1: if you think about it. Like the kind of the 451 00:23:19,760 --> 00:23:22,280 Speaker 1: core element of running a company and running an operation 452 00:23:22,400 --> 00:23:25,199 Speaker 1: is that you take the team and you go, what 453 00:23:25,240 --> 00:23:27,399 Speaker 1: did we learn yesterday and what are we going to 454 00:23:27,480 --> 00:23:29,720 Speaker 1: do better today? And like you can't have those conversations 455 00:23:29,720 --> 00:23:32,760 Speaker 1: because it's new people every day UM, and so it's 456 00:23:32,760 --> 00:23:35,040 Speaker 1: hard to unpack, like how much of the US port 457 00:23:35,119 --> 00:23:38,360 Speaker 1: inefficiency is from just like a weird structure that's put 458 00:23:38,400 --> 00:23:40,720 Speaker 1: in in terms of how the workers work with the management. 459 00:23:41,200 --> 00:23:42,639 Speaker 1: And I'm not blaming the union for that, by the way, 460 00:23:42,680 --> 00:23:44,280 Speaker 1: it's like why the management. I don't know. It's just 461 00:23:44,280 --> 00:23:47,760 Speaker 1: this adversarial relationship between management and union that that it 462 00:23:47,760 --> 00:23:50,679 Speaker 1: needs to get worked through. UM. And now look, I'm 463 00:23:50,680 --> 00:23:53,119 Speaker 1: an outsider, I don't I haven't worked in ports. I'm 464 00:23:53,160 --> 00:23:54,639 Speaker 1: sure these guys will criticize me and tell me I 465 00:23:54,640 --> 00:23:56,359 Speaker 1: have no idea what I'm talking about. But UM. But 466 00:23:56,440 --> 00:24:00,000 Speaker 1: then the automation UM piece is like a money saved 467 00:24:00,000 --> 00:24:04,720 Speaker 1: anything for the operators. I don't know how much efficiency 468 00:24:04,800 --> 00:24:06,760 Speaker 1: gains come out of it versus just like, hey, the 469 00:24:06,840 --> 00:24:08,960 Speaker 1: union workers are really well paid and you didn't have 470 00:24:08,960 --> 00:24:10,680 Speaker 1: any of them that you can make more money running 471 00:24:10,680 --> 00:24:13,960 Speaker 1: a port UM and lower the cost of shipping goods. 472 00:24:14,080 --> 00:24:17,479 Speaker 1: For sure, it costs about the terminals charge about six 473 00:24:18,119 --> 00:24:22,520 Speaker 1: to unload the container um that and I don't know, 474 00:24:22,560 --> 00:24:24,399 Speaker 1: it's like takes thirty seconds for a crane to go 475 00:24:24,520 --> 00:24:27,120 Speaker 1: like that. So it does seem like a pretty high 476 00:24:27,160 --> 00:24:30,320 Speaker 1: tax to put on the world China is about a 477 00:24:30,359 --> 00:24:32,760 Speaker 1: hundred buck and some of that is good to have 478 00:24:32,800 --> 00:24:34,320 Speaker 1: lower labor costs, but a lot of this because they've 479 00:24:34,320 --> 00:24:46,720 Speaker 1: got more automation. I was about to ask, can you 480 00:24:46,800 --> 00:24:50,680 Speaker 1: talk to us about non US ports and what they're 481 00:24:50,720 --> 00:24:52,840 Speaker 1: doing there, just to give us a sense of what 482 00:24:53,160 --> 00:24:56,560 Speaker 1: is possible here. Yeah, and what is possible by the way, 483 00:24:56,560 --> 00:24:59,480 Speaker 1: like Rotterdam has been a fully automated port for something 484 00:24:59,520 --> 00:25:03,440 Speaker 1: like five years with self driving trucks like for years ago, 485 00:25:03,440 --> 00:25:05,879 Speaker 1: because they don't need that much kind of just follow 486 00:25:05,880 --> 00:25:07,480 Speaker 1: a white line on the tape. There's no people to 487 00:25:07,560 --> 00:25:09,400 Speaker 1: run into. So it's it's a really it doesn't need 488 00:25:09,480 --> 00:25:13,359 Speaker 1: like really advanced AI or anything. Um. And their work 489 00:25:13,359 --> 00:25:16,040 Speaker 1: our friendly place. Like I don't think people are thinking like, oh, 490 00:25:16,119 --> 00:25:19,119 Speaker 1: the Dutch or this like terrible you know, like fascist 491 00:25:19,200 --> 00:25:21,520 Speaker 1: place where workers have no rights. Like I'm pretty sure 492 00:25:21,560 --> 00:25:24,600 Speaker 1: that the workers in the porta ROTTERDAMU okay. Um. So 493 00:25:24,680 --> 00:25:26,920 Speaker 1: it is. You know, there are other things that are 494 00:25:27,359 --> 00:25:29,879 Speaker 1: other ways of working that are possible and people can 495 00:25:29,920 --> 00:25:32,840 Speaker 1: get along with with investments in robotics, and I think 496 00:25:32,840 --> 00:25:35,480 Speaker 1: it's really important for civilization that we like keep improving 497 00:25:35,480 --> 00:25:38,720 Speaker 1: the efficiency of the way we ship stuff. Um globalization 498 00:25:38,760 --> 00:25:42,640 Speaker 1: and was really powered by the shipping container. We lower 499 00:25:42,680 --> 00:25:47,240 Speaker 1: the cost of shipping things by or more. We've lifted 500 00:25:47,359 --> 00:25:49,640 Speaker 1: like something like a billion people out of poverty through 501 00:25:51,080 --> 00:25:53,960 Speaker 1: largely in Asia. But the ability for anybody to trade 502 00:25:53,960 --> 00:25:57,080 Speaker 1: with anybody's created a huge economic benefit. Uh, And we 503 00:25:57,160 --> 00:25:59,040 Speaker 1: kind of like stop there, you guy, we don't need 504 00:25:59,080 --> 00:26:02,359 Speaker 1: any more of that, just like have uh you know, 505 00:26:02,440 --> 00:26:05,440 Speaker 1: We'll stop with the robotics thing and the containers flying. 506 00:26:05,480 --> 00:26:07,480 Speaker 1: We don't need optimize the inside of the container or 507 00:26:07,480 --> 00:26:10,359 Speaker 1: the way the containers are picked up. So it's it's 508 00:26:10,400 --> 00:26:12,240 Speaker 1: disappointing to me as someone would like to see more 509 00:26:12,760 --> 00:26:14,680 Speaker 1: growth in the world. I'm sort of a single issue 510 00:26:14,760 --> 00:26:17,600 Speaker 1: voter on economic growth. I'd like to see so if 511 00:26:17,600 --> 00:26:19,240 Speaker 1: we're all twice as rich, I feel like we'd be 512 00:26:19,240 --> 00:26:20,719 Speaker 1: able to solve most of the other problems that are 513 00:26:20,760 --> 00:26:25,040 Speaker 1: out there. Going back to, you know, the struggles that 514 00:26:25,080 --> 00:26:28,080 Speaker 1: you believe container shippers are going to face, Like what 515 00:26:28,160 --> 00:26:29,639 Speaker 1: are they gonna do? I mean, you we talked a 516 00:26:29,640 --> 00:26:31,000 Speaker 1: little bit about what they're going to do with all 517 00:26:31,080 --> 00:26:33,399 Speaker 1: the money that they made in the last two years, 518 00:26:33,520 --> 00:26:35,040 Speaker 1: but like, what do you see are some of the 519 00:26:35,160 --> 00:26:37,320 Speaker 1: ways they're going to navigate if we go through this 520 00:26:37,400 --> 00:26:41,360 Speaker 1: sort of uh down, you know, it's is like kind 521 00:26:41,359 --> 00:26:43,920 Speaker 1: of a bust for them. We're gonna see contation, Like 522 00:26:43,960 --> 00:26:46,120 Speaker 1: what are we going to see out of that? I mean, 523 00:26:46,160 --> 00:26:49,080 Speaker 1: it's a really fascinating thing to watch, Like I get 524 00:26:49,119 --> 00:26:50,680 Speaker 1: to be kind of front row seated in the game 525 00:26:50,720 --> 00:26:54,520 Speaker 1: a little bit. Um. They did make a lot of money. Uh, 526 00:26:54,720 --> 00:26:56,760 Speaker 1: and yet nobody likes to lose money, no matter how 527 00:26:56,840 --> 00:26:58,159 Speaker 1: much they have. You don't want to sit there and 528 00:26:58,160 --> 00:27:00,480 Speaker 1: lose money. So they've returned and a lot of it 529 00:27:00,520 --> 00:27:04,440 Speaker 1: to shareholders. Uh, they're investing in new business lines. But 530 00:27:04,480 --> 00:27:06,399 Speaker 1: the end of the day, at the price goes down 531 00:27:07,160 --> 00:27:09,920 Speaker 1: below the cost, you know, below their costs, they start 532 00:27:09,960 --> 00:27:13,280 Speaker 1: bleeding cash. Like how long do you bleed cash? What happened? 533 00:27:13,560 --> 00:27:15,760 Speaker 1: We've already had a huge amount of consolidation during the 534 00:27:15,800 --> 00:27:18,960 Speaker 1: prior glut, Like when flex sports started there were twenty 535 00:27:18,960 --> 00:27:22,359 Speaker 1: three major ocean carriers were down to ten or twelve 536 00:27:22,440 --> 00:27:24,480 Speaker 1: depending how you count them today. So there's been a 537 00:27:24,560 --> 00:27:27,280 Speaker 1: lot of consolidation. I don't know there's that much room 538 00:27:27,320 --> 00:27:31,720 Speaker 1: for more consolidation. Two, as weak players go bankrupt, maybe 539 00:27:31,760 --> 00:27:33,760 Speaker 1: some of them get bought up UM, and there might 540 00:27:33,800 --> 00:27:36,360 Speaker 1: be some bankrupts. These people might walk away say hey, 541 00:27:36,400 --> 00:27:37,960 Speaker 1: like we made tons of money, we don't, you know, 542 00:27:38,040 --> 00:27:40,880 Speaker 1: let this thing go. But they also largely paid down 543 00:27:40,920 --> 00:27:43,199 Speaker 1: their debts, so I don't know that they have a 544 00:27:43,240 --> 00:27:45,840 Speaker 1: huge amount of debt to default on in the first place. 545 00:27:46,640 --> 00:27:49,320 Speaker 1: So very interesting to see. UM. There are a couple 546 00:27:49,359 --> 00:27:54,000 Speaker 1: of factors that might change this trajectory. UM. One is 547 00:27:54,040 --> 00:27:56,359 Speaker 1: that the consumer is actually still pretty strong in the 548 00:27:56,440 --> 00:27:59,479 Speaker 1: United States. Like container volumes are way down, but actually 549 00:27:59,520 --> 00:28:02,800 Speaker 1: consumer spending is not gone down on even on goods 550 00:28:02,880 --> 00:28:04,960 Speaker 1: um services has gone way up. It's a good spending 551 00:28:04,960 --> 00:28:08,840 Speaker 1: has stayed elevated. UM. So maybe there's a world where 552 00:28:08,880 --> 00:28:12,760 Speaker 1: the consumers continue to spend goods and those trade volumes 553 00:28:12,760 --> 00:28:15,800 Speaker 1: will come back up. One reason to think about why 554 00:28:15,800 --> 00:28:18,080 Speaker 1: why trade volumes have gone weight down in the last 555 00:28:18,160 --> 00:28:22,159 Speaker 1: quarter is that trensit times improved, right, and so it 556 00:28:22,240 --> 00:28:24,000 Speaker 1: was taking a hundred and twenty days to get a 557 00:28:24,000 --> 00:28:27,399 Speaker 1: container from China to the US at peak. I mean 558 00:28:27,440 --> 00:28:29,520 Speaker 1: it used to be forty We're back down to like 559 00:28:29,520 --> 00:28:32,320 Speaker 1: fifty or sixty days. And so if all of a 560 00:28:32,359 --> 00:28:35,440 Speaker 1: sudden you have your your ships go sixty days faster, 561 00:28:35,560 --> 00:28:37,639 Speaker 1: than you thought they were gonna go. You're gonna have 562 00:28:37,680 --> 00:28:40,080 Speaker 1: two months of extra inventory in stock in the United 563 00:28:40,080 --> 00:28:41,720 Speaker 1: States and then you're like, hey, I don't need to 564 00:28:41,800 --> 00:28:44,479 Speaker 1: order more stock, but you're gonna sell through that inventory 565 00:28:44,520 --> 00:28:47,800 Speaker 1: if the consumers stay strong, and then you should have. So, 566 00:28:48,440 --> 00:28:51,480 Speaker 1: you know, I think the carriers really hoping that January 567 00:28:51,480 --> 00:28:54,720 Speaker 1: February April May you know, the next few months, people 568 00:28:54,720 --> 00:28:59,480 Speaker 1: start reorder the factory, start producing more in the company, 569 00:28:59,520 --> 00:29:01,840 Speaker 1: start ordering more goods to get to get them into 570 00:29:01,880 --> 00:29:04,600 Speaker 1: the country. So there's some hope there that the consumers 571 00:29:04,600 --> 00:29:08,640 Speaker 1: stay strong and that all the recession talk is overblown. UM. 572 00:29:08,640 --> 00:29:10,600 Speaker 1: They have another thing on supply side that's coming down 573 00:29:10,600 --> 00:29:15,520 Speaker 1: the pipeline meaning the supply side meaning the capacity for shipping, 574 00:29:15,520 --> 00:29:17,720 Speaker 1: the number of ships that are out there, and they're um, 575 00:29:18,200 --> 00:29:20,200 Speaker 1: you sort of the big factors are how many ships 576 00:29:20,240 --> 00:29:21,960 Speaker 1: are there, what's their capacity, and the how fast do 577 00:29:22,000 --> 00:29:26,440 Speaker 1: they go? UM. And under this thing UM, the International 578 00:29:26,480 --> 00:29:30,640 Speaker 1: Maritime Organization that's the division of the United Nations that 579 00:29:30,800 --> 00:29:34,600 Speaker 1: oversees it's kind of the governance body for ocean freight. UM. 580 00:29:34,640 --> 00:29:37,120 Speaker 1: They have a rule that kicks in in two weeks 581 00:29:37,200 --> 00:29:41,080 Speaker 1: on January one, that the ships, UH must reduce their 582 00:29:41,120 --> 00:29:46,480 Speaker 1: carbon emissions by and the only way to do that 583 00:29:46,680 --> 00:29:51,480 Speaker 1: for an internal combustion engine is to just go slower. UM. 584 00:29:51,520 --> 00:29:53,480 Speaker 1: And so all these ships are going to start slow steaming. 585 00:29:54,240 --> 00:29:58,800 Speaker 1: We estimate that if they have to go slower than 586 00:29:58,880 --> 00:30:02,520 Speaker 1: their max speed in order to hit that target. UM. 587 00:30:02,560 --> 00:30:04,080 Speaker 1: Now it turns out there a lot of them are 588 00:30:04,120 --> 00:30:06,680 Speaker 1: already going slower in order to kind of rain in 589 00:30:06,720 --> 00:30:11,520 Speaker 1: capacity and lower fuel costs. So our economist estimate this 590 00:30:11,560 --> 00:30:15,040 Speaker 1: is gonna be a four to six reduction in capacity 591 00:30:16,560 --> 00:30:19,520 Speaker 1: UM that that will start in January, so that may 592 00:30:20,280 --> 00:30:21,840 Speaker 1: you know, that may rain in some of it as 593 00:30:21,880 --> 00:30:27,240 Speaker 1: well on the counterside dough. During this boom and yours prior, 594 00:30:27,800 --> 00:30:30,320 Speaker 1: these ocean carriers ordered a lot of ships. So over 595 00:30:30,320 --> 00:30:33,400 Speaker 1: the next three years you're gonna see increase in container 596 00:30:33,440 --> 00:30:36,800 Speaker 1: capacity as new ships come online, and those orders are 597 00:30:36,800 --> 00:30:40,120 Speaker 1: already placed and the ships are in construction. So UM, 598 00:30:40,200 --> 00:30:42,400 Speaker 1: from where I said, it looks like the price has 599 00:30:42,440 --> 00:30:44,960 Speaker 1: to go down a lot and then the carriers will 600 00:30:45,280 --> 00:30:47,760 Speaker 1: go back to the old world. And I think, you know, 601 00:30:47,960 --> 00:30:49,960 Speaker 1: there's a lot of hate spewed at these outra carriers 602 00:30:50,000 --> 00:30:51,680 Speaker 1: the last few years, but those of us have been 603 00:30:51,680 --> 00:30:53,760 Speaker 1: an industry. I know, Hey, this was a ugly business. 604 00:30:53,760 --> 00:30:56,320 Speaker 1: They lost money for a long time. They're gonna you know, 605 00:30:56,360 --> 00:30:59,080 Speaker 1: they're gonna fail if they can't make money. They made money. 606 00:30:59,360 --> 00:31:01,360 Speaker 1: It comes into aves as as it turns out they 607 00:31:01,360 --> 00:31:02,680 Speaker 1: made a lot of money for a couple of years, 608 00:31:02,880 --> 00:31:04,520 Speaker 1: they may lose money for a lot of a long 609 00:31:04,560 --> 00:31:07,960 Speaker 1: time coming up and hopefully you know they're in it 610 00:31:08,000 --> 00:31:10,040 Speaker 1: for the long run, as these kind of family businesses 611 00:31:10,040 --> 00:31:12,080 Speaker 1: and national businesses that they're willing to ride out a 612 00:31:12,120 --> 00:31:14,800 Speaker 1: downturn because they know the upsides can be so good 613 00:31:14,800 --> 00:31:16,960 Speaker 1: when when they come. Tracey, I'm kind of fascinated by 614 00:31:17,000 --> 00:31:23,200 Speaker 1: that point about environmental regulations as de facto capacity curbing mechanisms. 615 00:31:23,240 --> 00:31:26,080 Speaker 1: It's like, if they're all the rules are imposed at once, 616 00:31:26,120 --> 00:31:28,880 Speaker 1: then they sort of can solve the game theory of 617 00:31:29,360 --> 00:31:32,800 Speaker 1: limiting capacity. Um, I just want to go back to 618 00:31:33,520 --> 00:31:37,920 Speaker 1: that cyclical point um, because we know that shipping itself 619 00:31:38,000 --> 00:31:41,000 Speaker 1: is a very cyclical industry and it's gone from basically 620 00:31:41,120 --> 00:31:48,120 Speaker 1: bus to a massive, massive, like historical boom. But you've 621 00:31:48,120 --> 00:31:51,960 Speaker 1: spoken about this before, the sort of like the pressures 622 00:31:52,000 --> 00:31:56,680 Speaker 1: of short termism on the broader business cycle. So this 623 00:31:56,760 --> 00:32:00,960 Speaker 1: idea that everyone's obsessed with making money with generating return 624 00:32:01,000 --> 00:32:04,640 Speaker 1: on equity. Um. Everyone moved to just in time inventory 625 00:32:04,680 --> 00:32:07,400 Speaker 1: and things like that, which kind of contributed to the 626 00:32:07,400 --> 00:32:09,840 Speaker 1: bottle note because you don't have a lot of stuff 627 00:32:09,880 --> 00:32:13,680 Speaker 1: on hand when suddenly demand starts to spike. Have you 628 00:32:13,720 --> 00:32:17,320 Speaker 1: seen any progress from that perspective? Like, did anyone in 629 00:32:17,440 --> 00:32:21,960 Speaker 1: business in manufacturing and retail learn from the experience of 630 00:32:23,360 --> 00:32:26,640 Speaker 1: one that actually, maybe we want to move to some 631 00:32:26,680 --> 00:32:32,640 Speaker 1: sort of more resilient model. It's um, I assume some 632 00:32:32,680 --> 00:32:34,560 Speaker 1: people learn. A lot of companies have you know, more 633 00:32:34,600 --> 00:32:36,440 Speaker 1: inventory than ever right now. I'm not sure how much 634 00:32:36,440 --> 00:32:38,800 Speaker 1: of that planned versus like, hey, the transit time sped 635 00:32:38,880 --> 00:32:41,440 Speaker 1: up and they're they're they've got more inventory than they 636 00:32:41,480 --> 00:32:45,760 Speaker 1: want right now. Um. The there is a bit of 637 00:32:45,800 --> 00:32:48,680 Speaker 1: a Darwinian function in economies, right the people who played 638 00:32:48,840 --> 00:32:51,959 Speaker 1: over the long game. Uh, those people who do it 639 00:32:52,080 --> 00:32:54,920 Speaker 1: right should come out ahead and win. Um. But it's 640 00:32:54,920 --> 00:32:58,000 Speaker 1: difficult because you know, you in the meantime you have 641 00:32:58,040 --> 00:33:00,680 Speaker 1: too many, too many assets. Uh, you running a return 642 00:33:00,680 --> 00:33:02,920 Speaker 1: on assets? As the CEO you get you get canned 643 00:33:03,160 --> 00:33:06,800 Speaker 1: um and and or you go bankrupt because assets are 644 00:33:06,800 --> 00:33:09,240 Speaker 1: not free and so can you even you know. Actually, 645 00:33:09,280 --> 00:33:12,240 Speaker 1: the great reminder here is Hunting, which is a Korean 646 00:33:12,280 --> 00:33:17,480 Speaker 1: ocean carrier that went bankrupt. And if they would have 647 00:33:17,680 --> 00:33:21,880 Speaker 1: just held on for six more years, somehow they would 648 00:33:21,880 --> 00:33:25,960 Speaker 1: have made like dollars in front in the last two years. 649 00:33:25,960 --> 00:33:28,960 Speaker 1: And uh. And so you know, they might have the 650 00:33:29,040 --> 00:33:31,080 Speaker 1: right strategy, they had the right assets, they were ready, 651 00:33:31,080 --> 00:33:34,120 Speaker 1: but they couldn't um they couldn't survive to see the 652 00:33:34,440 --> 00:33:37,760 Speaker 1: strategy through. So it's really difficult to just stand from 653 00:33:37,760 --> 00:33:39,800 Speaker 1: the outside and say, oh, everybody should have more assets 654 00:33:39,800 --> 00:33:42,320 Speaker 1: on the balance sheet and yet uh, and yet there 655 00:33:42,320 --> 00:33:44,760 Speaker 1: are there is a competitive advantage to doing that. Amazon 656 00:33:44,800 --> 00:33:47,160 Speaker 1: has kind of proven this very interesting to see how 657 00:33:47,160 --> 00:33:51,240 Speaker 1: eBay still thirty years later hasn't responded un to like 658 00:33:51,320 --> 00:33:53,600 Speaker 1: Amazon opening up its own fulfillment centers and running a 659 00:33:53,640 --> 00:33:56,840 Speaker 1: logistics network and kind of dominating an e commerce and 660 00:33:56,880 --> 00:33:59,280 Speaker 1: you Bays still like, no, We've just like our market 661 00:33:59,320 --> 00:34:01,680 Speaker 1: place for you, you know, John, But I don't know. 662 00:34:01,720 --> 00:34:04,400 Speaker 1: It seems like there's an opportunity that that's missed in 663 00:34:04,480 --> 00:34:08,240 Speaker 1: going to invest in assets that is many many companies 664 00:34:08,239 --> 00:34:11,200 Speaker 1: are afraid to do all right, So the big lesson 665 00:34:11,520 --> 00:34:15,520 Speaker 1: of the last two years is here comes another downturn, 666 00:34:15,880 --> 00:34:17,800 Speaker 1: and no one actually learned any lessons, are going to 667 00:34:17,840 --> 00:34:20,319 Speaker 1: do any business any differently. Everyone's gonna go back to 668 00:34:20,360 --> 00:34:24,400 Speaker 1: just in time, manufacturer in China, manufacturer. It's all just 669 00:34:24,760 --> 00:34:26,960 Speaker 1: the same world, same world. That's what it's kind of 670 00:34:27,000 --> 00:34:29,320 Speaker 1: like my takeaway from all that. Can I word on 671 00:34:29,400 --> 00:34:32,080 Speaker 1: this point. Words are going to get any more, but 672 00:34:32,239 --> 00:34:35,080 Speaker 1: just on this point at a minimum. We've spent the 673 00:34:35,080 --> 00:34:38,600 Speaker 1: past two years talking about supply issues and the sort 674 00:34:38,600 --> 00:34:42,279 Speaker 1: of hidden like plumbing of the global economy. Has that 675 00:34:42,360 --> 00:34:47,279 Speaker 1: not translated into anything tangible? I don't know, you know, 676 00:34:47,360 --> 00:34:49,680 Speaker 1: I think never underestimate the ability of human beings to 677 00:34:49,760 --> 00:34:54,840 Speaker 1: forget terrible. I think that's some good episodes out of 678 00:34:54,880 --> 00:34:59,399 Speaker 1: it all. So I think there'll be more discussion of it. Um. 679 00:35:00,040 --> 00:35:03,360 Speaker 1: It always not always like Washington has taken some action 680 00:35:03,440 --> 00:35:07,640 Speaker 1: to do some things that actually are valuable. UM. Now, 681 00:35:08,239 --> 00:35:13,640 Speaker 1: ocean carriers have to provide the date uh and when 682 00:35:13,680 --> 00:35:18,080 Speaker 1: a container is made available uh, which seems like yeah, 683 00:35:18,320 --> 00:35:21,080 Speaker 1: like that's a reasonable regulation to require that they could 684 00:35:21,080 --> 00:35:24,360 Speaker 1: tell us exactly when this container was available, because you remember, 685 00:35:24,400 --> 00:35:26,480 Speaker 1: you only have seven days to pick up the container 686 00:35:26,840 --> 00:35:31,440 Speaker 1: after it's available, Before you start paying daily fine and 687 00:35:31,520 --> 00:35:34,120 Speaker 1: if they can't tell you when it's available, it's precisely like, 688 00:35:34,160 --> 00:35:36,759 Speaker 1: how are they gonna what ground truth do you have 689 00:35:36,800 --> 00:35:38,840 Speaker 1: to base those fines on. So that was one of 690 00:35:38,840 --> 00:35:40,880 Speaker 1: the things that came out of the Ocean Shipping Reform 691 00:35:40,920 --> 00:35:43,880 Speaker 1: Act that Washington passed. That one seemed pretty sensible. The 692 00:35:43,880 --> 00:35:45,759 Speaker 1: rest of it. I haven't seen a big impact, but 693 00:35:45,800 --> 00:35:50,160 Speaker 1: that one. It's a good rule in my opinion. Um So, 694 00:35:50,680 --> 00:35:53,120 Speaker 1: but sometimes you know Washington that wants to take action 695 00:35:53,160 --> 00:35:55,600 Speaker 1: and action you get a group of people in the 696 00:35:55,680 --> 00:35:57,000 Speaker 1: room and say you have to do something, you will 697 00:35:57,000 --> 00:35:59,960 Speaker 1: definitely do something, but not whether that thing is bad 698 00:36:00,280 --> 00:36:03,880 Speaker 1: or not is like a big, big question. Mark, Ryan Peterson, 699 00:36:04,000 --> 00:36:06,160 Speaker 1: co CEO Flex Sport, thank you so much for coming 700 00:36:06,200 --> 00:36:21,640 Speaker 1: back on odlines. My pleasure. Thanks for having me. I 701 00:36:21,800 --> 00:36:25,560 Speaker 1: thought that last point, Tracy, never does it. Never underestimate 702 00:36:25,719 --> 00:36:28,839 Speaker 1: humans ability to forget. It's kind of bad and good. 703 00:36:29,120 --> 00:36:30,520 Speaker 1: I think I don't think it's like kind of a 704 00:36:30,560 --> 00:36:32,680 Speaker 1: neutral thing like, Okay, we wish something's got fixed. But 705 00:36:32,680 --> 00:36:34,880 Speaker 1: on the other hand, right, maybe just move on. I 706 00:36:34,920 --> 00:36:37,840 Speaker 1: think it's kind of bad. Joe. I mean, I started 707 00:36:37,840 --> 00:36:41,440 Speaker 1: this episode trying to be on an upbeat note that 708 00:36:41,480 --> 00:36:44,839 Speaker 1: maybe we have learned something from this crisis, but I mean, 709 00:36:45,800 --> 00:36:48,440 Speaker 1: I don't know. Ryan had some examples of stuff that 710 00:36:48,520 --> 00:36:52,399 Speaker 1: had changed that he had actually affected change personally, like 711 00:36:52,480 --> 00:36:58,160 Speaker 1: stacking containing one one day modest sized port. They did 712 00:36:58,280 --> 00:37:02,200 Speaker 1: add an extra layer of stack. So some things are possible, 713 00:37:02,280 --> 00:37:05,760 Speaker 1: it seems. But it does feel like the cyclical nature 714 00:37:06,000 --> 00:37:08,799 Speaker 1: of shipping means that a lot of people are just 715 00:37:08,800 --> 00:37:11,000 Speaker 1: going to look through the past couple of years and 716 00:37:11,040 --> 00:37:12,440 Speaker 1: just be like, well, you know, it's kind of an 717 00:37:12,480 --> 00:37:15,480 Speaker 1: abnormal It was an abnormal boom, but it's not unusual 718 00:37:15,560 --> 00:37:18,280 Speaker 1: that we get these booms followed by these big bus 719 00:37:18,440 --> 00:37:20,319 Speaker 1: and you know the fact that they only would out 720 00:37:20,440 --> 00:37:23,480 Speaker 1: made these big orders, like did they start believing it 721 00:37:23,520 --> 00:37:25,800 Speaker 1: to that something is gonna be fun to my change 722 00:37:25,880 --> 00:37:27,920 Speaker 1: the permanent bus. And so it does seem like the 723 00:37:28,000 --> 00:37:32,839 Speaker 1: overcapacity story is really like staring us in the face. Yeah, 724 00:37:32,920 --> 00:37:34,600 Speaker 1: it seems like the thing that that would help would 725 00:37:34,640 --> 00:37:38,000 Speaker 1: be if if there was some sort of floor put 726 00:37:38,280 --> 00:37:41,520 Speaker 1: under some of these like you know, you want I mean, 727 00:37:41,560 --> 00:37:44,680 Speaker 1: that's like when he said, like, okay, the environmental regulations 728 00:37:44,800 --> 00:37:46,640 Speaker 1: kind of do have that effect, like okay, if you 729 00:37:46,719 --> 00:37:50,440 Speaker 1: mandate if you put out some emissions mandate, and the 730 00:37:50,440 --> 00:37:52,799 Speaker 1: only way to hit that emissions mandates for everyone to 731 00:37:52,800 --> 00:37:55,239 Speaker 1: get slower. No one is going to sort of voluntarily 732 00:37:55,280 --> 00:37:58,279 Speaker 1: get slower if there's no force. You could see how 733 00:37:58,320 --> 00:38:01,000 Speaker 1: these sort of curbs might have an effect of like 734 00:38:01,040 --> 00:38:03,560 Speaker 1: solving some of these capacity problems, solving some of the 735 00:38:03,600 --> 00:38:07,279 Speaker 1: game theory that otherwise would automatically result in the race 736 00:38:07,320 --> 00:38:09,879 Speaker 1: to the bottom. Yeah, alright, Well, we've done our our 737 00:38:09,920 --> 00:38:12,839 Speaker 1: shipping bust episode. I guess maybe in two or three 738 00:38:12,880 --> 00:38:16,520 Speaker 1: years we'll do another boom episode. Yeah, hopefully not under 739 00:38:16,640 --> 00:38:20,279 Speaker 1: like global pandemic condition, hopefully something else. But we'll just 740 00:38:20,400 --> 00:38:23,440 Speaker 1: keep marking all the turns in the cycle. Shall we 741 00:38:23,520 --> 00:38:25,480 Speaker 1: leave it there? Let's leave it there? Okay, this has 742 00:38:25,520 --> 00:38:28,840 Speaker 1: been another episode of the Odd Thoughts podcast. I'm Tracy Alloway. 743 00:38:28,920 --> 00:38:31,279 Speaker 1: You can follow me on Twitter at Tracy Alloway and 744 00:38:31,320 --> 00:38:34,359 Speaker 1: I'm Joe Wisntal. You could follow me on Twitter at 745 00:38:34,400 --> 00:38:37,920 Speaker 1: the Stalwart. Follow our producer Kermen Rodriguez on Twitter at 746 00:38:38,000 --> 00:38:42,800 Speaker 1: Kerman Arman. Follow our guest Ryan Peterson, He's at types Fast, 747 00:38:43,160 --> 00:38:46,279 Speaker 1: and follow all of the Bloomberg podcasts on Twitter under 748 00:38:46,280 --> 00:38:50,160 Speaker 1: the handle at podcasts and for more odd Lots content 749 00:38:50,200 --> 00:38:52,600 Speaker 1: go to Bloomberg dot com slash odd Lots, where we 750 00:38:52,680 --> 00:38:55,960 Speaker 1: post transcripts, Tracy and I blog, and we publish a 751 00:38:56,000 --> 00:38:58,319 Speaker 1: one week newsletter every Friday. We can go there and 752 00:38:58,360 --> 00:39:00,920 Speaker 1: sign up to get it in your inbox. Thanks for listening.