1 00:00:02,720 --> 00:00:13,920 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:18,520 --> 00:00:22,040 Speaker 2: Hello and welcome to another episode of the Odd Lots podcast. 3 00:00:22,160 --> 00:00:25,480 Speaker 2: I'm Jill Wisenthal and I'm Tracy Alloway. Tracy, we can't 4 00:00:25,480 --> 00:00:29,159 Speaker 2: get enough of trying to understand the immediate impact that 5 00:00:29,200 --> 00:00:31,840 Speaker 2: the new tariff announcement they are having basically to like 6 00:00:32,000 --> 00:00:35,199 Speaker 2: every business in the world, but certainly any business that 7 00:00:35,280 --> 00:00:38,640 Speaker 2: touches goods and certainly any business that touches goods that 8 00:00:38,720 --> 00:00:41,120 Speaker 2: at some point across a border, which at some point 9 00:00:41,159 --> 00:00:41,680 Speaker 2: is all of them. 10 00:00:41,920 --> 00:00:43,680 Speaker 3: I like the implication that we're just going to do 11 00:00:43,720 --> 00:00:46,600 Speaker 3: episodes on every single business in the world. That's what 12 00:00:46,640 --> 00:00:49,800 Speaker 3: we're saying, right, are we Yeah, I think we are. 13 00:00:49,600 --> 00:00:52,040 Speaker 3: We're deep in the process of doing that already. So 14 00:00:52,159 --> 00:00:54,080 Speaker 3: here's an episode with another business. 15 00:00:54,320 --> 00:00:57,320 Speaker 2: Well, so yesterday in our episode, our first of the 16 00:00:57,560 --> 00:01:00,520 Speaker 2: multiple emergency tariff episodes, were like, we just got to 17 00:01:00,560 --> 00:01:02,240 Speaker 2: go down the list and talk to all the supply 18 00:01:02,400 --> 00:01:05,440 Speaker 2: chain specialists that we talked to a few years ago 19 00:01:05,440 --> 00:01:07,839 Speaker 2: over the last several years, and so we're just gonna 20 00:01:07,880 --> 00:01:10,760 Speaker 2: do that. And we have another guest today who I 21 00:01:10,760 --> 00:01:13,000 Speaker 2: think we talked to about a year ago, maybe a 22 00:01:13,000 --> 00:01:16,280 Speaker 2: little less. We're going to be speaking with Matt Silver. 23 00:01:16,440 --> 00:01:19,960 Speaker 2: He is the co founder and CEO of Cargato, which 24 00:01:20,000 --> 00:01:25,160 Speaker 2: is a freight brokerage that really specializes in US Mexico lanes. 25 00:01:25,280 --> 00:01:28,639 Speaker 2: North America. Knows a lot about North America trucking, cross 26 00:01:28,680 --> 00:01:32,119 Speaker 2: border trucking, et cetera. And given the world of tariffs, 27 00:01:32,680 --> 00:01:35,200 Speaker 2: you know, suddenly things like knowing about the world of 28 00:01:35,240 --> 00:01:36,360 Speaker 2: cross border trucking. 29 00:01:36,720 --> 00:01:38,920 Speaker 3: You know. The last time we spoke to him, I 30 00:01:38,920 --> 00:01:42,120 Speaker 3: think the episode was titled like how shippers are responding 31 00:01:42,160 --> 00:01:44,080 Speaker 3: to a US Mexico trade boom? 32 00:01:44,200 --> 00:01:46,600 Speaker 2: Oh yeah, so I guess we'll I guess we're going 33 00:01:46,680 --> 00:01:48,080 Speaker 2: to check in on whether. 34 00:01:47,840 --> 00:01:50,120 Speaker 3: That you check in on the Mexico trade boom? 35 00:01:50,160 --> 00:01:53,600 Speaker 2: Matt, Is there a US Mexico trade boom happening right 36 00:01:53,640 --> 00:01:55,760 Speaker 2: now on April seventh and twenty twenty twenty five. 37 00:01:56,240 --> 00:01:59,040 Speaker 4: Well, first of all, trade for Q one is up 38 00:01:59,120 --> 00:02:02,200 Speaker 4: your overear Mexico, so it is definitely still going in 39 00:02:02,200 --> 00:02:05,360 Speaker 4: the right direction. One thing to clarify, We're not a brokerage, 40 00:02:05,400 --> 00:02:08,880 Speaker 4: we're a software business. But yeah, so we work with 41 00:02:08,919 --> 00:02:12,160 Speaker 4: freight brokers and trucking companies that are moving across border freight. 42 00:02:12,240 --> 00:02:15,679 Speaker 4: So we hear it from everybody involved in the process, 43 00:02:15,880 --> 00:02:20,680 Speaker 4: and there's definitely anxiety and concern over how these tariffs 44 00:02:20,680 --> 00:02:23,640 Speaker 4: are going to impact trade with Mexico and Canada. The 45 00:02:23,720 --> 00:02:26,560 Speaker 4: thing is, like the news that we heard this week 46 00:02:27,080 --> 00:02:30,440 Speaker 4: revolved around basically every country besides Mexico and Canada and 47 00:02:31,000 --> 00:02:33,800 Speaker 4: the USMCA got some sort of a reprieve, if you will, 48 00:02:34,400 --> 00:02:36,760 Speaker 4: but they were still hit by tariffs over the last 49 00:02:36,880 --> 00:02:40,920 Speaker 4: couple of months. And so the companies, like the automakers 50 00:02:40,919 --> 00:02:44,880 Speaker 4: that are producing cars throughout North America, they're not getting 51 00:02:44,960 --> 00:02:46,840 Speaker 4: hit the same way the companies that are bringing their 52 00:02:46,880 --> 00:02:49,680 Speaker 4: cars in from overseas, from Europe or Asia. And so 53 00:02:50,720 --> 00:02:53,160 Speaker 4: you know, the trucking companies that are moving this freight, 54 00:02:53,639 --> 00:02:56,080 Speaker 4: they're going to continue to move the freight that they 55 00:02:56,120 --> 00:03:00,440 Speaker 4: can still move that's consistently shipping. But they understand that 56 00:03:00,480 --> 00:03:02,800 Speaker 4: things might get a little bit rocky as all these 57 00:03:02,840 --> 00:03:06,639 Speaker 4: discussions get worked through, and so they're gonna stand strong 58 00:03:06,680 --> 00:03:09,040 Speaker 4: and I guess ultimately and wait and see what happens 59 00:03:09,280 --> 00:03:10,639 Speaker 4: with the market, right. 60 00:03:10,960 --> 00:03:13,840 Speaker 3: I mean, I think even if Mexico was exempted from 61 00:03:13,919 --> 00:03:16,760 Speaker 3: the reciprocal tariffs that were announced last week, and I 62 00:03:16,760 --> 00:03:19,840 Speaker 3: should just mention we're recording this on April seventh. Lots 63 00:03:19,840 --> 00:03:22,560 Speaker 3: of things could still change, but even if they were exempt, 64 00:03:22,680 --> 00:03:27,000 Speaker 3: I mean, the direction of travel seems fairly clear at 65 00:03:27,000 --> 00:03:31,200 Speaker 3: this point. Give us a reminder of why US Mexico 66 00:03:31,320 --> 00:03:35,440 Speaker 3: trade had been on a sort of upwards trend line 67 00:03:35,480 --> 00:03:37,720 Speaker 3: because a lot of people were saying, well, this is actual, 68 00:03:37,840 --> 00:03:41,160 Speaker 3: genuine trade between the US and Mexico, and then other 69 00:03:41,240 --> 00:03:44,600 Speaker 3: people would say, well, this is China re routing some 70 00:03:44,640 --> 00:03:48,240 Speaker 3: stuff through Mexico in order to get further away from 71 00:03:48,320 --> 00:03:52,760 Speaker 3: the Trump administration's first round of tariffs back in circa 72 00:03:52,840 --> 00:03:53,640 Speaker 3: twenty eighteen. 73 00:03:54,080 --> 00:03:57,360 Speaker 4: Yeah, so going back to twenty eighteen, that's on Trump 74 00:03:57,400 --> 00:04:02,360 Speaker 4: updated NAFTA to the USMCA, and that encouraged more manufacturing 75 00:04:02,400 --> 00:04:04,520 Speaker 4: to happen in North America on less overseas. And so 76 00:04:04,920 --> 00:04:08,120 Speaker 4: you've got the pandemic that scared everybody and thinking that 77 00:04:08,520 --> 00:04:10,760 Speaker 4: it's not such a great idea to rely on China 78 00:04:10,800 --> 00:04:14,680 Speaker 4: for manufacturing. Couple that with the general relations that the 79 00:04:14,800 --> 00:04:17,159 Speaker 4: US and China have had for the last decade or so, 80 00:04:17,279 --> 00:04:21,040 Speaker 4: which has been contentious and it's not super friendly. Then 81 00:04:21,120 --> 00:04:24,039 Speaker 4: you've got the latest round and everything even up to 82 00:04:24,080 --> 00:04:27,000 Speaker 4: the last few hours when Trump said that if China 83 00:04:27,160 --> 00:04:30,000 Speaker 4: goes through with the increased tariffs that they announced. I 84 00:04:30,000 --> 00:04:32,680 Speaker 4: think he said ninety percent would be placed on all 85 00:04:32,760 --> 00:04:36,680 Speaker 4: goods coming from China, and so things are only escalating. 86 00:04:36,720 --> 00:04:40,200 Speaker 4: And between the fact that Mexico is primarily on the 87 00:04:40,200 --> 00:04:42,960 Speaker 4: same or similar time zones as the United States, it's 88 00:04:42,960 --> 00:04:45,880 Speaker 4: only a few hours to get there, whereas it's I 89 00:04:45,880 --> 00:04:48,760 Speaker 4: think fourteen or fifteen hours to get to China. And 90 00:04:48,800 --> 00:04:52,400 Speaker 4: then the culture and language barriers are a lot simpler 91 00:04:52,800 --> 00:04:55,200 Speaker 4: and easier to get through with Mexico than it is 92 00:04:55,200 --> 00:04:57,640 Speaker 4: with overseas. And so there are a lot of reasons 93 00:04:57,640 --> 00:05:00,599 Speaker 4: why companies already do manufacture in Mexico and why they're 94 00:05:00,600 --> 00:05:03,680 Speaker 4: going to continue to do that. Yes, there's Chinese investment 95 00:05:03,720 --> 00:05:06,000 Speaker 4: in Mexico, but it's not as heavy as people make 96 00:05:06,040 --> 00:05:08,039 Speaker 4: it out. To me. It's just you start to hear 97 00:05:08,080 --> 00:05:10,880 Speaker 4: it more because everyone's going, well, here's how China's reacting 98 00:05:10,920 --> 00:05:14,360 Speaker 4: to this trade war. They're investing in countries nearby like Mexico. 99 00:05:14,480 --> 00:05:17,800 Speaker 4: But I still think we'll see more American companies investing 100 00:05:17,839 --> 00:05:20,320 Speaker 4: in Mexico than we will Chinese. 101 00:05:20,200 --> 00:05:23,200 Speaker 2: Time zones in language two of the great non tariff 102 00:05:23,240 --> 00:05:26,400 Speaker 2: trade barriers that affect our world. All right, why don't 103 00:05:26,400 --> 00:05:30,240 Speaker 2: we applause here give us the status of the terriffs, 104 00:05:30,240 --> 00:05:32,000 Speaker 2: because it seemed like Trumpe was like, really, you know 105 00:05:32,000 --> 00:05:34,440 Speaker 2: for a while, like talking about blowing up the USMCA. 106 00:05:34,560 --> 00:05:37,400 Speaker 2: Right now on April seventh, what is the status of 107 00:05:37,440 --> 00:05:40,719 Speaker 2: what's newly being tariffed, what isn't in the cross border 108 00:05:40,880 --> 00:05:42,080 Speaker 2: US Mexico trade. 109 00:05:42,520 --> 00:05:46,200 Speaker 4: So you hear about the big separator being what qualifies 110 00:05:46,240 --> 00:05:50,320 Speaker 4: under the USMCA. I think most agricultural products still qualify 111 00:05:50,400 --> 00:05:52,040 Speaker 4: under that, and so we're not seeing an impact on 112 00:05:52,480 --> 00:05:55,000 Speaker 4: most of those goods, although the US for a long 113 00:05:55,000 --> 00:05:58,039 Speaker 4: time said tariffs on sugar, Mexico has had it on 114 00:05:58,080 --> 00:06:01,440 Speaker 4: some dairy products. Like the irony right now is like 115 00:06:01,480 --> 00:06:04,919 Speaker 4: the RFK movement talks about trying to reduce the reliance 116 00:06:04,920 --> 00:06:07,919 Speaker 4: on highfritose corn syrup, and like the biggest counter to 117 00:06:07,960 --> 00:06:10,640 Speaker 4: that would be sugar, which we could buy from Mexico. 118 00:06:10,720 --> 00:06:14,240 Speaker 4: And so on one side, like you've got goods that 119 00:06:14,360 --> 00:06:17,800 Speaker 4: fall under the USMCA that have those requirements. So like 120 00:06:18,200 --> 00:06:21,839 Speaker 4: take a car, for example, if seventy five percent of 121 00:06:21,880 --> 00:06:24,640 Speaker 4: the value of the car came from Mexico, the US 122 00:06:24,760 --> 00:06:28,440 Speaker 4: or Canada, it falls under the USMCA, and it's qualified. 123 00:06:28,920 --> 00:06:31,520 Speaker 4: The difference now, though, is that the parts that are 124 00:06:31,600 --> 00:06:35,960 Speaker 4: not falling under the USMCA will get taxed right now 125 00:06:36,000 --> 00:06:39,799 Speaker 4: at that twenty five percent rate. And so if let's 126 00:06:39,800 --> 00:06:43,400 Speaker 4: say on a forty thousand dollars car, ten percent of 127 00:06:43,400 --> 00:06:46,039 Speaker 4: that car, so about four thousand dollars worth of value 128 00:06:46,839 --> 00:06:50,920 Speaker 4: is coming from overseas that could still have tariffs applied 129 00:06:50,960 --> 00:06:53,200 Speaker 4: to it. And if it's twenty five percent tariff, then 130 00:06:53,520 --> 00:06:55,839 Speaker 4: it'd be twenty five percent on that four thousand dollars, 131 00:06:55,920 --> 00:06:58,560 Speaker 4: So about one thousand dollars would get added to the 132 00:06:58,960 --> 00:07:02,279 Speaker 4: forty thousand dollars car, and so they're only taxing that piece. 133 00:07:02,680 --> 00:07:06,040 Speaker 3: Who actually does those calculations though, because that seems seems 134 00:07:06,040 --> 00:07:08,400 Speaker 3: like a lot of paperwork to break cars down by 135 00:07:08,480 --> 00:07:10,560 Speaker 3: like components and where those components are made. 136 00:07:11,080 --> 00:07:15,560 Speaker 4: It's the customs broker. Oh wow, and there's yeah, I 137 00:07:15,600 --> 00:07:18,600 Speaker 4: mean there's there's a startup called guy Dynamics that's also 138 00:07:18,640 --> 00:07:21,760 Speaker 4: doing that using AI, and so companies are able to 139 00:07:21,840 --> 00:07:24,480 Speaker 4: use them for that stuff now too. But like it's 140 00:07:24,680 --> 00:07:29,200 Speaker 4: very specific, like if you're using something made of steel 141 00:07:29,280 --> 00:07:32,920 Speaker 4: versus aluminum versus and other raw material even if it's 142 00:07:32,920 --> 00:07:35,640 Speaker 4: a screw, it's still it depends on what it's made 143 00:07:35,680 --> 00:07:37,360 Speaker 4: out of, and it depends on the size of it 144 00:07:37,440 --> 00:07:40,280 Speaker 4: and all that other stuff. So like they're very specific. 145 00:07:41,040 --> 00:07:44,360 Speaker 4: It's called harmonized tariff codes that are assigned to each 146 00:07:44,560 --> 00:07:47,840 Speaker 4: good and then there's a potential tax related to that 147 00:07:48,360 --> 00:07:51,040 Speaker 4: along with requirements very specific. 148 00:08:06,680 --> 00:08:09,240 Speaker 2: Okay, so let's say I'm some company and you know, 149 00:08:09,320 --> 00:08:12,840 Speaker 2: I don't know what the future is of US Mexico trade. 150 00:08:13,080 --> 00:08:16,720 Speaker 2: Some things are getting tariffed now that weren't so much 151 00:08:17,200 --> 00:08:19,520 Speaker 2: like what am I passing along and what am I eating? 152 00:08:19,920 --> 00:08:23,400 Speaker 4: So it depends on what if so the who is 153 00:08:23,440 --> 00:08:27,640 Speaker 4: a land Rover Jaguar the name of their brand is 154 00:08:27,680 --> 00:08:30,200 Speaker 4: now like they announced that all their cars coming in 155 00:08:30,240 --> 00:08:33,079 Speaker 4: from overseas are pausing for a moment until they figure 156 00:08:33,120 --> 00:08:37,880 Speaker 4: out exactly how to manage this. And historically even cars 157 00:08:37,960 --> 00:08:41,199 Speaker 4: like that that were coming from Europe were still or Asia. 158 00:08:41,240 --> 00:08:44,480 Speaker 4: We're still getting grandfathered in under kind of almost like 159 00:08:44,520 --> 00:08:47,360 Speaker 4: a side letter to the USMCA. And so some of 160 00:08:47,360 --> 00:08:48,960 Speaker 4: those companies were able to get by and now all 161 00:08:48,960 --> 00:08:50,840 Speaker 4: of a suddeny're getting hit with these terriffs, and so 162 00:08:51,360 --> 00:08:53,880 Speaker 4: they don't want to go turn around to their customers 163 00:08:53,880 --> 00:08:56,280 Speaker 4: and raise prices. They know it's not a good look, 164 00:08:56,480 --> 00:08:59,440 Speaker 4: and so rather than raising prices, they're saying, hey, hang 165 00:08:59,480 --> 00:09:01,080 Speaker 4: on a second, we're not going to put more cards 166 00:09:01,120 --> 00:09:03,240 Speaker 4: on the lot. We're going to stop shipping for a 167 00:09:03,280 --> 00:09:06,080 Speaker 4: moment until we figure this out, and they're you know, 168 00:09:06,200 --> 00:09:09,360 Speaker 4: over the next call it five to ten days. As 169 00:09:09,400 --> 00:09:12,680 Speaker 4: like the US and the EU navigate and negotiate, and 170 00:09:12,720 --> 00:09:16,400 Speaker 4: I think I just saw recently that that conversation is starting, 171 00:09:16,440 --> 00:09:19,040 Speaker 4: and you'll see similar with a lot of other countries 172 00:09:19,120 --> 00:09:23,200 Speaker 4: or trade organizations that ideally that'll get back to some 173 00:09:23,440 --> 00:09:26,439 Speaker 4: level of a more balanced trade agreement where there's ideally 174 00:09:26,480 --> 00:09:29,559 Speaker 4: no tariffs in either direction. And so those companies that 175 00:09:29,559 --> 00:09:31,480 Speaker 4: are getting affected by it, they just have to wait. 176 00:09:31,760 --> 00:09:33,400 Speaker 4: And I think a lot of them are just waiting, 177 00:09:33,600 --> 00:09:36,640 Speaker 4: and they're okay with less inventory for the time being 178 00:09:37,080 --> 00:09:39,760 Speaker 4: and keeping the prices the same because those cars already landed, 179 00:09:40,360 --> 00:09:42,880 Speaker 4: rather than trying to charge more to the consumer or 180 00:09:42,960 --> 00:09:43,760 Speaker 4: eat that cost. 181 00:09:44,360 --> 00:09:47,800 Speaker 3: So if we were to assume that maybe things don't 182 00:09:47,880 --> 00:09:50,600 Speaker 3: change from what's been declared, like let's just assume that 183 00:09:50,679 --> 00:09:53,200 Speaker 3: we don't see a bunch of deals like Trump is 184 00:09:53,200 --> 00:09:56,600 Speaker 3: advocating for and these tariffs were stuck with them for 185 00:09:56,640 --> 00:10:00,320 Speaker 3: a while. How would you expect some of your clients 186 00:10:00,440 --> 00:10:04,600 Speaker 3: to actually react and maybe reorient their businesses for this 187 00:10:04,679 --> 00:10:06,120 Speaker 3: new reality. What would they do? 188 00:10:06,760 --> 00:10:10,040 Speaker 4: Our customers are logistics companies, and I think what you're 189 00:10:10,080 --> 00:10:12,319 Speaker 4: thinking about is more on the manufacturer side, which is 190 00:10:12,360 --> 00:10:15,280 Speaker 4: their customers. And so I'll put myself in the shoes 191 00:10:15,280 --> 00:10:19,480 Speaker 4: of a logistics company that's working with manufacturer. My first 192 00:10:19,559 --> 00:10:22,480 Speaker 4: thought is like, let's build some consistency around the freight 193 00:10:22,480 --> 00:10:24,800 Speaker 4: that you're moving, because if you have to move that freight, 194 00:10:25,360 --> 00:10:27,319 Speaker 4: one of the levers that you have is how much 195 00:10:27,320 --> 00:10:30,280 Speaker 4: you're spending on moving it. So if you're getting an 196 00:10:30,360 --> 00:10:32,679 Speaker 4: increase in the taxes and duties that you're paying on 197 00:10:32,720 --> 00:10:35,680 Speaker 4: your goods, then I would be looking at ways to 198 00:10:35,720 --> 00:10:38,440 Speaker 4: reduce my costs, which would be relying more on a 199 00:10:38,480 --> 00:10:41,319 Speaker 4: logistics company or a third party logistics provider that can 200 00:10:41,360 --> 00:10:44,760 Speaker 4: help kind of spread that price risk and the operational risk, 201 00:10:45,360 --> 00:10:47,800 Speaker 4: and they can take that on with more volume. So 202 00:10:47,840 --> 00:10:50,720 Speaker 4: you think about how more density builds over time with 203 00:10:50,800 --> 00:10:53,880 Speaker 4: more freight moving in an individual lane, well, all of 204 00:10:53,920 --> 00:10:56,760 Speaker 4: that that's going to drive ideally a better price control 205 00:10:56,840 --> 00:11:00,880 Speaker 4: and so for a shipper thinking about their freight moving 206 00:11:00,880 --> 00:11:03,600 Speaker 4: across the border, I might rely more on a logistics 207 00:11:03,600 --> 00:11:06,839 Speaker 4: company to try to navigate that and reduce my cost 208 00:11:06,960 --> 00:11:10,640 Speaker 4: of actually procuring different trucking companies and potentially be able 209 00:11:10,640 --> 00:11:13,079 Speaker 4: to scale that business up by outsourcing more of that. 210 00:11:13,679 --> 00:11:15,680 Speaker 4: And so if I'm a shipper, that's how I'm thinking 211 00:11:15,679 --> 00:11:18,560 Speaker 4: about it. If I'm a trucking company, from what I 212 00:11:18,640 --> 00:11:21,360 Speaker 4: understand is right now, trucking companies are not running out 213 00:11:21,400 --> 00:11:23,880 Speaker 4: and buying more trucks. They want to see what's going 214 00:11:23,920 --> 00:11:28,280 Speaker 4: to happen right now. They're waiting, they're not panicking, they're 215 00:11:28,320 --> 00:11:31,520 Speaker 4: not picking up and switching how their business operates. So 216 00:11:31,640 --> 00:11:33,640 Speaker 4: like I was in Canada recently and I met with 217 00:11:33,720 --> 00:11:36,760 Speaker 4: a handful of trucking companies that move freight from Mexico 218 00:11:36,800 --> 00:11:39,560 Speaker 4: to Canada and vice versa, and they told me, you know, 219 00:11:39,679 --> 00:11:43,040 Speaker 4: look like there's definitely anxiety here. Like there's this much 220 00:11:43,480 --> 00:11:46,400 Speaker 4: outrage that I heard from every trucking company and burger 221 00:11:46,440 --> 00:11:48,319 Speaker 4: that I met with in Canada a few weeks ago, 222 00:11:48,600 --> 00:11:51,360 Speaker 4: that I've seen on social media about everything going on 223 00:11:51,440 --> 00:11:54,080 Speaker 4: right now in politics. And so most of those trucking 224 00:11:54,120 --> 00:11:56,800 Speaker 4: companies are saying like, hey, we're going to stay calm, 225 00:11:57,040 --> 00:11:59,960 Speaker 4: We're going to focus on supporting what we can support. 226 00:12:00,120 --> 00:12:02,839 Speaker 4: We know some customers might not be shipping right now 227 00:12:02,840 --> 00:12:06,720 Speaker 4: if they're freight is getting taxed heavily, and so we 228 00:12:06,800 --> 00:12:10,000 Speaker 4: have to find freight elsewhere. But for the time being, 229 00:12:10,320 --> 00:12:12,080 Speaker 4: we're going to stand strong. We're going to wait and see, 230 00:12:12,080 --> 00:12:13,680 Speaker 4: because we don't think this is how it's going to 231 00:12:13,800 --> 00:12:16,760 Speaker 4: stay long term. And so they're of a more long 232 00:12:16,840 --> 00:12:19,679 Speaker 4: term mindset of waiting and seeing what happens, rather than 233 00:12:19,720 --> 00:12:22,800 Speaker 4: panicking and trying to switch what they're doing or shutting 234 00:12:22,840 --> 00:12:25,680 Speaker 4: something down or slowing down their fleet. They might just 235 00:12:25,720 --> 00:12:27,640 Speaker 4: not grow as much right now, but they're not going 236 00:12:27,679 --> 00:12:28,600 Speaker 4: to stop their trucks. 237 00:12:28,880 --> 00:12:31,400 Speaker 2: But it sounds like no matter who you're talking about. 238 00:12:31,480 --> 00:12:35,000 Speaker 2: And it's funny because look in the financial markets, one 239 00:12:35,000 --> 00:12:37,280 Speaker 2: gets the sense that there is a widespread belief that 240 00:12:37,880 --> 00:12:40,120 Speaker 2: the CURL rules can't stay in place, like this can't 241 00:12:40,120 --> 00:12:42,640 Speaker 2: be the ultimate status quo, and no one really wants 242 00:12:42,679 --> 00:12:46,600 Speaker 2: to accept that the new tariff schedules are really the 243 00:12:46,640 --> 00:12:48,480 Speaker 2: whole thing. And I think there's a widespread belief that 244 00:12:48,520 --> 00:12:51,040 Speaker 2: if somehow you at a crystal ball and these were 245 00:12:51,080 --> 00:12:54,040 Speaker 2: the permanent tariffs for years to come, the markets would 246 00:12:54,040 --> 00:12:57,280 Speaker 2: go a lot lower. It sounds like actually from you 247 00:12:57,960 --> 00:13:00,600 Speaker 2: that that's kind of the same in industry, whether we're 248 00:13:00,600 --> 00:13:04,400 Speaker 2: talking about manufacturers or whether we're talking about truckers. Yeah, okay, 249 00:13:04,400 --> 00:13:08,480 Speaker 2: so pausing, We're not gonna move new inventory in right now. 250 00:13:08,559 --> 00:13:10,800 Speaker 2: We're not going to change our business model. But at 251 00:13:10,800 --> 00:13:13,560 Speaker 2: the moment still the sort of widespread belief that this 252 00:13:13,600 --> 00:13:15,360 Speaker 2: can't be the final set of rules. 253 00:13:16,000 --> 00:13:18,720 Speaker 4: Correct, And like, keep in mind that, you know, the 254 00:13:18,800 --> 00:13:21,560 Speaker 4: big market that everybody talks about is the US market 255 00:13:21,600 --> 00:13:24,840 Speaker 4: when it comes to freight. And obviously ocean freight's going 256 00:13:24,880 --> 00:13:27,880 Speaker 4: to slow down. We're already hearing about that on both 257 00:13:27,920 --> 00:13:32,040 Speaker 4: social and from customers directly that they're seeing volume coming 258 00:13:32,120 --> 00:13:35,840 Speaker 4: in through the port slowdown. And then two that freight 259 00:13:35,920 --> 00:13:38,040 Speaker 4: comes into the port, it goes to a warehouse at 260 00:13:38,040 --> 00:13:42,200 Speaker 4: some point, it gets repackaged or labeled and then packaged 261 00:13:42,240 --> 00:13:45,720 Speaker 4: and palatized. It goes on a truck after that. And 262 00:13:45,800 --> 00:13:49,120 Speaker 4: so what people in you know, the US market would 263 00:13:49,120 --> 00:13:52,880 Speaker 4: say is considered domestic freight moving from like Los Angeles 264 00:13:52,880 --> 00:13:55,400 Speaker 4: to Dallas. That freight very well is going on a 265 00:13:55,440 --> 00:13:58,199 Speaker 4: truck and it is considered a domestic shipment at that point, 266 00:13:58,200 --> 00:14:00,800 Speaker 4: but it's really part of an international move and so 267 00:14:01,040 --> 00:14:04,720 Speaker 4: if international freight slows down coming in over the ocean, 268 00:14:05,160 --> 00:14:07,640 Speaker 4: that is ultimately going to impact over the road throughout 269 00:14:07,640 --> 00:14:10,080 Speaker 4: the US. And so I don't think we're going to 270 00:14:10,080 --> 00:14:12,360 Speaker 4: see a spike in rates by any means. I think 271 00:14:12,400 --> 00:14:14,959 Speaker 4: we might see some weird fluctuation over the next couple 272 00:14:15,000 --> 00:14:18,240 Speaker 4: months as these things settle, but I think overall the 273 00:14:18,280 --> 00:14:20,320 Speaker 4: market's going to be a little bit slower for freight 274 00:14:20,360 --> 00:14:23,160 Speaker 4: in general, not just for cross border or international. 275 00:14:23,920 --> 00:14:26,000 Speaker 3: I mean, on this note, one of the things we 276 00:14:26,200 --> 00:14:29,960 Speaker 3: learned from the twenty twenty pandemic and the supply chain 277 00:14:30,000 --> 00:14:33,600 Speaker 3: disruptions after that, one of the things we really internalized 278 00:14:33,720 --> 00:14:37,440 Speaker 3: is just how cyclical the trucking business actually is and 279 00:14:37,480 --> 00:14:40,440 Speaker 3: how you do tend to get these boom bust cycles. 280 00:14:40,480 --> 00:14:43,160 Speaker 3: And it feels like the more sort of one off 281 00:14:43,240 --> 00:14:46,680 Speaker 3: shocks we have to the system, the worse that cyclicality 282 00:14:46,840 --> 00:14:51,240 Speaker 3: kind of gets. How bad should we assume things are 283 00:14:51,280 --> 00:14:55,760 Speaker 3: going to get if this tariff uncertainty sticks around for 284 00:14:55,800 --> 00:14:56,200 Speaker 3: a while. 285 00:14:56,720 --> 00:14:58,920 Speaker 4: I think it really depends on what happens with China 286 00:15:00,040 --> 00:15:02,720 Speaker 4: all the other countries like it all has an effect, right, 287 00:15:02,800 --> 00:15:05,400 Speaker 4: Like if you think about what happened during the pandemic 288 00:15:05,440 --> 00:15:08,000 Speaker 4: when all of a sudden there's a shortage with semiconductor 289 00:15:08,080 --> 00:15:11,360 Speaker 4: chips and what that did to everything. Like all of 290 00:15:11,400 --> 00:15:14,000 Speaker 4: a sudden, cars were not rolling off of lines because 291 00:15:14,000 --> 00:15:16,120 Speaker 4: of how many chips are going to a car, And 292 00:15:16,200 --> 00:15:20,320 Speaker 4: so the whole ecosystem is really tied in more than 293 00:15:20,360 --> 00:15:23,600 Speaker 4: you'd think. But China is really the big one that 294 00:15:23,680 --> 00:15:26,040 Speaker 4: it's all going to depend on, right Like if we 295 00:15:26,120 --> 00:15:29,400 Speaker 4: come out of this with significant tariffs from both sides 296 00:15:29,560 --> 00:15:33,480 Speaker 4: on China, yeah, and from China to the US, then like, yeah, 297 00:15:33,560 --> 00:15:36,560 Speaker 4: it's going to slow things down if things go to 298 00:15:36,600 --> 00:15:39,680 Speaker 4: a new normal. But to me, normal still means that 299 00:15:40,240 --> 00:15:42,840 Speaker 4: supply chains don't have to be completely redone in a 300 00:15:42,880 --> 00:15:46,280 Speaker 4: really quick fashion. Then I think the market should pick 301 00:15:46,320 --> 00:15:49,880 Speaker 4: back up and there should be excitement from the new 302 00:15:49,960 --> 00:15:53,320 Speaker 4: agreements in place where people might start buying again. People 303 00:15:53,320 --> 00:15:56,320 Speaker 4: are not obviously happy about their bank accounts right now. 304 00:15:56,800 --> 00:15:59,280 Speaker 2: Yeah, obviously not. No. I mean like this is sort 305 00:15:59,280 --> 00:16:02,640 Speaker 2: of the big one because if some of these levels 306 00:16:02,680 --> 00:16:04,880 Speaker 2: that are being discussed, and again we're talking about this 307 00:16:04,960 --> 00:16:07,920 Speaker 2: April seventh, two thirty five pm Eastern time. If some 308 00:16:07,960 --> 00:16:10,960 Speaker 2: of these levels for China tariffs remain in place, I mean, 309 00:16:11,000 --> 00:16:15,040 Speaker 2: people are talking about the end of US China trading, 310 00:16:15,080 --> 00:16:18,280 Speaker 2: which is the sort of the defining economic relationship of 311 00:16:18,320 --> 00:16:21,240 Speaker 2: the entire world. Matt Silver, thank you so much for 312 00:16:21,280 --> 00:16:22,960 Speaker 2: coming back on oddlocks. 313 00:16:23,400 --> 00:16:24,760 Speaker 4: Absolutely thanks for having me. 314 00:16:37,480 --> 00:16:40,520 Speaker 2: It really feels tracy, even with all of the market volatility. 315 00:16:40,520 --> 00:16:42,280 Speaker 2: I love catching up with Matt. By the way, it 316 00:16:42,320 --> 00:16:45,560 Speaker 2: really feels though, with all the market volatility that we've seen, 317 00:16:46,280 --> 00:16:48,920 Speaker 2: with all the selling, like no one just believes that 318 00:16:48,960 --> 00:16:51,160 Speaker 2: this could be the the new normal right now. 319 00:16:51,200 --> 00:16:51,880 Speaker 4: Everyone's like waiting. 320 00:16:52,400 --> 00:16:54,400 Speaker 2: It's like, Oh, we're gonna see what happens with negotiations. 321 00:16:54,440 --> 00:16:56,680 Speaker 2: I'm like, what negotiations? But you know, there's got to 322 00:16:56,720 --> 00:16:59,480 Speaker 2: be something, right, Everyone assumes there must be some deal 323 00:16:59,520 --> 00:16:59,960 Speaker 2: to be cut. 324 00:17:00,200 --> 00:17:03,440 Speaker 3: Yeah. Well, I mean ostensibly that's the whole point of 325 00:17:03,480 --> 00:17:07,560 Speaker 3: this process, right, It's to use leverage to strike deals. 326 00:17:07,840 --> 00:17:10,159 Speaker 3: But in the meantime we're all sort of grappling with 327 00:17:10,200 --> 00:17:12,760 Speaker 3: all this uncertainty of what's going to happen. But I 328 00:17:12,760 --> 00:17:15,480 Speaker 3: thought that was really interesting, good to catch up with Matt. 329 00:17:15,560 --> 00:17:19,240 Speaker 3: I did think his emphasis on the importance of China 330 00:17:19,440 --> 00:17:22,200 Speaker 3: is a really big deal, and you've said it very 331 00:17:22,200 --> 00:17:24,560 Speaker 3: well at the end as well, like the world's two 332 00:17:24,760 --> 00:17:29,120 Speaker 3: largest economies, there's a real chance that they're basically decoupling 333 00:17:29,640 --> 00:17:33,480 Speaker 3: from each other, which seems like it could reverberate around 334 00:17:33,560 --> 00:17:36,520 Speaker 3: supply chains and industries around the world. So again, no 335 00:17:36,600 --> 00:17:39,679 Speaker 3: matter what happens, you know, if the US strikes a 336 00:17:39,760 --> 00:17:44,240 Speaker 3: deal with I don't know, like some small Pacific island 337 00:17:44,480 --> 00:17:47,720 Speaker 3: or something like, maybe it doesn't really matter because the 338 00:17:47,840 --> 00:17:52,160 Speaker 3: US China relationship is much much bigger and weighs much 339 00:17:52,200 --> 00:17:54,440 Speaker 3: much much more heavily on the global economy. 340 00:17:54,840 --> 00:17:56,960 Speaker 2: Yeah, it seems like the big one. And so it's like, 341 00:17:57,080 --> 00:18:00,200 Speaker 2: even if you're talking about US versus Mexico trail aid, 342 00:18:00,840 --> 00:18:03,919 Speaker 2: the future of US and Mexico trade is contingent to 343 00:18:03,960 --> 00:18:07,000 Speaker 2: some there still China of US China trade because A 344 00:18:07,600 --> 00:18:09,520 Speaker 2: there's a question of well, can Chinese good to get 345 00:18:09,520 --> 00:18:11,679 Speaker 2: through Mexico and then to the US, which happens to 346 00:18:11,720 --> 00:18:14,199 Speaker 2: some extent. And then B if you're really shut off 347 00:18:14,240 --> 00:18:18,119 Speaker 2: from China, how much actual actual capital I investment do 348 00:18:18,160 --> 00:18:20,840 Speaker 2: you then make it in North America? And how much 349 00:18:20,880 --> 00:18:23,920 Speaker 2: you make in Mexico versus the United States. Many big questions, 350 00:18:24,119 --> 00:18:27,640 Speaker 2: But like investors, it sounds like the world of shippers 351 00:18:27,640 --> 00:18:29,960 Speaker 2: and carriers are also in a certain kind of light 352 00:18:30,040 --> 00:18:30,639 Speaker 2: and see mode. 353 00:18:30,760 --> 00:18:32,880 Speaker 3: Yeah, And I mean the other big thing happening here 354 00:18:33,040 --> 00:18:36,479 Speaker 3: is the difference between now versus twenty eighteen is you 355 00:18:36,520 --> 00:18:39,959 Speaker 3: don't have those outlet countries necessarily, right, So you can't 356 00:18:40,000 --> 00:18:44,280 Speaker 3: just re route stuff into Vietnam or into Mexico away 357 00:18:44,280 --> 00:18:47,639 Speaker 3: from China like that is no longer an option. So 358 00:18:47,680 --> 00:18:50,800 Speaker 3: that seems to make it much much more complicated as well. 359 00:18:51,320 --> 00:18:52,200 Speaker 3: Shall we leave it there? 360 00:18:52,400 --> 00:18:53,120 Speaker 4: Let's leave it there. 361 00:18:53,280 --> 00:18:56,040 Speaker 3: This has been another episode of the Authoughts podcast. I'm 362 00:18:56,080 --> 00:18:59,200 Speaker 3: Tracy Alloway. You can follow me at Tracy Alloway. 363 00:18:58,880 --> 00:19:01,080 Speaker 2: And I'm Jill Wasn't the You can follow me at 364 00:19:01,080 --> 00:19:04,720 Speaker 2: the Stalwart. Follow Matt Silver, He's at Matt Silver. Follow 365 00:19:04,760 --> 00:19:08,080 Speaker 2: our producers Carmen Rodriguez at Kerman armand dash Ol Bennett 366 00:19:08,080 --> 00:19:11,639 Speaker 2: at Dashbod and Kelbrooks at Kelbrooks. 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