1 00:00:02,480 --> 00:00:10,520 Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. 2 00:00:18,160 --> 00:00:22,279 Speaker 2: Hello and welcome to another episode of the Odd Lags podcast. 3 00:00:22,360 --> 00:00:24,639 Speaker 1: I'm Jill Wisenthal and I'm Tracy Allaway. 4 00:00:24,800 --> 00:00:28,440 Speaker 2: So obviously, Tracy is something that we've grown more interested 5 00:00:28,600 --> 00:00:30,720 Speaker 2: in lately and it has very interesting sort of a 6 00:00:31,000 --> 00:00:35,440 Speaker 2: macro trade maybe political implications. Is this sort of the 7 00:00:35,479 --> 00:00:38,400 Speaker 2: booming numbers we see in US Mexico trade? 8 00:00:38,720 --> 00:00:42,840 Speaker 1: Absolutely so, US Mexico trade has picked up, as you 9 00:00:42,880 --> 00:00:45,959 Speaker 1: have pointed out, and I'm kind of curious about the 10 00:00:46,000 --> 00:00:49,440 Speaker 1: reasons why this is what most interests me at the moment, 11 00:00:49,600 --> 00:00:52,200 Speaker 1: as well as like the physical process of moving goods 12 00:00:52,200 --> 00:00:55,640 Speaker 1: from Mexico into the US. But there's the story this 13 00:00:55,760 --> 00:00:59,960 Speaker 1: idea here about friend shoring. So given the Trump trade 14 00:01:00,280 --> 00:01:05,040 Speaker 1: war and its ongoing evolution under the Biden administration, tensions 15 00:01:05,080 --> 00:01:09,000 Speaker 1: happened rising with China, there's this idea of companies maybe 16 00:01:09,040 --> 00:01:12,800 Speaker 1: moving some of their production away from China into either 17 00:01:12,840 --> 00:01:16,479 Speaker 1: Southeast Asia or maybe Mexico. So we've seen a bit 18 00:01:16,520 --> 00:01:19,200 Speaker 1: of a pickup. I really want to know what is 19 00:01:19,280 --> 00:01:22,640 Speaker 1: driving it. Is it actually that friend shoring idea, or 20 00:01:22,720 --> 00:01:25,080 Speaker 1: is it maybe something else. I know, Mexico, for instance, 21 00:01:25,120 --> 00:01:28,280 Speaker 1: is a really big exporter of car parts, so how 22 00:01:28,360 --> 00:01:31,280 Speaker 1: much of that is driving it? I've seen Brad Setzer 23 00:01:31,440 --> 00:01:34,160 Speaker 1: discuss this a little bit on Twitter. So I am 24 00:01:34,200 --> 00:01:37,240 Speaker 1: excited to get into Mexico US trade totally. 25 00:01:37,319 --> 00:01:39,640 Speaker 2: And you know you mentioned, you know, sort of Trump 26 00:01:39,760 --> 00:01:42,600 Speaker 2: kicked it off after he won the twenty sixteen election 27 00:01:43,160 --> 00:01:47,000 Speaker 2: by beginning the process of tariffs sound China and rewriting 28 00:01:47,080 --> 00:01:50,720 Speaker 2: NAFTA which became the USMCA and really sort of encouraging 29 00:01:51,160 --> 00:01:55,360 Speaker 2: a shift in supply chains to North America to the 30 00:01:55,360 --> 00:01:58,760 Speaker 2: Western hemisphere. And then it probably really accelerated further with 31 00:01:58,880 --> 00:02:01,559 Speaker 2: COVID and just the mass of headaches that everyone had 32 00:02:02,000 --> 00:02:05,320 Speaker 2: getting stuff out of China. And so right, that's sort 33 00:02:05,360 --> 00:02:08,080 Speaker 2: of when the idea of like friends showing or near 34 00:02:08,120 --> 00:02:10,160 Speaker 2: shoring like really picked up, like just sort of this 35 00:02:10,280 --> 00:02:15,119 Speaker 2: supply chain resiliency idea. And then this raises all sorts 36 00:02:15,120 --> 00:02:17,760 Speaker 2: of other interesting questions because of course, if you're a 37 00:02:17,840 --> 00:02:21,600 Speaker 2: Chinese company, like you're a Chinese automaker, say, or a 38 00:02:21,720 --> 00:02:24,280 Speaker 2: company that makes other high tech goods and maybe you're 39 00:02:24,320 --> 00:02:27,000 Speaker 2: worried about terrorists, we're like, well, can you set up 40 00:02:27,000 --> 00:02:29,360 Speaker 2: in Mexico and get around evidence so that it's like, 41 00:02:29,680 --> 00:02:32,520 Speaker 2: so it is still coming in from Mexico, but the 42 00:02:32,520 --> 00:02:35,280 Speaker 2: beneficial owner somewhere in China. Like, there are some really 43 00:02:35,440 --> 00:02:40,120 Speaker 2: interesting questions that arise out of cross border US Mexico trade. 44 00:02:40,200 --> 00:02:42,160 Speaker 1: Yeah, it's funny you mentioned that. I was just reading 45 00:02:42,240 --> 00:02:45,480 Speaker 1: an article in the FT that came out recently and 46 00:02:45,520 --> 00:02:48,000 Speaker 1: they were talking about the number of container ships going 47 00:02:48,000 --> 00:02:51,320 Speaker 1: from China to Mexico has hit eight hundred and eighty 48 00:02:51,360 --> 00:02:54,600 Speaker 1: one thousand in the first three quarters of twenty twenty three, 49 00:02:54,880 --> 00:02:58,239 Speaker 1: which is up from like six hundred eighty nine thousand 50 00:02:58,320 --> 00:03:01,840 Speaker 1: in the same period from so a lot of growth 51 00:03:02,040 --> 00:03:03,600 Speaker 1: just in the space of a year. And it does 52 00:03:03,639 --> 00:03:07,880 Speaker 1: beg the question again of what exactly is coming through Mexico. 53 00:03:08,040 --> 00:03:10,640 Speaker 1: How much of this is a genuine shift in US 54 00:03:10,800 --> 00:03:15,359 Speaker 1: trade away from China versus the sort of rerouting totally. 55 00:03:15,400 --> 00:03:17,280 Speaker 2: So we see the numbers and we want to get 56 00:03:17,280 --> 00:03:19,560 Speaker 2: a better understanding what are the types of goods and 57 00:03:19,600 --> 00:03:21,960 Speaker 2: so on. And I'm very excited to say, we really 58 00:03:21,960 --> 00:03:24,720 Speaker 2: do have the perfect guest. It's someone from the freight 59 00:03:24,760 --> 00:03:28,200 Speaker 2: world who's been working with US Mexico trade for a 60 00:03:28,200 --> 00:03:31,160 Speaker 2: long time and now the co founder of a new 61 00:03:31,240 --> 00:03:34,440 Speaker 2: company that's sort of going to focus on freight that 62 00:03:34,520 --> 00:03:37,480 Speaker 2: goes cross border from Mexico to the US. Matt Silver, 63 00:03:37,600 --> 00:03:40,240 Speaker 2: co founder and CEO of car Gato, Matt, thank you 64 00:03:40,320 --> 00:03:41,680 Speaker 2: so much for coming on odd Laws. 65 00:03:42,000 --> 00:03:44,080 Speaker 3: Absolutely thank you for having me excited to be here. 66 00:03:44,200 --> 00:03:48,760 Speaker 2: All right, So, really simple question to start. If there's 67 00:03:48,800 --> 00:03:51,960 Speaker 2: some piece of machinery that you want to ship from, 68 00:03:52,000 --> 00:03:56,440 Speaker 2: say Texas to California, how much easier is that than 69 00:03:56,760 --> 00:04:00,080 Speaker 2: shipping a piece of machinery from Mexico to California. May 70 00:04:00,280 --> 00:04:03,080 Speaker 2: to flip it the other way around. For a given 71 00:04:03,280 --> 00:04:07,240 Speaker 2: unit of good, what is the complexity of getting that 72 00:04:07,280 --> 00:04:09,400 Speaker 2: good across the border rather than just shipping it. 73 00:04:09,360 --> 00:04:14,440 Speaker 3: Domestically, So shipping something from Texas to California, if you're 74 00:04:14,440 --> 00:04:17,599 Speaker 3: a logistics provider or a trucking company, your main responsibility 75 00:04:17,640 --> 00:04:19,560 Speaker 3: is to make sure that you get the freight picked 76 00:04:19,640 --> 00:04:23,560 Speaker 3: up at that location in Texas, that it's scheduled to delivery, 77 00:04:23,720 --> 00:04:25,880 Speaker 3: and that ultimately you go deliver the load on time, 78 00:04:26,480 --> 00:04:28,680 Speaker 3: and that you get what was considered the bill of 79 00:04:28,760 --> 00:04:31,200 Speaker 3: lading signed by the receiver and it turns into a 80 00:04:31,240 --> 00:04:33,880 Speaker 3: proof of delivery and you're good to go. When you're 81 00:04:33,920 --> 00:04:36,240 Speaker 3: moving a shipment from Mexico to the United States. And 82 00:04:36,320 --> 00:04:39,480 Speaker 3: let's say you're going from somewhere Lake Monterey to California. 83 00:04:40,080 --> 00:04:42,040 Speaker 3: You would get that load picked up in Monterey by 84 00:04:42,080 --> 00:04:44,440 Speaker 3: a Mexican trucking company that would bring the freight up 85 00:04:44,480 --> 00:04:47,599 Speaker 3: to the border. It would clear Mexico customs, go through 86 00:04:47,720 --> 00:04:50,880 Speaker 3: US customs, dealing with a Mexico customs broker and a 87 00:04:50,960 --> 00:04:54,400 Speaker 3: US customs broker and a border crossing carrier, and then 88 00:04:54,400 --> 00:04:57,039 Speaker 3: you're working with a US trucking company that's going to 89 00:04:57,040 --> 00:05:00,360 Speaker 3: bring that load from say Laredo, Texas to Los Angeles. 90 00:05:00,800 --> 00:05:03,719 Speaker 3: And so for a cross border shipment, there's somewhere between 91 00:05:03,760 --> 00:05:06,599 Speaker 3: six and eight parties involved in a single shipment, whereas 92 00:05:06,600 --> 00:05:09,080 Speaker 3: the domestic shipment has you know, the trucking company and 93 00:05:09,080 --> 00:05:09,960 Speaker 3: the shipper and the receiver. 94 00:05:10,640 --> 00:05:13,240 Speaker 1: As someone who has shipped a lot of stuff like 95 00:05:13,440 --> 00:05:17,080 Speaker 1: home goods between the US and other places, the customs 96 00:05:17,160 --> 00:05:21,000 Speaker 1: process is always more complex and more time consuming than 97 00:05:21,040 --> 00:05:23,960 Speaker 1: you think it will be. On which note, Matt, how 98 00:05:24,040 --> 00:05:27,360 Speaker 1: long would it take for that entire end to end 99 00:05:27,560 --> 00:05:31,359 Speaker 1: process versus say a domestic shipment, which I guess just 100 00:05:31,360 --> 00:05:33,880 Speaker 1: gets picked up. And then the uncertainty on the time 101 00:05:33,920 --> 00:05:36,760 Speaker 1: is really just the driver going somewhere, and how long 102 00:05:36,800 --> 00:05:39,880 Speaker 1: that takes. How long does that sort of customs process 103 00:05:40,000 --> 00:05:40,640 Speaker 1: usually take. 104 00:05:41,320 --> 00:05:44,039 Speaker 3: Customs can take anywhere from one to three days. It 105 00:05:44,080 --> 00:05:46,440 Speaker 3: could really go up to ten days. It could get 106 00:05:46,480 --> 00:05:48,240 Speaker 3: longer than that if it takes a long time to 107 00:05:48,320 --> 00:05:51,520 Speaker 3: prepare the paperwork. So the way that I always compare 108 00:05:51,560 --> 00:05:53,719 Speaker 3: it from explaining this to somebody that has a basic 109 00:05:53,800 --> 00:05:57,400 Speaker 3: understanding of freight is that a domestic shipment is your 110 00:05:57,400 --> 00:06:00,640 Speaker 3: responsibility as a broker for you know, call it one 111 00:06:00,760 --> 00:06:03,160 Speaker 3: to two days, maybe three days if it's a longer 112 00:06:03,240 --> 00:06:05,839 Speaker 3: length of haul, but that load picks up and it delivers, 113 00:06:05,839 --> 00:06:08,400 Speaker 3: and that's it. For a cross border shipment, it can 114 00:06:08,400 --> 00:06:11,719 Speaker 3: be any anywhere from seven to twenty days. So you 115 00:06:11,800 --> 00:06:14,480 Speaker 3: got your your standard transit time that you know from 116 00:06:14,560 --> 00:06:18,599 Speaker 3: Monterey is four to six hours. From Central Mexico could 117 00:06:18,600 --> 00:06:20,800 Speaker 3: be about a day, and then it could take anywhere 118 00:06:20,839 --> 00:06:22,680 Speaker 3: from one to three days to cross the border, and 119 00:06:22,720 --> 00:06:24,800 Speaker 3: then you know there might be a twenty four hour 120 00:06:24,880 --> 00:06:27,360 Speaker 3: wait time before the load actually gets dispatch for delivery 121 00:06:27,400 --> 00:06:30,680 Speaker 3: and then your standard transit in the US. So that's 122 00:06:30,720 --> 00:06:32,760 Speaker 3: where it ends up at that seven to ten if 123 00:06:32,800 --> 00:06:33,760 Speaker 3: not twenty days. 124 00:06:34,080 --> 00:06:36,719 Speaker 2: Let's back up a little bit. I mentioned that you're 125 00:06:36,800 --> 00:06:39,200 Speaker 2: the co founder of a new company that's going to 126 00:06:39,240 --> 00:06:43,720 Speaker 2: focus on US Mexico trade. You've been interested in Mexico 127 00:06:44,279 --> 00:06:46,240 Speaker 2: for several years. Why don't you just sort of give 128 00:06:46,320 --> 00:06:49,880 Speaker 2: us the quick background of how you became a Mexico 129 00:06:50,000 --> 00:06:53,640 Speaker 2: trade person and why you want to continue making this bet. 130 00:06:53,640 --> 00:06:54,960 Speaker 1: A Mexico trade mega. 131 00:06:55,080 --> 00:06:57,680 Speaker 2: Let you know you can describe your proper title. I'm 132 00:06:57,680 --> 00:06:59,200 Speaker 2: just going to call you a Mexico trade. 133 00:06:59,000 --> 00:07:02,880 Speaker 3: Person, Mexico freight expert, Mexico freight expert. May that's a 134 00:07:02,920 --> 00:07:09,000 Speaker 3: little bitter Mexico Matt, there's a joke, but all right. 135 00:07:09,040 --> 00:07:11,040 Speaker 3: So I got involved in Mexico freight when I was 136 00:07:11,080 --> 00:07:13,240 Speaker 3: at Coyote. I was at Coyote for about a decade 137 00:07:13,640 --> 00:07:18,280 Speaker 3: and some freight brokerage, yes, Coyote Logistics Brokerage. And I 138 00:07:18,320 --> 00:07:20,360 Speaker 3: started the Mexico business while I was there by by 139 00:07:20,360 --> 00:07:24,320 Speaker 3: sheer dumb luck and started building the network out and 140 00:07:24,320 --> 00:07:26,960 Speaker 3: growing the Mexico business. And I spent about three three 141 00:07:27,000 --> 00:07:28,720 Speaker 3: and a half years doing that, and then I left 142 00:07:28,720 --> 00:07:31,960 Speaker 3: Coyote in twenty eighteen started my own company called Forager. 143 00:07:32,080 --> 00:07:34,440 Speaker 3: We were a cross border digital freight brokerage. So we 144 00:07:34,640 --> 00:07:38,000 Speaker 3: built our own proprietary technology similar to like an uber 145 00:07:38,040 --> 00:07:41,040 Speaker 3: freight or a convoy, but specifically focused on moving freight 146 00:07:41,040 --> 00:07:43,920 Speaker 3: between the US and Mexico. We were acquired by Arrival 147 00:07:43,920 --> 00:07:46,160 Speaker 3: Logistics at the end of January of twenty twenty two, 148 00:07:46,640 --> 00:07:48,240 Speaker 3: and then I left at the end of September of 149 00:07:48,280 --> 00:07:52,000 Speaker 3: twenty twenty three. After helping integrate Forgernal Arrive and helping 150 00:07:52,360 --> 00:07:55,120 Speaker 3: leading grow the Mexico business, ultimately left at the end 151 00:07:55,120 --> 00:07:57,720 Speaker 3: of September and started working on Cargado shortly after that. 152 00:07:58,640 --> 00:08:02,880 Speaker 1: So what was the in inspiration behind creating a company 153 00:08:02,880 --> 00:08:07,320 Speaker 1: that is dedicated to Mexico US freight. What's the opportunity 154 00:08:07,320 --> 00:08:08,040 Speaker 1: that you see there. 155 00:08:08,880 --> 00:08:11,360 Speaker 3: I think there is so much complexity involved in moving 156 00:08:11,440 --> 00:08:13,880 Speaker 3: across order shipment. Like I just kind of outlined that, 157 00:08:14,560 --> 00:08:16,880 Speaker 3: I think there's a lot of need for technology, and 158 00:08:17,080 --> 00:08:20,480 Speaker 3: with near shoring becoming such a major trend, all these 159 00:08:20,480 --> 00:08:24,160 Speaker 3: manufacturers are moving production in Mexico. That's leading to the 160 00:08:24,200 --> 00:08:27,320 Speaker 3: suppliers that have to support those manufacturers, whether it's their 161 00:08:27,720 --> 00:08:30,160 Speaker 3: physical suppliers that are building the goods that are going 162 00:08:30,240 --> 00:08:32,800 Speaker 3: into the parts that go into the car, or the 163 00:08:32,840 --> 00:08:37,080 Speaker 3: packaging that goes into CpG products. Ultimately, it could be 164 00:08:37,080 --> 00:08:39,280 Speaker 3: those types of suppliers, or it could be logistics companies 165 00:08:39,280 --> 00:08:42,520 Speaker 3: and trucking companies, but they're all rushing to support their 166 00:08:42,559 --> 00:08:46,280 Speaker 3: customers in Mexico. And so as all these logistics providers 167 00:08:46,320 --> 00:08:49,679 Speaker 3: and trucking companies get involved in Mexico, I believe that 168 00:08:49,679 --> 00:08:51,160 Speaker 3: they're going to need tools to be able to do 169 00:08:51,200 --> 00:08:53,120 Speaker 3: their jobs. And I think that there's a better way 170 00:08:53,160 --> 00:08:56,280 Speaker 3: to help them do their jobs. And it's just a 171 00:08:56,320 --> 00:08:58,840 Speaker 3: matter of starting with the roadmap that we've built out 172 00:08:58,840 --> 00:09:00,720 Speaker 3: to build what we're building at Cargatto. 173 00:09:01,320 --> 00:09:03,280 Speaker 2: Talk to us about what you see on the ground. 174 00:09:03,400 --> 00:09:06,199 Speaker 2: So I know a lot of the investments in Monterey, 175 00:09:06,640 --> 00:09:09,640 Speaker 2: you know, we know there's a Tesla factory, say twenty 176 00:09:09,679 --> 00:09:12,080 Speaker 2: twenty four versus I think you said you've gotten to 177 00:09:12,200 --> 00:09:15,520 Speaker 2: Mexico stuff about a decade ago. Talk to us about, 178 00:09:15,520 --> 00:09:18,600 Speaker 2: like what you see happening on the ground in various 179 00:09:18,640 --> 00:09:21,400 Speaker 2: parts of northern Mexico and elsewhere in twenty twenty four 180 00:09:21,800 --> 00:09:23,480 Speaker 2: versus what it looked like in twenty fourteen. 181 00:09:24,040 --> 00:09:26,800 Speaker 3: Let me start at a really high level. When I 182 00:09:26,840 --> 00:09:30,680 Speaker 3: started building with Mexico at Coyote, we were communicating with 183 00:09:30,760 --> 00:09:33,880 Speaker 3: drivers in Mexico via those nextele phones where it was 184 00:09:33,880 --> 00:09:37,280 Speaker 3: like a walkie talkie they would click to communicate with them. 185 00:09:37,320 --> 00:09:39,679 Speaker 3: And so now most of the drivers in Mexico, most 186 00:09:39,720 --> 00:09:43,080 Speaker 3: of the trucking companies have smartphones, they have iPhones or androids, 187 00:09:43,360 --> 00:09:46,360 Speaker 3: they've got laptops, they've got iPads or tablets, and so 188 00:09:46,679 --> 00:09:49,040 Speaker 3: technology has come a lot further along in the last 189 00:09:49,080 --> 00:09:52,679 Speaker 3: decade from a you know, physically what's on the ground perspective, 190 00:09:53,000 --> 00:09:55,360 Speaker 3: Monterey has expanded massively. You know, I was down there 191 00:09:55,360 --> 00:09:58,560 Speaker 3: a few weeks ago and the amount of new facilities 192 00:09:58,559 --> 00:10:01,440 Speaker 3: that are still getting built. Everywhere you drive, you see 193 00:10:01,480 --> 00:10:04,959 Speaker 3: brands that you recognize, like I saw LG. I saw 194 00:10:05,320 --> 00:10:08,120 Speaker 3: some of the different golf companies that produce golf balls 195 00:10:08,120 --> 00:10:10,280 Speaker 3: and golf clubs and everything else that comes along with that. 196 00:10:10,760 --> 00:10:14,480 Speaker 3: Manufacturing in money, there's lots of CpG brands that are 197 00:10:14,480 --> 00:10:17,319 Speaker 3: starting to build up plants in money, appliances and electronics, 198 00:10:17,360 --> 00:10:19,760 Speaker 3: and so you see all these different companies that are 199 00:10:19,760 --> 00:10:22,760 Speaker 3: building in Monterey right now that the same things happening 200 00:10:22,760 --> 00:10:26,080 Speaker 3: in Ramasresepei, which is just south of Monterey, and Salteo. 201 00:10:26,240 --> 00:10:31,760 Speaker 3: It's happening in the Baihio, which is in Central Mexico, Cadetro, Aguas, Calientis, Guadalajara, 202 00:10:32,160 --> 00:10:35,760 Speaker 3: Mexico City, Puebla. It's starting to spread all throughout Mexico 203 00:10:35,800 --> 00:10:38,640 Speaker 3: as people realize makes a lot more sense to manufacture 204 00:10:38,640 --> 00:10:39,959 Speaker 3: there than it does overseas. 205 00:10:40,280 --> 00:10:43,160 Speaker 1: What exactly is Mexico actually exporting to the US? So 206 00:10:43,320 --> 00:10:46,240 Speaker 1: I mentioned in the intro famously there's a lot of 207 00:10:46,480 --> 00:10:50,440 Speaker 1: car components and vehicles involved here, and you were just 208 00:10:50,480 --> 00:10:52,840 Speaker 1: discussing some of the car companies that have been moving 209 00:10:53,000 --> 00:10:55,760 Speaker 1: some aspects of production down there. But what are the 210 00:10:55,800 --> 00:10:59,040 Speaker 1: things that are actually coming across the border? And has 211 00:10:59,080 --> 00:11:02,040 Speaker 1: there been any changed there over the past couple of 212 00:11:02,080 --> 00:11:02,600 Speaker 1: years or so. 213 00:11:03,240 --> 00:11:04,960 Speaker 3: I think it's been a lot of the same stuff. So, 214 00:11:05,000 --> 00:11:07,360 Speaker 3: like a lot of the automotive companies, for example, have 215 00:11:07,360 --> 00:11:10,200 Speaker 3: been in Mexico for decades, like General Motors and Ford 216 00:11:10,240 --> 00:11:14,240 Speaker 3: and Brysler and everybody else. Like Tesla's the newest entrant 217 00:11:14,240 --> 00:11:16,400 Speaker 3: to come into Mexico, and they've done it the loudest, 218 00:11:16,400 --> 00:11:18,120 Speaker 3: but they've been there for a long time. Most of 219 00:11:18,120 --> 00:11:21,640 Speaker 3: the automotive suppliers, and so automotive has along been a 220 00:11:21,640 --> 00:11:25,959 Speaker 3: big part of it. Electronics, whether it's appliances or computers 221 00:11:26,000 --> 00:11:29,400 Speaker 3: or TVs. I remember we used to ship video game 222 00:11:29,440 --> 00:11:33,959 Speaker 3: consoles to Mexico for a large electronics manufacturer. Beer is 223 00:11:34,000 --> 00:11:36,520 Speaker 3: a major product that comes out of Mexico. All sorts 224 00:11:36,520 --> 00:11:39,839 Speaker 3: of food products. Obviously, tequila comes out of Mexico, out 225 00:11:39,840 --> 00:11:42,800 Speaker 3: of Jalisco. You've got mezcal coming out of Wahaka and 226 00:11:42,840 --> 00:11:45,640 Speaker 3: some other parts of Mexico. There's a lot of components 227 00:11:45,679 --> 00:11:49,960 Speaker 3: that go into anything electrical. And then you've got anything 228 00:11:49,960 --> 00:11:51,840 Speaker 3: that you would find in an office, anything that you'd 229 00:11:51,880 --> 00:11:54,920 Speaker 3: find around your house that's got wiring in it, there's 230 00:11:54,920 --> 00:11:57,040 Speaker 3: a really good chance that it came from Mexico. So 231 00:11:57,120 --> 00:11:59,960 Speaker 3: most of the major appliance manufacturers have plants throughout back, 232 00:12:00,480 --> 00:12:03,760 Speaker 3: whether it's LG or Samsung or higher which is ge. 233 00:12:04,360 --> 00:12:06,640 Speaker 3: The majority of them are manufacturing in Mexico. 234 00:12:06,920 --> 00:12:09,000 Speaker 2: So what is the main case? Why are they doing it? 235 00:12:09,040 --> 00:12:11,120 Speaker 2: I mean, I guess obviously some of it must be 236 00:12:11,520 --> 00:12:15,480 Speaker 2: the USMCA and Trump's the tariffs on China. Maybe some 237 00:12:15,640 --> 00:12:19,680 Speaker 2: of it the COVID supply chain frailties. But what is 238 00:12:19,720 --> 00:12:22,240 Speaker 2: the pitch right now? A company is thinking about setting 239 00:12:22,280 --> 00:12:24,000 Speaker 2: up to Mexico, how much is it about that and 240 00:12:24,040 --> 00:12:27,680 Speaker 2: how much is it about, say, improvements in Mexico's own 241 00:12:27,800 --> 00:12:31,000 Speaker 2: infrastructure such that a neighbor that's so close to the 242 00:12:31,120 --> 00:12:35,160 Speaker 2: United States actually makes more sense as a manufacturing hub. 243 00:12:35,559 --> 00:12:38,199 Speaker 3: I think it boils down to a few things. USMCA 244 00:12:38,480 --> 00:12:40,679 Speaker 3: update from NAFTA is definitely one of them, and so 245 00:12:40,760 --> 00:12:44,560 Speaker 3: you touched on that. That encouraged more automotive parts, for example, 246 00:12:44,559 --> 00:12:47,080 Speaker 3: to be made in North America that go into a car. 247 00:12:47,280 --> 00:12:49,480 Speaker 3: That raised that percentage from sixty two and a half 248 00:12:49,520 --> 00:12:52,720 Speaker 3: to seventy five percent. Pandemic was definitely another major piece. 249 00:12:52,760 --> 00:12:55,760 Speaker 3: So I remember at Forger we had a customer reach 250 00:12:55,800 --> 00:12:58,920 Speaker 3: out a company called Premium Guard that said, we just 251 00:12:58,960 --> 00:13:02,600 Speaker 3: acquired this plant from Federal Mogul in Mexico because our 252 00:13:02,640 --> 00:13:04,960 Speaker 3: manufacturing in China was slowing down and so we needed 253 00:13:04,960 --> 00:13:08,000 Speaker 3: to be able to continue to manufacture and sell filters 254 00:13:08,360 --> 00:13:10,360 Speaker 3: in spite of the fact that China was shut down, 255 00:13:10,440 --> 00:13:12,719 Speaker 3: and so we bought a plant in Mexico. We need 256 00:13:12,720 --> 00:13:15,000 Speaker 3: your help shipping their freight from Mexico the United States, 257 00:13:15,160 --> 00:13:18,880 Speaker 3: and so overnight their volume just started shipping. And we 258 00:13:18,960 --> 00:13:21,160 Speaker 3: saw that happen with a lot of other companies, and 259 00:13:21,200 --> 00:13:24,000 Speaker 3: so the pandemic secured everybody is the second piece, and 260 00:13:24,040 --> 00:13:27,360 Speaker 3: then the third piece is that the proximity makes a 261 00:13:27,400 --> 00:13:30,680 Speaker 3: lot of sense. Like it's a three hour flight from Chicago, 262 00:13:30,720 --> 00:13:32,600 Speaker 3: monor A to go meet with a customer, to go 263 00:13:32,640 --> 00:13:35,120 Speaker 3: meet with the team, to meet with a potential vendor. 264 00:13:35,559 --> 00:13:37,559 Speaker 3: It's I think, what fifteen to eighteen hours to fly 265 00:13:37,640 --> 00:13:41,599 Speaker 3: to China from the US. So getting to Mexico's a 266 00:13:41,640 --> 00:13:44,360 Speaker 3: lot easier. Time zones are a lot more similar. They're 267 00:13:44,400 --> 00:13:47,280 Speaker 3: not exactly the same, but they're similar, and so it's 268 00:13:47,320 --> 00:13:50,520 Speaker 3: easier from a communication perspective. There's also a lot more 269 00:13:50,520 --> 00:13:52,960 Speaker 3: people that speak Spanish in the United States than Mandarin, 270 00:13:53,080 --> 00:13:56,679 Speaker 3: and so you're much likelier to find more cultural alignment, 271 00:13:57,080 --> 00:13:59,920 Speaker 3: easier to communicate with people in Mexico than people in 272 00:14:00,160 --> 00:14:04,199 Speaker 3: Asia or overseas. And ultimately, that time that you can 273 00:14:04,200 --> 00:14:07,920 Speaker 3: cut down on travel and everything else directly affects your 274 00:14:07,920 --> 00:14:11,440 Speaker 3: ability to control quality and control cost and everything else. 275 00:14:11,520 --> 00:14:14,120 Speaker 3: And so Mexico has just made so much more sense. 276 00:14:14,160 --> 00:14:16,360 Speaker 3: And then on top of it, if you're setting up 277 00:14:16,400 --> 00:14:19,720 Speaker 3: manufacturing and Monterey right now, it's like shooting fish in 278 00:14:19,760 --> 00:14:21,720 Speaker 3: a barrel to be able to go find a provider 279 00:14:21,760 --> 00:14:24,760 Speaker 3: that can help you. If you're freight or help you 280 00:14:25,080 --> 00:14:29,080 Speaker 3: manage your customs process because of the density that's already there. 281 00:14:29,480 --> 00:14:32,360 Speaker 3: You're walking into a market that already exists. It's getting 282 00:14:32,480 --> 00:14:48,840 Speaker 3: more expensive, but it's there already. 283 00:14:50,360 --> 00:14:52,680 Speaker 2: Tracy, have you been to Mexico. I have not, So 284 00:14:52,960 --> 00:14:54,920 Speaker 2: I just this is going to be like the most part. 285 00:14:54,920 --> 00:14:56,640 Speaker 1: But I mean I have when I was like a 286 00:14:56,720 --> 00:14:58,880 Speaker 1: kid and we lived in Dallas. I think we went 287 00:14:58,920 --> 00:15:02,200 Speaker 1: to one of the border towns, but I barely remember it. Sorry, 288 00:15:02,240 --> 00:15:04,520 Speaker 1: I feel like I have to be very specific here. 289 00:15:04,680 --> 00:15:07,000 Speaker 2: Yeah, this is like gonna be the most boring point. 290 00:15:07,160 --> 00:15:09,440 Speaker 2: But like to Matt's point about how it's just a 291 00:15:09,440 --> 00:15:12,280 Speaker 2: three hour flight, Mexico is so close from like anywhere, 292 00:15:12,280 --> 00:15:14,200 Speaker 2: and like you could just take a long weekend trip. 293 00:15:14,240 --> 00:15:17,200 Speaker 2: There's so easy. And every time I traveled to Mexico, 294 00:15:17,240 --> 00:15:20,160 Speaker 2: like on a vacation, I'm just like it's like it's 295 00:15:20,280 --> 00:15:22,720 Speaker 2: right here. And so that point about I was just 296 00:15:22,800 --> 00:15:25,400 Speaker 2: a three hour flight from Mexico maybe seems obvious, but 297 00:15:25,480 --> 00:15:27,480 Speaker 2: it also is like it is so easy. 298 00:15:27,680 --> 00:15:30,400 Speaker 1: Wait, I'm glad you brought that up. Actually, the idea 299 00:15:30,560 --> 00:15:34,280 Speaker 1: of obvious. So I'm thinking how to frame this question. 300 00:15:34,640 --> 00:15:37,800 Speaker 1: So I realized there is already a degree of trade 301 00:15:37,840 --> 00:15:40,640 Speaker 1: between the US and Mexico obviously, and there is the 302 00:15:40,800 --> 00:15:44,720 Speaker 1: free Trade Agreement, of course, But why hasn't Mexico been 303 00:15:44,960 --> 00:15:48,560 Speaker 1: a bigger market before, like, let's say, twenty years ago. 304 00:15:49,000 --> 00:15:51,520 Speaker 1: Why didn't this happen earlier? What was the hold up? 305 00:15:52,040 --> 00:15:55,160 Speaker 3: I think the technology advancement was a big piece. Again, 306 00:15:55,200 --> 00:15:58,320 Speaker 3: there's been manufacturing down there for decades, like General Motors 307 00:15:58,360 --> 00:16:00,200 Speaker 3: has been down there I think for fifty years or 308 00:16:00,240 --> 00:16:02,440 Speaker 3: something like that. But it was while Trump was in 309 00:16:02,480 --> 00:16:05,040 Speaker 3: office and started the whole trade war thing with China 310 00:16:05,200 --> 00:16:07,440 Speaker 3: and said we're going to bring everything closer to home 311 00:16:07,560 --> 00:16:11,680 Speaker 3: and branded the usmcas America First. But in reality, quote 312 00:16:11,720 --> 00:16:14,320 Speaker 3: unquote America First was really about North America, and so 313 00:16:14,800 --> 00:16:17,360 Speaker 3: that encouraged trade for all of North America. And I 314 00:16:17,360 --> 00:16:20,640 Speaker 3: think that was the catalyst that caused all this growth 315 00:16:20,720 --> 00:16:23,000 Speaker 3: to happen. And then the pandemic kind of tipped it 316 00:16:23,040 --> 00:16:26,440 Speaker 3: all over. But you know, it's been growing steadily for 317 00:16:26,680 --> 00:16:27,960 Speaker 3: twenty or thirty years. Now. 318 00:16:28,760 --> 00:16:31,840 Speaker 1: What about infrastructure, You know, Joe brought that up. We've 319 00:16:31,880 --> 00:16:36,480 Speaker 1: seen some concerns over things like congestion in the Suez Canal. 320 00:16:36,520 --> 00:16:39,760 Speaker 1: At various points in time, You've seen attacks on ships. 321 00:16:39,840 --> 00:16:44,360 Speaker 1: You've seen drought in the Panama Canal. Has Mexico built 322 00:16:44,440 --> 00:16:47,680 Speaker 1: out its infrastructure at all to make the exchange of 323 00:16:47,680 --> 00:16:51,920 Speaker 1: goods easier or is it benefiting from I guess, deteriorating 324 00:16:52,000 --> 00:16:54,880 Speaker 1: infrastructure elsewhere in the world both. 325 00:16:55,200 --> 00:16:58,840 Speaker 3: I think, you know, there's definitely those external factors that 326 00:16:58,880 --> 00:17:02,160 Speaker 3: are providing benefit. But you know, there's been some investment 327 00:17:02,160 --> 00:17:05,640 Speaker 3: in infrastructure in Mexico, and the highways are getting better, 328 00:17:05,800 --> 00:17:07,720 Speaker 3: the toll ways that most trucks are going to use 329 00:17:07,840 --> 00:17:10,640 Speaker 3: are getting better. There's definitely still a need to better 330 00:17:10,680 --> 00:17:13,960 Speaker 3: support it and better regulate it. So, for example, in 331 00:17:13,960 --> 00:17:16,080 Speaker 3: the United States, you could go on a website and 332 00:17:16,119 --> 00:17:18,800 Speaker 3: you could find a bunch of details about a trucking 333 00:17:18,840 --> 00:17:21,159 Speaker 3: company and a matter of you know, three minutes if 334 00:17:21,200 --> 00:17:24,080 Speaker 3: you just type in their MC number their dot number. 335 00:17:24,280 --> 00:17:26,159 Speaker 3: You can't do that with the trucking company in Mexico. 336 00:17:26,520 --> 00:17:29,280 Speaker 3: And there's no regulation over freight brokeriges in Mexico. And 337 00:17:29,320 --> 00:17:32,000 Speaker 3: so I think what I would ask of Mexico to 338 00:17:32,080 --> 00:17:35,040 Speaker 3: do to make things better would be figuring out ways 339 00:17:35,080 --> 00:17:38,679 Speaker 3: to help with security issues like theft in Mexico. You know, 340 00:17:38,720 --> 00:17:41,880 Speaker 3: the cartel issues in Mexico definitely continue to be an issue. 341 00:17:42,400 --> 00:17:45,440 Speaker 3: And then the infrastructure side of it is really related 342 00:17:45,480 --> 00:17:48,919 Speaker 3: to the actual information related to the companies that are 343 00:17:48,920 --> 00:17:51,679 Speaker 3: involved in the transactions and being able to register them, 344 00:17:51,720 --> 00:17:54,160 Speaker 3: being able to understand what they do, because otherwise it's 345 00:17:54,200 --> 00:17:55,760 Speaker 3: just the wild West, and that's how you end up 346 00:17:55,800 --> 00:17:56,719 Speaker 3: with freak getting stolen. 347 00:17:57,359 --> 00:18:00,359 Speaker 1: Joe, have you been on the Mexican trucking boards there 348 00:18:00,400 --> 00:18:01,600 Speaker 1: are Mexican shocking boards. 349 00:18:01,640 --> 00:18:03,159 Speaker 2: No, I have it, But I find that to be 350 00:18:03,359 --> 00:18:06,000 Speaker 2: a really interesting point that I'd never thought of, which 351 00:18:06,040 --> 00:18:10,479 Speaker 2: is we talk about infrastructure as highways or toll roads 352 00:18:10,760 --> 00:18:14,600 Speaker 2: or canals or whatever, but the idea of like also 353 00:18:14,880 --> 00:18:17,840 Speaker 2: it's important that there be some sort of centralized place 354 00:18:17,880 --> 00:18:20,159 Speaker 2: where you can just look up the reputation of a 355 00:18:20,200 --> 00:18:23,280 Speaker 2: freight brokerage or a truck and company, and how valuable 356 00:18:23,400 --> 00:18:25,760 Speaker 2: it is for the government to be able to centralize 357 00:18:25,760 --> 00:18:28,919 Speaker 2: that and just sort of smooth. That is not something 358 00:18:29,000 --> 00:18:32,119 Speaker 2: I had really thought about before, but it is infrastructure 359 00:18:32,240 --> 00:18:33,960 Speaker 2: in the sense talk to us a little bit more 360 00:18:34,000 --> 00:18:37,320 Speaker 2: obviously the security situation. So it seems like this is 361 00:18:37,359 --> 00:18:40,280 Speaker 2: one area where under the Homlo years, over the last 362 00:18:40,280 --> 00:18:43,880 Speaker 2: five or six years, maybe no progress at all on security, 363 00:18:43,880 --> 00:18:47,239 Speaker 2: whether we're talking about homicides or the strength of the 364 00:18:47,240 --> 00:18:49,719 Speaker 2: cartels in certain parts of the country. Talk to us 365 00:18:49,720 --> 00:18:52,879 Speaker 2: a little bit more about what you're seeing on the 366 00:18:52,920 --> 00:18:56,359 Speaker 2: ground from that perspective, and then how risk of freight, theft, 367 00:18:56,400 --> 00:18:59,800 Speaker 2: et cetera goes into companies making investment decisions. 368 00:19:00,280 --> 00:19:03,639 Speaker 3: So there are parts of Mexico that are totally fine 369 00:19:04,160 --> 00:19:06,800 Speaker 3: when it comes to moving freight, like you know, knock 370 00:19:06,880 --> 00:19:09,760 Speaker 3: on wood. I rarely hear about issues with product coming 371 00:19:09,760 --> 00:19:12,840 Speaker 3: out of Monterey, like out of northern Mexico or central Mexico. 372 00:19:13,400 --> 00:19:16,520 Speaker 3: It's usually product coming out of southern Mexico, like near Puebla, 373 00:19:17,080 --> 00:19:20,000 Speaker 3: So Pueblo. There's a big Volkswagen plant there and it's 374 00:19:20,040 --> 00:19:24,320 Speaker 3: about two hours south of Mexico City, and so it's 375 00:19:24,400 --> 00:19:26,520 Speaker 3: relatively close to what I would consider to be a 376 00:19:26,520 --> 00:19:29,879 Speaker 3: major market, but a lot of carris are scared to 377 00:19:29,880 --> 00:19:31,439 Speaker 3: go there because of theft, and there's a lot of 378 00:19:31,440 --> 00:19:34,680 Speaker 3: cartile activity there. And then Vera Cruz, which is along 379 00:19:34,720 --> 00:19:37,960 Speaker 3: the Gulf of Mexico, and so that's southern part of Mexico, 380 00:19:38,040 --> 00:19:40,200 Speaker 3: is still very frightening for a lot of trucking companies, 381 00:19:40,200 --> 00:19:42,480 Speaker 3: for a lot of shippers, for a lot of freight 382 00:19:42,480 --> 00:19:45,240 Speaker 3: brokridges to get involved in moving freight there, and so 383 00:19:45,280 --> 00:19:48,320 Speaker 3: that's where there's a lot of cartele activity. I've also seen, 384 00:19:48,640 --> 00:19:51,200 Speaker 3: you know, shipments get stolen coming out of Jalisco and 385 00:19:51,280 --> 00:19:54,719 Speaker 3: Aguas Calientis, which is in central Mexico. So it's not 386 00:19:54,760 --> 00:19:58,240 Speaker 3: to say that it doesn't happen, but the concern is 387 00:19:58,280 --> 00:20:02,200 Speaker 3: definitely in southern Mexico. And then from a perspective of 388 00:20:02,400 --> 00:20:05,040 Speaker 3: what people think about when they start investing in Mexico. 389 00:20:05,640 --> 00:20:08,720 Speaker 3: Another thing related to the regulation and infrastructure side is 390 00:20:08,720 --> 00:20:11,719 Speaker 3: that in the United States, cargo insurance is something that 391 00:20:12,080 --> 00:20:15,639 Speaker 3: is required of freight brokerages and trucking companies, and so 392 00:20:15,760 --> 00:20:18,959 Speaker 3: anybody that's shipping goods in the United States, there's cargo 393 00:20:19,000 --> 00:20:21,720 Speaker 3: insurance that insured those goods if there were a truckload 394 00:20:21,760 --> 00:20:25,000 Speaker 3: that got into an accident and the goods were destroyed. Separately, 395 00:20:25,000 --> 00:20:27,280 Speaker 3: there's insurance if a car was damaged or if anybody 396 00:20:27,359 --> 00:20:30,320 Speaker 3: was hurt, but there's insurance for the freight. In Mexico, 397 00:20:30,400 --> 00:20:33,359 Speaker 3: there's no requirement for freight to be insured, and so 398 00:20:33,520 --> 00:20:36,119 Speaker 3: none of the freight providers insure it, none of the 399 00:20:36,119 --> 00:20:39,760 Speaker 3: trucking companies insure it, and most of the beneficial cargo owners, 400 00:20:39,760 --> 00:20:43,320 Speaker 3: like the manufacturers, some of them don't know that it's required, 401 00:20:43,400 --> 00:20:46,400 Speaker 3: and if they do, they try to get it insured, 402 00:20:46,400 --> 00:20:49,280 Speaker 3: but it becomes kind of a headache. And so that's 403 00:20:49,320 --> 00:20:52,000 Speaker 3: another big area is the fact that insurance isn't required. 404 00:20:52,040 --> 00:20:54,280 Speaker 3: And so when people think about where they're going to 405 00:20:54,280 --> 00:20:57,080 Speaker 3: set up manufacturing, they think, is my freight potentially going 406 00:20:57,119 --> 00:20:59,240 Speaker 3: to get stolen? And if so, am I going to 407 00:20:59,240 --> 00:21:01,080 Speaker 3: have to replace it? Or do I have insurance that 408 00:21:01,119 --> 00:21:01,760 Speaker 3: can cover that? 409 00:21:01,920 --> 00:21:04,439 Speaker 1: Wait, this might be a good opportunity. And I realized 410 00:21:04,480 --> 00:21:07,439 Speaker 1: we probably should have asked you about this earlier. But 411 00:21:07,520 --> 00:21:11,480 Speaker 1: can you walk us in excruciating detail, like the process 412 00:21:11,720 --> 00:21:16,240 Speaker 1: of how these goods get moved? And again we touched 413 00:21:16,280 --> 00:21:20,200 Speaker 1: on it earlier, but like who hires the trucking company here? 414 00:21:20,840 --> 00:21:24,000 Speaker 1: Or like who hires the freight broker? And then like 415 00:21:24,480 --> 00:21:29,119 Speaker 1: is the trucking company? Is the freight company actually US incorporated? 416 00:21:29,280 --> 00:21:32,120 Speaker 1: Or is it Mexican? Who are the drivers? How does 417 00:21:32,160 --> 00:21:34,960 Speaker 1: that like immigration process work? Is it a Mexican driver 418 00:21:35,400 --> 00:21:38,240 Speaker 1: going into the US? Do they switch over at the border? 419 00:21:38,560 --> 00:21:41,639 Speaker 1: Is it a US driver? I honestly have no idea, 420 00:21:41,720 --> 00:21:44,960 Speaker 1: but it seems like the process is important here. 421 00:21:45,359 --> 00:21:48,600 Speaker 3: Yes, let's start at the very beginning. I'm a transportation 422 00:21:48,760 --> 00:21:53,240 Speaker 3: leader that works at a large manufacturer in the United States, 423 00:21:53,400 --> 00:21:56,800 Speaker 3: like one of the big automotive companies, and I have 424 00:21:57,280 --> 00:22:00,240 Speaker 3: my manufacturing plants set up in Mexico. I've got some 425 00:22:00,280 --> 00:22:02,760 Speaker 3: of my suppliers set up in Mexico. I've got some 426 00:22:02,800 --> 00:22:04,920 Speaker 3: of my factories in the United States or my assemblies 427 00:22:04,920 --> 00:22:07,800 Speaker 3: in the United States, and I need to make sure 428 00:22:07,800 --> 00:22:10,720 Speaker 3: that my stuff gets from Mexico to the United States 429 00:22:10,760 --> 00:22:13,240 Speaker 3: on a regular basis. And so I'm probably going to 430 00:22:13,320 --> 00:22:16,760 Speaker 3: run an RFP or request for pricing on an annual basis. 431 00:22:16,760 --> 00:22:18,560 Speaker 3: I'm going to reach out to all of my providers. 432 00:22:18,960 --> 00:22:21,280 Speaker 3: I'm going to go to a group of freight brokerages 433 00:22:21,280 --> 00:22:23,400 Speaker 3: that I work with, especially when it comes to Mexico, 434 00:22:23,760 --> 00:22:26,080 Speaker 3: that I trust and know, that can provide good quality 435 00:22:26,080 --> 00:22:28,920 Speaker 3: cross border service, who have the scale that I need. 436 00:22:28,960 --> 00:22:31,120 Speaker 3: And then I'm also going to rely on a lot 437 00:22:31,119 --> 00:22:33,800 Speaker 3: of the trucking companies that I've had long relationships with 438 00:22:34,240 --> 00:22:37,040 Speaker 3: that continue to provide dedicated direct service to me. And 439 00:22:37,080 --> 00:22:39,800 Speaker 3: so I'm going to say, hey, let's say I've got 440 00:22:40,119 --> 00:22:42,080 Speaker 3: ten thousand shipments a year that are coming out of 441 00:22:42,119 --> 00:22:45,280 Speaker 3: Mexico to the United States. I need capacity for that. 442 00:22:45,680 --> 00:22:48,480 Speaker 3: I've got out of those ten thousand, two thousand of 443 00:22:48,520 --> 00:22:50,080 Speaker 3: them are going to come out of Monterey going to 444 00:22:50,119 --> 00:22:52,840 Speaker 3: my plants in the southeast. Four thousand of them are 445 00:22:52,880 --> 00:22:55,400 Speaker 3: going to come out of my Mexico City facility going 446 00:22:55,400 --> 00:22:57,760 Speaker 3: to my plants in the Southeast and in the Midwest, 447 00:22:58,119 --> 00:22:59,520 Speaker 3: and then the rest of them are going to come 448 00:22:59,520 --> 00:23:02,120 Speaker 3: out of my Stanley's boot to see a facility going 449 00:23:02,160 --> 00:23:05,480 Speaker 3: to Dallas, in Atlanta and Chicago. So, all of you 450 00:23:05,560 --> 00:23:07,800 Speaker 3: trucking companies and your freight brokerges, I need you guys 451 00:23:07,840 --> 00:23:11,080 Speaker 3: to provide pricing for me. And typically they're going to 452 00:23:11,119 --> 00:23:13,080 Speaker 3: say I need it to be door to door, which 453 00:23:13,119 --> 00:23:14,760 Speaker 3: means that I need you to be able to handle 454 00:23:14,800 --> 00:23:17,879 Speaker 3: the entire thing from the pickup in Mexico to the 455 00:23:17,920 --> 00:23:20,760 Speaker 3: delivery in the United States. Separately, I'm going to hire 456 00:23:20,760 --> 00:23:23,600 Speaker 3: my own customs broker because I already have a customs 457 00:23:23,600 --> 00:23:25,520 Speaker 3: broker that clears the freight for me at the border, 458 00:23:26,119 --> 00:23:28,760 Speaker 3: and I've got that relationship. I've had it for fifteen 459 00:23:28,840 --> 00:23:29,600 Speaker 3: or twenty years. 460 00:23:29,640 --> 00:23:31,679 Speaker 2: Real quickly, what does a customs broker do? 461 00:23:32,280 --> 00:23:35,800 Speaker 3: So customs broker acts on behalf of the manufacturer the 462 00:23:35,840 --> 00:23:40,280 Speaker 3: importer and works between them and the US or Mexican 463 00:23:40,320 --> 00:23:43,600 Speaker 3: government to file taxes and duties and make sure all 464 00:23:43,600 --> 00:23:45,640 Speaker 3: the paperwork gets fine, all right, keep going thank you 465 00:23:46,240 --> 00:23:48,720 Speaker 3: like a travel agent kind of yeah. And so they 466 00:23:48,720 --> 00:23:51,080 Speaker 3: act on behalf of the shipper, and so you there's 467 00:23:51,119 --> 00:23:53,520 Speaker 3: always just saying that, like you marry your customs worker 468 00:23:53,520 --> 00:23:57,200 Speaker 3: and you date your forwarder, you're stuck a lot longer 469 00:23:57,200 --> 00:23:59,840 Speaker 3: with your customs borker. You sign a power of attorney 470 00:23:59,880 --> 00:24:03,560 Speaker 3: with them, and they're filing all this paperwork that has 471 00:24:04,080 --> 00:24:06,520 Speaker 3: the exact number of nuts and bolts that are inside 472 00:24:06,520 --> 00:24:10,000 Speaker 3: of your trailer, every single little piece of detail. If 473 00:24:10,040 --> 00:24:11,920 Speaker 3: they get one thing wrong, that could cost you a 474 00:24:11,960 --> 00:24:14,199 Speaker 3: lot of money. And so you have a long standing 475 00:24:14,200 --> 00:24:16,679 Speaker 3: relationship and you don't want that to change. And so 476 00:24:16,880 --> 00:24:20,120 Speaker 3: you go to your trucking and freight providers and say, 477 00:24:20,280 --> 00:24:23,400 Speaker 3: give me your pricing on all these locations in Mexico 478 00:24:23,440 --> 00:24:26,080 Speaker 3: to all these locations in the US. Those guys are 479 00:24:26,119 --> 00:24:29,080 Speaker 3: going to then either use whatever pricing data they already have, 480 00:24:29,680 --> 00:24:31,520 Speaker 3: or they're going to go out to their existing network, 481 00:24:31,640 --> 00:24:33,639 Speaker 3: or if they're their own trucking companies, they already have 482 00:24:33,680 --> 00:24:36,800 Speaker 3: their pricing internally, and they're going to provide pricing door 483 00:24:36,840 --> 00:24:39,240 Speaker 3: to door to be able to handle those moves. And 484 00:24:39,320 --> 00:24:42,240 Speaker 3: so let's fast forward after the RFP, after the shipper 485 00:24:42,400 --> 00:24:45,280 Speaker 3: decides or I decide, Hey, I'm going to hire these 486 00:24:45,280 --> 00:24:47,879 Speaker 3: brokers and these carriers to be my main providers on 487 00:24:47,880 --> 00:24:50,800 Speaker 3: this freight. I'm going to start tendering them loads. And 488 00:24:50,880 --> 00:24:53,159 Speaker 3: so I'm going to go and tender a load to 489 00:24:54,040 --> 00:24:57,080 Speaker 3: Joe's Trucking in Laredo, Texas, and say, hey, Joe, I've 490 00:24:57,080 --> 00:24:59,600 Speaker 3: got a load for you guys going from Monterey to Atlanta. 491 00:25:00,040 --> 00:25:02,320 Speaker 3: Can you pick it up for me? And you're based 492 00:25:02,320 --> 00:25:04,320 Speaker 3: in Laredo, Texas, so you're based in the United States. 493 00:25:04,320 --> 00:25:07,320 Speaker 3: You've got an MC number, a dot number, insurance and 494 00:25:07,359 --> 00:25:09,600 Speaker 3: all that stuff. You're going to turn around and go, 495 00:25:09,920 --> 00:25:12,480 Speaker 3: all right, which of my partner companies in Mexico have 496 00:25:12,600 --> 00:25:16,000 Speaker 3: my trailers in Monterey? And so you're going to call 497 00:25:16,280 --> 00:25:19,760 Speaker 3: Jose's Trucking in Monterey and say, hey, Jose, can you 498 00:25:19,800 --> 00:25:22,320 Speaker 3: take one of my trailers over to this factory in Monterey, 499 00:25:22,720 --> 00:25:25,320 Speaker 3: get loaded with these automotive parts, and then bring it 500 00:25:25,359 --> 00:25:27,520 Speaker 3: up to Neueva Laredo, which is the Mexican side of 501 00:25:27,520 --> 00:25:30,200 Speaker 3: the border and drop it off. At that point, we're 502 00:25:30,200 --> 00:25:32,560 Speaker 3: going to hire a border transfer company kind of like 503 00:25:32,600 --> 00:25:35,560 Speaker 3: a drage company at the ports, and we're going to say, 504 00:25:35,560 --> 00:25:39,680 Speaker 3: can you guys move this trailer from neuevl Laredo to Laredo, Texas. 505 00:25:40,119 --> 00:25:43,600 Speaker 3: So that's the trucking company. Joe's Trucking does that. Then 506 00:25:43,680 --> 00:25:46,680 Speaker 3: Joe's Trucking has a driver that's based in Laredo that's 507 00:25:46,680 --> 00:25:48,560 Speaker 3: going to take the load from Laredo in the same 508 00:25:48,600 --> 00:25:51,200 Speaker 3: trailer all the way to the final destination in Atlanta. 509 00:25:51,720 --> 00:25:53,040 Speaker 3: That's one way that it happens. 510 00:25:53,080 --> 00:25:55,800 Speaker 1: Wow, I see, So it sounds like the majority of 511 00:25:55,840 --> 00:25:58,240 Speaker 1: it does switch over at the border. 512 00:25:58,600 --> 00:26:01,760 Speaker 3: There's a version of a switch over, whether it happens 513 00:26:01,800 --> 00:26:03,760 Speaker 3: where the freight goes on the same trailer all the 514 00:26:03,760 --> 00:26:06,160 Speaker 3: way through, which is called through trailer or door to door, 515 00:26:06,800 --> 00:26:09,160 Speaker 3: or if it gets unloaded at the border and moved 516 00:26:09,160 --> 00:26:12,080 Speaker 3: onto a different trailer, which is called transloading. Both of 517 00:26:12,119 --> 00:26:14,320 Speaker 3: those are options, and both of those get done every 518 00:26:14,400 --> 00:26:18,560 Speaker 3: day by brokers and three pels and carriers. Sometimes it's 519 00:26:18,600 --> 00:26:22,399 Speaker 3: a US driver, sometimes it's a Mexican driver that takes 520 00:26:22,400 --> 00:26:24,840 Speaker 3: the load from Nuevo Laredo, they cross it with what's 521 00:26:24,840 --> 00:26:27,119 Speaker 3: called B one visa and then they go deliver the 522 00:26:27,119 --> 00:26:40,920 Speaker 3: load into the United States. 523 00:26:44,240 --> 00:26:45,760 Speaker 2: I don't know why. It's always amused me. There are 524 00:26:45,760 --> 00:26:47,280 Speaker 2: a lot of cities in the US that start with 525 00:26:47,400 --> 00:26:50,480 Speaker 2: new because the old country is the original name, except 526 00:26:50,560 --> 00:26:53,240 Speaker 2: in the case of Laredo in the US, and then 527 00:26:53,400 --> 00:26:57,560 Speaker 2: the Mexican partner on the other side is Nuevo Laredo. 528 00:26:57,720 --> 00:27:00,439 Speaker 2: It's the only one that I know of like that. 529 00:27:00,880 --> 00:27:04,439 Speaker 2: So you mentioned that there are not requirements for freight insurance, 530 00:27:04,640 --> 00:27:07,159 Speaker 2: that there isn't a centralized database where you can just 531 00:27:07,200 --> 00:27:10,160 Speaker 2: type in the number of the trucking company and figure 532 00:27:10,200 --> 00:27:12,199 Speaker 2: out like who they are and what their deal is. 533 00:27:12,600 --> 00:27:15,760 Speaker 2: How much does that put an emphasis on, basically the 534 00:27:15,840 --> 00:27:18,679 Speaker 2: sort of like boots on the ground or feed on 535 00:27:18,720 --> 00:27:22,600 Speaker 2: the ground of trusted relationships and actually getting to know 536 00:27:22,920 --> 00:27:26,359 Speaker 2: who you actually can work with in the absence of 537 00:27:26,480 --> 00:27:28,800 Speaker 2: sort of like more formal regulatory regimes. 538 00:27:29,600 --> 00:27:32,240 Speaker 3: So it's a culture thing and it's a process thing. 539 00:27:32,400 --> 00:27:35,119 Speaker 3: So when you're doing business in Mexico, you're usually going 540 00:27:35,160 --> 00:27:36,720 Speaker 3: to go to dinner, You're going to go get drinks 541 00:27:36,720 --> 00:27:39,320 Speaker 3: with somebody. You're going to build a relationship It's not 542 00:27:39,359 --> 00:27:42,240 Speaker 3: just about a formal, you know, commercial agreement. You sit 543 00:27:42,280 --> 00:27:44,320 Speaker 3: down in an office and you shake hand and you're done. 544 00:27:44,680 --> 00:27:47,760 Speaker 3: And this is something that I experienced definitely when I 545 00:27:47,840 --> 00:27:50,919 Speaker 3: was at Coyote and forger and arrived, but also something 546 00:27:50,960 --> 00:27:52,480 Speaker 3: that I've heard a lot over the last few months 547 00:27:52,520 --> 00:27:55,879 Speaker 3: as I've talked to other brokerage leaders who are leading, 548 00:27:55,920 --> 00:27:58,640 Speaker 3: you know, the Mexico business for other freight burgriges, and 549 00:27:58,760 --> 00:28:01,000 Speaker 3: I say, what's the number one thing that drives how 550 00:28:01,040 --> 00:28:04,320 Speaker 3: you go about evaluating your carrier base? And several people 551 00:28:04,320 --> 00:28:06,080 Speaker 3: have said, I have to go down and be able 552 00:28:06,119 --> 00:28:06,800 Speaker 3: to get drunk with. 553 00:28:06,760 --> 00:28:09,280 Speaker 1: Them on tequila. 554 00:28:09,880 --> 00:28:11,280 Speaker 3: I have to be able to Yeah, I have to 555 00:28:11,280 --> 00:28:13,080 Speaker 3: be able to drink tequila and kind of he os 556 00:28:13,119 --> 00:28:15,840 Speaker 3: with them and look them in the face and understand 557 00:28:15,920 --> 00:28:18,200 Speaker 3: or look them in the eyes and understand if they're 558 00:28:18,240 --> 00:28:20,280 Speaker 3: actually going to provide great service for us and if 559 00:28:20,320 --> 00:28:22,000 Speaker 3: they're going to answer their phone when I call them. 560 00:28:22,920 --> 00:28:27,159 Speaker 1: So you've obviously founded your own company to specialize in 561 00:28:27,280 --> 00:28:31,240 Speaker 1: US Mexico freight. Do you see other competitors in that space? 562 00:28:31,280 --> 00:28:36,000 Speaker 1: Are people like building out trucking supply in this particular 563 00:28:36,040 --> 00:28:37,159 Speaker 1: area at the moment. 564 00:28:37,359 --> 00:28:40,640 Speaker 3: We're building software. We're not building a service business. You know, 565 00:28:40,640 --> 00:28:43,120 Speaker 3: we're not trying to build like another cross border freight brokerage. 566 00:28:43,120 --> 00:28:46,280 Speaker 3: We're building software for all those brokerages. I don't see 567 00:28:46,280 --> 00:28:48,320 Speaker 3: anybody else trying to do what we're doing because of 568 00:28:48,360 --> 00:28:50,520 Speaker 3: the complexity that goes into it. I do see a 569 00:28:50,560 --> 00:28:52,720 Speaker 3: lot of freight companies that are expanding in the Mexico. 570 00:28:53,360 --> 00:28:55,640 Speaker 3: So just like a Arrive bought Forager a couple of 571 00:28:55,680 --> 00:28:58,800 Speaker 3: years ago, there are tons of other brokerages now in 572 00:28:58,840 --> 00:29:01,040 Speaker 3: the US that are looking to buy companies in Mexico 573 00:29:01,480 --> 00:29:05,160 Speaker 3: by specialized cross border providers. There's also I've seen people 574 00:29:05,160 --> 00:29:06,680 Speaker 3: that used to work for me, I think that have 575 00:29:06,760 --> 00:29:09,640 Speaker 3: gone and started their own businesses that are either focusing 576 00:29:09,680 --> 00:29:12,400 Speaker 3: on cross border or including it as a part of 577 00:29:12,440 --> 00:29:15,160 Speaker 3: what they do. And so I think there's a lot 578 00:29:15,200 --> 00:29:17,600 Speaker 3: of these providers that are going to come out, you know, 579 00:29:17,680 --> 00:29:20,640 Speaker 3: we're trying to go solve these problems for their customers, 580 00:29:21,040 --> 00:29:22,520 Speaker 3: and I'm excited to be able to support all of 581 00:29:22,560 --> 00:29:23,240 Speaker 3: them as they do that. 582 00:29:23,760 --> 00:29:25,800 Speaker 2: So I realized this is going to be sort of 583 00:29:25,880 --> 00:29:30,320 Speaker 2: like a gimme or softball question or book talking opportunity. 584 00:29:30,360 --> 00:29:33,640 Speaker 2: But you wouldn't be starting yet another sort of Mexico 585 00:29:33,760 --> 00:29:37,360 Speaker 2: focused company if you weren't bullish on the prospects of 586 00:29:37,680 --> 00:29:40,200 Speaker 2: continued growth. So we had this incredible growth of the 587 00:29:40,280 --> 00:29:43,960 Speaker 2: last ten years, Mexico has surpassed China over as the 588 00:29:44,080 --> 00:29:48,440 Speaker 2: number one source of imports into the United States. How 589 00:29:48,480 --> 00:29:51,760 Speaker 2: much more could it grow? Like how much more runway 590 00:29:51,880 --> 00:29:55,240 Speaker 2: or green space is there for the US Mexico trade. 591 00:29:55,440 --> 00:29:57,680 Speaker 3: There's two things that I'll point out about this. One is, 592 00:29:58,320 --> 00:30:00,400 Speaker 3: first of all, Tesla is building their plan there. It's 593 00:30:00,440 --> 00:30:03,960 Speaker 3: not built yet, So none of that increased volume that 594 00:30:04,000 --> 00:30:07,160 Speaker 3: we've seen is because Tesla is a plant there, it's 595 00:30:07,200 --> 00:30:09,200 Speaker 3: not built yet. And there's a lot of other companies 596 00:30:09,200 --> 00:30:11,920 Speaker 3: that have announced investments but that are not built yet, 597 00:30:11,920 --> 00:30:14,720 Speaker 3: which means that there's a lot more growth coming from 598 00:30:14,760 --> 00:30:16,320 Speaker 3: just that volume. And I think there's gonna be a 599 00:30:16,360 --> 00:30:19,000 Speaker 3: few things that are going to come from that. One 600 00:30:19,040 --> 00:30:23,040 Speaker 3: is intra Mexico volume is going to grow significantly along 601 00:30:23,080 --> 00:30:25,400 Speaker 3: with drayage volume in Mexico, and that's why you know 602 00:30:25,560 --> 00:30:29,200 Speaker 3: we're seeing the skyrocketing of container moves going into Mexico 603 00:30:29,240 --> 00:30:32,280 Speaker 3: from China. And then the other big thing is that 604 00:30:32,640 --> 00:30:35,800 Speaker 3: as all of this starts to happen. I think there's 605 00:30:35,840 --> 00:30:37,800 Speaker 3: a lot of other room in Mexico in terms of 606 00:30:37,840 --> 00:30:39,800 Speaker 3: like you know, white space or green space that people 607 00:30:39,920 --> 00:30:42,960 Speaker 3: go build in the Baheo is still not saturated yet, 608 00:30:43,000 --> 00:30:47,120 Speaker 3: Like there's still markets in central Mexico that is not saturated. 609 00:30:47,400 --> 00:30:50,120 Speaker 3: If public can get better from a security perspective, there 610 00:30:50,120 --> 00:30:52,840 Speaker 3: could be a lot more manufacturing in that area. There's 611 00:30:53,000 --> 00:30:56,000 Speaker 3: I think over six hundred Mekilidoras that are just in 612 00:30:56,120 --> 00:30:59,680 Speaker 3: Wares alone, which by the way, Mikilidora is a manufacturer 613 00:30:59,680 --> 00:31:02,360 Speaker 3: that it's sports the United States from Mexico. There's a 614 00:31:02,360 --> 00:31:05,080 Speaker 3: ton of manufacturing opportunity there. And then I think we 615 00:31:05,080 --> 00:31:07,280 Speaker 3: can end up seeing a lot of production end up 616 00:31:07,480 --> 00:31:11,840 Speaker 3: moving to Tijuana, Mexicali and hermo Cio, which is south 617 00:31:11,880 --> 00:31:15,080 Speaker 3: of Nogallas. And so I wouldn't be surprised at all 618 00:31:15,080 --> 00:31:19,080 Speaker 3: to see growth happening well beyond monter A and most 619 00:31:19,120 --> 00:31:21,160 Speaker 3: of the rest of Mexico is still you know, wide 620 00:31:21,200 --> 00:31:23,080 Speaker 3: open in terms of investment opportunity. 621 00:31:23,800 --> 00:31:27,800 Speaker 1: What happens if Trump wins the presidency. So I realized 622 00:31:27,800 --> 00:31:33,440 Speaker 1: that Trump administration renegotiated NAFTA, so you know, presumably Trump 623 00:31:33,520 --> 00:31:38,920 Speaker 1: isn't targeting Mexico specifically. But on the other hand, given 624 00:31:39,240 --> 00:31:43,000 Speaker 1: the growing trade deficit and given that Trump you know, 625 00:31:43,120 --> 00:31:47,920 Speaker 1: sometimes unveils ideas that are not exactly expected, and one 626 00:31:47,920 --> 00:31:52,440 Speaker 1: of those recently was a universal ten percent tariff on imports. 627 00:31:53,320 --> 00:31:57,960 Speaker 1: Is there a risk there that Mexico trade does come 628 00:31:58,080 --> 00:31:59,720 Speaker 1: under scrutiny from that administration? 629 00:31:59,760 --> 00:32:03,400 Speaker 3: Again, I think he definitely made some comments last time 630 00:32:03,400 --> 00:32:05,480 Speaker 3: around when he was in office that made it seem 631 00:32:05,480 --> 00:32:07,600 Speaker 3: like he was gonna start a trade war with both Mexico, 632 00:32:08,120 --> 00:32:10,920 Speaker 3: and I think it was posturing around getting the USMCA done. 633 00:32:11,280 --> 00:32:13,400 Speaker 3: And so look, I think if he gets re elected, 634 00:32:13,480 --> 00:32:16,960 Speaker 3: it's it could definitely cost some issues with trade because 635 00:32:17,240 --> 00:32:20,160 Speaker 3: we've already seen it cause issues. I do think what 636 00:32:20,200 --> 00:32:22,800 Speaker 3: would end up happening is he would be much more 637 00:32:22,840 --> 00:32:26,320 Speaker 3: affirm about the whole thing about China sending stuff into 638 00:32:26,360 --> 00:32:29,520 Speaker 3: Mexico and then coming to the United States. And I 639 00:32:29,560 --> 00:32:31,560 Speaker 3: don't know that we're going to see any bid cars 640 00:32:31,600 --> 00:32:34,120 Speaker 3: like certainly throughout the United States anyway anytime soon, but 641 00:32:34,200 --> 00:32:36,360 Speaker 3: like I saw them everywhere in Mexico and I was there, 642 00:32:36,640 --> 00:32:37,040 Speaker 3: Oh yeah, I. 643 00:32:37,040 --> 00:32:39,200 Speaker 2: Saw be a bunch of bids on the road when. 644 00:32:39,040 --> 00:32:42,080 Speaker 3: You're there, Oh yeah, MG. I think is another brand 645 00:32:42,120 --> 00:32:43,480 Speaker 3: that used to be British and it's owned by the 646 00:32:43,560 --> 00:32:46,120 Speaker 3: Chinese now, Like oh, I think yeah. I was in 647 00:32:46,480 --> 00:32:49,600 Speaker 3: all cars that were Chinese cars, and they it didn't 648 00:32:49,600 --> 00:32:52,600 Speaker 3: seem any different than a European car or a Created 649 00:32:52,680 --> 00:32:55,000 Speaker 3: car or American car anything that I've been in before, 650 00:32:55,040 --> 00:32:56,719 Speaker 3: but the brands were different. 651 00:32:57,120 --> 00:33:00,200 Speaker 2: I was in Salulita recently near Port of Ayre, and 652 00:33:00,280 --> 00:33:01,760 Speaker 2: I was looking out to see if I would see 653 00:33:01,760 --> 00:33:03,880 Speaker 2: an Ebuyds. I didn't see any when I was there, 654 00:33:03,920 --> 00:33:05,880 Speaker 2: but maybe I just missed them. Also, there weren't a 655 00:33:05,920 --> 00:33:07,960 Speaker 2: lot of cars around there. Sorry, keep going no. 656 00:33:07,920 --> 00:33:09,840 Speaker 3: But and like you've got to like be looking for it. 657 00:33:09,880 --> 00:33:11,920 Speaker 3: But and I noticed it when I walked out of 658 00:33:11,960 --> 00:33:13,560 Speaker 3: the airport because I was like, oh, that's a logo 659 00:33:13,600 --> 00:33:15,640 Speaker 3: I've never seen before. And I just I know a 660 00:33:15,640 --> 00:33:17,880 Speaker 3: lot of these automotive companies from working with them in 661 00:33:18,040 --> 00:33:21,240 Speaker 3: past roles. And so I think I could see Trump 662 00:33:21,640 --> 00:33:25,760 Speaker 3: putting a lot more emphasis on Chinese imports in New 663 00:33:25,800 --> 00:33:28,120 Speaker 3: Mexico that come in the United States and making a 664 00:33:28,160 --> 00:33:30,520 Speaker 3: push to try to stop that, and then that will 665 00:33:30,520 --> 00:33:33,200 Speaker 3: have a downstream effect because there's a lot of manufacturers 666 00:33:33,200 --> 00:33:35,440 Speaker 3: that I've talked to in the United States who have said, hey, 667 00:33:35,920 --> 00:33:39,320 Speaker 3: my suppliers were in China. They've established joint ventures in 668 00:33:39,360 --> 00:33:43,360 Speaker 3: Mexico to support US, and they've they're building plants in Mexico. 669 00:33:43,520 --> 00:33:46,280 Speaker 3: And so if that ends up being something where Trump 670 00:33:46,320 --> 00:33:48,840 Speaker 3: puts a teriff on those types of companies, it will 671 00:33:48,840 --> 00:33:52,880 Speaker 3: have a direct impact on every American consumer and all 672 00:33:52,920 --> 00:33:55,960 Speaker 3: the manufacturers that are building stuff and selling stuff to 673 00:33:56,000 --> 00:33:59,040 Speaker 3: the consumers, because their prices will go up and the 674 00:33:59,080 --> 00:33:59,680 Speaker 3: cost will go up. 675 00:33:59,680 --> 00:34:03,920 Speaker 2: To make what is the effect on trade if there 676 00:34:03,960 --> 00:34:07,800 Speaker 2: was a much tighter border crackdown when it comes to migration, 677 00:34:08,080 --> 00:34:10,440 Speaker 2: and we did see this a little bit, I believe 678 00:34:10,920 --> 00:34:15,000 Speaker 2: last year when the US Customs and Border Protection halted 679 00:34:15,040 --> 00:34:18,640 Speaker 2: trade in some areas out of due to the rise 680 00:34:18,800 --> 00:34:21,239 Speaker 2: in migrants. How do they interact with each other? 681 00:34:21,640 --> 00:34:24,040 Speaker 3: It causes delays when they pull people that are supposed 682 00:34:24,040 --> 00:34:27,000 Speaker 3: to be clearing freight away from clearing freight to go 683 00:34:27,320 --> 00:34:31,400 Speaker 3: you know, heard people and so I remember when this happened, 684 00:34:31,400 --> 00:34:33,600 Speaker 3: I think while Trump was in office, and then Governor 685 00:34:33,640 --> 00:34:36,600 Speaker 3: Abbott did the same thing or similar thing somewhat recently. 686 00:34:36,719 --> 00:34:39,279 Speaker 3: Is like they pulled people away from helping clear the 687 00:34:39,280 --> 00:34:42,120 Speaker 3: freight examining it and enabling it to come across the 688 00:34:42,120 --> 00:34:44,640 Speaker 3: border and said go, you know, round people up and 689 00:34:44,680 --> 00:34:46,400 Speaker 3: make sure you get them where they need to be. 690 00:34:46,880 --> 00:34:49,640 Speaker 3: And that pulled people away from clearing freight, which created 691 00:34:49,640 --> 00:34:52,839 Speaker 3: longer lines of the border, created longer truck lines, which 692 00:34:52,880 --> 00:34:56,120 Speaker 3: caused delays, and ultimately could have caused disruptions in people's 693 00:34:56,120 --> 00:34:59,080 Speaker 3: supply chains because of the need for a lot of 694 00:34:59,080 --> 00:35:00,839 Speaker 3: these parts. Most what's this freight, by the way, coming 695 00:35:00,880 --> 00:35:04,560 Speaker 3: out of Mexico is manufacturing driven. It's not distribution driven, 696 00:35:04,600 --> 00:35:07,040 Speaker 3: and so it's all stuff that's going into production that's 697 00:35:07,080 --> 00:35:09,839 Speaker 3: going to help make something at all. And so if 698 00:35:09,880 --> 00:35:12,759 Speaker 3: you stop at the truckload from moving, it could cause 699 00:35:12,760 --> 00:35:14,799 Speaker 3: an entire supply chain to shut down. 700 00:35:15,920 --> 00:35:18,719 Speaker 2: Matt Silver, thank you so much for coming on odd Locks. 701 00:35:18,840 --> 00:35:22,799 Speaker 2: Really appreciate explanation, the level of detail and clarity, and 702 00:35:23,120 --> 00:35:24,799 Speaker 2: maybe I have some I think I have a little 703 00:35:24,840 --> 00:35:27,560 Speaker 2: bit more understanding now of how goods get across the border, 704 00:35:27,560 --> 00:35:28,800 Speaker 2: but I appreciate. 705 00:35:28,400 --> 00:35:30,680 Speaker 3: You taking the time. Absolutely, thank you for having me. 706 00:35:43,560 --> 00:35:45,600 Speaker 2: Tracy. There was a lot in there that I like, 707 00:35:45,760 --> 00:35:48,480 Speaker 2: but I'll just start with the simple point, the idea 708 00:35:48,560 --> 00:35:52,960 Speaker 2: of like sort of registries and regulation as sort of 709 00:35:53,200 --> 00:35:56,959 Speaker 2: making doing business much easier. I think is a point 710 00:35:56,960 --> 00:35:59,520 Speaker 2: that's easy to forget. Like we think of regulation as 711 00:35:59,520 --> 00:36:02,000 Speaker 2: some sort of like a curtailman of business. But if 712 00:36:02,000 --> 00:36:04,160 Speaker 2: the regulation is you have to put in some info 713 00:36:04,200 --> 00:36:06,600 Speaker 2: about yourself into a website that anyone can look up, 714 00:36:06,760 --> 00:36:08,160 Speaker 2: it makes life easier for everyone. 715 00:36:08,560 --> 00:36:11,880 Speaker 1: Yes, to some extent. I mean I guess it helps 716 00:36:11,880 --> 00:36:14,399 Speaker 1: from an insurance perspective and things like that. It goes 717 00:36:14,440 --> 00:36:17,720 Speaker 1: back to sure the sort of like rule of law 718 00:36:17,880 --> 00:36:20,920 Speaker 1: institutional strength thing. Yes, I have to say I kind 719 00:36:20,920 --> 00:36:21,920 Speaker 1: of want to go to Laredo. 720 00:36:22,560 --> 00:36:23,279 Speaker 3: No, I do too? 721 00:36:23,600 --> 00:36:24,120 Speaker 2: Is that weird? 722 00:36:24,480 --> 00:36:25,080 Speaker 3: I have this. 723 00:36:25,040 --> 00:36:27,960 Speaker 1: Weird impression of Laredo because my dad always complains about 724 00:36:27,960 --> 00:36:30,360 Speaker 1: it because I think he did his Air Force training there, 725 00:36:30,719 --> 00:36:34,040 Speaker 1: which wasn't a fun experience for him. So he's always 726 00:36:34,080 --> 00:36:36,160 Speaker 1: been kind of down on Laredo. But I feel like 727 00:36:36,200 --> 00:36:38,800 Speaker 1: I want to go and watch the like the truck 728 00:36:38,840 --> 00:36:40,120 Speaker 1: switch over totally. 729 00:36:40,200 --> 00:36:40,520 Speaker 3: I would. 730 00:36:40,520 --> 00:36:43,960 Speaker 2: I've always wanted to go to Laredo and also go 731 00:36:44,000 --> 00:36:46,960 Speaker 2: across the border to Nuevo Laredo. Also, I really want 732 00:36:47,000 --> 00:36:49,600 Speaker 2: to go to Nuevo Leone, the capital of Monterey, Like 733 00:36:49,640 --> 00:36:52,480 Speaker 2: if you look at its skyline. There's some great pictures 734 00:36:52,480 --> 00:36:54,920 Speaker 2: of it, like it looks like this sort of like 735 00:36:54,920 --> 00:36:56,880 Speaker 2: like if you just looked at the skyline on a 736 00:36:56,920 --> 00:36:59,879 Speaker 2: picture like Google Images, you'd think it's like some rise 737 00:37:00,680 --> 00:37:04,360 Speaker 2: East Asian city because it looks so modern and gleaming 738 00:37:04,440 --> 00:37:06,239 Speaker 2: and nestled in the mountains, like you think you'd be 739 00:37:06,280 --> 00:37:08,960 Speaker 2: looking at somewhere in Taiwan or Career or something. So 740 00:37:09,200 --> 00:37:10,840 Speaker 2: I want to take a I want to take a 741 00:37:10,880 --> 00:37:12,200 Speaker 2: Nueva Leone trip as well. 742 00:37:12,320 --> 00:37:16,040 Speaker 1: Yeah, that'd be interesting. So that was fascinating. I especially 743 00:37:16,160 --> 00:37:19,640 Speaker 1: liked Matt's detailed description of you know, from the time 744 00:37:19,840 --> 00:37:23,520 Speaker 1: the request for trucking or a quote is made to 745 00:37:23,760 --> 00:37:26,279 Speaker 1: like the end goal of actually moving the goods. That 746 00:37:26,360 --> 00:37:29,439 Speaker 1: was really interesting. I guess the one question I have, 747 00:37:29,800 --> 00:37:33,160 Speaker 1: and Brad Setzer has written quite a bit about this, 748 00:37:33,320 --> 00:37:37,040 Speaker 1: but like, how much of the increase in Mexico US 749 00:37:37,160 --> 00:37:42,319 Speaker 1: trade that widening deficit has been a post pandemic recovery 750 00:37:42,520 --> 00:37:46,800 Speaker 1: and maybe more car imports being made. We've certainly seen 751 00:37:46,880 --> 00:37:51,080 Speaker 1: that in the numbers versus that friend shoring idea or 752 00:37:51,120 --> 00:37:53,120 Speaker 1: a mix of both. But it does seem to me 753 00:37:53,480 --> 00:37:57,080 Speaker 1: like maybe there's also the thing that you mentioned in 754 00:37:57,120 --> 00:38:00,759 Speaker 1: the intro the idea that like the trade statistics undercount 755 00:38:01,040 --> 00:38:04,600 Speaker 1: some Chinese imports or they don't take into account Chinese 756 00:38:04,640 --> 00:38:07,840 Speaker 1: imports that are going through Mexico and then onto the US. 757 00:38:08,360 --> 00:38:11,840 Speaker 1: So I guess I still have some questions around that 758 00:38:12,040 --> 00:38:15,520 Speaker 1: overall picture, but that was super interesting. 759 00:38:15,800 --> 00:38:19,000 Speaker 2: The thing that I'm really interested is whether, like we're 760 00:38:19,040 --> 00:38:22,480 Speaker 2: going to see a sustained capital deepening in Mexico. So 761 00:38:22,600 --> 00:38:25,719 Speaker 2: you build a big Tesla factory and then suddenly there 762 00:38:25,719 --> 00:38:28,400 Speaker 2: are a lot more people that have had the experience 763 00:38:28,520 --> 00:38:31,680 Speaker 2: of building a factory, right, and so that presumably you 764 00:38:31,719 --> 00:38:33,440 Speaker 2: can do. I mean, it's the story we always talk 765 00:38:33,480 --> 00:38:36,319 Speaker 2: about with the rise of East Asian manufacturing. But then 766 00:38:36,320 --> 00:38:38,080 Speaker 2: you have that sort of learning, and then you have 767 00:38:38,200 --> 00:38:40,959 Speaker 2: more people that know how to do other advanced manufacturing. 768 00:38:41,239 --> 00:38:45,080 Speaker 1: Some monkeys jumping from trees, that's right, are monkeys going 769 00:38:45,120 --> 00:38:47,520 Speaker 1: from tree to tree as Housemen's. 770 00:38:47,000 --> 00:38:49,920 Speaker 2: Dis cardio houseman pudding. Like to me, like, that's really 771 00:38:50,160 --> 00:38:53,800 Speaker 2: exciting if that sort of takeoff, those sort of network 772 00:38:53,800 --> 00:38:56,200 Speaker 2: effects can be built up, and so then you have 773 00:38:56,280 --> 00:38:59,560 Speaker 2: manufacturing that leads to more manufacturing. And then of course 774 00:39:00,080 --> 00:39:03,359 Speaker 2: theory at least that it requires like some success from 775 00:39:03,400 --> 00:39:08,280 Speaker 2: the public sector, both on security and then also infrastructure, electricity, 776 00:39:08,880 --> 00:39:12,360 Speaker 2: highways through almost the country. Still not great, but it 777 00:39:12,440 --> 00:39:14,839 Speaker 2: seems like there could be the seeds there of some 778 00:39:14,880 --> 00:39:18,680 Speaker 2: sort of like sustained, sustained increase in wealth, which would 779 00:39:18,680 --> 00:39:19,640 Speaker 2: be pretty cool, or just the. 780 00:39:19,560 --> 00:39:23,000 Speaker 1: Idea that capital attracts additional capital. Yeah, people see stuff 781 00:39:23,040 --> 00:39:25,520 Speaker 1: getting built. It's kind of like a network effect. Everyone 782 00:39:25,719 --> 00:39:29,200 Speaker 1: gets excited one thing is built and that enables a 783 00:39:29,239 --> 00:39:31,600 Speaker 1: bunch of other things. Absolutely, I can't believe I said 784 00:39:31,640 --> 00:39:35,279 Speaker 1: monkeys jumping from trees. I suddenly had an image of, like, 785 00:39:35,920 --> 00:39:38,200 Speaker 1: I don't know, a chimpanzee, like just leaping out of 786 00:39:38,239 --> 00:39:40,560 Speaker 1: a tree, going ah and falling to the ground. That 787 00:39:40,600 --> 00:39:42,920 Speaker 1: doesn't make sense in a trade context. That's not a 788 00:39:42,920 --> 00:39:43,800 Speaker 1: good trade analogy. 789 00:39:44,520 --> 00:39:48,160 Speaker 2: Leave it there, Okay, all right, we're. 790 00:39:48,080 --> 00:39:50,520 Speaker 1: Leaving it there. This has been another episode of the 791 00:39:50,560 --> 00:39:53,400 Speaker 1: All Thoughts podcast. I'm Tracy Alloway. You can follow me 792 00:39:53,640 --> 00:39:55,080 Speaker 1: at Tracy Alloway and. 793 00:39:55,000 --> 00:39:57,960 Speaker 2: I'm Jill Wysenthal. You can follow me at the Stalwart. 794 00:39:58,160 --> 00:40:01,960 Speaker 2: Follow our guest Matt Silver Hea at Matt Silver Follow 795 00:40:02,000 --> 00:40:06,120 Speaker 2: our producers Kerman Rodriguez at Kerman Arman, Dashel Bennett at 796 00:40:06,200 --> 00:40:09,400 Speaker 2: Dashbot and Kelbrooks at Kelbrooks and thank you to our 797 00:40:09,440 --> 00:40:13,040 Speaker 2: producer Moses Ondem. For more Oddlots content, go to Bloomberg 798 00:40:13,080 --> 00:40:16,200 Speaker 2: dot com slash odd Lots. We have transcripts, a blog, 799 00:40:16,400 --> 00:40:19,359 Speaker 2: and the weekly newsletter that we write every week, and 800 00:40:19,719 --> 00:40:23,120 Speaker 2: you can chat with fellow listeners in our discord discord 801 00:40:23,160 --> 00:40:26,480 Speaker 2: dot gg. 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