Global Maritime Shipping with Sal Mercogliano | Episode 254

Get ready for an in-depth look at global shipping logistics, where we compare the roles of merchant mariners to airline pilots and discuss the economic and technological shifts in the industry. From the evolution of container ownership to the impact of geopolitical events, Sal provides a comprehensive overview of the changes shaping modern shipping. We also touch on the long-term effects of COVID-19 on global supply chains and speculate on future trends, emphasizing the significant roles played by major U.S. ports. This episode is a must-listen for anyone keen on understanding the intricacies of global logistics and the freight industry.

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Useful Links from Sal:

2024 Port Performance Freight Statistics Program: Annual Report to Congress (bts.gov)

NRF | Monthly Import Cargo To Hit Highest Level Since 2022

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Transcript

Speaker 1: 0:19

Welcome back for another episode of the Freight360 podcast. We got a special guest today. We'll get to him in just a second. First, please take a moment to hit the like button, share us with all your friends and colleagues in the industry and leave us a comment. I know we got a lot of comments on some recent YouTube videos. Something's good, something's not so good, but we appreciate all of it and we'll actually I'm going to we'll introduce our guests here in just a minute and we'll pick his brain on YouTube because he's quite the YouTube star. But it all helps the algorithm and gets us in front of more people. So appreciate the engagement, whichever way you're taking it, and check out all the rest of our content at Freight360.net. You'll also find the Freight Broker Basics course there if you'd like an educational option. You'll also find the Freight Broker Basics course there if you'd like an educational option.

Speaker 1: 1:05

And without further ado, we've got with us today, sal Mercogliano. Sal, welcome to the show. How are you, sir? Oh, thanks for having me. I appreciate it. Yeah, so real quick. We'll get into your backstory in a little bit here, but for those who don't know you, quick 30 second rundown who are you, what do you do and you know know you're more famous than us in the youtube space. But a quick little rundown.

Speaker 2: 1:28

Yeah, I'm a associate professor of history over at campbell university in north carolina. I'm a former merchant mariner. I both worked ashore and afloat in the merchant marine and I host a youtube channel. What's going on with shipping going into my third year now?

Speaker 1: 1:43

awesome, very, very good. We'll pick your brain some more on YouTube and what your content's all about in just a little bit. But, ben, how are you doing down in Florida today? Man, you guys got to be toasting.

Speaker 3: 1:53

Doing well, trying to stay in the air conditioning. My wife is doing gardening and I keep saying, well, maybe middle of the day, it's probably not the best in July, but hey, fair enough, that's what it is. There you go. How's the new house coming along? Progress a little bit at a time very good.

Speaker 1: 2:10

Uh, well, quick little sports. We got the olympics starting. This will drop friday and that's, I believe, opening ceremony day in uh in france. So, um, team usa always a uh, always a front runner for the medal count. We'll see how it all pans out. It it's crazy to think how many Olympics there were recently, with COVID pushing 2020 back to 21. And then, just six months later, we had the Winter Olympics in 22 and we're back at it again for Summer Olympics. I'm decked out in my Bills gear today, training camp starting this week here in Western New York. We're all really excited to see how our draft class is going to do. Sal, I guess you're, so you're originally from New York and you're down in Carolina now. But what's? Are you a Giants fan, jets fan? Are you a football fan at all? What do we got?

Speaker 2: 2:57

Oh yeah, Giants fan. And then I did my PhD at University of Alabama. So roll tide.

Speaker 1: 3:03

Okay, there you go, there you go. Very good, ben, anything in the well, didn't we have the Open? Yeah?

Speaker 3: 3:14

It was a really good finish. I only got to watch it Sunday, but I mean it was a great finish. I thought it was a great tournament. Did you get to catch any of it?

Speaker 1: 3:21

I did not, just got the updates on my phone from ESPN but that's about it.

Speaker 3: 3:27

Yeah, xander Shoffley won his second major this year and I think those were his first two. Actually, I don't think he's won a major prior to the PGA that he won this year. So he had a long stretch of being one of the top golfers in the world without a major. Great finish to the tournament. I Great finish to the tournament. I mean he kind of I don't want to say he ran away with it, but I mean there were still, I think, a handful of folks on 16 and 17 when he finished and he was like, I think a two or three-stroke lead against the field and, yeah, closed it out. Really good tournament to watch. Scotty Shuffler didn't do as well as I was kind of hoping, but really good tournament overall.

Speaker 1: 4:04

Nice, there you go, love it. Well, we'll be coming back with all of the football updates coming here in the coming weeks and months, so I'm excited for those extended sports segments on the Freight 360 podcast. Quick little news update here. And if you're not subscribed to our newsletter, please check it out. You can go right to our website and there's a sign up button on the homepage. Signs out every Tuesday and Thursday for news market updates. All that good stuff, our latest content.

Speaker 1: 4:34

But one of the stories that I saw this week that really got me curious was the FMCSA. So there were obviously, for the last two plus years now, fraud has been the hot topic when it comes to the domestic freight industry and the FMCSA is the licensing entity that covers motor carriers and freight brokers, forwarders etc. And there's been a lot of pressure put on the FMCSA as to why they haven't been doing much with the complaints of fraud. You know the the the rough estimates that we've been using when we've lobbied in DC each fall and just in general discussion, is 80,000 complaints per year of double brokerage or illegal brokerage activity, something in the ballpark of 800800 million a year worth of if you monetize that fraud and cargo theft. And the FMCSA came back this week and said their excuse was we don't have enough data. That's why we're not doing anything with all these complaints and I struggle to swallow that pill because there's been.

Speaker 1: 5:43

The TIA has done a really, really good job at spending time around the calendar year meeting with members of Congress to talk about these issues and you know, you know, being a voice for the the rest of the members of the TIA, member parties and companies and they say they don't have enough data. So I don't understand. I don't know where we go from here. I'm curious, ben, if you have any thoughts on the excuse. Do you think it's valid? Do you think that you know they can do anything with it?

Speaker 3: 6:16

The other thing I read which I didn't really kind of understand is like they said that they have no ability to enforce any of the fines. Right, and I'm like that at least makes sense. And they need, you know, obviously the fast moving wheels of government to catch up, to be able to allow them to create some type of penalty. That, to me, always made sense as to why things aren't being done. The data piece makes zero sense because everyone's trying to report it. Everyone in the industry is trying to send information to them. It is not that there is no information available for sure and at least from our point of view, we're talking to very risk insurance companies constantly, large brokers, factoring companies. Everyone in the industry wants to feed this data to the FMCSA for them to do something, and no way is nobody willing to provide the information to me.

Speaker 1: 7:03

It's they don't have the people or the ability to process it and to do anything with it is more likely they have is us reporting it through the office of inspector general or through their general complaint um site, then I guess, yeah, they don't have very substantiated data, but um, their solution then could be they can implement some sort of um actual reporting tool intended for fraudulent practices in broke in the brokerage space, instead of just the general department of transportation inspector general office, because that's a very, very broad, loose category. They're not really narrowing down what the complaint or the issue is. So if there was some sort of system or a department, you know segment of the department, that has a task force or whatever you want to call it, that manages the reports of someone stealing a brokerage's identity to you know illegally broker freight, or a trucking company that brokers freight without a license to do so, or a freight broker who rebrokers a load without consent from the you know first broker in the transaction or without the customer's knowledge, if there's some way to really get the you know fine detail on that, then I feel like they could have better data right and but we'll see. We'll.

Speaker 1: 8:39

The TIA Capital or the Policy Forum and you know when we go on Capitol Hill is coming up in just under two months here. So we'll see, and usually, you know, there's good chance to talk with members of Congress as well, as we had some members from the FMCSA last year to have an open table discussion with. So we'll see. We're getting. You know, we're getting more and more into this every single year. So the good news is we're making progress, the conversation is happening. The question is you know, what do you do from this point? Moving forward, because it is a very costly thing and we'll pick sales brain on the maritime side of that, because I'm sure it's. You know there's a lot more going on in that space globally than just domestically on the roads here in the US. So anything else in the news, ben.

Speaker 3: 9:26

Nah, let's dig into it. I'm anxious to talk. Some shipping here.

Speaker 1: 9:29

All right, sal. Well, so for those that don't know you, you have a very, very impressive YouTube channel called what's Going On With Shipping. I didn't realize you just started it three years ago, but I was checking it out yesterday. I know steven was filling us in on the stats, but you got like 300 000 subscribers. Some of your top videos have millions and millions of views. Uh, obviously, with the, the bridge in baltimore, a lot of people watching on that. The ocean gate, um, submersible last year. Obviously those are those big, interesting topics that folks will go on and you did a great job really analyzing and covering details of those stories. But you mentioned Merchant Mariner, collegiate work. Fill us in a little bit more, in more detail. How did you get to what you're doing today? Fill in the blanks there.

Speaker 2: 10:25

Yeah, so I started. I grew up in New York, new York City, and my dad was a butcher, owned his own butcher shop, and so he had a boat and I used to love to go fishing. I hate fishing, I can't stand fish, I don't like fishing, but I love the boat and we used to go out offshore fishing and my job was to drive the boat and you know I see the ships coming in at New York Harbor and that got me really interested in it. So I attended the State University of New York Maritime College it's one of six state maritime academies that are out there. I got a BS in marine transportation and I got my third mate's license and sailed for a few years doing that. I love sailing. It was great. I would have kept doing it, but I came down with a condition that precluded my sailing career from continuing. I got married and so came ashore and-.

Speaker 2: 11:14

It's ended a lot of golf careers too. It ends a lot of careers. It ends a lot. So I worked ashore for a few years and then I decided to go to academia. It was a few years in. My wife said you know, if you want to go back out to sea, you can go. Now We've been, it's good, now you can go, but too late. I got my master's in maritime history and nautical archaeology from East Carolina and I went and got a PhD in military history side. But right around 2008, I started teaching a course for the US Merchant Marine Academy on maritime industry policy, a graduate level course, with people who are in the industry, and so I started writing about maritime industry policy, what's going on in the industry.

Speaker 2: 11:55

And then in 2021, when Ever Given went sideways in the Suez, I was writing about monthly for G-C, g Captain, which is an online maritime site, and I got asked to go on BBC to talk about what was happening with Ever Given getting stuck in the Suez and did my interview. It went really well and my buddy who runs G Captain, john Conrad, and I decided to do a video, an hour long video just breaking down what we knew, and that was the start of it, I had like 3000 views on that video and I was like. I was like man, this is great, this is fantastic, this is this is really good. And I started doing. It was initially what's going on in the Suez, so we were talking about the ship in the Suez and then I had a viewer sat there and said one day you know, hey, there's more ships out there, why don't you expand it? And so expanded outward and, like you said, three years later, here I am 300,000 subscribers, 50 million views. It's just, it's insane.

Speaker 1: 12:49

I'm actually curious. So I was going through your LinkedIn and on your background so you did some time with Military Sealift Command. Can you talk about that just a little bit? Yeah, that was my first sailing job.

Speaker 2: 13:02

So I sailed with the military right out of college. I worked for the military seal command. Most people don't know but the Navy about one out of every five ships in the US Navy have a merchant Marine crew on board and that's what I did For three years. I did underway replenishment. I did the refueling of ships at sea, either fuel or cargo and ammunition. It was on one of those ships that I met my wife. She was a Navy nurse. I was on the hospital ship Comfort during the first Persian Gulf War, so some people come back with PTSD. My wife came back with me, which she says is worse. So we did that. And then I went ashore. I worked for Military Seal of Command ashore for four years. I did ship chartering and working on the afloat prepositioning program.

Speaker 2: 13:43

So I worked with commercial ships. I worked with government ships and you know I was really at the point about eight years, do I stay with the government or change my career? And I decided to go the academic because I was always interested in the background of my profession and I really couldn't find that much about it. I didn't think it was very well written, I didn't think there was a lot documented about it, and so that really became my goal and so went off, got my academic career taught at I can't even tell you how many places the US Military Academy, the US Naval Academy, the US Marine Academy, university of North Carolina East University, a small private college in North Carolina. I've been the chair of the Department of History, criminal Justice and Political Science now for four years.

Speaker 1: 14:30

So when you I want to, and this is from my own curiosity you mentioned the afloat prepositioning. Is that the Army's preposition stock that you're referring to?

Speaker 2: 14:39

Yeah, it was actually. I actually worked with the Marine Corps first, so I did the Marine Corps prepositioning and then I helped start the Army prepositioning program and so we started putting equipment ashore for the US Army an entire brigade set, along with all the support and ancillary equipment. They're in the process now of phasing it down and closing it out the Army. It's a very controversial issue. I did a video on it not too long ago, but it's part of the for out the Army. It's a very controversial issue. I did a video on it not too long ago, but it's part of the. For example, the gear you're seeing off Gaza, for example. A lot of that is that old Army equipment that was on there.

Speaker 1: 16:20

Yeah, so for a lot of people that listen and sell you probably don't know this I'm in the National Guard. I'm a National Guard, I'm a logistics officer. I've been in for almost 20 years now and one of the things that's fascinating to me is how robust the logistics and supply chain operates and its reach for the Department of Defense. Obviously, military Sealift Command, msc, that's the Navy, that's our maritime platform. You've got US Transcom as the transportation command, you've got Air Mobility Command with the Air Force, but the preposition stock is incredible and obviously you mentioned that it's changing. But the concept behind it, for anyone that's curious, is a brigade-size element worth of equipment they have prepositioned around the globe. So there's some that's on land and, like you mentioned, some that's actually floating, so it can be mobilized to anywhere in the world within a certain timeframe and it's pretty incredible to see.

Speaker 1: 17:25

I remember seeing the one pre-positioned stockyard in Kuwait about 10 years ago and unfortunately everything just sat there, never got used and wasn't ever maintained. I think the program wasn't handled in its most efficient way, which is very common for the military and I'm sure you saw a lot of that in your time in military seal of command and our producer, steven was a corpsman, I'm sure he saw the inefficiencies of the military himself. But big animals like Department of Defense are going to have big logistical operations behind them that are required to support them and if not handled properly it can come to your demise, lead your demise, but if done right, can give you a great advantage. And the same goes to large shipping operations, whether it's globally, in the maritime space or domestically, what we talk about with large trucking companies and brokerage firms and whatnot. But, man, you can get people like myself and you, sal, nerding out on logistics and supply chain and go on and on all day about it.

Speaker 1: 18:29

But a very cool background. I appreciate all of that. Ben, what do you want to? What do you want to dig into first? I know you. You did some work in the, I would say, the steamship line space. You're probably more.

Speaker 3: 18:44

Long time ago, early on, one of the first things I did was negotiate all of the agreements between, like, non-asset brokerages and the steamship line, so like Maersk, cma, costco, and them like 2016, 17. So I worked a lot with them on inland transport, handing off the cargo and doing the rubber side of it. The question I wanted to ask, though, but I didn't want to interrupt, is like, can you just tell the audience like what is a merchant marine from an overview, so they can kind of categorize that in their head?

Speaker 2: 19:17

Yeah, so I mean, merchant mariners are basically, you know, they're what pilots are in terms of airlines and air freight companies, you know, and the merchant mariners are commercial sailors. Instead of working for the Navy or something like that, they work for commercial firms. So in my case, I worked for the US government and I sailed for them. But a lot of merchant mariners work for unions, you know, maybe it's the mastermates and pilots. If you're a deck officer, maybe it's the engineering unions, meba, the Marine Engineers Beneficial Association, or it's overseas mariners, and that's more the case than anything else is merchant mariners basically make their career at sea. They sail ships, you know, and they get jobs through crewing agencies, through brokerages, through crewing companies. They will go out there and sail. There's over 100,000 ships right now over 100 gross tons sailing on the world's ocean. About 1.8 million merchant mariners are out there. The US sector of that is extremely small. The US only represents about 0.4% of the total number of ships on the world's oceans today, so we're very small.

Speaker 2: 20:18

What we saw happen post-World War II was a transition from large national fleets of the US, great Britain, france, germany, japan and now the biggest registries out there are countries like Panama, liberia and the Marshall Islands. They control over 50% of the world shipping and the crews come from countries like the Philippines, india, indonesia, China, russia, ukraine that's who you see really moving freight around the world. And one of the reasons we did that was to get costs down. It was found to be extremely much more cost efficient. Registering a ship in Liberia doesn't require a lot of the extra costs associated with the United States. Hiring a merchant mariner from the Philippines is a lot cheaper than hiring a union mariner from the United States.

Speaker 2: 21:06

And when you add technology into it, particularly the advent of containerization, in the 1950s, malcolm McLean, a truck driver from Maxton, north Carolina, about 50 miles from where I'm at right now, developed the concept of containerization, the idea that we're going to take a box that can go on the back of a truck, a rail or on a ship and you can modularize it and move it basically intermodalism it and move it, basically intermodalism. That became the method that we move goods. In truth, mclean could not sell that concept at all in the 1950s and 60s. It just did not go anywhere. What sold it was he convinced the US military that this will clear up the problem in Vietnam, because they had a huge backlog trying to get ships into Vietnam. A great book by Mark Levinson called the Box recommended to everybody. It really talks about that development of freight.

Speaker 3: 21:59

It's a really interesting period. I remember and it's been some years, but for some reason I remember the banana somehow being integral to the changing of the way shipping worked sometime around that time period. The way shipping worked sometime around that time period it like either wasn't prevalent or became prevalent because of the containerized, or it was somehow affiliated with it.

Speaker 2: 22:18

Oh, the old banana boats running. I mean, you were actually. If you look back in the 20s and 30s they were converting old Navy destroyers in the banana boats because they had to run them that fast because the bananas would spoil and you didn't have air conditioning. So they were actually. The ships would have these huge kind of scoops on them. Have you ever watched movies like Titanic or something like that? You'll see these big scoops up on deck. Those catch the wind. That's your air conditioning that actually gets the airflow down into the ship. They would run these ships old Navy destroyers, fast cargo ships. It was really expensive. It was really expensive to haul bananas.

Speaker 2: 22:50

What changed everything was not just the container but the refrigerated container. Once you got the refrigerated container, it changed everything. And then all of a sudden, any ship at all can do it. You didn't have to have a ship purposely. You know, quote unquote the banana boat just running bananas. You can load other cargo on it. You can have climate control, which turned out to be the big game changer of everything, because you can load the bananas earlier, they would ripen slower and so you can start moving cargo.

Speaker 2: 23:19

And this is the big issue we see on containers right now, not every box can be refrigerated. There's a certain amount of outlets on it. It becomes a big issue on board ships. But containerization is the thing that changed everything when it came to global freight for everyone, and what we're seeing now, by the way, is a big change. You don't see a lot of ocean containers more than 50 to 100 miles from the coast, because what we see right now is that transition from the ocean container into the trailer, into the 45, 53 foot trailers and loading, and so it changes everything quite a bit, and we've really seen the container ship, for example, go from that very first container ship in 1958 that carried excuse me, 1956, that carried 58 boxes, to ships like the Everolot that carry 24,000 boxes today.

Speaker 1: 24:07

That's insane. Is that the largest one that's out there right now?

Speaker 2: 24:10

Well, Everolot has actually been eclipsed by another vessel, but roughly around 24,000 boxes is where we're seeing it. And that limit, by the way, is set by the Suez Canal. You can't have a ship longer than I think it's 399.99 meters in length. That's the limit. But now those ships aren't going through the Suez Canal anymore because of the Houthi, so we may start seeing ships get longer, which means we may see another spurt here in growth of container ships.

Speaker 3: 24:37

That's what I want to, can I? I want to segue from that right into, kind of what we were saying. I think that's a it's a perfect segue. Is that like, how should things be functioning right for the layman when they think about global shipping? Right, like, what is the typical structure of how? And I know it's a very broad question to ask very succinctly but if you can kind of summarize how they kind of look so we can get into some of the things that are happening that are changing that and creating issues within the domestic side.

Speaker 2: 25:07

Yeah. So it goes back to what Nate was talking about actually believe it or not with military logistics. So you know, if you look at the way we do military logistics in the US, and especially since post Cold War, he was talking about how good we do logistics. We do logistics very good, but it's been uncontested logistics. This is the big thing that the military is finding out right now is what happens when your logistics gets contested. In other words, somebody fights you to get your goods through, when you know, when we fought Korea, vietnam, persian Gulf War, iraq, afghanistan, no one's contesting our logistics and so logistics work great. What we're seeing right now in commercial freight is contested logistics. It's not that someone's fighting although we do have the Houthi and we'll talk about them in a minute but what we saw happen with COVID and the global supply chain crisis that came with it, that was a global disruption of shipping. As you know and I tell everybody this all the time the way global shipping works is it has an assumed level of trade. We basically assume we're going to move X amounts of containers every year and the system is programmed for that. We're going to move X amount of containers on this route this year.

Speaker 2: 26:08

What happened in 2020 when everybody went home was it changed everyone's buying pattern, and so what we had was the previous buying pattern being shipped on ships, and then you added the new buying pattern. Hey, I'm at home, I need an office, I need furniture, I need a whole batch of new things, but we don't know when it's going to end. And what we saw was the global supply chain had to react to that and it doesn't react very quickly in some ways. And what we saw was dispersions. There was no shortage of ships. Everyone likes to say, well, we were short of ships in the global supply chain. We weren't. There was 109 off LA and Long Beach. That's not a shortage. What we saw was those ships shifted from other markets and flooded into LA and Long Beach and overloaded the system.

Speaker 2: 26:50

And what we've been seeing since 2021, I would argue is these disruptions coming into the global supply chain and the system. I use the analogy of a flat pond or a pool Pool the water is set, it's nice and thing, and then somebody threw a boulder in. That was COVID. That was the COVID, and now you got the swells in and if you leave it long enough, it will settle back down. But what we've had since 2020 is more rocks being thrown in. It's Ever Given going sideways in the Suez. Ever Given was in the Suez for six days, but the impact of Ever Given last six months it created this massive disruption.

Speaker 2: 27:26

When the Houthi started shooting at ships in Maersk and Hapag on December 15th, 2023 announced they're pulling out, Everybody was like holy crap, what's this mean? And you saw the initial spike in the freight rates and then it started to come down and everyone's like, oh, okay, we're going to settle back into a routine. And now it's spiked back up again. That's the long-term effects coming in. And that's the thing with global shipping you don't tend to see the effects immediately. They tend to be dispersed over a long period of time. So it may be weeks, even months at times, till you feel that impact, but you have it.

Speaker 2: 28:02

So what we're seeing right now, with diversions in case of the Houthi in Yemen, for example is ocean shipping is accommodating. Ocean shipping is like water on a sidewalk it's going to find the cracks. It'll find ways to get around issues. The problem you have now is this elongated freight rate, now what we call in ocean shipping ton miles. How many miles do you have to ship a ton.

Speaker 2: 29:43

Normally, sailing from Asia to Europe is a finite amount. You're shipping one ton, 5,000, 6,000 miles. Well, now you're shipping that same ton 8,000, 9,000 miles, which means a container ship that normally can do six runs a year, now can only do five. That means you either have to pile cargo higher on the ships. You either have to sail faster, which you can't do because of fuel restrictions and the IMO, the International Maritime Organization, that says you have to slow up and the EU is taxing you on your carbon emissions, or you have to put more ships on the route and that means also you're going into other ports, which leads you to surcharges. It leads you to double handling cargo more than you normally would.

Speaker 2: 30:26

And you have the fact that US ports can't handle these big, massive container ships. The big 24,000 box ships can't come into the United States because we don't have the facilities to handle them. So that cargo has got to be moved. So all of it resonates against. This is one of the reasons why, when people are shipping things they're like, why am I getting these extra charges? Why is this causing me disruptions? Because the system still to this day. We're talking about six months after the Houthis started full-fledged attacks. We're still seeing the system work its way out.

Speaker 1: 31:02

That's wild. So I'm actually curious, ben, you might have an input on this. I've never really spent a lot of time in the drayage world, but there's a lot of costs associated with um detention, demurrage, you know. So if a container doesn't get returned back to a port um in a certain amount of time, these charges start to pile up. So, ben, you might be able to speak to this. Sal, your inputs welcome as well. But who owns the containers? Are these cost deriving? Are they there as a penalty because of how urgent the boxes need to get back to the port, because of the stresses that we're seeing? What does that all look like?

Speaker 3: 31:42

The thing I wanted to say too, because I'm going to kick it back to Sal too, because there was a question in there.

Speaker 3: 31:46

I'm glad you brought that up, it's like yeah typically, you bring a loaded container into the United States, you have a certain amount of time to return that empty, or you get feed per day. Right, like this is pretty simple. Right, you also get feed if you don't get it out of the port in time because, again, there's limited room. To Sal's point, like you got more cargo coming in, you can't just leave it there, so you get a window and then the fees go up a little bit as that window gets longer. Same thing for returning the empties right, and again for the shipping lines that own the containers right, like that's their asset. They need that back so that they can go and get it to where they can get it loaded again to make money from it.

Speaker 3: 32:24

The thing that I found really interesting when I first started working with the shipping lines, where they had told me and again, this is a long time ago, that's why I was curious for Sal to shed some light on Is it like I think it was like almost 40% of the containers moved were air like on ships, like a very large portion were just empty containers being repositioned because and again, the way it was explained, and this is 2016 or 15, right, like we have a big trade imbalance with China, for example. Right Like we bring more loaded containers here, they need the empties to refill them up over there. So a lot of the ships are literally moving empty containers and that's a large cost. And I'm curious for Sal to shed some light on, like how that works on the larger perspective and how that plays into rates, costs. Any of those things Lag time, no.

Speaker 2: 33:14

So I mean, it's a great point and you know a couple of things on that. You know, during the height of the supply chain crisis, you know you had guys like Gene Sirocco, the executive director of the Port of LA, talking about the fact that the biggest export out of LA is air. I would argue it's hot air, but it's air anyway coming out of there. And it's true. A couple of things. Number one up until about 2008,. The container companies, the shipping lines, own their containers. It's why you see Maersk and all those containers with their names on the side 2008,. You had the global supply chain crisis hit. Excuse me, you had the housing crisis hit and you had the recession hit, and the shipping companies found themselves in a lot of economic problems, and so they had to sell stuff off, and one of the things they sold off were their boxes and their chassis, and so they got rid of that a lot. And so today what you see is China is the largest manufacturer of containers. They also own the firms that are the lessees for containers, and so a lot of that is controlled through. Basically, you lease your containers, you're leasing a container all the time, and the thing that leasing companies love is fines. They love it. It's the best thing. It's the old blockbuster video thing. The way they make their money is the delay and not rewinding. It's the same thing in containers. It's the same exact thing they do, and what we saw happen in 2021, 2022 was the freight rates went through the roof. I mean, we were talking about $10,000 spot rates up to $20,000 spot rates coming across, and so you had shipping companies bringing containers across, dumping them in LA and Long Beach and other ports, and what they wanted to do was take an empty container back, bring it across so it can load. What they didn't want to bring back was full containers, because full containers slow the system up. If you're an agricultural guy and you want to get your grain out through a West Coast port, you could not ship it out in 2021, 2022, because the priority there was getting an empty container, because if you take that full container back to East Asia, it's got to be offloaded, it's got to be moved, it's a delay. The money is on the West to East run, not the East to West run, and so that was the big priority. And then you had these other container companies that came out of nowhere to jump on this rate. Hey, I can get $25,000 for a box going across. I'm YM line that operates just in Asia. I'm going to get a ship, I'm going to load it with goods, I'm going to bring it across to LA or Long Beach and I'm going to dump it off and I'm not going to pick anything up in return because I'm out of here. I'm just going to go back and get another run.

Speaker 2: 35:46

And this is one of the reasons why, in 2022, we saw Representative Garamendi from California, a Democrat, and Representative Johnson from South Dakota, a Republican, co-chair what was called the Ocean Shipping Reform Act.

Speaker 2: 36:00

That was the first piece of legislation in 30 years that aimed to really fix what was going on with ocean shipping, because Dusty Johnson, a farmer, knew his farmers were getting screwed out there.

Speaker 2: 36:12

They couldn't get the agriculture out, and so there had to be something to adjust this. What is happening with the Houthi now is you know, if I hand you a piece of paper and I hand you know, we go around our little cube here of four people and we each hand each other a piece of paper and flows very nicely, but if I all of a sudden, you know, reach out a little further, get the distance between us a little further, then it may slow things up and it may create this problem. That's what we're seeing right now. That ton mile distance that's added means that the empty containers are not getting back to get stuffed in Asia and that creates the disruption. It's one of the reasons why some container companies were willing to run through the Red Sea, take the chance because they had to get container. They were actually running back with empty containers through a war zone because they knew the profit was there if they can get them back and loaded and then get them on the run.

Speaker 1: 37:04

Well, let me ask you this Is there not enough? Because I think about in the domestic trucking side, we back hauls, right head haul. You're leaving your domicile to take something where it's going and you'll use usually run it back cheaper to get back home to your origin. Um, you usually would rather take a cheap load back than drive back empty and make nothing. How does that? It begs the question why would a shipping line not want to take some money to take freight back to Asia? Because I mean, if they're running back empty, they're not making any money right.

Speaker 3: 37:38

I want to ask that Can I layer on one thing to Nate's question, because I was thinking the same thing. If the containers aren't owned by the shipping lines, they're leased back. I got to imagine they still got to pay a shipping rate somewhere. Money's changing hands to Nate's point to take the empties back, not just the opportunity cost of them being loaded. Right, how does that?

Speaker 1: 37:59

kind of play out.

Speaker 2: 38:07

Yeah Well, I mean when you look at the rate. I mean we tend to focus when you see any of the stories that talk about freight rates, it is the rate coming out of Asia to Europe to the United States. It is the rate coming out of Asia to Europe to the United States. If you look and you dig down and look at Drury's, look at the Baltic Index and look at any of the guides, look at the rate from the US to Asia. It's ridiculous. It's cheap, it is like we're ones in the thousands, ones in the hundreds and it's like there is no incentive, money for that. And if you're the lesser, you're the one who's leasing the containers. You'd much rather have the empty container back, because that will mean you can turn it over, rotate the contract and get another one going.

Speaker 1: 38:42

The juice isn't worth the squeeze. Basically, then, there's not enough money that's worth my time or headache to load. Take it back and unload.

Speaker 2: 38:50

Yeah, wow, when you look at the West Coast to give you that number that you were talking about. At the height of the supply chain crisis, normally about a third of a container ship heading back to Asia was empty. It was empty containers and that's what you saw. During the height of it, it became a half, and I was following the numbers from the port of LA and what you saw were the empties just stacking up, stacking up in the port and what you had was you were overloading the system. It was too much. The Tetris map was very high and you couldn't move anything around.

Speaker 2: 39:23

And that's where LA and Long Beach came up with this super demerge. They came up with with this crazy number that they kept threatening everybody with that if you have a container on the terminal more than nine days, we're going to charge you $100. And then the next day we're going to charge you $200 on top of the $100. It was going to be this huge kind of just escalating cost. They never did it. They never imposed it because, number one, they couldn't, because it would have been determined to be illegal.

Speaker 2: 39:50

First of all, they were colluding together. Second of all, no one wanted to dig through the fact that LA and Long Beach to get containers into their yards, had offered these great deals to people to basically use their terminals as lay down areas. Yeah, you get nine days free, but if you're Amazon, we'll give you 15. And so they had all these little deals there so that you can bring your cargo in, it can sit in the terminal. It's not a big deal and it would have all come to into the light afterwards and the container companies didn't want to talk about it either. Nobody wanted to talk about the deal.

Speaker 3: 40:22

Weren't there injuries? I remember reading about literally like they were stacked so high they were literally falling over and killing people and causing like physical harm because they didn't have the room and they were stacking them in a way that they never should have been, at heights that they shouldn't have been.

Speaker 2: 40:36

Well, and they were getting permission to stack them higher too, because they had these. I mean, the citizens in Long Beach and Wilmington, for example, were complaining because there were. I mean, there were lines of trucks out, you know, on the roads there trying to get in and they couldn't get in. You were jamming the system. You had ships leaving without being fully loaded and that was a big issue, and they finally rectified that. You had the ships at anchor right off the coast and eventually they had to send them off the coast. So, yeah, it was a huge log jam and it was massive, and again, it all had to do with that seamless nature. We were overloading two ports in there. Now what we've seen come out, by the way, is a much more efficient thing.

Speaker 2: 41:16

One of the things that came out of LA and Long Beach for a lot of shippers was man, why am I going 100% in the LA and Long Beach? I'm getting screwed here, I can't get my cargo out. Reliability went from 70% cargo delivery on time down to 30% and I'm paying five times more for this. And so a lot of people diversified. They sat there and said listen, there's a new lane in the Panama Canal, opened in 2016 that allows now container ships that were previously restricted to 4,500 boxes. Now you can sail ships that are 16,000 boxes through. And everybody jumped on that bandwagon because ports like New York, New Jersey, raised the Bayonne Bridge, Savannah dredged like crazy and built this massive terminal in Savannah. Houston came in and it's like why am I shipping into LA and Long Beach? I'm getting stuck in the terminal. Then I'm loading them on class one railways, Union Pacific. They're sitting there because they've gone from half-mile trains to two-mile trains. They're getting looted in the Alameda Corridor and it's still taking me forever to get them.

Speaker 2: 42:19

When 80% of America's population is east of Texas, why don't I just come right here? I cut out the Class 1 railways. I set up my distribution centers in a state like Georgia, where Savannah is, or Texas, where Houston is. This is the genius thing I'm going to do. And then everybody flows through the Panama Canal and then the Panama Canal has a drought and you see the Panama Canal go down to two-thirds levels of shipping coming through. They restricted the number of boxes on the ships. It's like every time you think we've got this fixed, another event happens. It's the black swan event, and what I keep saying is you know, a black swan is supposed to be a rare event. You're supposed to see a black swan once in a decade and it's gone. What we have is a flock of black swans and we can't get the flock out of here because we keep getting hit with them. So let me ask.

Speaker 3: 43:09

I wanted to add one thing to exactly what you said, like what I did for most of the steamship lines during that period was I handled rail to rail through Chicago. So this massive backlog coming from California that had to go switch from rail to rail. We had lists from all the major shipping lines that were thousands of containers long that there's no way in capacity and like it was the heyday right for trucking in Chicago for that period because they all needed to move from one rail line to one rail line, because they were all coming in from that side. And then to your point, once it came back down, it went to almost nothing, comparatively speaking.

Speaker 2: 43:43

And it's why you see in trucking the proliferation of new trucking firms during that period. You know, what's interesting about trucking and shipping is that they're completely inverse Trucking, you know, hey, during the heyday of this, I'm going to start my trucking firm. I'm going to get a truck, I'm going to get a firm going and you know, the biggest trucking firm controls you know what? Maybe a few percentage of the total number of trucks in the United States In shipping, the top nine firms which are in three big alliances control 85% of every container afloat. They're not a cartel. They'll tell you they're not a cartel. They'll scream they're not a cartel. But they're vessel sharing agreements and they do control ocean shipping in a way that's very cartel-like.

Speaker 3: 44:25

I feel like they operate like utility companies because it costs so much to build these ships and the hundreds of millions of dollars that they can justify to your point. Operating like OPEC or kind of like a cartel, in a way that nobody has any ability to influence.

Speaker 2: 44:39

Yeah, it's been, and it's not that they just operated that way. The US, the EU, china, all gave the go-ahead for this. This was the decision because, again, what the benefit was was cheap shipping and it was cheap rates and everybody enjoyed it. If you look at the ocean shipping companies in the 2010s, they were horrible business models.

Speaker 2: 44:57

I mean, they were barely making money. If you look at them, maybe one year they're making money, next year they're losing money. They were not a very profitable business model and what you saw was a very cutthroat type entity. You saw the collapse of Hanjin in 2017. And they were all kind of feasting on each other. And then the global supply chain crisis happened and in 2021, the ocean shipping companies made more profits than they did in the entire decade combined, and then they made more money in 2022.

Speaker 1: 45:28

I mean, we saw, I feel like there's this very similar correlation with with trucking, just with inflated rates during that time. I'm curious to try and give some perspective, because the majority of our audience is in the domestic freight brokerage space. Our freight that is imported, it's going to come in on ship the vast majority of the time. So, as far as infrastructure goes, can you give a just a real one on one level majority of the time? So, as far as infrastructure goes, can you give just a real one-on-one level? What are the major ports and what is the breakup of percentage of tonnage that's coming in or out of each of those ports? So you mentioned LA and Long Beach in Southern California, you hit on Houston, savannah, new Jersey. Where are these big ports and what's the breakdown of the volume coming in percentage-wise?

Speaker 2: 46:12

I mean top four ports are LA Long Beach, number one by far. La Long Beach just outdoes everybody. They're two separate ports but they're doing somewhere in the range of just under 10 million containers a year apiece.

Speaker 1: 46:27

What percentage is that of the total US port volume? What percentage is that of the total US port volume?

Speaker 2: 46:32

It is. If you look at total containers into the US, I want to say it's about 60 million containers into the US, maybe about 50 million containers right around there, so it's a huge, massive. I mean, when you take LA, long Beach, new York, new Jersey which is the same port Savannah and Houston, those are the big four. I mean that is the big four that are on top there, and then you throw in there the kind of the minor ports that are underneath them would be and this is not ranking them, but just from my head, going through them. It's Norfolk, it's Charleston, jacksonville, Miami and then probably Seattle is going to be your other ones that are there. And it has everything to do with population and distribution. I mean, one of the reasons on the West Coast that you go into LA and Long Beach is because two-thirds of those containers that go into LA and Long Beach go out of LA and Long Beach. They don't stay there, they go out, they're being shipped out. But the reason you don't go into Oakland, the reason you don't send more into Seattle and Tacoma, is because you got to get over the frigging mountains and anytime you got to move freight over a mountain, whether it's by rail or truck. You're adding cost to that. I'd much rather go into LA and Long Beach and go on a flat railway across the plains than anything else. It's the same way created that new lane of the Panama Canal and it opened in 2016,.

Speaker 2: 47:51

The ports of Savannah, charleston, baltimore all the ports were dredging like crazy to accommodate these 50-foot draft container ships coming in, because they knew it was going to be business. I mean, new York and New Jersey raised the Bayonne Bridge. They had to lift it up. They didn't tear it down, they lifted it up while they were driving on it and it cost $1.5 billion to do that, because they wanted to get those ships in there and you would much rather go in. That's why, when Dolly took out the bridge in Baltimore, it was a huge event for Baltimore, because Baltimore was developing into a pretty good size. I think it was number 12 in terms of US ports around the world, but it was the fastest developing container port Because if you offload in Baltimore, think about where you are.

Speaker 2: 48:33

You're stride really the network of US population right there. It gives you a nexus into Pennsylvania, into Pittsburgh, into the Midwest region. It's a key port and when Dolly takes out the bridge, that's two months of freight not moving in. Yeah, that's a key port and when Dolly takes out the bridge, that's two months of freight not moving in.

Speaker 1: 48:52

Yeah, that's insane. So, ben, do you have anything else on this? I got a couple more questions. No, go ahead. So we talked a lot of impact in the past 2016, 2020, obviously with covid 21, with ever given the hoothies. Now, um, what is the future? I guess? Give us the current state of where you know what's the black salon population right now, what are we dealing with and and what's projected. You know possible disruptors or solutions to make the the shipping situation better or, you know, fix what our issues are currently.

Speaker 2: 49:30

Yeah. So I mean, I just checked my numbers too we're looking at about 25 million containers into the US on an annual basis. So when you talk about almost 20, it's less than that now because we're down from the peak in LA and Long Beach, but you're looking about 17 million into the port. So that's a big, huge percentage right there. You see. But one of the things that we're looking at right now is the Houthi have created the biggest disruption. Obviously they have disrupted ocean shipping, that thread that runs from Europe to Asia, through the Suez Canal, down the Red Sea out into the Indian Ocean. That handles 15% of world trade 15%. That's a ribbon there. It's the most dense shipping channel there is. The other element is about 35% of that, 35% of the world's containers go on that route. We move about 100 million containers a year on the world's ocean. So about 35 million containers move on that route. A lot of people will sit there and say, well, that doesn't impact the US, it does. About 15% of those containers go to the US. Because one of the things that you find out is, if you're sailing from Shanghai and you want to get to New York, it's about 50-50. Whether you go east across the Pacific, through the Panama Canal or go west, and so when the Houthi came in, that causes the disruption, as I mentioned to you before, that creates these longer ton miles, and the ocean carriers are very funny because they will sit there and say, oh, the Houthi are bad news, they're disruptive, they're creating massive problems for us and you know, they're creating this increase. At the same time, they're generating a lot of revenue for the ocean carriers. This is the part they don't tell you. It's like we're secretly very happy about the Houthi because we were looking at our profits being really down after 2023. And now, all of a sudden, they're up because freight rates are up. You saw that huge spike in moving containers around the world. We went from about $1,000 to $1,500 to move a container up to about $4,000. You see the surcharges coming in because they're overloading certain ports, ports that did not expect to get cargo or getting them. So Singapore, for example, has got a 2 million TEU backlog. Kaohsiung in Taiwan, port Klang in Malaysia, algeciras in Spain, tangier in Morocco they're all jammed and so it's getting very difficult. What we saw happen in LA and Long Beach in 2021, 2022 is happening in these ports right now, and so that's having a resonance through the system. It's slowing everything down. You're clogging the system up Now.

Speaker 2: 52:03

The ocean carriers also invested immensely those massive profits they had. When you give a sailor money, they're drunk on cash. They're going to spend it, and that's what the ocean carriers did, and they diversified in several ways. You got outfits like Mediterranean Shipping, bought an air freight company. Maersk bought terminals. They bought their old terminals they had sold. They bought them back. But one thing that they all did is bought ships. They all bought brand new ships and so new ships are coming online.

Speaker 2: 52:34

And so, at this period of time when the ocean carriers need more ships, they're coming online, but what they're not doing is scrapping them. They're not getting rid of. The things the ocean carriers have learned how to do is really control the rates a bit more, and they do it usually by blank sailings. Everybody knows I got myself booked on this freight and man, they canceled it. It's like flying Delta right now. It's like man, I got canceled. It's like this just stinks, and what they're going to do is start scrapping ships like crazy. They're going to be running them aground in Bangladesh and India and Pakistan and getting rid of them as these new ships come online.

Speaker 2: 53:13

Plus, the other element that most people don't know is that there's a new requirement being put on the ocean carriers by the International Maritime Organization to become more fuel efficient. This issue is driving everything slow steaming. You can't steam as fast as you used to steam, which means you need more ships, which wasn't as much of a problem until you added a detour around Africa. You've got carbon taxes. If your freight's going through Europe. The EU is imposing a carbon tax on every ship coming in. You've got to pay a carbon tax, and that's not the ocean carriers paying that, that's the shipper paying that. Ships have to have a report card on how well they're doing. If they get three failing grades, the ship's got to be scrapped.

Speaker 2: 54:04

There's new fuels which are really expensive this very low sulfur fuel, there's liquefied natural gas, there's ammonia, there's methanol, there's hybrid, you name it and the old diesel fuel that was nice and cheap isn't nice and cheap anymore. And because of this elongated ocean rates. We're also seeing the impact on things like aviation, because aviation fuel is at a premium, because aviation fuel that was being refined in the Middle East and sent to Europe now has to go all the way around Africa. That makes that expensive and you've got freight forwarders and people shipping things from Shanghai across Asia by truck because they know I can have it driven across Asia and Europe in 18 days and that's more reliable than putting it on a boat in Shanghai and it may show up at my terminal in three, four, five weeks. I don't know. You know it depends on the routing.

Speaker 1: 54:55

Ben doesn't. So much of this. It correlates to trucking.

Speaker 1: 54:58

I even think back to when you're talking about inflated rates and, like you, go back to to like the post shutdown, the post COVID shutdown boom, post shutdown, the post-covid shutdown boom.

Speaker 1: 55:13

And obviously there was a capacity. For us, trucking was very tight, which naturally supply and demand leads to inflated rates, which means truck drivers and freight brokers who really are our costs don't really go up, but our we're a margin-based business and our a lot of people made a lot money. And then when you take that away and the rates go down, it's like the old Warren Buffett you know who's skinny dipping. When the tie goes out right, all the profits go away. And then you have all these businesses that bought up things left and right and now they're like I have all these trucks that cost money to maintain and I have notes on a lot of them and I overpaid for them and now there's not enough money in it for me to afford it and we see companies go out of business. But yeah, ben, I yeah it, for sure does it's exactly the same thing that we've done.

Speaker 3: 56:00

Yeah problems and profits right, like the more the issues are. Hurricane comes in, rates go up, right, some giant storm comes in or a freeze over in Texas, rates are going to go up right To your point. Same thing in logistics, globally, domestically. When you disrupt the system especially abruptly, rates go up because you've got to get different things to happen quicker and you've got to incentivize those things to happen, which allows you to your point on the shipping line justify higher fees, higher costs, change orders or additional fees on top of it. Can you go through that just real, simply, kind of at the end we were talking about this earlier or maybe even have been off air, like I know lots of our customers.

Speaker 3: 56:39

We see this, you know, even from the brokerage side, like when we're talking to them, they're having a hard time bringing cargo into the US, not because they necessarily can't get it in or that they can't deal with the lag time, it's the unpredictability of the cost to be able to sell that commodity. Like, just for one example for the listeners, I have a customer that is a distributor of chemicals, right, mostly like glycerin and things used in food. So they bring those things in from overseas and then they resell them, but they're having a very hard time because, like they don't know what it's literally going to cost them to bring it in. How long, or can you give some people some high level why that happens in the context of what you explained, and how long we can expect that to be happening if we know when it'll stop?

Speaker 2: 57:25

Yeah, I would argue. I don't think we're going to know because right now we're dealing with so many issues that are disrupting the flow. As you see, freight rates spike on ocean shipping. One of the things you tend to see is that shipping lines jump at that. They want to jump at those spot rates. They want to grab those spot rates because that's pure profitability for them and, unfortunately, the people who have long-term contracts sometimes get bumped because they want to grab those spot rates, and that's something that happened.

Speaker 2: 57:55

One of the reasons for the Ocean Shipping Reform Act was you had companies like Bed Bath Beyond, for example, that went bankrupt during the global supply chain crisis. They made the argument that listen, we had a contract with Mediterranean Shipping Company to haul our goods in and they continually bumped our cargo because they wanted to move high profit short term you know spot rates over their long term. They weren't honoring their agreement and you know that was one of the things that gave power to, or renewed power to, an entity called the Federal Maritime Commission. It's the maritime entity. It's a federal government entity that does maritime, kind of what you guys were talking about earlier with trucking. The problem is, the FMC was really defanged. I mean, it had almost no power whatsoever and now they've got new power, they've got new staffing and they're trying to do it, but there's a lot of pushback.

Speaker 2: 58:41

The ocean carriers are really well organized. They are extremely efficient in their lobbying. This is something that's a lot different than what you see. I think the closest you have is rail to it, where you have just a few companies in the rail industry. It's kind of like shipping. Shipping is really the World Shipping Council, which is the most evil sounding entity I ever have heard. It's like it should be Dr Evil with a volcano in the background.

Speaker 2: 59:07

But the World Shipping Council represents all these shipping firms and they lobby like crazy on this and they're really efficient on it. And then you know you throw. One thing everyone listening should be aware of is you may remember that on the West Coast we had this labor issue between the Pacific Maritime Association and the ILWU, the International Longshore and Warehouse Union. They were out of contract for a long time, I mean since 2016,. They were out of contract and then negotiations were going on. There were slowdowns, there was a threat of a strike and eventually they hammered out an agreement. Well, the East Coast Labor Union, the International Longshoremen's Association, the ILA, is in negotiations with the US Maritime Alliance on the East and Gulf Coast. That contract expires on September 30th, just a month, five weeks before the election.

Speaker 2: 59:56

If you don't think that's going to go down to the wire and be an issue, it's going to be a major player right there. So if you've got cargo coming in, everyone's looking at that right now and sitting there. If there's an East Coast strike, on East or Gulf Coast strike, what am I going to do in this scenario? How do I fix that coming in and then you have the prospect of a Trump presidency where he's already talking about 60% tariffs on Chinese goods, 10% tariffs on other foreign goods. If you go back prior to 2020, look at what happened in 2018, 2019, we saw spikes in shipping, everybody trying to get everything in before the tariffs hit and then the bottom dropped out in it. So you know, I can't tell you that hey, you know everything's back to normal. It's going to be. It's the ocean man. It could be flat calm one minute and the next minute you're hurling over the rail and that's kind of what we're seeing right now.

Speaker 3: 1:00:52

That's really really good context.

Speaker 3: 1:00:53

And the thing I want to tie into for listeners out here is that, like again, most of us as brokers are talking with your customers and shippers related to what we do on the domestic side, but I can't tell you how valuable it is to be able to have even a general understanding of what Sal's gone through in this episode.

Speaker 3: 1:01:09

Because if most of your customers like they still do international and a lot of the small and medium-sized shippers like literally it's the same person, like I mean there's at least a half dozen of my customers that are doing they literally tender all the loads in the US and they also arrange all of their containers and to be able to have a conversation from a high level with this understanding, like Sal provided, as to what's happening in the bigger context, makes you so much more valuable as a resource, even if you're not doing that, because it shows that not only you're really good and care about the things you do handle inside the US and domestically, but how things are all connected right, they call a supply chain because it's literally a chain.

Speaker 3: 1:01:48

Right, they're links together that go much longer than the piece we touch and to understand how the links down the chain affect you and could affect your customer with these things is really valuable insight that allows them to understand what's coming down the road right, like he was just saying it could be a huge strike in the fall right related to East Coast ports. He was just saying it could be a huge strike in the fall right Related to East Coast ports. If you just remember that takeaway and you can have a conversation generally about that, like it is going to increase the value of you in that relationship, which allows you to either do more business or to have more trust, and you should know where your things are coming from, not just where you pick them up and where they're going and then not worry about it after that.

Speaker 1: 1:02:28

Yeah, great takeaway, also understanding where the volumes are and what the volumes are and where they're coming in the different ports throughout the country. There's obviously opportunity there. So well, sal, we appreciate it. You have anything you want to wrap up with here? I know we're getting towards the tail end.

Speaker 2: 1:02:46

No, I mean. The only other thing I always like to add is you will hear discussions periodically, especially when it comes to shipping in the United States, about more coastal shipping, and you always hear the Jones Act will crop up in a discussion about moving things. And understand the US really isn't conducive to really moving a lot of freight along the coast because of the fact that we have a massive interstate highway and rail system. Unfortunately, you're not going to move cargo on the I-5, i-95 maritime corridor when you can get a rate of less than $2 a mile for trucking and when you have to go through two US ports to move something. And it's really one of the things that I've learned over the three years I've been doing this. My focus was on global shipping, but the thing that I've become very cognizant of is to understand shipping in transportation is you got to understand all methods and modes, or at least have a knowledge of it. It doesn't do me any good to be in the water if I don't understand the port interface, if I don't understand road, rail, aviation elements, and I think that's the element. And then the last thing is have your backup plan. To go back to what we were talking about what Ben was talking about. If you're in that supply chain setup, then the weakest link can break the chain. That's why you want to get a supply web. A web means you can cut one leg and it still sustains itself.

Speaker 2: 1:04:12

I did a video early on on the Houthi crisis and I said this is going to cause disruptions, that East-West ocean shipping from China to Europe is going to be disrupted. And I got a note from a guy, a very nice note. He sent me a note. He said listen, I listened to your YouTube channel and I was able to divert some freight in China onto a ship heading to California, vice, going via Europe, and it saved me. He goes, I look like a genius that I did that and he goes. I look really good, he goes.

Speaker 2: 1:04:40

And it's just that. And I'm not saying it because you listen to me and you get that, but it's being that aware. It's really not banking a 100% on a certain venue or avenue, because if you do that, then you run the possibility of it being severed, disrupted, delayed, and then you're scrambling. And I think that's the thing that I get from military logistics that applies into commercial logistics is don't get yourself 100%. You've got to have the backups in place is don't get yourself 100%. You've got to have the backups in place. You don't have to have a warehouse full of stuff stocked, but you better have multiple routes so that you can do it on the fly, and that's either having contacts with good freight forwarders, nvox, whatever it is. Have that network in place so that you can move very quickly.

Speaker 1: 1:05:24

That's really good. That's excellent advice. Well, sal, we appreciate you being on the show. If you guys want to check out his YouTube channel again it's called what's Going On With Shipping you can join the massive crowd of 300,000 others that are out there and it's growing. Congrats on that. By the way, that's awesome to see that kind of growth in such a short amount of time. I appreciate that, ben. Any closing final thoughts here?

Speaker 3: 1:05:50

Whether you believe you can or believe you can't you're right, and until next time, go Bills.