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All Business. No Boundaries. The DHL Supply Chain Podcast
Welcome to All Business. No Boundaries, a collection of supply chain stories by DHL Supply Chain, the North American leader in contract logistics. This is a place for in-depth discussions on the supply chain challenges keeping you up at night. We’re breaking beyond the boundaries that are limiting your supply chain.
All Business. No Boundaries. The DHL Supply Chain Podcast
Supply Chain in the News: A Conversation with CNBC Reporter Lori Ann LaRocco
In our newest podcast episode, we sat down with Lori Ann LaRocco, Senior Editor of Guests for CNBC Business News, to discuss her books and the general portrayal of the supply chain industry in the media since the COVID-19 pandemic.
Lori Ann LaRocco is the author of: “Trade War: Containers Don’t Lie, Navigating the Bluster” (Marine Money Inc., 2019) “Dynasties of the Sea: The Untold Stories of the Postwar Shipping Pioneers” (Marine Money Inc., 2018), “Opportunity Knocking” (Agate Publishing, 2014), “Dynasties of the Sea: The Ships and Entrepreneurs Who Ushered in the Era of Free Trade” (Marine Money, 2012), and “Thriving in the New Economy: Lessons from Today’s Top Business Minds” (Wiley, 2010).
Welcome to All Business No Boundaries, a collection of supply chain stories by DHL Supply Chain, the North American leader in contract logistics. I'm your host, will Haywood. This is a place for in-depth discussions on the supply chain, challenges keeping you up at night. We're breaking beyond the boundaries that are limiting your supply chain. This episode is supply chain in the news, A conversation with CN b C Senior editor Lorianne Morocco at cn BBC Lorianne coordinates high profile interviews and special multimillion dollar on location productions for all shows on the CNBC network and has been with the network since 2000. Prior to joining cnbc, Lorianne was an anchor, reporter and assignment editor in various local news markets around the country. Her solid track record has earned her trust and respect from Wall Street to Washington. Her relationships with top business leaders have earned her first access to business deals in the billions of dollars, allowing the network to break the news. First, her main specialty is in politics and she is the best selling author of several books, including Trade War Containers Don't Lie, navigating the Bluster Dynasties of the Sea, the untold Stories of the post-war shipping pioneers and opportunity knocking. If you're interested in hearing more from Lorianne after today's discussion, find all of our publications linked below in our show notes. Let's dive in. Thanks for joining me today, Lorianne. We're very excited to have you on the podcast today. As our first guest from the media, uh, Lorianne, I was hoping to start the discussion with a question on your use of shipping containers to predict and monitor the trade war. Um, it was the subject to your bestselling book, trade War Containers Don't Lie, navigating the Bluster. Can you tell us a little bit more about why you used containers as a barometer for the trade war in the economy?
Speaker 2:Trade is a forward-looking indicator of the consumption of the consumer as well as the health of the country's economy. And so during the trade war, I actually documented what was going on using the bills of lading, which are the receipts of a container from China to the United States as well as China to other countries like Russia. And based on that, I was able to tell you if the United States was winning or losing the trade war. And I didn't issue my opinion. I issued data. For example, in August of 2019, secretary of the Treasury, Steven Minuchin, was supposed to go to China and it was abruptly called off. We heard some verbal sparring from then President Trump saying, you know what he normally used to say just like pointing a finger at China. But when you looked at the tray data, you found out that three days prior to Secretary of Nation's visit China Inta deal with Russia to allow their soybean farmers to move to Russia and have their own exports, you know, transported back. And that was the reason why. And so when you look at the phase one obligations, when you look at what is being moved by the Chinese carriers, you can be on a shadow of a doubt, look at the flow of trade and also it's a good indicator even three to four months prior to even when a company is reporting earnings on how they are doing. And so that's the reason why that I use containers as a barometer.
Speaker 3:Okay, good, good. You were tracking containers well in advance of the onset of covid and then through your research or your data, you saw that something was happening in China? Mm-hmm.<affirmative>?
Speaker 2:Yes. Yes. Yeah, I mean, you know, looking at marine traffic, I mean folks may not realize this, but most of the, or pretty much all of the ports in China are automated. They're a lot faster than we could ever be in terms of turning around vessels. They're in for not even a day. And in the Port of Wuhan, you literally saw vessels start stacking up in January of 2020. And then my sources were also telling me that drayage, which is the nice Scrabble word as I like to call it, for trucking. And that was pretty much it fell off a cliff and the reason why people were sick. And based on that I started looking and you just saw the lack of productivity out of these ports and the movement, if you will, of the product going from the warehouse to the port. And as a result of that, you know, I was able to look at the severity, if you will, of that illness. But on the inverse, I used the same pipes of trade, particularly looking at trucking to see when tr when China was back open and I was 10 days before the rest of the world who waited for smog to build up. I just looked to see if people are driving the trucks.
Speaker 3:Huh. Yeah. So Covid was a pretty important phenomenon as it relates to the supply chain industry, at least in terms of the general public's awareness of how supply chain functions, it's, you know, kind of role in the economy and all. You've obviously been on the beat for quite a bit longer than that. But I wondered if you could just talk about, as a journalist and the, the field of journalism, how do you believe that your field sort of evolved, uh, in covering supply chain? What happened in the pandemic and then sort of where do you think things are today?
Speaker 2:Well, I mean, compared to the general news media, you do have reporters that you cover, you know, the space like I do. But for the general news folks, you know, they had to learn as they go. There is a misconception, uh, even in the headlines today of, you know, news organizations declaring that supply chain is back to normal because the price of ocean freight is down to pre pandemic levels. But that is a misunderstanding of the supply chain. The price of ocean freight is a direct correlation to demand and there is no demand right now for products coming out of China because of the bloated inventories. The only thing that shows you what's coming out of the supply chain would be the volume of product or the orders being placed into China. And that is more of, you know, what's going on in terms of if there are hiccups and you know how long things take to get from point A to point B. But price does not reflect if supply chain is normal or not. In fact, HVAC systems have a delay of 99 weeks to this day to come in.
Speaker 3:That's on the production side is the problem. Yeah, for the HVAC example. Yeah. Yep. So back to your container indicator, it, container volumes are down
Speaker 2:Way down. Yeah, they're, they're way down from pre pandemic levels. I mean you still have more product coming in versus before the pandemic because you do see some delays of items going through the ports, but you do not have the historic delays that we saw on both sides of, you know, the coast.
Speaker 3:Got it. Okay. On the inventory's point that you just raised, if you were placing a bet, how do you think retailers are gonna cope with the inventory glu that they're sitting on currently?
Speaker 2:Well, currently you're looking at warehousing that's 99% full. So they have to unload it most likely through drastic price cuts. While you do have the TJ Maxes and the Marshalls and the home goods buying these products on the secondary market, it's still in a warehouse. So it's not moving out of the warehouse. When you're looking at products that are moving out, uh, you're seeing more of the luxury goods and that's based on what data that Dhhl has given me. And you know, d Hhl is a CNBC supply chain heat map provider. And so based on looking at what the trucks are moving in and out can give you a good indication of what appetite the consumer has. As of right now, the consumer does not wanna buy the cheaper chicken like a t-shirt. They rather pull their money and buy more expensive sneakers or luxury items rather than buying like a, like a cheap t-shirt or a cheap pair of pants.
Speaker 3:So do you get into the business of figuring out or prognosticating around, we're in a recession, we're not in a recession, one's coming, one's not coming.
Speaker 2:I can't cate if we're in a recession or not. What I can ate is the fact that we will still have more inflation. And I've been right every time since it's been going on since the Fed started looking at, uh, the inflationary pressures. When you look at the supply chain, all of the charges that are within the supply chain are passed onto the consumer. The biggest charge right now, which will become in vogue so to speak, is called per diem. That is a charge that the shippers pay when they use their ocean container as storage. And the reason what we're, what we're seeing right now is that you are seeing an increase of ocean containers becoming warehouses again because there's no room in the warehouse. And so what happens is shippers get a double whammy where they get charged not only for the container after a certain amount of free time, you know, when they can have it for free. They're also getting charged for the chassis that the container is sitting on. And those are charges that are passed onto the consumer. And it's for those reasons that inflation will continue because you're looking at inflationary pressures hitting the second and third quarter. And so those product prices, like those Passover costs are gonna be on the products that we buy for the summer.
Speaker 3:I see. Is as you sit in your seat with sort of a good view of the global trade and global economy, what's the one thing that you wish the general public knew today? That they probably don't.
Speaker 2:It, it would be nice for them to appreciate the uncertainty that the logistics community has to deal with because if it wasn't for the men and women who were trying to navigate, you know, which vessel to get on to, they, you know, bring things via air freight, uh, we would not have the product that we have now. Also, when you're looking at the middle mile last mile, all of these different components on the road are also exceptionally important. I think people, while they appreciate supply chain and logistics, I don't think they realize the magnitude in which that to have product on our shelves. This is a 24 7 industry. Mm-hmm.
Speaker 3:<affirmative>, do you think the industry has made material improvements in terms of its ability to be flexible and to adapt?
Speaker 2:I think it depends on the company in, in all honesty. I mean, every company now, you know, has their own dashboard, if you will. Right. You know, looking at the freight, you know, from say, you know, from one port all the way in, I wish that there was more of a dynamic data system where if everybody would get on board and just kind of share to see where the container is when it comes to what's in the container, what you're moving, other companies don't necessarily have to know. They just have to know the number of the container in order to find a deeper line of sight. When it comes to the US government trying to do this, the government is going to be way too slow and they are, and people don't trust the, the federal government. So I think the private sector, it only benefits every member within this ecosystem to try to find some sort of way to work together. So the connectivity will be there. Cuz as of right now, there really is not one universal connectivity in the United States, and it would benefit everybody because a freight at rest is not making money.
Speaker 3:Right. Right. So what I think you're describing there is the wrapped up in the buzzword of supply chain visibility, right?
Speaker 2:Yeah, exactly. Yeah, exactly. And there's, there's way too many systems and everybody tells that there's the best, but you know, they're not. Right.
Speaker 3:Right, right. Well, listen, I really appreciate you taking the time here today. This is an interesting perspective and you get to talk to a lot of interesting folks in the industry who are up against it every day, as you put it. Appreciate you sharing some of your perspectives with us here today.
Speaker 2:Thank you for having me.
Speaker 3:Thank you.
Speaker 1:If you enjoyed today's episode, please be sure to rate and subscribe on Apple Podcasts, Spotify, or wherever you get your podcasts. You can also re-listen to our entire library of episodes on our website, dhhl.com/a b and b podcast. We'll see you on our next episode, which will feature a great conversation between Alice Marie, Jeff on President of Packaging at Dhhl Supply Chain, and Katie, leader of Women in Supply chain initiative at the M I T Center for Transportation and Logistics. They'll discuss the importance of diversity in the supply chain and share their experiences as leading women in the industry in honor of March being Women's History Month. We'll see you then.