Episode Transcript
[00:00:00] Speaker A: Boost your EBIT by 10% in just a few months. Sounds like another empty promise, doesn't it? Maybe. We'll tell you it's magic. A sprinkle of fairy dust and poof. Your profits soar. But here's the deal. No fairy dust, just proven results. We've slashed late billing by 80%, recovered millions in missed revenues, and cut cash cycles by five days for some of the world's biggest forwarders. Real numbers, real impact, real fast. If you are ready to find out how we do it, visit www.ontegos.cloud.
[00:00:35] Speaker B: You are listening to the Freight Buyers Club, a home for those interested in international trade, shipping, procurement, logistics and air freight. In fact, all things supply chain in the Americas, Asia and beyond.
[00:00:50] Speaker A: Hello, I'm Mike Cat King and welcome to this episode of Freight Buyers Club Insights, sponsored by Ontiga's Cloud. As you probably know by now, we are available on all podcast platforms, on YouTube on www.thefreightbuyersclub.com so even more people can find us than the ever growing numbers of you who are already doing so. And thanks very much for that. Please also follow me and the Freight Buyers club page on LinkedIn where you can also find all our content. Now, after a bit of a break, we're back. And I don't know, it's not a hangover, but to be honest with you, I'm still digesting what this post TPM World looks like. That's TPM25 that was held in Long beach at the start of the month and I'm delighted to say that today I'm joined by one of the best speakers there. In her 30 plus year career she's held senior ocean freight positions at DHL, DB, Schenke, Kuner and Nagel and Renus and quite good for a podcast, of course, she's not short of an opinion or two. Stephanie Loomis, thanks for joining me today on the Freight Buyers Club.
[00:01:59] Speaker B: All right, Mike, thanks so much for having me. Always fun to talk with you, Steph.
[00:02:03] Speaker A: So tpm, there was just so much happening while we were there, wasn't there? I was throwing out content and there was always this nagging feeling that it sort of had to be done quick, but because the, the news cycle was churning and, and there was this worry that it was going to be obsolete before it all came out. I mean, did you feel that same sort of pressure?
[00:02:24] Speaker B: Yeah, I did.
You know, I think we're dealing with a situation in the market right now unlike anything we've ever seen before. Seems like every year we're dealing with another unprecedented situation and the administration is sort of like a bit of a boomerang effect with the tariffs. And so yeah, it was sort of like chasing your tail, figuring out what content was going to stay with you and would have an impact throughout your decision making in the next few months and what might. Well, that's already obsolete. So move on to the next thing.
[00:02:59] Speaker A: Hopefully this, this podcast doesn't get obsolete too quickly. Yeah, obviously tariff changes was one of those big events and we'll come back to that. But obviously on day one of the show you were on stage talking about the evolving carrier approach to markets post Covid and post consolidation of the container shipping sector over the last decade or so. Then on day two, just illustrating the fast moving nature of everything, MSC Mediterranean Shipping Company, the world's largest carrier, announced this megadeal with Hutchison Port that will make it the largest port operator in the world. This was also announced as a win for President Trump due to BlackRock's involvement and the inclusion of terminals in Panama. Sort of a separate point, but worth mentioning. The question you were posed in that session was whether we were seeing the emergence of a new container shipping DNA. This is sort of the implication being is this a wiser industry? It's less prone to panic, is more consolidated, so maybe it's more robust in the face of challenging in markets, maybe bearish markets. What did you conclude and did this massive MSC deal say anything to this?
[00:04:10] Speaker B: Yeah, I think it says that the carriers are a very revenue generated, focused community of companies. Now when I started in the industry, obviously there were a lot more carriers back then. I think there was a time when I started there might have been as many as 25 global carriers. And most of my career the carriers were primarily focused on volume, obviously loading their ships, getting the highest load factors possible, rates be damned. It was not uncommon to watch them fall down a rabbit hole and just keep going and digging and digging, regardless of how low the freight rates went. And those days seem to be behind us, at least to some degree. So much more focused on profitability, much more focused on where it makes sense for them to gain business to handle business, and a much different just way they're dealing with. The NVO world I think is also the biggest takeaway from that panel and what I've seen in the last few years.
[00:05:16] Speaker A: I'll come back to a few of those points in a moment. But the new alliance structure for container shipping, obviously MSC is going it alone and now it's going to have all these hub ports. Maersk and Hapag are promising improvements to service levels via Gemini and they've got their own hub portal, although they seem to be ducking under that 90% according to the latest report. What do you think of these offerings from those carriers and from the other major carriers? Are you impressed by them?
[00:05:46] Speaker B: Well, I think it's going to take some time to show whether or not they, they can really show a different service level to go along with their different philosophies and strategy. Obviously the world itself is not making it easy for them given the fact that we've seen so many disruptions and the Suez Canal continues to be sort of off the grid and are more likely to be opened anytime soon for regular container traffic. I think it depends on who you know. The Gemini is obviously the big elephant in the room. They have decided to use a strategy that is very different from anything we've ever seen. The whole idea of the hub and spoke looking more like an airline than what we're accustomed to in ocean shipping. You know, I, I think the world economic situation is going to challenge their goals, the discipline and the management of how they'll handle the feeder operations. Along with the larger vessels, they're going to move on the main ports they service. It's going to be more important for them to be really tight on how they're managing that because as we all know, the scheduler liability is still very, very low in the industry overall. And I think it's. To me it would be highly unlikely that they would achieve those numbers anytime soon just given what I'm sure we're going to get into the possibility of volume seconding and, and everything else. So the Ocean alliance is sort of, I think, banking on the fact that they're the most stable, they look the same. Nothing is all that different other than CMA is obviously now soon to pass Maersk as the second largest vessel operator, which was always coming. It was just a matter of when those ships actually came online. You know, Premier is going to be interesting because O and E, you know, O and E was extremely forwarder friendly last year. Probably the friendliest to most for a larger non, you know, a Yang Ming and one of the more niche kind of carriers for one of the larger carriers. They were very conducive to working with the forwarders the way that we like to be worked with, giving us a fair amount of nap business compared to FA K. They may change their tune, but with the expectation that I have of possible volume declines. I don't Think so. I think they're going to remain a good, solid option for a lot of the nbos to rely on. They're boosting a lot of their services. They did very, very well out of the Trans Pacific last year and I expect them to continue to look at growing that. And msc, I mean, they're the biggest and the baddest now. I mean, they're situated to, I think, do very well at handling the global business all by themselves along with the terminal operations. And you know, depending on the market conditions, they may be challenging to work with just because of their size. They sort of demand to be treated as they are, which is the biggest carrier in the world and they expect some respect for that.
[00:09:02] Speaker A: So, yeah, fair enough. Just to commit the container shipping realignment of these alliances, is there anything that jumps out of you in terms of pros or cons for US importers or exporters from how they've set up?
[00:09:16] Speaker B: Well, I mean, obviously if Gemini can achieve those numbers, that could be a game changer for importers that move product. That is, you know, there are certain commodities that customers are not as, you know, not needing to have super fast transits or super reliable. I mean, we've all had to deal with very low reliability for so long that if they can achieve those numbers, I think it has the ability to pull everybody's numbers up. Certainly the idea that you're holding yourself to a higher expectation. So that could be in a world of a lot of disruptions, continuing instability, that could be very attractive to a lot of the shippers and importers. Unfortunately, there's a lot of variables around that that that may impact whether or not that's as desired or as, as necessary for the importing community. But that's certainly who I would be looking at the most just because they're doing something very different.
[00:10:21] Speaker A: I did speak to Rolf Haben Janssen, the CEO of Hapag Lloyd, at the start of March on this channel. You can find that on YouTube, guys. He did say that they'd managed to hit that 90% target for Gemini cooperation. I should just stress to Everybody. So that's 90% target is for just the services that Hapag and Maersk are offering within the Gemini cooperation. And that's port to port. It doesn't include services outside operated individually by those lines. There are reports popping out, which I haven't confirmed yet, that maybe they've been ducking under 90%, but that's still a, a big old jump from where most carriers were, which was 50 to 60% through 2024, some were pushing 65, including me, towards the end of the end of the year. So yeah, it could be setting a new bar for, for shippers back to the, the container shipping DNA. So I was going to ask you about this, but things changed very quickly. My question was going to be would this new container shipping DNA, this new resilience, this new ability to not react to the market too severely and fight for capacity and slash rates that we've seen historically. And I was wondering if this would happen if the Suez Canal reopened, which would release all this extra capacity that's tied up going around the Cape at the moment. Now that possibility has receded in the last few days with the end of the ceasefire over in Gaza. Not a great prospect of peace in the next few weeks. I mean this is at certain times over the last six months we've been talking about, well, maybe Suez is open for most container shipping in the first half of this year. I mean now we're talking about end of the year even if it happened relatively soon before all the bottlenecks that would result cleared. We're already talking end of the year really. I think realistically, even if there was a big change in that peace situation there, how does this latest flare up affect how you view the ocean freight market, the freight rate outlook? I guess it helps carriers.
[00:12:24] Speaker B: Yeah, I mean theoretically, I think just the discussion that, you know, the ceasefire while it was in place, the hope and expectation that this could run, you know, long term and that you're right, that we could potentially see traffic moving back through the Suez Canal maybe in the short term rather than the long term. I think that alone impacted freight rates and helped this slide that we're seeing along, you know, the post Chinese New Year lull and but you know, we've got so much more in the market that's impacting those numbers aside from just the Suez Canal now. And I think it certainly will give the carrier some leg to stand on when they continue to push through the GR because you know, the freight rates continue to go down. So I think the last I read, rates are pretty much locked in through the end of the month. There was no chance they were going to get a mid month GRI through. They're certainly going to announce an April 1st and then April 15th. I think this gives them a leg to hope that maybe they can get a little bump. But my experience is once the slide happens, it is very difficult for them to stop it. And I think it's going to need something bigger than, oh, the Status quo is going to happen. We're going to continue to move around.
[00:13:50] Speaker A: The Cape just giving listeners and viewers a taste of what those carrier numbers have been looking like. We saw carrier profits drop around 25% year on year in the fourth quarter. This is the top carriers according to the latest numbers from Alpha Liner, which you can find a great chart from Alpha liner on my LinkedIn if you want to check it out there. They were still at historically high levels though. Now collective operating profits for the carriers analyzed were an estimated 32.6 billion in 2024, still well below the more than US$100 billion generated in both 21 and 22 before in excess of pretty much all of the years. The first quarter 2025 numbers will be interesting I guess considering, you know, this spot market drops that we've seen quite consistently.
[00:14:39] Speaker B: Yeah, I just read, I can't remember now if it was Alpha Liner or Dynaliner is predicting that the carriers could be down as much as 80% this year. So yeah, I still think the outlook is not great for them. The, you know that I know we're going to get into the TP negotiations but like I said earlier, once those spot rates start to go down, it's really hard to get a bounce back up and certainly a large bounce. You would need some new disruption, you know, a ship parked somewhere again that, that blocks the Panama Canal or you know, we're, we're already sub 2000 to the west coast on spot rate. So the likelihood that, that the carriers are going to make major revenue in 2025 on spot rates does not look great for them. So I do think their numbers for first quarter are going to look quite different.
[00:15:34] Speaker A: Come back to where you think the Transpac long term contracts might stabilize on average in a moment.
But do you think those negotiations for Trans Pacific contracts that we saw so much of at tpm there was a sense that there was a softening of the market on economic concerns, on tariffs and these fall into spot markets. When we were in Long Beach. Does this tighten things up a little bit what we're seeing now, the, you know, the sewers, I know there's so many moving parts. I'm trying to isolate you on one, but.
[00:16:04] Speaker B: Yeah, yeah, well, I would say that, that, that will, you know, that was obviously a big, a big unknown that was causing for shippers and importers. They were holding back with the expectation that, you know, if we see a light at the end of the tunnel that says we could be seeing that the routes go back through the Suez Canal that, that changes everything for them. Then they were pushing for rates that would be even lower than what they paid last year. With the carriers, of course, on the other side of the spectrum really believing that they left money on the table last year, they need to get a higher rate, knowing the spot market is not going to bring them the kind of revenue that it has in the past. But we've already seen some, like you just said, we've already seen some softening from their initial, you know, they, they dribbled some numbers out into the market early, you know, right before tpm and during the beginnings of the TPM conversations, those numbers have already, there's already rates being offered that are lower than that. So kind of similar to spot rates. Without a major disruption coming out in the near term, I don't see how the carriers can lift those numbers back up. So I think they're going to be, this could potentially give them some leverage to hold where they are now and maybe not give back any more. But I, you know, I do think that they're looking at contract rates that are not where they wanted them to be and will be more advantageous to the bcos and the shippers.
[00:17:41] Speaker A: I did have a chat to a major Trans Pacific shipper in Asia off the record, and the view there was spot rates are going to keep falling, but then there might be an agenda there too, while those contracts are being negotiated.
There was a suggestion at TPM that small forwarders and SMEs are increasingly under pressure and the days of canny smaller players getting similar rates to the big, huge BTOs were sort of gone. That the carriers are going to be looking back to these guys now, then if they're struggling to get the rates they want.
[00:18:14] Speaker B: Yeah, I mean, anytime the market softens, you know, the end, the NVOs get a little bit more of a warm shoulder from the carriers versus a cold shoulder. But that being said, I do think that we are seeing more of a tiered level in our industry now where if you're a certain size and you, you manage and carry a certain level of containers, that puts you in this tier and then it drops from there, like I said, versus when I, you know, years ago in the business where a rate was a rate and if you were smart enough to know the market and get a lot of offers, you, you could gain, you know, a West coast rate or an east coast rate similar to some of the biggest importers. You know, the carriers are just more selective, not only just the size of their customer, but I think the how knowledgeable the, you know, you're dealing with a very large importer, a large pco. They not only move a lot of freight, but they move it with a certain amount of skill and understanding for what they need on a week to week basis from which port to which sport. And they, they're easier for the carriers to deal with. Where the smaller you get as a carrier, you know that you're either dealing with somebody that's not as consistent with their shipping or may change more often, their rollovers may be more often, there are no shows, maybe more often. So, you know, some of it is to be understood that somebody moving 200,000 containers probably should pay a little bit different than somebody that moves 2,000 containers. But that being said, it's more important for the smaller NGOs and the smaller importers to be a good steward to their carrier partners to show up when they say they're going to show up, know their business well, be able to put it together with the strings and the sailing schedules and work well with the carriers versus just demanding a low rate and then walking away and thinking that's all, that's all that's important in their contracts.
[00:20:28] Speaker A: If you're maybe an SME shipper in the States or something, is this, this managing this tender period, is this about balancing minimum quantity commitments while maybe maintaining some spot market flexibility, maybe trying to avoid peak season surcharges and getting something in that contract on visibility and performance?
[00:20:49] Speaker B: Yeah, I mean, for sure I would. As a smaller importer, I, you know, I always say this. I'm, I do think that you're better off working with an ndo. If I could give importers any advice right now, it would be do everything you can to make sure that you've got a decent amount of your business spread across all the alliances. Always important, just in case something really go, you know, if Gemini doesn't want, if it's not operating to the efficiencies that they claim or, and then depending on your volume, really limit the number of vendors you're going to work with because it's easier for a forwarder or a carrier to rack themselves around you having wet re business that they can count on. So, yes, if you're working with a forwarder, be prepared to give them very strong forecasts. You know, we're going to get into this with the tariffs. A lot is going to change.
So at least be transparent about that. And I think in this market it actually will benefit the importer to possibly have more of a hybrid model where Some of their volume is locked into a named account rate, but some of that is free to float on the spot market because that may end up being the better deal. And it'll allow you that flexibility that you might need if you're changing suppliers because of tariffs or what have you.
[00:22:21] Speaker A: Lots of interesting decisions to be made. And then there's something else hanging around all this as well. If we pivot slightly and look at tariffs, just drawing on your experience over the years in forwarding, how would you explain how forwarders manage all this tariff uncertainty we're seeing from the White House? And we've got another round of announcements expect at the start of April. I won't go through what all the different tariffs are because by the time someone listens to this, they could. That could all be entirely different. I've already been banned a few times this year. But how would. How do forwarders cope with this and help their customers?
[00:22:55] Speaker B: Well, I mean, you know, you've got to have a lot of coverage. So this is going to be a market and a year where people are going to try to pivot fast and nimble. I think that's where, you know, the one thing there's a lot of, obviously a lot of some doom and gloom happening in our industry right now. Right. Just because there's fear that these tariffs could cause volumes to decline, possibly dramatically. But one of the things that I have been reading consistently is if there's anyone in our industry that might benefit from this, it is the forwarders. Because our whole business model is built on being nimble and having coverage on all legs, on all markets in all regions. So I think it's more and more important for forwarders to make sure that they are doing some speculative anticipating that maybe Vietnam is going to pick up. Although we just heard that Vietnam is now going to be slapped with some possible tariffs. But, you know, looking at the other markets that could align with the commodities and the manufacturing expertise that the importers might be looking for, because they could easily shift over there. And you've got to have. You've got to have some allocation available for those, those shifts. And so I think, you know, the more nimble the forwarders are, which some of the big global guys maybe are not well known for being nimble. But I, I do think that's something that all of them are working to do better because this is a market that we're expecting to see changes come very fast. And, yeah, customers expect us to bring some kind of miracle when they need to make a quick shift. They want our advice, they want our expertise and they expect that we can help them in any, you know, any multiple of markets that they could all of a sudden pivot to on that demand side.
[00:24:53] Speaker A: You mentioned that we've been seeing stock markets tanking. Consumer confidence in the US has been on a three month losing streak. There's talk of recessions growing. Now I have to say I'm slightly skeptical on this because I've been interviewing economists for about three years talking about the US market post Covid and throughout that period quite a few of them have been predicting a recession of some sort in the US and it hasn't happened. But you're quite worried about the demand side and tariffs being passed on by retailers to customers?
[00:25:26] Speaker B: Yeah, I am. That's, I mean I'm, I follow a lot of different journals and industry rags and you know, all the different economic journals as well. And not to get too deep into the politics, the bottom line is this, this is a very different president that we're dealing with who doesn't seem to care as much about the short term gains as what he thinks is a very long term strategy to legacy. Yeah, bring major manufacturing, go back to the 50s and the heyday when we made everything and didn't need anyone. So depending on how long he holds on to that strategy, you know, I don't see too many. Again, all the economic, all the economists that I'm reading are pretty doom and gloom on this. So I would agree with you. I think that there was every reason to think that we potentially should have had a recession after the pandemic.
Maybe we were lucky to some degree, but you know, we, we came out of that pretty strong. But the hangover, you know, the fact that inventories have been once again padded pretty heavily by the retailers and the importers. If the consumers stop spending because of the fears, if the stock market keeps going down. Yeah, I think there's a potential that volumes could dramatically decline. At least looking into second quarter.
[00:26:58] Speaker A: It takes so much for us consumers to stop spending though.
[00:27:04] Speaker B: They have many, many times over. Surprised me, no doubt about it. And I'm not going to lie, I'm a part of that consumer. I mean I still have Amazon showing up at my door almost every two to three days.
[00:27:16] Speaker A: You're not the only one.
[00:27:17] Speaker B: And I'm unemployed, so that's really bad.
[00:27:23] Speaker A: I just, I'll just make a note. Someone did say to me that if you're looking for stock market tips, probably don't listen to me, but someone did say keep an eye out on what? How those retailers are performing because there's this double dipping thing where okay, you've got a tariff but if you can get your supplier to swallow that tariff increase and also make a convincing case that consumers should a bit more your profits could go up. So anyway, whether that happens or not, we'll see. But something to watch. Something to watch. You mentioned this president's policies. There's so much to try and unpack. Say not going into detail on on the tariffs but there's one other element of this is a bunch of initiatives designed to boost your shipbuilding the US merchant fleet. One of those initiatives could see shipping paying $1.5 million per poor call I think was it the World Council on Shipping World shipping organ Sorentoft at TPM. We'll stick with that one $20 billion. This would cost land a year and might see all the secondary ports cut out as as well Now I'm not sure if all those costs will end up coming through or if this would even be implemented on that we wouldn't find some sort of workaround about this and maybe the cost per container wouldn't even be that high depending on how all this plays out. And I can also see and I know from some of your LinkedIn posts you're not going to agree with me on this. There's a little bit of logic. If you were assuming a very conflicted world and a US China conflict, then this industrialized China able to bang out hundreds of ships a year with all of these seafarers from a geopolitical point of view building up that the US manufacturing base and the US shipbuilding base could make geopolitical sense. Your view is it probably doesn't and it's going to be bad for freight bias.
[00:29:14] Speaker B: Well look, I've been following this industry and especially how China is acting in the world for a long time. Don't think that I don't see this. There's certainly concerns over having China be so dominant in the maritime world for sure. But yeah, I think it's a little bit of a too little too late and certainly we should be looking at building more, you know especially military. You know our military has been quite depleted. Obviously we need to be building more military ships and but the on the container side what I don't like about this is the extent to the fee which is quite substantial and it feeling like what China did was simply fill a void. Right. People need vessels. This was not something that came out of nowhere. The container carriers made a ton of money during COVID They needed new ships for environmental reasons as well as their belief that the market will continue to fill these ships. Somebody had to build them. We don't build ships anymore here. We don't build a lot of things in the US for reasons that are quite clear that we have a, you know, people want to, you know, we're going to. The people manufacturing in the US Are going to make a lot more money, so it costs more. I would even argue that we have younger generations now that have no interest in being in manufacturing. I don't know where we're going to find all these laborers to, to build all these great things that, that the president thinks we're going to build. But in the short term, it does nothing but. Cause I don't want to get too vicious here because this. To me, there's been plenty of other people outside of me that have said that this potential fee on the carrier purport is just outrageous and shows, if nothing else, that there are not very many people in this administration that really understand shipping and the global supply chain. So for me, it's more that it's penalizing the carriers for doing nothing more than buying ships from countries that make ships, which is China, Korea and Japan. And the penalty is not going to be paid by the carriers. We all know that they will pass it along in the cost of the freight, which will dribble down to the retailers, which will more than likely be passed along to the consumer. So to me, it's just a flagrant misunderstanding of who you're angry at and who actually will pay the price. So whether or not, you know, we bring shipbuilding back to the U.S. maybe it'll happen. But, you know, right now, all the studies, everything I've read, a vessel made here would be four times as expensive as the other three countries that are making ships. So I don't know who would buy.
[00:32:13] Speaker A: Yeah, I guess some of the carriers might be scared off by some of the labour rates at ports that they've been sort of forced to pay in the latest settlement with the threat of closure of those ports, first on the west coast and then this year on the Eastern Gulf coasts. So I guess the labor thing would be a factor if you're, you know, you want your ships on time at a decent cost. But then we did see CMA CGM commit to spending quite a lot of money on US Shipbuilding logistics. Well, the specifics weren't exactly there on that story. Right, but that's a positive or is it just a political win?
[00:32:51] Speaker B: Yeah, I think there's a lot of sort of walking this fine line of pandering to the administration because we all know that is something he expects is that people will say yes and bow their head and you know, so I, but I think it was more of a gesture. We'll see. And again, you know, it takes three years to build a vessel so you know, we'll see. But I'm hard pressed to think that CMA is really going to pay four times as much for a vessel they could get somewhere else. So I think their offering, you know, it was more about we're going to put a big air freight facility here and that's all great. Obviously we, the US will always be an important part of the global supply chain. I hope regardless of what happens with the tariffs, I hope people continue to want to buy our products and let us buy products that aren't too horribly expensive.
[00:33:48] Speaker A: Yeah, well, there seems to be quite a few popular revolts against US products internally in Europe. From what I've been seeing. Just let's pivot to something more positive.
During your career across container shipping forwarding, how would you say that the technology has changed? Where do you see the big advances and do you think you can still see a lot more adoption on in terms of digitalization? Is there a lot of low hanging fruit out there do you think?
[00:34:17] Speaker B: Absolutely.
You know, obviously visibility has been something that, you know, when I started in the industry there was no such thing. So we, we've come a very long way. There's still a long way to go. I, I still think there's too much disconnection, too much lag, too much. Even the best systems still have a lot of back office holes that are being filled in a non techy way. But you know, it's a unique problem that our industry serves which is so many different components in any, even a simple, simple move from A to B involves so many different players, all on different technology platforms, all offering things in different formats and different types of digitization. And so I, you know, I still think that there's somebody out there who's going to find a secret sauce to be able to bring all of that together. There are some decent products out there that can because for forwarders this is no longer a like to have, this is a must have. You know, it is absolutely expected by our customer base that we are going to bring them significant value as it relates to either visibility, different business analytics, different abilities to help them predict. All of these things are going to come from different technological advances that we make. Now obviously the big one is AI and there's been some, I think, significant advancements and improvements with AI that are doing some real good for forwarders as far as bringing value to the customers and their own organizations.
[00:36:05] Speaker A: This ties into a good point you made, actually. You said the idea of bringing back manufacturing is sort of fanciful when, you know, the way the labor market have moved and costs and, and all of this, especially when the US economy is leading in so many fields, including this high tech and particularly AI. So I mean, in our industry particularly, where do you see AI can being used more often and how does it, how will it benefit customers?
[00:36:34] Speaker B: Well, the obvious that scares a lot of people is that there's no way that I don't see AI someday being able to dramatically decrease the headcount that forwarders need on an operational level. At the desk level, there's, you know, which obviously that's our largest expense outside of freight costs and outlays. And, you know, forwarders are made up of a lot, a lot of people, and those people cost money. So, you know, I do think, I don't know if it'll happen yet in my career lifetime, but when people talk about law firms that will need hundreds and hundreds of people and insurance company, you know, anything that is a more simplified, routine roach sort of process, I think there's great potential for that to really impact forwarding in the short term. I mean, we're seeing, there's been some, some great advancements for quoting, being able to dump all your rate information into some of these engines where the AI puts all the pieces together. And what used to take us in some cases days or hours to formulate quotes are now done in seconds. I mean, that's huge because most customers, no matter what they say, will often give their business to whoever gets them their quotes and their pricing the fastest. So that's something that's happening in real time today at forwarders. And I think that's only going to grow.
[00:38:10] Speaker A: So positives and negatives there. I mean, if you want to finish this podcast on a positive, feel free to if you want to pick out some positives that we're going to see in the world. I was going to ask you about geopolitical uncertainty and how you plan around it. But you know what, you can be positive if you want.
[00:38:27] Speaker B: Well, I mean, I'm trying. It's interesting because I have, you know, some friends who have sort of been giving me some grief for being a little too, too obsessed with what's going on and with this administration. And my hope is that that we will see. You know, I hate to say it, but my hope is that we'll, we'll see some. Maybe backlash is the wrong word. But you know, I, I do hope that more, whether they be shippers, whether they be large bcos, global hoarders, really start pointing out the fact that we buy from each other in this world has been a phenomenal thing for millions and millions of people. You know that people love to say in our industry that the container itself pulled hundreds of millions of people out of poverty by making the world smaller and allowing us to ship goods from far away places to where we need them. I think that's an important thing that should be protected and should be, we should be proud of as a country that we are a part of a global economy that makes so many things better and easier to get and lift so many people out of poverty. And you know, if nothing else, when we buy from each other, we probably won't shoot at each other.
[00:39:50] Speaker A: People forget that sometimes, don't they? Yeah, trades tend to historically have helped that avoid the war part.
[00:39:57] Speaker B: Yes. I mean, I've, I've been reading a lot about the Snoot, you know, Holly act and the fact that 66% of global volumes dropped almost overnight after, you know, and it led to the Second World War. So I don't think the United States really wants to isolate itself from the rest of the world. Maybe we overshot a little in the fact that so much of what we buy and so much of our economy is driven by consumerism. But I would argue that if we try to bring a lot of manufacturing back to the United States, it'll more than likely be made by robots anyway. You know, AI is going to take the thought that we will have hundreds of thousands of manufacturing jobs I think is crazy. So I think we should build on what we've done. Well, certainly things should maybe be better, but let's not throw the baby out with the bathwater.
[00:40:54] Speaker A: Well, I did speak to someone at TPM and they were explaining to me that in China they recently visited a factory, I think it was solar panels, and 27 people were banging out 120,000 TU product a year. So it's not about bringing manufacturing jobs back to the US they're already going in in China. Which raises another thing in terms of a US China geopolitical conflict, because everyone talks about China's in retreat demographically. Well, there's an awful lot of people that aren't working in factories or don't need to work in factories, such as the technological lead that China is building in quite a lot of industries. Anyway, I don't know if that's finishing on absolutely a positive note.
[00:41:36] Speaker B: Well, I just, you know, my hope is that maybe some folks and that disagree or, or think differently will, will just hear what I'm saying. But I would argue having a huge import deficit is not necessarily a bad thing. It depends on how you look at it and it depends on how your economy is structured. And you know, that still brings money back into the to the country. So I'm just not a big proponent of breaking things for the sake of breaking things.
[00:42:05] Speaker A: I'll definitely be getting into the role of the dollar in US Trade, in global trade, and the importance of maintaining it if you want to have some sort of a hegemony in various power theaters in future podcasts. But for now, Steph Loomis, thanks for joining me today on the Freight Buyers Club.
[00:42:20] Speaker B: Thanks Mike. It was fun as always.
[00:42:24] Speaker A: And big thanks. Thanks also to Antigua's Cloud for supporting this episode, Karen Ball and Tom Matthews for making this production happen, and you all for listening. Please follow and like wherever you found us because we have got loads more content coming your way. Goodbye.
