Transcripts
Welcome to Unboxing Logistics.
Speaker:I'm your host, Lori Boyer.
Speaker:Today, if you have ever wondered about how your packages you're shipping are getting
Speaker:across the ocean, or packages you're buying we have the perfect guest for you.
Speaker:We have on our show today the one and only Sal Mercogliano.
Speaker:He is a maritime historian.
Speaker:I love history, so I'm really excited about that.
Speaker:He has worked on ships.
Speaker:He is the host of the amazing YouTube channel, huge shout out, love this
Speaker:channel, What's Going on with Shipping?
Speaker:Basically, Sal is the guru at taking really crazy what's happening out
Speaker:on the oceans into our understanding as kind of more small, not quite
Speaker:as well understood individuals.
Speaker:And right now with everything going on in the Middle East, it has never
Speaker:been a bigger, more important time to hear what is happening on our oceans.
Speaker:Sal, welcome.
Speaker:Can you tell our guests, can you tell our audience anything more about you?
Speaker:Tell us a little bit about your background more than I already did.
Speaker:No, you did a great job, Lori.
Speaker:Again I, a former merchant mariner turned historian, turned maritime analyst.
Speaker:And, and about five years ago, almost five years ago this month, matter of
Speaker:fact, I started the YouTube channel when the Ever Given, got stuck in the Suez.
Speaker:And so I started commenting on Ever Given.
Speaker:And then somebody said, well, there's other ships, start talking about that.
Speaker:So I figured I'd put a video out, maybe once a week, talk about shipping.
Speaker:There'd be nothing to talk about in shipping because it's ships.
Speaker:Nothing ever happens with ships.
Speaker:And, and here I am five years later and, and I, I've spent this entire past week,
Speaker:every morning getting up and doing an update on the Strait of Hormuz and, and,
Speaker:and global shipping around the world.
Speaker:And it has become just a, a, a facet of my life more than
Speaker:anything else I ever imagined.
Speaker:It's crazy and Sal has hundreds of thousands of followers.
Speaker:He is got millions of views on his videos.
Speaker:I love the comments that I see where people say things like, I
Speaker:never thought I'd be interested in a shipping channel, but here I am.
Speaker:And it is because Sal just makes it fun and easy to understand.
Speaker:So let's jump into it.
Speaker:You mentioned the Strait of Hormuz.
Speaker:I think we don't think oceans that often until something breaks, and
Speaker:that's kind of what we've got going on.
Speaker:Can you share a little bit about maybe background for people who don't know.
Speaker:What is the Strait of Hormuz?
Speaker:Why is it important and what's going on right now?
Speaker:Sure.
Speaker:So I mean, what you have around the ocean are things called choke points.
Speaker:These are narrow little areas where kind of traffic funnels together.
Speaker:Imagine your, you know, busy intersection in your local town, or where two
Speaker:highways cross, that's a classic kind of choke point where all of a
Speaker:sudden everything comes together.
Speaker:And one of the biggest ones in the world is this Strait of Hormuz.
Speaker:This is the strait where the Persian Gulf dumps out into the Indian Ocean.
Speaker:And what makes the strait so significant is it, it's about 20 miles wide at
Speaker:the navigable part, but what makes it unique is about 20% of global oil and
Speaker:liquified natural gas come out of this.
Speaker:So, I mean, a fifth of really the major energy comes out and what we've
Speaker:had happen since the United States and Israel struck Iran, is that
Speaker:shipping has stopped going through.
Speaker:It's not, the Iranians are blocked it by any means.
Speaker:It's just that shipping has basically looked at each side and sat there
Speaker:and said, it's a little dangerous.
Speaker:We're gonna hunker down and wait for everything to calm down.
Speaker:It's, it's very akin to what happened when the Ever Given went sideways
Speaker:in the Suez and we, for six days watch ships pile up on each side.
Speaker:And one of the reasons I think I started my channel was because
Speaker:to explain to people not so much however Ever Given got stuck.
Speaker:We did that and we talked about the ship, which was interesting, but then we started
Speaker:talking about how does this impact me?
Speaker:Why is it a ship stuck in Egypt impact me.
Speaker:Why is it a conflict in, in, in Iran going to impact me?
Speaker:And it is.
Speaker:'Cause the next time you go get your gas at the pump, it's affecting you
Speaker:right now because we've just seen record value for oil shipped outta the Gulf
Speaker:Coast of the United States over to Asia.
Speaker:Record number.
Speaker:It's the highest it's ever been.
Speaker:And that translates to higher cost for us.
Speaker:Okay.
Speaker:So I would love to say there's so much I wanna unpack here, but let's start with
Speaker:the, the strait itself and the ship.
Speaker:So what you're saying is we're getting the ships piling up on
Speaker:the outskirts of the strait.
Speaker:Right.
Speaker:What, how long, I guess, can they be there?
Speaker:Are they no longer starting to come from their original destinations?
Speaker:Are are countries halting, you know, the departure of these ships.
Speaker:What's gonna happen when it becomes too congested there?
Speaker:This is where logistics comes into it.
Speaker:So the ships inside the strait, you know, inside the Persian Gulf and
Speaker:the cul-de-sac in there are starting to be filled up with oil and gas.
Speaker:So they're starting to fill up, they're, they're going to facilities
Speaker:all the way from Kuwait down to the United Arab Emirates.
Speaker:And they're filling up.
Speaker:Now when they eventually all fill up, that's a problem because then
Speaker:those facilities ashore don't have enough fac storage areas.
Speaker:They gotta bring new ships in.
Speaker:So we're, what we're watching is kind of the gauge go up as ships fill up,
Speaker:and that's telling us, okay, ships are gonna have to come in soon.
Speaker:At the same time, marketplaces, particularly Asian art marketplaces,
Speaker:'cause that's where a lot of this oil goes to is Asia, India
Speaker:all the way over to China.
Speaker:They're pulling from a fleet of anchored vessels off of Singapore
Speaker:and Malaysia that sit there.
Speaker:They normally do.
Speaker:They sit there and they wait to find out where's the best place to
Speaker:go sell my oil, where, where can I sell my oil for the best money?
Speaker:And they're being pulled now.
Speaker:And as they start going down in level, we're gonna need to pull oil out.
Speaker:And so empty tankers are heading to the Persian Gulf.
Speaker:Filled tankers are coming to the end of the per Persian Gulf, and sooner
Speaker:or later that band's gonna snap.
Speaker:And everyone's gonna go.
Speaker:And the driving force here is insurance.
Speaker:It's all about money and insurance.
Speaker:And, and everyone in logistics knows this, that insurance is the key.
Speaker:And, and once you know, what they're gonna weigh is risk.
Speaker:Do I wanna risk my ship right now?
Speaker:I can wait a few days.
Speaker:I can wait a few days.
Speaker:Maybe I'll get a little bit more from my ship later on.
Speaker:So everybody's waiting, but once it goes, it's gonna go.
Speaker:And what we'll see is, is the marketplace go.
Speaker:And that will trigger ships going.
Speaker:Now we may have attacks, we may have vessel damages, and that could
Speaker:potentially cause disruptions.
Speaker:And we're seeing some small scale attacks on ships right now.
Speaker:Yeah, we have seen, I was looking at the numbers.
Speaker:There are some ships that have been hit and damaged.
Speaker:Correct?
Speaker:When talking about insurance, so we had, insurance prices typically go up
Speaker:anytime that there's kind of a more dangerous area, just as insurance does.
Speaker:Is insurance getting pulled yet?
Speaker:How?
Speaker:How is the insurance situation kind of evolving?
Speaker:Shipping is is very unique.
Speaker:It's the oldest transportation system in the world.
Speaker:And shipping insurance is actually done in these, what are called
Speaker:clubs, which aren't clubs.
Speaker:I mean, it's not like you go someplace and have a great time.
Speaker:These are, these are clubs that are formed by the ship owners.
Speaker:And there's a dozen of them, literally 12 of them, that form what's
Speaker:called the international P&I Club.
Speaker:It is a protection indemnity.
Speaker:So it's the ship owners that insure their own ships, but like every other type
Speaker:of insurance, you have insurance on the insurance, what's called reinsurance.
Speaker:And so what basically happens here is the ship owners realize, okay,
Speaker:the danger is the val, the the, the cost may be so much that we don't
Speaker:have enough insurance on the ships.
Speaker:That's why they stop sailing.
Speaker:It's like, okay.
Speaker:We were paying danger insurance, but now we may need more danger insurance.
Speaker:So to give you the idea of the numbers, sailing through the
Speaker:Strait of Hormuz cost about 0.2% the value of the shipping cargo.
Speaker:So for a hundred million dollars tanker, it was costing you $200,000,
Speaker:and that was a money that you factored in that was spread across
Speaker:the oil that was being shipped.
Speaker:Well, now it's jumped to 2%.
Speaker:That's $2 million.
Speaker:So now all of a sudden you gotta spread it across.
Speaker:It's why the big container ships, when the Houthis started attacking
Speaker:ships in the Red Sea, sat there and said, we're not gonna go through the
Speaker:Red Sea, because a, a 1% war risk on a billion dollar ship is $10 million.
Speaker:And it's like.
Speaker:A lot more than I have.
Speaker:Right.
Speaker:It's cheaper to go around because there was an alternative.
Speaker:You can go around the Cape of Good Hope, you can go around
Speaker:the southern tip of Africa.
Speaker:There's no shortcut here.
Speaker:There's no, hey, I got a better idea.
Speaker:Let's go around the, the Persian Gulf.
Speaker:You can't.
Speaker:You've gotta go through the strait and, and so that's what's
Speaker:causing the crisis right now.
Speaker:How many ships are actually going through right now?
Speaker:So on March fourth, two ships went through.
Speaker:One got hit by a drone and the other one made it through.
Speaker:So, I mean, you're getting the idea here.
Speaker:It's very small numbers, however.
Speaker:So a 50 50 risk.
Speaker:Right.
Speaker:So, but we, we are starting to see ships run through.
Speaker:And like, I, I literally have a map up here of, of ships sailing right
Speaker:now, and we're seeing a couple of ships start venturing that way.
Speaker:So what, what we'll eventually see is when it's economical and the risk is
Speaker:outweighed by the benefit, ships are gonna start going in and, and it's
Speaker:only a matter of time till it happens.
Speaker:So how long does it typically take when things clog up?
Speaker:You know, let's see, before businesses or consumers, we as
Speaker:Americans, I guess when, when do we really start to feel the impacts?
Speaker:Well, we were actually feeling this beforehand because there's a thing out
Speaker:there with, you may have heard of called the Dark Fleet, which is a fleet of
Speaker:commercial ships out there that are moving Russian oil, Venezuelan oil, Iranian oil.
Speaker:And the US had started to sanction that fleet and which meant that you were
Speaker:taking those tankers out of the pool.
Speaker:It, it's like having, you know, a thousand tractor trailers and
Speaker:now all of a sudden you have 600.
Speaker:And that's going to all of a sudden raise the cost to use those 600
Speaker:'cause you can't use the other ones.
Speaker:So we were already seeing that happen.
Speaker:And with, due to futures markets and the way the oil industry
Speaker:works, we're already seeing it.
Speaker:We're, we're seeing, I, I mean, because when you're booking a cargo
Speaker:on an oil tanker, you're actually paying for the next load coming,
Speaker:not so much the load you're getting.
Speaker:So you're seeing those costs go up.
Speaker:I'll give you the idea here.
Speaker:A very large crude carrier, this is the big super tankers.
Speaker:This is a thousand long, a thousand foot long ship can carry
Speaker:a million to 2 million barrels.
Speaker:A barrel is 42 gallons of oil.
Speaker:I'm talking about a massive vessel.
Speaker:That vessel about two months ago to charter it, to rent it for the
Speaker:day to go to your, you know, U-Haul of tankers and rent that day,
Speaker:ship for a day cost you $50,000.
Speaker:They just booked one yesterday for $440,000.
Speaker:So this is, this is the markup.
Speaker:Now the, the price of the ship hasn't changed.
Speaker:They paid for that ship.
Speaker:It's paid, the crews paid, the oil, you know, the fuel
Speaker:for it is basically the same.
Speaker:What's changing is the demand and demand is just through the roof.
Speaker:So what do you anticipate happening?
Speaker:I, let's take timeframes, you know, I mean, obviously it's easy to
Speaker:say, let's wait two or three days.
Speaker:If this drags on and, you know, conflict continues, I guess, what are
Speaker:sort of the recourses for ships here?
Speaker:Well, one of the things you, you'll start seeing happen is ships will
Speaker:go to other places to draw oil from.
Speaker:So we'll see ships come to the United States.
Speaker:You're gonna start seeing the Gulf Coast get busy.
Speaker:You'll see other areas that have oil.
Speaker:Nigeria, Venezuela is a good potential here.
Speaker:Venezuela now all of a sudden could start doing it if, if the
Speaker:sanctions are listed on them.
Speaker:So.
Speaker:You'll see other que other countries do it.
Speaker:The problem is we're not just, you know, shutting off the Persian Gulf,
Speaker:but we've shut Russia off 'cause of the Russian invasion of Ukraine.
Speaker:So it becomes a big commodity issue.
Speaker:One of the biggest things that comes outta the Persian Gulf is liquified natural gas.
Speaker:The four biggest producers of that is, Qatar in the Persian
Speaker:Gulf, which can't get its gas out.
Speaker:Russia, which is under sanctions.
Speaker:And then the United States and Australia.
Speaker:But there's a finite number of what's called liquified natural gas carriers.
Speaker:You, you have to take natural gas and liquefy it, which means you
Speaker:put it into a ship by cooling it.
Speaker:Super cool it.
Speaker:So there's only a finite number of those ships.
Speaker:And you know, if, if now you get a sail from the United States to China,
Speaker:to Japan, to Korea, to Europe, well, you know, Qatar in the Middle East is
Speaker:really close to Europe, but now it's not.
Speaker:And now you have to go further distances and there's set amount
Speaker:you can ship because there's finite, you know, pools available.
Speaker:That's just gonna drive prices up.
Speaker:We're already seeing, for example, in India gas rationing going
Speaker:to take place because they're not getting the gas they need.
Speaker:Already.
Speaker:Already.
Speaker:Yeah.
Speaker:'cause they're worried.
Speaker:They're worried about, because you know what happens is, what happens
Speaker:always is people hear about this.
Speaker:It's like, oh, I gotta panic.
Speaker:The go of a toilet paper incident.
Speaker:That's what I'm hearing here, Sal.
Speaker:Right?
Speaker:The mi, the minute the Colonial pipeline shuts in the Eastern part
Speaker:of the United States, Southeastern part of the United States.
Speaker:When a hurricane comes in, what do people do?
Speaker:I live in North Carolina.
Speaker:Everybody runs to the gas station and fills up every cup they have with gas.
Speaker:Even though we have days worth of fuel, prepositioned in tanks
Speaker:all along the pipeline, you can't tell people that they're gonna
Speaker:panic because you just don't know.
Speaker:Yeah, absolutely.
Speaker:Okay.
Speaker:Sal, one thing I really love about you is that I feel like you're really
Speaker:understand the human element of things.
Speaker:I think especially maybe 'cause you've worked on ships, you're a merchant marine.
Speaker:So I guess gimme some perspective maybe understanding of what the
Speaker:crew members might be going through.
Speaker:So I'll, I'll say this from the crew perspective, they, most of
Speaker:'em have no idea what's going on.
Speaker:They really don't.
Speaker:They're, they're fixated on doing their job.
Speaker:They're kind of, Hey, I gotta get the shit from point A to point B. I don't
Speaker:know what's going on geopolitically.
Speaker:I, I, I, and that's the way I was really, it was just, it was really, it was a
Speaker:fascinating thing when I came ashore from shipping to go into the, the business side
Speaker:of it and then to look at it historically and analytically, it's a lot different.
Speaker:It's much like a truck driver has, you know, very narrow view of the job in front
Speaker:of them versus the kind of the corporate.
Speaker:On the ship side, it's been really challenging for ocean shippers
Speaker:for roughly about six years now.
Speaker:I'll say, since COVID.
Speaker:COVID, we've all talked about how important logistics is, and how
Speaker:it's really the unsung, it kept everything moving during COVID.
Speaker:Well magnify that by ocean shipping.
Speaker:There's about 1.5 million mariners who sail ships around the world.
Speaker:And those 1.5 million largely come from pretty poor countries around the world.
Speaker:Philippines, India, Indonesia, China, Ukraine, Russia.
Speaker:And what happened during COVID was if they were on the ship,
Speaker:they were stuck on the ship.
Speaker:And, and, and, and I mean, stuck.
Speaker:And understand working on a ship is, is Groundhog's Day.
Speaker:Every day is Monday.
Speaker:It's the same thing.
Speaker:You don't have weekends because every day you work, you work
Speaker:at least eight hours a day.
Speaker:There's no, you know, you don't go home.
Speaker:You, you live on the ship.
Speaker:You just, you literally walk up and down flights of stairs and you're,
Speaker:you doing the same job and, and.
Speaker:Some of these people were on ships for over a year.
Speaker:They couldn't get off.
Speaker:I mean, because they couldn't fly out because of COVID.
Speaker:And so, and then the people who were coming out to relieve them
Speaker:couldn't fly out because you weren't allowed to because of COVID.
Speaker:And what we saw was a huge attrition in the fleet in terms of mariners out there.
Speaker:And, and that's still an impact today.
Speaker:It's a real big problem out there because now we've lost a
Speaker:lot of trained crews out there.
Speaker:And so we're, we're, we're trying to find crews from other places.
Speaker:Like any a company in the world, hey, I wanna get the best mariner
Speaker:I can, but at the cheapest price, where can I find that cheap mariner?
Speaker:Because the minimum wage to work on a ship is like $666 a month, so 20 bucks a day.
Speaker:You know, where can I go?
Speaker:And, and, and, and right now they're pulling from Africa.
Speaker:They're pulling from Central America.
Speaker:And the problem you have is very inexperienced crews out there, crews
Speaker:that have big language barriers for, for example, and we're making
Speaker:ships much more sophisticated and complicated than ever before.
Speaker:So it's a real difficult thing.
Speaker:You know, the idea of, you know, hey, I'm gonna work on a ship and I'm gonna
Speaker:pull into a port and I'm gonna go ashore and enjoy life ashore for a day or two.
Speaker:That doesn't happen.
Speaker:When you pull into an ocean terminal and a container ship, they're throwing
Speaker:lines out, the cranes are coming out, and you are outta port as soon
Speaker:as they, they move that last box.
Speaker:Because as a ship owner, I don't make money when you're in port,
Speaker:I make money when you're moving.
Speaker:And then I want you out 'cause you're costing me dock fees.
Speaker:You're, you're, you're, you know, impacting my schedule.
Speaker:I need you moving.
Speaker:And it's a really, really tough life.
Speaker:I, I make it akin to long haul truckers.
Speaker:You know, it's very much that type of, of environment where
Speaker:it's, it's the, it's the trudge.
Speaker:It's the gruel.
Speaker:And it's a really tough one.
Speaker:So.
Speaker:As we zoom out a little bit and kind of look at the macro, maybe what's
Speaker:going on with the industry as a whole, it seems like labor's kind of
Speaker:a little bit of a challenge right now.
Speaker:What?
Speaker:What are some of the other kind of just general challenges, not
Speaker:specifically related to what's going on in the Middle East?
Speaker:Sure.
Speaker:So if you look at the US for example, let's talk about the, the
Speaker:ports and the infrastructure there.
Speaker:So, I mean, obviously we just came out of two, a couple of years of big
Speaker:negotiations with the longshoremen on the West coast and on the East coast.
Speaker:And then this got a lot of attention last year when on the
Speaker:East Coast the the union went on strike garnered a lot of attention.
Speaker:Three days in October of 2024 we saw that shut down take place.
Speaker:And you know, one of the big issues is automation.
Speaker:How do I make this, this flow of goods from, from the dock side into the terminal
Speaker:and then out the gate more efficient.
Speaker:And you know, a lot of people were pointing at the longshoremen.
Speaker:Man, the longshoremen are working backwards.
Speaker:They're, they're archaic.
Speaker:They, they don't wanna advance.
Speaker:And I would argue that's not the case at all.
Speaker:It really isn't.
Speaker:I, I, I, if you look at some of our terminals, especially on the West coast,
Speaker:look at the APM terminal in Long Beach.
Speaker:Look at the LBCT terminal in Long Beach LBCT in Long Beach.
Speaker:The APM in LA.
Speaker:Very sophisticated, very modernized, where we're definitely seeing that.
Speaker:And so it, it's really that integration that has changed.
Speaker:One of the things that I think that everyone should have noticed, and I
Speaker:know I did, when we had the supply chain crisis, we had 21, 22, 2021, 2022.
Speaker:We saw the system get overloaded.
Speaker:I mean, it just clogged up.
Speaker:And it wasn't because of a shortage of ships.
Speaker:We had 109 off LA and Long Beach.
Speaker:There was no shortage of ships.
Speaker:What we did was jam eight lanes of traffic into two.
Speaker:And the system clogged.
Speaker:What I noticed when the tariffs hit last year, when President Trump initiated the
Speaker:tariffs, a lot of smart shippers learn lessons from the supply chain crises.
Speaker:Hey, I'm not gonna put everything, a hundred percent through LA because I
Speaker:saw what happened when LA clogged up.
Speaker:I'm gonna work with a 3PL or I'm gonna work with a a, a freight forwarder or an
Speaker:NV and I'm gonna have some flexibility.
Speaker:I'm gonna be able to swing my cargo, maybe not through LA but through the new lane
Speaker:of the Panama Canal, and I'm gonna land in Savannah or Charleston or Jacksonville or,
Speaker:or you know, one of the other Virginia, you know, I'm gonna be able to do that.
Speaker:And what you see is a lot of nimble work right now.
Speaker:Hey, it may cost me a little more to go that longer distance on the ship,
Speaker:but it's gonna pay off because if I land in LA I'm gonna have to deal
Speaker:with warehousing, I'm gonna have to deal with class one railways.
Speaker:I'm, I, I got a lot of issues there.
Speaker:I'm gonna pay a little more, but my reliability goes through the roof and,
Speaker:and, and it's, it's much more flexible.
Speaker:And I think a lot of freight forwarders and a lot of people
Speaker:are looking at that now.
Speaker:A lot.
Speaker:If you are still getting your cargo through that one port, through
Speaker:that one operator, you, you are asking for disaster at some point.
Speaker:Because we saw that happen with Dolly in Baltimore.
Speaker:When Dolly took out the bridge in Baltimore.
Speaker:You shut a medium-sized port, maybe the 11th, 12th, biggest port in
Speaker:the United States for two months.
Speaker:And if you are a hundred percent into the port of Baltimore, you got hurt.
Speaker:You got hurt really bad.
Speaker:Oh, that was crazy, Sal.
Speaker:That was some crazy, I wish we could have had an episode just
Speaker:talking about that, but I just do wanna say like diversification.
Speaker:We work with big ecommerce shippers and even with carriers, and it's not.
Speaker:In 2026, we're not in the kind of era where we need to have
Speaker:all our eggs in one basket.
Speaker:We really need to be spreading that risk around a little bit.
Speaker:And being, I love how you said, more nimble and being able to pivot
Speaker:when geopolitical things happen, which are happening all the time.
Speaker:Or anything.
Speaker:Accidents, you know, weather issues, all of that kind of stuff.
Speaker:So.
Speaker:Exactly right, Lori.
Speaker:'cause I, I know, like for example, when, when the Red Sea happened and
Speaker:the Houthis started attacking ships, I was doing videos on that and I had a,
Speaker:I had a, a, a shipping guy contact me and said, hey, I watched your video.
Speaker:And man, I, I immediately shifted my cargo that was routing through the Suez
Speaker:onto ships going across to the Pacific.
Speaker:I didn't wanna go toLAbut you know what?
Speaker:LA was open and like, I'm gonna route to LA and do it.
Speaker:And, and so, you know, you, you, you have to be able to do it.
Speaker:And I'm not saying that everyone needs to be a geopolitical expert and watch
Speaker:everything in the news, but again, and, and the problem is it costs money.
Speaker:And this is always the issue.
Speaker:It's like, where can I cut my budget?
Speaker:Where, you know, yeah, I, I can consolidate.
Speaker:I love consolidation.
Speaker:Consolidation is great.
Speaker:I can just put everything in here and I don't have to worry about it.
Speaker:But it, it comes back and, and like I said, if, if you have that flexibility to
Speaker:do that, then you, you gotta be doing it.
Speaker:Maybe not every load, but maybe once in a while you're doing it so that you
Speaker:have a network and contacts developed.
Speaker:Oh, absolutely.
Speaker:Great, great point.
Speaker:Because relationships in our industry are so critical and developing that
Speaker:they help you pivot more quickly.
Speaker:So really good point about finding, creating those relationships, getting
Speaker:some contact points and, and a little bit of experience with using some different
Speaker:ports and, and diversifying a little bit.
Speaker:I think real quick, this is the most like advanced business in the
Speaker:world, but at the same time, it is the oldest business in the world that
Speaker:uses personalities and fax machines.
Speaker:So I mean, you have to build that up.
Speaker:Okay.
Speaker:So I love you.
Speaker:I feel like that too, like this is a complicated, highly
Speaker:technical, automated, but at the same time, so relationship based.
Speaker:It's really crazy.
Speaker:I love that.
Speaker:Okay, let's talk a little bit back.
Speaker:So going back to what's going on in the Middle East, are we gonna see, do
Speaker:you feel like, you know, you mentioned the clogging up and how that happened
Speaker:in the ports here in the US it.
Speaker:Even if things get moving, I mean, aren't we seeing kind of a big clogging there?
Speaker:Like how is that, I guess give me best case scenario
Speaker:here that it gets worked out.
Speaker:Worst case scenario, what?
Speaker:What do you see that we're gonna do there?
Speaker:Even, you know, right now, everything stops, straits open up, everything's
Speaker:flowing, you know, magically.
Speaker:We're still gonna have disruptions.
Speaker:Because the minute you clog, you create the kind of, again, it it, it's
Speaker:driving down the highway and all of a sudden traffic comes to a stop for some
Speaker:reason, you don't know why, because there was an accident there an hour
Speaker:ago and it just hasn't cleared up yet.
Speaker:And, and that's what we're seeing.
Speaker:We're gonna see it's gonna, you know, for almost every day of a, of an incident,
Speaker:it takes three to four to clear it out.
Speaker:Jeremy Nixon, the CEO of ONE, Ocean Network Express was talking at
Speaker:the TPM conference in Long Beach.
Speaker:And he said 10% of of the container market is tied up in this.
Speaker:And, and I, I questioned that for a minute.
Speaker:I was like, well, hang on a second.
Speaker:There's not 10% of the container ships in there, but what he's talking about
Speaker:is 10% of the routing of the, of, of, of ships that even touch that area
Speaker:are going to be affected by this.
Speaker:And as he said, if I can't get my ships into the Middle East, I
Speaker:can't get into the Persian Gulf.
Speaker:That cargo goes somewhere.
Speaker:And when does it go?
Speaker:It piles up in the terminals and, and as the terminals clog up, it's
Speaker:the big Jenga set or the big Tetris, it starts filling up and it becomes
Speaker:more inefficient in the ports.
Speaker:And you know, I gotta get this cargo off, so I gotta dump it into a port.
Speaker:And now if I'm routing cargo, I gotta route it over multiple places.
Speaker:The, the I, I always use it.
Speaker:It's, it's the musical chairs of, of container shipping.
Speaker:The minute you pull a chair out or you occupy a chair, you cause a disruption.
Speaker:And, and that's what we see.
Speaker:It's the accordion effect.
Speaker:And, and, and that's exactly what we're gonna see.
Speaker:It doesn't matter what sector we talk about, if we talk about containers
Speaker:and we talk about bulk, if we talk about you know, oil, if we talk about
Speaker:gas, we talk about passenger liners.
Speaker:There's six passenger ships stuck in the, in the, in the area.
Speaker:That's upsetting schedules for other ships that, that are doing that.
Speaker:And it just has this kind of knockdown effect.
Speaker:And if, you know, if it affects you in a small business where you have
Speaker:six employees and one doesn't show up, imagine what this does when
Speaker:you take one sixth or you know, 10% of the ships out of the sequence.
Speaker:It, it creates a massive disruption on a global scale.
Speaker:Wow.
Speaker:That is crazy.
Speaker:So.
Speaker:Are we thinking, would you anticipate, you know, is this gonna be a
Speaker:multiple quarters kind of disruption?
Speaker:I mean, obviously you dunno what's gonna happen in the conflict there, but should
Speaker:our shippers be thinking longer term?
Speaker:I guess what advice do you give them for the next few months even?
Speaker:So, I, I, I just, you know, end of the year you do those forecasts and
Speaker:so I was reflecting back on 2025 and I'm reading everyone's, you know,
Speaker:predictions for 2026 and I'm reading the ocean carriers, the big ocean
Speaker:carriers like, oh, 2026 is gonna be bad.
Speaker:It's gonna be, you know, it's gonna be, you know, we've got over capacity.
Speaker:We, we, we, we have too many ships and, and the, the Red Sea's gonna open up
Speaker:and rates are coming down and, and you know, the ocean carriers were, woe is me.
Speaker:I'm not gonna be making, you know, the billions I was making a few years ago,
Speaker:and I literally just read a story today.
Speaker:It's like, oh, we don't have enough ships for the ocean carriers.
Speaker:I'm like, are you kidding me?
Speaker:It's like, it's like, it, it's like you were just complaining
Speaker:that you had too many ships.
Speaker:You're blank sailing like crazy.
Speaker:And, and I think that's the, that's the element right there.
Speaker:It, it's going to be, disruptions.
Speaker:Again, what I found during the tariff, for example, is, is alright, if you look at
Speaker:2025 versus 2024, we shipped almost the same amount of goods in those two years.
Speaker:I mean, grant, there wasn't a raise.
Speaker:We didn't, we didn't grow.
Speaker:It was about stable what we did.
Speaker:But if I remember reading the, the, the forecast for 2025, it's like,
Speaker:oh, this is gonna be horrible.
Speaker:This is gonna be, you know, you know, I was listening to the port of LA
Speaker:talking about a, a one third reduction.
Speaker:In the amount of cargo coming into the port of Valley.
Speaker:They're the third best year ever.
Speaker:I mean, third best year they've ever had.
Speaker:And, and when I looked at those numbers and I said this and I had
Speaker:people say, you're crazy, Sal.
Speaker:It's like, no, because shippers learned, what do we do?
Speaker:We front loaded the first quarter of last year, May and June was
Speaker:down, which normally it isn't, you know, it's usually a, peak, but
Speaker:man, we had a big dip in there.
Speaker:And then what happened, August through the roof.
Speaker:And even in the fourth quarter, we went big 'cause we knew this was gonna be a
Speaker:l really late New Year over there.
Speaker:A Chinese New Year.
Speaker:It was gonna be late.
Speaker:And I, I think again, we're going to see this kind of adaptability.
Speaker:I think you have to see it.
Speaker:I think the ocean shippers see an opportunity here.
Speaker:And let me be clear, I'm, I'm very hard on ocean shippers.
Speaker:They will do everything they can to orchestrate the system to
Speaker:make sure they're making rates.
Speaker:They don't coordinate, they don't work together, but man, they're gonna cancel
Speaker:shippers and they're gonna make sure.
Speaker:So I think that's one of the reasons why, for example, out of TPM right now,
Speaker:you're not hearing a lot of contracts being signed, because everybody's
Speaker:waiting and waiting and waiting.
Speaker:Because everybody knows those long-term rates.
Speaker:What they want to do is wait until those rates are as high as
Speaker:they can get 'em and lock 'em in.
Speaker:The spot rates are always the big mis giver.
Speaker:'cause you know, spot rates are, are 30% in the marketplace.
Speaker:People are jumping on those because they can't commit the long
Speaker:term or they don't have enough volume to commit the long term.
Speaker:So I, I, I think.
Speaker:You have to be really careful and, and watch what you're doing.
Speaker:And, and we've had some changes in the ocean carriers, Maersk and Hop Hog
Speaker:and this Gemini corporation are, are, are trying this new spoken hub system.
Speaker:They touted a ridiculous reliability.
Speaker:I, I don't know if I buy the 90% reliability.
Speaker:But then you have Mediterranean Shipping, which is just in the behemoth.
Speaker:I mean, just a monster of, of, of an entity out there.
Speaker:And they seem to be doing good.
Speaker:We've got Zim who's playing a game here that maybe bought
Speaker:up, so there's a lot going on.
Speaker:I'm not sure I got back to your question, Lori.
Speaker:There's so much there.
Speaker:I apologize.
Speaker:I, I know that we could talk forever and I know we're running a little
Speaker:bit low on time, so I wanted to jump into, any signal that you're looking
Speaker:for, any, you know, anything that our shippers should be keeping their
Speaker:eye on right now that you recommend?
Speaker:Just in our current situation?
Speaker:Yeah.
Speaker:I, I, I would be watching, you know, the, the fed, you know, puts
Speaker:together some charts, which are really interesting about, you know congestion
Speaker:in ports, especially in East Asia.
Speaker:To me, that is always the thing I'm looking at.
Speaker:I'm always looking at when the East Asia ports start getting congested because
Speaker:that's a good indication for me, number one, rates are gonna start going up.
Speaker:There's gonna be some difficulties coming in, and what you start seeing
Speaker:is the unexpected surges in the port.
Speaker:What throws everything off in the ports is, is when everything's
Speaker:flowing nicely, that's great.
Speaker:When it's a nice level of flow and, and, and ships are coming in,
Speaker:it's expected, everything's great.
Speaker:It's when you have these pulses come in, that causes a lot of disruption
Speaker:because if you know US ports, we're not gonna work that third shift.
Speaker:We're not gonna work weekends typically.
Speaker:And so things will start backing up, piling up, and it gets a
Speaker:little bit difficult out there.
Speaker:So I, I watch that a lot.
Speaker:The other thing that, you know, that was really incredible, I think.
Speaker:We, we learned so many lessons from the supply chain.
Speaker:I, I, I always never buy this idea that people don't learn.
Speaker:They did.
Speaker:I mean, we've got better management, for example, of warehouse space in
Speaker:the United States than ever before.
Speaker:A lot of components out there that can give you, you know, hey, you
Speaker:don't have to store everything in, in, in the Inland Empire.
Speaker:You can go out along a class one railway and find a spot in
Speaker:Phoenix, in El Paso in, in Topeka.
Speaker:And, and a lot of available availability out there.
Speaker:A lot of fight between the ports right now to try to get business.
Speaker:It's, it's cutthroat.
Speaker:It's, it's, there's a lot of offers coming in about that.
Speaker:I think some of the mid-range ports offer a lot of flexibility you don't
Speaker:get in the big ports in some ways.
Speaker:You know, I was just down in the port of Jacksonville.
Speaker:I watch what Charleston is doing.
Speaker:I watch what the Port of Virginia is doing is really incredible.
Speaker:And then some ports outside the United States too.
Speaker:Vancouver, really interesting.
Speaker:If you're in the Midwest, Vancouver is a really interesting aspect to come
Speaker:in because you've got that railway connection between the Canadian
Speaker:Pacific and the Kansas City.
Speaker:I, I. I'm always leery of the Mexican ports because you get so much trouble
Speaker:coming across that southern border.
Speaker:That border is, is is always a, a danger in some ways.
Speaker:Pacific Northwest, Seattle, Tacoma, developing really nice they're
Speaker:working a lot to get that in there.
Speaker:So yeah, those are the kind of the big things I watch and every time, you know,
Speaker:anything ticks on a global scale, it's good to take a moment and, you know,
Speaker:just peruse the major news sources.
Speaker:You know, I look at G Captain, I look at Lloyd's List, Digital Commerce.
Speaker:You know, understand some of them have a perspective they're trying to talk about.
Speaker:Always un always know.
Speaker:I'm a historian, I always tell people no biases, you know, so always be, be
Speaker:aware of that, but, you know, be, be aware of that and get into networks.
Speaker:The other thing I talk about all the time is, is, is, is groups and, and
Speaker:trade networks and trade associations, which communicate like-minded
Speaker:people experiencing the same things.
Speaker:That's really, really important, you know.
Speaker:And, and things you do at your podcast, for example, is
Speaker:a good thing about that too.
Speaker:I would tout my own channel, but that's really self-serving,
Speaker:so I don't like to do.
Speaker:I I'm gonna tout it for you.
Speaker:What's Going on With Shipping?
Speaker:Completely keeps you in the loop of what's going on with shipping.
Speaker:And I, I actually love that point, Sal, as we close out here, this is
Speaker:an, an industry heavily based on relationships, but that's great.
Speaker:I mean.
Speaker:What it means is that go out there, there are people who are experts and
Speaker:you don't have to become an expert.
Speaker:You can listen to them and you can get your information.
Speaker:You don't have to spend 10 hours a day like Sal probably does
Speaker:keeping up with what's going on.
Speaker:You can just check in, find out what, what the latest news is and, and
Speaker:keep yourself abreast of situations.
Speaker:Fortunately, we're early enough in the year.
Speaker:Year, we're a little, you know, ahead of all the peak season and craziness
Speaker:where a lot of our shippers are trying to move goods across the ocean.
Speaker:So, stay abreast of what's going on is, is my recommendation.
Speaker:Any final recommendations from you, Sal?
Speaker:The only other one I'd add, Lori, too is social media is, is you do not, I know
Speaker:people have this fear of social media and, and you do not need to be tweeting
Speaker:and posting all the time, but if you follow some really key people, I, I'll
Speaker:say this, you know, when I started this, I knew shipping, I knew ocean shipping.
Speaker:I knew it.
Speaker:I, I understand rail, I understand trucking now, and that is because
Speaker:I made some great connections on some people on, on that.
Speaker:So, you know, if I have an issue about trucking, I know who to look
Speaker:at, I what are they saying about this?
Speaker:I got a rail issue.
Speaker:I know who to look at.
Speaker:And, and again, you know, it, it's not like I have to tweet and say anything
Speaker:to them or follow them on LinkedIn.
Speaker:You know, there's a couple of key follows on LinkedIn I follow all the time and,
Speaker:and there's so much information out there.
Speaker:There literally is.
Speaker:The question is what, and this is a, a thing I do as a history teacher for my
Speaker:students is the problem today is not lack of information, it's too much information.
Speaker:You have to figure out what's good information, how do you sort through
Speaker:the chaff out there and find this is the nugget I need to pull and, and follow and,
Speaker:and that's why you follow good people.
Speaker:You really do that.
Speaker:And I think for your businesses too.
Speaker:You need to be on social media.
Speaker:You need to be out there doing that, especially when it comes to looking for
Speaker:workforce employees, why your job is cool.
Speaker:I I, I get so many students come up to me now who find, follow my
Speaker:channel and they sit there and go, how do I get into the supply chain?
Speaker:Because again, nobody knew what supply chain was.
Speaker:Been around forever, yet now everyone is like, hey, what do you do?
Speaker:You do something with supply chain.
Speaker:I, I, I literally run into people all the time, ask me this question because
Speaker:it's interesting and, and as you well know, there is a myriad of jobs within
Speaker:supply chain you can morph into.
Speaker:Maybe you're, you start to hear, I don't like this as much, but I really love this.
Speaker:If you love solving problems, I got a career for you.
Speaker:It's called supply chain because you'll do it on a consistent basis.
Speaker:Absolutely.
Speaker:I echo that a hundred million thousand percent and I love history
Speaker:as you do, so I love studying, you know, ancient Roman supply chain
Speaker:and all of the different aspects.
Speaker:It has, it's been around forever.
Speaker:The Romans won because they were great at logistics.
Speaker:That's exactly right, Sal.
Speaker:So thank you so much for being here.
Speaker:I know your day's super busy and you've been having spring break and
Speaker:everything and it has just been great.
Speaker:Our, our Unboxing Logistics family are really gonna enjoy hearing from you.
Speaker:Lori, I appreciate the offer.
Speaker:Thank you so much for having me.
Speaker:Uhhuh.
Speaker:We'll see you all next time.
