S2E5: Steering through Stormy Seas with Maritime Expert Don Maier

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Introduction: 0:37

Welcome to the Tennessee on Supply Chain Management podcast. Listen in as co-hosts Ted Stank and Tom Goldsby set sail into the world of end-to-end supply chain management, diving deep into today's most relevant business topics. They'll share insights and pressing industry issues and tackle the challenges keeping supply chain professionals up at night. If you're enjoying the ride, download and subscribe to Tennessee on Supply Chain Management on your favorite podcast platform now.

Ted Stank: 1:05

Hey everybody and welcome to the Tennessee on Supply Chain Management podcast. We're coming to you here in early January 2024. We're going to try to cover a lot of hot topics looking forward this year, as well as some of the reports on the broader economy. Then we're going to pivot to our guest, Dr Don Meyer, expert in maritime transportation on our faculty. We'll introduce him a bit later on. He's got a great background and brings a lot of insights into what's going on in the world today related to maritime transportation and some of the crazy geopolitical things we've got going on here with my good friend Tom Goldsby. Tom, how you doing.

Tom Goldsby: 1:44

Ted, I'm really proud of you on these first episodes. I would understand if we'd still refer to the year as 2023. It's kind of like writing those first checks of the year and so forth for those who still write checks. Loyal listeners want to know, Ted, something right here at the outset of our first podcast of 2024. How are you doing on your New Year's resolution? I remember that you closed out the year promising that you weren't going to have any surgeries. How are we doing?

Ted Stank: 2:14

No, it was to stay out of a hospital.

Tom Goldsby: 2:16

'I don't want to be in a hospital.' Even more broadly defined.

Ted Stank: 2:21

Yes.

Tom Goldsby: 2:21

Okay, so tell me. I'm not aware that you've broken that commitment yet. How are we doing?

Ted Stank: 2:26

Well, it's 10:53 a. m. Eastern US time on January 5th. So far, nothing inside a hospital.

Tom Goldsby: 2:36

All right, we'll insert applause the celebration. Let's try to keep that streak going a little bit longer, maybe throughout the whole year.

Ted Stank: 2:44

I also danced around with Dry January, but I've already broken that.

Tom Goldsby: 2:48

You know, something they always say about resolutions is they need to be reasonable, right? In your case, I think that's a wholly unreasonable assertion. But hey, kudos to even thinking that way.

Ted Stank: 2:58

Well, there's a new thing they're talking about called Damp January, so I'm going to stick with that.

Tom Goldsby: 3:04

I've never heard of that. Well, hey, a lot to talk about other than personal commitments to the New Year. There are a lot of action in the world of supply chain business and the world in general, so where do we want to get started? Let's take a quick look, maybe, at those holiday sales recap. When we last spoke, we had had Black Friday, we had had Cyber Monday and even Cyber Week and those were up and in total it looked like holiday sales were up by 3.1 percent and online, in particular, doing well with spending up 5 percent. That was a record $222 billion over the months of November and December U. S. online sales. Also very robust restaurant spending in that holiday season, up 7.8 percent. So folks are opening up the pocketbooks and also registering credit and bringing up credit too, to make that happen.

Ted Stank: 3:59

Consumer confidence is up again pretty considerably over previous months, so people are feeling better about things and spending. But I know, Tom, that you track a lot. That will be interesting for those of us in supply chain management, particularly in reverse logistics. Standard numbers are about 16 percent of all online purchases are returned. So as we make records in online spending, that also means we're going to have records, probably for returns. So stand by for that right, you're right.

Tom Goldsby: 4:31

We're going to be watching out for those numbers in the coming weeks. However, there is starting to be a little bit of pushback, and maybe our listeners are seeing that, in the form of retailers setting time limits or trying to direct people to return that merchandise to stores rather than free pickups and things like that. So it will be pretty interesting to see if some of those retail overtures are starting to register and take effect and, as you point out, we are doing a lot of work in return. So we're going to be keenly watching that. Something else we keenly watch around here are the jobs report.

Tom Goldsby: 5:03

A new one just came out just this morning for December. That really surprised people. I think the pros were quite surprised that 216,000 jobs added in the US last month, and particularly in areas of health care, government and construction. I think we were talking before we started recording. The expectation was going to be about 160 or something like that 160. So we're way up there. And also, notably in December, wages outpacing inflation, with wages up 5.2% compared to inflation at 3.1%. That's going back to November numbers, but things are starting to come back in line.

Ted Stank: 5:42

Unemployment clicking in at around 3.7%, and so you're starting to hear a lot more from financial markets of that proverbial soft landing. Although we're not expecting US GDP growth to be particularly strong this year projections of almost only between 1% and 2%. If we can get inflation down, have at least some growth. Keep employment up, we should be okay, and have gotten through this.

Ted Stank: 6:12

So, barring any other crazy thing happening in the world which we know, we're in such a consistent, stable time and we'll talk with Don Meyer quite a bit about some of the things going on, these shock points that are always there waiting to happen and increasingly making their way to supply chains.

Tom Goldsby: 6:30

That said, supply chains held up very well throughout the holiday, particularly on the domestic side of things. It seems like those inventories were right-sized and, by and large, in the right places. We're not hearing about tremendous challenges with on-time deliveries or on-shelf availability. It sounds like, again, supply chains held up pretty well despite some blustery weather that occurred in various parts of the country late in the year.

Ted Stank: 6:56

That always kills me. You see these big weather reports. It's late December and January and there's blustery weather.

Tom Goldsby: 7:03

Well, you and I both lived in Iowa, right, we've experienced those Januarys in Iowa first year. Come on media, can't we focus on?

Ted Stank: 7:09

something else. I'm going to make a lot of people mad right now, but let's find something else that Jim Harbaugh did to prevent him from coaching in the natural championship game, right?

Tom Goldsby: 7:19

Well, don't get me started, but anyway.

Ted Stank: 7:21

Hey, manufacturing starts are up, but it's uneven across industries again. But in general manufacturing starts up improving, although they're still in contraction zone, but it's above where it's been, so that looks good. We're seeing warehouse vacancy rates increase, so potentially we can see rents and warehousing go down a bit this year. Domestic freight still a tough marketplace but again, as manufacturing improves and maybe some restocking after the holidays, we'll see some freight volume returning as well.

Tom Goldsby: 7:55

Something else we're keeping an eye on obviously are the unforced heirs of our own federal government and the possibility that by the time of our next podcast, there could be a government shutdown. We continue to kick that can down the road, but it sounds like House Republicans are trying to make an issue of immigration hardlining that topic, and they just might try to force the issue, which could make life hard on.

Ted Stank: 8:18

To me, Tom, that's about like talking about a snowstorm in January.

Tom Goldsby: 8:21

Yeah, fair enough, it's just here.

Ted Stank: 8:24

It's with us. Unfortunately, it's not seasonal, it's all year round.

Tom Goldsby: 8:28

It is year round. But yeah, it's predictable, right, we know what is it. January 19th is when that could go down. So well, you can almost set your watch to it.

Ted Stank: 8:35

Yeah. So we're going to have a little brinksmanship coming up in a couple of weeks and we'll see what happens. I wouldn't be surprised if a government shutdown happened this time. A lot of big things happening around the world in 2024, several major economies having elections Canada, us, russia, the UK, india, taiwan, south Korea it's kind of like the who's who of the industrialized world. Wow, a few in the, I think, the eurozone having European Union elections. So there's a lot going on, all of which could have major impact on government policies, on trade, on migration, all different things that impact us in supply chain management, and we should probably talk about that a bit later, when we bring Don in with us as well.

Tom Goldsby: 9:21

Yeah, and some of the issues that we're starting to percolate there toward the end continue. The drought, the challenge, shipping through the Panama Canal and, of course, geopolitics rear in its ugly head with regard to the Red Sea crisis that we're facing right now, with the Iranian-backed Houthis routinely attacking, and I've been trying to keep up with the news as well as the action there, but you and I are kind of hacks when it comes to ocean shipping, right, I mean, I'm in Landlock, tennessee. You're closer to the coast, recording today in Carolina.

Ted Stank: 9:57

Absolutely. I spent a lot of time at sea, but those tankers and container ships were things that we just had to dodge in the middle of the ocean Because they never changed course whether they were going to run you down or not. So, yeah, let's bring on our guest, Dr Don Meyer. He's a professor of practice with us here at University of Tennessee. He's formerly Dean of Maine Maritime Academy and California Maritime Academy, Also has lots of industry time in logistics with the likes of Monsanto, Penske, Office Depot and FedEx. Don, we are extremely happy to have you with us today, as well as to have you with us on the faculty here at UT. Don brings an element to our programs at Tennessee that we probably haven't had in quite a while, which is a real expertise in ocean maritime transportation. Don, what are some of the things you're thinking? Give us a little bit about the kind of things that keep you up at night and things you're focusing on.

Don Maier: 10:53

Well, it's kind of like what we had talked about before, as you, and when you guys invited me to be on the podcast, which thank you very much for being here with you guys. It's an honor to be invited. Now we're actually getting it done. But when we first talked about this, maritime World was relatively quiet and then, all of a sudden, everything just broke loose. So on the one hand, it's like, yeah, I'm being invited, because it's January, nobody else is around Yet at the same time, it's like, boy, this was perfect timing. So you guys, with your magic crystal ball, I think this has worked out very well for us, or for all of us.

Ted Stank: 11:24

If you swirl your beer mug around and then look down into the bottom of it, you can read those.

Don Maier: 11:30

Those tea leaves.

Ted Stank: 11:31

Yeah, that's right, yeah perfect, perfect.

Tom Goldsby: 11:33

Well, it's something that Ted and I have been accused of. We're pretty good at seeing the future. We just don't know exactly when that future might manifest. And in this case we got very lucky, because it is a tender box out there, as you pointed out, don. I mean rates had finally subsided. We're starting to make reference to pre-pandemic rate levels and volumes and things like that. And just almost a moment's notice later I alluded to it earlier the havoc of the Red Sea, with the Houthi attacks on vessels of various kinds, targeted primarily toward certainly Israeli, but also US ships. Also European vessels seem to be at target here.

Ted Stank: 12:13

I was this great champion, starting in 2016, of shifting trade lanes Asia to US East Coast ports through the Panama Canal. That was a marvel. Seeing the new locks of the Panama Canal in 2016, 17, etc Still an engineering marvel. But what the engineers didn't bank on was the lake water dropping six feet and staying six feet down. The marvel of engineering in the Panama Canal has been that they've never used any mechanisms to pump water. It was all natural that water would rain in the mountains in the middle of the isthmus and it would flow into the canals and everything was good. And now they're talking about having to potentially start doing pumping from one of the other rivers and dams and various different things. So, okay, we can't use the Panama Canal, no problem, we'll go through the Suez Canal to hit US East Coast ports. And then, starting in October 7th, the war in Israel and Gaza, which has to me, I hold my breath every day, with the risk of that spreading to the broader region. Don, what are you saying with that?

Don Maier: 13:18

Like you guys said, I remember speaking with my class right before the end of the semester back in early December saying, oh yeah, jewelry just came out with their container index, which they just came out yesterday, and I believe it was about $1,400, the global spot rate for a container, which is really inexpensive. Actually, it may have been less than that once. They was like 12, maybe $1,300, give or take, and now it's up roughly 30% just going to LA. It's up roughly 170%, I think, going into Rotterdam from Asia. So we really begin to see how much this kind of a situation will have on the impact of maritime shipping and, like you guys had just said, we've seen how there's been this large shift in global trade over the past 20 or so years, when that we're beginning to understand that there's a lot more politics involved with just moving our freight across international borders. The Red Sea I mean we had just talked about it. You guys hit it dead on. It's like, okay, I was going to come on it probably talk about Panama and the canals. Certainly then, ted, you had just mentioned that our next option is well, yeah, sure, we can go through the Red Sea, not a problem, we can go through the Suez Canal, I can cover the East Coast, we're all good.

Don Maier: 14:31

And then this situation hits, and I think it's something that we as consumers and as people across the world really need to understand is this one situation is also a microcosm of a number of other different situations.

Don Maier: 14:45

So we have the Ukrainian situation going on, we have the situation like Ted just mentioned in Israel, the Panama Canal, there's the situation in the Taiwan Strait, so you have the Chinese Navy actually chartering fishing trawlers, tying them up, and there's like three dozen of them all tied up, anchored all together as a flotilla.

Don Maier: 15:07

But it's there and these boats are in immaculate condition. There's no fishy equipment on board, so why would they be there other than to just disrupt shipping? And they're right near what the Philippines call part of their economic enterprise zone. So now, all of a sudden, we have more international trade law issues that are being disputed. The Hague has come out and said, hey, china, you have no claims on this, and China still ignores it. So now the US Navy is actually exercising with the Philippine Navy currently doing some exercise in the area, and China is saying, hey, you guys shouldn't be doing this, that's a potential tinderbox and that will then lead to your Straits of Malacca, which is also one of the other major trade routes that maritime side, are going to move our freight from Asia over to Europe and certainly over to the east coast of the US. So all of these things will begin to play in.

Ted Stank: 15:58

You know, as a former US Navy destroyer man again, this is no surprise to me right For centuries, one of the ways of waging economic war was to control trade lanes and cut off lanes of traffic flow and commercial flow. And you know, once again we wake up and we think this is new, right, tom?

Don Maier: 16:16

But it's, there's not a new one to the sun. Yeah, there is absolutely nothing new that if it's not one situation and it's another. So, you know, telling the students that it's kind of like the butterfly effect, that, hey, when that butterfly flaps and swings in Asia, somebody's going to sneeze in New York. And that's the things that we really need to watch in supply chain is all of these little pieces in the world and what's that impact going to be to our supply chain and my logistics operation? Right, and it's not just for today, it's what am I going to be planning on for, you know, the near future.

Don Maier: 16:47

One of the things is, you know this, at this time of year, especially if you know, coming out of industry, this was our quiet time, you know. You guys should have said that. You know inventory levels are starting to be right, size, right. I think the inventory rate was like 1.3, which is actually good. But yet this would also be the time that, as a manufacturer, I'm going to be pulling some inventory forward, because I got the lunar new year coming up in February, right, so that's going to shut down everything. So now, all of a sudden, I have to hurry up, pull inventory forward, which is good, but I'm going to have delay because most of my container ships are now going around to keep a good hope, which is going to add additional time. So I go from one situation into another. So any kind of pre-planning has just been changed.

Tom Goldsby: 17:32

Hey, don you know there's been some suggestion that the shipping lines have been I'm gonna use this word manipulating freight rates by virtue of capacity, and hey, that's their right and privilege to do so, so long as it doesn't affect national defense and other matters. What circumstance or card do you think the shipping lines would be playing right about now? Do they have the capacity to come back online? Would it be sufficient capacity, given what you noted about these longer transit times around Cape Good Hope and around the Horn of Africa and so forth, and as well as South America? I mean, do they have that capacity? Do they want to bring that capacity on, or are they enjoying those elevated freight rates that we're seeing?

Don Maier: 18:20

Let's say yes to everything just because it's easier, right? So the elevated freight rates really have only come about because of this Red Sea situation. So it literally has been since, well, I believe December 22nd so roughly two weeks is that we've seen that 150% increase in container rates. Everything prior to that it literally has been on the spot rate. The global average has been on the decline. So on the one hand, you know again, as if I'm a company and I'm trying to manage my assets, I'm certainly gonna tie up some of my vessels because I need to watch the assets and the costs of my operating costs and providing that I'm still meeting my commitments to my customers. I'm good so I can have those blank sailings, readjust some of my capacity levels to the certain trade lanes that the demand is there, so I'm managing my assets better. And then all of a sudden we come into this situation. So certainly that the rates are going up. But it's almost necessary because my costs of operating have also gone up. So it's not necessarily because of a supply-demand type situation, it's. I now have to take a longer route. So I'm gonna give you an example of like a dry tanker Roughly it's about $123,000 a day to charge that vessel Now, because if I go around the Cape, I'm gonna add on an additional 15 days. Those 15 days, at that $123,000 charter rate, has now increased my costs by $1.8 million. Well, how am I gonna absorb that? So that's part of the reason why some of those rates are going up.

Don Maier: 19:51

So do the shipping lines have the capacity? They have the capacity to take care of the demand. I think they have the capacity to take care of the extra or the longer transits. I believe that they are gonna be able to recoup some of their additional operating costs because of this situation. Then we have a longer route and it's also in the back of all of your ocean bill of ladings that, hey, in terms of piracy, war zones, force-missure, basically, that they can actually change the contract rates and we can increase the rate because of these different situations, and that's what they've done. So that's nothing new. So that's something that most logisticians should understand, especially on the international side. That's gonna happen. The fact that it's hitting everybody, or both sides of the US for the most part to some extent, is a bigger challenge. So, yeah, I think we have the capacity. I don't wanna say that. Certainly they enjoy having additional revenue. Do they wanna have that additional revenue because of the situation? Probably not.

Ted Stank: 20:50

And Don, it's also true that there's a lot of capacity coming online, correct? Isn't there a tidal wave of capacity coming online? Yeah?

Don Maier: 20:57

yeah, so there's an additional capacity. I believe I saw a report that there's like in 2024, I believe it's like seven or 8% additional growth and capacity. So we got more container ships coming on and then in 2025, it goes down to about four or 5%. So it's not a huge amount, but in terms of the size of the vessels and the containers coming on board, it's a lot more capacity and the demand is actually lower. So they're actually forecasting that the global demand is going to be three or 4% for the next two years, but we have 7% or 8% capacity coming on. So the capacity is there.

Ted Stank: 21:29

I would not wanna be a capital planner for any of the big ocean carriers because their lead times for bringing capacity on is so long that your crystal ball has to be five years out, and we all know in today's environment.

Don Maier: 21:41

Yeah, and then even on the maritime side so you brought it up, ted is that I need to forecast and do some capital planning, which means I have to get the financing ahead of time for a vessel that I'm not gonna have in my fleet for another two or three years Great. So I book that ship to be built. It's gonna take 18 months to two years before it comes into my fleet. But in the meantime we now had, back in July, the IMOs, international Marine Term Organization changed the fuel requirements. It says oh hey, by the way, you guys now had to have better, more emission controls on all of your ships.

Don Maier: 22:17

Okay, great, but what kind of fuel do you want me to use? And the IMO doesn't give any kind of requirements on that. So everybody, all of the ship lines, are like well, what kind of systems do I put, kind of engine do I put into my ship? That's gonna be built. That's gonna come online in two years when the IMO rules and regulations are also gonna be hitting. So there's all of that issues that are also being fumbled through and those also are gonna impact all of the shippers, your BCOs that are trying to put containers on the ships.

Tom Goldsby: 22:49

Yeah, let's get to that shipper perspective, don. I think you've done a great job kind of laying out the landscape and the decisions that the shipping lines are evaluating and having that capacity and choosing to deploy it in this circumstance. But what about shippers? We're seeing European shippers, as you pointed out, are the ones that are on the bleeding edge of the Red Sea issue right now. But the question is what about North American shippers? When are we gonna really start to see it? As you pointed out, 30% rate increases in the last few weeks. So we're feeling that, perhaps, but what about these ideas of alternative routes and even maybe bringing other modes, notably air, into the picture?

Don Maier: 23:28

Yeah, so there has been a little bit of a shift to the air side, not a significant amount, because I think a lot of the shippers, in terms of the inventory that's on the water now, that was already pre-planned, so they know it was already coming. What I think, what they're trying to figure out, is well, how long is this situation going to prolong itself? And the longer it goes, then I may have to shift to a different type of a mode where air comes into play. So it'll give the chance for I'm gonna shift the air. If I'm one of the manufacturers, of the shippers, I'm gonna shift train change to air to bring in some of the inventory, to buy me time for the additional two weeks until I can get into a more of a recurring cycle. So in supply chain we love being able to manage time as best as we can. I know it's gonna cost me more, but as long as I know I got a reliable service that's gonna take two weeks more. I may not like the additional two weeks, but as long as I know it's gonna take two weeks, I'm gonna make the adjustments now and when those two weeks come through, I'm used to it. It becomes more reliable and I think that's what the shippers are going to have to experience A 30% increase in rates. Yeah, we're getting closer to what the rate may have looked like back in like 2019. So it's not too significant on the US side, but it's certainly something that we need to be cognizant of.

Don Maier: 24:44

The other big picture that I think, if I was one of the shippers negotiating with the lines is we're walking into contract season, so in that contract rates usually they'll run May 1st to April 30th of the following year, but we started our negotiations between February, march and April. So if I'm a shipping line and I have these issues currently Occurring right now and I have these spot rates that are also going up, theoretically that actually pushes my contract rates up too. So if I'm a shipper, I better be expecting that my shipping lines are going to say, hey, we will have to have a higher contract rate or, by the way, you can also just go on this plot rate and hope that we actually have the capacity for you. So let's go back to okay, is it better for me to pay more with better, reliable service, or can I save money and hope for the best right? So it's a crystal ball situation. So Me, as a shipper, I certainly would be looking at different alternative routes, like we started talked about earlier. There's not a lot of alternative routes that we're looking at right now. We can send, you know, vessels through the Panama Canal. They increase the transits up to about 24 ships not a lot compared to what they were doing, but it's a little bit more. But it's gonna cost me more because I have to pay an additional $800,000, I believe, just to get into the reservation system. Well, I have to push those costs on on to somebody, because I can't absorb that kind of a cost. Okay, so as a shipper, I better be aware of that.

Don Maier: 26:09

Now, one thing that I've been kind of watching is let's go back to 2021 ish, when the Canadian Pacific bought the KCS, the Kansas City Southern right. So now you have the CP KC. So if you look at their rail line, they're going all the way across Canada, right through the middle of the United States, all the way through the middle of Mexico, and they connect to both oceans. So now we have an option that we know that in 23. We just resolved the issue with the West Coast ports with the ILWU 2024. By the way, the ILA on the East Coast has already said we are not going to do any kind of a contract extension. We will have a new contract as of I think it's September 30th, but we will strike as of October 1st. There's gonna be no extension like we did on the West Coast. So as a shipper I need to be prepared for that if I'm doing anything for Maine, all the way down the Brownsville, texas, those port potentially could be tied up. Now, if I'm looking at a different alternative, well, the West Coast are still going to be operating, but if everybody shifts over to the West Coast now we have a lot more congestion and the West Coast ports can't handle it for a number of other different reasons. So this whole Acquisition from two years ago now begins to make a lot more strategic sense as a new route.

Don Maier: 27:25

If I'm a shipper thinking Hmm, I would want to know what steamship lines are going on to the Pacific side of Mexico so I could tie into that CP KC line to run all the way up to the middle of the United States, whether it's in the Memphis or up in Chicago, and then I can't buy sick the United States. Here's another interesting thing that has just come up, probably since the middle of December, us Customs and Border Patrol has actually stopped a number of the trains Crossing over. Well, in fact I just saw it for California, arizona and Texas again. So I know in Texas they were shut down for the BNSF and the UP for about five, six days. So think about that no trains crossing that border for six days. And each of those rail lines have roughly what three trains a day crossing over those bridges and they were stopped. So now that creates more of an issue.

Don Maier: 28:14

Okay, so this whole plan of me thinking, okay, Maybe I can go into the West Coast of Mexico, then go into the Midwest, maybe that may not be an option. But here's an interesting thing also that just came out a few days ago the Genesee Wyoming short line Signed a partnership with Grupo Mexico. So Grupo Mexico is is a large Logistics infrastructure type company. They also own Ferre-Mex, which is the Mexican railroad, and in this partnership they are not going to have a weekly sailing from Mobile, alabama, all the way down to Costa-Cola Mexico on the Atlantic side, and they're going to have a railcar ferry, so the trains can literally just drive right on board the ship when they get into Mobile. They're going to come right off that ship on a track, go right onto the railroad track and then they can move up. So as a shipper, here's one of those things that that might be a nice option. So even if I go from the Pacific side in the Mexico, ferro-mex and Grupo Mexico have already started the project a hundred eighty mile corridor going from the Pacific side by train over to the Atlantic side, right where this railcar ferry service is going to take effect, and now I can go right into Mobile, alabama, so I can start to shift and avoid different areas. But I got a plan for that and know who are the different lines operating at those different ports. So the other piece is it's not just on the shipping side and the maritime piece.

Don Maier: 29:45

The other big thing that's really going to impact United States shippers and consumers is what's going to happen at the ports. So the ports are still the bottleneck in the US supply chain system. We saw that during COVID, you know, and the ILA or the ILWU said, hey, we have all of our folks working. They weren't working. We saw what happens when you still have a significant increase in demand and there's not enough throughput coming through. So because we don't have the throughput going through. Now we're gonna have a bigger challenge.

Don Maier: 30:14

California and CARB California Air Resources Board has come out and said Every Draman or every DRAE vehicle coming into a California port has to be registered. Okay, they were trying to tack on a $30 charge To register. That's gonna be a challenge, which was upheld in the course. Say no, you can't do that, but they can still register all of those vehicles. And, by the way, by 2035, any tractor going into a California port also has to be an Azirium mission vehicle. When now you just increase my cost by two, three, three and a half times, how am I going to do that? So these are the things that are going to impact us more on the US side is what's going to happen to the port congestion. I got to have that throughput.

Ted Stank: 31:00

Don, you're making me nostalgic for 2021 and 2022.

Tom Goldsby: 31:04

Come on now. Let's not go to extremes here. That's crazy talk. But it is fascinating, right? So many moving parts at least we hope they're moving. That's the whole premise of logistics. But it's really fascinating to hear one on one regard the creative solutions, but then also the introduction of new constraints. It means it's such a dynamic and rapidly changing problem and we're also just tied up, as Ted pointed out, with international politics, global politics and kind of a pawn in many ways there. But do you see a time in 2024 when this all just kind of settles down? I mean, if we force the crystal ball back to you, Don, what do you see All?

Don Maier: 31:45

right. So if I'm going to forecast in 2024, if there is going to be a pause, I think it's going to be probably November, because by that time we're going to have gone through the ILA contract negotiations, hopefully the resolve. By then, I'm going to hope that the Houdi situation is resolved, hopefully that the rest of the conflicts in Israel are also resolved. That'd be awesome. So because of that and we've already gotten through the Christmas rush of inventory coming in that's when the pause should come about, which is actually what we saw in 2023. So that's why all those container rates dropped is because things are starting to settle out. And then you have just one more other political issue, however. So it gives us that little pause in November. The other big challenge, though, ted and that's in Thomas is just how we kind of started was this is an election year, it's November 4th, guys, so who knows what could happen? So that pause, it's going to be very short, from like October 15th to November 4th.

Ted Stank: 32:39

You know, election season in the United States traditionally has been a time of interesting change. This year could be a time of very tumultuous change, with also stoppages of economics and commerce because of what may happen depending on the results on November 4th.

Tom Goldsby: 32:55

So, ted, you're making my head and stomach hurt. Let's.

Ted Stank: 32:58

I'll tell you what, though. If there's nothing else that I've seen in my 30 plus years of doing this, and particularly in the last several years, is I am always astounded at the resilience of supply chain and logistics managers to find ways through all the challenges we have. Don, your insights have been absolutely incredible. I hope our listeners take away a lot of notes from you about some things they might be thinking about to try to manage through these tough times.

Don Maier: 33:28

Well, hopefully I didn't scare them, though, either. I mean, ted, like you just said, I always loved having the conversation, and I told the students today in logistics, we can get anything you want, anywhere you want, at any time, as long as you're okay with the cost.

Tom Goldsby: 33:41

You want it there.

Don Maier: 33:42

I'll get it there and I'll figure out a way to make it happen. So that's what I loved about logistics it's like this constantly changing puzzle which was makes our world so exciting.

Ted Stank: 33:51

Reminds me of what a contractor told my wife one time when she was wanting all kinds of craziness done in a new job. She's like ma'am, I can do anything you want, as long as you're willing to pay.

Tom Goldsby: 34:02

Yeah, very good. Well, don, you are certainly a man of international intrigue. Thank you very much for not only bringing it to the podcast, but for bringing it to the University of Tennessee. We are so fortunate to have you on the team. You've been with us a little more than a year now and you've made such a huge impact already. It's clear that you have much more to do and we really welcome that. So thank you very much, don. Today and as well as the things you're going to offer into the future.

Tom Goldsby: 34:29

Speaking of how fortunate we are to have you on our team, we are losing a very vital member of our team. I think it's incumbent on us to recognize Casey Keith, who's been our marketing director and a real champion for this podcast. She's really helped to up our game in the podcast and so many other areas, what we do at the Global Supply Chain Institute. Casey, best wishes to you. We're moving to another gig in this fine institution as you move over toward our E-University initiative, the online branch. So I know we're going to stay in touch, but we're going to miss you over here at GSEI.

Ted Stank: 35:06

You're going to miss you Casey. She's produced all of our podcasts over the last two years. Brian Kenever is our new producer. He's been an assistant producer to Casey and he's got big shoes to fill, but he's certainly up to the task.

Tom Goldsby: 35:20

That's what we do at GSEI is we bring in the most talented people and then try to provide the right opportunities. And hey, sometimes better opportunities come along and we just can't deny that. But, casey, thank you so much for what you brought to GSEI and the podcast. We're just so pleased With that. I think we need to sign off If you want to reach us. You know the address by now GSEI at utkedu. Until next time, be well.

Introduction: 35:47

Thanks for tuning in to Tennessee on Supply Chain Management. If you enjoyed the episode, subscribe today on your favorite listening platform to get all of our episodes as soon as they drop, and don't forget to take a moment to leave us a rating. Have any questions, thoughts or feedback? We'd love to hear from our listeners. Email us at GSEI at utkedu. Join us next time as we continue pulling back the curtain on the world of supply chain, educating and entertaining you along the way. Until then, listeners.