Intro & Outro: 0:00

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: 0:28

Welcome listeners. This is Ted Stank with Tennessee on Supply Chain Management podcast. We're coming to you from our February 2025 Executive Advisory Board meeting. I'm informed by our producer, Brian Kniever, that this is Season 3, Episode 5. Really excited to be here with you today. These are always interesting times. We're a full month into the President Trump's second administration and anybody that hasn't been on the far side of the galaxy has known that there's been a lot of things happening politically that impact the economic environment and the geopolitical environment that also impact our supply chain environment. We're going to track a few things that are happening today. I'd like to welcome a couple of people with me. My partner in crime, Tom Goldsby, is not with us here today. He's attending in a conference and expresses his sorrow for not being here with us, but we have a real able co-host, Josh King, our Global Supply Chain Institute Marketing and Operations Director. He's also a UT MBA, worked for a while in customer supply chain with SC Johnson. Josh is joining us. Welcome, Josh.

Josh King: 1:34

Welcome, ted. I have to tell you that it is an honor to be on this podcast with you, looking at where this podcast has come from its origin, seeing its progress and helping it move along in the back end a little bit. I'm happy to be here sitting with you talking to a great guest.

Ted Stank: 1:49

Well, I'm happy to have you here with us too.

Josh King: 1:51

I'm feeling the BS meter going up a little bit high, absolutely Well, I'm trying to match the standard level of the podcast generally. You're right.

Ted Stank: 1:58

We do that a lot. So, hey, let us talk about our guest. I'm really, really happy to welcome an old friend of mine, Barbara Melvin, who is the president and CEO of South Carolina Ports Authority. Just about everything we're talking about. We just had a briefing by Marianne Wanamaker, who was our guest in December, about what's happening today in the political and economic environment, and just about every one of the themes that Marianne talks about is something that Barbara deals with. So I'm really looking forward to having Barbara's commentary on some of the things that are happening. Josh want to give us a quick update on some things that are happening with the Institute.

Josh King: 2:31

Sure, well, you've mentioned it. You know one of the things already, which is the Executive Advisory Board meeting. We're so happy that in the past couple of weeks the Institute has done some really exciting work and we're looking forward to some future events that we think our members will really benefit from. So in the past we've had the Advanced Supply Chain Collaborative quarterly meeting I think we had some great collaboration there followed by the Expo the Expo right. So career management, we had Cole Burns and our new colleague Buki Abdul leading, I think, 50 employers through meeting our students who were looking for jobs and internships.

Josh King: 3:07

And then we're here at the advisory board meeting where we have, I think, record attendance since the pandemic. So I think we've got 30 executives here coming to learn, to advise and to help us keep on being the number one supply chain management program in the world In the future. Final update you know we have an exciting event coming up April 8th through the 10th here in Knoxville the Supply Chain Forum. So we're expecting around 700 people there, students coming and going. We're excited to see the chief supply chain officer of the tractor supply company, colin Yankee, being on this podcast live recorded there at the forum, and we encourage our partners to go ahead and register, so we're looking forward to seeing them here in Knoxville in April. That's the Institute update.

Ted Stank: 3:50

You know GSC, I'm marketing and operations director. Given that plug, I might cut operations out of your time. You're becoming a pure marketer now.

Josh King: 3:58

It's a heavy lift, but you know we have a great team at the Institute, and so I'm able to look forward and hopefully promote everything we're doing.

Ted Stank: 4:05

Quick plug on that expo in February. We've always had a supply chain exclusive career services fair in September. This is the first time we did it in the winter and again, that was something our advisory board really pushed us to do. Well, josh, in the bigger picture, let's start talking about some of the things that are going on in supply chain. There's tariffs and threats of tariffs. Some of them are nationally directed, some of them are commodity directed, like steel and aluminum. A lot of talk about changing global trade patterns. A lot of geopolitical things happening with Ukraine and Russia, with Middle East and, right now, an uncertain peace between Hamas and Israel. Barbara, you probably know more about this. I haven't seen that there's been an increase in transits through the Red Sea, but that's certainly something that is possible if there's peace there. A lot of talk about immigration controls, about DEI, et cetera. There's just a lot going on.

Josh King: 4:58

There's so much going on right now and it's interesting to see how supply chain management is affected or interwoven throughout all of it. Interesting to see how supply chain management is affected or interwoven throughout all of it. You know top line tariffs, I believe. In our last episode, tom Goldsby said that all of this tariff talk is probably based on what he's hearing 60% rhetoric and 40% fact. I think we're getting some new information about what's fact and what's rhetoric Since the last episode. What do you think is fact about tariffs?

Ted Stank: 5:25

I mean, I think the only fact that we can really bet on is that President Trump is a world-class, well-renowned negotiator and he's a tough negotiator. I mean, his book was the Heart of the Deal, right, and I think for me, what I've seen is that these tariff threats are the start of negotiating positions. You know, the market was all worked up about the day that. He said, starting midnight tonight, we're going to put a 25% tariff on Mexico and Canada, and I came into work and having coffee that morning I can't remember who I said it to was. By the time we go home today there's going to be news from both Mexico and Canada. They've made concessions and we're going to delay tariffs. Sure enough.

Josh King: 6:04

Crystal ball.

Ted Stank: 6:06

That's not surprising. I mean, he is what he is. Love him or hate him, he is what he is. He is a world-class negotiator, and I think that's part of what he's doing. We've heard some recent things about steel and aluminum tariffs. I don't think we can share from where we heard it from, but interesting concessions on that front as well.

Josh King: 6:30

Interesting developments, and I think that another interesting development that I like to consider when thinking about tariffs is inflation. So typically, when I think of tariffs, I think of inflation, and it sounds like, as of the news reports yesterday, we may not have achieved a soft landing and tariffs may be something that could negatively impact inflation. What are your thoughts on that?

Ted Stank: 6:49

Yeah, so today is February 13th, 2025. February 12th. Yesterday the new inflation data came out for January and it showed an uptick we're up to. Cpi is around 3%. They're saying a lot of it is due to housing costs. Most of us that own houses or are looking to buy houses know that that market is not eased at all, and so there's thinking that the Fed was premature in cutting the federal rate back in December.

Ted Stank: 7:16

One of the things again, when you hang out with economists, you learn some really interesting things. One of the things I heard was that President Trump's leverage in using threats of tariffs to gain concessions may lose some of their power if we are really on that edge of seeing inflation come back, because the thought is he's not going to want to do anything that's really going to cause inflation. So you know we're just in a time of pretty significant uncertainty, although inventory to sales ratios look pretty good. We had a really good sales season in November and December, so holiday sales came through like a champ and that has eased the burden a bit where everybody thought we were stocking up so much in the summer months.

Ted Stank: 7:56

Largely, barbara, we'll talk to you about this too, about the threat of East Coast labor strife at our ports. So a lot of people were a lot of threats about what China tariff war might be. So we stocked up a lot but it seems that a lot of that inventory is sold. I think our latest inventory to sales ratio is 1.32, which is a pretty good number, right? So you know we're talking a lot around the issue. Let's bring Barbara in and get her take on this.

Josh King: 8:23

This is exciting to have her with us. So to introduce Barbara a little further, first and foremost she is a Vol Go Vols. She's a UT Executive MBA grad. Among her many accolades, I might add, she has won UT's Nexus Woman in Supply Chain of the Year Award and I hear from our students on a regular basis that she is adored as a person and revered as a role model. So that's a little bit about Barbara Looking forward to talking with you. Barbara, welcome to the show.

Barbara Melvin: 8:51

Thank you so much. It's great to be here. I think I'm on round two, so I must not have bombed the first one too badly.

Ted Stank: 8:57

Yep, you're a special guest all the way back to season one.

Josh King: 9:00

Great to have you back. I was doing some research for this conversation and these facts really stood out to me about the port. So you're CEO of the Port of Charleston Big job. The Port of Charleston is one of the fastest-growing ports in the country and the fourth-busiest gateway on the East Coast. Charleston has the deepest harbor on the US East Coast and this was fascinating to me. Talk about labor implications One out of nine South Carolina jobs is tied to port operations.

Barbara Melvin: 9:29

That's correct.

Josh King: 9:29

Wow. So what is it like having that kind of weight and responsibility?

Barbara Melvin: 9:32

Well, it's about as equal as it is to be a role model for UT supply chain students. It's quite an honor every day to get up and think about impacting one in nine jobs, either directly or indirectly, in South Carolina, and we remind our workforce of that. We want to make sure that they have a safe and productive day, given the amount of people that count on them to do those jobs and do them well and help us stand out as a port. The port business is not for the faint of heart. You mentioned the deepening project.

Barbara Melvin: 10:09

We are capital intensive business, probably only rivaled by railroads and probably not as intensive in a railroad as we are in ports. And you know some of the issues that you brought up earlier actually are playing a part in that. We all, as sports, look at buying equipment and what do steel cost? Tariffs due to our ability to have a reasonable purchase price on our port equipment that has long lead times. So when there are long lead times for delivery of equipment, uncertainty about where tariffs are just lead people to price higher and not assume risk in what it may look like upon delivery. So a lot of what happens at a port is the same thing that a family faces every day the decisions you make. Where do you invest your capital? How about your people? How do you keep your workforce interested and active and safe in what they're doing? And then, how do you stand out among other ports and what is important to people in their supply chains? That make you customer focused.

Ted Stank: 11:18

Yeah, I'd say, Barb. I think we've known each other for probably closing on 10 years now or more. One of the things that's always impressed me about the Charleston port is how innovative and entrepreneurial you all are. I mean, Josh, you talked about deepening the port. I know I've walked with you during that whole project and getting the funding for it.

Ted Stank: 11:37

You've opened a couple of inland ports with rail connections from those inland ports to the actual port so that you could try to reduce congestion. Former Charlestonian here, a city that I love dearly. It's a peninsula. It's historically hard to get down to the port on the peninsula and so anything you can do to reduce congestion. When you were in the MBA program with us, you were working a year-long program about getting a rail hub opened right at the port so that rail cars could side right up to the port and be able to load containers on and off. So you all are so amazingly innovative. Can you talk about that culture and how you've kept that culture going?

Barbara Melvin: 12:16

Sure, we like to call ourselves scrappy. We don't think that we have captive cargo. We consider every box discretionary because we feel like we have to earn it, and so every day we are looking for solutions inside of the supply chain. Ports should be the least selfish. We should be doing things on a daily basis that allow for our customers to be more successful and then have enough earnings to continue to invest in our capital and in our people. You know, this is a business that allows us we're an enterprise agency, which is really interesting that we have an aspect of us that is affiliated with our state government, our state legislature, our governor. We have a governing board that also interacts with our governor and our state legislature, but yet we are expected to run on business principles and really our value proposition is to be the preferred port in the country. We'll never be the largest, we'll never have airports or other things affiliated with us, but when people say if I could do business anywhere in the country, we want them to say we choose the South Carolina port.

Ted Stank: 13:29

You've been pretty successful. Again, I mentioned I was a Charlestonian back in the 80s and I drive to Charleston today and you come in on 26, and you just see all the development of manufacturing, distribution et cetera. So much of that is related to accessibility to the poor. It's really an impressive thing to see.

Barbara Melvin: 13:46

Well, thank you, and I must say that it's also a tremendous piece of the South Carolina business climate that matters. Our elected officials, our business stakeholders, they all realize that when they invest in the port they're investing directly in economic development and infrastructure that benefits South Carolinians and beyond. So we have customers well beyond the South Carolina borders into other parts of the hinterland, and you know. I must say too that the success of our port is largely due to two UT grads. My predecessor was very involved in the UT supply chain programs. He's undergraduate and graduate degrees from the University of Tennessee and really got me interested in it. So learning from business people who now teach, I think it's the big game changer, the big differentiator and of course, Barb's talking about a good friend of ours, Jim Newsom, who's been a guest on this podcast.

Josh King: 14:42

You know, barbara, I'm struck by your use of the term scrappy and a culture that doesn't take anything for granted. You know, the workforce that you get the opportunity to lead is diverse and it is not immune to labor issues. So potential labor strikes, workforce shortages at ports and those things really impact supply chain. How do you try to get in front of that? Be proactive and make sure that that scrappy workforce is showing up for work and being as productive as they can be.

Barbara Melvin: 15:11

Well, you know, the first thing is really communication and having all of the maritime partners that work around your terminals every day having the same value system. So we work together with our stevedores, our international longshoremen, our own workforce, our motor carriers. It's a supply chain that has to all work together and if we have one part of it that is failing, we've all seen exactly what happens. So we try to have a shared value system and a shared culture. When you hear us all talk, what you hear is we work at the South Carolina ports.

Barbara Melvin: 15:47

We don't really differentiate jobs and so so far we have not run into any availability of labor issues. We have people that still want to work with us on a daily basis. We spend a lot of time on safety and training and productivity, and I think that pays off for us and that's across the board. It doesn't matter who you're working for. That's a shared culture that we have, culture that we have. And then, with regards to kind of labor situations, we experienced exactly what every board experienced on the East and Gulf Coast very temporarily in October, and the good news about that is the USMX, which is the United States Maritime Alliance and the International Longshoremen's Association, achieved a master contract with one side already ratifying it, and the International Longshoremen will do that at the end of February, and that again restores confidence in our labor force and our productivity and our fluidity on the East and Gulf, just as the West Coast was able to achieve for the next six years. So that is certainty, and what does business benefit the most from Certainty?

Ted Stank: 16:57

Can you share a little bit? Are you allowed to share a little bit of some of those conversations? I know the world was holding its breath at least the US domestic business world was holding its breath about the East Coast port labor situation. The word on the street was this was all about maintaining jobs for the unions and again the popular press was that it was kind of an anti-automation move by the unions to protect jobs. Can you kind of talk a little bit about that? And again, what projections are for you? Again, to give everybody a context, we just came from a talk by Marianne Wanamaker talking about how dire the labor situation is going to be out into the not too distant future. And so certainly a port that employs a lot of people, that's got to be top of mind for you.

Barbara Melvin: 17:43

Sure. Well, I don't sit at that negotiating table so I can share what I understand the results of the negotiations to be. I think it was twofold to be. I think it was twofold. When you have a six-year contract and you have something like COVID that interrupted that six-year contract, you know you could. What I believe the international longshoremen saw were lagging wages based on inflation that came about during that period. So when you roll the dice on a six-year contract and don't have in it something that mitigates for additional wage growth when prices go up, that's going to have a lasting effect on the next negotiation. So I think that was part of the wage story was that by the time that six-year contract expired their wages had not kept up with inflation. So the large percentages you heard were a result of them being further behind, because the employers were able to benefit from the lower wages than the international longshoremen needed to catch up.

Barbara Melvin: 18:48

On the other side of it, I believe what the result of conversations around investments in technology and automation really centered on. As a result of the conversations, I believe improvements in productivity and safety. So if you could make that worker, who you're not replacing with the technology, more productive in their job and in a safer environment. The international longshoremen have said we want to look at that, we want to review it, and if that's exactly what you're doing, that's an investment that we will support. So I think that that's fair and, frankly, it's the same way we look at our investments in technology If it is allowing for that worker not to replace them, but to make them safer and more productive in their job.

Barbara Melvin: 19:36

That's what we support and what we invest in. And I think it's important too, because we have a dual mission we are to move waterborne commerce and to support economic development. And by supporting economic development we see that as a job. So we need to help create jobs and clearly one in nine is either directly or indirectly related to our success. So we must be doing something right. And the productivity at our port is mentioned, not by us, but in a report measuring productivity around the world. We are the top in the United States.

Barbara Melvin: 20:13

Yeah, I've seen that product and we don't have the automation that was being talked about. These are our workers, our partners in the International Longshoremen's Association, our stevedores, our tug pilots, our harbor pilots, our motor carriers. Those are the people achieving that productivity, our railroads.

Josh King: 20:31

What a statement to have productivity enabled through people and through a culture, Switching gears a little bit. Last night at dinner we were privileged to have you with us and also to have Hardy Pearson, who is on the advisory board, who's a senior VP of sales and customer service at Hapag-Lloyd, and I think our dinner was the day after the big announcement about the new alliance between Hapagloid and Maersk and I know that I was excited to see it. I believe it's called the Gemini Cooperation Correct and it's driving towards reliability. So when you see those types of alliances, are you excited about that kind of cooperation?

Barbara Melvin: 21:09

Of course you know, the world in ocean shipping has been clustered in alliances now for quite a few years and just this year we've seen some shifting in the alliances and we've seen the Mediterranean shipping company go out on their own, although you know, they are still having vessel cooperation with other ocean carriers, with other ocean carriers. But anytime that there are choices in which ocean carrier you use, then those ocean carriers are each providing different solutions to their customers. Such as Gemini is concentrating on service reliability and on-time performance of their ships. Others, including Gemini, are making investments in newer technology and how they power their ships, so fuels of the future. I mean it's really exciting how they work together and yet challenge each other in different alliances to make improvements in what is, you know, an innovative industry. Although most people just see a ship, they have no idea what all goes behind those thoughts, but it's an innovative industry that has always looked to the future to make improvements in the way they do business.

Ted Stank: 22:22

And also you know that capital intensiveness you mentioned before. You talk about having to make a bet in terms of investment.

Barbara Melvin: 22:28

Absolutely. You know you can build a ship in three years, but it takes 10 to 12 to deepen a harbor. So you're constantly, as a port, reacting to the industry and trying to make sure that, as you're making very long-term capital investments, that they are sufficient enough to support Gen 1, gen 2, and Gen 3 of whatever the ocean carriers are thinking.

Ted Stank: 22:51

next, Am I right in my perception that the carriers have backed off a little bit from building bigger and bigger and bigger container ships?

Barbara Melvin: 22:58

I think that there was certainly an achievement of an economies of scale. If you have to add a second engine, are you really doing much to reduce fuel consumption or create efficiencies? How many ports can those really large ships actually call and what trade lanes support that much capacity on them? And so you know, I think you'll still see the largest ships on the water existing between Asia and Europe trades. And then the cascading effect of those 16 to 18,000 to 20,000 TEU ships, you know, and you see them today, really start to appear in US trades, west Coast and East Coast. As a matter of fact, very soon we'll have our largest ship ever coming in to the port and it's greater than 16,000, but it, by record, will be a few containers larger than the last one that we had. You know, those investments, when they make them from a ship perspective, have to call more than one port. So you're only as good as the ports that you need in your network.

Josh King: 24:04

So, ted, we're coming up towards the end of the show here and I noticed that at the beginning of the show you really tried to tempt Barbara with some hot topics and she, just she, wasn't taking them.

Ted Stank: 24:10

So I think she's taken them all. I do have one more for her, okay, okay, so we haven't talked about tariffs and the impact of tariffs on global trade and trade patterns etc. I mean, obviously tariffs against Mexico and Canada aren't going to affect you as an ocean port very much, although maybe if we start trading with somebody else because we don't get it from Mexico or Canada. But the next I think next big frontier of tariff talks is with Europe and our European trade partners. What kind of thoughts do you all have on changing trade lanes and how tariffs might impact it?

Barbara Melvin: 24:44

So, around the subject of tariffs, so far I'm not sure that we have a good understanding of the ground rules and I do believe that they are one arrow in the quiver of a leader who is seeking to equalize trading with our country and nobody can blame him for that and I think, as you stated, he's an excellent negotiator. But countries, businesses, if we are to pivot from supply chains that we have today, need to understand where is it safe to go. So we've got to understand, if we do change from some of our trading partners largest trading partners today where do we go? What is a victory defined as? What does the win look like? And then, in the long run, how is it going to impact our exporting?

Barbara Melvin: 25:39

Because if this becomes well, if we do this to you, what are you going to do to us? I think we've got to keep our eye on the ball of how we are going to be able to export, because there've been a lot of industries that we have talked as a country, strategically, about returning to the United States. We can be the leader in those industries and become larger exporters of that, but then we have our meat and potatoes, not to make a food joke, but we export food and forest products and resins around the world. We need to make sure we can still do that and not hurt our farmers.

Barbara Melvin: 26:13

So it's really the rules and what is the win and how do we use tariffs to achieve those wins without enduring negative impacts on our own economy?

Ted Stank: 26:24

Today? What are your biggest trade lines today, both on the import and exports?

Barbara Melvin: 26:28

Asia, India, Southeast Asia. So the promise of the new Panama.

Ted Stank: 26:32

Canal locks has really paid off in terms of Asian trade.

Barbara Melvin: 26:35

Absolutely and then impactfully. We have seen much longer transit times around the Cape because of the no use of the Red Sea and the Suez Canal and we're very hopeful that that comes back soon. You've seen ocean carriers talking about the impact that that has on their profitability carriers talking about the impact that that has on their profitability. So there is a very strong hope that trade lanes return to normal through the Suez Canal soon, but they need to be safe. You can't-.

Ted Stank: 27:02

Has there been any increase in the last, you know, couple of weeks? No, we haven't.

Barbara Melvin: 27:06

I think that the ocean carriers will be cautious in returning to those trade lanes and they need to make sure that they're stable.

Ted Stank: 27:15

Well, okay, I think we're getting a high sign from Brian that we need to wrap this up.

Josh King: 27:18

Yeah, you know, Barbara has some students to go meet with next she does.

Ted Stank: 27:21

She's going to meet with those students that worship her.

Josh King: 27:23

Absolutely so. Parting moment, barbara, if you have something to deliver to a student interested in your area, interested in becoming a leader in your area what would you say to encourage that person to drive them forward?

Barbara Melvin: 27:44

Always take advantage of a good crisis. And the pandemic spotlighted the importance of supply chain. Our supply chain folks no longer are sitting just in procurement, they're sitting in board meetings. They're interacting with everyone in the C-suite because of the importance of fluidity, not just in inventory but transportation costs and really across the board, and how important what they do is for the health of their company or their business or their port or whatever portion of supply chain they go into and really sit proudly at that board table and interact and give input, because the economy showed it when we are failing it has lasting impact and so we can't do it again. We have to learn.

Josh King: 28:28

True words.

Ted Stank: 28:29

Love it. Yeah, one of the attendees at our advisory board meeting told me last night this is a housing products manufacturing company that just before he came to the meeting yesterday he had a one-hour meeting scheduled with the CEO and it turned into a three-and-a-half-hour meeting at the CEO's request because the CEO didn't have strong supply chain background and needed that insight. And this person does sit at that executive level, which is really good to hear that people are listening to us.

Barbara Melvin: 28:57

Absolutely. Barbara, thank you so much for being with us. I don't want to hold you from the students.

Ted Stank: 29:02

Josh, fill in. Josh, you did a great job Doing my best, all right, thanks for leading the way, ted. Yeah, okay, everybody, we're going to wrap today, as always. If you want to get in touch with us, gsci at utkedu, send us questions, send us potential guests you'd like to hear, love, to hear from you, our listeners, so that we can make this more focused on the kind of things y'all want to hear. With that, we're going to adjourn and we will see you in March. Well, you'll hear us. I have a voice for radio. No, no, it's not a voice, the saying is yeah, I have a face for radio.

Josh King: 29:35

You certainly have a hairdo for radio.

Ted Stank: 29:37

Yeah, that's true. All right everybody, Thank you. Thank you, Josh and Barbara. We're going to adjourn. See you soon.

Intro & Outro: 29:44

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 gsci 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.