Ep 505 ｜ Food Shortages & Slow Supply Chains： What’s Going On？ ｜ Guest： Ross Kennedy
Episode Stats
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Summary
Ross Kennedy is a 15-year veteran of the logistics and supply chain industry. In this episode, he talks about why supply chain issues are happening and what we can do about it. He also talks about some solutions that we can take into our own hands.
Transcript
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Hey guys, welcome to Relatable. Happy Wednesday. All right, we've got a little bit of a different
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show for you today. Today, we are talking about logistics. We're talking about supply
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chains. You've probably seen some stories of these huge shipping containers off the coast
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of California not being able to unload all of the items that are in those containers. You've
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probably even gone to the grocery store and you've seen there's a shortage of items or maybe you are
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trying to buy supplies for some kind of project at home and you aren't able to get the supplies
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or there's like a six-week lag time. All of these things are interconnected and there are some
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political theories about why all of this is happening. It's just contributing to this anxiety
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that a lot of people have about the geopolitical sphere right now and the state of our world and
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specifically the state of our country. Thankfully, I really think this episode is going to walk you
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back from the ledge rather than all of that contributing to this kind of like apocalyptic
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feeling that we all have, which maybe it's a little justified, but I think that you'll learn
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today that it's not completely justified. And rather than thinking that it's, you know,
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intentionally this, you know, master plan to, you know, to drive us into complete scarcity,
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we're going to talk to someone who is very logical about this. He is an expert in logistics and supply
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chains and he is going to tell us exactly why this is happening. He's going to reveal some things that I
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just didn't realize that have been going on behind the scenes for a really long time. And then at the
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end, he's going to talk about some solutions, not just solutions on the political level,
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but also solutions that you and I, that we can do, that we can take things into our own hands
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if we are worried about, you know, the supply chains and the things and the shortages and the things
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that we see that are going on. So it's a really interesting conversation. Again, a different
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conversation than we're used to on Relatable. It's not about theology. It's not about culture.
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It's not even really about politics. It's about this very nitty gritty process that I personally
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know very little about. And we are going to, we're going to get smarter because of this person.
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He's going to bring in expertise that we don't typically have on this podcast. So I'm super
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excited for you to hear from our new friend, Ross Kennedy. Without further ado, here he is.
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Ross, thank you so much for joining us. Can you tell everyone who you are and what you do?
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Yeah, my name is Ross Kennedy, a 15-year veteran of the logistics and supply chain industry.
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Pretty simple way of just saying that other people pay me to move things from point A to point B.
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My particular sort of expertise seems to be in this sort of intersection of politics,
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geopolitics, economics, and logistics and supply chain. And it's been a wild ride the last few
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months seeing how what I do has suddenly, which has always been kind of this man behind the curtain
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for an average consumer, has now kind of stepped forward in a way that I don't think most people
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realize quite how interconnected the world was and how the big world of ships and trains and
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trucks gets things from overseas to our store shelves.
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Yeah. And I found you on Twitter for that reason, because I've been trying to look into,
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OK, why are we having these? Why are we having these shipping containers that are unable to
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unload the supplies? And there are a lot of conspiracies about that. But I don't know a lot
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about the supply chain and logistics. And so I found you on Twitter and you seem to actually know
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something about it. Most people in my realm, we like to pretend like we know something about
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everything. But when it comes to this, a lot of political, cultural commentators,
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which is what I am, we don't actually know. So I wanted to bring an expert on when people are
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talking about supply chain issues, when people are looking at all of the ships and all of the ports
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that are unable to unload the supplies that they have. What are we really looking at here? What are we
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Yeah, I think for a lot of people, really, the first thing that people really ever triggered in
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on since the pandemic started, in terms of really understanding the scope and the vulnerability of
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this very sort of vast globalized network we've built, was the Ever Given incident back in March.
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And it sort of captured the imagination of the world that this giant steel ship that's 400 meters
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long, you know, four football fields long, essentially, or even a little bit longer had
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somehow managed to get itself turned sideways and wedged into the bank of the Suez Canal and
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effectively blocking about 15% of all the trade in the world at the time.
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That route is so important. And it really hit home for people the first time that image came out of
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a fairly large excavator. We all have some sense of scope of how large an excavator is. You see
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them on the road at construction sites or whatever. And those are pretty big machines. And so you see
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this very large machine sitting on the bank of a river and it is absolutely dwarfed by this massive
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vessel. And when you start to, and then that caused people, I think, to start to look a little bit
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about a 40 foot container they see going down the road, they realize 40 feet is actually pretty big.
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You know, these containers are eight and a half feet tall, nine and a half feet tall.
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They're sitting on top of, you know, three and a half foot tall chassis off the road.
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And they begin to realize that there's a lot of stuff that moves in these things.
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And as they began to consider the scope of even one single ship with that many containers,
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with that much weight and that much mass, and then scale that across thousands of these ships around
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the world, I think it really started to hit home for people that there's something bigger at play here.
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And so when you're, you know, when we see the video of traffic reporters or CNN reporters or
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whomever, you know, flying over the harbors there at Los Angeles and Long Beach, and you see 30, 40,
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50 ships at anchor, people maybe for the first time are able to connect that to each of these huge
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ships is the size of the same one that wedged itself into the canal and into the Suez Canal.
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And the scope is almost overwhelming when you really think about what these ships weigh, how fast
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they move. It's not an agile system that we have built that can sustain and support a network of
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ships like this that are carrying all of the trade of the world. About 90% of global trade moves on
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water. And so when you, when you consider that 20% of everything in the world is made in China
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and that 90% of that, you know, just using rough statistics is moving on water. That,
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that is a phenomenal, uh, scale and scope for the average person to go, Hey,
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wow. You know, wow. All of this gets here that way.
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And we don't typically have a visual of it, but I think seeing all of these ships off of a port,
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unable to unload, it gives us a visual of what you're talking about that most of us at this point,
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you know, at this point in the advancement of technology, we're so detached from where we
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actually get our stuff that we're really not thinking about it. We're just relying on the
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fact that we're going to be able to click on Amazon. It's going to show up to our front door,
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but we're not even thinking about where it's traveling from or how it's getting here or who
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is unloading it. And so people are understandably really concerned about this, especially in what
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already seems like a tense political moment. And it seems like there may be some conspiracies flying
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around that this is Joe Biden purposely, you know, not allowing the supplies to get to America
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because he's trying to, you know, he's trying to crush us or something like that. Is that the case?
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No, not at all. In fact, these problems predate, um, the, the, really the, the direct cause
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goes back to when China shut down in January, pre lunar new year of 2020, the, none of us in the
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industry really knew what was happening. All we knew is this, this, this thing, you know,
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this, this coronavirus, which we were seeing the videos coming out of China. And there was a lot of,
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uh, uh, back and forth over, is this serious? Is this an op? Is this what, what's really going on
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here? And so we get to the end of January, president Trump declares this national emergency
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and very quickly, uh, the uncertainty of political bias and political agendas came in.
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First, we were supposed to mask them. We weren't supposed to mask. And we had all these things going
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on, but from a supply chain side, all of this relies on certainty at the moment, a, a, a company
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who may be a Walmart, a target, anybody says, we're going to import goods. There's a certain
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amount of stability and reliability that they depend on from a geopolitical side, from an economic
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side. So while we were all sitting here at, at sort of this moment of confusion, not knowing
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what's going to happen, is this world war Z or is this just sort of a, you know, sort of a tempest
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in a teapot or something in the middle, all of these companies were still having to assume
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that because supply chains can't stop and start on a dime, they're not a race car. Right. And so they
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were having to assume that this is probably going to be business as usual at some level
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from a shopping standpoint. So they were still putting orders in at the factory and we're used
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to a three week or a four week delay around lunar new year. And that's baked into the cake of
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everybody's procurement and logistic cycles. That's a Chinese holiday. Is that what you're saying?
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Yes. Okay. And so you anticipate kind of a slow turnaround then because things are just
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slower there. They're celebrating like we would celebrate Christmas. Absolutely. Absolutely. Uh,
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and, and one thing a lot of people don't realize is, is that a lot of the manufacturing in China is not
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done by people who live year round, uh, in Shanghai or in Shenzhen or in Hong Kong or Qingdao or wherever
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those people come from interior, you know, interior provinces, whatever it may be in China. You know,
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geographically is a huge country just like ours. So those people will have to take, it takes them days
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to leave the cities, to get back home to their families, to celebrate. They spend the actual week
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of, of the lunar new year holiday with their family. And then it takes them days to get back.
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So there's this whole, it's about, you know, a one week, technically a one week holiday. Actually,
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it's about a three week productivity loss from a supply chain side for American importers that are
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manufacturing. This time in 2020, what we had was a very long, uh, very long cycle of six to eight
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weeks while China was locked down before, during, and after lunar new year.
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Hmm. Cause lunar new year is what beginning of February?
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The last year, it was the very beginning of February. Okay. Okay. So you're talking about,
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it just extended even longer than usual. And maybe that's part of why you guys didn't know,
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okay, is this just an extension of our normal, you know, the normal slowness that we are experiencing
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right now, or is this going to be something a lot more drastic, right?
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Absolutely. Absolutely. And so during that time, it wasn't just the uncertainty of us in the industry
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wondering, well, how long is this, is this really a durable issue? Purchase orders were still flowing
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in from American companies, American importers into these factories. So before when the factories
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would turn back on and they'd have about three weeks of purchase orders to make, you know, home
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goods or apparel or electronics or auto parts or chemicals or whatever it may be that a company is
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making over there and importing here. Now we're at six, seven, eight weeks of backlog, production
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backlog, six, seven, eight weeks of raw materials, not moving into China. And so the calculation
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that I made at that point was that China would do what's called a V-shaped recovery, which is
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where as quickly as they stopped, they were going to ramp back up as hard as they possibly
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can from a production cycle, because China is very dependent on the dollars and the currency
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it generates from its exports. So the longer they were offline, the longer China was locked down
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and the factories weren't producing and exporting goods to the rest of the world, the worse it was
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going to be financially for China. So my calculation, which ended up being correct, is that they were
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going to go from a standing stop to just ramping up as fast as they possibly can, throw bodies at the
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problem. If people get sick, it doesn't matter. But as soon as they could end their lockdowns over
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there, they would. And so they did. Concurrent to that, though, what happens is these ocean carriers,
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remember these big, huge ships, these things cost anywhere from $50,000 to a couple hundred
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thousand dollars a day to operate. That's the fuel, that's paying the crew, that's provisioning,
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that's all the things that goes into the operation of one of these giant ships. And so they're not going
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to just keep these ships tied up close by, waiting for the port of Shanghai to resume business as
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usual. They moved those ships out. They took them somewhere else where maybe the lanes were still
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productive or they were doing these things, but a huge amount of capacity exited the market right
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away from a transportation standpoint, because if they left all that capacity in and the factories
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didn't come back online, rates would bottom out, costs would skyrocket because these ships aren't
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operating. And all of a sudden the ocean carriers are going broke. So they overcorrected the other way.
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They took a huge amount of capacity out of the market and it took weeks to start, even start
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getting capacity back for the carriers to trust that, that, that this demand for export was real
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again. And so you had this, this as, as production increased and capacity decreased, production kept
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accelerating as high as possible. Capacity slowly went with it. So you had this just divergence of,
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um, of, of, of output and things to ship and, and a much slower recovery of capacity to ship it with
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and rates begin to increase. And so by the time the ocean carriers, which was around June or July,
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got their full capacity back into the transport, what we call the trans-Pacific trade, which is Asia
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and the U S by the time they got all of that capacity back in rates had already doubled.
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demand had already backlogged to such an incredible extent that even if we stopped making anything in
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China right then, it would have been October before we cleared the backlog of goods that were
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being produced at the factory. October 2020 at this point is, is, is what we're looking at. And
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sorry, just to, just to clarify a couple of things, because I know, you know, this is not something that
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we typically talk about. So you're talking about, um, towards the beginning of 2020 when we didn't
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really know what was going on. We didn't know when the, when the factories were going to start up,
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again, when we'd be actually able to, when I guess companies would actually be able to
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empty the supplies on these shipping containers outside of Shanghai, they said, okay, we don't want
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to just sit there. You said that they have to move to other places where the vessels are still open.
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But then you said that you have to take, uh, we took a lot of stuff where the companies took a lot
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of stuff out of market. So what do you, what do you mean by that? Um, so like, were they still
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able to unload these ships or like, did they turn around and go home? What exactly kind of
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happened there? So when an ocean carrier, uh, either what's lays a vessel up, they put them in
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labor or they, um, move that vessel to another, what we call a trade or a trade lane. So for example,
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they may take a vessel that's normally running from the port of the Antion and South China to the
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port of Los Angeles and say, okay, well, this vessel still needs to be productive. We still
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need to keep the crew occupied. Cause again, at that time, we didn't know what we didn't know
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about COVID. We didn't know we were going to have to lock the whole world down. Right. And that that
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was a political calculation that would be made. So these ships suddenly nothing was being made in
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China. So maybe they then moved them to Vietnam where Vietnam was still producing goods at the time.
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And so that ship started moving goods from Vietnam to, uh, Rotterdam in Europe because they wanted to
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keep these big expensive vessels turning profitably to the extent that they could while minimizing the
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amount of ships that they had to lay up crews that they had to send home. It takes a week to two weeks
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for a crew to get back to the port, reassemble and get back into the, you know, the rotation on the
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ships. So we had a lot of these things happening where decisions were made to stop, but it takes
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weeks, weeks to get a vessel back online, moving back in that trade, loading again at Shanghai and
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taking goods to Los Angeles. Gotcha. So those decisions that were made to stop things very
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quickly took a lot longer to get the capacity back in. And we're talking about all kinds of,
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uh, all kinds of goods, all kinds of materials from all kinds of different companies.
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Absolutely. It was everything from, I mean, the semiconductor shortage is the one that's got a lot of
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attention now, but, uh, it was everything from tires to electronics, uh, apparel furniture is a
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huge thing that gets made in China, particularly knockdown furniture, like you'd buy at Walmart or
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big lots or target Ikea. Uh, so we had, we had all of this stuff just stopped being made and then
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suddenly it was being made again, but there was no place to send it because there was no way to carry
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it across the biggest ocean in the world from there to here. Yeah. So we had the ability at the time to
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receive it. They had the ability to ship it, but there were no ships sitting in the middle to carry
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things from A to B. I don't remember in 2020 feeling, um, uh, like feeling the inconveniences
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or the weight of a supply shortage. Like this is the first time just in the past couple of months
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that I've seen people even talking about the inability to get the stuff off the ships outside of
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the United States. Why is it that it seemed like things were going pretty seamlessly in 2020 when
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you're really describing, uh, what sounds like kind of a big mess at the beginning of COVID?
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It was already becoming a mess. What happened though, and, and really where it began to kind
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of sort of dawn on some people that this could be a very durable problem past 2020, you know,
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into 2021 was the, we started to see the effects in about July of, of lockdowns, plus the first
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round of stimulus that went out. And I think maybe even by then we were into our second round of
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stimulus, but what happened there was restaurants shut down. People weren't going to athletic events
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that were getting to go play golf with their buddies. They were getting to go out drinking bars
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or whatever it may be that they did as a recreational hobby or as a way of spending dollars and time
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outside the home. Mostly they were sitting at home, not going anywhere, not spending money on
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vacations. And they were looking at the TV or at the couch that they didn't like. They've got
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stimulus dollars. Most people were still working at the time and saying, you know what, I've got all this
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disposable income suddenly available to me, this bit of a windfall. I'm going to replace this furniture.
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I'm going to buy the new TV. I'm going to get the laptop. So they, we transferred spending and
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economic activity from things that don't require ships and containers all the way. We dumped all of
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that money suddenly into things that require ships and containers. The system has already largely been
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hand to mouth in some ways. Trucking has been constrained for years. Rail capacity to move
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containers between the ports in the interior cities like Chicago or St. Louis has been constrained for
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years. Chassis, the, the, the bare frames that the containers ride on, on the back of semis,
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those have been constrained for years, but it was a hidden issue that we more or less kind of kept
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in the industry. The world at large didn't really know about it. Where this got, where this got bad
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was right around August and September. There was, there was a, a sudden and very rapid divergence rate
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wise for the ocean carriers, MSC, Maersk, you know, CMA, CGM, Hapag Lloyd realized, A, this issue is not
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going away. B, they have all the ability in the world to start to increase rates dramatically.
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And, and nobody could say anything about it. Nobody was going to stop them from doing it. And
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now is the chance for the ocean carriers who normally operate at a pretty significant loss,
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but are floated along because they're all too big to fail institutions. All of a sudden, at that point,
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the rates began to pop. What do you mean by that? The rates, I've heard you say that a few times.
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Can you explain what do you mean by rates began to rise? I think you said at one point,
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the rates doubled. What do you mean by that? Yeah. So the ocean carriers get paid on in some
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way by either the shipper or by the receiver in the United States. So sometimes the shipper overseas
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in China will pay the ocean carriers for, to move the goods on the ship and move them somewhere in
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the United States, or in most cases here in the U S our companies that import will pay the bill for the
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ocean freight. And so that's paying Maersk or MSC or any of the, but the ones that actually own and
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operate these massive ships and containers to move these goods and services. So what two or three
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years ago was maybe a 800 to $1,500 per 40 foot steel container to, to whatever you can get in that
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container. We'll move it for 1500 bucks per container from Shanghai to Los Angeles. Those rates
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now are anywhere from 10 to $15,000. Gotcha. So we've seen a 1000, I guess it'd be 1000%, you know,
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increase in two and a half years to move a single container of goods from China to the U S and there's
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this whole downstream ecosystem of costs and things that are involved to move a container, but broadly
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speaking to get a container from Shanghai to China, from Shanghai, China to say Chicago, Illinois,
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what was a, to a warehouse, right? To a Walmart distribution center or target distribution center,
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whatever it may be, maybe that container costs by the time everything was added up, except for customs
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duties, it was about $4,000 to $4,500. That same container now is going to cost 23 to $25,000.
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So it's an enormous, uh, uh, working capital issue for companies to suddenly have one container be
00:22:13.720
five or six times more expensive than it was. The cost of goods has gone up in China to produce
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these things because demand is high on raw materials or labor are getting short. So it's had this huge
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impact on the economy. And by the time this, this sort of slow motion train wreck began at the ports,
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we began to see as far back as August last year, where a ship would not immediately be able to pull
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into birth. It would have to wait maybe a day or two on water, and then it would get a birth.
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And as the year we kind of turned into the new year, uh, we began to get into the new lunar new
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year cycle at the beginning of 2021, things slowed down for just a minute. We had the same effect
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happen where this huge pop of demand for containers to move from China to the U S began. And it was
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just, it was really off to the races at that point, June. I mean, even as far back as May and June,
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we would have 15 or 20 vessels sitting on water out at the West coast ports. Nobody was talking about
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it. Nobody was porting on it. It wasn't 2020 or 2021, 2021. Okay. You know, so we've had this issue
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ongoing now for months where ships are having to sit for days before they can get a birth.
00:23:24.840
I think the reason that have any of that have to do with particular policies, because it may be this
00:23:33.300
is just people trying to make it a left, right issue, but you know, people are blaming Gavin
00:23:38.140
Newsom for what's happening in California. Then I saw some statement by, you know, governor DeSantis
00:23:43.140
in Florida saying, well, our ports are open. So, you know, so I don't, does it really have to do
00:23:48.800
with anything that someone like Gavin Newsom or even Joe Biden is doing, or is it only everything
00:23:54.600
that you have just described? Do politics play a role in it at all? Politics do play a role, but
00:24:00.200
politics play a, a shaping role in how a system like this works because of the role that politics,
00:24:08.400
monetary policy, um, in particular with lockdowns and contact tracing and things like that,
00:24:14.100
the political decision that maybe was made with best intentions, maybe it wasn't, um,
00:24:22.060
that political decision though, to engage lockdowns, to keep people at home, to do the
00:24:26.980
contact tracing and very aggressively limit the ability of people to leave their homes and to
00:24:32.160
interact economically with one another or with their jobs and their employers. That labor deficit
00:24:38.040
was a, was and remains a very durable and, uh, uh, concerning constraint on the system.
00:24:47.620
So that's what stopped a lot of the labor flow from going in. You saw warehouses that maybe they were
00:24:51.960
used to operating with a hundred employees now operating with 50 and, and, and, but everything
00:24:58.180
continues to flow in, right? So the backups of the warehouse level are getting worse and worse and
00:25:02.260
worse as well, which means they can't take containers out of the port as fast. And it just sort of
00:25:06.220
starts this cascade all the way back to China. The other political decision is, was the, the
00:25:11.940
combination of lockdowns and stimulus pulled a lot of people out of the labor force that still
00:25:15.860
haven't come back in. Right. It's only been in the last few weeks, last month or two that most
00:25:20.380
states have seen the sunset of the CARES Act provisions, the boost in unemployment and stimulus
00:25:25.380
and things like that for people that, uh, got laid off or were not able to work during the pandemic.
00:25:30.780
And a lot of those people are not coming back to work either. They readjusted their lives over the
00:25:35.080
last year around one less income or around, in a lot of cases, if someone's a laborer who makes 15
00:25:40.840
bucks an hour and works full time, that's equivalent to a $30,000 a year salary. Yeah. Child care. You
00:25:46.020
know, if, if, if they have to go to job, they have to pay someone to take care of their child
00:25:49.180
to go to a $30,000 a year job. It doesn't pencil out for them. Yeah. Yeah. It doesn't pencil out for
00:25:56.580
them to, to actually go back to work. Right. You know? So it's, it's one of these things where to the
00:26:02.060
extent politics has absolutely made a huge impact, uh, it has for governor DeSantis, whom I'm the fan
00:26:09.520
I'm in general, I'm very much a fan of, uh, but to dunk on some of the bad political decisions that
00:26:17.980
Gavin Newsom's made as governor of California, but a massive thing that one man, no, no, no whole book
00:26:25.280
of policies could have fixed because of the way freight flows to and from the United States.
00:26:31.280
Florida is just not as big of an import market. The port of Miami is, I think maybe like the seventh
00:26:36.620
or eighth ranked largest port in the U S by volume. Savannah's bigger, Houston's bigger. The
00:26:41.460
port of New York is bigger. Charleston's bigger, Seattle, Tacoma is bigger. The two main ports of
00:26:46.780
Los Angeles and Long Beach. So it's also a question of how much demand Florida is not a gateway port.
00:26:53.660
Florida is a fantastic state, but it's an appendage that hangs off the bottom of the United States
00:26:57.980
that from a freight market standpoint is not very optimal to utilize as a gateway to the rest of the
00:27:04.820
United States, which is why New York, Savannah, Los Angeles, Long Beach, and Seattle, Tacoma are the
00:27:10.040
big four as far as what we call the gateway port, which is the biggest ships, the most freight coming
00:27:16.460
in, not just to the distribution centers that have set up in those areas, but movement on rail and by
00:27:22.100
truck into the interior of the rest of the United States where a lot of demand is.
00:27:27.580
The U S yeah, we don't just live at the ports, but yeah. So California's problem is much bigger than
00:27:33.080
anything, a good or a bad governor could do. Yeah.
00:27:36.580
Right. Um, so everything that people are seeing right now, and you don't have to be a logistics
00:27:41.840
expert to say, huh, things don't really feel that great economically. Things feel strange. People
00:27:47.740
even have like that intangible feeling, but at the same time, some people are going to grocery stores
00:27:53.220
and they're seeing, why are we out of the eggs? That's really weird. Or there's not things that I
00:27:57.700
can typically get available on Amazon, something really small. And I understand is a first world
00:28:03.040
problem, but there are times that we get our, uh, our groceries delivered and that service was
00:28:08.780
unavailable for a little while. There are products that we typically get through that service that we
00:28:14.080
are unable to get. And then some people say they're, you know, renovating their kitchen or
00:28:20.000
their bathroom. They're unable to get those supplies or they're just super expensive. Um,
00:28:24.580
car dealerships are dealing with a shortage. Do all of those have to do with the supply chain issues
00:28:30.300
or are they separate issues? No, every single one of them has the same root cause or, or at least
00:28:37.340
is experiencing the same impact. This is globalization in particular, but, but even just the way
00:28:43.640
an economy functions, okay, there's buyer and their seller and that's A and B and everything in the
00:28:52.440
middle of supply chains and everything that physically needs to be made and transported
00:28:56.580
through time and space is subject to the same sort of disruptive factors, particularly when you're
00:29:01.120
talking about a pandemic, you're talking about a lot of political and economic motive where
00:29:05.360
everybody's kind of at war within the United States, but you know, other countries, everybody's
00:29:10.100
competing for suddenly scarce resources. So a good example is, uh, meat, right? We produce an enormous
00:29:17.980
amount of meat. We're a huge exporter of meat to the rest of the world. And that would be things like
00:29:22.360
chicken and pork and, and, you know, other kinds of poultry steak, uh, you know, beef, whatever it may
00:29:28.000
be. But suddenly shortages were showing up on our shelves and people couldn't figure out why they're
00:29:32.300
like, well, what's going on here? You know, we've still got plenty of cows, but two things that
00:29:36.100
happened. Uh, there were numerous outbreaks of COVID amongst workforces at slaughterhouses,
00:29:41.560
and we don't have near as many meat or, you know, slaughterhouses, any more meat processing
00:29:46.040
facilities. And so suddenly meat processing capacity was offline because a lot of workers
00:29:51.580
were out of work for 14 days and that shut down the pipeline, but even something as simple as
00:29:56.200
packaging, there was a shortage of packaging, the foam trays that stakes go in. And then the,
00:30:01.200
you know, the plastic wrap that goes around and the labels that go on it. Most of that stuff's
00:30:05.960
not made in the U S most of that's made at factories overseas in Vietnam or Thailand,
00:30:10.800
Malaysia, or China, and they make the foam packaging. And then that foam packaging or
00:30:15.020
the Saran wrap or whatever is imported to the United States. So even if we had steak that we
00:30:20.640
could theoretically put on the shelves, the grocery stores, the meat processors, whatever,
00:30:24.900
didn't have the materials they need to actually safely process and transport that stuff to our
00:30:30.160
shelves. Now, is it, is part of the problem that over the years, Republicans and Democrats have,
00:30:41.060
um, have increased our reliance on China. And second part of that question, do the politics
00:30:49.420
between the United States or really just the West and China have anything to do with these shortage
00:30:54.580
issues? I've heard you talk about before that when you're looking at supply chains and logistics,
00:30:58.360
you're not just talking about companies who, you know, from the pure motives of their heart
00:31:04.100
wants to make sure that people have the things that they need. Like you've said that there's
00:31:08.060
ego that's cut, that comes into play. There's different kinds of competition. There are all
00:31:12.800
kinds of political factors that don't necessarily just have to do with, um, supply and demand and
00:31:20.160
profitability and, and things like that. So I know that's like six questions in one,
00:31:25.580
but can you talk about, can you talk about what are some of those like behind the scenes things
00:31:30.640
that are going on, maybe in particular, in relation to our relationship with China?
00:31:36.360
Yeah, absolutely. So one of the heuristics that, that, I mean, it's, it's in my bio,
00:31:41.260
my Twitter profile, which is kind of how this whole thing got snowballed for me was, you know,
00:31:44.520
people discovering some of the things I was saying on social media, but, you know, I say that
00:31:48.000
logistics is a map of human intent. And, and what that does is, is it, is it clarifies the fact that
00:31:53.760
nothing, nothing is actually moving for any reason other than humans want it to move.
00:32:00.200
So then it's really a question of these systems that we've built up, these, these, these massive
00:32:04.120
ships, uh, monetary supply drilling for oil or whatever, all of that exists to serve human needs.
00:32:10.960
And so as subject to the, to the very complex and sometimes unpredictable, uh, desires and behaviors
00:32:17.620
of human beings as well. And if you, if you understand that, I guess, at a conceptual level,
00:32:22.760
then scaling it up very quickly to the geopolitical level, uh, is also something that
00:32:29.040
we can do. China for 30 years, really since the, the, the mid to late eighties, they liberalized
00:32:35.680
in 1979 and we opened relations with them on an economic basis, uh, and a full economic basis.
00:32:41.140
You had Deng Xiaoping and you had Jimmy Carter and George HW Bush was a part of that as well
00:32:45.820
as Henry Kissinger, who was part of it with Nixon and then all the way through the seventies.
00:32:49.460
So liberalization of China and treating them as a trade partner, despite them being a communist
00:32:55.120
regime, despite everything that had happened in the fifties and sixties with Mao, uh, we
00:33:00.560
saw an opportunity there to co-opt communism for the first time and utilize a communist country
00:33:05.840
as a partner or as a trade weapon against the Soviet union.
00:33:09.440
Mm-hmm. And so we said, well, let's, let's help China move upstream from, you know, basically very
00:33:17.520
basic manufacturing, subsistence farming, these sorts of things that they were doing in the sixties
00:33:21.800
and seventies. And by the way, China had nuclear weapons a long time ago. Yeah. Like they had some
00:33:25.860
level of manufacturing capability and we saw that and we said, Oh, we can tap into this. We can tap into,
00:33:31.380
uh, their huge labor pool. They were already a much larger country than us, uh, you know, from,
00:33:36.040
from a population standpoint and, and let's, let's utilize trade and, and, and bilateral economic
00:33:42.780
relations as a way to maybe keep communism in line and, and also benefit the American economy.
00:33:48.920
Reagan was a huge part of this. I love Ronald Reagan, but if you read his autobiography,
00:33:53.280
you know, published in the mid nineties, he still really believed that if we imported capitalism,
00:33:59.420
um, then, you know, they would see how wonderful Liberty is and that they would become more like the
00:34:05.340
United States, but we've imported capitalism and they've kind of exported communism to some
00:34:09.980
extent, unfortunately. And I guess that's, you're saying that's part of what has led to the problems
00:34:14.180
that we're seeing today and the over-reliance on them, right? Yeah, absolutely. So you had two
00:34:19.300
factors at work there. Deng Xiaoping always said, you know, bide your time, hide your strength.
00:34:23.800
And, and he meant it. And, and to what extent maybe he meant that as, as a weapon against the West,
00:34:28.480
we can't necessarily be sure, but we certainly can look backwards at least and realize that there was a
00:34:35.080
recognition by China that even as a hedge against American hegemony, if we ever got on the wrong
00:34:40.320
side of them, they got on the wrong side of us. Control of our supply chains was very much part of
00:34:45.620
their, of their doctrine and of their plan going all the way back into the eighties. In 1999, a book
00:34:50.840
came out, you know, in the military and in the national security establishment, they call them the
00:34:54.880
two colonels. Uh, but a book came out in 1999. It was written by two colonels in the People's Liberation
00:34:59.280
Army. It's called unrestricted warfare. And what unrestricted warfare was, was, was loosely,
00:35:03.960
uh, a 50, 60, 70 page white paper on all the various ways in which a country like the United
00:35:10.060
States is vulnerable to asymmetric attack on an economic basis, on a political basis, on a cultural
00:35:18.480
and social basis without ever actually attacking a country like the U S would it be possible to fight
00:35:24.220
us and collapse us without ever firing a shot. And so as, as that became, uh, that, and that was open.
00:35:32.620
So it was doctrine before that, but 1999, they published this thing publicly and everybody's
00:35:38.040
kind of like, what are they, what are these crazy guys talking about? Like China's not going to do
00:35:41.040
that. China depends on us and our consumer demand. It was hard to imagine that they would become the
00:35:45.840
superpower that they are today then. I mean, I think a lot of people then were still thinking
00:35:50.560
about rural, poor China that had been crushed by Mao's cultural revolution. There was no way
00:35:57.680
that they would ever be able to get to the level that America was, but they've always been playing
00:36:02.320
the, the long gang. Um, and I want to, I want to hear you talk about that more. I could talk to you
00:36:08.340
for another hour about that. That's kind of randomly something we talk about a lot is the rise of China,
00:36:13.540
but because I know I have to let you go. Um, I want to know, is this the new normal,
00:36:20.600
these supply chain issues? That's part a of the question. And then part B, which I know that you've
00:36:25.700
been talking about quite a lot is what are some solutions? Maybe, you know, I can't do anything
00:36:31.220
about it, but what do you think is a way that we can get out of this mess? Yeah. So, uh, to,
00:36:37.900
to the question of part a, is this the new normal, uh, normal for what we would recognize in the U S
00:36:44.360
in the last 30 years, where there's just this incredible abundance of cheap things on the shelves.
00:36:50.440
We're not really going to retreat to that however much we want to, uh, because what I think is going
00:36:55.300
to happen is, is that we're going to see optionality. We're not going to see, uh,
00:37:01.140
types of products limited to us. We're still going to have TVs. We're still going to have computers and
00:37:05.500
phones and all these other things, but two things that's going to happen. We may not have the,
00:37:09.820
the feature rich abundance, uh, of saying, well, I've for, for a phone, uh, in this particular model,
00:37:17.960
I can choose, you know, five different, uh, memory levels and two different processors and
00:37:23.400
different qualities of camera. We're going to have fewer options, but we're still going to have
00:37:26.760
plenty, right? What we do have may be a little bit more expensive, particularly as we undergo the
00:37:31.200
shaking out of a very difficult to scale raw materials, like for example, semiconductors.
00:37:37.020
Uh, but we will get our feet under us. We will find a way to innovate our way out of this as quickly
00:37:42.700
as possible because the dollar is still a very powerful incentive for companies to do that.
00:37:47.200
Uh, it won't be like it was, but it's not going to be the end of the world either.
00:37:50.420
To the question of some solutions and things that we could be doing right now,
00:37:54.980
uh, the world is to think two mega, you know, what I'm thinking is like macro trends are happening
00:38:00.380
at once here. One is, is that the world is very much bifurcating and has into two spheres of power.
00:38:06.500
You're going to have the Chinese led, uh, uh, sphere of influence and order, and then you're going to
00:38:10.720
have an Anglo sphere led by the U S but also with the UK, Canada, Australia, India, uh, the quad,
00:38:17.000
uh, in Asia, uh, as part of that, where, where we've kind of lined up in these two big columns
00:38:22.820
of, of influence and the next 25 to 50 years is going to be shaped, uh, by, by sort of this
00:38:29.080
existential give and take, uh, between those two spheres of influence on, uh, across all domains
00:38:34.640
at the smaller level, but still just as important is, is that the average human's relationship
00:38:41.240
to globalization and the average human's relationship to its own government is changing,
00:38:46.380
particularly here in the U S there's people who would have never thought two years ago,
00:38:50.820
uh, about where meat comes from, but now they're asking, how can I go find a farmer, pay that farmer
00:38:56.700
to produce and, and, and process state for me. And then I can buy 400 pounds. So yeah. Decentralization
00:39:02.680
localization, moving supply chains downstream as close as possible to the individual level
00:39:09.060
is going to be where I think the next revolution in human innovation and supply chain innovation is
00:39:15.500
going to live. Yeah. I feel that I was about to say localization too. It's just, it's almost just
00:39:20.960
something that humans are so interesting. And I feel like as someone who is an expert in logistics,
00:39:25.580
you're really studying a lot about human nature. Since you said logistics is about human
00:39:29.760
intense, you're just learning kind of how humans naturally react to chaos and feeling like things are
00:39:36.200
too big, feeling like things are out of our control. Humans really don't like that. We don't
00:39:40.980
like, um, volatility. We don't like to not rely on things. And so if we can control as much as we
00:39:47.440
can, we are going to, and that means relying on yourself and the people around you as much as
00:39:54.080
possible. Maybe that's actually a good thing. There's going to be, I think some pains in transition,
00:39:58.680
but maybe that's a positive step in the right direction. I don't know. I'm trying to end on a
00:40:03.420
little bit of an optimistic note because it's a little bit scary. Um, can you tell us, okay,
00:40:07.680
how can people follow you? How can they support you and all that good stuff? Um, well, my individual
00:40:14.420
account or my personal account on Twitter is a man underscore integrated. Um, the, uh, not really a
00:40:21.060
think tank so much is just more of this, this kind of ideation machine where I can share content out
00:40:25.160
on Substack is a Fortis F-O-R-T-I-S analysis at Substack.com. Um, I, I put most things out for
00:40:34.500
free on there because I, I really do want to share with the world. I don't want to tell people what
00:40:38.660
to think. What I'm interested in is helping other people learn how to recognize these things for
00:40:45.700
themselves, filter them through their own worldview and begin to make better decisions that, that help
00:40:51.100
them live happier and healthier lives at the individual and community level. The United States,
00:40:55.540
I mean, you know, constitutionally, Ali, we're a country that, you know, we were born on localism.
00:40:59.680
We were born on States rights. We were born on being a federated union of States. The idea has always
00:41:05.660
been that humans organize best around small to medium scale, not massive, uh, you know, mega conglomerate
00:41:13.720
scale. And so to the extent that we do that, it requires transmitting a certain ability within
00:41:22.360
people to develop mental models, to assess and manage risk at an individual level and not be told
00:41:27.400
what to think, but be encouraged to think differently, maybe to be wrong, to take risks, uh, and to do
00:41:34.640
things that, that advance themselves in positive ways along with those around them. Um, so most of what I
00:41:40.280
put out, I do for free, uh, you know, the paid stuff I do or where I ask for money is usually when
00:41:44.860
it's like some strategic deep dive into a specific issue for a company. Gotcha. Well, thank you so
00:41:49.700
much. I'm thankful for the wisdom that you do put out there the way that you're able to break it down
00:41:54.240
for people like me who don't do this and study this for a living. I really, really appreciate you
00:41:58.700
taking the time. Thank you. Yes, ma'am. Thank you. Okay. So a couple of things I wanted to say that I
00:42:08.500
was thinking and he had, uh, he had to stop when we did. And there were so many other things that I
00:42:13.800
wanted to talk to him about. We'll have to have him back on. I'm sure you guys are thinking of
00:42:18.540
your own questions as well. And maybe one thing you're thinking about is the great reset. How does
00:42:22.840
this play with the great reset? So I've seen some things out there, um, that this is, you know, this
00:42:28.560
is Joe Biden. This is Democrats, as I kind of alluded to in the conversation, you know, purposely trying to
00:42:33.000
mess with the supply chains so that we can, I don't know, rely on the government to take care
00:42:38.660
of us. And then that plays into the great reset. Well, I asked Justin Haskins about that, who is
00:42:44.020
the expert on the great reset, who we've had on before rolling to those past episodes. And he says,
00:42:49.600
that's not really the case. And after talking to Ross, I'm kind of realizing, um, that that is true.
00:42:55.220
What Justin told me is that the people, you know, the economic elites that we have specified and
00:43:01.200
defined in those previous episodes really don't like a lot of the supply chain issues because it
00:43:05.380
makes them look incompetent. If they're the ones who are running the show and all, and everyone is
00:43:10.280
freaking out like, Oh, we can't rely on globalization to meet our needs. Then people are going to do
00:43:15.640
exactly what Ross talked about at the end there. Localization. Localization is not good for the great
00:43:23.420
reset. The great reset is predicated on this idea that we can globalize everything and really that
00:43:29.680
nationalism in particular is something that, um, the great resetters see as an impediment to the
00:43:38.280
great reset in this whole new world order. I know that sounds so conspiratorial, all of these different
00:43:43.380
buzzwords, but it's real. It's real. Go back and listen to those episodes if you haven't already.
00:43:49.480
And so this is not exactly a deliberate attempt to play into the great reset. It actually is probably
00:43:55.440
inhibiting it in some ways because as we just noted, people are naturally going to localize.
00:44:02.300
People are going to say, okay, how can we rely on ourselves? Like you are seeing, it seems like a
00:44:07.180
big exodus from, um, the inner cities, even some people, if they can afford it, leaving the suburbs
00:44:13.520
and looking to buy land. Whereas a couple of years ago, they weren't. I saw this funny, uh, video that
00:44:19.800
someone put on Instagram that like millennials in 2018 were in New York city saying, Oh, I love the
00:44:25.400
concrete. I love the busy life. I love the tall buildings. And it's like millennials in 2021. It's
00:44:31.280
like, Oh, like in a little bonnet in the middle of nowhere being like, how do I make my own quilts?
00:44:37.660
And they really has transitioned like that to where now it seems like young families are thinking
00:44:43.460
about, okay, how can I be self-reliant? How can I rely on farmer's markets? How can I rely on
00:44:48.940
local suppliers? It's really just kind of incredible how humans naturally adapt. Um, and so my
00:44:55.800
encouragement is to keep on doing that. I do think that as far as we can, we should think about
00:45:00.520
how can we rely less on this huge, massive system and how we can rely more on ourselves. Now I'm not
00:45:07.360
saying that we shouldn't be going to the grocery store. We shouldn't be relying on these suppliers
00:45:12.760
at all. Um, I think, you know, that's inevitable still at this point, but I know my family and I,
00:45:19.900
we are thinking about how we can rely more on ourselves and our local community. I think that
00:45:25.260
we should lean into that. This is a special opportunity, I would say for the church to ensure
00:45:31.020
that we are relying on one another. This actually kind of goes back to historical Christianity when
00:45:36.000
Christians had no other option, but to rely on each other. I mean, think about, you know, the early
00:45:40.540
church in Acts, how they were making sure that no one in the church had any need, had any lack that
00:45:47.040
they were supplying one another with their needs. Like this is a very unique time. I would say for
00:45:52.900
Christians to ensure even more that we are doing that where there is lack, where there is need,
00:45:58.740
the Christian church should be stepping in. I think first and foremost, taking care of each other.
00:46:03.180
Unfortunately, I think a lot of people misapply some of the verses in the Bible about,
00:46:07.240
you know, caring for those around us is just meaning caring for everyone in the world. That's
00:46:12.860
not necessarily true. First and foremost, we are called to care for our brothers and sisters in
00:46:16.860
Christ. And so I think that we need to put our eyes closer to home when it comes to how do we deal
00:46:23.640
with these problems in the supply chain and these needs that now people have that they didn't realize
00:46:27.700
that they had before. Like I even think about all of the people who have been fired from their jobs,
00:46:32.360
all of the nurses who have been fired because of the vaccine mandates. Like, is there an opportunity
00:46:37.480
while the opportunity still exists before the global elites come in and try to mess all of this
00:46:43.020
up? Like, is there an opportunity for like smaller clinics to be created with some of the people who
00:46:49.360
were fired? I don't know. Like, I don't know if that's possible at all. I'm sure there are a lot of
00:46:54.180
regulatory hoops that you have to jump through in order to do that. But is this a way to that America,
00:47:01.920
that the world is polarizing even more, not just between, you know, East versus West,
00:47:07.040
as Ross was talking about, but globalization versus localization, conservatives versus liberals,
00:47:14.680
Christians versus non-Christians, traditionalists versus non-traditionalists, rural versus urban,
00:47:19.740
like things are quickly being more polarized and divided. And maybe rather than constantly talking
00:47:28.100
about this pie in the sky dream of unity with people who have no desire to, you know, share our
00:47:34.060
values and uphold the things that we want for ourselves and our families, like maybe we should
00:47:38.560
lean into that. Maybe we should lean into the communities that value the same things we do.
00:47:43.260
Maybe we should be relying on ourselves and each other even more. Maybe this is a good opportunity
00:47:48.140
for us to rely on our church, rely on our communities to get to know our neighbors,
00:47:53.020
and to try to focus on supplying things for ourselves and those immediately around us.
00:47:59.540
Maybe this is some kind of blessing and we should see it as that. I'm hoping to end on a positive note
00:48:06.360
because I know that all of that can be overwhelming. Tomorrow, we are talking to a doctor, Dr. Pierre
00:48:12.080
Corey, and I'm super excited about it. We're going to be talking about the famous, I have to call it
00:48:18.700
horse to warmer, because it is a term or it's a word that we're really not supposed to say. It can
00:48:24.500
actually get us censored, but we're going to say it. We're going to talk about it tomorrow. And just the
00:48:30.240
media, the media blitzkrieg, I think is what Dr. Corey called it, against this medication, why Big Pharma
00:48:40.340
doesn't want you to know about it, why they're trying to wage a negative PR campaign against it. We're going to
00:48:46.940
talk about how you can get it, the corruption at the top of these organizations that's causing all
00:48:51.140
of this craziness. And then again, we're going to end with some practical advice, some positive things,
00:48:56.040
but it's really, it's going to, it's going to blow your mind. I'll tell you that after we already
00:48:59.340
recorded it, after we recorded the interview, he said, you know, this is actually the deepest that
00:49:04.400
I've actually gotten in talking about the corruption in the public health bureaucracy, Dr. Fauci,
00:49:11.480
the NIH, the FDA, the CDC. So it is a must listen to interview. All right. That's all we've got for