Relatable with Allie Beth Stuckey - Ep 505 ｜ Food Shortages & Slow Supply Chains： What’s Going On？｜ Guest： Ross Kennedy

00:00:00.000 Hey guys, welcome to Relatable. Happy Wednesday. All right, we've got a little bit of a different

00:00:14.460 show for you today. Today, we are talking about logistics. We're talking about supply

00:00:18.400 chains. You've probably seen some stories of these huge shipping containers off the coast

00:00:24.800 of California not being able to unload all of the items that are in those containers. You've

00:00:31.700 probably even gone to the grocery store and you've seen there's a shortage of items or maybe you are

00:00:36.980 trying to buy supplies for some kind of project at home and you aren't able to get the supplies

00:00:42.920 or there's like a six-week lag time. All of these things are interconnected and there are some

00:00:49.260 political theories about why all of this is happening. It's just contributing to this anxiety

00:00:54.120 that a lot of people have about the geopolitical sphere right now and the state of our world and

00:00:58.600 specifically the state of our country. Thankfully, I really think this episode is going to walk you

00:01:05.020 back from the ledge rather than all of that contributing to this kind of like apocalyptic

00:01:10.060 feeling that we all have, which maybe it's a little justified, but I think that you'll learn

00:01:15.840 today that it's not completely justified. And rather than thinking that it's, you know,

00:01:19.800 intentionally this, you know, master plan to, you know, to drive us into complete scarcity,

00:01:26.860 we're going to talk to someone who is very logical about this. He is an expert in logistics and supply

00:01:33.560 chains and he is going to tell us exactly why this is happening. He's going to reveal some things that I

00:01:39.220 just didn't realize that have been going on behind the scenes for a really long time. And then at the

00:01:43.280 end, he's going to talk about some solutions, not just solutions on the political level,

00:01:47.620 but also solutions that you and I, that we can do, that we can take things into our own hands

00:01:52.960 if we are worried about, you know, the supply chains and the things and the shortages and the things

00:01:57.460 that we see that are going on. So it's a really interesting conversation. Again, a different

00:02:01.600 conversation than we're used to on Relatable. It's not about theology. It's not about culture.

00:02:05.840 It's not even really about politics. It's about this very nitty gritty process that I personally

00:02:10.820 know very little about. And we are going to, we're going to get smarter because of this person.

00:02:16.900 He's going to bring in expertise that we don't typically have on this podcast. So I'm super

00:02:20.600 excited for you to hear from our new friend, Ross Kennedy. Without further ado, here he is.

00:02:28.520 Ross, thank you so much for joining us. Can you tell everyone who you are and what you do?

00:02:32.500 Yeah, my name is Ross Kennedy, a 15-year veteran of the logistics and supply chain industry.

00:02:39.360 Pretty simple way of just saying that other people pay me to move things from point A to point B.

00:02:46.640 My particular sort of expertise seems to be in this sort of intersection of politics,

00:02:53.280 geopolitics, economics, and logistics and supply chain. And it's been a wild ride the last few

00:02:59.020 months seeing how what I do has suddenly, which has always been kind of this man behind the curtain

00:03:06.620 for an average consumer, has now kind of stepped forward in a way that I don't think most people

00:03:13.820 realize quite how interconnected the world was and how the big world of ships and trains and

00:03:19.600 trucks gets things from overseas to our store shelves.

00:03:23.780 Yeah. And I found you on Twitter for that reason, because I've been trying to look into,

00:03:28.880 OK, why are we having these? Why are we having these shipping containers that are unable to

00:03:34.620 unload the supplies? And there are a lot of conspiracies about that. But I don't know a lot

00:03:39.480 about the supply chain and logistics. And so I found you on Twitter and you seem to actually know

00:03:44.140 something about it. Most people in my realm, we like to pretend like we know something about

00:03:48.320 everything. But when it comes to this, a lot of political, cultural commentators,

00:03:53.680 which is what I am, we don't actually know. So I wanted to bring an expert on when people are

00:03:58.680 talking about supply chain issues, when people are looking at all of the ships and all of the ports

00:04:02.600 that are unable to unload the supplies that they have. What are we really looking at here? What are we

00:04:08.040 talking about?

00:04:08.680 Yeah, I think for a lot of people, really, the first thing that people really ever triggered in

00:04:20.420 on since the pandemic started, in terms of really understanding the scope and the vulnerability of

00:04:27.120 this very sort of vast globalized network we've built, was the Ever Given incident back in March.

00:04:33.340 And it sort of captured the imagination of the world that this giant steel ship that's 400 meters

00:04:40.540 long, you know, four football fields long, essentially, or even a little bit longer had

00:04:44.400 somehow managed to get itself turned sideways and wedged into the bank of the Suez Canal and

00:04:48.940 effectively blocking about 15% of all the trade in the world at the time.

00:04:52.540 Right.

00:04:53.000 That route is so important. And it really hit home for people the first time that image came out of

00:04:58.860 a fairly large excavator. We all have some sense of scope of how large an excavator is. You see

00:05:04.440 them on the road at construction sites or whatever. And those are pretty big machines. And so you see

00:05:08.660 this very large machine sitting on the bank of a river and it is absolutely dwarfed by this massive

00:05:13.580 vessel. And when you start to, and then that caused people, I think, to start to look a little bit

00:05:18.540 about a 40 foot container they see going down the road, they realize 40 feet is actually pretty big.

00:05:23.740 You know, these containers are eight and a half feet tall, nine and a half feet tall.

00:05:26.240 They're sitting on top of, you know, three and a half foot tall chassis off the road.

00:05:30.160 And they begin to realize that there's a lot of stuff that moves in these things.

00:05:34.120 And as they began to consider the scope of even one single ship with that many containers,

00:05:39.400 with that much weight and that much mass, and then scale that across thousands of these ships around

00:05:44.900 the world, I think it really started to hit home for people that there's something bigger at play here.

00:05:50.480 And so when you're, you know, when we see the video of traffic reporters or CNN reporters or

00:05:57.500 whomever, you know, flying over the harbors there at Los Angeles and Long Beach, and you see 30, 40,

00:06:03.260 50 ships at anchor, people maybe for the first time are able to connect that to each of these huge

00:06:08.100 ships is the size of the same one that wedged itself into the canal and into the Suez Canal.

00:06:14.600 And the scope is almost overwhelming when you really think about what these ships weigh, how fast

00:06:21.160 they move. It's not an agile system that we have built that can sustain and support a network of

00:06:29.100 ships like this that are carrying all of the trade of the world. About 90% of global trade moves on

00:06:34.260 water. And so when you, when you consider that 20% of everything in the world is made in China 0.89

00:06:40.700 and that 90% of that, you know, just using rough statistics is moving on water. That,

00:06:47.020 that is a phenomenal, uh, scale and scope for the average person to go, Hey,

00:06:52.580 wow. You know, wow. All of this gets here that way.

00:06:57.100 And we don't typically have a visual of it, but I think seeing all of these ships off of a port,

00:07:02.020 unable to unload, it gives us a visual of what you're talking about that most of us at this point,

00:07:07.540 you know, at this point in the advancement of technology, we're so detached from where we

00:07:12.440 actually get our stuff that we're really not thinking about it. We're just relying on the

00:07:16.540 fact that we're going to be able to click on Amazon. It's going to show up to our front door,

00:07:20.060 but we're not even thinking about where it's traveling from or how it's getting here or who

00:07:25.620 is unloading it. And so people are understandably really concerned about this, especially in what

00:07:30.720 already seems like a tense political moment. And it seems like there may be some conspiracies flying

00:07:36.300 around that this is Joe Biden purposely, you know, not allowing the supplies to get to America

00:07:42.340 because he's trying to, you know, he's trying to crush us or something like that. Is that the case?

00:07:48.720 No, not at all. In fact, these problems predate, um, the, the, really the, the direct cause

00:07:56.780 goes back to when China shut down in January, pre lunar new year of 2020, the, none of us in the

00:08:05.040 industry really knew what was happening. All we knew is this, this, this thing, you know,

00:08:11.220 this, this coronavirus, which we were seeing the videos coming out of China. And there was a lot of,

00:08:16.040 uh, uh, back and forth over, is this serious? Is this an op? Is this what, what's really going on

00:08:21.760 here? And so we get to the end of January, president Trump declares this national emergency

00:08:26.340 and very quickly, uh, the uncertainty of political bias and political agendas came in.

00:08:34.420 First, we were supposed to mask them. We weren't supposed to mask. And we had all these things going

00:08:37.820 on, but from a supply chain side, all of this relies on certainty at the moment, a, a, a company

00:08:44.860 who may be a Walmart, a target, anybody says, we're going to import goods. There's a certain

00:08:50.920 amount of stability and reliability that they depend on from a geopolitical side, from an economic

00:08:57.040 side. So while we were all sitting here at, at sort of this moment of confusion, not knowing

00:09:02.380 what's going to happen, is this world war Z or is this just sort of a, you know, sort of a tempest

00:09:07.440 in a teapot or something in the middle, all of these companies were still having to assume

00:09:13.900 that because supply chains can't stop and start on a dime, they're not a race car. Right. And so they

00:09:18.600 were having to assume that this is probably going to be business as usual at some level

00:09:22.120 from a shopping standpoint. So they were still putting orders in at the factory and we're used

00:09:26.880 to a three week or a four week delay around lunar new year. And that's baked into the cake of

00:09:30.180 everybody's procurement and logistic cycles. That's a Chinese holiday. Is that what you're saying?

00:09:35.240 Yes. Okay. And so you anticipate kind of a slow turnaround then because things are just

00:09:40.340 slower there. They're celebrating like we would celebrate Christmas. Absolutely. Absolutely. Uh,

00:09:46.320 and, and one thing a lot of people don't realize is, is that a lot of the manufacturing in China is not

00:09:50.080 done by people who live year round, uh, in Shanghai or in Shenzhen or in Hong Kong or Qingdao or wherever

00:09:57.240 those people come from interior, you know, interior provinces, whatever it may be in China. You know,

00:10:02.940 geographically is a huge country just like ours. So those people will have to take, it takes them days

00:10:08.080 to leave the cities, to get back home to their families, to celebrate. They spend the actual week

00:10:13.060 of, of the lunar new year holiday with their family. And then it takes them days to get back.

00:10:18.120 So there's this whole, it's about, you know, a one week, technically a one week holiday. Actually,

00:10:22.060 it's about a three week productivity loss from a supply chain side for American importers that are

00:10:28.040 manufacturing. This time in 2020, what we had was a very long, uh, very long cycle of six to eight

00:10:36.980 weeks while China was locked down before, during, and after lunar new year.

00:10:41.020 Hmm. Cause lunar new year is what beginning of February?

00:10:44.660 The last year, it was the very beginning of February. Okay. Okay. So you're talking about,

00:10:50.340 it just extended even longer than usual. And maybe that's part of why you guys didn't know,

00:10:55.320 okay, is this just an extension of our normal, you know, the normal slowness that we are experiencing

00:11:00.700 right now, or is this going to be something a lot more drastic, right?

00:11:04.600 Absolutely. Absolutely. And so during that time, it wasn't just the uncertainty of us in the industry

00:11:10.440 wondering, well, how long is this, is this really a durable issue? Purchase orders were still flowing

00:11:15.860 in from American companies, American importers into these factories. So before when the factories

00:11:20.620 would turn back on and they'd have about three weeks of purchase orders to make, you know, home

00:11:25.100 goods or apparel or electronics or auto parts or chemicals or whatever it may be that a company is

00:11:30.200 making over there and importing here. Now we're at six, seven, eight weeks of backlog, production

00:11:36.060 backlog, six, seven, eight weeks of raw materials, not moving into China. And so the calculation

00:11:43.700 that I made at that point was that China would do what's called a V-shaped recovery, which is

00:11:49.860 where as quickly as they stopped, they were going to ramp back up as hard as they possibly

00:11:53.900 can from a production cycle, because China is very dependent on the dollars and the currency

00:11:59.960 it generates from its exports. So the longer they were offline, the longer China was locked down

00:12:05.180 and the factories weren't producing and exporting goods to the rest of the world, the worse it was

00:12:09.220 going to be financially for China. So my calculation, which ended up being correct, is that they were

00:12:13.940 going to go from a standing stop to just ramping up as fast as they possibly can, throw bodies at the

00:12:20.120 problem. If people get sick, it doesn't matter. But as soon as they could end their lockdowns over

00:12:24.320 there, they would. And so they did. Concurrent to that, though, what happens is these ocean carriers,

00:12:29.980 remember these big, huge ships, these things cost anywhere from $50,000 to a couple hundred

00:12:35.500 thousand dollars a day to operate. That's the fuel, that's paying the crew, that's provisioning,

00:12:40.820 that's all the things that goes into the operation of one of these giant ships. And so they're not going

00:12:45.380 to just keep these ships tied up close by, waiting for the port of Shanghai to resume business as

00:12:50.840 usual. They moved those ships out. They took them somewhere else where maybe the lanes were still

00:12:55.320 productive or they were doing these things, but a huge amount of capacity exited the market right

00:13:00.320 away from a transportation standpoint, because if they left all that capacity in and the factories

00:13:05.440 didn't come back online, rates would bottom out, costs would skyrocket because these ships aren't

00:13:10.280 operating. And all of a sudden the ocean carriers are going broke. So they overcorrected the other way.

00:13:15.580 They took a huge amount of capacity out of the market and it took weeks to start, even start

00:13:21.180 getting capacity back for the carriers to trust that, that, that this demand for export was real

00:13:26.520 again. And so you had this, this as, as production increased and capacity decreased, production kept

00:13:33.040 accelerating as high as possible. Capacity slowly went with it. So you had this just divergence of,

00:13:39.640 um, of, of, of output and things to ship and, and a much slower recovery of capacity to ship it with

00:13:47.800 and rates begin to increase. And so by the time the ocean carriers, which was around June or July,

00:13:55.720 got their full capacity back into the transport, what we call the trans-Pacific trade, which is Asia

00:14:00.220 and the U S by the time they got all of that capacity back in rates had already doubled.

00:14:04.860 demand had already backlogged to such an incredible extent that even if we stopped making anything in

00:14:12.840 China right then, it would have been October before we cleared the backlog of goods that were

00:14:17.100 being produced at the factory. October 2020 at this point is, is, is what we're looking at. And

00:14:21.240 sorry, just to, just to clarify a couple of things, because I know, you know, this is not something that

00:14:25.660 we typically talk about. So you're talking about, um, towards the beginning of 2020 when we didn't

00:14:30.800 really know what was going on. We didn't know when the, when the factories were going to start up,

00:14:34.840 again, when we'd be actually able to, when I guess companies would actually be able to

00:14:39.800 empty the supplies on these shipping containers outside of Shanghai, they said, okay, we don't want

00:14:45.320 to just sit there. You said that they have to move to other places where the vessels are still open.

00:14:51.320 But then you said that you have to take, uh, we took a lot of stuff where the companies took a lot

00:14:56.280 of stuff out of market. So what do you, what do you mean by that? Um, so like, were they still

00:15:03.280 able to unload these ships or like, did they turn around and go home? What exactly kind of

00:15:08.500 happened there? So when an ocean carrier, uh, either what's lays a vessel up, they put them in

00:15:15.300 labor or they, um, move that vessel to another, what we call a trade or a trade lane. So for example,

00:15:23.860 they may take a vessel that's normally running from the port of the Antion and South China to the

00:15:29.180 port of Los Angeles and say, okay, well, this vessel still needs to be productive. We still

00:15:33.900 need to keep the crew occupied. Cause again, at that time, we didn't know what we didn't know

00:15:37.200 about COVID. We didn't know we were going to have to lock the whole world down. Right. And that that

00:15:41.080 was a political calculation that would be made. So these ships suddenly nothing was being made in

00:15:46.920 China. So maybe they then moved them to Vietnam where Vietnam was still producing goods at the time.

00:15:52.220 And so that ship started moving goods from Vietnam to, uh, Rotterdam in Europe because they wanted to

00:15:59.820 keep these big expensive vessels turning profitably to the extent that they could while minimizing the

00:16:05.000 amount of ships that they had to lay up crews that they had to send home. It takes a week to two weeks

00:16:09.140 for a crew to get back to the port, reassemble and get back into the, you know, the rotation on the

00:16:14.320 ships. So we had a lot of these things happening where decisions were made to stop, but it takes

00:16:19.760 weeks, weeks to get a vessel back online, moving back in that trade, loading again at Shanghai and

00:16:26.620 taking goods to Los Angeles. Gotcha. So those decisions that were made to stop things very

00:16:31.740 quickly took a lot longer to get the capacity back in. And we're talking about all kinds of,

00:16:38.100 uh, all kinds of goods, all kinds of materials from all kinds of different companies.

00:16:44.420 Absolutely. It was everything from, I mean, the semiconductor shortage is the one that's got a lot of

00:16:48.500 attention now, but, uh, it was everything from tires to electronics, uh, apparel furniture is a

00:16:54.660 huge thing that gets made in China, particularly knockdown furniture, like you'd buy at Walmart or

00:16:58.300 big lots or target Ikea. Uh, so we had, we had all of this stuff just stopped being made and then

00:17:06.300 suddenly it was being made again, but there was no place to send it because there was no way to carry

00:17:10.160 it across the biggest ocean in the world from there to here. Yeah. So we had the ability at the time to

00:17:15.600 receive it. They had the ability to ship it, but there were no ships sitting in the middle to carry

00:17:21.100 things from A to B. I don't remember in 2020 feeling, um, uh, like feeling the inconveniences

00:17:32.440 or the weight of a supply shortage. Like this is the first time just in the past couple of months

00:17:38.960 that I've seen people even talking about the inability to get the stuff off the ships outside of

00:17:44.480 the United States. Why is it that it seemed like things were going pretty seamlessly in 2020 when

00:17:50.500 you're really describing, uh, what sounds like kind of a big mess at the beginning of COVID?

00:17:56.540 It was already becoming a mess. What happened though, and, and really where it began to kind

00:18:02.800 of sort of dawn on some people that this could be a very durable problem past 2020, you know,

00:18:09.140 into 2021 was the, we started to see the effects in about July of, of lockdowns, plus the first

00:18:18.340 round of stimulus that went out. And I think maybe even by then we were into our second round of

00:18:22.820 stimulus, but what happened there was restaurants shut down. People weren't going to athletic events

00:18:28.440 that were getting to go play golf with their buddies. They were getting to go out drinking bars

00:18:31.340 or whatever it may be that they did as a recreational hobby or as a way of spending dollars and time

00:18:36.540 outside the home. Mostly they were sitting at home, not going anywhere, not spending money on

00:18:41.880 vacations. And they were looking at the TV or at the couch that they didn't like. They've got

00:18:45.640 stimulus dollars. Most people were still working at the time and saying, you know what, I've got all this

00:18:50.260 disposable income suddenly available to me, this bit of a windfall. I'm going to replace this furniture.

00:18:55.420 I'm going to buy the new TV. I'm going to get the laptop. So they, we transferred spending and

00:19:00.800 economic activity from things that don't require ships and containers all the way. We dumped all of

00:19:07.380 that money suddenly into things that require ships and containers. The system has already largely been

00:19:13.080 hand to mouth in some ways. Trucking has been constrained for years. Rail capacity to move

00:19:19.400 containers between the ports in the interior cities like Chicago or St. Louis has been constrained for

00:19:24.220 years. Chassis, the, the, the bare frames that the containers ride on, on the back of semis,

00:19:29.120 those have been constrained for years, but it was a hidden issue that we more or less kind of kept

00:19:33.760 in the industry. The world at large didn't really know about it. Where this got, where this got bad

00:19:40.400 was right around August and September. There was, there was a, a sudden and very rapid divergence rate

00:19:47.920 wise for the ocean carriers, MSC, Maersk, you know, CMA, CGM, Hapag Lloyd realized, A, this issue is not

00:19:56.900 going away. B, they have all the ability in the world to start to increase rates dramatically.

00:20:03.780 And, and nobody could say anything about it. Nobody was going to stop them from doing it. And

00:20:07.520 now is the chance for the ocean carriers who normally operate at a pretty significant loss,

00:20:12.720 but are floated along because they're all too big to fail institutions. All of a sudden, at that point,

00:20:17.180 the rates began to pop. What do you mean by that? The rates, I've heard you say that a few times.

00:20:21.720 Can you explain what do you mean by rates began to rise? I think you said at one point,

00:20:25.340 the rates doubled. What do you mean by that? Yeah. So the ocean carriers get paid on in some

00:20:31.580 way by either the shipper or by the receiver in the United States. So sometimes the shipper overseas

00:20:37.420 in China will pay the ocean carriers for, to move the goods on the ship and move them somewhere in

00:20:44.280 the United States, or in most cases here in the U S our companies that import will pay the bill for the

00:20:50.760 ocean freight. And so that's paying Maersk or MSC or any of the, but the ones that actually own and

00:20:56.700 operate these massive ships and containers to move these goods and services. So what two or three

00:21:03.260 years ago was maybe a 800 to $1,500 per 40 foot steel container to, to whatever you can get in that

00:21:11.920 container. We'll move it for 1500 bucks per container from Shanghai to Los Angeles. Those rates

00:21:17.180 now are anywhere from 10 to $15,000. Gotcha. So we've seen a 1000, I guess it'd be 1000%, you know,

00:21:24.960 increase in two and a half years to move a single container of goods from China to the U S and there's

00:21:33.360 this whole downstream ecosystem of costs and things that are involved to move a container, but broadly

00:21:40.160 speaking to get a container from Shanghai to China, from Shanghai, China to say Chicago, Illinois,

00:21:47.480 what was a, to a warehouse, right? To a Walmart distribution center or target distribution center,

00:21:53.440 whatever it may be, maybe that container costs by the time everything was added up, except for customs

00:21:58.240 duties, it was about $4,000 to $4,500. That same container now is going to cost 23 to $25,000.

00:22:05.340 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

00:22:20.620 these things because demand is high on raw materials or labor are getting short. So it's had this huge

00:22:25.540 impact on the economy. And by the time this, this sort of slow motion train wreck began at the ports,

00:22:32.320 we began to see as far back as August last year, where a ship would not immediately be able to pull

00:22:38.640 into birth. It would have to wait maybe a day or two on water, and then it would get a birth.

00:22:44.680 And as the year we kind of turned into the new year, uh, we began to get into the new lunar new

00:22:50.180 year cycle at the beginning of 2021, things slowed down for just a minute. We had the same effect

00:22:55.380 happen where this huge pop of demand for containers to move from China to the U S began. And it was

00:23:02.040 just, it was really off to the races at that point, June. I mean, even as far back as May and June,

00:23:06.980 we would have 15 or 20 vessels sitting on water out at the West coast ports. Nobody was talking about

00:23:12.880 it. Nobody was porting on it. It wasn't 2020 or 2021, 2021. Okay. You know, so we've had this issue

00:23:20.000 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.

00:24:46.460 Mm-hmm.

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.

00:27:27.020 Okay.

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 0.80

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 0.99

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 0.97

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 0.98

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 0.51

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, 0.93

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, 0.71

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

00:49:19.960 today. I will see you guys back here tomorrow.

Relatable with Allie Beth Stuckey - October 13, 2021

Ep 505 ｜ Food Shortages & Slow Supply Chains： What’s Going On？｜ Guest： Ross Kennedy

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Relatable with Allie Beth Stuckey - October 13, 2021

Ep 505 ｜ Food Shortages & Slow Supply Chains： What’s Going On？ ｜ Guest： Ross Kennedy

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Ep 505 ｜ Food Shortages & Slow Supply Chains： What’s Going On？｜ Guest： Ross Kennedy