Latest / Stephanomics / Covid's Supply Chain Chaos Is Just a Dress Rehearsal for What's Coming

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Covid's Supply Chain Chaos Is Just a Dress Rehearsal for What's Coming · Stephanomics

• 0:06
  Speaker 1: Hello, and welcome to Stephano Mix, the podcast that brings
• 0:08
  Speaker 1: the global economy to you. And the good news from
• 0:11
  Speaker 1: the front lines is that getting a container ship into
• 0:13
  Speaker 1: port is no longer the great pitch point in global
• 0:17
  Speaker 1: supply chains. The congestion in the waters outside the main
• 0:20
  Speaker 1: US ports today it's a fraction of what it was
• 0:23
  Speaker 1: at the start of the year. That's the good news.
• 0:25
  Speaker 1: The bad news is that now the containers from those
• 0:28
  Speaker 1: ships are waiting a long time to catch a train.
• 0:32
  Speaker 1: Right now, there are nearly thirty thousand containers at any
• 0:35
  Speaker 1: one time sitting in the docks. That's three times the
• 0:38
  Speaker 1: usual number, and they're waiting seven or eight days to
• 0:41
  Speaker 1: get on a train instead of the usual two. So
• 0:45
  Speaker 1: the great supply chain snarl up hasn't gone away, it's
• 0:48
  Speaker 1: just got closer to home. That's lesson. One lesson to
• 0:53
  Speaker 1: This would be a really bad time to have a
• 0:55
  Speaker 1: U S rail strike, which certainly explains why the Biden
• 0:58
  Speaker 1: administration is now actively trying to resolve a dispute between
• 1:02
  Speaker 1: US rail workers and their employers. In a few minutes,
• 1:06
  Speaker 1: have a fascinating conversation with the author and journalist Christopher
• 1:09
  Speaker 1: Mimms about the arriving today. Economy, how the route that
• 1:13
  Speaker 1: a product takes to our front door somehow became more
• 1:16
  Speaker 1: important than the way it was made, and why the
• 1:20
  Speaker 1: fast changing world of supply chains and overnight delivery is
• 1:24
  Speaker 1: now being changed even more by the pandemic. But first,
• 1:28
  Speaker 1: here's Bloomberg u S Economy reporter Augustus Serreva down at
• 1:31
  Speaker 1: the docks. The biggest challenge facing us in the supply
• 1:46
  Speaker 1: chain has been the sheer strength of the American consumers
• 1:51
  Speaker 1: buying power. Retail sales up one cent on a month
• 1:56
  Speaker 1: over month basis, and it is certainly better that it
• 1:58
  Speaker 1: was the prior and the chair and CEO of Bank
• 2:02
  Speaker 1: of America Brian Moyne Andrew said he's looking at the
• 2:04
  Speaker 1: consumer from where he sits. He says, it's really very
• 2:06
  Speaker 1: strong and that will take us through the tightening that
• 2:08
  Speaker 1: we're looking at. It looks like Americans are still spending,
• 2:11
  Speaker 1: if not a little bit less than they had been
• 2:14
  Speaker 1: anticipated down. So what's gonna slowing down? Nothing? Right now?
• 2:20
  Speaker 1: During COVID, many Americans were working from home. We couldn't travel,
• 2:26
  Speaker 1: we weren't going out to restaurants, events for movies. Some
• 2:30
  Speaker 1: of us decided to buy furniture, sporting goods, a new refrigerator,
• 2:36
  Speaker 1: and all of this turned into cargo that was part
• 2:41
  Speaker 1: of Los Angeles executive director Jeane Siroca, who leads the
• 2:45
  Speaker 1: busiest port in the US. Things have used up a
• 2:49
  Speaker 1: little bit for Saroka. Recently, the huge backlog of cargo
• 2:53
  Speaker 1: ships at l A and the nearby port of Long Beach,
• 2:56
  Speaker 1: which once grew to more than a hundred ships awaiting
• 2:58
  Speaker 1: a chance to unload test dwindled, and the TV newsmans
• 3:03
  Speaker 1: that beamed on flattering images of all A's bottlenecks worldwide
• 3:08
  Speaker 1: are incoming around as much. Still, the improvement at American
• 3:12
  Speaker 1: ports has hardly fixed the country's supply chain hadas warehouses
• 3:17
  Speaker 1: from Los Angeles to New York remain full. The arteries
• 3:22
  Speaker 1: of the nation's largest railroads are still clogged in the
• 3:25
  Speaker 1: Midwest in labor issues on the docks, railways and roads
• 3:30
  Speaker 1: are threatening to throw a ranch at The recovery COVID
• 3:34
  Speaker 1: nineteen and the buying frenzy it sparked exposed cracks throughout
• 3:39
  Speaker 1: the US supply chain infrastructure, and fixing it could take years,
• 3:44
  Speaker 1: said Stephanie Loomis, vice president of Procurement at US based
• 3:48
  Speaker 1: free forwarding firm Cargo trans Well. I mean part of
• 3:52
  Speaker 1: it is what what COVID really showed is it proved that,
• 3:57
  Speaker 1: you know, overall, our global supply chain is really quite fragile,
• 4:03
  Speaker 1: and it doesn't take much to upend it. And then
• 4:07
  Speaker 1: once it is upended, then every little hiccup becomes, you know,
• 4:14
  Speaker 1: becomes a tsunami. If you're finding it hard to find
• 4:18
  Speaker 1: baby formula and a c and even a brand new
• 4:21
  Speaker 1: Tesla lately, you can blame the American consumer in part.
• 4:26
  Speaker 1: Not even inflation running at nine point a new for
• 4:30
  Speaker 1: a year high and fears of a recession hitting in
• 4:33
  Speaker 1: the US have put the brakes on the turbo charged
• 4:36
  Speaker 1: the American consumer. The country's largest ports of Los Angeles
• 4:41
  Speaker 1: and Long Beach registered their busiest June on record in
• 4:45
  Speaker 1: these California ports are expecting to handle even more cargo
• 4:49
  Speaker 1: this month as retailer stock shelves ahead of the holiday season.
• 4:54
  Speaker 1: Here's saroke again. Our nation's economy is driven by you
• 4:59
  Speaker 1: and me buying goods. So I think we may start
• 5:03
  Speaker 1: buying Hamburger instead of stake. We may buy beer instead
• 5:08
  Speaker 1: of fine wine. We're gonna watch our family's pocketbook a
• 5:12
  Speaker 1: little bit closer. We're gonna keep buying. The relentlessness of
• 5:17
  Speaker 1: US consumer buying has surprised analysts when unprecedented demand for
• 5:22
  Speaker 1: goods broke the US supply chain last year, showing crucks
• 5:26
  Speaker 1: throughout the process. Many analysts expected consumers to eventually go
• 5:31
  Speaker 1: back to spending money on flights, movie tickets, and nights out.
• 5:35
  Speaker 1: That should have eased the pressure on the American logistics network,
• 5:39
  Speaker 1: but demand for goods has remained strong so far. To
• 5:44
  Speaker 1: be sure, indicators compiled by the New York Fed City
• 5:47
  Speaker 1: Bank and a startup freight forward or Flag Sport are
• 5:51
  Speaker 1: all anticipating that, with shipping strains on demand, a painful
• 5:55
  Speaker 1: spell of weaker demand might be an expert global supply
• 5:59
  Speaker 1: chains free costs are declining and inventories are beginning to
• 6:04
  Speaker 1: pile up. But importers got the message last year and
• 6:09
  Speaker 1: they don't want to risk another crisis ruining Christmas for
• 6:12
  Speaker 1: Americans this time around, So retailers begin this year racing
• 6:18
  Speaker 1: around the clock to beat these issues ahead of the
• 6:21
  Speaker 1: holiday season. We have a shipper, for example, that has
• 6:25
  Speaker 1: over six hundred containers worth of artificial Christmas trees that
• 6:30
  Speaker 1: were already in the port in the March April time
• 6:33
  Speaker 1: frame that would have been unheard of prior to the pandemic.
• 6:38
  Speaker 1: Bath Rooney, director of the Port of New York and
• 6:41
  Speaker 1: New Jersey, the second largest sport complex in the US.
• 6:45
  Speaker 1: But when you have outdated infrastructure and thousands of retailers
• 6:49
  Speaker 1: fighting for limited capacity, that means while more bottlenecks. I
• 6:54
  Speaker 1: equate this to us going to the Department of Motor Vehicles,
• 6:58
  Speaker 1: are going to a walk in medical center where before
• 7:02
  Speaker 1: they open, we and a hundred other people bull show
• 7:06
  Speaker 1: up thinking we're going to be the first ones online.
• 7:09
  Speaker 1: In fact, massive retailer is like Target and Walmart, will
• 7:13
  Speaker 1: wind up being first in line to get their products
• 7:16
  Speaker 1: shipped around the country, said loom Is, the Free Forwarding
• 7:20
  Speaker 1: executive in Indianapolis. In the meantime, with limited capacity all around,
• 7:26
  Speaker 1: smaller companies with less money to spend have found themselves
• 7:30
  Speaker 1: bagging actors across the supply chain to take their cargo.
• 7:34
  Speaker 1: You know, if if targets calling, the carrier is going
• 7:37
  Speaker 1: to move Target. The carriers have made it clear that
• 7:40
  Speaker 1: their priority is their largest customers, not so much the
• 7:45
  Speaker 1: rest of You know it, I say it all the time.
• 7:48
  Speaker 1: You know the world doesn't revolve around Walmart, Target Amazon.
• 7:53
  Speaker 1: There's there's billions of companies that also I forwards on
• 7:58
  Speaker 1: China and meet their adducts to come in, and they
• 8:01
  Speaker 1: only have two weeks to do it. You either put
• 8:03
  Speaker 1: it on a ship before you put it in the air.
• 8:07
  Speaker 1: But without big time investment in infrastructure, clogged supply chains
• 8:11
  Speaker 1: are risking becoming fossilized as the new normal. American ports
• 8:16
  Speaker 1: often rank as the world's most inefficient for containers, and
• 8:21
  Speaker 1: some parts of the supply chain haven't been modernized in decades.
• 8:26
  Speaker 1: The US government's infrastructure package passed in has promised seventeen
• 8:33
  Speaker 1: billion dollars reports. On top of that, ports and their
• 8:37
  Speaker 1: tenants plan to invest almost thirty three billion dollars per
• 8:41
  Speaker 1: year by Some of those plans, however, involve upgrades like automation,
• 8:47
  Speaker 1: which are currently a topic of fierce debate and contract
• 8:51
  Speaker 1: talks between union dockworkers on the West Coast and their employers,
• 8:57
  Speaker 1: but these investments take time. In the emirror, can supply
• 9:00
  Speaker 1: chain is begging for solutions. Now here's loom is again.
• 9:05
  Speaker 1: The real solution is that in several places around the world,
• 9:10
  Speaker 1: most reportedly in the United States, we need serious infrastructure
• 9:16
  Speaker 1: UM advancement, and it proves that and those things just
• 9:20
  Speaker 1: don't come over late. For Bloomberg News, I'm a guest
• 9:25
  Speaker 1: to Sarava. I'm genuinely delighted now to be talking to
• 9:47
  Speaker 1: Christopher Mims, who I should say is a slightly unusual
• 9:50
  Speaker 1: interviewee for Stephanomics, because not only does he right for
• 9:53
  Speaker 1: a competing media organization, he's technology columnists for the Wall
• 9:56
  Speaker 1: Street Journal. But he's here because I just came across
• 10:00
  Speaker 1: his book and really liked it. The book is arriving today,
• 10:04
  Speaker 1: and I've found it without the help of any publisher
• 10:06
  Speaker 1: or agent. In fact, my sister Laura Flanders told me
• 10:09
  Speaker 1: about it, and I thought it was just such an
• 10:11
  Speaker 1: interesting piece of reporting about every part of the global
• 10:14
  Speaker 1: supply chains that we talked about often on this podcast.
• 10:18
  Speaker 1: I've been waiting for an excuse to have the author
• 10:20
  Speaker 1: on the show, So Christopher, no journalistic impartiality here. I
• 10:24
  Speaker 1: am a fan of your book. Um. The full title
• 10:27
  Speaker 1: is arriving today. Why everything about what we buy and
• 10:31
  Speaker 1: how we buy it has changed? And I was struck
• 10:34
  Speaker 1: listening to that piece from Augusta surreva Um, the freight
• 10:38
  Speaker 1: company person at the end, says talks about how a
• 10:42
  Speaker 1: hiccup in global supply chains now can quite easily become
• 10:46
  Speaker 1: a tsunami, and that struck me certainly for me in
• 10:49
  Speaker 1: your book, that's one of the things that has changed, right,
• 10:51
  Speaker 1: Supply chains are more complicated, more global, and also a
• 10:55
  Speaker 1: lot more fragile. Yes, they are a lot more fragile.
• 10:58
  Speaker 1: I mean, it's it's a pretty simple principle to understand.
• 11:01
  Speaker 1: I think the longer you make a supply chain, um,
• 11:05
  Speaker 1: the more points of failure there are. And the thing
• 11:07
  Speaker 1: is that a supply chain is a physical thing, it's
• 11:11
  Speaker 1: a geographic thing. And you know, we live on a
• 11:14
  Speaker 1: planet now where whether it's a pandemic or political strife
• 11:21
  Speaker 1: or increasingly extreme weather and climate change, um, individual events
• 11:26
  Speaker 1: anywhere along that supply chain can interrupt the whole thing.
• 11:29
  Speaker 1: And on top of that, you know, supply chains have
• 11:32
  Speaker 1: been made more efficient year by year, uh, you know,
• 11:35
  Speaker 1: in the name of not carrying excess inventory. And when
• 11:39
  Speaker 1: you live in a world where everyone has adopted this
• 11:42
  Speaker 1: this Fortist or Toyota production system idea that everything should
• 11:47
  Speaker 1: be just in time manufacturing and supplies, and you twin
• 11:52
  Speaker 1: that with really long supply chains, then you end up
• 11:57
  Speaker 1: with tremendous vulnerability, and frankly, I think we've seen new
• 12:01
  Speaker 1: kinds of waste. So in a funny way, all of
• 12:05
  Speaker 1: these retailers that we've seen, especially in the US, with
• 12:07
  Speaker 1: all this excess inventory, um, you know, they ended up
• 12:11
  Speaker 1: with it despite doing their darnists to try to avoid
• 12:14
  Speaker 1: that by creating these these long, just in time supply chains.
• 12:18
  Speaker 1: And as we heard in the piece, and we'll get
• 12:20
  Speaker 1: into I think later, there are still some serious issues,
• 12:24
  Speaker 1: particularly on the sort of ground based bit of the
• 12:27
  Speaker 1: supply chain. Right now, it's kind of moved a bit
• 12:29
  Speaker 1: from from long lines of container ships to to what's
• 12:33
  Speaker 1: happening on the ground. But we should we should back
• 12:35
  Speaker 1: up a little bit, and if you could just tell
• 12:37
  Speaker 1: us briefly what you set out to do with your book,
• 12:40
  Speaker 1: because you've taken on a pretty big terrain. So I
• 12:44
  Speaker 1: wanted to trace the path of just sort of a
• 12:47
  Speaker 1: typical consumer good from Asia. You know, in the past
• 12:51
  Speaker 1: people have been creative and done things like T shirts,
• 12:55
  Speaker 1: but I just did a USB charger because it's this
• 12:57
  Speaker 1: ubiquitous electronic object. It's sort of the first run on
• 13:01
  Speaker 1: the ladder when a country starts to get a little
• 13:03
  Speaker 1: more sophisticated in their manufacturing because there is a fair
• 13:05
  Speaker 1: amount of electronics and microchips in it. And so I
• 13:09
  Speaker 1: traced the path of one of these from Vietnam, which
• 13:12
  Speaker 1: of course is becoming this new manufacturing powerhouse, and just
• 13:15
  Speaker 1: trace its journey across the ocean and then across the
• 13:18
  Speaker 1: continental US, and in the process, you know, it gave
• 13:20
  Speaker 1: me an excuse to talk about how shipping works and
• 13:25
  Speaker 1: has changed, how ports have changed tremendously, how trucking and
• 13:29
  Speaker 1: rail has changed, and then how sort of the Amazon
• 13:32
  Speaker 1: portion of the supply chain has changed hugely, Right, so
• 13:36
  Speaker 1: all of what we used to do where we would
• 13:38
  Speaker 1: get you know, by goods from a store, now of
• 13:40
  Speaker 1: course through e commerce. How does that distribution network function
• 13:45
  Speaker 1: and how is it dependent on you know, not just
• 13:48
  Speaker 1: armies of millions of people, but lots of robotics, artificial intelligence,
• 13:53
  Speaker 1: prediction algorithms. How has that made that arriving today, uh
• 13:59
  Speaker 1: noteification possible? Why is it that I can go online
• 14:02
  Speaker 1: and pretty much anything I want there is a seemingly
• 14:05
  Speaker 1: infinite variety of it available to me within what was
• 14:09
  Speaker 1: two days now it's one day, now it's four hours,
• 14:12
  Speaker 1: even though that object began its journey maybe six months ago,
• 14:16
  Speaker 1: twelve thousand miles away on the opposite side of the globe.
• 14:19
  Speaker 1: And I guess we should say the timing was pretty
• 14:22
  Speaker 1: relevant here. So you you were, you were how far
• 14:25
  Speaker 1: through the book when COVID struck because that obviously that
• 14:28
  Speaker 1: must have made reporting a lot more difficult, but obviously
• 14:31
  Speaker 1: everything about what you were writing about a lot more
• 14:33
  Speaker 1: interesting to more people. Yeah. I was probably about two
• 14:37
  Speaker 1: thirds of the way through the reporting, um. And you know,
• 14:42
  Speaker 1: I hadn't written a word when I was standing, you know,
• 14:45
  Speaker 1: on the dock in Vietnam and getting texts from friends like, hey,
• 14:48
  Speaker 1: have you heard about what's going on, uh, you know
• 14:51
  Speaker 1: in China right now with this virus that's spreading. And
• 14:54
  Speaker 1: I was like, I don't know what you're talking about,
• 14:56
  Speaker 1: you know. And at the time, I was literally on
• 14:58
  Speaker 1: and around the world journey. Um. And so a lot
• 15:01
  Speaker 1: of the goods that I saw on the dock that day,
• 15:04
  Speaker 1: you know, containers full of things like, um, items that
• 15:07
  Speaker 1: people would buy to make working from home and educating
• 15:10
  Speaker 1: their kids from how possible, uh, you know ppe you know,
• 15:15
  Speaker 1: masks and gowns and stuff was in these containers that
• 15:17
  Speaker 1: I was watching get loaded that would then arrive you know, um,
• 15:22
  Speaker 1: two to six weeks later at the Port of l
• 15:25
  Speaker 1: a and be part of that initial just buying spree
• 15:29
  Speaker 1: that happened at right after lockdown. There's been a lot
• 15:33
  Speaker 1: of books that explained, you know, how important that container
• 15:35
  Speaker 1: ships are and the creation of the container and how
• 15:38
  Speaker 1: it built the modern world. And I've read quite all
• 15:40
  Speaker 1: of those books. But you're the first person who actually
• 15:42
  Speaker 1: took the trouble to find out how on earth you
• 15:45
  Speaker 1: pilot one of those enormous container ships into the Port
• 15:49
  Speaker 1: of Los Angeles and Long Beach, which is obviously where
• 15:54
  Speaker 1: of goods from Asia come into the US. So just
• 15:58
  Speaker 1: tell us a little bit bit about because it turns
• 16:00
  Speaker 1: out it's a much tougher parking job. But I think
• 16:03
  Speaker 1: any of them would have imagined. Yeah, I mean, I
• 16:06
  Speaker 1: think one of the great untold stories of the of
• 16:09
  Speaker 1: this century and the last half of the previous century
• 16:13
  Speaker 1: is the way that so many jobs that used to
• 16:15
  Speaker 1: be sort of mundane blue collar jobs have become really
• 16:20
  Speaker 1: skilled labor. And a great example of that is the
• 16:22
  Speaker 1: harbor pilot. I mean, they've been harbor pilots since ancient Greece,
• 16:26
  Speaker 1: because when your ship arrived to a port, you don't
• 16:28
  Speaker 1: know where the shoals are, you don't know how to navigate.
• 16:31
  Speaker 1: It's very tricky. So a native pilot would come out
• 16:34
  Speaker 1: on a boat and this still happens to this day,
• 16:37
  Speaker 1: um and hops on the boat and they're the only
• 16:40
  Speaker 1: person who is allowed to pilot that ship into the port. Nowadays,
• 16:44
  Speaker 1: it's extra important with these truly enormous container ships because
• 16:48
  Speaker 1: the tolerances are so narrow. The way I described it
• 16:51
  Speaker 1: in the book is like imagine you have like a
• 16:53
  Speaker 1: wooden block and you're just kind of like pushing it
• 16:56
  Speaker 1: down a rain gutter, and there's maybe a centimeter on
• 16:59
  Speaker 1: the bottom and on each side, and that's how wide
• 17:02
  Speaker 1: the ship is relative to these ship channels. And then
• 17:05
  Speaker 1: you know, even the tolerance on the top is very
• 17:08
  Speaker 1: tight because a lot of these ships as they go
• 17:10
  Speaker 1: under you know, let's say a bridge when they're going
• 17:12
  Speaker 1: into the port, you know there's there's maybe only two
• 17:14
  Speaker 1: ms tolerance, and if it's a hot day and the
• 17:16
  Speaker 1: bridge is sagging, maybe it's just a meter. So these
• 17:20
  Speaker 1: harbor pilots um, you know, if they mess up millions
• 17:24
  Speaker 1: and millions of dollars worth of equipment is smashed and
• 17:27
  Speaker 1: and it's a huge problem. So their job is really tough,
• 17:32
  Speaker 1: and they're compensated accordingly. They're the highest paid, uh you know,
• 17:36
  Speaker 1: civil servants in in the on the payroll of the
• 17:39
  Speaker 1: city of Los Angeles and make more than four hundred
• 17:41
  Speaker 1: thousand dollars a year because they are so rare. But
• 17:45
  Speaker 1: they also, it sets out, have quite a high risk
• 17:48
  Speaker 1: of dying on the job. They're still having to basically
• 17:52
  Speaker 1: jump onto one of those ladders, kind of hanging off
• 17:56
  Speaker 1: the side of Jacob's ladder. I mean that to me
• 17:58
  Speaker 1: was just extraordinary, and they quite regularly fall off and die, right, Yeah,
• 18:03
  Speaker 1: So they have harbor Pellet as a one in twenty
• 18:05
  Speaker 1: chance of dying on the job during their career. Because
• 18:09
  Speaker 1: to this day, transferring somebody from a small boat to
• 18:12
  Speaker 1: a large ship is very difficult. They kind of hop
• 18:14
  Speaker 1: onto this rope ladder and climb up the side. You know,
• 18:16
  Speaker 1: you would think that they would invent some kind of
• 18:18
  Speaker 1: I don't know, escalator or something, but it's just nobody's
• 18:21
  Speaker 1: figured out any better way to get a person onto
• 18:24
  Speaker 1: a giant ship at sea. You also made a point
• 18:27
  Speaker 1: of mentioning the sailors around the world who are marooned
• 18:31
  Speaker 1: on all these container ships during COVID, and I think
• 18:34
  Speaker 1: you sort of had a line about, you know, never
• 18:36
  Speaker 1: has so much be known to so few. Yeah, I
• 18:38
  Speaker 1: mean at the peak, there were hundreds of thousands of
• 18:40
  Speaker 1: sailors varied a lot for months and months who could
• 18:43
  Speaker 1: not get off of their ships because it was a
• 18:47
  Speaker 1: collective action problem, right, Like if a ship comes into
• 18:51
  Speaker 1: a port, you know, those sailors could belong to a
• 18:53
  Speaker 1: half different nationalities, none of which are the same as
• 18:59
  Speaker 1: the country in which they've just alighted. And during you know,
• 19:03
  Speaker 1: the early COVID times, even these countries didn't want to
• 19:05
  Speaker 1: let sailors off of these ships. Nor could these sailors
• 19:10
  Speaker 1: necessarily hop on a plane during the early part of
• 19:13
  Speaker 1: the lockdown to fly home. And so you ended up
• 19:15
  Speaker 1: with sailors who, you know, they would sign up for
• 19:17
  Speaker 1: a six month contract and they would be kept a
• 19:20
  Speaker 1: year or eighteen months. And you know, it wasn't quite
• 19:24
  Speaker 1: that they were enslaved on these ships, but it was
• 19:28
  Speaker 1: in a way, you know, it's close, right, It is
• 19:31
  Speaker 1: a form of servitude where they absolutely could not get
• 19:33
  Speaker 1: out of the situation. They could not get home, and
• 19:35
  Speaker 1: the sailors who whose entire income is depending on getting
• 19:39
  Speaker 1: onto those ships and relieving the ones who are on there,
• 19:42
  Speaker 1: couldn't get on and make a living. So it ended
• 19:44
  Speaker 1: up being this this really kind of collective disaster that's
• 19:48
  Speaker 1: a product of the way that you know, the seas
• 19:51
  Speaker 1: are still um. You know, you get out beyond beyond
• 19:55
  Speaker 1: the range of of countries Navy, it's still lawless zone
• 20:00
  Speaker 1: in a way, and it's a place where countries have
• 20:02
  Speaker 1: to collaborate, and you know, these these blue color largely
• 20:08
  Speaker 1: sailors were the victim of that during the pandemic, and
• 20:11
  Speaker 1: it was it was this tiny fraction of the global
• 20:13
  Speaker 1: workforce who are still managing. We're responsible for the for
• 20:16
  Speaker 1: the supplies that did get through during that time when
• 20:18
  Speaker 1: we were all locked up at home. Okay, so we
• 20:21
  Speaker 1: have we do currently have doc and railroad worker unions
• 20:25
  Speaker 1: negotiating contracts with their employers and on the railroad workers,
• 20:29
  Speaker 1: given that we already have all these delays of goods
• 20:32
  Speaker 1: waiting to get onto trains. The White House is so
• 20:35
  Speaker 1: worried about the paralyzing effect of a strike that they've
• 20:39
  Speaker 1: just created a Presidential Emergency Board to come up with
• 20:42
  Speaker 1: a plan to that will be acceptable to railroad management
• 20:46
  Speaker 1: and the union workers. The International Longshore and Warehouse Union,
• 20:50
  Speaker 1: which you write about in the book, are also in
• 20:52
  Speaker 1: talks at these Some of these workers are subject to
• 20:57
  Speaker 1: this paradox of automation that you described, So just tell
• 21:01
  Speaker 1: us a little bit about that. Yeah, port workers, especially
• 21:06
  Speaker 1: these days, um, are subject to, uh, this paradox where
• 21:12
  Speaker 1: if you want to make these ports cleaner, greener, more productive, um,
• 21:18
  Speaker 1: you know, you've got to automate them. Um. But of
• 21:20
  Speaker 1: course the Longshoreman's union doesn't want that. So what they
• 21:24
  Speaker 1: have negotiated for in the past is okay, you can
• 21:27
  Speaker 1: automate you know, this terminal, because ports are can sometimes
• 21:30
  Speaker 1: be made up of dozens of terminals. But in exchange,
• 21:33
  Speaker 1: you will retrain this many workers to maintain the robots
• 21:38
  Speaker 1: that are literally going to replace the people who before
• 21:41
  Speaker 1: we're driving the cranes, driving the yard trucks that move
• 21:45
  Speaker 1: containers around, etcetera. Um. So this has been the story
• 21:51
  Speaker 1: in shipping and imports frankly since the debut of the
• 21:54
  Speaker 1: shipping container. The shipping container wiped out more jobs in
• 21:58
  Speaker 1: ports than any subsequent innovation. But this latest iteration will
• 22:04
  Speaker 1: certainly shrink the ranks of UM long shoreman even further.
• 22:09
  Speaker 1: And you know, to be clear, you know, if you
• 22:12
  Speaker 1: go to the port of Rotterdam, which was really the
• 22:14
  Speaker 1: first giant port in the world to automate back in
• 22:16
  Speaker 1: the late n or you go especially in China, there's
• 22:20
  Speaker 1: tremendous automation there already the technology is available, but it
• 22:23
  Speaker 1: is this real struggle now that you don't frankly often
• 22:26
  Speaker 1: see where it is a direct trade off between automation
• 22:29
  Speaker 1: and jobs. Usually automation displaces workers into new roles, but
• 22:33
  Speaker 1: here it's like, you know, those jobs are going to
• 22:35
  Speaker 1: go away. A lot of other bits of your book,
• 22:38
  Speaker 1: which about the rise of sort of mass manufacturing and
• 22:42
  Speaker 1: scientific management techniques, I mean, we can't go into all
• 22:45
  Speaker 1: of it, but the trucking I think we do need
• 22:47
  Speaker 1: to make time for because shortages of truckers has been
• 22:52
  Speaker 1: such a feature of the recovery post COVID, not just
• 22:57
  Speaker 1: in the US, but also across Europe and in the
• 22:59
  Speaker 1: UK um in the past couple of years. So why
• 23:03
  Speaker 1: is it that we find truckers probably as important, maybe
• 23:08
  Speaker 1: more important to getting goods to us than forty years ago,
• 23:13
  Speaker 1: but somehow not enough of them. Yeah, trucking is an
• 23:17
  Speaker 1: area where technology has made truckers more productive. Um. Certainly,
• 23:24
  Speaker 1: deregulation in the United States also went a long way
• 23:28
  Speaker 1: toward making truckers more economically productive, but it made the
• 23:32
  Speaker 1: job more punishing, more difficult, longer hours, frankly, much lower pay.
• 23:39
  Speaker 1: It's no surprise that you have so much turnover in
• 23:42
  Speaker 1: trucking because you especially in the US, you have lots
• 23:45
  Speaker 1: and lots of people who are certified to drive long
• 23:48
  Speaker 1: haul trucks who go and get that commercial driver's license,
• 23:52
  Speaker 1: but they burn out quickly. And a big part of
• 23:55
  Speaker 1: it is, you know, if you're on the road, let's
• 23:57
  Speaker 1: say your long haul trucker for twenty days out of
• 24:00
  Speaker 1: every month, you're working fourteen hours a day. Uh, you
• 24:03
  Speaker 1: know minimum because that's the federal limit, and you're essentially
• 24:08
  Speaker 1: making the equivalent minimum wage. Well, forget that. You could
• 24:12
  Speaker 1: just stay home and have two jobs in fast food
• 24:15
  Speaker 1: and at least sleep at home at night. So it's
• 24:19
  Speaker 1: become a very unappealing and a very difficult and a
• 24:22
  Speaker 1: very lonely job. And so the average age of truckers
• 24:25
  Speaker 1: just keeps going up. Um. And you know, there's I
• 24:28
  Speaker 1: think a lot of political paralysis around addressing what the
• 24:32
  Speaker 1: real quality of life issues are there. You point out
• 24:37
  Speaker 1: in your pieces that they're earning two thirds less in
• 24:39
  Speaker 1: real terms than they were forty years ago, these truck workers,
• 24:43
  Speaker 1: despite being just as important to the supply chain, if
• 24:48
  Speaker 1: not more so. So, I guess the obvious question is
• 24:49
  Speaker 1: why aren't they just paid more by these companies who
• 24:52
  Speaker 1: rely on them so intensely. I mean, it's complicated. Part
• 24:57
  Speaker 1: of it is that you know, they they're not able
• 24:59
  Speaker 1: to really unis effectively anymore, whereas before they were all
• 25:02
  Speaker 1: part of the team Stars union. UM. But I think
• 25:05
  Speaker 1: a trend you see overall in a lot of these
• 25:08
  Speaker 1: jobs you're at the supply chain is that UM, more
• 25:12
  Speaker 1: and more efficiency and cost is wrung out of the
• 25:15
  Speaker 1: supply chain, but at the price of robustness and reliability.
• 25:20
  Speaker 1: And when workers are part of the the system that
• 25:25
  Speaker 1: is paying the price for all of that increased efficiency
• 25:28
  Speaker 1: and lower cost. Because truck transportation is significantly cheaper now
• 25:32
  Speaker 1: than it was before deregulation, then you end up with
• 25:35
  Speaker 1: a more fragile system. So in some ways it is
• 25:39
  Speaker 1: it is a choice that has been collectively made UM,
• 25:43
  Speaker 1: both politically and economically having devoted all this time to
• 25:48
  Speaker 1: the way the global supply chains were and then seeing
• 25:51
  Speaker 1: how they were tested in by COVID, seeing how the
• 25:57
  Speaker 1: recovery has affected been affected by supply chain issues. There's
• 26:03
  Speaker 1: a huge debate about whether or not this system of
• 26:07
  Speaker 1: globalization is going to be unpicked, you know, whether we're
• 26:09
  Speaker 1: going to sort of try and unscramble the omelet and
• 26:12
  Speaker 1: have more regional or even local production, and that a
• 26:17
  Speaker 1: lot of these very elaborate systems that you catalog and
• 26:20
  Speaker 1: describe are just going to go away because they haven't
• 26:25
  Speaker 1: been a good fit for the last couple of years.
• 26:27
  Speaker 1: What do you think about that? I mean, how much
• 26:29
  Speaker 1: will the pandemic change all those things that you've looked at?
• 26:34
  Speaker 1: The experts I have talked to you who've been studying
• 26:36
  Speaker 1: this for decades have told me that the pandemic was
• 26:41
  Speaker 1: in some ways address rehearsal for other challenges to come,
• 26:46
  Speaker 1: and that this entire system, which has become so efficient
• 26:50
  Speaker 1: and so affordable, you know, grew up during a period
• 26:54
  Speaker 1: of unusual peace, prosperity, lack of international ConfL But now
• 27:00
  Speaker 1: that you have you know, war in Europe, you have
• 27:05
  Speaker 1: extreme weather events, you have political unrest as a result
• 27:09
  Speaker 1: of rising prices and food shortages. All of these things
• 27:13
  Speaker 1: directly affect you know, name a commodity right or name
• 27:18
  Speaker 1: a finished good, and so what you have people talking
• 27:21
  Speaker 1: about is near shoring, ally shoring, you know, even before
• 27:25
  Speaker 1: you get to so called re shoring. So I think
• 27:27
  Speaker 1: that it is just a natural consequence of all of
• 27:31
  Speaker 1: these interruptions that manufacturers that you know, all the people
• 27:35
  Speaker 1: who are in the back, and and our kind of
• 27:37
  Speaker 1: villains on euros of this who have to manage these
• 27:39
  Speaker 1: supply chains are like, I need to find a new
• 27:42
  Speaker 1: place to get these goods, or I need to bring
• 27:44
  Speaker 1: some of this uh in house, or I need to
• 27:47
  Speaker 1: pay my suppliers and subcontractors war to guarantee that they
• 27:52
  Speaker 1: will have enough extra capacity for me. You see this
• 27:55
  Speaker 1: in the automotive industry, paying chip companies more to guarantee capacity. Um.
• 28:00
  Speaker 1: So I do think that what you are going to
• 28:03
  Speaker 1: end up with are shorter supply chains and some amount
• 28:07
  Speaker 1: of what's called near shoring. And you know, frankly, it's
• 28:13
  Speaker 1: probably about time because there are many ways that this
• 28:16
  Speaker 1: was in some senses environmentally unsustainable long before it was
• 28:20
  Speaker 1: economically unsustainable. Do you think Amazon is going to stop
• 28:24
  Speaker 1: doing things differently because all of that could change and
• 28:27
  Speaker 1: you'd still it would still be pretty hard working in
• 28:29
  Speaker 1: an Amazon warehouse. True, Amazon has changed a great deal.
• 28:34
  Speaker 1: That's one reason they've had to continue increasing their wages,
• 28:38
  Speaker 1: and it's one reason that they're facing this pressure from unions,
• 28:40
  Speaker 1: although it is still extraordinarily hard to unionize a warehouse
• 28:44
  Speaker 1: in the United States, so that's on their side. I
• 28:46
  Speaker 1: think that the way in which Amazon will change is
• 28:49
  Speaker 1: Amazon the bulk of the goods that they sell is
• 28:51
  Speaker 1: through a marketplace, so they're agnostic about the source of
• 28:54
  Speaker 1: those goods. So Amazon quote unquote could do a massive
• 28:58
  Speaker 1: pivot to nearer suppliers and not even know it because
• 29:04
  Speaker 1: it's just where those manufacturers are sourcing from. That's interesting
• 29:07
  Speaker 1: in this unprecedented advert for Wall Street Journal columnists. We
• 29:12
  Speaker 1: recognize quality wherever it is. But you did mention that
• 29:14
  Speaker 1: you've just finished a documentary, So so tell us how
• 29:17
  Speaker 1: we could see because that sort of is providing some
• 29:19
  Speaker 1: of this kind of update post COVID update to your analysis. Yeah,
• 29:23
  Speaker 1: and and a lot of visuals that make it real
• 29:26
  Speaker 1: because the scale of it is hard to understand unless
• 29:28
  Speaker 1: you can see it. But um, yeah, if you just
• 29:31
  Speaker 1: like search YouTube for it's actually called chain Reactions and
• 29:35
  Speaker 1: just search it for like chain reaction, w s J
• 29:37
  Speaker 1: or something, Um, it'll pop up. It's also on w
• 29:40
  Speaker 1: s J dot com. It's free there. But yeah, that
• 29:43
  Speaker 1: documentary really lays out a lot of this and you
• 29:46
  Speaker 1: can hear it straight from the truckers, the longshoreman, longshore people,
• 29:53
  Speaker 1: but she prefers the term longshoreman. You know, the ups drivers,
• 29:55
  Speaker 1: the Amazon workers, um. And I think it's really powerful, frankly,
• 29:59
  Speaker 1: to hear it directly from the people responsible for making
• 30:02
  Speaker 1: the system work, as I did, because certainly that's not
• 30:06
  Speaker 1: an encounter that we have every day generally unless we
• 30:08
  Speaker 1: work in this industry. Christopher Mims, thanks so much. Yeah,
• 30:12
  Speaker 1: thank you very much for having me. That's it for
• 30:22
  Speaker 1: this episode of Stephanomics. Will be back next week for
• 30:25
  Speaker 1: the season finale. In the meantime, do please rate the
• 30:28
  Speaker 1: show if you like it, and check out the Bloomberg
• 30:30
  Speaker 1: News website for more economic news and views on the
• 30:33
  Speaker 1: global economy. You can also follow at economics on Twitter.
• 30:37
  Speaker 1: This episode was produced by Summer Sadi and Young Young,
• 30:40
  Speaker 1: with special thanks also to Augustus Seraiva, Anna Montero, Brendan Murray,
• 30:45
  Speaker 1: and Christopher Mims. Mike Sasso is the executive producer of Stephanomics,
• 31:01
  Speaker 1: The s