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UAW, ECB, DHL, and Tor Hagen · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
• 0:04
  Speaker 1: my co host Matt Miller.
• 0:05
  Speaker 2: Every business day we bring you interviews from CEOs, market pros,
• 0:09
  Speaker 2: and Bloomberg experts, along with essential market moven news.
• 0:14
  Speaker 1: Find the Bloomberg Markets Podcast on Apple Podcasts or wherever
• 0:17
  Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.
• 0:21
  Speaker 1: All Right, the big thing for me, I think this
• 0:22
  Speaker 1: is this weekly. I mean, there's a lot of ego
• 0:24
  Speaker 1: data coming down, But are we going to have a
• 0:26
  Speaker 1: strike in the auto industry? I mean, it kind of
• 0:28
  Speaker 1: feels like it and.
• 0:29
  Speaker 2: That could push, by the way, not only the state
• 0:32
  Speaker 2: of Michigan into a recession, but if it goes on
• 0:35
  Speaker 2: for a long time, it could be bad for the
• 0:38
  Speaker 2: growth trajectory of the US economy and for the inflation
• 0:42
  Speaker 2: underlying inflation.
• 0:43
  Speaker 1: Yep, it's big, So hopefully they can get something done.
• 0:45
  Speaker 1: Joe Levington joins us here. He's a director credit research
• 0:48
  Speaker 1: for Bloomberg Intelligence. In his day job, he covers kind
• 0:50
  Speaker 1: of the industrial companies, including the auto companies. Joins us
• 0:53
  Speaker 1: here in our Bloomberg Interactive Brokers studio. So, Joe, what's
• 0:56
  Speaker 1: your sense here. You know these companies for a long time.
• 0:59
  Speaker 1: Does this feel like they're going to go on strike?
• 1:01
  Speaker 1: The union will go on strike Thursday at midnight.
• 1:03
  Speaker 3: Yeah, no, definitely, Paul, it does feel like a strike
• 1:05
  Speaker 3: is coming. You know, even when you see Bloomberg reporting
• 1:09
  Speaker 3: that the UAW has offered some concessions, going from forty
• 1:14
  Speaker 3: percent growth to thirty six percent growth, is still a
• 1:17
  Speaker 3: huge difference between the fourteen and a half percent that
• 1:20
  Speaker 3: the auto companies seem to be giving.
• 1:21
  Speaker 2: So let's look at the let's get the hard numbers
• 1:23
  Speaker 2: behind that. This is what they want in terms of
• 1:26
  Speaker 2: an increase for salary and benefits Rachel, So what does
• 1:31
  Speaker 2: it boil down to in terms of the cost for
• 1:34
  Speaker 2: the automakers to get an hour of work from a
• 1:37
  Speaker 2: union member.
• 1:38
  Speaker 4: Yeah, no, you're totally right.
• 1:39
  Speaker 3: The way that I've looked at it is really in
• 1:41
  Speaker 3: terms of EBIT for twenty twenty four, in terms of
• 1:43
  Speaker 3: profitability for in the best case scenario, at twenty percent,
• 1:48
  Speaker 3: you'd have something like Stilantis being about two percent impacted,
• 1:51
  Speaker 3: So really not that much before you consider some of
• 1:54
  Speaker 3: the things that they could do.
• 1:55
  Speaker 4: For Ford, which.
• 1:55
  Speaker 3: Has a bigger unionized auto group, it could be as
• 1:58
  Speaker 3: much as ten percent of twenty twenty five or EBIT. Now,
• 2:01
  Speaker 3: I do think there are ways that they can offset it,
• 2:03
  Speaker 3: And going to your point about inflation price is the
• 2:06
  Speaker 3: number one tool that they have to use is to
• 2:08
  Speaker 3: increase prices and pass it on to consumers. Of course,
• 2:11
  Speaker 3: that leads to different challenges and different.
• 2:13
  Speaker 2: Ways, also done numerous times over the past couple of years.
• 2:18
  Speaker 4: That's exactly right.
• 2:19
  Speaker 2: When I priced my Dodge Challenger RT scat pack.
• 2:23
  Speaker 1: Wide body, which is still not in delivery, which.
• 2:25
  Speaker 2: Still has not been delivered, and I hear, by the
• 2:28
  Speaker 2: way from inside the company they're like, yeah, you know what,
• 2:30
  Speaker 2: I think it's going to be delivered September fifteenth, and
• 2:33
  Speaker 2: now that's just three days away, and I've gotten bup
• 2:36
  Speaker 2: kissed in terms of anyway. The bottom line is when
• 2:40
  Speaker 2: I ordered it in you know, a year ago, it's
• 2:43
  Speaker 2: the price has already been increased like two or three times,
• 2:46
  Speaker 2: and I'm wondering, do I have to then pay that price?
• 2:50
  Speaker 2: But when they finally deliver.
• 2:51
  Speaker 4: It, I don't know that works. No, In fact, you
• 2:54
  Speaker 4: don't have to pay that price.
• 2:55
  Speaker 3: But that's where some of the EV companies are getting
• 2:57
  Speaker 3: hit materially, like a riythean or a Lucid, which made
• 3:01
  Speaker 3: deals two or three years ago, and now they're, you know,
• 3:04
  Speaker 3: like offering these cars up at thirty percent less than
• 3:06
  Speaker 3: worth the prices today and they're taking that loss and
• 3:09
  Speaker 3: gross profit and really killing their liquidity. So to your point,
• 3:13
  Speaker 3: you won't have to get hit with that, Matt, but
• 3:14
  Speaker 3: you did have to wait.
• 3:15
  Speaker 2: And I bet you the dealer is gonna try. I'll
• 3:17
  Speaker 2: bet the dealer tries.
• 3:19
  Speaker 4: But you're savvy, old of guy.
• 3:20
  Speaker 2: You're not well now because Joel told me that, you know,
• 3:22
  Speaker 2: I would say, I have documentation, I know the only
• 3:25
  Speaker 2: day I ordered.
• 3:25
  Speaker 1: I know the owner of Stillantis, the CEO of Stalantis.
• 3:29
  Speaker 2: All right, So it doesn't help A dealer does not care.
• 3:32
  Speaker 1: That doesn't care.
• 3:33
  Speaker 2: Okay, I've interviewed Carlos Tavaris. That doesn't help me when
• 3:36
  Speaker 2: I go into the dealership.
• 3:37
  Speaker 5: All right.
• 3:37
  Speaker 1: So Joel, if you're these big auto companies, you don't
• 3:42
  Speaker 1: want to go on strike, but you feel like you
• 3:44
  Speaker 1: can't pay thirty or forty percent increase in So where
• 3:47
  Speaker 1: do you think this shakes out?
• 3:49
  Speaker 3: I mean, yeah, I think you probably get to a
• 3:52
  Speaker 3: midpoint of maybe about twenty five percent over four years Now,
• 3:55
  Speaker 3: the offsets to that is, you know, if you increase
• 3:58
  Speaker 3: pricing one percent, that a huge chunk of that increase away,
• 4:03
  Speaker 3: And then you start thinking about costs and where you
• 4:05
  Speaker 3: can do that. One of the things I always think
• 4:07
  Speaker 3: about is bringing in products that you have gotten from supplier,
• 4:12
  Speaker 3: so insourcing some componentry. If you do that, that means
• 4:16
  Speaker 3: you might be saving money. That might be a pressure
• 4:19
  Speaker 3: point for a lot of the auto suppliers and how
• 4:21
  Speaker 3: they're gonna get hit. Obviously, if you're going for pricing,
• 4:24
  Speaker 3: that's positive for the dealers and what that means for them, well.
• 4:28
  Speaker 2: If they can move the metal. Because consider that these
• 4:32
  Speaker 2: increases are only gonna hit GM, Forward and Stilantis. So
• 4:37
  Speaker 2: if you're cross shopping, say the new newest GM electric
• 4:41
  Speaker 2: vehicle on a Tesla, and Tesla has to pay its
• 4:44
  Speaker 2: employees like a third of what GM pays their employees,
• 4:48
  Speaker 2: you're gonna find a better price over at elon Musk's company.
• 4:51
  Speaker 4: I think you're totally right, Matt.
• 4:53
  Speaker 3: I Also, I wrote about this a couple of weeks ago,
• 4:55
  Speaker 3: how Tesla might actually be the biggest winner. Now, I'm sure, folks,
• 4:59
  Speaker 3: is Tesla's plants see a let's say twenty five percent increase,
• 5:03
  Speaker 3: and they're gonna be asking for something too, But my
• 5:06
  Speaker 3: guess is it's incremental or modest relative to what the
• 5:09
  Speaker 3: UAW is gonna get. So on a relative basis, Tesla's
• 5:12
  Speaker 3: gonna win on that. And as you've seen, what they've
• 5:14
  Speaker 3: done this year is they've used that price to cut
• 5:18
  Speaker 3: their prices or take a relative price cut and draw
• 5:21
  Speaker 3: demand off of it, which I think means that Tesla
• 5:23
  Speaker 3: will be, you know, like the eventual winner out of
• 5:25
  Speaker 3: the out of this game with the auto companies.
• 5:28
  Speaker 2: And the others who produce here that don't have union labor, right,
• 5:31
  Speaker 2: which is like a ton of Asian and European automakers.
• 5:35
  Speaker 1: So like the BMW plants in Tennessee or wherever they
• 5:38
  Speaker 1: put them South Carolina, South Carolina are they're not unionized.
• 5:40
  Speaker 3: They're not And so you know, like there is going
• 5:42
  Speaker 3: to be a relative trade here in terms of how
• 5:44
  Speaker 3: much you can go. And it's one of the reasons
• 5:46
  Speaker 3: why the auto companies are pushing back so hard because
• 5:48
  Speaker 3: they play in a global market space.
• 5:51
  Speaker 2: I don't know, so all right, from that, you've got
• 5:52
  Speaker 2: to decide as a worker, Paul, do you want to
• 5:54
  Speaker 2: live in Spartanburg. Do you want to live in Austin?
• 5:57
  Speaker 2: Do you want to live in Motown?
• 6:00
  Speaker 5: Spartan Burs?
• 6:00
  Speaker 4: Looking pretty good?
• 6:01
  Speaker 6: Yeah?
• 6:02
  Speaker 5: All right.
• 6:03
  Speaker 1: So from the balance sheet perspective, jol, do any of
• 6:05
  Speaker 1: these Ford GM stialantas do they have a balance sheet
• 6:08
  Speaker 1: that you're nervous about should a long strike take place.
• 6:12
  Speaker 3: Well, the thing that I look at the most, and
• 6:14
  Speaker 3: this is really a Ford and GM issue more than
• 6:16
  Speaker 3: a Stalantis issue, is that the way that they get
• 6:19
  Speaker 3: paid is that they get paid when they sell the
• 6:21
  Speaker 3: car to the dealer, right, but they don't pay their
• 6:24
  Speaker 3: suppliers until your typical forty five or sixty days afterwards.
• 6:28
  Speaker 3: What that means is that they have a huge amount
• 6:30
  Speaker 3: of payables that are lined up and very little receivables.
• 6:33
  Speaker 3: When you have a stoppage of work, there's no receivable
• 6:36
  Speaker 3: of money coming in, but there's a huge amount of
• 6:38
  Speaker 3: payables to the tune of maybe like five billion dollars
• 6:40
  Speaker 3: a quarter. So you have to have massive amounts of
• 6:42
  Speaker 3: liquidity to handle kind of such a situation, which is
• 6:46
  Speaker 3: really what Ford and GM have. I think Ford has
• 6:48
  Speaker 3: something like fifty billion of liquidity available.
• 6:50
  Speaker 4: GM has about forty five billion.
• 6:52
  Speaker 3: Dollars of liquidity available, so they can handle a near
• 6:55
  Speaker 3: term impact, but it has.
• 6:56
  Speaker 5: A huge.
• 6:58
  Speaker 3: View in terms of free cap flow for a year,
• 7:01
  Speaker 3: in terms of the liquidity on their balance sheet.
• 7:04
  Speaker 1: They got a lot of leverage here. I'm looking at GM.
• 7:06
  Speaker 1: I mean they got to that the IBATA. I mean
• 7:08
  Speaker 1: that's there's a lot.
• 7:09
  Speaker 3: There there there is, But keep in mind that that
• 7:11
  Speaker 3: includes the finance company.
• 7:12
  Speaker 4: When you start that out.
• 7:14
  Speaker 3: If the leverage at GM and Ford is actually relatively modest,
• 7:17
  Speaker 3: maybe more like one to one and a half turnska,
• 7:20
  Speaker 3: it's really that they have finance companies, which is kind
• 7:23
  Speaker 3: of hard to see, uh sometimes just because it's blended
• 7:26
  Speaker 3: all together under their under their primary.
• 7:28
  Speaker 2: Now, I will say everyone we talked to from we
• 7:31
  Speaker 2: talked to Seth Harris yesterday Northeastern, who used to be
• 7:35
  Speaker 2: an advisor to President Biden and deputy director of the
• 7:38
  Speaker 2: White House's National Economic Council, and Cloudy Assam, she of
• 7:42
  Speaker 2: the SOM rule. They all say, look, the union took
• 7:46
  Speaker 2: bad deals for the workers at the end of the
• 7:48
  Speaker 2: financial crisis, and the carmakers have raked it in since then.
• 7:53
  Speaker 2: Surely they've been setting aside billions because they knew these
• 7:56
  Speaker 2: negotiations were coming right surely.
• 8:00
  Speaker 1: But you're right. I mean they kind of they got
• 8:03
  Speaker 1: a certain deal to certain pay increases, and then this
• 8:05
  Speaker 1: inflation came along, which nobody saw, and then boom, and
• 8:08
  Speaker 1: now they feel like they need to get back. It's
• 8:09
  Speaker 1: gonna be interesting, it feels, it feels contentious. Hopefully they
• 8:13
  Speaker 1: can get something done by midnight Thursday night.
• 8:15
  Speaker 2: Especially if they haven't produced my challenger I know, I mean,
• 8:18
  Speaker 2: I need them to make that instead it here.
• 8:20
  Speaker 4: It'll be the priority of the Nego.
• 8:21
  Speaker 1: She's the whole thing. We got to get that thing
• 8:23
  Speaker 1: off the line. Joe Levington, he's director of Credit Research
• 8:26
  Speaker 1: for Bloomberg Intelligence, senior auto and industrial credit analyst as well,
• 8:30
  Speaker 1: so we appreciate getting some of his thoughts here. Again,
• 8:33
  Speaker 1: Big big issues for the auto manufacturers coming up, big labor,
• 8:37
  Speaker 1: big auto. We've got strikes seemingly in a number of
• 8:39
  Speaker 1: industries across this country.
• 8:42
  Speaker 7: You're listening to the Team Ken's are Live program Bloomberg
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• 8:52
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• 8:57
  Speaker 1: Monica Defend joins us. She's a head and chief strategy
• 9:00
  Speaker 1: just at a Munday Institute that's Europe's largest asset manager.
• 9:03
  Speaker 1: She joined us here in Bloomberg Interactive Brokers studio. I
• 9:06
  Speaker 1: love to have her in studio here. So Monica talked
• 9:08
  Speaker 1: to us about kind of the European economy. I know
• 9:11
  Speaker 1: we can't talk about it as a whole because you
• 9:13
  Speaker 1: have so many different countries. But my concern, I think
• 9:17
  Speaker 1: my understanding is if Germany is in trouble, Europe's in trouble,
• 9:21
  Speaker 1: talk to us about how you guys view the European economies.
• 9:24
  Speaker 8: Well, short term, we are really relying on Americans taking
• 9:28
  Speaker 8: over and during the summer, so probably we can have
• 9:31
  Speaker 8: some lift on the quarterly GDP sequencing. But as you
• 9:36
  Speaker 8: were rightly pointing out, on an aggregate, europe euraline is
• 9:41
  Speaker 8: not doing bad. If you look at at the Commission
• 9:46
  Speaker 8: at you Commission projection released yesterday, there is no recession
• 9:51
  Speaker 8: but latisha growth. It is true that if you open
• 9:54
  Speaker 8: the box, there are different countries within the same region.
• 9:58
  Speaker 8: With Germany that is running into our session for different reasons.
• 10:03
  Speaker 8: It's started with a manufacturing sector paint at all of
• 10:08
  Speaker 8: the industrial policy and of an economy centered on energy dependence,
• 10:12
  Speaker 8: but now it's moving into the service sector. Industrial data
• 10:17
  Speaker 8: and that's production data were soft last week. But it
• 10:20
  Speaker 8: goes without saying that if Germany is in trouble, this
• 10:23
  Speaker 8: is going to be difficult for the entire region. Ivy
• 10:28
  Speaker 8: said that we have some other countries, France, for example,
• 10:32
  Speaker 8: where we see the political willingness to continue to run
• 10:37
  Speaker 8: physical support for the country, and France is an important economy.
• 10:42
  Speaker 8: Spain again has been supported by subsidies on the energy
• 10:47
  Speaker 8: sector and this has been supporting consumption. It is going
• 10:51
  Speaker 8: to fade away, and but at least Italy, where again
• 10:55
  Speaker 8: the construction boomb is over. So it is true that
• 10:58
  Speaker 8: on aggregate the situation is manageable. Probably at country level
• 11:02
  Speaker 8: there are several issues that needs to be tackled.
• 11:05
  Speaker 2: But not a super attractive place to invest right. I mean,
• 11:10
  Speaker 2: Germany's manufacturing sector is going to be hit hard by
• 11:14
  Speaker 2: problems in China, failures there and threats from companies like Tesla,
• 11:19
  Speaker 2: who seem to be able to do Volkswagen's work far better.
• 11:24
  Speaker 2: You know, the French have luxury goods that again won't
• 11:29
  Speaker 2: be purchased by rich Chinese people anytime soon. The Italians
• 11:33
  Speaker 2: have democratic disaster, you know, like a constant for the
• 11:37
  Speaker 2: last what fifty sixty seventy years, and the Spanish are
• 11:41
  Speaker 2: just supported by the rest of the continent. Plus Britain
• 11:43
  Speaker 2: shoots itself in the foot any chance it gets. I mean,
• 11:46
  Speaker 2: where would you invest if you wanted to go to Europe?
• 11:49
  Speaker 8: Well, nice to see these from American perspective, it is
• 11:53
  Speaker 8: not that bad.
• 11:54
  Speaker 4: You are are European.
• 11:55
  Speaker 8: But Evan said that first of all, in engaging the
• 11:59
  Speaker 8: green transition bottom up level, there are some nice evidence.
• 12:03
  Speaker 8: It is true that China slow down is not that
• 12:09
  Speaker 8: it is negative for for the region, but we need
• 12:12
  Speaker 8: to resize starting from Germany, the dependence UH to uh
• 12:16
  Speaker 8: TO to China when it goes to to Treda and
• 12:19
  Speaker 8: exportation because a lot is done within the region starting
• 12:23
  Speaker 8: from uh from Germany, which is an important an important
• 12:27
  Speaker 8: take if you ask me. Long term, probably as Europeans
• 12:32
  Speaker 8: we should think more on an industrial and on our
• 12:37
  Speaker 8: industrial policy. But this is what we are discussing. When
• 12:40
  Speaker 8: it goes to EarthCare, when it goes to pharma, it's
• 12:44
  Speaker 8: going beyond the semiconductor story. And I think we are
• 12:48
  Speaker 8: moving slowly, but we're active on that front.
• 12:51
  Speaker 1: So at the MOUNDI were you guys in terms of
• 12:54
  Speaker 1: your asset allocation these days and maybe maybe how it's
• 12:57
  Speaker 1: changed over the last several years.
• 12:59
  Speaker 8: Well, it has been given the macro uncertainty and uncertainty
• 13:03
  Speaker 8: on the monetary policy framework, it has been difficult really
• 13:07
  Speaker 8: to pencil midium to long term strategy. We've been quite
• 13:11
  Speaker 8: a jilt, for example on the durrection positioning with a
• 13:16
  Speaker 8: preference for US longer and that you neutral position. But
• 13:21
  Speaker 8: again it has been the time for agile, tactical relative positioning.
• 13:28
  Speaker 8: When it goes to the risk asset, we've been progressively
• 13:32
  Speaker 8: reducing the exposure to to credit it notably the.
• 13:36
  Speaker 1: High healed So reducing exposure to high credit is that
• 13:40
  Speaker 1: that you guys are just generally more conservative on your
• 13:43
  Speaker 1: economic outlook and industry policies.
• 13:46
  Speaker 8: It was also going into the US, I have to say,
• 13:51
  Speaker 8: so it's really when you need to balance the risk
• 13:55
  Speaker 8: return opportunity. Probably repositioning on govin and equity on the
• 14:00
  Speaker 8: traditional was for US more appealing equity wise, while maintaining
• 14:07
  Speaker 8: cocial stunts. We do like the US value and on
• 14:13
  Speaker 8: the emerging market we have been repositioning moving to neutral
• 14:17
  Speaker 8: into Chinese equity, but be more active in the emerging
• 14:22
  Speaker 8: market region, notably Brazil, India, for example, Indonesia. So these
• 14:29
  Speaker 8: are all countries that for different reasons, are getting track.
• 14:34
  Speaker 2: But you are looking in the US value. Are you
• 14:38
  Speaker 2: concerned that we do eventually have a recession here? The
• 14:41
  Speaker 2: consumers looking pretty stretched. We're going to get some data
• 14:43
  Speaker 2: I know out on Thursday retail spending, and it looks
• 14:48
  Speaker 2: much worse than the last month's data we got. We're
• 14:50
  Speaker 2: going to get inflation data out tomorrow that looks worse
• 14:53
  Speaker 2: than last month's data that we got. Is the situation
• 14:55
  Speaker 2: you're getting worse.
• 14:56
  Speaker 8: So when it goes to the recession call, we do
• 14:59
  Speaker 8: belie if there will be a shallow session, this will materialize,
• 15:04
  Speaker 8: likely in the first half of twenty twenty four. For
• 15:07
  Speaker 8: the reason you were mentioning the labor market is eventually cooling,
• 15:11
  Speaker 8: Excess savings have been reducing remarkably over time, and probably
• 15:17
  Speaker 8: also the physcal diviidenomics and impulse to the investments business investments,
• 15:24
  Speaker 8: I won't be there for longer. When it goes to
• 15:29
  Speaker 8: CPI inflation, we think it is normalizing, it will normalize.
• 15:34
  Speaker 8: It probably not in a linear way energy prices. Recent
• 15:41
  Speaker 8: prints on oil will have a positive contribution to headline
• 15:48
  Speaker 8: and the core will prove to be sticky. But as
• 15:50
  Speaker 8: I was saying, overall, we expect this nonlinear and volatile
• 15:55
  Speaker 8: and probably less rapid than expected downward driven inflation to
• 16:00
  Speaker 8: to continue. And this ands with the cold that we
• 16:02
  Speaker 8: were making on the Fed where we expect them to
• 16:05
  Speaker 8: orkish post posts.
• 16:07
  Speaker 1: I'm down with that, all right. So you spend half
• 16:10
  Speaker 1: your time in Paris, half your time in Milan area?
• 16:13
  Speaker 1: How was like Como this summer? I have yet to
• 16:16
  Speaker 1: go too, but it's.
• 16:18
  Speaker 2: On my bull. You mean you yet to go to
• 16:19
  Speaker 2: Lake Como ever?
• 16:20
  Speaker 5: Ever?
• 16:20
  Speaker 1: And I pend up on land like a dozen times.
• 16:23
  Speaker 2: Why would you spend so much time in boring Milan
• 16:26
  Speaker 2: and get up to lake where the money is.
• 16:29
  Speaker 1: That's where the money managers are, all right?
• 16:31
  Speaker 8: So I was in Internobio early in September where all
• 16:36
  Speaker 8: we are having these think tank meeting and the people
• 16:41
  Speaker 8: out there were saying, we have been taken over by Americans,
• 16:44
  Speaker 8: and we do think.
• 16:46
  Speaker 2: George Clooney, George, you must be happy to.
• 16:49
  Speaker 8: Have us, you know, honestly, being an Italian, I don't
• 16:52
  Speaker 8: know why you guys are going to the Lake of
• 16:54
  Speaker 8: Como and not to the seaside in Sicilia. Probably is
• 16:57
  Speaker 8: the weather, but definitely there there are a lot of tourists.
• 17:01
  Speaker 8: We are really seeing this renaissance in Milan itself.
• 17:05
  Speaker 4: Nice.
• 17:06
  Speaker 1: I love them a lot.
• 17:06
  Speaker 2: It's great, I love but they're taking down I spent
• 17:10
  Speaker 2: in Sicily.
• 17:11
  Speaker 1: I know.
• 17:11
  Speaker 2: I've been in Bari, been in Venice a number of times.
• 17:14
  Speaker 2: I've been in Florence. I got I got done cycling
• 17:17
  Speaker 2: trips around the country. I've done cooking trips in the country.
• 17:21
  Speaker 2: I've been to the horse.
• 17:22
  Speaker 1: I had to work. I had to work for a living.
• 17:24
  Speaker 1: Monica Defen thanks for joining us. She's head and chief
• 17:26
  Speaker 1: strategists at a Mundi Institute.
• 17:28
  Speaker 7: You're listening to the tape Can's are Live program Bloomberg
• 17:31
  Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 17:35
  Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business App.
• 17:38
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• 17:41
  Speaker 7: flagship New York station Just Say Alexa playing Bloomberg eleven thirty.
• 17:47
  Speaker 1: All right, we had an M and a trade in
• 17:49
  Speaker 1: like I don't know the packaging industry. Smurfit Kappa Group.
• 17:53
  Speaker 1: It's Irish. It doesn't sound it, but it's Irish. I
• 17:55
  Speaker 1: agreed to acquire west Rock, an eleven point two billion
• 17:58
  Speaker 1: dollar deal that creates a package industry powerhouse domiciled in
• 18:03
  Speaker 1: my home land of Ireland. Pretty cool stuff. And we
• 18:05
  Speaker 1: actually have an analyst who knows this business. Believe it
• 18:07
  Speaker 1: or not. Richard Burke joins us. He's a senior Aronalds.
• 18:09
  Speaker 1: The Bloomberg Intelligence covered all the basic materials. I want
• 18:12
  Speaker 1: to talk about this deal. I want to talk to you
• 18:14
  Speaker 1: about the potential auto strike, what that means for steal.
• 18:16
  Speaker 1: Lots of stuff to talk to you about today, Richard,
• 18:18
  Speaker 1: what's going on here with this deal. It's a big deal.
• 18:20
  Speaker 1: I guess we need more heft in the packaging industry.
• 18:24
  Speaker 9: Well, what it is is, if you look at the
• 18:26
  Speaker 9: two players. West Rock is undergoing what they call strategic transformation.
• 18:31
  Speaker 9: They're trying to, you know, boost their margins versus their peers,
• 18:37
  Speaker 9: their trail. They trail their margin, their margins trail their peers.
• 18:41
  Speaker 9: They undertook a transformation program and it may be going
• 18:44
  Speaker 9: a little bit slower than they want to. Smurf Kappa
• 18:48
  Speaker 9: doesn't have a presence in the US. This gives them
• 18:52
  Speaker 9: a large presence in the US. Smurf Kappa's margins are
• 18:55
  Speaker 9: about three hundred basis points higher than West Rocks. So
• 19:00
  Speaker 9: and they undertook their journey about seven years ago. They
• 19:04
  Speaker 9: started a capital improvement program and now they're at the
• 19:08
  Speaker 9: end of it. And you know, from what the executives
• 19:12
  Speaker 9: laid out on this morning's call was, you know, we
• 19:15
  Speaker 9: think we can help west Rock on their journey and
• 19:18
  Speaker 9: combine the company companies going forward and boost west Rock's margins,
• 19:24
  Speaker 9: bring them more in line to what where what Smurfit
• 19:28
  Speaker 9: Kampa is.
• 19:30
  Speaker 2: One of these companies I never heard of before West Rock.
• 19:33
  Speaker 2: The other one I never knew what they did, Smurfed Kappa.
• 19:36
  Speaker 2: Now they're going to have a combined annual revenue of
• 19:39
  Speaker 2: thirty four billion dollars. What do they make?
• 19:42
  Speaker 9: They make basically pretty much predominantly just cardboard boxes.
• 19:47
  Speaker 1: See I told you it's a cardboard box company.
• 19:49
  Speaker 2: I mean yeah, but like so iPhone.
• 19:51
  Speaker 9: Boxes, uh, you know, the Gamut, the Gammon boxes, the
• 19:55
  Speaker 9: Gamut from you know.
• 19:56
  Speaker 2: The regular U haul boxes like U haul the Gamut.
• 19:59
  Speaker 9: They go all the way across the universe to the
• 20:03
  Speaker 9: cardboard box that Amazon puts on your well, probably the
• 20:07
  Speaker 9: three cardboard boxes the Amazon puts on your doorsteps, the
• 20:09
  Speaker 9: big one to protect everything, and then the smaller ones
• 20:12
  Speaker 9: in and they also make all the way down to
• 20:15
  Speaker 9: those very more brand where retailers are trying to get
• 20:20
  Speaker 9: more brand experience. The other big thing that's driving this
• 20:24
  Speaker 9: is especially more so in Europe, is the way away
• 20:28
  Speaker 9: from plastic packaging. So, for example, one of the big
• 20:32
  Speaker 9: products that West Rocks just really introduced was a thing
• 20:37
  Speaker 9: to do way remember when you used to buy a
• 20:38
  Speaker 9: six pack of beer and the plastic rains. They have
• 20:41
  Speaker 9: a product that does away with the plastic.
• 20:43
  Speaker 1: Grains and I use that and that is a great
• 20:45
  Speaker 1: product because it's so much easier to get the cans
• 20:47
  Speaker 1: out of there. So that was weir.
• 20:49
  Speaker 10: What what do you mean the black plastic caps that
• 20:52
  Speaker 10: go on top of like, but you buy a six
• 20:54
  Speaker 10: pack of soda instead of having a little plastic grains ahold,
• 20:57
  Speaker 10: this is like a little cardboard top that just kind
• 20:59
  Speaker 10: of hold them all together.
• 21:00
  Speaker 1: And it's just very easy to take the can out
• 21:03
  Speaker 1: of the little cardboard top or take the whole carver
• 21:05
  Speaker 1: top off. Genius whatever thought it, and.
• 21:07
  Speaker 2: Less likely to strangle fish exactly right, which I've been
• 21:11
  Speaker 2: cutting those up since I was a little kid.
• 21:12
  Speaker 1: You know, the little things good for you. So I
• 21:14
  Speaker 1: tell you I do my party care. The packing business,
• 21:18
  Speaker 1: I mean the talk to us just about the cargated
• 21:21
  Speaker 1: box business. There's pre pandemic, there's huge demand, but then
• 21:25
  Speaker 1: the pandemic hit. Then everybody that got stuff delivered. Talk
• 21:29
  Speaker 1: to us about the last three four, five years in
• 21:31
  Speaker 1: that business.
• 21:32
  Speaker 9: Well, we've gone from pre pandemic where you know, historically
• 21:35
  Speaker 9: the packaging business kind of GDP GDP growth. Okay, pandemic hits,
• 21:41
  Speaker 9: everybody's at home, nobody can spend money on restaurants or
• 21:45
  Speaker 9: food or travel. Well, you got to spend money somehow,
• 21:48
  Speaker 9: so you ordered goods over the air and neet yeap
• 21:51
  Speaker 9: then came to these boxes. So the box over a
• 21:54
  Speaker 9: two year period went from GDP type growth to about
• 21:57
  Speaker 9: eight to nine growth. Then what happened, and it totally
• 22:01
  Speaker 9: reversed because everybody after a pandemic over everybody had what
• 22:05
  Speaker 9: they call what revenge travel, everything, and we've been in
• 22:10
  Speaker 9: a downfall. In fact, we're actually back to almost pre
• 22:14
  Speaker 9: pandemic levels.
• 22:15
  Speaker 1: Okay, so there's been.
• 22:17
  Speaker 9: But the bigger push longer term is again back to sustainability.
• 22:23
  Speaker 9: Can we can we replace past plastic packaging car?
• 22:27
  Speaker 1: You know what, back way back in the day, I
• 22:29
  Speaker 1: had a investment in a box company like just this
• 22:33
  Speaker 1: Southeastern US. Never made a dime on it, and then
• 22:37
  Speaker 1: the whole and I sold back my steak. Then this
• 22:40
  Speaker 1: company named Amazon came out. I was like, oh, I
• 22:44
  Speaker 1: missed it and bought them or what. No, it just
• 22:46
  Speaker 1: just kind of came out and said we're gonna started
• 22:48
  Speaker 1: shipping everything to you. And of course then this company's
• 22:51
  Speaker 1: value went through the roof. All right, we got potential
• 22:53
  Speaker 1: strike coming out of the auto business. If they're not
• 22:57
  Speaker 1: making cars, does that mean they don't need steel, in
• 22:59
  Speaker 1: which we're gonna have some issues with steel talks about
• 23:02
  Speaker 1: how that might impact steel.
• 23:04
  Speaker 4: Correct.
• 23:04
  Speaker 9: If you look at the auto market for the steel
• 23:07
  Speaker 9: sucker or auto demand or the auto end market is
• 23:10
  Speaker 9: about twenty five percent of the steel market. Okay, So
• 23:13
  Speaker 9: if we see that and you know, not only do
• 23:15
  Speaker 9: you have you kin'd have a ripple effect. Not only
• 23:18
  Speaker 9: do the big car makers stop making cars, but everybody
• 23:21
  Speaker 9: who makes the parts, you know, the tier one, the
• 23:23
  Speaker 9: Tier two, the Tier three suppliers stop making their parts too,
• 23:27
  Speaker 9: and you know, in the last the difference between this
• 23:31
  Speaker 9: strike possibly and the last strike is normally the UAW
• 23:35
  Speaker 9: you would only target one auto maker. This time they're
• 23:39
  Speaker 9: talking about maybe targeting all three. So we'll see if
• 23:43
  Speaker 9: the rhetoric, the rhetoric is definitely ramped up, and we'll
• 23:46
  Speaker 9: see what happened.
• 23:47
  Speaker 1: What are the steel makers themselves saying or they just
• 23:50
  Speaker 1: kind of staying out of it, and we'll say, well,
• 23:52
  Speaker 1: you know.
• 23:52
  Speaker 9: They've been quiet. The thing that was interesting, I thought
• 23:56
  Speaker 9: the second quarter on their earnings call, a few of
• 23:59
  Speaker 9: them mentioned that they had and totally ship more in
• 24:04
  Speaker 9: the second quarter than they were expecting to the automakers,
• 24:07
  Speaker 9: which exactly tells me the automakers were like, Okay, well
• 24:11
  Speaker 9: maybe we need to wrap up production and things like that,
• 24:15
  Speaker 9: and and honestly, you're not going to see if they
• 24:18
  Speaker 9: do strike their schedule. The contract expires this Thursday night
• 24:22
  Speaker 9: at eleven fifty nine pm. You know, we're already halfway through,
• 24:27
  Speaker 9: you know, halfway through the month, but you're almost you're
• 24:30
  Speaker 9: only two weeks from a course, so you may not
• 24:32
  Speaker 9: see that big of effect on this quarter on the
• 24:35
  Speaker 9: steel makers. It would probably be next more next quarter
• 24:38
  Speaker 9: of things also the steel makers normally take some downtime
• 24:43
  Speaker 9: and they kind of rejiggered their downtime to kind of.
• 24:46
  Speaker 5: Be see going forward.
• 24:48
  Speaker 9: So if there is a hit that they're not as
• 24:51
  Speaker 9: impacted as they might have been.
• 24:53
  Speaker 1: Interesting, I mean, did the auto guys did they did?
• 24:56
  Speaker 1: Are they like a justin time with their steel? It's
• 24:58
  Speaker 1: like I place my steel orders because I'm gonnaut. I'm
• 25:01
  Speaker 1: gonna start bending it like tomorrow or next week or something.
• 25:04
  Speaker 9: Most of it all depends on where you're at. Like
• 25:08
  Speaker 9: the Oheit, the big three are definitely probably more just
• 25:11
  Speaker 9: in time.
• 25:12
  Speaker 5: Okay, where the.
• 25:13
  Speaker 9: Maybe there's some of the spliers Tier one, Tier two,
• 25:16
  Speaker 9: Tier three are is you know, everybody's trying to be
• 25:20
  Speaker 9: just in time, but they probably do hold more.
• 25:23
  Speaker 1: All right, So boom, we knocked out cargated boxes and
• 25:27
  Speaker 1: steal in one segment. How good is that you can
• 25:29
  Speaker 1: do that with Rich Burke? Why he gets a bachelor's
• 25:32
  Speaker 1: degree in engineering from Illinois. Then he goes and gets
• 25:35
  Speaker 1: some masters in engineering electrical engineering, and then he goes
• 25:37
  Speaker 1: against an NBA from Chicago. You can't get the guy
• 25:40
  Speaker 1: out of the out of Illinois. All right, good stuff, Rich,
• 25:43
  Speaker 1: We appreciate it. From Bloomberg Intelligence.
• 25:45
  Speaker 7: You're listening to the Team Ken's are Live program Bloomberg
• 25:49
  Speaker 7: Markets weekdays at ten am Eastern on Bloomberg dot Com,
• 25:52
  Speaker 7: the iHeartRadio app and the Bloomberg Business App, or listen
• 25:55
  Speaker 7: on demand wherever you get your podcasts.
• 26:00
  Speaker 1: Let's talk about shipping boxes. We talked that we had
• 26:03
  Speaker 1: an M and a trade in the carrogated box business.
• 26:06
  Speaker 1: Who what a thunk it is Murphy Kappa buy yep
• 26:09
  Speaker 1: eleven billion, so eleven large there, So kind of staying
• 26:13
  Speaker 1: on a kind of the box thing and kind of
• 26:15
  Speaker 1: moving boxes around. We have Mike Para. Mike joins us.
• 26:18
  Speaker 1: He is the CEO for the Americas for d h
• 26:20
  Speaker 1: L Express. He joins us live here in our Bloomberg
• 26:23
  Speaker 1: Interactive Brooker Studio. So Mike, I don't know, do you
• 26:26
  Speaker 1: care where the boxes come from? It's your just job
• 26:29
  Speaker 1: just to move.
• 26:30
  Speaker 11: Them, right, absolutely, But we would I would say, we
• 26:33
  Speaker 11: would like to see less air inside those boxes. So
• 26:36
  Speaker 11: that was a great that was a great interview. And
• 26:39
  Speaker 11: I am in so less air in the boxes, less
• 26:41
  Speaker 11: air in the boxes?
• 26:42
  Speaker 1: What does that mean?
• 26:43
  Speaker 11: Well, I mean remember air takes up space, right and
• 26:46
  Speaker 11: then also when you got more air in boxes, you
• 26:48
  Speaker 11: have a greater propensity to have damage. Okay as well,
• 26:51
  Speaker 11: so less air less damage, less air means we can
• 26:54
  Speaker 11: put more boxes into our aircraft.
• 26:56
  Speaker 1: Are what percent of your aircraft? I guess what percent
• 27:01
  Speaker 1: is full? Do they fly when they actually take off?
• 27:03
  Speaker 11: Oh, well, you're gonna fly. You're gonna fly. It's not
• 27:06
  Speaker 11: gonna be at full weight because that would that would
• 27:08
  Speaker 11: be ideal by the way that that means you're moving
• 27:11
  Speaker 11: water right as an example, But on average, our weightload
• 27:14
  Speaker 11: factor is somewhere between eighty and ninety percent. Is where
• 27:18
  Speaker 11: we're at from a weightload factor on an aircraft.
• 27:21
  Speaker 2: So how does it look to you right now? Because
• 27:25
  Speaker 2: you have a great position in terms of judging the
• 27:29
  Speaker 2: US economy, right are we still buying and shipping just
• 27:33
  Speaker 2: as much stuff as we were last quarter or the
• 27:35
  Speaker 2: same quarter last year.
• 27:36
  Speaker 5: Yeah.
• 27:36
  Speaker 11: One of the great things that we're seeing as a
• 27:38
  Speaker 11: result of what's going on globally in this move away
• 27:42
  Speaker 11: from China. We're never gonna decouple ourselves from China, but
• 27:45
  Speaker 11: we are seeing you know, friend shoring, near shoring, omni
• 27:48
  Speaker 11: shoring that's taking place, and we're seeing a lot more
• 27:51
  Speaker 11: outbound from the US, which is encouraging. It's encouraging for us,
• 27:55
  Speaker 11: but we're seeing it predominantly in the space.
• 27:57
  Speaker 4: Of e commerce.
• 27:58
  Speaker 11: Okay, So that's what we're seeing, which is fantastic. But
• 28:01
  Speaker 11: what we have seen is we're starting to see that
• 28:04
  Speaker 11: China plus one really starting to happen. As an example,
• 28:08
  Speaker 11: near and dear to me because it's within my region
• 28:10
  Speaker 11: is Mexico, and you're starting to hear this term made
• 28:13
  Speaker 11: in Mexico. We're starting to see that in the northern
• 28:16
  Speaker 11: part of Mexico, so Guadalajara. So that's what is those
• 28:22
  Speaker 11: markets were starting to see an explosion raw goods coming
• 28:25
  Speaker 11: in being assembled and then exported out of Mexico, either
• 28:29
  Speaker 11: back to the US, to Canada or throughout the rest
• 28:32
  Speaker 11: of the world.
• 28:32
  Speaker 1: Where does DHL Americas fly to.
• 28:35
  Speaker 11: What are your planes going across the entire Americas? So
• 28:38
  Speaker 11: we fly intro America, okay, and then out of the
• 28:40
  Speaker 11: Americas to Europe, Asia, the Middle East, and Africa.
• 28:44
  Speaker 1: Are there certain airports that are hubs for you guys.
• 28:46
  Speaker 11: Absolutely.
• 28:47
  Speaker 5: Yeah.
• 28:47
  Speaker 11: A big air hub for the Americas is in northern
• 28:49
  Speaker 11: Kentucky and Cincinnati. We're doing ninety departures in and ninety
• 28:54
  Speaker 11: arrivals in on a daily basis.
• 28:56
  Speaker 2: How do you compete with I mean, when you talk
• 28:58
  Speaker 2: shipping in this country, everybody knows I just moved here
• 29:01
  Speaker 2: by the way from Germany, so no problem for me.
• 29:04
  Speaker 2: DHL was on my doorstep every single day. But now
• 29:07
  Speaker 2: you know it's ups FedEx Amazon.
• 29:12
  Speaker 11: How do you compete with those big guys. Yeah, we're
• 29:14
  Speaker 11: We're not competing in the space of intra US. So
• 29:17
  Speaker 11: we got out of the US Book of Business back
• 29:19
  Speaker 11: in two thousand and seven going into two thousand and
• 29:22
  Speaker 11: eight because we wanted to focus focus on our core competency,
• 29:26
  Speaker 11: and our core competency is international, so the world into
• 29:29
  Speaker 11: the US, the US to the world. So that's our focus.
• 29:32
  Speaker 11: That's what that's the lane that we play in, and
• 29:35
  Speaker 11: we have been extremely successful.
• 29:36
  Speaker 2: Is it getting harder or easier in terms I actually
• 29:40
  Speaker 2: have a lot of experience with those kinds of shipping
• 29:42
  Speaker 2: as well, and I'm constantly trying to get you know,
• 29:46
  Speaker 2: a set of triple trees from Italy to here, or
• 29:50
  Speaker 2: shipping Olan sporks back to Sweden for something. So it's
• 29:54
  Speaker 2: difficult to deal with customs, all the different regulations. Is
• 29:58
  Speaker 2: that getting easier or is that getting hard?
• 30:00
  Speaker 11: In reality, it's been the same. What is getting easier
• 30:04
  Speaker 11: is through automation and digitalization. We clear ninety two percent
• 30:09
  Speaker 11: of our shipments are cleared in the air, so they
• 30:11
  Speaker 11: don't they're cleared by customs in the air, and then
• 30:13
  Speaker 11: they're only really looking at somewhere in the range of
• 30:17
  Speaker 11: seven to eight percent is what they're looking at. They're
• 30:21
  Speaker 11: targeting those specifically. Now you get that through having a
• 30:25
  Speaker 11: great relationship and a consistent relationship that spans over a
• 30:28
  Speaker 11: long period of time with customs, where the reliability of
• 30:32
  Speaker 11: the information the contents that we're moving line up with
• 30:36
  Speaker 11: the manifest that we're submitting to them electronically. So that
• 30:39
  Speaker 11: part is getting easier. Where it gets difficult is when
• 30:43
  Speaker 11: you have someone who refuses to give you the right
• 30:46
  Speaker 11: level of information, an EI number, the HTS code for
• 30:50
  Speaker 11: clearance is wrong. Those type of things is where a
• 30:53
  Speaker 11: shipment gets delayed. But ninety to ninety two percent of
• 30:56
  Speaker 11: our goods are cleared in the air, so that makes
• 30:58
  Speaker 11: it easier. Whereas before would have gone twenty I started
• 31:01
  Speaker 11: thirty seven years ago in this industry was much harder.
• 31:04
  Speaker 11: It was much more of a manual process, much more
• 31:07
  Speaker 11: of an opener ship and look and see today it's
• 31:10
  Speaker 11: much easier from that perspective.
• 31:12
  Speaker 1: All right, so you ship from the Americas out to
• 31:15
  Speaker 1: the rest of the world and back. Yes, where are
• 31:19
  Speaker 1: the growth areas versus maybe the not so growth areas well.
• 31:23
  Speaker 11: We're seeing growth out of Canada, so in what we're
• 31:26
  Speaker 11: calling Friendshory Canada, the US, and Mexico, we're seeing a
• 31:29
  Speaker 11: lot of growth from that perspective, we're seeing growth in
• 31:32
  Speaker 11: parts of Central and South America. As a matter of fact,
• 31:35
  Speaker 11: we just launched our own dedicated flight now to Argentina,
• 31:38
  Speaker 11: so we're starting to see growth and it goes it
• 31:40
  Speaker 11: goes Miami, Argentina, Argentina, Chile, back to Central America and
• 31:45
  Speaker 11: then back up to the States. So we're seeing growth
• 31:47
  Speaker 11: in those markets as well. Every time we have a
• 31:49
  Speaker 11: growth market, we'll pull we'll come off a commercial airline
• 31:52
  Speaker 11: and we'll put our own aircraft in place.
• 31:54
  Speaker 1: So what does that mean. You'll take oh, you'll take
• 31:56
  Speaker 1: some of your packages.
• 31:58
  Speaker 11: Off commercial airline where we were by belly space before,
• 32:01
  Speaker 11: and then we'll put it out about.
• 32:02
  Speaker 1: That business, which I never really understand. So what percentage
• 32:05
  Speaker 1: of your business goes on an airline and what goes
• 32:08
  Speaker 1: on your plane and how do you make that decision?
• 32:10
  Speaker 11: Met Well, okay, so thank you for asking that question.
• 32:13
  Speaker 11: By the way, we're the largest commercial airline purchaser of
• 32:17
  Speaker 11: belly space in the world, Okay, through all of our entities.
• 32:20
  Speaker 11: From a DHL Group perspective, the decision is made once
• 32:24
  Speaker 11: you have greater than fifty percent way load factor that
• 32:26
  Speaker 11: you can put on your own plane, where you can
• 32:28
  Speaker 11: start to pay for the physical asset up and down
• 32:31
  Speaker 11: and the fuel that you have going into that plane.
• 32:33
  Speaker 11: So the cost of operating an aircraft.
• 32:36
  Speaker 2: And fuel costs, I mean, right now, the outlook isn't
• 32:39
  Speaker 2: great with we're reporting that there's going to be a
• 32:43
  Speaker 2: three million barrel a day shortfall in the next quarter
• 32:46
  Speaker 2: because of the output cuts from OPEC.
• 32:48
  Speaker 11: Plus yeah, fuel costs is interesting up and down, right,
• 32:51
  Speaker 11: So fuel is always somewhere between seventy and one hundred
• 32:54
  Speaker 11: and we almost think that there's a reason for that.
• 32:57
  Speaker 11: The interesting part about that is we have what's called
• 32:59
  Speaker 11: the Fuels our Charge, and that's where we take those
• 33:02
  Speaker 11: expenses and we pass on the least amount that we
• 33:05
  Speaker 11: have to to our customers associated with it. But that's
• 33:07
  Speaker 11: how we protect ourselves and it either goes up or
• 33:10
  Speaker 11: comes down and wet. We protect the customer on the
• 33:13
  Speaker 11: way down.
• 33:13
  Speaker 2: The other big cost is labor. How's that looking.
• 33:15
  Speaker 11: Yeah, Okay, we're fine because it was tough. It was
• 33:19
  Speaker 11: tough for a while. The good thing about now is
• 33:22
  Speaker 11: we're replacing roles, we're hiring roles where we need to,
• 33:25
  Speaker 11: which is a good thing, and we're getting ready for
• 33:27
  Speaker 11: peak season, which is, by the way, in our opinion,
• 33:30
  Speaker 11: is going to be a soft peak season. The uncertainty remains.
• 33:33
  Speaker 11: It is going to be a soft peak season. It's
• 33:35
  Speaker 11: going to be in line with what we saw last year.
• 33:39
  Speaker 11: But really the next couple of weeks are going to
• 33:41
  Speaker 11: be very telling. The end of this month, the beginning
• 33:43
  Speaker 11: of October are going to be very telling to see
• 33:45
  Speaker 11: what's going to happen in peak season, because really what
• 33:48
  Speaker 11: starts to happen is people start to order in advance
• 33:50
  Speaker 11: of Black Friday, Cyber Monday, and the lead up to
• 33:54
  Speaker 11: the Christmas holidays. So we're keeping a close eye as
• 33:57
  Speaker 11: to what's going to happen here over the next couple
• 33:58
  Speaker 11: of weeks.
• 33:59
  Speaker 1: Twenty seconds, what kind of aircraft do you flying? Can
• 34:01
  Speaker 1: you get them?
• 34:03
  Speaker 11: So we're flying triple sevens, we're flying seven six sevens,
• 34:07
  Speaker 11: seven three sevens, and then we still have a couple
• 34:10
  Speaker 11: seven four sevens that are out there eight hundreds. Can
• 34:13
  Speaker 11: we get them? Yeah, there's a lot of there's aircraft
• 34:16
  Speaker 11: today that are available. Much more aircraft today available based
• 34:19
  Speaker 11: on the shortfall and volume that was out there in
• 34:21
  Speaker 11: people standing down planes and right sizing their network. We
• 34:25
  Speaker 11: right sized our network eighteen months ago. We're constantly right
• 34:28
  Speaker 11: sizing our network. So it's not a new initiative for
• 34:31
  Speaker 11: us at DHL.
• 34:32
  Speaker 1: Fascinating. I can talk about this stuff all day. Mike Parat,
• 34:34
  Speaker 1: thanks so much for joining us. He's the CEO of
• 34:37
  Speaker 1: the Americas for d h L Express. Kind of getting
• 34:40
  Speaker 1: a good view on kind of the economy and we're
• 34:43
  Speaker 1: we're seeing some growth and not so much growth.
• 34:47
  Speaker 7: You're listening to the tape. Can's our live program Bloomberg
• 34:50
  Speaker 7: Markets weekdays at ten am Eastern on Bloomberg Radio, the
• 34:54
  Speaker 7: tune in app, Bloomberg dot Com, and the Bloomberg Business app.
• 34:57
  Speaker 7: You can also listen live on Amazon Alexa from our
• 35:00
  Speaker 7: flagship New York station, just Say Alexa playing Bloomberg eleven thirty.
• 35:06
  Speaker 10: Well.
• 35:06
  Speaker 1: We also like is commercial real estate because I have
• 35:09
  Speaker 1: no idea how this business is going to shake out.
• 35:12
  Speaker 1: So we're glad that we have an informed guest joining us.
• 35:15
  Speaker 1: Barry de Ramondo, founder and CEO steel Wave. He joins
• 35:19
  Speaker 1: us live here in our Bloomberg Interactive Broker's studio. Barry,
• 35:22
  Speaker 1: thanks so much for joining us here. What what steel Wave?
• 35:25
  Speaker 1: What kind of real estate do you guys plan? And
• 35:29
  Speaker 1: where we'll start there?
• 35:30
  Speaker 12: Well, we're West Coast based, okay, right, and the triangle
• 35:33
  Speaker 12: is really San Diego south up to Seattle, to the
• 35:37
  Speaker 12: north out to Austin.
• 35:38
  Speaker 1: It's all the tech hubs, okay.
• 35:40
  Speaker 12: And it's office, it's life science, and it's it's industrial
• 35:43
  Speaker 12: all right.
• 35:44
  Speaker 2: So office, well, you can't paint it with a broad brush,
• 35:47
  Speaker 2: right you When you say office, you're talking about Third
• 35:50
  Speaker 2: Avenue here.
• 35:50
  Speaker 1: I was. We talked about Third Avenue and so now
• 35:53
  Speaker 1: I understand that he's like in the real world, Yes, Austin,
• 35:57
  Speaker 1: San Diego, stuff like that. How is office space in
• 36:00
  Speaker 1: the real world outside in New York City.
• 36:03
  Speaker 12: Well, it's got its challenges, sure, I mean, look, you've
• 36:05
  Speaker 12: got the capital markets issues with high interest rates and
• 36:07
  Speaker 12: cap rates and you know all the stuff that that brings.
• 36:10
  Speaker 12: But you've got that with multifamily or industrial. You know,
• 36:13
  Speaker 12: what you don't have in multifamily and industrial is the
• 36:18
  Speaker 12: supplied demand headwinds that you have in office. You know,
• 36:21
  Speaker 12: and you're still dealing with work from home. So you've
• 36:25
  Speaker 12: got all that stuff going on on the office sector
• 36:28
  Speaker 12: that you know is candidly created an enormous dislocation you know,
• 36:33
  Speaker 12: in that market.
• 36:34
  Speaker 2: So is office space. I mean when you say life
• 36:37
  Speaker 2: science is in tech, I'm thinking about chip fabs and laboratories,
• 36:41
  Speaker 2: but you're talking about actual office office where the same
• 36:46
  Speaker 2: thing could be done from home.
• 36:48
  Speaker 12: Yes, yeah, I mean, look on some level, you're competing
• 36:51
  Speaker 12: with someone's couch. Yeah, all right, right for office space.
• 36:54
  Speaker 12: And in order to bring people back into the office,
• 36:58
  Speaker 12: you've got to create environments that people want to come
• 37:00
  Speaker 12: to work in. And this isn't you know, post COVID,
• 37:03
  Speaker 12: This this has been happening for We started seeing the
• 37:07
  Speaker 12: trends really in the early two thousands and it's just
• 37:10
  Speaker 12: magnified over time. But you've got to create a work
• 37:14
  Speaker 12: environment that's highly amenditized, where people actually want to come
• 37:19
  Speaker 12: to work and it doesn't feel like you're at work
• 37:20
  Speaker 12: when you're at work.
• 37:22
  Speaker 1: So have you done that? With your properties and what
• 37:24
  Speaker 1: have you done, how have you done and has it worked?
• 37:27
  Speaker 12: Yeah, I mean that's that's kind of our design theme.
• 37:30
  Speaker 12: You know, we're very much of a design driven group.
• 37:33
  Speaker 12: And it's it's it's adding hospitality, it's adding residential elements
• 37:37
  Speaker 12: to it so it doesn't feel like an office building candidly,
• 37:40
  Speaker 12: you know, it's you know, we tend to cater to
• 37:43
  Speaker 12: the innovation workforce. It's all tech, media, tech, traditional tech, biotech,
• 37:47
  Speaker 12: you know, go down the list. So we're trying to
• 37:50
  Speaker 12: attract the innovation workforce back to the office. And you
• 37:56
  Speaker 12: have to create amenities such that people don't think they're
• 38:00
  Speaker 12: the office.
• 38:00
  Speaker 2: So when you say amenities, I mean to think about Google,
• 38:04
  Speaker 2: ping pong, table and snacks, right, but you're talking I
• 38:06
  Speaker 2: would guess more about fitness, you know, gyms, maybe restaurants, daycares,
• 38:15
  Speaker 2: all of.
• 38:15
  Speaker 12: That, right, you know. Cool, And it's not just the
• 38:19
  Speaker 12: run of the mill stuff. It's creating kind of differentiated
• 38:23
  Speaker 12: you know, food and beverage, you know options, you know,
• 38:25
  Speaker 12: full health centers, you know, for people to take advantage of.
• 38:28
  Speaker 12: What you're trying to do is bring people together. That's
• 38:31
  Speaker 12: really what you're doing. So it if you just create
• 38:34
  Speaker 12: a gym and stick it off in the corner that
• 38:37
  Speaker 12: that's not collaborative. What you got to do is amendetize
• 38:41
  Speaker 12: the gym, and you got yoga classes, you got stretch
• 38:43
  Speaker 12: where people actually get together.
• 38:45
  Speaker 1: Do you have any evidence that if you do that,
• 38:47
  Speaker 1: if you make that investment which impacts your returns, if
• 38:51
  Speaker 1: you do make that investment, does it work?
• 38:53
  Speaker 4: Not equivocally.
• 38:55
  Speaker 12: Look, we're at a point in the market where if
• 38:58
  Speaker 12: you don't make that investment there's no rent that will
• 39:01
  Speaker 12: clear for a car.
• 39:02
  Speaker 1: I something like that.
• 39:04
  Speaker 2: I like it. I like it because I want to
• 39:05
  Speaker 2: work in your office. I hear about office.
• 39:08
  Speaker 1: We got fish, we got food, we got flowers, we
• 39:10
  Speaker 1: got I mean, look at this office.
• 39:12
  Speaker 2: Well we have a pretty great office.
• 39:14
  Speaker 1: We got the best, I think, but out there. But
• 39:17
  Speaker 1: I just think about driving out there in real America,
• 39:19
  Speaker 1: which I do occasionally get off this island, and there's
• 39:23
  Speaker 1: so many office buildings and every single one has of
• 39:27
  Speaker 1: you know, announcing how much space they have available there.
• 39:31
  Speaker 12: And all you gotta do is look at the parking lot.
• 39:33
  Speaker 1: Yeah, yeah, that's right.
• 39:35
  Speaker 12: That's your biggest indicator. If there's no cars, guess what,
• 39:38
  Speaker 12: there's no bodies.
• 39:39
  Speaker 1: So how how do you guys in that office reels,
• 39:41
  Speaker 1: I mean, how do you think about your business? Do
• 39:43
  Speaker 1: you have you taken your return parameters down dramatically because
• 39:47
  Speaker 1: at the time you've got your properties, I'm guessing have
• 39:51
  Speaker 1: higher occupancies than pre pandemic, and your cost of capital
• 39:54
  Speaker 1: is higher.
• 39:56
  Speaker 12: I think that's right, I mean the cost of capitals.
• 39:58
  Speaker 12: I mean at the moment you got to I understand,
• 40:00
  Speaker 12: today is a dislocated market, so it's kind of upside down.
• 40:03
  Speaker 12: So you can't look at what's happening at this very
• 40:06
  Speaker 12: moment as a barometer to you know, the market in general.
• 40:11
  Speaker 12: You know, I would say a commodity office building, whether
• 40:15
  Speaker 12: it's New York or San Francisco today, if it had
• 40:17
  Speaker 12: to trade compared to say eighteen twenty four months ago,
• 40:22
  Speaker 12: is trading at forty to thirty percent of what it
• 40:26
  Speaker 12: would have traded for, not forty to thirty percent off
• 40:29
  Speaker 12: talking you know, sixty to seventy percent off.
• 40:32
  Speaker 1: Oh man, And I don't know how.
• 40:34
  Speaker 2: I don't know if that's a commodity office building, but
• 40:36
  Speaker 2: what you do is different. And also the rents that
• 40:38
  Speaker 2: you get are higher, I imagine because if you create
• 40:41
  Speaker 2: the kind of space that you're talking about. People will
• 40:44
  Speaker 2: be bidding on that space and willing to and trying
• 40:49
  Speaker 2: to outbid competitors.
• 40:50
  Speaker 5: Right.
• 40:51
  Speaker 12: Well, more importantly, there's a rent thatal clear, and if
• 40:54
  Speaker 12: you're a commodity there is no rent total clear. I
• 40:57
  Speaker 12: mean there's people think, well, I just lower the rent
• 41:00
  Speaker 12: and my occupancy is going to go up. That actually
• 41:03
  Speaker 12: doesn't work in office for commodity office. You know, for
• 41:07
  Speaker 12: if it's apartments, you lower your rents, your occupancy goes up.
• 41:10
  Speaker 12: For office, depending on what kind office you have, there
• 41:13
  Speaker 12: may not be a rent that clears. And you know,
• 41:16
  Speaker 12: it's a very bifurcated market. Excuse me. I mean if
• 41:20
  Speaker 12: you look at Hudson Yards, you know they're pushing rents up. Yeah, right,
• 41:24
  Speaker 12: But if you look at sort of mid block third
• 41:26
  Speaker 12: Avenue here, I'm not sure there's a rental clear.
• 41:30
  Speaker 7: Wow.
• 41:30
  Speaker 1: See that's that's kind of where I think the market is.
• 41:32
  Speaker 1: And that is brutal. Did they start knocking down office
• 41:35
  Speaker 1: buildings around the country.
• 41:36
  Speaker 2: I would want to work in Hudson Yards, yep. And
• 41:39
  Speaker 2: I would not want to work on that.
• 41:41
  Speaker 5: See that.
• 41:41
  Speaker 10: I know.
• 41:41
  Speaker 1: I guess before I would tell you, I don't care
• 41:43
  Speaker 1: what you want but now I have to care, right,
• 41:46
  Speaker 1: I have to care again. You're another guy who could
• 41:49
  Speaker 1: talk go all day long on this stuff. Barry di Rimondo,
• 41:52
  Speaker 1: Founder and CEO Steelwave, based on the West Coast. Whenever
• 41:55
  Speaker 1: you're back in New York, let us know you're listening.
• 41:57
  Speaker 7: To the tape catcher line program Bloomberg Market. It's weekdays
• 42:00
  Speaker 7: at ten am Eastern on Bloomberg Radio, the tune in app,
• 42:04
  Speaker 7: Bloomberg dot Com, and the Bloomberg Business App. You can
• 42:06
  Speaker 7: also listen live on Amazon Alexa from our flagship New
• 42:10
  Speaker 7: York station. Just say Alexa play Bloomberg eleven thirty.
• 42:15
  Speaker 1: I'm gonna put this on the bucket list. I have
• 42:17
  Speaker 1: to go on a cruise. Yeah you do.
• 42:19
  Speaker 2: You have to.
• 42:19
  Speaker 1: You just have to tie me one thing. You got
• 42:21
  Speaker 1: to be curious. I'm curious. I'm curious, So I'll put
• 42:25
  Speaker 1: that on the bucket list. But you know how I
• 42:26
  Speaker 1: love the cruise business. I think it's a fascinating business
• 42:29
  Speaker 1: business model. And we've got a great person to talk
• 42:32
  Speaker 1: to you about that. That's tors Hoggen, CEO and chairman
• 42:35
  Speaker 1: of Viking Cruises Tours. Thanks so much for joining us here.
• 42:39
  Speaker 1: I got a million questions here, But I'd love to
• 42:41
  Speaker 1: just get a real thirty thousand foot view from you
• 42:44
  Speaker 1: about how is the cruise business today versus pre pandemic.
• 42:51
  Speaker 1: Just it was just no industry in my mind or
• 42:53
  Speaker 1: what You're one of the industries that really got impacted
• 42:55
  Speaker 1: the most immediate and most directly. How is your industry changed?
• 43:00
  Speaker 6: Well, I can't speak so much about the industry, but
• 43:03
  Speaker 6: I can speak well about ourselves, and you can say
• 43:06
  Speaker 6: we are now back to a higher level of demand
• 43:11
  Speaker 6: than we had before the pandemic. I've never seen anything
• 43:15
  Speaker 6: like this in my life. So our ships this here
• 43:18
  Speaker 6: have been full and we are heading into twenty twenty
• 43:21
  Speaker 6: four with the I think it's seventy percent of our
• 43:25
  Speaker 6: capacity sold on the ocean business and sixty percent of
• 43:28
  Speaker 6: the river business.
• 43:31
  Speaker 5: So it's it's rebounded very nicely.
• 43:34
  Speaker 6: Now, in your introduction, we meant that you're curious, and
• 43:37
  Speaker 6: I think that's one of the reasons we're doing so well,
• 43:39
  Speaker 6: because our guests.
• 43:41
  Speaker 5: Are curious travelers.
• 43:43
  Speaker 6: They don't go on a cruise to sit by the
• 43:45
  Speaker 6: pool and get some tanned and so forth. They go
• 43:49
  Speaker 6: places to experience and to relive history and so forth.
• 43:54
  Speaker 6: And of course Europe is a very big destination for us,
• 43:58
  Speaker 6: so we hit it quite well. And we are kind
• 44:02
  Speaker 6: of contrarian. So during the pandemic, we took delivery over
• 44:06
  Speaker 6: I think was sixteen new ships and people said, you
• 44:09
  Speaker 6: must be nuts, what are you want to do when
• 44:10
  Speaker 6: this is over?
• 44:12
  Speaker 5: And this year we're filling it entirely.
• 44:15
  Speaker 2: So Viking Cruises is very different from the you know,
• 44:19
  Speaker 2: Royal Caribbean kind of Disney. It's not as you say,
• 44:24
  Speaker 2: tours about you know, drinking a pina klada by the
• 44:28
  Speaker 2: pool and it doesn't matter where you.
• 44:30
  Speaker 6: Are, don't object to drink a pino konada. But that's
• 44:32
  Speaker 6: not why our guests got no.
• 44:36
  Speaker 2: I just look at the destinations and it's more about
• 44:39
  Speaker 2: exploration for for a Viking cruises more about adventures.
• 44:43
  Speaker 6: It's exploration in the widest sense because you know, exploration
• 44:47
  Speaker 6: is seeing places you know. It's also I call it
• 44:50
  Speaker 6: the mental exploration because our guests are material travelers. They're
• 44:55
  Speaker 6: seeing most things in life, but now here's a chance
• 44:58
  Speaker 6: of sort of reliving things they'd only read about before.
• 45:02
  Speaker 6: So it's it's a it's a great thing to do
• 45:05
  Speaker 6: to do, and we are different. We are so different
• 45:09
  Speaker 6: from the others that that. A couple of years ago
• 45:12
  Speaker 6: we even dropped cruises from our name, so we are
• 45:15
  Speaker 6: now just playing Viking.
• 45:18
  Speaker 1: So you know what, what I understand about your business
• 45:22
  Speaker 1: that you know is different from some of the others,
• 45:24
  Speaker 1: is you're not just ocean. You're in you have a
• 45:26
  Speaker 1: river cruise line and expedition well, and.
• 45:29
  Speaker 2: I would imagine necessarily the focus is right.
• 45:31
  Speaker 5: Because yeah, the two, the two, the two are about
• 45:34
  Speaker 5: our equal size.
• 45:35
  Speaker 6: We started as a river company in Russia, of all
• 45:37
  Speaker 6: places that that we we we are now about fifty
• 45:43
  Speaker 6: to fifty. We're an ocean and the expedition business is very,
• 45:48
  Speaker 6: very nice too. I took my first vacation twenty five
• 45:52
  Speaker 6: years over Christmas and I went to Antarctica and somebody asked.
• 45:57
  Speaker 5: Me where we did like to go next? I really
• 45:59
  Speaker 5: like to go back. It was a phenomenal experience.
• 46:04
  Speaker 1: Talk to me about the labor because so many industries
• 46:08
  Speaker 1: have suggested that that labor is one of the real
• 46:11
  Speaker 1: challenges they face. Is that also the case with your company?
• 46:14
  Speaker 1: And if so, how do you deal with it?
• 46:17
  Speaker 6: You know, if I say no, that's a little bit
• 46:21
  Speaker 6: strong maybe, But the point is that during pandemic we
• 46:26
  Speaker 6: took care our staff. We didn't do like the others
• 46:30
  Speaker 6: and sent them all home. We took care of our
• 46:32
  Speaker 6: staff greatly, so we didn't have any problems starting up people.
• 46:39
  Speaker 6: Other travel companies have had big issues getting restarted, and
• 46:44
  Speaker 6: we didn't have that quite frankly, so I think we
• 46:47
  Speaker 6: are we are. We're quite different, you know, we are.
• 46:50
  Speaker 6: I can call it family control company, but we have
• 46:53
  Speaker 6: to financial shoulders too.
• 46:55
  Speaker 5: But but you can say we are not a conglomerates.
• 46:58
  Speaker 6: We're not part of a conglomerate, and we can generally
• 47:02
  Speaker 6: say that we you know, customers do come first. And
• 47:06
  Speaker 6: when I said customers come first, maybe I should even
• 47:09
  Speaker 6: say our staff come first. So we we we have
• 47:14
  Speaker 6: very good ratings by our guests.
• 47:16
  Speaker 5: They love our staff. Ships is one thing.
• 47:19
  Speaker 6: But the way we deal with the staff and the
• 47:22
  Speaker 6: way our staff deals with I guess the second or none,
• 47:26
  Speaker 6: it's very different.
• 47:27
  Speaker 2: I wonder a little bit about you and how this
• 47:29
  Speaker 2: company started. You briefly alluded to the fact that I
• 47:33
  Speaker 2: guess what your first cruise was river cruise in Saint Petersburg, Russia,
• 47:38
  Speaker 2: or at least the business started there. And now your
• 47:42
  Speaker 2: headquarters I believe, are in Basel, but you're clearly Norwegian.
• 47:47
  Speaker 2: So how does this all work out? How did it
• 47:49
  Speaker 2: all work out?
• 47:51
  Speaker 6: Yeah, Well, I've had a long life in the cruise
• 47:54
  Speaker 6: industry and I've done a lot of things in my life,
• 47:57
  Speaker 6: but my heart had always been and with cruises. I
• 48:04
  Speaker 6: ran a company called Royal Viking Line once upon a time,
• 48:07
  Speaker 6: and I thought it'd be nice if we could recreate
• 48:09
  Speaker 6: something something like it. It was the cruise line of
• 48:12
  Speaker 6: the times in the eighties, but somebody went ahead bought
• 48:16
  Speaker 6: it and destroyed it.
• 48:17
  Speaker 5: So I said, maybe I could have a chance of
• 48:19
  Speaker 5: recreating it.
• 48:20
  Speaker 6: But I've had a life, you know, full of ups
• 48:22
  Speaker 6: and downs, and that's called life in my vocabulary.
• 48:26
  Speaker 5: And we're very pleaseful where we are now.
• 48:28
  Speaker 6: Of course, it's been a phenomenal success, and we're doing
• 48:32
  Speaker 6: it because there's some things that make us stand out.
• 48:37
  Speaker 6: We have one brand, not part of a conglomerate. We
• 48:41
  Speaker 6: have no children on board, no casinos, no Nicholin diming,
• 48:47
  Speaker 6: and then there's only one language on board our ships,
• 48:50
  Speaker 6: so it's not this mixture of everything.
• 48:54
  Speaker 5: We are very clear as to what we do.
• 48:56
  Speaker 1: So what are some of the popular destinations right now.
• 49:01
  Speaker 6: Towards I say Europe remains popular and we have a
• 49:09
  Speaker 6: very more than half our cruises involved Europe, and you
• 49:13
  Speaker 6: can see even Europe in the winter is quite okay.
• 49:17
  Speaker 6: Now we have you can go to Norway and see
• 49:19
  Speaker 6: the Northern lights. The weather can be a little bit rough,
• 49:22
  Speaker 6: but you know, to see the Northern lights from a
• 49:25
  Speaker 6: ship in Norway is fantastic.
• 49:29
  Speaker 5: Of course. The other thing we have is we have
• 49:32
  Speaker 5: started an operation in Egypt.
• 49:35
  Speaker 6: We were there now and a couple of months ago
• 49:37
  Speaker 6: to take delivery of new ships. We have by far
• 49:41
  Speaker 6: the greatest ships on the Nile River. I think we
• 49:43
  Speaker 6: have four now and we have another for cooming. So
• 49:48
  Speaker 6: the Nile is extremely popular. As a matter of fact,
• 49:51
  Speaker 6: it's virtually sold out for next year twenty four, and
• 49:57
  Speaker 6: it's pretty much sold out for much sold out for
• 50:00
  Speaker 6: twenty twenty five.
• 50:00
  Speaker 5: Even so we have now had to open twenty twenty six.
• 50:05
  Speaker 2: That's it's an amazing.
• 50:09
  Speaker 1: Up and down the Nile.
• 50:09
  Speaker 2: It's the only place I've ever gone on a cruise.
• 50:12
  Speaker 5: I was there.
• 50:12
  Speaker 6: It was forty two degrees centigrade and that's a FO
• 50:15
  Speaker 6: one hundred and four far a night or something. It
• 50:17
  Speaker 6: sounds terrible, but the heat is dry and to be
• 50:22
  Speaker 6: on the Nile and have the wind, the breeze in
• 50:26
  Speaker 6: your in your face.
• 50:27
  Speaker 5: It's it's so we decided, hey, we can do this
• 50:30
  Speaker 5: in August.
• 50:32
  Speaker 2: How has the Russian invasion of Ukraine at all impacted
• 50:36
  Speaker 2: your business?
• 50:37
  Speaker 5: Yeah, we have. As I said, we start our business
• 50:40
  Speaker 5: in Russia, so we still have five ships there. They're
• 50:44
  Speaker 5: doing nothing.
• 50:45
  Speaker 6: Of course, we have to take care of our staff
• 50:48
  Speaker 6: so that so that when this will reopen, whenever that
• 50:52
  Speaker 6: will be, they'll be ready to go. Of course they
• 50:55
  Speaker 6: need they need to feed their families too, So it's
• 51:00
  Speaker 6: have five ships doing nothing is not fun. It it's
• 51:04
  Speaker 6: not such a large part of our business anymore. And
• 51:09
  Speaker 6: we have one ship in Ukraine. It has been in Odessa.
• 51:13
  Speaker 6: It has still is there at least the last things
• 51:17
  Speaker 6: I saw on television.
• 51:20
  Speaker 5: But who knows. It's a terrible situation for everybody involved.
• 51:25
  Speaker 2: What about the China situation? Have you got I know
• 51:27
  Speaker 2: you have Chinese flags over some of your ships. Are
• 51:30
  Speaker 2: they cruising?
• 51:32
  Speaker 6: Yes, we started in twenty nineteen or a couple of
• 51:37
  Speaker 6: years before that. In twenty nineteen we had four river
• 51:43
  Speaker 6: ships in Europe with Chinese staff, Chinese food and Chinese
• 51:51
  Speaker 6: sign it and the guests are all one language. That's
• 51:55
  Speaker 6: all the mantra we have when we do something. It's
• 51:58
  Speaker 6: important that people travel like the people. Then we have
• 52:01
  Speaker 6: had one of our ocean hips that have been part
• 52:04
  Speaker 6: of become part of a joint venture with China Emergence
• 52:09
  Speaker 6: that is now operating between between Shanghai and Japan, and
• 52:15
  Speaker 6: we'll be going between chen Chin and Vietnam. But you
• 52:20
  Speaker 6: can say the startup after Code and China as being
• 52:24
  Speaker 6: a bit slow, but of course when you look at
• 52:28
  Speaker 6: the potential for the Chinese market, it's huge. We have
• 52:32
  Speaker 6: had we have had the consulting firms assessed what is
• 52:37
  Speaker 6: huge mean, and when we look at it, it's huge.
• 52:41
  Speaker 6: So it's just a matter of being prepared to take
• 52:43
  Speaker 6: some losses for a couple of years and then we'll
• 52:46
  Speaker 6: be all through the races.
• 52:47
  Speaker 1: All right, tours, We're gonna have to leave it there.
• 52:48
  Speaker 1: But thank you so much. We really appreciate getting your time.
• 52:51
  Speaker 1: Fascinating discussion towards Hagen, CEO and Chairman of Viking. It's
• 52:56
  Speaker 1: not Viking cruises, it's Viking, so we're going to go
• 52:58
  Speaker 1: with that. That makes a lot of it's a fascinating discussion.
• 53:01
  Speaker 1: We appreciate getting some of towards his time.
• 53:04
  Speaker 2: Thanks for listening to the Bloomberg Markets podcasts. You can
• 53:07
  Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever
• 53:11
  Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
• 53:14
  Speaker 2: at Matt Miller nineteen seventy three.
• 53:17
  Speaker 1: And I'm Fall Sweeney. I'm on Twitter at pt Sweeney.
• 53:19
  Speaker 1: Before the podcast, you can always catch us worldwide at
• 53:22
  Speaker 1: Bloomberg Radio