Attacks in the Red Sea Are Reconfiguring Global Trade Again

Joe Weisenthal (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Joe Weisenthal.

Tracy Alloway (0:15)

And I'm Tracy Alloway.

Joe Weisenthal (0:16)

Tracy, it's time to return to our favorite topic of supply chains and freight.

Tracy Alloway (0:21)

There's no escape. You can't escape the supply chain. Yes, you are absolutely right. We had, I feel like, a relatively quiet year in 2023 in terms of disruptions, but towards the end of the year.

And now into 2024, supply chain disruptions are back. They're everywhere. Everyone's talking about them.

Joe Weisenthal (0:43)

There is indeed a new acute source of supply chain stress, and that, of course, are the attacks from the rebels in Yemen, the Houthi rebels disrupting trade through the Red Sea. We're beginning to see the return of those maps that we see, where this is where the ships were a month ago, and this is what the shipping lanes look like today.

Not unlike, what was it, in the Suez two years ago, but yes, supply chain disruptions, at least on some level, are back a little bit.

Tracy Alloway (1:12)

Yeah, you know it's bad when people are breaking out the maps with the ships and also the container rate charts.

Joe Weisenthal (1:17)

Yes, container rate charts.

Tracy Alloway (1:18)

Those are making the rounds again, so we've seen some container rates start to jump, and we can get more into that in a few minutes. For the record, Joe, I am not shipping anything at the moment, nothing from China to Europe, so I am unaffected by this particular development so far.

Joe Weisenthal (1:35)

It's only a matter of time. Also, listeners should know that every time we're in public and people come to us, one of the first questions they always ask Tracy is usually about that. They're like, do you have any furniture stuck on a container ship somewhere? It's either that or questions about the coal in Tracy's basement. It's not 50-50.

Tracy Alloway (1:52)

Yeah, sometimes I feel like my life is actually a logistics company and it's just dealing with commodities like coal and lumber and moving furniture.

Joe Weisenthal (1:59)

Well, yeah, and we talked to Brad Jacobs recently and we talked all about your building supply and needs for your house.

Tracy Alloway (2:05)

But even before the Red Sea developments, we actually wanted to do another shipping slash freight episode because if you remember this time last year, we did quite a few episodes, I think, about the coming difficulties, challenges, bloodbath, choose your preferred noun there, coming to freight and shipping. And the idea was that after the big boom during the pandemic, when container rates, trucking rates, basically everything exploded and became very, very profitable, that we were now going to see the sort of downturn. And I think that has come to fruition.

I think 2023 was an extremely bad year for a lot of shippers and truckers. But we're going to get into that as well because in addition to the disruptions, we're at this sort of like weird moment in time where we're waiting to see whether or not there's a recovery.

Joe Weisenthal (2:57)

Yeah, you know, it's funny, even without disruptions, as you mentioned, one of the first things that we learned when we started getting interested in this topic is that freight trucking in particular is like hypercyclical.

Tracy Alloway (3:09)

So cyclical.

Joe Weisenthal (3:10)

So you had this already pretty crazy cycle for the US economy between 2020 and 2023, maybe now, and it was even crazier for freight. You know, another thing that happened last year too is we saw the demise to varying degrees of various freight tech companies because, like ourselves, we got interested in freight. I think a lot of VCs did, and you see a lot of, oh, there must be a way to solve all of these problems with software and AI, and I think a lot of these problems continue to persist.

So there's just a lot of freight stuff we got to catch up on.

Tracy Alloway (3:42)

Yeah, let's do it.

Joe Weisenthal (3:43)

Well, I'm very excited because a multi-time guest, I think the first guest we had who talked about trucking, we have him back and in studio, we're going to be speaking with Craig Fuller, founder and CEO of FreightWaves. So Craig, thank you so much for coming back on Odd Lots.

Craig Fuller (3:58)

Joe, Tracy, great to be here again.

Joe Weisenthal (3:59)

There really is a lot to talk about, but why don't we start off with the disruptions in the Red Sea? What do you characterize as you see it, the situation right now?