Flexport CEO Says a ‘Great Recession’ Is Here for Global Shipping

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)

So Tracy, it seems, it seems...

Tracy Alloway (0:20)

You're gonna jinx it.

Joe Weisenthal (0:21)

I know. It seems like the supply chain, it seems like the supply chain crisis that people are, it kind of feels like that's over in my opinion.

Tracy Alloway (0:31)

I mean, I definitely think we're seeing some of the bottlenecks that we spent the better part of 2020 and 2021 talking about. Those are starting to ease.

Some of the import boom into the US seems to be easing. There is this general shift from consumer goods to services, but things are still relatively busy. But I think they've settled down enough that we can start to talk about what we have learned from this whole saga.

Joe Weisenthal (0:58)

Absolutely. I think so too. I mean, there are definitely, you know, you still see like occasionally specific products will be in shortage.

There are certain types of equipment. And if you read the surveys of like the ISM or PMI surveys, you still see manufacturers talk about difficulty getting certain things. Electrical equipment seems to be up there. But the sort of like generalized shortage of everything, those like crazy lines we were seeing of boats at the ports and trucks at the ports and all that stuff, I kind of think that story is over.

Tracy Alloway (1:28)

Right. And one of the few good things that tends to come out of crises in general is that they offer you this opportunity to look at what exactly went wrong and why were things designed poorly? Is there stuff that we can do better in the future? And so now that some of these supply chain issues and transportation and shipping and logistical issues are starting to ease, we can go back and think about what we've learned, what we can do differently.

Joe Weisenthal (1:58)

And you raise a really good point, and which is that you have some crisis and there's always like, okay, what should we fix? What could be done better? But on the other hand, what about maybe not fix anything? Because once in a century pandemic, is that a good reason to completely upend the way the world does business? To me, it's like, let's just put it this way, it's not obvious to me that we won't eventually just return to 2019 pattern.

Tracy Alloway (2:20)

Well, this is the other question I have, because the industry that we've been talking about, the shipping and logistical industry, this is already incredibly cyclical, right? So do they just look at 2020, 2021 and say like, well, that was a crazy cycle. Now we can get back to our normal cycles and just do what we were doing before.

Joe Weisenthal (2:38)

And well, we mostly talk about the pandemic and the COVID disruptions. There are other developments globally. There's the ongoing war in Europe. There's a heightening tensions between US and China.

Politically, there's the energy cost surge in Europe, which may not ease for a long time. So there are other things going on. Anyway, throughout the crisis, we've talked to this guest multiple times. So perfect time to get him back in. We are going to be speaking with Ryan Petersen. He is the founder and co-CEO of Flexport. So Ryan, thanks for coming back on Odd Lots.

And also, are we right? Like is the crisis phase of this over?

Ryan Petersen (3:16)

Well, it depends who you are. I think for the average consumer in business, yeah, more or less passed now. If you own ships or planes, the crisis might just be starting right now.

Joe Weisenthal (3:25)

Oh, really?

Ryan Petersen (3:26)

Because the prices of food and food prices just kind of at the price of price, going down 80%. They were all making a lot of money. And now we got a speed run through one of those cycles that you're talking about that usually take 20 years and we did it in two, two or three. And so right now, I think we're looking at the opposite problem of excess capacity. There's too many, there's going to be too many ships and perhaps too many planes relative to the demand to ship things. And so-

Joe Weisenthal (3:50)

Tracy and I have been joking that maybe our odd lots is for 2023

It's just going to be take all the episodes we did in 2022 about how there's a shortage of certain prices and then just flip the signal to negative. So, oh, plunging prices over capacity. We'll just do all the episodes over again and change the direction arrow.