Why Tracy Can't Ship a Teddy Bear from Hong Kong to the U.S. Right Now

Tracy Alloway (0:10)

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

Joe Weisenthal (0:15)

And I'm Joe Weisenthal.

Tracy Alloway (0:18)

Joe, do you remember that time I bought an actual barrel of oil? Or I tried to.

Joe Weisenthal (0:24)

Yeah, I thought about that. And you know what's cool? We used to sit right next to each other. I mean, now we're on the opposite sides of the world.

But that was fun, we didn't appreciate it. That was great. We actually got to work next to each other. And I remember you bought some oil and you kept it on your desk for a while.

Tracy Alloway (0:37)

Yeah, well, I didn't really want to leave it in my apartment because I'd heard and learned that crude oil evaporates into the air and it's not very safe. So obviously I took it to the office and I put it on the desk that was right next to you.

But the whole point of that- Yeah, the whole point of that, actually, you know, I heard that the little thing of oil fully evaporated after a few years. It's totally gone now. It's kind of crazy.

Joe Weisenthal (1:03)

Oh man, wait, where did it go?

Tracy Alloway (1:05)

Into the air. Oh, someone else at Bloomberg took it and then it evaporated. So I'm sure it's in the trash now.

Anyway, okay, that was a very strange tangent. Okay, the point of doing that story, to actually try to buy a barrel of oil was to show exactly what was going on in a key commodities market in crude oil, of course, at a really interesting time. This is when we had some interesting patterns in the market, the contango structure, where in theory you could buy oil and sit on it and forward sell it to someone else, and you could pocket the difference and make some money just by buying oil and then storing it for a while. Do you remember that?

Joe Weisenthal (1:48)

I do. That was right. That was like the whole point. It wasn't just that you wanted to learn how to transfer oil, but there was like a carry trade or a contango trade or something going on.

Tracy Alloway (1:58)

So, you know, I've taken an interest this year in logistics and transport and the shipping chaos that we've seen. We've done a number of episodes at this point on the gridlock in global shipping.

Joe Weisenthal (2:11)

Yeah, this is the topic du jour. I mean, I think there are many topics, but, you know, all the interesting stories this year have not been really in anything related to liquid markets or anything classically macro, but in micro, how does shipping work? How does home building work? How do saw mills work?

Anything sort of like real on the ground economy is where it's at in 2021

Tracy Alloway (2:36)

That's right. I'm so glad you said micro because we are going to be going very, very micro in this episode. So in the spirit of actually buying a barrel of oil or some oil, earlier this year, around January, I set out to actually ship something via container from Hong Kong to the West Coast of the US.

Did I tell you about that?

Joe Weisenthal (3:00)

You brought it up on our interview with the Flexport CEO.

Tracy Alloway (3:02)

That's right, yes.

Joe Weisenthal (3:04)

But we didn't really get into what happened. I don't even know. Did you ship it? I don't even know what happened.

Tracy Alloway (3:09)

Yeah, okay, so spoiler alert. We didn't ship it in the end. It turns out that the gridlock in global shipping is so extreme that I couldn't make this work, and we tried for about four or five months, and I just kept getting bumped from ship to ship to ship. So I gave up eventually.

Joe Weisenthal (3:25)

I'm sorry, but I know that all these ships are packed. However, I refuse to believe that there wasn't space for a teddy bear on one ship.

Come on.

Tracy Alloway (3:36)

Okay, we're going to get into exactly what happened. We're gonna go super micro, very granular, and talk about what it is actually like to try to ship something via container from the east to the west at the moment. And I think it's gonna be a really enjoyable conversation in the spirit of gonzo financial journalism.

Joe Weisenthal (3:57)

Great, let's do it.

Tracy Alloway (3:57)

All right, so our guests on this episode are two people that were very, very helpful to me in trying to arrange this experiment. They spent an enormous amount of their time on this, and I feel really bad that we couldn't make it work. But we're gonna be speaking with Anton Posner. He's the chief executive officer at the Mercury Group and Margo Brock. She's a president at Mercury Group as well. So Anton and Margo, thank you so much for coming on.