- Welcome to Modes, a trucking newsletter by Business Insider’s Rachel Premack.
- This is my full interview with Joe Weisenthal, who co-hosts Bloomberg’s Odd Lots podcast and a daily show on Bloomberg TV.
- You can subscribe to Modes emails here.
- See more stories on Insider’s business page.
Hello Modes readers!
Here is my full conversation with Bloomberg’s Joe Weisenthal. You probably know him as @TheStalwart on Twitter or as the co-host of Bloomberg’s Odd Lots podcast. I was excited when Joe accepted my offer to get on the phone and talk about trucking and non-trucking topics. Here’s our conversation.
Beer is bad
Rachel: I wanted to start with something completely unrelated to trucking or freight. You’re one of the few people who agreed with my take that beer is bad, it seems. And I just wanted to say thanks for taking the right side on this.
Joe: Wait, wait. What was the thing that I agreed with?
Rachel: So I tweeted that there is no way that anyone actually likes beer, and you retweeted that-
Joe: Yeah, oh my God.
Rachel: And it kind of went viral, which was both good and bad.
Joe: Beer is foul. Beer is foul, and I want it on the record that I agree. My view in general is that I think most alcohol is just really foul. But yeah, beer sucks because it doesn’t taste good and it fills you up and makes you feel gross.
The costs of allowing the economy to falter
Rachel: I guess going back to the topic, I feel like you’re always one of the first to speak out on what’s going to be the driving conversation for the next few weeks. You were one of the first to speak out on lumber. When the yield curve inverted, I think I learned about it through your Twitter feed and through your coverage. And obviously you have the Bloomberg Terminal at your hands, but how generally do you spot these trends so early? And what’s your secret behind that?
Joe: Well, it’s very flattering to say that I spot them early, because I’m not often sure that I do, but I appreciate your saying it. I feel like I try to take in a broad range of news sources. I try to consume a lot.
But also, I think I have a framework for how I think about these things. Even going back to last year, during the worst of the COVID crisis, it became apparent to me that the essential challenge was how do we maintain economic capacity so that when the lights come back on and we all go back outside and we resume a normal life, we have an economy to use. It’s like, “Okay, it’s great. Everyone wants to go back out to restaurants, but that doesn’t get us very far if the PPP hadn’t happened and we had let more restaurants collapse.” That seemed like the intuitive thing.
People always talk about, “Well, how are we going to pay for this? How are we going to pay for all this spending?” I’ve always thought that that was exactly backwards. When you look at everything, what we ended up paying for very severely is the downturns.
And I remember this was very stark in the Eurozone crisis in, say, 2010 and 2011. It seemed like this thing where we’re like, “Oh, well. We have to save money. Like posterity. We have to get our books balanced for some reason.”
But the price we pay is a generation of people without work — literally a generation of young people, maybe going 10 years without sustained employment. The societal costs to something that like that are just massive.
People always talk about, “Well, what are we going to do for the children?” And, “Are we worried about all this spending and what that means for them?” But do children want their parents to not have jobs and to not be able to pay for their healthcare and things like that?
So I think I’ve always just started from this perspective that the way we think about costs in this society are not just wrong, but 180 degrees backwards. So thinking about some of these areas like lumber or semiconductors, which has been one of my obsessions for the last few months, these things have fit into a framework, I guess I would say, that feels very comfortable to me. And what are the prices that we’ve paid for letting supply side capacity diminish over the last decade?
Rachel: The supply side thing, I think that’s really interesting from what we’re seeing in trucking right now. In 2018, when I started covering the industry, it was on fire. There were crazy pay increases. There was a lot of demand for truck drivers and there were quite a few publications that were talking about a truck driver shortage. Then there were a lot of truck drivers enter the trucking labor market. And in 2019, we saw a massive increase in trucking bankruptcies. There were hundreds of bankruptcies in 2019 of trucking fleets, including one of the largest trucking bankruptcies ever, at the end of 2019.
And then of course, everything that happened in 2020 contracted the industry even more. And now we’re in 2021 and the lights are back on, so to speak. There’s now this incredible demand for truck drivers and for trucks.
I feel like the industry would just work better if there were fewer drastic ups and downs and if things were just a little bit more stabilized. But just the way that the labor market works for trucking is that you’re paid per mile, it’s just a stressful day by day, even hour by hour kind of job.
Joe: I was just going to say, I think these ups and downs, they proved to be extremely costly over the longterm in ways we don’t appreciate at the time.
I’ve been talking to the last few days about the home builder market, which I think has seen similar dynamics. But look, one of the factors is just simply the fact that people who knew how to build homes over the last 10 years left the business because there wasn’t that much home building going on.
And they were like, “Well, why am I going to stay here?” And now everyone wants to buy a home and there are multiple models next to it, including lumber. Another one is simply just the lack of people that have any experience in putting together a home and we’re paying that price for it now.
An interesting point about labor shortages: Why do we just assume McDonald’s should be able to hire so easily?
Rachel: I’m curious what you think about the conversation when we say there’s a blank labor shortage or a blank whatever shortage. For things like fast food workers, for instance, if fast food companies are complaining that they can’t hire, many people are now responding like, “Well, did you try raising the wages or anything like that?” I’m curious what your thoughts are around that whole dialogue.
Joe: I would say a few things on the concept of a labor shortage, both of the fast food, low paid realm and more broadly.
So obviously, part of the answer is just higher wages and we know that because there was this great article in, I think it was about a week ago in one of the Pittsburgh business newspapers. You got to check it out.
Basically, there are some companies that are doing well hiring. What’s the secret? And it’s that one weird trick, they raised wages! So, there is obviously an element of that.
Joe: But I think even deeper, the fascinating thing is we just assume that if a restaurant puts out a help wanted sign and they don’t get many applicants that something must be broken, or maybe we did something wrong with policy or maybe UI was too high or something like that.
The deeper question that fascinates me is, why do we assume that restaurants should always be able to hire easily? We just accept that that’s how the economy works. That if you put out a help wanted sign for a very low paying job, that you get this flood of applicants and we don’t even question it.
If you were doing a tech startup and you would put out a, “We’re trying to hire a CTO.” You would expect to have a very difficult time hiring a CTO, right? They’re not everywhere, highly-talented engineers. I know it’s a competitive area. So there are these certain things that we just seem to take for granted as like, “Oh, in a normal economy, you can always hire someone cheap to work at McDonald’s or in an Amazon warehouse or something like that.”
I get that that’s been the case for a long time, but it’s still this odd assumption that almost nobody on either side of the UI debate actually challenges like, “Well, why do we just assume this?”
What are the things that we just think of as the laws of nature about how the economy works and why do we assume that that’s always true? I think this is very revealing for that.
Rachel: That’s really interesting about taking for granted that there’s always going to be someone wanting to work for $8 an hour, $10 an hour at McDonald’s or some other fast food place. And it is true. We just assume that would always be the case.
Joe: Right. And normally it is the case, except if you go to, I think, in countries where there is much less inequality, I don’t think they take these assumptions as much. I think you pay, from what I understand, a lot more for a taxi drive in Tokyo than you do in New York, because other economies haven’t stratified their labor market in exactly the same way such that there are people that always just have to take these relatively low-paying jobs.
The end of the yuppie lifestyle. (It’s time to learn how to hang up your own picture frames!)
Rachel: Going back to McDonald’s again, my understanding is that the Big Mac in Stockholm, that whole meal is $10 or something extraordinarily expensive. I’m sure it’s a much better paying job and that the labor costs dials into that.
Joe: Right. There’s certain expectations of the modern yuppie lifestyle, like being able to get a burrito bowl at Chipotle and being able to take an Uber, et cetera. You see numerous people on Twitter these days complaining about the price of Uber. It has gone up a lot, a lot of people have noticed that.
But there is this weird expectation that the pre-crisis price of things, well, that was the right thing. Now we’re in a potentially different regime, and so that must be broken. I don’t know why we get that whole impression in the first place.
Rachel: That’s really interesting. There’s this really good article by Derek Thompson at The Atlantic, that was talking about how the gig economy has enabled this weird new type of economy where we have servants, essentially. The modern yuppie, they can just outsource all of these things that, frankly, one should be able to do themselves, such as make their own lunch, make their own dinner, hang a frame on their own.
Joe: We could go to a world in which people are expected to have to do that, or pay a lot. We haven’t had that world in a long time. People who have money, they assume that they can just get childcare whenever they need it, or if they want to go out for the night, that there’s a babysitter. Well, there’s no iron law of economics that says those things must always be available.
The most interesting freight indicators to track
Rachel: Going back to trucking and freight, how often do you track freight indicators and what are the key numbers you look out for?
Joe: Wow. That is a really good question. I’ve been super fascinated lately by everything relating to the whole process of the container shipping and the process of a container that starts somewhere in China. Just this morning, I was looking at containers, the inbound and outbound container numbers from the Port of Long Beach.
Those numbers are super interesting right now because there’s always more inbound containers. We always import more from China than we export. Those numbers got so out of whack, especially last year when we were spending all of our money on goods, almost none of it on services themselves.
I wrote about this this morning, actually, about this weird situation in which there was so much demand for goods from China and so many factories turning out so much stuff, that the ships turned around to get the next order, but they didn’t even bring the containers back with them.
So, the ships got to China and there were all these goods, except there weren’t any containers there to ship them back — which is the root of our current supply chain nightmare, on some level. It’s simply that there’s always a gap between inbound and outbound container shipping, but it’s gotten really crazy. Anything relating to that has been super interesting to me lately.
Joe: On the pure trucking side, I guess my observations are a little bit more anecdotal, but we were talking about lumber and the one entities in the lumber ecosystem that really should be printing money right now are the sawmills. They have so much market power, more power than even the timber companies.
I forget which company reported earnings about two weeks ago, and they missed estimates although demand was crazy. But there literally just wasn’t enough trucking capacity to get the lumber from the sawmills to the lumberyards.
It feels like we’re in a moment where so many supply chain disruptions are building upon each other and really compounding right now. And I don’t think there’s some obvious timeline for it to resolve.
Economists have no clue what’s going on!
Rachel: I definitely agree. In 2018, we saw a lot of earnings reports that mentioned, “Oh, XYZ is not doing well because of trucking capacity.” It’s like we’re going back to that whole theme. The container shipping is particularly interesting because with air freight, trucking and, relatively, trains, these things can resolve somewhat quickly if there’s a capacity issue — if you have the employment numbers right.
But ocean shipping is so fascinating to me because the timescale is so much longer. To get from point A to point B is three to four weeks. Whereas with trucking, it’s a day. Or with air freight, it’s a few hours. When an issue builds up in the ocean side of things, it just takes so long to resolve.
Joe: That’s a great way to put it. Because we’ve been covering this more as like, “Oh, this is going to be the top.” Like, “Okay, we do a podcast episode about lumber. Great. But I guarantee that means the day it comes out, lumber prices are going to peak.” And it didn’t, it kept going.
I think, with a lot of these things, the corrective effect is super slow moving and it just cannot be switched on a dime. It’s really hard to predict supply. It’s really hard to predict demand.
What do you think about this week’s Modes? Send me an email with your thoughts!
You look at, even economists forecasts right now, and I’m obsessed with the daily economic data releases, the economists are getting things wrong left and right. They totally whiffed on the March job number that came out in April. They totally whiffed on the April inflation number.
We’re in this very weird moment, for obvious reasons. And the economists are whiffing, they have a very hard time forecasting.
Rachel considers becoming a mattress blogger
Joe: A really great Bloomberg story that some of my colleagues did, they focused on this mattress company. The price for the foam in the mattress is going up. Traditional economists would say, “Okay, that should curb demand somewhat. And then that balances out.”
It has the opposite effect because what happens then is the mattress companies start ordering even more because they’re more afraid of shortages down the road. You have this situation where there’s already an industry facing shortage and then everybody ramps up their orders because they’re so worried about not being able to meet their commitment. Then, that exacerbates it even further.
And then you figure, okay, you’re on the other side. Let’s say you’re a factory in China and you make Styrofoam for mattresses. How do you then go about planning or forecasting or trying to figure out how much to manufacture for the next quarter? You don’t know if these orders represent a new trend. You don’t know if the increases are a one-off. So I think everybody right now, it’s like the instruments that they use. Like if you’re in pilot and you’re trying to fly with some instruments, the instruments that they use are just totally giving off all kinds of wild signals.
Rachel: Yeah. That’s interesting. I feel like, generally speaking of mattresses, the mattress industry is weirdly fascinating. I feel like every time I read a story… okay, I’m not often reading a story about mattresses because of there are no mattress reporters. But anytime I hear or read a story about the mattress industry, it’s always interesting.
I’m definitely going to read that story you just mentioned. And then there’s that one, I think in Fast Company, about the whole affiliate marketing mattress scheme.
Joe: I don’t know him at all, but apparently the guy who started Casper went to the same college as me. He went to University of Texas. Apparently, he’s just a mattress nerd. His whole life he wanted to figure out how to get students mattresses.
So it’s like, man, that’s the prize. You obsess on something that most people don’t think about more than five minutes every three years. And he just became a total mattress nerd and got this wild company.
But also, you mentioned there’s no mattress beat, but if someone became the must-read mattress Substack, it would probably do pretty well.
Rachel: I know, and it makes me want to switch from trucking to mattresses. No, I don’t think I could really pick up. Maybe, I don’t know.
Joe: I think there’s this moment where you could go super niche and detailed on some industry that no one thinks about. You could probably make them really interested in it.
Rachel: The other interesting thing I know about the mattress world is that obviously they’re all free guaranteed returns or if you don’t like it within 90 days, you can ship it back. But that whole thing is so complicated because you can’t really fit it back into the box. And then where do the mattresses go? Do you donate them? The reverse logistics of that is very complicated.
Joe: Yeah, there’s all kinds of questions, like bed bugs. They really don’t want to like resell used mattresses, so that creates all kinds of issues too. You probably really could be a highly successful mattress blogger if you wanted to.
Rachel: I don’t know. Now I’m thinking about it. I’m really thinking about it.
Joe: I will sign up for your Substack if you publish it. If you do a spin-off project.
Rachel: I’ll think about it. I’m considering it.
How to avoid burnout, according someone who ‘really likes being online’
Rachel: Then one last question, just from journalist to journalist, not related to trucking. Obviously you go at a pace that I think most journalists would actually complain about. I read The New York Times article about your blogging pace and I obviously I follow your Twitter. And I’m just curious, just because there is that increased conversation right now about burnout. How do you avoid it? And were you always like this? And have you slowed down at all since that piece came out?
Joe: I do have to slow down at some point soon. There’s really no question about that, one of these days.
I’m a poster and I really like being online. I really like Twitter. I really like the fact that in this world we can just put our thoughts. I find it very fun. I’ll just say that.
I have gotten burned out a few times and the good news about having gotten burned out a few times is I’m able to recognize it, so I can get to a point where like, “Wow. I hate my life. This is miserable. I don’t like getting up in the morning. What am I doing?”
The nice thing about having been through that cycle at least a handful of times in my life is like, “Oh right, that’s this again?” I recognize that rather than doing something dramatic like quitting my job and moving to a ranch in West Texas, maybe I should at least take a week off first and then rethink things.
Rachel: That makes sense.
Joe: I think burnout is real. People really should watch it, but I also think that there are small steps you can take first to really identify what you feel and then come back. If you’re still burned out, then maybe it’s time to do something else.
But I think I would recommend to anyone that at least they take a moderate step and do take vacation days and days where you can sleep in. It really does make a difference.
Joe deems Modes ‘cool’!
Rachel: Thank you so much for talking with me, Joe. Before I turn off the recorder, is there anything else that I didn’t ask about or anything else that you’d want to mention about the trucking or freight world?
Joe: I would just say, in my career, I’ve mostly covered markets and when people ask me, “Well, what does markets mean?” I always say, “Oh, it’s a line that goes up and down on their chart. Where the X axis is time and the Y axis is price and anything that fits that bill is market.”
I have to say, for the first time in my career, it really feels like all the interesting action is truly on the real side. Less on what’s going on on the chart and what actually is going on in terms of, how does the mattress company source its foam or whatever. It feels like this is a moment in which all the volatility and all the things I want to talk about are more on this — basically the stuff that you’re covering and I think it’s really cool.
Send me a note with your thoughts at [email protected] and be sure to subscribe to Modes for next week’s edition.
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