WEBVTT NOTE This file was generated by Descript 00:00:00.000 --> 00:00:04.950 Farid: We are very tight when it comes to vessels, to equipments to everything else. 00:00:04.950 --> 00:00:11.820 So if we have another geopolitical issues that the, the war in Middle East, you 00:00:11.820 --> 00:00:14.525 know, spread out then we are in real pain. 00:00:18.992 --> 00:00:21.782 A key component of the modern world economy, the chemical 00:00:21.782 --> 00:00:25.332 industry delivers products and innovations to enhance everyday life. 00:00:25.852 --> 00:00:29.842 It is also an industry in transformation, where chemical executives and 00:00:29.842 --> 00:00:33.462 workers are delivering growth and industry changing advancements while 00:00:33.462 --> 00:00:37.212 responding to pressures from investors, regulators, and public opinion. 00:00:37.762 --> 00:00:40.692 Discover how leading companies are approaching these challenges 00:00:40.702 --> 00:00:42.322 here on The Chemical Show. 00:00:42.772 --> 00:00:46.122 Join Victoria Meyer, president of Progressio Global and 00:00:46.132 --> 00:00:47.552 host of The Chemical Show. 00:00:47.807 --> 00:00:52.017 As she speaks with executives across the industry and learns how they are leading 00:00:52.017 --> 00:00:57.607 their companies to grow, transform, and push industry boundaries on all frontiers. 00:00:57.937 --> 00:01:00.197 Here's your host, Victoria Meyer. 00:01:02.797 --> 00:01:04.327 Victoria: Hi, this is Victoria Meyer. 00:01:04.357 --> 00:01:08.077 Welcome back to The Chemical Show where Chemicals Means Business. 00:01:08.357 --> 00:01:13.037 Today I am speaking with Farid Tahvildari, who is the managing 00:01:13.037 --> 00:01:14.897 director at NUCO Logistics. 00:01:15.257 --> 00:01:19.037 Farid has a wealth of experience in chemicals and marine logistics, 00:01:19.277 --> 00:01:20.597 as well as some other places. 00:01:20.937 --> 00:01:25.917 And he is here today to talk about what's happening in shipping, really 00:01:25.947 --> 00:01:30.417 with a focus on the impact of the Red Sea ,Panama Canal, and more. 00:01:30.717 --> 00:01:32.397 So Farid, welcome to The Chemical Show. 00:01:33.486 --> 00:01:35.061 Farid: Good to be here today, Victoria. 00:01:35.061 --> 00:01:36.036 Thank you for having me. 00:01:36.052 --> 00:01:36.166 me 00:01:36.472 --> 00:01:37.612 Victoria: Thank you for joining me. 00:01:37.912 --> 00:01:42.922 So let's just start by telling us, tell us a little bit about yourself and how 00:01:42.927 --> 00:01:45.262 you got involved in the shipping industry. 00:01:46.141 --> 00:01:46.321 Farid: Well, 00:01:46.321 --> 00:01:47.431 that's an interesting story. 00:01:47.461 --> 00:01:53.461 Uh, My background is in finance and in previous life I was involved with 00:01:53.461 --> 00:01:58.356 the hospitality industry, so managing hotels acquiring new properties, 00:01:58.356 --> 00:02:02.626 managing restaurants and nightclubs, and even was involved with the 00:02:02.626 --> 00:02:04.756 transition of, casino in Vegas. 00:02:04.846 --> 00:02:09.826 But um, Noushin and I, we started NUCO Logistics back in 2008. 00:02:10.156 --> 00:02:15.976 And initially uh, Noushin was pretty much carrying the load till 00:02:15.976 --> 00:02:17.686 uh, NUCO could stand on its own. 00:02:17.956 --> 00:02:23.261 And in 2014 that was the time that we realized that I need to join the company. 00:02:23.261 --> 00:02:27.521 Even though finance for different industries and different companies 00:02:27.521 --> 00:02:31.451 is pretty much the same, but it was a whole different industry for me. 00:02:31.451 --> 00:02:35.561 So it's like going back to school and learning the new lingo and 00:02:35.566 --> 00:02:39.731 learning about all the variables that impacts the logistics industry. 00:02:40.011 --> 00:02:43.711 Of course with COVID pandemic happening, it was like a crash course 00:02:43.741 --> 00:02:45.331 for all of us to learn more about it. 00:02:45.381 --> 00:02:49.191 Even though I've been involved with new logistics since 2008, but I got 00:02:49.191 --> 00:02:54.781 really heavily involved starting 2014, and I spent a lot of time learning 00:02:54.831 --> 00:02:57.376 talking to our vendors, to our clients. 00:02:57.586 --> 00:02:59.896 And of course, Noushin was my uh, TA. 00:03:00.256 --> 00:03:02.086 So definitely I learned a lot. 00:03:02.091 --> 00:03:06.706 And I still every year I learn new things about this industry. 00:03:07.962 --> 00:03:08.262 Victoria: Yeah. 00:03:08.442 --> 00:03:08.772 Awesome. 00:03:08.802 --> 00:03:09.252 That's great. 00:03:09.252 --> 00:03:15.932 And for those listeners who don't know, Farid is married to Noushin Shamsili, 00:03:16.192 --> 00:03:18.472 who is the CEO of NUCO Logistics. 00:03:18.472 --> 00:03:20.632 So basically his wife 00:03:21.481 --> 00:03:21.577 Farid: I 00:03:21.631 --> 00:03:22.381 I'm my boss. 00:03:22.381 --> 00:03:22.765 there you go. 00:03:23.051 --> 00:03:23.381 Victoria: Yeah. 00:03:23.471 --> 00:03:24.238 Oh, you're your boss. 00:03:24.311 --> 00:03:24.581 Okay. 00:03:25.641 --> 00:03:26.811 And and Noushin's been on 00:03:26.816 --> 00:03:30.261 The Chemical Show a couple times, so I will link her episode so that 00:03:30.291 --> 00:03:33.741 we can go back and listen to those episodes if you're interested. 00:03:34.971 --> 00:03:39.076 So, , you touched on, uh, just some of the challenges in COVID, which I think. 00:03:39.216 --> 00:03:42.966 You know, So many supply chain related and marine logistics related 00:03:42.966 --> 00:03:47.516 challenges due to COVID, especially in that 2020 to 2022 time period. 00:03:48.106 --> 00:03:51.036 We seemed to be getting back to normal, right? 00:03:51.041 --> 00:03:56.226 I think I heard from so many people in 2023 that, okay, things are lining out, 00:03:56.226 --> 00:03:58.266 we're getting back to normal and now. 00:03:58.871 --> 00:04:00.191 That is not the case. 00:04:00.461 --> 00:04:04.331 So we've got challenges with the Red Sea, the Suez Canal, and of 00:04:04.331 --> 00:04:06.221 course the Panama Canal as well. 00:04:06.431 --> 00:04:08.561 So let's start with the Red Sea. 00:04:08.831 --> 00:04:12.211 Can you just provide an overview of what's happening there and 00:04:12.211 --> 00:04:13.766 how it's affecting the industry? 00:04:13.816 --> 00:04:14.236 Farid: Sure. 00:04:14.336 --> 00:04:20.156 Just to summarize how we ended up here, of course, the war between Hamas 00:04:20.186 --> 00:04:26.056 and Israel happened and the Hamas, their supporters and the proxies of 00:04:26.056 --> 00:04:28.736 Iran, they started making some noise. 00:04:28.736 --> 00:04:36.506 And we had skirmishes in Lebanon, in Iraq, and of all the proxies, Houthis in 00:04:36.596 --> 00:04:41.596 Yemen seems to be the most active one, and they started attacking container 00:04:41.646 --> 00:04:46.996 shipments that goes through the Suez Canal and that kind of put a stop to 00:04:47.026 --> 00:04:52.076 the commerce through that Suez Canal and of course, US and allies, they 00:04:52.356 --> 00:04:54.756 start attacking the Houthis in Yemen. 00:04:54.816 --> 00:04:57.516 And we've seen some reduction in their attack. 00:04:57.796 --> 00:05:01.946 But basically all major shipping lines, they have stopped 00:05:02.266 --> 00:05:04.006 the route through Suez Canal. 00:05:04.006 --> 00:05:08.626 And they've basically gone around Africa going through Cape of Good 00:05:08.626 --> 00:05:14.146 Hope to get to their destination in Europe and the east coast of US. 00:05:14.376 --> 00:05:20.801 Even though only like 12% of US import comes through Suez Canal, 00:05:21.011 --> 00:05:26.101 but because of the uncertainty it has an impact on the global stage. 00:05:26.131 --> 00:05:30.916 So that's basically where we stand right now in regard to Suez Canal. 00:05:31.367 --> 00:05:34.277 Victoria: Right, And and obviously the Suez Canal, much like the Panama 00:05:34.277 --> 00:05:38.417 Canal, um, you know, it's intended to help streamline that shipping. 00:05:38.417 --> 00:05:44.477 So as people and, and vessels have to go, not through the Suez Canal, but around 00:05:44.482 --> 00:05:45.857 the Cape of Good Hope, is that right? 00:05:46.667 --> 00:05:49.487 it adds to the shipping time, does it not? 00:05:49.547 --> 00:05:49.877 not 00:05:50.381 --> 00:05:55.381 Farid: So on average it adds 10 to 14 days to the time that 00:05:55.381 --> 00:05:57.541 it travels through that area. 00:05:57.581 --> 00:06:01.431 . What it happened was initially when the Houthis started attacking 00:06:01.721 --> 00:06:05.351 there was a shock to the system because all of a sudden they stopped 00:06:05.481 --> 00:06:07.461 all this container ships stopped. 00:06:07.651 --> 00:06:11.841 But it took the shipping industry to a while to adjust their inventory, 00:06:11.841 --> 00:06:13.761 basically move fleets around. 00:06:13.951 --> 00:06:18.681 And they had some idle vessels that they brought into their network. 00:06:18.821 --> 00:06:21.191 If I can back up a little bit. 00:06:22.671 --> 00:06:24.681 , Most shipping lines, they were flushed with cash. 00:06:24.741 --> 00:06:29.061 So all of a sudden they started adding, ordering a lot of new vessels. 00:06:29.271 --> 00:06:33.171 The latest number I saw was like additional 30% capacity 00:06:33.171 --> 00:06:34.461 to their existing fleet. 00:06:34.911 --> 00:06:40.291 So of course some of it was to get rid of their old vessels and these new vessels 00:06:40.291 --> 00:06:42.811 to be in compliance with the new IMOs. 00:06:42.991 --> 00:06:43.891 So about. 00:06:44.311 --> 00:06:48.301 10% of the 30% that they were ordering. 00:06:48.856 --> 00:06:51.706 They're coming on board in 2024. 00:06:51.856 --> 00:06:54.136 So the timing of it was perfect. 00:06:54.466 --> 00:07:00.576 So in a sense they could bring these new vessels to their network and instead 00:07:00.581 --> 00:07:04.386 of getting rid of the old vessels, they're keeping them in service. 00:07:04.686 --> 00:07:10.146 The initial shock that the system got, that we pretty much passed that point, 00:07:10.566 --> 00:07:16.486 but the challenge remains that, number one for each shipping line, for each 00:07:16.486 --> 00:07:22.316 ship, if they expected to use that ship like 10 or 12 times round trip per year. 00:07:22.646 --> 00:07:26.156 Because of the additional time that is gonna be reduced 00:07:26.156 --> 00:07:27.836 to five or six times a year. 00:07:27.986 --> 00:07:32.066 So all of a sudden the return on investments will be much lower. 00:07:32.066 --> 00:07:37.256 So, uh, I don't foresee too much increases in rates. 00:07:38.586 --> 00:07:44.226 Like we've seen during COVID, but the reduction in rates that we had experienced 00:07:44.226 --> 00:07:46.116 last year, I don't foresee that. 00:07:46.776 --> 00:07:52.266 There are some GRIs in place that they opted like a thousand dollars to use. 00:07:52.281 --> 00:07:55.416 But with our clients, what we've seen is like $200 or 00:07:55.416 --> 00:07:58.146 $400 depending on destination. 00:07:58.426 --> 00:07:59.296 Victoria: Okay, So I'm 00:07:59.296 --> 00:08:00.616 gonna interrupt you here real quick. 00:08:00.616 --> 00:08:02.866 Farid, what if, so what is a GRI? 00:08:03.505 --> 00:08:04.885 Farid: Uh, 00:08:05.155 --> 00:08:06.565 General rate increase. 00:08:07.831 --> 00:08:08.121 Victoria: Okay. 00:08:08.416 --> 00:08:10.516 So basically a, just an increase that they, 00:08:10.675 --> 00:08:11.245 Farid: Increase rate. 00:08:11.395 --> 00:08:13.075 Yeah, it's like a temporary increase. 00:08:13.105 --> 00:08:19.085 So rather than increasing the rates by $500, this is like a temporary increase. 00:08:19.175 --> 00:08:22.370 And that's where they look looking into it. 00:08:22.370 --> 00:08:27.060 But, what happens is for all these GRIs, they need to submit their requests. 00:08:27.330 --> 00:08:32.500 And then FMC Federal Maritime Commission, they have 30 days to 00:08:32.500 --> 00:08:37.880 approve it, but because of the emergency here, FMC was approving it, 00:08:37.880 --> 00:08:40.340 basically waiving the 30 day notice. 00:08:40.470 --> 00:08:44.705 So all these GRIs are in place for January and February and, but 00:08:44.705 --> 00:08:49.465 other than the GRI going back, we haven't seen huge increases in rates 00:08:49.625 --> 00:08:51.665 as we had seen right after COVID. 00:08:51.905 --> 00:08:56.950 But by the same token we tell our clients don't expect like a huge discounts 00:08:57.120 --> 00:09:01.480 in rates because of the challenges that the shipping lines face right 00:09:01.711 --> 00:09:01.981 Victoria: Right. 00:09:03.001 --> 00:09:04.321 So a couple of things here. 00:09:04.321 --> 00:09:07.651 Farid, I what I, number one, what I had not appreciated was that 00:09:07.661 --> 00:09:11.951 um, that there was actually excess capacity from a shipping perspective 00:09:12.281 --> 00:09:13.611 because just, um, I don't know. 00:09:13.611 --> 00:09:17.211 It seems like it, I knew it had gotten tight and then it had gotten looser, but, 00:09:17.241 --> 00:09:21.921 um, the fact that many of the shipping companies had vessels that they could. 00:09:22.656 --> 00:09:27.696 Keep in service and add to service has certainly helped, which is probably why 00:09:28.056 --> 00:09:30.366 frankly, as a consumer, we're not seeing. 00:09:30.986 --> 00:09:35.876 you know, challenges that we saw like back in 2020, 21 when in, in our 00:09:35.876 --> 00:09:37.526 inability to get the products we wanted. 00:09:37.526 --> 00:09:40.826 So certainly the intermediates, the chemical companies and others 00:09:40.826 --> 00:09:43.696 may be seeing that, but I that's, um, that's pretty interesting. 00:09:43.786 --> 00:09:46.726 And then the second piece that the base rates you're seeing are staying 00:09:47.236 --> 00:09:53.386 flat for now, but it's just that we've got surcharges applied temporarily 00:09:53.506 --> 00:09:54.946 and we don't really know how temporary 00:09:55.056 --> 00:09:55.616 Farid: Exact, exact. 00:09:55.926 --> 00:09:56.096 ly. 00:09:56.114 --> 00:09:56.384 Exactly.. 00:09:56.791 --> 00:09:57.031 Victoria: Yeah. 00:09:57.691 --> 00:09:57.961 Yeah. 00:09:58.141 --> 00:10:03.331 So I know that for a while, um, it, it sounds like the, the vessels 00:10:03.331 --> 00:10:06.721 are working their way out, but I also had heard that containers 00:10:06.721 --> 00:10:09.391 themselves got very tight again. 00:10:09.731 --> 00:10:11.081 Is that what you're seeing as well? 00:10:11.081 --> 00:10:11.111 I. 00:10:11.270 --> 00:10:14.800 Farid: Yes we've seen some shortage in equipments like ISO tanks. 00:10:15.050 --> 00:10:19.620 So that's a combination of, because of a situation in for the Suez Canal 00:10:19.635 --> 00:10:23.340 and also seasonal because of the Chinese New Year you have a lot of 00:10:23.340 --> 00:10:27.780 containers in certain areas and then they need to move back to other areas. 00:10:27.780 --> 00:10:32.285 So, because it takes 14 days, additional days for these ships to 00:10:32.285 --> 00:10:33.845 get from one port to another port. 00:10:34.175 --> 00:10:39.015 Of course these containers are sitting on the ship rather than in their destination. 00:10:39.015 --> 00:10:43.845 So definitely the tightness, I would say of the equipments will remain in place. 00:10:44.005 --> 00:10:47.905 Because even though we have additional vessels, we don't have additional 00:10:47.905 --> 00:10:50.575 containers or chassis or things like that. 00:10:50.575 --> 00:10:54.595 The restriction and the tightness on equipments will remain in place. 00:10:54.805 --> 00:10:59.365 But with the, chinese New Year behind us that to some extent 00:10:59.365 --> 00:11:00.775 that should remedy itself. 00:11:00.775 --> 00:11:08.095 But what I tell everyone is even though we have additional vessels in place and 00:11:08.095 --> 00:11:12.695 the shipping industry has been able to cope with this new challenge, pretty well, 00:11:12.725 --> 00:11:18.125 considering the challenges that we face, but we are very tight when it comes to 00:11:18.305 --> 00:11:20.615 vessels, to equipments to everything else. 00:11:20.615 --> 00:11:27.105 So if we have another geopolitical issues that you know the war in Middle 00:11:27.105 --> 00:11:32.100 East, spread out then we are in real in a really pain area that right now 00:11:32.100 --> 00:11:33.510 that we everybody needs to deal with. 00:11:33.560 --> 00:11:37.340 Our recommendation to everyone is to plan plan, plan. 00:11:37.460 --> 00:11:43.280 It's I know everyone wants to kind of, last year everyone had excess inventory, 00:11:43.310 --> 00:11:45.350 so nobody wanted to order anything. 00:11:45.355 --> 00:11:48.200 And it was like, if we need it, we order it, we get it right away. 00:11:48.650 --> 00:11:49.880 That's not the case this year. 00:11:50.130 --> 00:11:54.620 We know most shippers, they try to have a 30 day inventory on 00:11:54.625 --> 00:11:58.190 hand just to be on the safe side as a precaution, as an insurance. 00:11:58.420 --> 00:12:03.880 So we definitely recommend our clients to have adequate inventory in place 00:12:04.030 --> 00:12:09.910 and, have secondary and third option for their shipments because you never 00:12:09.910 --> 00:12:14.500 know from blank sailing or some other geopolitical thing happens, or lack 00:12:14.500 --> 00:12:16.495 of equipment things could go away. 00:12:17.345 --> 00:12:20.965 Victoria: yeah We're, yeah, , we're kind of one crisis from another crisis. 00:12:21.025 --> 00:12:21.385 Right? 00:12:22.375 --> 00:12:22.825 Yeah. 00:12:22.895 --> 00:12:27.200 And so, your mention of having, . adequate supply on hand? 00:12:27.200 --> 00:12:31.050 , I asked within The Chemical Community um, I reached out and asked people, 00:12:31.080 --> 00:12:35.660 okay, so how are you handling, this Red Sea crisis and, and the 00:12:35.665 --> 00:12:37.010 impact that it's had on shipping? 00:12:37.010 --> 00:12:41.360 And that was one of the feedbacks that came back, is people are, moving a 00:12:41.360 --> 00:12:45.170 little bit from, you know, there was a certain amount of just in time, right, 00:12:45.224 --> 00:12:45.854 Farid: Absolutely. 00:12:46.214 --> 00:12:46.544 Yep. 00:12:46.700 --> 00:12:48.230 Victoria: especially 2023. 00:12:48.230 --> 00:12:50.690 Everyone was so focused on cash management. 00:12:51.020 --> 00:12:55.380 There was a destocking , trying to reduce the inventories in place. 00:12:55.380 --> 00:13:01.445 And now what we're seeing, and I picked this up at ACI where I was recently, and 00:13:01.495 --> 00:13:04.935 also as I said in The Chemical Community, just asking people that are part of that. 00:13:05.275 --> 00:13:09.285 And they are starting to increase their safety stocks a little bit. 00:13:09.285 --> 00:13:15.545 So being much more mindful that boy, an extra 14 days, requires more product. 00:13:15.550 --> 00:13:20.645 But also, as you pointed out earlier, we're really one crisis away 00:13:20.975 --> 00:13:23.610 from a real crisis and critical situation. 00:13:23.739 --> 00:13:24.339 Farid: Exactly. 00:13:24.549 --> 00:13:25.119 Exactly. 00:13:26.175 --> 00:13:30.085 Victoria: Yeah, so let's turn over and look at the Panama Canal. 00:13:30.085 --> 00:13:30.385 Farid: Mm-Hmm. 00:13:30.915 --> 00:13:35.295 Victoria: because that's our next big, critical shipping channel. 00:13:35.455 --> 00:13:39.925 And it seems like at times we get mixed answers, and yet it's clear that 00:13:39.930 --> 00:13:44.815 the availability of transit via the Panama Canal has actually decreased 00:13:44.815 --> 00:13:47.095 by 30 to 40% versus a year ago. 00:13:47.345 --> 00:13:50.525 I actually came upon a, something probably that you guys use all the 00:13:50.525 --> 00:13:54.560 time, some tool online and I'll, I will find it and link it 'cause I don't 00:13:54.560 --> 00:13:57.830 recall the name of it, but actually showed daily shipments through the 00:13:57.830 --> 00:14:01.670 Panama Canal and it was fascinating just to see that significant drop. 00:14:01.670 --> 00:14:04.880 So clearly it's an issue. 00:14:05.280 --> 00:14:08.490 Can you talk more about what's going on with the Panama Canal 00:14:08.550 --> 00:14:10.150 and how companies are responding? 00:14:10.150 --> 00:14:10.200 I. 00:14:10.390 --> 00:14:10.640 Farid: Sure. 00:14:11.064 --> 00:14:13.989 This year in Panama, they had a really dry season. 00:14:14.399 --> 00:14:17.464 It seems every May is like their monsoon season. 00:14:17.744 --> 00:14:20.474 And last year they didn't have adequate rain. 00:14:20.684 --> 00:14:25.564 So all of a sudden the, water reserve that they need to work the locks 00:14:25.564 --> 00:14:30.854 at the Panama Canal doesn't work as efficiently as it's supposed to be. 00:14:31.104 --> 00:14:36.694 All of a sudden the number of vessels that can go through the canal has been reduced. 00:14:36.944 --> 00:14:39.124 The tonnage has been reduced. 00:14:39.244 --> 00:14:44.084 So all of a sudden there is another kink in the in the geopolitical 00:14:44.184 --> 00:14:45.564 issues that we have here. 00:14:45.794 --> 00:14:48.794 Now so there are some, uh. 00:14:50.969 --> 00:14:51.839 solutions here. 00:14:52.079 --> 00:14:57.299 One in Panama, they had this big project of additional water reservoir 00:14:57.509 --> 00:15:01.859 uh, they were supposed to build and it was like over $2 billion 00:15:02.159 --> 00:15:04.639 and they decided to forego on that. 00:15:04.699 --> 00:15:06.169 So unfortunately. 00:15:06.919 --> 00:15:10.739 That project, I'm sure they're trying to get the project up and 00:15:10.739 --> 00:15:14.429 running, but like anything else is gonna take a while to come online. 00:15:14.779 --> 00:15:18.089 So we are all waiting for next May and see whether they're 00:15:18.094 --> 00:15:19.979 gonna have adequate rain or not. 00:15:19.979 --> 00:15:23.189 We have plenty of rain here in California this year, so I'm not sure whether that 00:15:23.429 --> 00:15:26.139 translates into rain in Panama or not. 00:15:26.289 --> 00:15:30.769 So that is the second thing that we need to look at is come May, are they gonna 00:15:30.769 --> 00:15:35.229 have adequate rain to replenish the water reservoir that had they had in place. 00:15:35.679 --> 00:15:39.349 Now I came across this documentary a couple of weeks ago, which 00:15:39.349 --> 00:15:40.489 was rather interesting. 00:15:40.879 --> 00:15:45.559 So in Mexico, so all those Latin American countries, all of a sudden 00:15:45.559 --> 00:15:50.359 they see, oh, Panama has issues, so how can we take advantage of this? 00:15:50.719 --> 00:15:53.449 And there are a lot of different projects. 00:15:53.449 --> 00:15:55.249 Everybody's talking about it, but. 00:15:55.609 --> 00:15:59.059 The most pros promising project is in Mexico. 00:15:59.469 --> 00:16:02.329 There's a it's called CIIT. 00:16:02.629 --> 00:16:06.499 Of course the translation is Inter Oceanic Corridor of Mexico. 00:16:06.499 --> 00:16:07.664 Sorry, I had to look because I 00:16:07.730 --> 00:16:08.354 keep forgetting the 00:16:08.465 --> 00:16:09.752 Victoria: Yeah, no, I remember 00:16:09.755 --> 00:16:09.859 that 00:16:09.909 --> 00:16:16.719 Farid: So this is basically a railroad that connects the East coast to 00:16:16.719 --> 00:16:18.849 West coast, so Atlantic to Pacific. 00:16:19.449 --> 00:16:24.589 And this railroad was in place before Panama Canal came on board. 00:16:24.859 --> 00:16:27.109 They were using that for a few years. 00:16:27.239 --> 00:16:30.989 So basically ships come on, either Atlantic or Pacific. 00:16:30.989 --> 00:16:35.909 They off offload, they put on a train, they crosses the country, 00:16:36.119 --> 00:16:40.094 goes to the other side, and then they load on the other side and 00:16:40.094 --> 00:16:41.654 take it to their destination. 00:16:42.114 --> 00:16:47.484 So actually make, it was working fine, but with Panama Canal opening up, then 00:16:47.489 --> 00:16:50.844 everybody just decided to go through Panama Canal because it was easier. 00:16:50.849 --> 00:16:54.294 You didn't have to deal with unloading and offloading and so on and so forth. 00:16:54.664 --> 00:16:59.114 With the new president that of Mexico that came on, about five years ago. 00:16:59.819 --> 00:17:02.599 He decided to get that railroad open. 00:17:02.989 --> 00:17:06.079 So they worked on it, they replenished it, they rebuilt it. 00:17:06.079 --> 00:17:08.299 So the railroad is working now. 00:17:08.349 --> 00:17:13.284 This year they started the passenger train and now they're working on, basically 00:17:13.284 --> 00:17:18.774 making the ports on either side of the railroad up and running so the ships 00:17:18.774 --> 00:17:20.804 can come in and offload and onload. 00:17:21.114 --> 00:17:24.234 They're supposed to open up by end of this year, and so 00:17:24.234 --> 00:17:25.844 far they've been going strong. 00:17:26.154 --> 00:17:31.299 Definitely, I wouldn't expect until 2025 we'd be like everybody uses that. 00:17:31.299 --> 00:17:36.129 But definitely it would be like a complement to Panama Canal because it's 00:17:36.129 --> 00:17:41.259 like it's close enough and it only takes nine hours to cross from east to west. 00:17:41.259 --> 00:17:43.939 So it's not it's not , too cumbersome. 00:17:43.939 --> 00:17:44.169 That's 00:17:44.185 --> 00:17:45.395 Victoria: faster than I would've anticipated. 00:17:45.417 --> 00:17:45.810 anticipated 00:17:46.294 --> 00:17:48.664 Farid: it's like the narrow side of the Mexico. 00:17:48.664 --> 00:17:52.464 And so those ports are supposed to be up and running by end of this year. 00:17:52.714 --> 00:17:56.224 I would say it takes a year for the shipping lines to do their due diligence 00:17:56.224 --> 00:18:00.249 and see how viable that option is, but with the challenges in Panama 00:18:00.409 --> 00:18:03.769 they definitely look closely at it, and it might become an alternative 00:18:03.769 --> 00:18:08.639 to Panama Canal, but for this year we gotta cross our fingers for May and 00:18:08.644 --> 00:18:10.359 see whether they get adequate rain. 00:18:10.389 --> 00:18:13.899 If not, then this challenge for Panama Canal remain in place. 00:18:14.680 --> 00:18:15.010 Victoria: Yeah. 00:18:15.100 --> 00:18:19.960 So what are companies doing today if they can't utilize the Panama Canal? 00:18:19.990 --> 00:18:25.030 'cause obviously capacity is reduced, um, and product still needs to move. 00:18:25.060 --> 00:18:27.975 So how are companies and shippers moving this product? 00:18:28.352 --> 00:18:28.579 product 00:18:28.629 --> 00:18:33.564 Farid: They're using smaller ships to deal with the tonnage issues and they're giving 00:18:33.564 --> 00:18:38.054 enough, themselves enough time to do the waiting in line and so on and so forth. 00:18:38.234 --> 00:18:43.274 But there is also a railroad right next to Panama Canal that they, 00:18:43.484 --> 00:18:47.144 what Mexico is planning to do, they can do it in Panama as well. 00:18:47.214 --> 00:18:49.554 These are all the alternatives they're using. 00:18:49.764 --> 00:18:53.644 The other option is to going all the way down to Argentina, because that, 00:18:53.644 --> 00:18:57.304 but that is like a really long, and nobody wants to take that route. 00:18:57.554 --> 00:19:02.924 So between the railroad right next to Panama and or basically a lot of 00:19:02.924 --> 00:19:07.374 shippers coming to West Coast or East Coast and just getting on the rail and 00:19:07.684 --> 00:19:09.764 hauling their cargo from east to west. 00:19:09.914 --> 00:19:13.514 So not the best options, but there are options available, but 00:19:13.520 --> 00:19:14.205 once again, it 00:19:14.435 --> 00:19:14.855 Victoria: a lot more 00:19:14.855 --> 00:19:17.095 marine or a lot more rail movement versus 00:19:17.275 --> 00:19:17.745 Farid: marine movementt. 00:19:17.745 --> 00:19:22.544 But once again, it adds to the time between Suez Canal and Panama Canal. 00:19:22.704 --> 00:19:26.224 It's still happening, but it takes much longer to get your 00:19:26.229 --> 00:19:28.114 cargo from one point to another. 00:19:28.600 --> 00:19:28.930 Victoria: Right. 00:19:29.200 --> 00:19:32.600 So what are the biggest questions that you're getting from your customers? 00:19:32.600 --> 00:19:37.010 Obviously you've been dealing with, and you guys deal with logistics 00:19:37.220 --> 00:19:39.770 and marine challenges all the time. 00:19:39.995 --> 00:19:44.055 But as we sit here in 2024, what's on people's minds? 00:19:44.155 --> 00:19:45.524 What's on your customer's minds? 00:19:45.534 --> 00:19:49.349 Farid: Initially it was like prices because all of a sudden because 00:19:49.349 --> 00:19:53.119 of the soft, as you mentioned soft market last year you could find 00:19:53.119 --> 00:19:58.429 some good uh, good options, but that was like out the window this year. 00:19:58.549 --> 00:20:01.819 And number two is like lack of equipment, as I mentioned, 00:20:01.819 --> 00:20:04.609 is uh, ISO tanks right now. 00:20:04.809 --> 00:20:08.759 We have issues with, depending on which market they wanna ship it to. 00:20:09.059 --> 00:20:15.849 And as we tell 'em, it's have second plan, third plan, fourth plan to just 00:20:15.849 --> 00:20:20.619 back up because there's a good possibility that the, your schedule vessel may 00:20:20.619 --> 00:20:22.824 not depart on the scheduled date. 00:20:22.894 --> 00:20:26.994 We tell 'em adequate inventory and uh, plan accordingly. 00:20:28.305 --> 00:20:28.595 Victoria: Yeah. 00:20:29.310 --> 00:20:29.970 Makes sense. 00:20:30.180 --> 00:20:30.780 Makes sense. 00:20:31.110 --> 00:20:34.110 Um, and then, you know, we maybe touched on this already, but should 00:20:34.110 --> 00:20:37.170 we expect normalization this year? 00:20:37.600 --> 00:20:40.450 You know, What's the likelihood of us getting back to kind of 00:20:41.050 --> 00:20:43.150 business as usual, so to speak? 00:20:43.204 --> 00:20:48.684 Farid: You never say never but in all reality is uh, market doesn't expect 00:20:48.684 --> 00:20:50.704 Suez Canal to open up this year. 00:20:51.324 --> 00:20:56.864 Because even though, as I mentioned earlier the Houthis have basically 00:20:56.944 --> 00:21:00.424 their capabilities have been diminished because of the skirmishes 00:21:00.444 --> 00:21:05.374 that were made by us and its allies, but they still can create havoc. 00:21:05.404 --> 00:21:09.544 And when you're not a hundred percent sure, nobody wants to touch that area. 00:21:10.024 --> 00:21:17.734 And as a point of reference, the Six Day War back in 1967 between Israel and Egypt 00:21:17.734 --> 00:21:23.774 and Syria, even though it was only six days , of course Suez Canal was shut down, 00:21:24.224 --> 00:21:26.684 but it took seven years for it to open up. 00:21:27.269 --> 00:21:30.869 I'm not saying it's gonna take seven years for Suez Canal to open 00:21:30.869 --> 00:21:33.799 up again, but things when go wrong, 00:21:33.829 --> 00:21:35.509 they shut down immediately. 00:21:35.559 --> 00:21:40.254 But to get back to normal, as we've seen recently after COVID, it takes a while. 00:21:40.504 --> 00:21:44.224 I would tell our clients not to have , their hopes high for 00:21:44.254 --> 00:21:45.934 Suez Canal opening up this year. 00:21:46.279 --> 00:21:50.899 It could happen, but we'll just cross our fingers and see how it goes 00:21:50.959 --> 00:21:55.879 next year, if there's a peace treaty in between Israel and Hamas, take 00:21:55.939 --> 00:22:00.259 uh, things go back to normal, then yes, by end of this year, we should 00:22:00.259 --> 00:22:02.479 see the opening up the Suez Canal. 00:22:02.479 --> 00:22:04.969 But so far we don't see that unfortunately. 00:22:05.800 --> 00:22:08.650 Victoria: Yeah, and then we're all supposed to pray for rain. 00:22:08.650 --> 00:22:09.650 Pray for the monsoon in Panama 00:22:09.709 --> 00:22:12.379 Farid: Yes, for uh, in month of May. 00:22:12.379 --> 00:22:16.464 And yes, let's see how that goes because if at least Panama Canal 00:22:16.464 --> 00:22:20.364 is back to its capacity, then at least kind of alleviate some of the 00:22:20.364 --> 00:22:21.429 challenges that we face right now. 00:22:22.380 --> 00:22:22.680 Victoria: Yeah. 00:22:22.985 --> 00:22:28.480 And, And Farid for you and your team at NUCO How are you guys adapting to this 00:22:28.480 --> 00:22:32.740 and what do you see as the year ahead for you as, 'cause you're obviously a service 00:22:32.740 --> 00:22:38.080 provider working closely with a variety of shippers, with the shipping companies and, 00:22:38.410 --> 00:22:40.595 and really helping solve these issues. 00:22:40.595 --> 00:22:42.065 You know, What are you guys looking forward to? 00:22:42.079 --> 00:22:42.859 Farid: Interesting. 00:22:42.909 --> 00:22:45.899 This year I'm looking for the organization that actually 00:22:45.904 --> 00:22:47.909 produces this uh, report. 00:22:48.189 --> 00:22:53.967 The global port tracker they uh, predict that the US imports for the 00:22:53.967 --> 00:22:58.647 first year, for the first half of this year is gonna increase over last year. 00:22:58.977 --> 00:23:04.262 So for example, in February the year over year increase was 23%. 00:23:04.892 --> 00:23:10.652 So if you compare February 24 versus 23, there's an increase of 23%. 00:23:12.047 --> 00:23:14.507 They predict the same thing in March and April. 00:23:14.507 --> 00:23:18.407 Not 20%, but 5% and 6% respectively. 00:23:18.617 --> 00:23:24.827 The outlook in US economy is strong and the issue with the inventory 00:23:24.827 --> 00:23:29.117 that everybody faced last year have been resolved to some extent. 00:23:29.267 --> 00:23:34.237 So all of a sudden everybody's, basically gearing up to import more products. 00:23:34.317 --> 00:23:36.807 So everybody wants to import more. 00:23:37.087 --> 00:23:42.727 We have issues with, as we discussed, with our equipments and vessels and the timing. 00:23:42.997 --> 00:23:49.267 So hence going back and telling everyone, plan, plan accordingly, because 00:23:49.477 --> 00:23:54.707 everything is gonna take much longer than we are used to from last year. 00:23:54.712 --> 00:23:58.072 Then, we hear about GRIs uh, increases. 00:23:58.072 --> 00:24:00.442 We hear about lack of equipment. 00:24:00.442 --> 00:24:05.142 So our team is literally dealing with challenges on a regular basis. 00:24:05.142 --> 00:24:10.487 But what we pride ourselves is we are, we might be bearer of bad news, but if we 00:24:10.492 --> 00:24:14.777 will inform our clients of the challenges that they face and we come up with some 00:24:14.782 --> 00:24:20.257 options for them, but that's what we tell everyone is like, plan, plan, plan because 00:24:20.497 --> 00:24:22.507 this year is gonna be a challenging year. 00:24:22.687 --> 00:24:26.497 Not as bad as COVID, not as bad as what we faced after a 00:24:26.497 --> 00:24:28.837 pandemic, but everything's tight. 00:24:29.287 --> 00:24:30.607 So buckle up. 00:24:30.628 --> 00:24:30.868 Victoria: Hmm. 00:24:31.048 --> 00:24:33.038 And that's a great final statement there. 00:24:33.088 --> 00:24:36.013 Farid, thank you for joining us today on The Chemical Show. 00:24:36.403 --> 00:24:38.953 Really appreciate you sharing your insight and expertise. 00:24:39.697 --> 00:24:39.857 Farid: Well, 00:24:39.857 --> 00:24:40.582 Thanks for having me. 00:24:40.582 --> 00:24:42.182 It was enjoyable always. 00:24:42.182 --> 00:24:45.362 I enjoyed talking to you, Victoria, and thanks for having me today. 00:24:46.553 --> 00:24:47.033 Victoria: Absolutely. 00:24:47.033 --> 00:24:48.413 And thanks everyone for listening. 00:24:48.413 --> 00:24:52.523 Keep listening, keep following, keep sharing, and we will talk again soon. 00:24:54.913 --> 00:24:56.693 We've come to the end of today's podcast. 00:24:57.093 --> 00:24:59.643 We hope you enjoyed your time with us and want to learn more. 00:25:00.063 --> 00:25:02.343 Simply visit thechemicalshow. 00:25:02.343 --> 00:25:05.093 com for additional information and helpful resources. 00:25:05.733 --> 00:25:09.723 Join us again next time here on The Chemical Show with Victoria Meyer.