Tariffs, Trade, Trump: A brief history and future of the global economy

FREIGHT Up.

Hello and welcome back to Freight Up, FIS's freight and commodity podcast.

I'm Chris Coo of FIS and we'll be taking over for this pre Easter special episode.

Joining me will be Richard Stephenson, the CEO of freightfix.

As we talk about the elephant in the room of all traders these days, Mr.

Donald Trump.

But before that, let's have a look at the latest movements in the key commodity markets covered by FIs.

So what have we?

Well, in the dry freight markets we have dropped down again.

Cape shedding some $5,000 a day on the index since the first of the month and lesser drops on the smaller ships, Panamaxes and the supers and handys dropping down.

We're nearly at 10,000 on both the P5 index and the Andy 7TC index as well, significantly dropping down since mid March when we started to see those rates come off.

On iron ore 62% we have dropped below the $100 mark, just settling very marginally under that.

Yesterday closed in terms of $99.95.

And on the fuel oils, we've seen that drop below the 500 mark following the drops in crude oil that we've seen as well.

With increasing OPEC as well as concerns about the global economy, there's obviously dragged down prices.

472.62 was the index for the Singapore 0.5% low sulfur fuel oil yesterday.

But let's move on to the main event of today, obviously talking to Richard Stephenson, who's CEO of Freight Fix.

Thank you Richard for joining me.

And I think it's probably best to start with in your own words, outlining obviously Freight Fix and a bit about your experience and before we get onto the meat of today's podcast.

Thanks, Chris.

No.

Pleasure to be with you.

Yes.

So Freight Fix is a ship, let's say data driven ship broker, focusing more on structured trades.

So we do a lot more in the way of analytics.

We price a lot of routes.

We tend to focus on things that aren't covered as much by the Baltic, which tends to add value to people who are active on routes that are off Baltic, which is a very large number.

We apply a lot more analytics slash macroeconomic analysis than the average.

So we're less execution, more solutions driven.

My background is in finance and financial engineering.

I studied these things at various universities around the world and then ended up trading structured credit and fixed income, moved to emerging markets and from there moved to shipping through converting into equity.

And then thereafter I made it all data driven.

So it makes now more than ever more interesting As I can bring everything together and comment on the.

The chaos, comment on the chaos.

And we can definitely say that our analysis of this and your data driven stuff will be a lot better than the, the way that the data's been used to calculate certain tariffs of recent history.

Yes, they're much more creative.

Exactly.

In my mind I've put this into three chunks.

First is obviously more of a long term view of recent history back kind of 1970s coming through of how have we got ourselves into this situation.

What have been the main points to highlight then?

Obviously since the start of this year we've had Trump's second term.

Some of the key points that we've had or assumptions from their side which have obviously got us into the situation with tariffs and all the chaos that you've also referenced at the moment before then dangerously perhaps trying to predict what we think will be the kind of near future and the end of Trump 3.0, dare I say it, there's views of, of our own, obviously our own opinion and should not be taken in too much seriousness, but always an interesting topic to pick up on.

So I know that I've seen and Richard, you've written quite a few points on this.

So if people haven't seen what Richard's been writing in terms of those, I definitely would recommend that to get in touch with him and get the full written out version of what we're trying to do, a short precede version of it today.

But we've seen some key headline points or eras starting in the 70s up to the financial crash and then kind of the shorter periods then coming up to obviously the reelection of Donald Trump.

So I don't know if we want to kind of start with that, Richard, and kind of outlining the kind of what you've kind of termed as the kind of financialization point and then we can obviously pick up the others.

It's worthwhile very quickly starting off post war because that's really framing the Trump Navarro worldview where Navarro is Trump's trade guy.

He and Trump share something and Trump has actually been surprisingly consistent since the 80s.

So despite the fact that he's flip flopping around now, that hasn't always been the case.

He's always, most would argue misunderstood the way Trump the way tariffs work.

And he found someone who has a PhD from Harvard and economics, albeit economics of philanthropy to support that view.

So post war, the US had obviously built a huge industrial base.

It was a very big surplus economy.

It was supplying lots of people.

And the result of that was that they wanted doors to open everywhere.

They wanted to effectively create markets for them to sell into.

So all of the post war Marshall Plan financing, which actually led to lots of military ships being converted into commercial vessels and the Liberties program, that was all supporting an expansion of US markets.

And so at that time, the US was trying to drive down trade barriers and everything that started off with the Bretton woods system and ended in 1973 and ended up with 1995 with the WTO was very much a US invention at a time when the US was extremely strong and an exporting nation.

Fast forward to 73 and early 70s where the US had effectively expended itself through the Vietnam War and it had left the gold standard and had allowed the dollar to float.

This is where things start to, let's say, formulate in the modern misunderstanding of Trump versus the rest of the world.

And that's primarily because he's coming into the market in the 70s, as is Navarro, and he's having a look at the state of New York and he's wondering what on earth's going on.

And he's seeing protesters, Vietnam, et cetera, et cetera.

So he's building his worldview in the 70s and early 80s, when the memory of the manufacturing dominance of the US and the surplus economies of the US is still very much on vogue.

Japan is still rising and Germany's rising, but still they're not really sort of dominant.

China's nowhere.

So the irony is that Kissinger and Nixon actually brought China into the global trade system to marginalize Russia.

And it was obviously not intended to build their number one competitor, but that was the end result.

And so in that period of time, a second wave came through because oil shocks led to what's called stagflation.

So stagnation and inflation simultaneously, which is something which is being circulated as a possibility now.

And that invalidates the economic dominance of the Keynesian school, which is basically you spend when the government spends, when the market's down, to bring it up again through lots of social programs which worked in the Second World War.

That system can't exist simultaneously with stagnation and inflation.

A predominant school at the time, a school that I personally was subscribed to and certainly studied through, it was the Chicago School of Economics, run by Milton Friedman.

So when the stagflation came into play, Keynesian was debased.

Everyone was in a state of shock because they were all shocks that debased the U.S.

economy.

And the Chicago school came into play in 73, together with behavioral economics.

And behavioral finance, Cameron Tversky and the option pricing theory, all these things started to kick off at the same time in 73 to try to get out of a world of pain that was caused by the oil shocks.

So fast forward to the 80s.

This is to your point, Chris, about the financialization, effectively, the Chicago school and more broadly, supply side economics focuses much more on expansion globally, minimizing input costs and optimizing everything and creating competitive environments and then adding more mathematics and financial engineering which allow risk distribution to be more global and prolific.

So many of the earlier presidents, in fact almost everyone was in the agreement that going offshore, minimizing costs, spreading a bit of increasing the possibility for customer markets abroad, but at the same time exploiting cheap labor costs and then moving towards higher value pursuits was the way forward.

China comes into the World trade organization in 2001 and obviously things start to really accelerate.

And by 2003 they've taken over as the number one buyer of iron ore and coal and oil, et cetera, et cetera.

You know, this acceleration, which everyone in shipping can remember very clearly, was almost vertical for every ship type as people were bringing production capacity for ships online, ended in tears in 2008, like so many things.

And this really laid the groundwork for Trump 1.0, which was briefly a reaction to, and this is somewhat opinion, but it's of opinion shared by many, a reaction to the unraveling of credit wealth, which effectively really boosts the C and the consumption element of the US GDP in particular, but also other Western countries.

And then on top of that, you had the beginning of social media that really took off in 2008, the iPhone, and then it really took off in abundance since 2010-15.

And that coincides with both Brexit that we won't talk about, and Trump won.

And that's really about people's discontent effectively being monetized and that visibility of how well everyone appears to be doing and the associated, let's say, money that can come from clicks from that process.

So that's where Trump 1 starts.

He's got a memory of the halcyon days of yesteryear from 1945 to, let's say, 1968, before the hippies took everything down.

He's personally benefited from huge amounts of credit and so on, but let's forget about that.

He's trying to get, let's say, into a public sphere.

He's trying to tap into some popularity.

People are upset with the existing establishment that hasn't given the American dream to the people despite the fact that they did everything right.

Because effectively working smart, studying smart versus just working hard and studying hard was the, let's say, miscommunication.

The results.

People were trained for the wrong things and there were no jobs at the end.

Property prices going through the sky masked that reality.

But then when the tide went out, that, that worked out badly and then they could all talk about it with everyone and see how everyone else is doing.

So there.

Yeah, that's, that's kind of how we got here.

And I'm exhausted already.

Okay.

Yeah, I mean, it's one of those ones where you could probably talk about this till the cows come home.

In terms of all the other things, whether you were down in the political route, where you want to kind of think about more of what you kind of outlined, the more broader theories of what was in vogue in terms of how you understand the world.

And a lot of it will be for traders.

You know, key people who are involved in supply chains will probably look at this quite worried.

But from my perspective, this just seems as well, it's an inevitable consequence of what happens when you have someone so strong as the US Were post war, there's going to be a break at some point.

And that really accelerated, as you outlined, with the World Trade Organization and China entering that, ironically supported by the US and now they're kind of reverse engineering kind of elements of that.

Let's talk about obviously the more recent history and kind of effects on markets and some of the underlying points that are being raised.

So clearly Taras, as you said, he's been quite consistent on it in terms of his viewpoint.

But tariffs have been touted as the solution to a problem.

A problem in terms of.

I think it's a pride point.

It's a hegemony point in terms of the world, the US there's really stark maps of going well pre.

No, you're Talking much earlier, 3/4 way through 20th century, in terms of major trading partners of the world.

US basically covers the map and compared to.

If you do it more recently, China has really taken that on.

And it's not necessarily.

This is a point that you've raised previously, not necessarily a consequence of the outsourcing point, but more of the highest skilled jobs and automation.

So it's not that the tariffs are going to be resulting in the reversal of the situation because it's a different point that's caused it.

I guess the question has to be, is one trying to solve a problem or is the solution to tell people things that in the short term make them feel that someone's got their back, he's looking out for America.

And it's much easier to do the latter than the former.

The former can often be boring and non glamorous, and that doesn't really work for Trump's approach.

So if a tariff can be reimagined as a tax on someone else, even though it's a tax on Americans, and it's obviously given the consumption basket of the average American, these tariffs constitute the largest tax increase on US consumers in recent history, certainly in the 20th century.

That will raise some money, but it's not raising money from external, it's from internal.

If you can do that and at the same time tout it as patriotism, then why not?

Because by the time people work it out, there'll be more things to be distracted with.

So certainly these tariffs are hurting China and you have the ability for China to readjust its trade patterns is now being put to the test and they appear to be doing it reasonably well.

We've seen now that everything from beef purchases to signing free trade agreements between Korea and China, something that was, let's say, being discussed, but now it's been accelerated and it's now very much on the table, likely to be ratified.

These are the sorts of results that are happening from the actions of Trump.

But it is obviously going to be painful.

And looking at various estimates, there will certainly be a reduction of revenue generated from exports from China because they'll either have to mark things down in price to hit markets that have weaker consumer, or sell less or focus on domestic.

So that is certainly a reality.

So his aim was to try to take aim at China.

Now, as you alluded to, technology and automation are the real killers of the rank and file jobs that left and went to China.

So they left, they were automated, they came back automated and expanded.

In the US the US now has a greater output.

It's a 50% more output for two thirds of the number of workers.

You've got a great fact which you pointed out in there.

In the 30s, one worker built five cars a year.

Today, one worker plus a team of engineers and army robots, 25 they can do now.

So it's not the outsourcing, it's the efficiency growing up.

But let's kind of concentrate a bit more in terms of what we were talking about on change of trade patterns.

I know there's a previous one I think that we've talked about in terms of soybeans and the switch that you're from the US To South America.

So there's trade still will continue.

It's just recalibrating of where it's going from where it's going to.

Yes.

So the soybean trade is one of the, let's say immediate effects and Panamax vessels are obviously having a look at that in terms of freight rates because clearly now the soybean from Trump 1 the number of soybeans going into China has been reduced materially but they're still the second largest buyer.

What's likely to happen now is that China's going to be buying soybeans from Brazil.

So Brazil will increase capacity and then the US will supply those that Brazil moves away from to leave demand there for US soybeans.

Now the ton mile differences slightly favor Brazil so it is slightly longer to get from Brazil to China than from the US Gulf to China.

There's a slight marginal effect there.

The only other major cargo would be coking coal where that coking coal supply would slightly shift towards South Asia and away from China such that the net net will probably be in the medium term around about neutral to slightly negative for Panamax demand.

But still, yes, trade patterns along that path will be materially changed and I think even any kind of deal based concession will be considered temporary anyway.

So people wouldn't stick to that and assume it's going to be there forever.

Yeah, I imagine you're going to get a stage where people are going to be wanting to watch markets much more carefully because you can have these quite significant and jaunty changes to policies because of what people would describe as erratic behavior going well I'm going to put a clearly ridiculous point to then bring you to the table to be able to negotiate.

That's the ultimate point of of these tariffs is to bring people to a table to get a better deal.

The art of the deal, we're going to mention it at some point.

So it's going to be you always going to be for trade, especially thinking about freight which is more difficult to react in terms of a very short time frame and where things can move about within a day when you don't have consistent trade patterns, especially when you're talking more about kind of dry freight routes where it's quite consistent over a long period of time.

Yes, I mean I think right now in terms of hedging, certainly option strategies might look quite interesting given now even if they've all been quite high.

It's certainly worthwhile expanding a few those elements into one's trading strategy for this precise reason.

But some things will certainly Change for the better, let's say.

So now I think there's a, as I mentioned, Japan, China, Korea and then Southeast Asia as well.

With China, this region will start to become much more interconnected, not just from inter sales but also collaborating to sell to other markets.

So obviously the China one belt one road system which got a bit of a knock some years ago in terms of returns in sub Saharan Africa is still very much a policy imperative of Xi Jinping.

And the way it rolls out soft power as the US loses it will certainly manifest itself through that expansion which will need lots of handies for the short haul moves of steels, et cetera, and then Panamax and cement carriers for the cement and clinker, et cetera, et cetera.

There are certainly some interesting rollouts.

Also BYD coming out now with the affordable supercar has just recently.

I think China is now in the process of agreeing a minimum price to supply to Europe.

So that's been one concern for Europe.

Obviously European car makers are very worried about China's ability to combine state support with private, private capital.

And as a result most of the phone makers are now switching to becoming carmakers and e carmakers which is a peculiar move, but tech's tech.

And so now I expect lots more demand for bauxite from West Africa as more aluminium is required to roll out the existing EV market globally by opening up Europe.

So a lot of that is happening now.

It's very much kind of acknowledged that Tesla is looking a bit dated now.

BYD's firing all cylinders and so that trade coupled with Simandao should see a lot more congestion action in the Atlantic for Capes for example.

So these are the positives clearly in absolute terms trade can in the short to medium term contract and China will suffer, but they're very resilient as an economy and as a people and I think far more so than the us.

So I think a lot of these sorts of developments will probably have a positive effect on their ability to accelerate and buckle down and certainly on the EV market which is much more politically aligned with Europe.

While the US shifts to drill, baby drill and maximizing hydrocarbons, China is actively through its coal use, through its EV focus.

It clearly couldn't compete with gas guzzling cars in the US so it switched straight to EVs and now it dominates that market entirely.

And Tesla Obviously, given Mr.

Musk's proximity to I guess dark MAGA would be the easiest way to put it, has had a negative effect on demand in Europe and clearly China is likely to be anything but supportive of anything American in the U.S.

now when there's a Chinese version of the same that's cheaper.

A very interesting kind of thing, political point and kind of economic point for Europe to make a choice really.

Yeah, exactly.

In terms of whether it's going to go come back to me in three years America and then kind of continue on with obviously its goals, which are much higher in terms of the environmental front, China adding more environmental capacity in terms of its national grid than the entire rest of the world put together.

So it's not just EVs, it's the wider area there as well on things.

One little final point before we kind of talk about the future, which was the reversal that happened.

We obviously had the tariffs announced.

Then actually all those extra ones are dropped.

You pointed out some things about the bond market and how that's kind of driven, perhaps a reaction to this and quieter voices coming after the initial tariff announcement.

Yes, quick thing on bonds versus equity in general, equity is considered to be within finance at least considered to be very much a kind of hype driven market, very sentiment driven.

So I can go zero to infinity very quickly on stories.

The bond market is much more fact based, it's much more analytical, much more kind of geometric and mathematical in that respect.

And so when the bond market moves, obviously the bond market is much larger than the equity market by a factor of multiple times.

Actually if you look at the global dollar based bond market, it's hundreds of trillions.

Then instantly anything that happens in the bond market that's a function of moving away from the hype of a tariff is put on and then it's removed, but then it's removed and then the elephant of China is still in the room.

That does tend to focus bond market investors much more.

So what essentially happens is a 10 year and 30 year bonds represent, let's say the long term risk perception of the US as an economy.

Overall, the short dated two year is more to do with interest rate policy that reacts to medium term inflation projections.

So effectively the relationship between the short and the long term is a function of both confidence and inflation expectations.

What normally happens is when there's a shock like 10% tariffs blanketed across the world and some strange equations used to justify reciprocal tariffs that they're not, the reaction is normally equity crashes.

People buy, they fly to safety and they buy Treasuries for want of a better word.

And that was what initially happened.

But then when people looked at the small print, they understood one basic thing.

There's a Recycling process with dollars with exporting nations that are high savers.

The US is the biggest economy in the world in terms of GDP driven by consumption.

That consumption is credit driven.

So the loan market drives a lot of credit cards and purchases of cars and things that can be afforded over a long time.

That credit is linked to the interest rate in the economy.

And whenever an exporter like China exports something to the US they receive dollars in exchange.

And those dollars are typically not spent like they would be if they're in the U.S.

they are primarily invested.

And the banks that receive those dollars tend to invest them in Treasuries.

Now if you issue Treasuries and lots of people buy them, that reduces the interest rate on those Treasuries.

So the yield gets compressed and therefore when the treasury is issued, the coupon that's effectively a snapshot of the historic yield is lower.

Similarly or conversely, if people buy less of them, then the yield increases.

So naturally, less exports from saving nations to the US equals less dollars to buy future Treasuries.

Now there were various hedge fund trades happening at the time, the basis trade, et cetera, et cetera.

But essentially people were unwinding partially because they feared that huge amounts of dollars would disappear from the bid for future Treasuries and therefore treasury yields went up.

Now of course, if yields start going up, irrespective of what's happening in the bond market, up or down 12 trillion from one day to the next, the bond market that is 50 to 100 trillion plus all in in the US that increases by 20, 30, 40 basis points.

The knock on effect of that is felt in the pocket of the consumer because the consumer debt costs are linked to, ultimately linked to banks that are linked to that rate.

Once the bond market started to respond by widening, as in the yield on the 10 year and the 30 year widened materially over the days.

And this is kind of independently of the volatility of the equity market that was responding positively to good news, negatively to bad news.

The bond market was looking medium to long term about broader confidence in the industry or in the U.S.

excuse me.

That's what really rattled people and that's what caused him to actually start walking back a lot of these policies.

And it's quite well documented now that Trump is very concerned about that.

Jamie Dimon, the CEO of JP Morgan, came out warning of stagflation.

As I mentioned before, that was what debased Keynesianism in 73 after the oil shocks.

Bill Ackman of Pershing Square, gigantic, very sophisticated and active hedge fund.

He came out saying economic winter of discontent.

It was all pretty bleak because anyone who understands fixed income understands the significance of that move.

And certainly I say this now, we never know about tomorrow.

But Trump, I think, is well aware of the impact of rising yields because he himself went bust several times from misunderstanding them.

So I think he learned his lesson.

After his small loan of a million dollars when he started out.

I don't think it was that small, actually.

I think it was a bit more than that.

I said that there's a much longer version if you want it.

So definitely ask Rich for the long version of that if you want to see more on that specific point on the bond markets and what's happened, especially more in recent history than the last couple of weeks.

The future, how does this resolve?

Where does it go?

I mean, from a political perspective, there was some elections in Florida the other day, I think it was yesterday where the Republican vote was significantly down.

I know that's a reaction right now in terms of the result and you have a long time going forward, but it's very consistent.

You've seen that an incumbent will always lose votes.

So you have the midterms coming 8th of November next year and a potential to lose both houses, lose the Senate, lose the House and to become a lame duck in the last two years with only kind of presidential orders that they could do.

So there's that potential outcome, especially if you're going to see, which I think you pointed out in the piece going, what you're seeing now is a new stage of inflation bubbling up for Americans.

Let's talk near future and more distant future where near future is much easier.

There is, unless there's a complete reversal in a really short time, Americans will pay more for not everything, but almost everything, everything in the mainstream.

So while they're paying for the same things they bought before, they'll be paying more.

And as they rotate to new, let's say lesser things, they'll be paying more for those lesser things.

So these are a given the extent to which Americans can withstand that for the sake of some future that's based on a past that no longer exists.

That will depend to a large extent on how social media pundits play this out.

And let's say many, many MAGA crowd people have already started to turn.

So it's quite conceivable that he might flip flop at some point and start to roll these things back.

So inflation in the short term is inevitable.

We've also got economic reduction, so we've got a stagflation scenario that's very challenging for Central for the Fed to manage.

So there'll be lots of jousting and blaming.

But for as long as Trump's base is as hypnotized by his charisma, he will be able to talk it out enough to get to the next stage to kick cans down the road.

I suspect there'll be some high level exits as people take the blame for various things and then try to insulate Trump and then fall on their souls elsewhere to be rewarded at some point in the future.

But there'll be chaos and then there'll be some normalization in some months because it's been such a front end loaded chaos bonanza.

So yeah, in the very short term inflation is inevitable.

And then from that likely economic pullback in the medium term, there needs to be something from the other side that is compelling, I think Kamala Harris, okay, there were some redeeming qualities for sure, but she repeated the same old, same old and that cost her and people were looking for something different.

Now they've tried something different and we'll see how that works for them.

If somehow somewhere, enough wins can be spun that it works, it's fine.

But it's going to be really hard to talk to auto workers or farmers positively because they remember Trump won.

The farmers received something between 20 and $30 billion bailout the first time around and that's nothing compared to now.

They will need help and that will need to come from tying home at some kind of budget which will be accompanied by a massive tax break.

A tax break has been coming, apparently that's the positive side of this recent chaos and we'll see how that pans out as well.

Short term chaos and inflation, medium term, it's easier actually to talk more about what will happen outside the US So the Middle east, for example, will be definitely looking to try to mediate and to raise their profile.

Dubai, where I'm sitting now, will clearly benefit a great deal from being the in the middle, the neutral party and providing stability and trying to increase its own interests.

And many other Middle Eastern countries are coming up in that regard as well.

Latin America, Brazil and Mexico are now beginning to collaborate much more to try to withstand a shock from the north.

And Canada and Mexico are now aligning much more with Europe in a kind of environmental drive to try to bring back that side of things.

And China is becoming increasingly important.

And of course China have a very strong history with France, where Mao famously studied in Paris before he went and Then created the industrial robot, the Chinese revolution.

So there are lots of seeds being sown.

Iran is obviously being wound down a bit by Trump now.

And there's Russia, which is obviously another subject.

So all these things come into play.

There's more of an alignment away from the us.

So the net result of all of this, irrespective of the caliber of people who come in after Trump, the US has been irreparably damaged from a reputational standpoint and people will diversify away as a result.

I remember there was someone calling for Canada to join the European Union, which I thought was an entertaining idea.

The UK is the only one left, not, not in it.

But that's a whole other story in terms of a previous thing that happened, that perhaps there's.

It's not inconceivable to kind of row back and feel that actually this is repairable.

You know, you've seen tons of the UK and a lot nicer noises, I think is a way of putting it towards, obviously the eu.

And talking of the eu, I definitely think there's going to be a stage here of a more muscular European Union thinking about actually, how can we do things ourselves more, rather than obviously relying on the US and generally thinking about its politics and where the shift is going there too.

But trying to wrap this all together, the world has changed.

What you've seen from the events that have happened is perhaps is that it's sped up something which was already a trend that was happening and forced people to think about actually, what are the fundamentals of the world, how it functions, who do we need to rely on?

Who are we exposed to?

Talking about risk and risk management and hedging in the freight markets.

You know, this is a wider general point for, on a national level, who are we exposed to?

What kind of things could they do?

What leverage do they have over us?

And you've seen obviously the reaction with tariffs or metals as well.

Steel's less of a reaction, but in terms of value premiums, everyone front loading stuff.

The Chinese economic data that came out yesterday to preempt all the tariff introduction.

The UK economy grew more than expected.

Everyone getting in advance.

So we could have a period of perhaps a little bit more calm as everyone goes, well, what happens now?

Before perhaps an unwinding as everyone went, maybe that wasn't the best idea.

And okay, where do we go now?

I'm reminded of a comment that someone who is a previous civil servant used to say to me when they were talking to government ministers in the UK and they used to hold their head in their hands because they used to.

The minister would talk, love steel production and all these people making things and how we used to be the world workshop and making everything.

And they just went, we don't have a 1970s economy anymore, things have moved on.

So definitely a change.

So inflationary pressure, as you said, some.

Very interesting memes coming out about lots of Americans returning to factories.

They all want factories to come back.

None of them wants to work in.

A factory, make cloth, making great again.

So obviously that inflationary pressure, which has been a real problem for governments of late post Covid a reorganization of trade routes as people settle what you were saying then are more interconnected regional groups.

So Asia as a region, Europe actually thinking a bit more about itself and its near neighbors as we kind of pointed out areas taking a bit more of a view of how can we be more insulated and kind of manage a bit more of this risk rather than a everything's okay, it's free trade, everyone just gets what they want and it's cool.

Completely agree.

I think there was too much reliant on the lines on the US particularly from Europe.

So as you point out, that is something that it's been a wake up call that was necessary and now it's being responded to and that will end up being better, having somewhat independence.

The US clearly doesn't want to engage in all these things.

People aren't being voted in on a whim.

I think there's certainly a general undercurrent that the US wants to focus more domestically and less internationally.

So the Americans felt that way.

So yeah, this is a natural progression.

The regional groups.

I certainly think it's going to be interesting.

Let's look at it from a pure efficiency standpoint without trade barriers, I.

E.

The plan of the US Post war, everything operates at its most efficient state.

As you increase barriers, you reduce efficiency.

And reductions in efficiency tends to increase cost of transportation, which is great for everyone in shipping, short term, medium term bottlenecks and front running that comes as a result.

You see aluminium premium flying, everyone's front running and that's happening across the board followed by some relief and then recalibration, which is like in absolute terms bowl all these things tend to lead towards less efficient system.

And overall in general, even if trade takes a hit in the medium term, it can be made up for to some extent by inefficiency in terms of total revenue to shipping.

But it's not just about that.

It's about the ability to take advantage of synergies which to some extent may wither as a result of this inefficiency.

So it's really hard to tell.

The further forward you go, the more difficult it is to forecast.

But now volume followed by some recalibration is likely and then medium to long term rearranged trade patterns that are less efficient and more costly for users.

Perhaps we need to have a revisit at some point later this year and we can actually see what actually happened as we review.

But Richard, thank you very much for talking this through with me and as I said, if people want more information, then definitely do reach out to him.

That's it for this week.

I hope everyone who is taking or has the holiday off for Easter enjoys that.

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