Supply Chain Disruptions: Commodity Experts Explain Trade Tensions

Commodity specialists from Posival & Company discuss the far-reaching impacts of recent tariff policies on global supply chains, Central Ohio businesses, and consumer prices.

• Uncertainty is the biggest challenge, as businesses struggle to predict costs and maintain international partnerships
• Consumer goods retailers like Dollar Tree face existential challenges with tariffs up to 145% on imported products
• Reshoring manufacturing to the US isn't simple—it requires years of development, substantial investment, and higher labor costs
• Southeast Asia presents alternative market opportunities as businesses pivot away from China
• Even with tariff barriers, business continues because "people still need to eat"
• Historical context shows trade conflicts have shaped American policy since the country's founding
• The maritime shipping imbalance is stark—China built 353 ships last year while the US built only 3

For supply chain consulting or to learn more about grain commodities trading, visit https://www.pnco-international.com/.

Whether you're a business owner managing global supply chains or a consumer wondering why prices are rising, this episode offers valuable insights into the complex world of international trade during turbulent times. Connect with Max Posival and Brian Thomas at https://www.pnco-international.com/ or find them on LinkedIn. 

Transcript

Speaker 1 0:01

Welcome to Central Ohio Matters, the podcast where we delve into the issues that shape Central Ohio's future. Each episode features in-depth conversations with local leaders, visionaries and changemakers driving progress in our region. These conversations offer insights into the challenges our communities face and the solutions being crafted to move them forward. Here are your hosts, michelle Gatchel and Ryan Rivers.

Speaker 2 0:24

Hello everybody and welcomeatchel and Ryan Rivers. Hello everybody and welcome to Central Ohio. Matters we're hearing in the news on a daily basis. You know there's tariffs what percentage? What countries? How are we all being affected? And how things are being affected is supply chains and you know sourcing things for businesses and I thought it would be a great idea to talk to some commodity specialists. So I invited Max and Brian from Possible and Company and gentlemen, thank you for joining us.

Understanding Tariff Impacts on Commodities

Speaker 3 0:56

Happy to be here. Thank you for having us. Thank you.

Speaker 2 1:00

So I'm sure you guys have been watching it more than anybody else, because it directly affects what you guys do. But how does it affect? That's kind of what I want to talk about today in this episode. The average person may or may not see it right away, but are you already feeling the strains on commodities being shipped different places? Strains on commodities being shipped different places.

Speaker 3 1:24

There's a few layers to that question and there is the very base financial layer which is going to be affected if certain tariffs are left in place. But even the threat of tariffs or tariffs coming in and going off fairly arbitrarily, we can see they have huge effects and disruptions in the markets themselves, and so futures are a big part of commodities and when you're trying to predict the future, tariffs are going to indicate how different things move and they're going to have wild fluctuations and people are going to bet on what's actually happening versus what might happen. So the biggest problem that we're facing is not in import or export, but it's the unknowing aspect of where prices are going to be, what people are going to have to pay for them, and being able to get cash flow that's able to pay those tariffs so that things can come into the country.

Speaker 2 2:37

And with your company? Do you deal more with companies that are in the US that want to ship out, or companies in the US that are trying to get stuff shipped into them?

Speaker 3 2:49

It's about equal. Right now, we deal with farmers who want to ship out, especially to Southeast Asia, and we have farmers who want to ship in, and what we primarily deal with is grains, and grains are the bread basket, they are what flour is made of, they're what tofu and they're what animal feed is made out of. Grain goes into pretty much everything we consume, and when it comes to reciprocal tariffs, you know that makes everything more difficult. However, people still have to eat, so even if tariffs are placed in something, that isn't going to stop the supply. We just have to figure out creative ways of how to deal with it.

Speaker 4 3:45

So, as far as obviously, as we go down this path, what has been the most disruptive would you say to this point? Just the actual unknown.

Speaker 3 3:58

Yeah it's the unknown. We have companies that don't want to do business with us anymore because they don't know how it's going to work out, and those are primarily international companies. Now our suppliers and our buyers remain the same, but even when we're shipping from international to international now people that were at the table are backing away because they don't necessarily trust an American company, and that's a big deal to deal with. We're still going to keep importing food here. People still need a quality of soybeans that you can only get out of the north of Columbus, south of Erie kind of belt, but for other things different types of flour, and people don't know what to do. So they're kind of putting the brakes on things and seeing if things will level out.

Speaker 4 4:49

Where would you say, this is having the greatest impact?

Speaker 5 4:54

I would say consumer goods mostly. I mean you have a lot of our economy is consumer driven and we import a lot of things from China, from Southeast Asia, because it's cheap and it helps keep inflation in check. It's really hard for a lot of people in retail right now to compete, and last night that Dollar Tree is starting to roll back purchases and trying to figure out what they do, because their business is squarely derived from importing from cheap sources over in China, vietnam, thailand, etc. Bring it into the country and aggressively and efficiently distribute that wherever. I mean. For a while, dollar Tree, for example, the slogan was everything was a dollar. It doesn't matter what it was, everything was a dollar. Now it's $1.25.

Speaker 5 5:50

And if you have 145% tariff on everything you know, let's say, your cost to bring it in is a dollar, it's now $2.45, landed cost before distribution, before anything. So that just basically kills the business distribution before anything. So that just basically kills the business. More importantly, though, then you have we can't change like that in our supply chain it takes five years this whole notion that well, we can build stuff here in the United States. Yes, true, we can. At what cost? Because American labor is very expensive, it's good, it's productive. We have some of the best workers in the world Arguably the best but it comes at a cost. That's a cost a lot of people don't understand, that they will have to pay.

Speaker 5 6:41

I mean just on automotive alone we're talking 10, 20, 10, 20, 15, somewhere in that range, depending on the value of it, of things going up and the cars are, you know, tens of thousands of dollars to begin with.

Speaker 3 6:54

So if you want to talk about reducing inflation, don't mess with tariffs yeah, on top of even the time it takes to build the factory, where do you get the parts for the factory? Those aren't all homegrown in America. Matter of fact, most of them are not. We have to import a lot of specialty goods, a lot of metals and minerals that are used in manufacturing processes and minerals that are used in manufacturing processes, and then there has to be a lot of infrastructure built up around that. So if you have the Honda plant, like in Marysville, well, they have hundreds of suppliers and factories in Ohio alone and they have hundreds of suppliers and factories that are in Ohio and surrounding states and international.

Speaker 3 7:41

Now, when you have prices added to the base materials you know wheats, grains, metals, oil resources, any resources, the energy costs to make these things go up the base metals costs go up, and then you also have a constricted supply and an increased demand. So the same amount of people are going to be demanding the same amount of products, but the supply is going to be much lower and more expensive. And so you really have a triple threat of increasing supply chain costs that go into every single piece of any materials that we consume. The pencil on my desk is going to go up. And that's just what happens when we put resistance into the free market and into trade. You have to compensate with that resistance with more money.

Speaker 4 8:43

I know none of us have a crystal ball and can accurately look out into the future and predict, but what do you see? As far as the production side, with AI robots, the more automated side of things on the manufacturing, the future holds on that end.

Future of Production and Automation

Speaker 3 9:05

The only thing that more expensive work does is it pushes the technology there faster, and we've already seen a lot of automation. We have a ton of manufacturing in America. The reason why we don't see as many people in manufacturing is because of the automation, not because we've outsourced it. The world has gotten a lot flatter over the last 15 years and it's no longer as cheap to make stuff in China and Vietnam and Mexico as it was, and so a lot of manufacturing has actually come back to the US on its own without having to manipulate the markets. Matter of fact, a lot of those factories are even Chinese owned. It's cheaper for China to build factories and own them in the US than it is for them to ship it across the ocean, depending on what the product is. So we've already seen AI and automation and things like that. That won't be directly impacted by the tariffs, unless there's something I'm not seeing, which is entirely possible, but more expensive labor force will drive investment into those areas.

Shifting Trade Focus to Southeast Asia

Speaker 2 10:17

So you guys are working primarily with weeds. We've talked to a couple of different councils, from the soy council to the corn and wheat council recently, and you know they're also talking about canada and mexico, too, being areas that they export to. What areas are you finding so far? Are what countries regions you should say? I mean, is there like a plan B? Do you have alternatives? If something has reciprocal tariffs too high, it doesn't jeopardize what people are growing right now. Or like he said, max, you said like five years out, it doesn't happen overnight.

Speaker 5 11:04

You know, yeah, oh, yeah, well, I planned on, this is not my first round with Trump in the presidencies, so I anticipated him being elected and that's why I really, in the last 18 months, really pulled back my focus on China. I mean, there was some there to begin with, but I realized it's not worth it.

Speaker 5 11:33

Plus, china is in a very interesting point in its development. So they overcounted by 150 million people. They're aging faster than anticipated. They're also in the mix of trying to emulate. What we do is shifting an investment and export driven economy to a consumer driven economy, and it's been really tough for them.

Speaker 5 12:00

So for us, you know grains and fitting within the footprint of everything, it's just retrenching with who we do business with. That's Southeast Asia, I mean Indonesia by itself is a population that's 275 million somewhere around there. Strong, it's stretched all the way out, it's almost as wide as the United States and it's a very different environment and dynamic and geographic footprint. I mean that's where most of the growth is going to be. It's not going to be China. China is a big panda bear. I'm using that on purpose. They have a central government. They can buy in bulk. They have the geographic wherewithal to bring bulk ships in. They only want to deal with ADM and cargo and Louis-Dreyfus and Bungie and all those and the Andersons.

Speaker 5 12:54

That's driving efficiency because they have over a billion people to feed. Well, southeast Asia's got Vietnam, thailand, indonesia, malaysia, singapore, cambodia, laos.

Speaker 5 13:05

Myanmar the much more politically divided, different areas of doing business. I mean the indonesians do business the dutch way, whereas malay and thailand tend to be more entrepreneurial. You know malay, what used to be a british part of the british empire, singapore, is a clearinghouse. You know the french have a huge influence in. You know lao, cambodia, vietnam. So there's different ways to do business. But the geography is they can't bring in the bulk ships as much. I mean so shipping to ho chi minh city. The ships are so big now we have to ship it to a place called vung tao, which is an artificial port, so they can put onto barges to go up the mekong delta, because they just can't go up to Saigon anymore.

Speaker 5 13:53

So it's different geography which presents different logistical challenges, and because they're smaller economies and the business is not as centrally planned as the economy of China is, there's hundreds and thousands of different businesses you can test, you can ship to, you can on a container basis and make it worthwhile.

Speaker 5 14:15

So it's just that creates an environment where it's less about can we get it there? But we can't, and we could get there in economic means is bridging the cultural gap, the communication gap, being able to effectively communicate, things like that. That's a lot of things that, in my opinion, americans are not the best at, but if we learn and really work at it and communicate I mean WhatsApp's a great thing, I can call anyone in the world we can do better and we can really shift away from this is how it's always been, because that's dangerous.

Speaker 5 14:56

So.

Speaker 2 14:58

So with that, you know, I know. Brian. You mentioned the fact that some people are already backing away from the table. And the fact that some people are already backing away from the table, with the stock market going up and down, and up and down, like every other day, do you think these things will slow down?

Speaker 3 15:24

And if so, how soon? What things?

Speaker 2 15:25

specifically, do you think people will be less? How long will it take to recover, I guess, from such a tumultuous couple of weeks?

Speaker 3 15:36

Well, I mean, the recovery was pretty immediate, as soon as the terrorists were let off. So, again, what we're really talking about is future predictions, and the chaos is far from over. We're just starting. We've only been in this administration for what? 85 days, 90 days, something like that, uh, and so the the minimum we have to go is another four years, um now, that being said, business is is like uh, forgive, forgive the uh oldage, the spice must flow.

Speaker 3 16:12

Everyone still needs to eat, and so what's going to happen is people might try to predict things and play things. I think a lot more is going to be done in the way of future contracts and there will likely be funding and this is a complete guess, but there might be funding set up with different businesses so that they can cover whatever tariffs come in. If they do, we don't know when the volatility is going to stop. It really depends on the administration.

Speaker 4 16:48

Is there any similarities? If we look in the past history that you see similar to where we're at today, any past experiences or times? We've gone through a little bit of turbulence.

Speaker 5 17:04

Historically and also modernly I mean, first round versus second round of the trump administration is just more of the same, just more aggressive. Um, some of the people he has around him, specifically peter navarro, just to have a very fringe view on how trade is to work. I, for, I've always been a free trade hawk, and the more I thought about it, there's a lot of things that we haven't really addressed as this country, and I got my head around having reciprocal trade. I'd rather have a few good countries that were actually having meaningful exchanges, where I mean United States.

Speaker 5 17:44

Rare earth metals is our Achilles heel right now. Yes, I've seen news about new deposits, but that's going to take a long time to develop and make it economically viable. So we still have to work with other countries, other mountainous countries like that other than china, like brazil and peru and chile, who may have these earth metals for us. So it's just, it's more the same from like like I the first time around. To get back to that just more intensely, we just got to put our entrepreneurial hat on and figure it out. But you know, this is usually leads to better things.

Speaker 5 18:24

For instance, we had a protective tariff during the Gilda days. You know, 1880s, 1890s led led to the creation of all these massive companies, but that showed how we needed the federal government to step up, be a referee, because you know, us Steel, standard Oil we had all these people controlling massive amounts of the economy. I mean, we didn't even go back further. The formation of this country was from. What I was taught was the intolerable acts the Navigation Acts, stamp Acts, te Acts because that was Britain's attempt to control maritime commerce and be able to raise revenue, and that led to the whole taxation without representation bit. So almost 250 years ago, we're still dealing with this.

Speaker 5 19:13

I'm a qualifying individual for a non-vessel operating common carrier license and what that has to do with anything is you need something shipped in a container on a boat, you call someone like me and we go take care of it. That's. That's a super high level part. But there's things I've had to learn and be better, better cognizant of and mindful of, and a lot, lot of that's Admiralty law when it comes to insurance and getting insurance on on cargos. A lot of that goes back to the 15 and 1600s.

Speaker 2 19:42

Really.

Speaker 5 19:43

Yeah, so understanding that and the precedence of where that has built off to, to everything I mean. I mean, just look at the scale of 250 years. Let's assume it's 2026. We're still embroiled in all this. We went from tariff issues and the British telling us we can only use English flagged vessels to do trade, negating the Dutch who were cheaper and had more vessels and were better trader partners in some respects, to we had a war with Britain and France in 1812. Same thing they were trying to steal our sailors and impress them into their navies because they were still fighting each other on the high seas.

Speaker 5 20:26

To American Civil War, we blockaded the South with our navy because we had enough. To the Spanish-American War, our trade allowed us to take the Philippines and Puerto Rico and Cuba. And then, you know, we kind of fell off that and then World War II happened. The Liberty ships we built was the foundation for the remaining top 10 steamship lines that are currently in existence, top 10 steamship lines that are currently in existence. And then now our administration is now fighting, now you can't. Our administration saying you can't, you, you shouldn't be using chinese-made vessels, you should be using american-made vessels, kind of echoing what we, how the whole thing started to for us to about from that level to what ends up on the grocery store shelves that we end up buying right and how that all trickles down yeah, we we're.

Speaker 5 21:26

We're the least maritime dependent country on the planet we have. We can feed ourselves, we can fuel ourselves. We have can fuel ourselves. We have massive inland waterways. We have some of the best harbors in the world Chesapeake Bay, hampton Roads, puget Sound. Look at Oakland and San Francisco. So it's no surprise how we can generate a lot of capital domestically and focus on these things domestically.

Speaker 5 21:52

But what? But you know, because of old war ii and you know our, our alliances, and then we have, I think there's some value in interacting with the world. I mean, we opened up japan at the end of a gunboat artillery, you know, weapon 18, what? 1854, 1860, something like that, so we can trade. It's just we gotta be, we gotta figure out. We're so large, we have so many diverting political aims and we just gotta figure out at least the baseline, what's good for us. I mean here's, here's a fact.

Current Maritime Trade Challenges

Speaker 5 22:28

I read this off of the US trade representative there's a current debate going on about should we put $1.5 million levy on every Chinese-made vessels making all into the United States? I'm of the opinion of no and I wrote to that. But I'm not afraid of shipping on US flag vessels, just need to have them. I will do that all day. We afraid of shipping on us flag vessels, just need to have them. I will do that all day. We just don't have. We built three ships last year. The united states built three ships for every one ship the us built.

Speaker 5 23:00

China built 353 of them oh, wow yeah, and even in the discourse and that whole thing, even the unions, the ship, the steel makers, the boiler makers, everything they agree like consensusly, we all. Basically the industry has said you know, from the ship builders, the people like myself, will book, pay space on ship and pay the ocean carriers. We have no problem doing it. Just don't do it this drastically because it will cause a lot of problems, like get something in place, have a plan, gradually, lean into things. I mean Atlantic Container Line, which is arguably one of the first ocean carriers, containerized ocean carriers in the North Atlantic. All their ships are Chinese built. They said if this happens, we're, even though we're owned by someone else in Europe, all of our operations are in the United States we're going to have to fire everyone, not call here. That's like a thousand jobs will just vaporize like that.

Speaker 4 24:00

Wow. Well, you said this round is a lot more aggressive than the first round with the Trump administration. Do you feel like there were many that were caught flat-footed, that didn't expect it to get to this level? Everyone?

Speaker 5 24:16

did. The way I saw it, it was just a four-year reprieve. If you didn't plan for it that's on you. This is very aggressive Ships move it's it's very, this is very aggressive.

Speaker 5 24:33

I mean ships ships move, a little saying and Brian has heard this. You know things move at a patient, glacial pace. And logistics, I mean ships are capable of moving at 10, 15, sometimes 20 knots, depending on the size and everything. They purposely slow steam to save fuel, which is smart. You know we've got gotta be environmentally and cost conscious. But if you're importing, if you're a startup and you're importing something it takes 20 days to get here, then all of a sudden your product costs 50 more. You're out of business like I don't, I don't. It's always a debate I have internally is why it's? Why can't people see this? But then again, you have to run payroll, you have to pay employees, you have to make sure there's all months out versus making sure you get the next pay period taken care of.

Speaker 5 25:36

But you've got to be able to see the forest and the trees because the little changes on the tactical side at least you know. Make an effort. Reach out to economic development people or the embassy or something. There are great conduits for these things. Participate in different chambers of commerce I'm a member of two. Just have that communication because it's really really everyone wants to do business. It's just keeping the friction down and be able to understand what people are doing is the biggest part.

Speaker 4 26:07

It sounds like both of you are preparing for the foot to stay on the gas and for the aggressive nature of these tariffs to continue.

Speaker 3 26:16

Well, you have to. If we decided that, oh, we're just not going to pay attention to it and we're going to pretend like everything is going to be easy and it's going to go back to the way it was six months ago, we're setting ourselves up for failure. So might as well hope for the best and plan for the worst, and people will still have to eat. So, at the end of the day, these costs will be passed on to the consumer, and we're expecting that people will still at least be able to afford, you know, wheat, grains, soy, all these things that are required for us to have sustenance now.

Speaker 2 27:03

So where can people find more information about you guys?

Speaker 5 27:08

We have our website, pnco-internationalcom. So if you want to reach out and sit, you know need any supply chain efforts or help and consulting. We're here for that. We're on LinkedIn Right now. We're just working with the farmers and everyone here to make sure everything's calm and we keep those containers moving with grain.

Speaker 2 27:35

Great Well, I want to thank you both for Go ahead, Matt.

Closing Thoughts and Contact Information

Speaker 3 27:39

I was going to say. The people that we typically work with are either the suppliers or the buyers, and that translates into farmers, metals, recyclers, factories, oil and energy producers, uh, to the distributors of those commodities, so people who add value to the goods, whether it's turning soy and uh soy soybean meal into animal feed, uh, whether that is processing it into tofu or other alternatives, large millers, things of that nature, and yeah. So we really are connectors and, no matter what the situation is, we pride ourselves on finding a solution.

Speaker 2 28:33

Well, thank you both for joining us and filling us in on the changes and whirlwind that's going on right now in the commodities world.

Speaker 5 28:41

Yes, thank you. You're welcome Absolutely. Thank you for having us.

Speaker 1 28:44

Thank you for listening to this episode of Central Ohio Matters. Be sure to like, share and download. We cover government policies, health care challenges, housing and business developments, transportation solutions, education and innovation. If you know of a good story we should be talking about, go to the radio station website and fill out a contact form Directed to Michelle Gatchel, host of Central Ohio Matters. Thank you,