Vikrant Host

Welcome everyone to Execution at Scale, episode 6. Today we have Laurie LaRocco with us. And as you know, this series exists because the best conversations in this industry happen in hallways and over coffee, and not on the stage. And so that's why this series exists; to change that and have honest conversations. And today, as we started straight off; the Hormuz [Strait situation] has fully been closed, so perfect timing. And today joining me is Lori, with LaRocco Consulting, one of the sharpest voices in global trade, as we know. Lori spent years at CNBC as a senior editor for global supply chain, and also writes a Substack called Trade Alert. And she's the author of several books; one of the ones I'm reading right now is called Trade War: Containers Don't Lie. So very excited to have you on, Lori. And before we go into the fun stuff, I'd love to see if you'd like to add on anything.

Lori Ann LaRocco Guest

Sure. I mean, I think what you're doing is really good in terms of promoting honest conversation. As you know, I just recently had my Supply Chain Symposium, which does the same. And, you know, you've got to put your egos aside in order to succeed in today's world of trade, because honestly, everybody has a competitor, and our competitors make us better, because it pushes us to be our best.

Vikrant Host

One of the things you and I talked about when we last spoke was around cancelled sailings, slow steaming. So let's go a little bit deeper into it; the whole "Plan B"; how a company can be better prepared, and also more aware, before things happen.

Lori Ann LaRocco Guest

The biggest thing is our data; our proprietary data is what keeps us one step ahead. Unfortunately, a lot of people don't know the power of their data, or it's a very limited scope. And recently I was at a private equity event, and I asked suppliers out there, companies out there; do you know your third-tier supplier? No one raised their hand. You need to know your suppliers all the way to the seventh level, because of what's going on with the Strait of Hormuz. So when it comes to supply chain, and something like the Strait of Hormuz, it's like what I did with the trade war with China; you want to figure out what's moving out of there. And it's not just the crude, it's the molecule. The cracking of the molecule creates 70,000 different products. So we're seeing chemical constraints; the price of paint is going up, you have plastic shortages, all because of the Strait of Hormuz. So this is where it gets back to needing to know your supply chain. So it's; do you hire an expert where they do it for you, or do you dive into your own data, create an agentic AI program, to see where you're vulnerable? And once you know where you're vulnerable, that's where your Plan B, C, D, E come from.

Vikrant Host

That's a trade-off, I guess, right? When we try to diversify some of our supply chain; have an A supplier, B supplier, C supplier, or even 10 of them, depending on the volume we're trading in; all of that trickles down, because prices; since most of our audience is warehouses; even if we look at shrink wrap, the price of shrink wrap goes up, the price of plastic pallets goes up. There are so many consumables that go into it, and at scale that becomes a very big number. And even looking at what's going on with the warehouse space; how's that looking?

Lori Ann LaRocco Guest

You know, the LMI recently came out; warehouse costs are up because inventory is still there, and we're seeing peak season early, so that means more product is coming in. And so, from the warehousing standpoint, if there are any FTZs out there; what are people doing there? Do you have enough FTZ space available for the next tranche of tariffs? Because, particularly with what's going on with the Section 301, the 232, the forced labor investigations; in the end, shippers are going to pay probably what they paid for on Liberation Day, after the layering of the tariffs. So you want to get one step ahead. What are the services? And this is something that doesn't matter if you're a small business or a large business; in today's time, service is what matters. So you need to take a hard look at yourself: what sets me apart from the others? Are there additional opportunities I can provide that others can't?

Vikrant Host

You bring up a very important point; that some percentage of that demand, on the other side, is also temporary. So yeah, we need it today, but how much of that will be left, let's say, a year and a half from now, when things maybe settle down and the supply chain eases out? So then now you have this empty space sitting. So it's a big cycle; what are your thoughts on that?

Lori Ann LaRocco Guest

There are always booms and busts and overbuilding, right? The one thing with FTZs and bonded warehouses is that it takes time, because the government has to issue it for you. So it's not like you're going to have a boom right now; it'll be whatever folks started trying in January, most likely, where they might see some expansion. You don't want to be too greedy, right; because when you buy up more space than you need, that's sitting there costing you money. And honestly, you and I both know; when it comes to bonded warehouses, when I did a documentary for CNBC, with the surprise pop-ins from customs; if you have one thing wrong, that can cost a lot of money. So you really need to keep on top of it. But at the same time, when you see all the uncertainty, if you do have that space available; FTZs are more long-term, as you know; but even with a bonded warehouse, you can go to your potential clients, or others; toys were huge for bonded warehouse in the last trade war, most likely it'll be big again. So maybe if you have some extra space, you can market it now. There are so many disruptions within the business, outside the business, that get affected

Vikrant Host

But as a company, as a team, all we can do is be resilient, face it, and try to find the optimum solution. And the only way you can prepare yourself as much as possible for events like these; and if there are people listening right now who didn't prepare in the past, that's fine, but this is a learning: build up secondary [supply routes], build up secondary suppliers, etc. That's something they can do for the next time it happens again.

Lori Ann LaRocco Guest

Exactly. And build the relationships. You have to keep in touch with the people you have relationships with. And if you drop those, because you're caught up in whatever the headlines are, when you call them because you need something, they can be like; why am I not talking to you, you haven't called me in six months, I'm going to go help the guy I've been talking to consistently.

Vikrant Host

Right. Or introduce yourself to another secondary supply chain provider, and be like, hi, what do you have? You've got to look at the flow of where things are going. And even the opening point you made, right; sometimes we think of people, when we go to associations or events, as competitors, but they're your collaborators as well. If I'm in, let's say, Toronto, and I'm a warehouse, and I know you're a warehouse in California; when things are changing, we can collaborate, we can help our customers together. I see that as very powerful, and, at least over the last couple of years, I've seen the whole 4PL model evolving a little bit more too. What are your thoughts on that; have you seen people collaborating more lately? What are you seeing? I'm very curious to know.

Lori Ann LaRocco Guest

Unfortunately, I don't see as much collaboration as I think there should be. I saw collaboration, like with the symposium; a lot of people sharing ideas; but when it comes to teaming up for the good of moving trade, a little bit, but not as much. It's like people need to realize you're only special to your mom, you know; in all honesty, because everybody has an AI platform, and I get lots of pitches on "this is never before, best ever," and I'm like, no, it's not; it's the same thing I saw from five other people. You need to step back from "oh, what I just created is special"; really? Is it really, truly special? Is it a disruptor? Are you disrupting the industry? Chances are, you're not. What makes you special is you, and your service, your personality. Are you a winner? Are you nice? In the end, it's you; you have to believe in yourself, and no one is going to think you're special out there, except your mom.

Vikrant Host

Yeah, no, Lori; I think that was probably the; every time you say something, this is the most powerful thing you've said. That's very interesting, but no, absolutely. And more than specialty; even if I think about it; I'm out of space, right, but I get a lead, and you're like my neighbor, and I say, hey neighbor, can you store it for me? What is that doing? I'm not turning down a customer; I'm building a relationship with the customer, and with you, the neighbor. And the same way, you need some help tomorrow, and this gives me time; maybe another six months or a year; to get another building next door or whatever. It helps you in your transition while you're building yours. And I believe so strongly in collaboration, and even capacity-sharing in some cases, especially for services businesses; because, deep down, like you were saying about disruption, I feel people who create disruption; their motivator isn't money.

Lori Ann LaRocco Guest

Their motivator is problem-solving, right; they're trying to solve for something. It's the way you look at a solution. A solution is how both parties win. It's not about how much money can I squeeze out of you because of a certain situation; it's what can we do together to make things better. That is the solution, that's the service. And so if you go to somebody; hey, listen, I don't have space, but Billy Bob does, right down the street, let me give him a call, let me see what I can do; and then you have an arrangement with Billy Bob about whatever it may be, and it's twofold; Billy [Bob]'s like, hey, thanks so much, Vic, next time I owe you one. And so it builds that community. If you build a community of service and thought leadership, it'll go a lot further. And particularly with the smaller businesses, you need to combine forces, because you're getting squeezed out by the big guy. Do you have the deep pockets of a DSV? Most likely not; but where do you start trawling? Where are the big guys putting their money, where are they investing? Because when it comes to logistics; and this is good for warehousing; I always say your future is based on where the big ocean carriers are building, because they build for the long haul, and infrastructure takes time to build. So, for example, where are they building right now? MSC and Maersk are spending a ton in Africa, and a ton in India; a ton. They're building roads, they're building terminals, they're doing all this. What are they going to need? Warehouses. What's one of the biggest problems in India? The warehouses are like two hours away from the port. So what do you do? Could there be warehouse areas closer to the port? That gives you a competitive advantage, because someone's going to want their stuff closer to the city, closer to the port, to get in and out.

Vikrant Host

That's the best point, right; and that applies in every industry too. We look at other competitors, and see, okay, there's a big fish that did X, there must be some reason for that; what's that reason? Just being curious helps you piggyback, right; they might have banked on that opportunity as a first mover, that's fine, but you can be the second mover. Don't be the last mover.

Lori Ann LaRocco Guest

Exactly. Their ROI is a lot higher to achieve than yours would be; that's the whole thing. So where else can you go, be part of associations, and, like you say, talk, meet; and if you're a nice person, people will remember. If you're not nice, people really remember that too, and people root for your failure, because people like nice people to succeed.

Vikrant Host

Yeah. And there's also a saying; it doesn't cost you anything to be nice, right?

Lori Ann LaRocco Guest

Exactly. Exactly. And more often than not, I've just found that to be; and I think someone can't fake it, it just comes naturally.

Vikrant Host

That's what I feel too; what do you think? If someone, like a jerk, thinks that even after listening to us he'll get convinced he should be nice; I don't think it's possible.

Lori Ann LaRocco Guest

Yeah. No, I mean, I was talking to some people last week at DC, and I said, you know, we're all "goobers"; we're goobers for trade. And they all looked at me like, oh my gosh, I am a goober. You know what I mean? It's that self-deprecating humor; in the world of trade and logistics, we're an odd bunch. We like numbers, we like things that aren't mainstream, and we're solutions-based. So instead of just; yeah, we all know the problems, but what are the solutions, how do we become solution providers? Where's the thought leadership in that? I think that's when the cream of the crop rises; where you have those discussions, and the people who invest in themselves are most likely listening to your podcast because they want to learn; they want that actionable information where the ROI is on themselves and their business, right?

Vikrant Host

Yeah, absolutely. And it goes back to the same thing; knowledge, investing in yourself. And what's interesting; and it might be a total topic switch here; people are using AI in good ways as well. What I've been seeing over the last three to four months; because I built some internal tools, this AI bot and other things, and we've built a few things for our customers; and even what customers are using it for, my clients, friends, everyone, at a small scale; even if you're not a coder, you can build a lot of smaller things using AI coding tools. And they're useful. But the problem I'm also seeing is that it's fine up to the point where you're using it for internal use; like, I built something myself, I'm not a coder, I did it just for scraping the news. The other problem I've been seeing over the last three, four months is that people are pretty much vibe-coding an enterprise system,

Lori Ann LaRocco Guest

Oh, wow.

Vikrant Host

and trying to sell it to other companies, right? So they're building; you know what I mean? And it's so funny; this was just three weeks back; I was approached by someone, and this guy had bought a company, without sharing too much what it does or doesn't do, just keeping it very simple; but it was a business-enabling system, right, like a CRM, a WMS; those fall into the business-enabling system category. For $1.2 million, he bought it outright, only to find out that, yeah, it works, but it has bugs, and everything was vibe-coded, and it had about 50 or so users on it.

Lori Ann LaRocco Guest

Oh my God.

Vikrant Host

And now we're working on stripping all that down, and pretty much they'll have to spend more money to restructure everything as commercial-grade software. And it's sad.

Lori Ann LaRocco Guest

Oh my God. No, no. I mean, and that's also garbage in, garbage out, you know? And then I've seen, even with Gemini; I was creating a graphic for my Substack, because you can make some cute graphics with it. I loaded data from Import Genius and put it in, and it didn't look right. Got on the phone with my contact, and I was like, look at this. He's like, Lori, that's not my data. It pulled additional data; the AI, with the Import Genius data I put in; and it was wrong. So you have to be very careful. And after that, I was like, screw that, I'm never doing that again; because you're thinking it's going to [work], and I looked at it and thought, what is wrong with this? I knew this story, I knew the data. And he was like, I don't know what that is, but that's not our data. I said, okay, that's enough, I'm not doing it. And what I think the problem is, is over-reliance. People aren't seeing it as a tool, they're seeing it as an assistant. Look at the predictive writing; when you're writing an email, it's like, really? No. How many times has it used that word? It's so overused. And, I'm a journalist, so; you don't have to say "said that," you can just say "said"; there are certain things that drive me nuts. But I think also, the younger generation; I've got three kids; some of them use it to write reports, and I'm like, it doesn't have the personality, it doesn't have the depth of knowledge, it doesn't have the emotion, and you need the people. And that's why, when you're looking specifically at data, and at trends, you need multiple sources.

Vikrant Host

If I kind of summarize everything; and I'll hand it to you to conclude; I think one of the things I learned from this is: one, increase your knowledge, and in that process, try to work with your peers, because a lot of smaller companies can combine to be like bigger companies, or compete with them. And third, use AI as a help, not as something to fully rely on. But I'll give it to you; anything you want to add?

Lori Ann LaRocco Guest

Sure. I mean, in the end, you have to know, as an entrepreneur, you have to know your worth, right? Because; why are you doing this? It's a struggle to start, and you need that belief. You need to take that into the room when you're negotiating freight rates, negotiating in general. And then there's also the power of; we find out which companies have programs for small and medium-sized businesses. Like I said, the Port of New York and New Jersey have a program; they have a program for small and medium-sized businesses, for free. A lot of people don't know that, but they have one; I know because I spoke with the CEO. So you have to arm yourself; do your Googles, or even ask; this actually worked for me; if you go on something like Gemini, you can just ask, which ocean carriers offer small and medium-sized business programs or offerings, something like that.

Vikrant Host

Absolutely. Thank you so much, Lori, for all the insights. And after this, when anyone asks me what the main learning was, I'll say; you have to listen to this to understand the power of "V." I think that's the new title of the episode, not the one we'd planned.

Lori Ann LaRocco Guest

Vikrant Host

Awesome. So whenever we post this, we'll drop your LinkedIn in the post so anyone can reach out to you. Once again, thank you so much, Lori, for your time; have a wonderful rest of your week and day. And thank you everyone for listening in.