Ryan Petersen Q&A On Opportunities For Startups In Freight

11 Aug 2024 · 2 min

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1:39

Ryan Petersen argues nearshoring hype is overblown because ocean freight is dirt cheap: shipping a container from Australia to the US costs less than trucking from Mexico. Mexico's mountainous terrain and lack of navigable rivers can't compete with the river networks that make Asian manufacturing efficient.

Katerina, do you want to come on?
Thank you, Mike. Thank you, Ryan, very much. This is so, so interesting. Quick question from me, especially related to nearshoring. With the increasing shift towards nearshoring and the redrafting of these traditional trade routes, what are your predictions for the next major developments in global trade infrastructure? Like, what kind of products or companies will we see emerging to support these new trade routes?
I think it's a little bit overblown. Ocean freight is so cheap. We're overthinking this. I mean, it's cheaper to ship ocean freight from Australia to the United States than it is to go to ship a truck from Mexico to the United States. So I, you know, it looks on the surface like, okay, we're going to stop, like China trade war, government's going to crack down on China. We're going to have tariffs. But like, I don't think that necessarily means that you move the manufacturing to the US or Mexico. The logistics— Mexico has good labor costs relative to the US, but, and relative to China even, but the logistics is so bad and it's not their fault. They just have crappy geography. It's a very mountainous country. There's not a single, you know, United States has more navigable rivers than the rest of the world combined. And Mexico doesn't have any navigable rivers. And navigable rivers mean are, cheap freight. You can, we move freight every day down the Yangtze River in China, down the Mekong River in Vietnam, up the Rhine River in Europe, like, but Mexico won't be able to do that ever.