Gary M. Goldfarb With Interport Logistics, LLC

Intro: [00:00:01] Broadcasting live from the Business RadioX studios in South Florida. It’s time for South Florida Business Radio. Now, here’s your host.

Lee Kantor: [00:00:14] Lee Kantor here another episode of South Florida Business Radio. And this is going to be a good one. But before we get started, it’s important to recognize our sponsor, Diaz Trade Law, your customs expert. Today on South Florida Business Radio, we have Gary Goldfarb with Interport Logistics. Welcome, Gary.

Gary Goldfarb: [00:00:33] Thank you very much.

Lee Kantor: [00:00:34] Well, I’m excited to learn what you’re up to. Tell us a little bit about airport logistics. How are you serving folks?

Gary Goldfarb: [00:00:41] Interport logistics is a very interesting company. It’s 20-21 years old, but it’s a surviving entity of a company. I started in the seventies, which went public and we’re very successful and we are again very large operator here and very successful.

Lee Kantor: [00:00:59] So what’s your backstory? Have you always been involved in supply chain and logistics?

Gary Goldfarb: [00:01:05] I have been in the logistics industry since January 12th, 1972.

Lee Kantor: [00:01:11] You remember the date, January 12th?

Gary Goldfarb: [00:01:14] Yeah, I remember the day of the date. I remember a lot of things. And that’s 50 years. And in 50 years, the business has gone from being a small mom and pop community where we used to have to ship by truck to New York to get to South America to being the gateway to the Americas and receiving cargo from Europe and Asia for the U.S., as well as Europe and Asia for the Caribbean, Central and South America. So it’s been it’s been quite a transformation.

Lee Kantor: [00:01:47] Now, for folks who aren’t familiar with they’re familiar with logistics when they go to the grocery store or get something off a shelf. But they may not understand how how difficult and challenging it is to do what you do every day. Can you share a little bit about the importance of having ports in the area and the ability to get goods from other places quickly into the country and out of the country and moving goods? It’s very complicated. I think people just kind of don’t understand the, you know, the complexity.

Gary Goldfarb: [00:02:24] Yeah, our industry is most probably the most complicated industry around. And people, you know, broad brush here, they call it people, they call it logistics, they call it trucking, they call it freight forwarding. It’s really the management of the supply chain. So the supply chain isn’t a factory that makes a finished good, that delivers it to a warehouse that receives a finished goods. It’s components coming together into a an assembly point. Is that finished product going to another assembly point or warehouse to be joined with other products to be first delivered to in the case of the United States, delivered to a distribution center or in the case of international delivered to another international port, for them to then deliver it to distribution center and then the merchandise gets to a store. So we handle a variety of very large, big box food retailers or club stores, if you will. They buy merchandise in 68 countries. But all of the merchandise in smaller quantities have to arrive in each one of their 24 stores. And we have to move the merchandise from the skate countries into centralized warehouses somewhere, whether it’s in Costa Rica, in Miami, in Los Angeles or one of our other facilities, then unload those those full containers of a single product, mix them with other products to create a store shipment to one of these mega stores containing maybe a thousand different items. It’s really complicated because you have to maintain tracking of where all these items are and what’s required in the store at any one time. Plus, if there are electronics, these items have serial numbers. So you have to track the serial numbers as well. It’s very complicated. I have gone to some of the high schools to speak to the trade and logistics students, because now in Miami, we have five high schools that teach trade and logistics. And I asked him if they know how they get a cell phone. And they say, yeah, they order online and it comes to their house. Well, all of that process of they order online and comes to the house. It’s all really complicated logistics.

Lee Kantor: [00:04:52] Now, you know, a while back, and I think we’re still kind of working through this supply chain crisis. And some of it was because of what you just said, where there’s a lot of parts going to a lot of different places. And over time, if one part isn’t there or one especially an electronic piece of technology isn’t there, then, you know, when the music stops, everybody stops, right? Like you can’t you can’t just send out that cell phone missing the one of the semiconductor components like that. Right.

Gary Goldfarb: [00:05:25] Or every car or a car with a computer.

Lee Kantor: [00:05:28] Right. So like, there are the cars just kind of backing up and they’re just waiting for the computer chip. Like, I mean, that’s part of what exacerbated the situation, right?

Gary Goldfarb: [00:05:38] Yeah. So the supply chain crisis began in February of 2020. At that time, I had written an article on the Hill advocating for something called stress tests of the supply chain. And the reason for that is we saw that any one hiccup could potentially damage the supply chain for very large companies that are publicly traded. And just like banks have stressed us to make sure the bank can survive its stress, nobody stress tests the supply chain of publicly traded companies and people buy and sell shares. Not realizing this company may miss their quarter simply because there are no computer chips for their cars or there is no toilet paper. As we saw at the beginning of the pandemic and I thought I truly thought accounting firms were going to pick this up and say, we’ll run this stress test. Nobody actually did. We did that for all of our customers. We ran a stress test for all of them and helped align their supply chain so that it wouldn’t be just in time. In the 1950s, when Japan was getting rebuilt by the US. They created a project called Just in Time Logistics, which meant that everything arrived just in time.

Gary Goldfarb: [00:06:57] You didn’t need warehouses or inventory to be able to manufacture. Over time, we created just in time retail and we were receiving product that was going to store shelf within a day or two. That doesn’t work anymore. So we’ve changed git over just in time to best deliver time. And when we work with our customers, we look at what is the soonest we can deliver all of it and we align all of the orders to have a best delivery time, not necessarily just in time, and it works. But some of the crisis is manufactured and some of the crisis was people or companies taking advantage of the fact that there is a crisis to profiteer. And you have steamship companies making billions and trillions of dollars of profit. And the rates are 20 times what they should have been. Know what they were. And 20 times. I’m not exaggerating. It’s it’s it’s a multiple of tow that’s profiteering. And some of that was allowed to happen. It shouldn’t have been allowed to happen.

Lee Kantor: [00:08:08] Now, was the thinking in just in time when you were just getting the element you need at the moment you need it, then you were saving money in warehousing it and and storing it. So rather than doing that, you were just getting it when you need it. So you didn’t have a need like the the shipping was the warehouse kind of.

Gary Goldfarb: [00:08:29] Right. So I did a Just In Time project for Airbus Industries in Toulouse, France, in the mid-nineties, and Airbus had 70 million square feet of warehousing in and around Toulouse, France, to be able to build an aircraft. And they had millions and millions and millions of dollars or hundreds of millions of dollars of parts sitting around and in avionics. It’s the technology improves so fast that some of these parts were becoming obsolete. So we convince them to allow us to do just in time logistics. It took us a year to develop a computer program to be able to manage it all. And we used to communicate by satellite because the Internet wasn’t worldwide yet, but we were able to change those 70 million square feet of space into a 20 day transportation pair of products coming in to the assembly line to arrive at the right time. So the wing sections would arrive the right time, and two weeks later the landing gear would arrive. There was no point in having the landing gear if the wind sections weren’t attached first, and so on and so forth. And it saved them maybe having hundreds of millions of dollars of inventory.

Gary Goldfarb: [00:09:49] It saved them from obsolescence and it saved them from having maybe two thirds of that 70 million square feet of warehousing space in Toulouse, France. So it does just in time. It’s a very. A creative, intelligent way of building things. They build automobiles just in time, and then there’s no glass for the windshield and the automobile factory shut down, or there is no computer chips for the cars and nobody can build the cars. So we’ve changed the whole dynamics of just in time, because as the world becomes more complex and now we have wars and in Eastern Europe and, you know, God knows what’s going to happen with China and Taiwan, all of those disruptions just don’t allow us to complete a task. So ensuring reassurance, reshoring or near shoring is very important for ensuring, which is a new terminology now, which means do business with friends rather than with strangers. French sharing has become very important, and it’s all because everybody wants to try to get as close to just in time as possible.

Lee Kantor: [00:11:03] But while still protecting themselves for these from these disruptions, because it’s very fragile. I mean, it requires trust on every and every every step of the way.

Gary Goldfarb: [00:11:16] Yeah. But part of it is, is a year long self infliction. We used to manufacture shirts in Colombia and a lot of the other apparel in Central America and computer chips in Costa Rica or the U.S. consumption countries that are still friendly to us over time. China and their giant manufacturing investments took the chips from Costa Rica to to China. They took the apparel from Central America. And therefore, we have a whole migration. Looking for work because there’s no work there. And they started to centralize everything in a location that is, at minimum 15 days transit time to the West Coast and 35 days transit time to the East Coast, a day at least a day’s travel, a different language and a different culture. So we set ourselves up. To fail. And on the first event, black swan event, we failed.

Lee Kantor: [00:12:21] And then are we making changes to prevent this from happening again, or are we still just kind of going boldly forward with what worked maybe five, ten, 20 years ago and isn’t really functioning?

Gary Goldfarb: [00:12:36] We were making changes under this administration. They’ve they’ve discounted those changes and re encouraged activities in China. But we were making changes. Mexico was starting the makela business all over again. Mexico at one time was our manufacturing base. It’s very important because Mexico is also a customer of ours. So it’s very important to do business with your friends because then they buy from you a finished product and a whole bunch of other services. Some apparel manufacturing is coming back to Central America. I don’t know that the chip business is coming back to Costa Rica, but there is some chip manufacturing coming to Texas now. But we haven’t made the inroads I thought we were going to make. The original reason for the famous China tariffs, what they call Section 301, which put 25% additional tariff on Chinese products, was to cause just that, to cause a movement towards manufacturing here. But the Chinese did is they went on to subsidize their factories by 8%. So the impact was a lesser impact and they still manufacture in China. China should be able to manufacture. Vietnam should be able to manufacture. And we do get a lot of product out of Vietnam, Taiwan, all of those countries should have a manufacturing base, but not to the point where they control our destiny. We should not allow that right.

Lee Kantor: [00:14:11] I don’t think that we can allow that, especially on things that are critical, not only just for our stuff that we enjoy from an entertainment standpoint, but for national defense. Some of these things are critical and we can’t be beholden to certain groups that may not have our best interests in hand.

Gary Goldfarb: [00:14:31] Or health care because a great deal of the components for our medicines and I’m talking about medicines that are that are to cure cancer or to or to arrest the development of cancer, come from from Asia, come from China. And the raw materials are the components to make this come from China. We move them, we know. And a container of that refrigerator, container of that medicine was prior to the pandemic. 3030 $500 in freight right now costs $35,000 to bring one of those containers. So if you go to the store and all of a sudden the medicine that you were buying costs twice as much, it’s because the cost of transportation has become exorbitant for no reason, because there’s more capacity. But since the supply chain has been disrupted, those who would profiteer are doing that. Some of the medicine is starting to come from Brazil now, but it’s not not in the volumes that they come out of China. Our. Most vital health care, health care medications, 80% of them are coming out of China.

Lee Kantor: [00:15:48] So where do you see things going like? Are we going to kind of lean more onto our friends and help our friends kind of spin up some of these components? Because we can be a good consumer of a lot of this stuff and we can be a good customer for them if we, you know, and that way we ensure kind of less disruption.

Gary Goldfarb: [00:16:12] Yeah. I mean, it takes political will and it takes political will on both sides. I was very impressed with the fact that that Nancy Pelosi actually went to Taiwan after being warned or threatened or insinuated not to go. And that’s the kind of stuff we need to see. During the previous administration, with all the, you know, the tweeting and all of that and putting all of that aside, we stood firm against China and we stood firm with Mexico, even though Mexico had a had a leftist election. And we said, we’ll work with you and we still trump to China. We said, we love to buy from you, but it can’t be everything. And we we need to be able to reshore some of these effects. Canada has the same issue in Canada has a bigger issue because Canada could be supplying us a tremendous amount of product, but they’re bringing a lot of product from China as well, a smaller population, more vulnerable to to stopping supply chain than us. So we need political will to be able to say, look, we need to make a certain amount of a product here and do a stress test of the government purchases, do a stress test of the publicly traded companies, and have a limit beneath which they can’t operate. So if it’s less if it’s more than 75% of your product coming out of one region, you have to you have to diversify.

Lee Kantor: [00:17:48] Right? I mean, we all know that.

Gary Goldfarb: [00:17:50] Or have more inventory, right?

Lee Kantor: [00:17:51] Right. I mean, you can’t put all your eggs in one basket. And especially if that baskets held by somebody that doesn’t have your best interest at heart.

Gary Goldfarb: [00:17:59] That seems Walmart and Target.

Lee Kantor: [00:18:03] Right? I mean, it becomes a risk. I mean, the risk that, you know, that’s how, you know, a lot of these big companies, when they’re big companies, you know, 50 years later, they don’t exist anymore. It’s from decisions like that.

Gary Goldfarb: [00:18:19] And it’s all about the supply chain. And that’s how that’s why it’s so absolutely complex. What we do is really, really, really complicated. You have export customs at Origin. You have import customs here, which Jennifer Diaz, your sponsor, deals with on a daily basis. And that’s not the only complexity, but one of the complexities. So all of this has to move and flow really fast because our ports aren’t these massive land masses. Our ports were pretty efficient, but they don’t have room for excess capacity. So if things don’t flow through customs, then then it gets stuck there. And we’ve seen Port of Los Angeles all of a sudden come to a complete screeching halt with with 80 or 100 vessels sitting outside the harbor because it didn’t flow through customs fast enough. So it’s you know, it’s a really, really complex industry. You need to be very good in math because if you’re not good in math and be able to calculate and it’s all driven by computer systems, but our computer systems are vast with with multiple terabytes of storage for just one month of operation. So it’s Amazon Cloud boasts most of the supply chain companies simply because they have this vast capacity for for data. And look at Amazon Amazon notes is started to falter and not have the right product mix because they couldn’t get the product.

Lee Kantor: [00:20:01] So now what are you as these chaotic times are stressing everybody out, but are you overall optimistic? Are you kind of bearish? How do you feel about maybe short term and long term? You know, I think.

Gary Goldfarb: [00:20:17] Our companies are making a lot of all of our companies are making a great deal of money because we are now before we were not even considered. Now we are we are the solution of the problem. Right. So those companies like us who are were highly, highly computerized, very organized. Everything in our warehouses is run by radio frequency. So we were the winners of the chaos and our companies are growing and keep on growing and our business keeps on growing. But at some point in time, we have to, as a country start to manufacture. We we need to stress test our supply chain to see where the merchandise is coming from and have a hard and fast rule that any more percentage of X for any one product line should be manufactured in various countries. You have a tremendous manufacturing base in Latin America. You have a tremendous manufacturing base and capability in Africa. Nobody’s ever tapped. You have a lot of Eastern European countries that have great capacity to manufacture. If the if the missiles stop falling, the Ukraine is a major producer of technology. We need to focus on those more so that we have a truly diversified supply chain. But to do that, we have to test ourselves honestly.

Lee Kantor: [00:21:45] Right. Well, that’s the that’s the first step. Right. You have to get a clear picture of of where we stand. And if, you know, 90% of your components are coming from one place, you’re at risk. And if everybody knew that the companies would be less likely to put themselves in that kind of risk. It was the same, like you said, with the financial situation. They were stress testing and they said you had to have this amount of money in cash or available. You can’t, you know, kind of go upside down like you had been. It’s the same thing here. You have to know where you stand. And I think people would be shocked if they knew that some people were relying, you know, at the levels you’re describing on on these kind of dangerous locations.

Gary Goldfarb: [00:22:36] Yeah. I mean, what’s what’s more what’s more important than life saving drugs, right? Right.

Lee Kantor: [00:22:41] I mean, like, people aren’t aware of that, though. I mean.

Gary Goldfarb: [00:22:45] Right. Yeah. Yeah.

Lee Kantor: [00:22:46] But so you have to create regulation, is that it? You have to have the government come in and say this has to be or can you get companies to voluntarily do this and say, hey, we can self-police ourselves, we’re going to do this to let ourselves and our shareholders and our customers know that we have your back.

Gary Goldfarb: [00:23:05] I wrote the I wrote this article in early March of 2020 where? At the beginning of the pandemic. And if you read it today. It’s on the Hill. It’s still out there. We read it today. You’ll see that everything that we thought was going to happen actually happened and magnified ten times over. And it was really, truly painful. I have spoken to several senators, especially Florida senators, and I’ve spoken to some of the Florida Congress community and in D.C. to see if we can at least start to have a conversation about stress testing ourselves. Maybe it becomes voluntary, but if it doesn’t become voluntary, at least government agencies should stress test themselves because it needs that needs to happen. And I thought that I truly, truly thought that the big six auditors, I think, is now the big five. We’re going to lead the charge, because for them, it would be a new a new line of business. But nobody really understood what was going to happen. And then when it happened, everybody said, well, supply chain, let’s blame China, but let’s blame ourselves. We knew this was coming.

Lee Kantor: [00:24:22] Right. I mean, just take responsibility. Well, you can take responsibility on I mean, we can control that part of the equation. We can see what’s what, you know, we can count. You said math was important. I mean, to do the math of where your components are coming from, what percentage is it? That’s a dream that can come true if you want to. If you have the will.

Gary Goldfarb: [00:24:44] Yeah. It’s just we have to. We have to have the political will to. To look at ourselves, not as Republicans and Democrats, but to look at ourselves as citizens of this great country and say, okay, how do we prevent this from happening again? The next time. And if we’re serious as a as a country, we do that. I’ve spoken to ta ta ta Senator Scott and he gets it. But he’s one of 100. You know, we need to have a greater conversation. And I think it requires Congress to to at least have some sort of hearings and say, okay, the supply chain isn’t broken because the Port of Los Angeles didn’t manage itself properly. It begins, like you said. It begins at the beginning. Where is our flow coming from and why is it all concentrated in one area?

Lee Kantor: [00:25:48] Right. But the public, it seems like they see a, you know, a photograph, a satellite photograph of 80 ships waiting. And then it’s easy to go, wow. Well, that’s the problem. Like, it’s so complex, a complex issue. I don’t know if the public can grasp where the problem begins and ends. And and that’s just a visual. Like they can get that, oh, look, they can’t get in. So that must be the problem. And it’s just more complicated than that. That’s just that’s not that might be a symptom, but that’s not the cause.

Gary Goldfarb: [00:26:22] Right. So so, you know, when you have an outage in a community and the traffic lights go out and then the traffic lights get out of synchronous synchronization and for two or three weeks until they synchronize again, you stop at every red light and you don’t understand why you’re not being able to go through. So imagine a multiply that by a thousand times and then you have the Port of Los Angeles gets really congested. So all of us start routing cargo away from Los Angeles to the East Coast. So now the ports in the East Coast are totally congested because we have more cargo than we were planning on having. Right. So it’s the same is the same. No, no longer synchronized. The red lights and the Panama Canal got congested because now the ships have to cross the Panama Canal. Yeah, we need to look at it from the beginning and it would be wonderful. I would more than glad to participate in anything like this. But we need to create a wave. And maybe the groundswell starts from South Florida because we are the leading community for for the supply international supply chain of global supply chain. There are more freight forwarders in Miami than in the rest of the United States combined. There are more bonded warehouses in Miami than in the rest of the United States combined.

Lee Kantor: [00:27:48] Well, I think it’s one of those things where, you know, if change has to start with some somewhere and and change can begin with one act. So, I mean, maybe we should continue to be having these conversations and just make more and more people aware of how fragile this is. We got a sense of how fragile things are. But, I mean, once you I think you’re right on point with this. Let’s just stress test things and just let the public and let everybody know how fragile this is. I mean, this is it’s too important of an issue. I mean, you saw that we’re just kneecapped when, you know, in a blink of an eye, the whole, you know, the house of cards come crashing down.

Gary Goldfarb: [00:28:34] Yeah. I mean, maybe you want to start a groundswell. I mean. I mean, if you want me to, but.

Lee Kantor: [00:28:39] Well, I think it’s important to just keep. Keep having these conversations. And and I think you’ve got to hold these companies accountable in terms of. Okay, what percentage of your components, how reliant are you on these players and what’s what? I mean, let’s this shouldn’t be a secret. If everybody knew, they’d be shocked. And then I think we’d be taking more action. But I think you’ve got to start somewhere.

Gary Goldfarb: [00:29:05] So Wal-Mart missed expectations this quarter, right?

Lee Kantor: [00:29:08] Right.

Gary Goldfarb: [00:29:09] Because of the supply chain. But they’ve known this all.

Lee Kantor: [00:29:12] Along, right? They know it. But but they’re not they’re not being transparent enough.

Gary Goldfarb: [00:29:21] So if I was the FTC, I would require companies that that have a vulnerability to supply chain to have published a supply chain stress test.

Lee Kantor: [00:29:31] Right. It’s like, look, it’s just it goes down to like even at the basic level for individuals, understand, there’s a label on your food that tells you what’s inside. There should be a label on these companies that say what percentage of their components are coming and how reliant are they, especially on things that we deem as essential and critical. I mean, it can’t be a secret that this is happening and then we’re like looking at each other. How did this happen? And we’re blaming other things where there was a lot of control that we had in this. We could have, you know, if if they were truly transparent, we could have been holding them accountable and saying, okay, why aren’t you know, when you get to whatever the percentage that you think is the right percentage, then you have to diversify. Then you move a plant somewhere else. That would help kind of the global situation here because it’s a big planet here filled with opportunity and other locations that you can diversify into, especially into when they know that you’re going to be a customer, that it’s not just a super risky thing that, you know, if we build it, they will come. You tell them, Look, I can’t give you any more capacity. I have to move it somewhere else, and I’d prefer to move it somewhere. That’s my friend.

Gary Goldfarb: [00:30:45] Right. So I don’t know how we’re running on time, but I can tell you that Wal-Mart took a different approach. They said, well, you know, if we’re going to be have shortages, we’re just going to buy two or three or four times what we normally buy and we’re going to have inventory on hand, which they did. And over the year, last year and a half, they built up a huge inventory on hand. And then with the recession, the economy slowed down and their sales slowed down. And now Wal-Mart is saying they have too much inventory because they didn’t do a stress test to begin with.

Lee Kantor: [00:31:23] Right. But that was their way of dealing with it without dealing with it. And it’s like you said when you were talking about those that airplane parts, they become obsolete at some point. Nobody wants, you know, the the fashion you thought they wanted, you know, 18 months ago. It’s it’s obsolete now. They’re not interested. Exactly. So now what do you do with it? Now you’re going to have to discount it, and now you’re going to miss earnings again. So if you knew all of this or you were held accountable to this, then you wouldn’t be in this situation. They tried to kind of use their power of money and solve this by throwing a lot of money at it. But they didn’t really get to the systemic heart of the problem.

Gary Goldfarb: [00:32:07] You’re absolutely right.

Lee Kantor: [00:32:09] Well, Gary, I could talk to you all day about this because I think it’s super important and I think that people should know about it because it is going to affect them one way or another, whether they realize it or not. But folks who want to learn more about airport logistics, what is the best way to get a hold of you or somebody on your team to so you can help them solve their supply chain crisis?

Gary Goldfarb: [00:32:35] You can always visit W WW and deport us. And then there’s a link to me there. Or you can go on on LinkedIn and friend me Gary Goldfarb on LinkedIn, which is a great product for the business community to be able to talk to each other. So I’m always available.

Lee Kantor: [00:32:55] Well, Gary, thank you so much for sharing your story today. You’re doing such important work and we appreciate you.

Gary Goldfarb: [00:33:02] Thank you very much for having me.

Lee Kantor: [00:33:03] All right. This is Lee Kantor will all next time on South Florida Business Radio.