Marketplace - Port workers and employers restart talks

Episode Date: January 8, 2025

Dockworkers are back to the negotiation table with employers, and automation is a big sticking point. Mechanizing port operations can make them more efficient, but the Longshoremen’s union is concerned that efficiency comes at the price of jobs. The deadline to avoid a possible strike is next week. Also in this episode: probing the mysteries of Spotify’s powerful algorithm, snowplowers take a hit from climate change, and the trade deficit isn’t as bad as it looks.

It's been a while since we've had a supply chain story, huh? We'll fix that today. From American public media, this is Marketplace. In Los Angeles, I'm Kyle Rizno. It is Tuesday today. This one is the 7th of January. Good as always to have you along, everybody. Hey, so you got everything you needed for the end of last year and over the holidays, right? Gifts, new cars perhaps, maybe new furniture

for the house or the apartment, what have you. Credit that to the very human, but also very corporate urge to procrastinate. The International Longshoremen's Association and their employers, the US Maritime Alliance, you might remember this, representing ports and shipping companies, they reached a tentative deal back in October that included a 62% pay bump for East and Gulf Coast dock workers. But they left until January the 15th. The most bitter part of the dispute, automation.

Talks resumed today. Marketplace's Abreu Benishour brings us up to date. The most bitter part of the dispute, automation. Talks resume today. Marketplace's Abreu Benishour brings us up to date. Automation at Ports could be as basic as just using an online scheduling app to book trucks. It could also be a robotic rail-mounted crane nine stories tall and 200 feet wide. Container cranes that can essentially automatically

unload ships or also cranes that can be used to stack containers. Jason Miller is professor of supply chain management at Michigan State University. The International Longshoremen's Association told Marketplace it has no updates, but it's previously made clear it is concerned automation will take jobs. Miller says it's hard to say definitively, but so far automation appears not to be replacing jobs but changing them.

As an example, if you have more automated container cranes, you may need less individuals in the role of being a container crane operator, but you now need more individuals with the specialized skills to fix those container cranes if they break. Miller says ports in the U.S. that are more automated haven't shrunk their payrolls, and the U.S. Maritime Alliance representing employers has said automation is needed to become more efficient. Robert Hanfield is professor of supply chain management at North Carolina State. Ports like Yangshan in China can move 113 to 80 containers per hour, which is very efficient. But the majority of the ports in Los Angeles and others are

around 25 per hour. The Longshoremen's Union counters international ports are more productive because they're doing easier work, like moving containers from one ship to another, as opposed to sending shipments along into deep domestic supply routes involving trucks and trains. As the two sides work through their issues, other businesses are bracing for the impact of a possible strike. Erin McLaughlin is a senior economist with the Conference Board. It could cost about $3.78 billion during the first week, which is $540 million a day.

Some shipments would just get delayed. Others, like fruit and meat, eventually start to perish. If a strike goes on beyond a week, she says, costs start to rise. In New York, I'm Sabri Benishor for Marketplace. Wall Street today's stocks got most of the attention as they always do. Sleep not though on bond yields. We'll have the details when we do the numbers. We talked a bit yesterday on the program about the T-word tariffs, specifically what they might do. Should President-elect Trump do what he says he's going to do, what those tariffs might do to the value of the dollar.

Today, a different but related exploration of the economic importance of the 20th letter of the alphabet, trade. We learned from the Commerce Department this morning that the trade deficit in November was just over 78 billion dollars. That's more than it was when President Biden took office and it's more than it was at the very beginning of the first Trump administration. But as Marketplace's Elizabeth Troval reminds us and for all that we are going to be hearing about them over the next four years, Trade gap numbers ain't all that. At first glance, deficit numbers might make you say, good God. Take March 2022, when the trade deficit ballooned to a record $107.7 billion. Except that increase was a sign of

something good, says Robert Dekel with USC. All the international supply chains were screwed up with the pandemic, and then that was starting to mend around 2022. So there was this surge in global trade and especially imports into the United States. Since then, U.S. consumers are still spending a lot on products coming from abroad, says Katie Russ with UC Davis. The economy is just really running strong in comparison to how other countries have been doing in 2024. And so with that, it seems like a very natural widening of the deficit.

A country's trade balance is tightly related to its balance of savings and investment, and the U.S. and Americans are not big savers. Scott Linsacum is with the Cato Institute. Nations that tend to save less and spend more will run trade deficits. Andy says trade policy, like tariffs, play a relatively minor role in the trade deficit, which he says is a symptom of something else. We're running massive budget deficits. And when we consider trade deficit numbers today, the Wonks have a

different figure they prefer, trade balance as share of GDP. It's not like we're hitting new heights of the deficit when you think of it relative to GDP. That's Sam Cordham at Yale. Sometimes these numbers can look huge when you look at them in dollar terms. If you look at the ratio kind of comes into focus. That focus? Trade deficits haven't fluctuated much relative to GDP during both the

Trump and Biden administrations. I'm Elizabeth Troval for Marketplace. to GDP during both the Trump and Biden administrations. I'm Elizabeth Troval for Marketplace. ["Song of the Sugar Plum Fairy"] Spotify has the biggest chunk, just over 30%, of all music service subscriptions in the United States. That market share and the influence that comes with it have helped the company transform the music industry and its business model over the past 10 or 15 years. And yet, much of what Spotify does and how it makes money are less than widely understood. That leads me to a new book out today by music journalist Liz Pelly. It's

called Mood Machine, The Rise of Spotify and the Costs of the Perfect Playlist. Liz, thanks for coming on the program. Thank you so much for having me. Let us begin with the title of this book, The Rise of Spotify, The Costs of the Perfect Playlist. That is the nut of Spotify's business, the playlist, right? For a long time it has been, yeah. I would say these days, you know, what they think of as maybe their core product offering offering is not just a playlist, but the whole recommendation

system or the whole different incarnations of how they serve you the perfect recommendation at the perfect moment through both play listing and algorithmic discovery tools. Well, so back up for us, actually, and take us back to how this originally started. Over in Europe, Daniel Leck from Sweden obviously and some collaborators. It didn't start with the playlist, right?

Yeah. When Spotify started, it was really more like a search bar and the user would have to know what they were looking for, whether that be an album or an artist. And it was really after they launched in the United States and compete with some other pre-existing digital services in the United States that they started to lean more into this idea of being not just an app that you go to to access quote unquote all the music in the world, but to really know your music tastes better than you know it yourself as they would frame it. So this idea of the playlist then is critical now to Spotify's business model.

I guess my question is, and we should have addressed this earlier actually, I should have, what do artists get out of the perfect playlist? We know what Spotify gets, which is a third of the market or whatever the heck it is, right? What do artists get out of it? Yeah, that's a great question. I think that in the early days of streaming, there were a lot of narratives that were pitched to artists as a much more democratized approach

to music recommendation than perhaps the old gatekeepers like commercial radio DJs or major record labels. But as the streaming era played out, a lot of musicians, you know, saw that what had happened was it was really just that new types of gatekeepers emerged. And one of the things that originally got me interested in researching this subject was hearing musicians talk about, you know, how confounded they were by this new playlist ecosystem that they were expected to navigate and how mystifying it was trying to figure out who was behind these playlists and how they're going to get onto them. The shift from the curated playlists to the algorithmic playlist has only kind of like further entrenched the sort of mystification and consolidation of power in terms of who

controls what the user sees when they open that app. Right, exactly. So this is one of the things I wanted to get to in this book and it was really interesting to me because there has been a push on Spotify's behalf to convince artists to sort of take less of a cut of the stream, as it were, the pennies on the dollar that they get, in order to get priority in a playlist. And I'm not describing it well, but there is an element of payola here, right?

It's the old pay to play thing that the FTC outlawed like in the 50s and 60s. Yeah, so something that's really interesting, and I'm always, you know, I'm hesitant to use the word payola because payola has a specific legal definition. So what I said- All right, so for the lawyers out there,

that's not what I said. I said something else. All right, anyway, go ahead. What I've been told is that really a more accurate phrase is calling it a payola-like practice because it has elements of payola. Payola-like practice, okay. It's slightly different in that

in the era of commercial radio payola, this was considered like, you know, something that had to be done under the table, like, you know, sliding piles of cash in exchange for radio play. But today, a lot of these pay for play programs are out in the open. So the program that you're referencing is called Discovery Mode. And it's a program where artists or their rights holder, their record label can accept a 30% reduction in royalties in exchange for algorithmic promotion or algorithmic placement in a playlist.

And the listener does not know when they're being served a recommendation that is shaped by these commercial deals. But it all operates under the banner of editorial. So about six weeks-ish ago, I said to myself, I'm going to stop listening to news and political podcasts because I was overloaded and blah, blah, blah. We all know why that happened. And I said, I'm just going to turn on Spotify.

When I would order a list into a podcast, I'm going to turn on Spotify and let the algorithm serve me up, whatever it's going to serve me up. Am I somehow to blame my consumers, somehow to blame for what Spotify has become? You know? So you're asking like if listeners are part of the problem. Yeah, basically.

I mean, I don't know if I think that, I don't know if I think it's true that listeners are part of the problem. I think that there is a degree to which not just Spotify, but the whole, in the whole platform era, there's been a sort of obsession with frictionlessness in order to boost user engagement, similar to how we've seen across other platforms, you know, platforms use certain tactics in order to hook users. And it's kind of part of a bigger dynamic that we see play out across, like, you know, what most people know as the internet today. Right, right. And user engagement is just a metaphor for corporate revenue.

Right. Exactly. Yeah. You know, like these are ways in which people's listening is being shaped to bolster a bottom line. Right. Right. Um, last thing, and then I'll let you go. This book, in addition to being deeply reported and super interesting interesting just in terms of learning new things about Spotify that probably a lot of people don't know, it is in some ways a cultural criticism, right? It's really thoughtful.

And I say that not to butter you up. I say it to set up this last question, which is this. At the end of the book, literally like second or third last page, you talk about where we go from here in the future of music. And you say, luckily the future of music is not something that was unilaterally decided in 2008 when the major labels struck their first deals with Spotify. Are you sure? I think so. I think that you know something that I

write in a similar breath in addition to the sentence maybe for the sake of this show that I say that music is too important to in addition to the sentence, maybe for the sake of this show, that I say that music is too important to be left to the marketplace alone and that it also requires a political counterweight. It's a story that begins nor ends with one company and also like the story of streaming is as much about what's changed as it is about what stayed the same. So in some ways, it's kind of like pushing open space for, you know, independent artists and space for engaging with music in a way that is more fair is kind

of like something that people in the music world have always had to do. If you thought you knew about Spotify, you did not. You should read this book. It's called Mood Machine. Liz Pally wrote it. Liz, thanks a lot. I really appreciate your time. Thank you. Coming up. We pay less now than we did. And we're happier.

Can't put a price on that, can you now? But first, let's do the numbers. Dow Industrial is down 178 today, 4 tenths percent, 42,528. The Nasdaq off 379 points. That is one in nine tenths percent today. 19,489. The SP500 down 66, 1.1 percent, 5909. We heard from Sabri about unionized dock workers negotiating over automation at ports. So, some shipping stocks, shall we? You try saying that 10 times fast. Star bulk carriers shined up 1%. Global ship lease grew 1.6%.

Matson down about 2 tenths of 1% today. Meta's gonna stop fact checking and removing restrictions on speech, both Facebook and Instagram. And Thread, you heard that today, right? Meta down 2%. Bonds fell yield on the 10-year T-note rose to 4.68%. More on that later in the program,

but you got to stick around to the end. You're listening to Marketplace. This is Marketplace. I'm Kyle Rizdal. If you are in that giant swath of the country that's gotten all the snow and the frigid temperatures over the past couple of days, it most certainly does not feel like this winter is going to be much less wintry than winters used to be. But it is. The National Oceanic and Atmospheric Administration says the southwest and most of the country east of the Mississippi, in fact, are going to

get warmer than usual weather a lot more usually now. That might not sound so bad unless you're the kind of person who enjoys shoveling the driveway a time or two before work in the morning, but lots of people rely on cold weather and the snow that comes with it to put food on the table. Among them, people who count on plowing snow every winter. Marketplace's Kaylee Wells spoke to some of them in Northeast Ohio. snow every winter. Marketplace's Kaylee Wells spoke to some of them in northeast Ohio. When there's a big snowfall in the Cleveland area, Andy Lenart is out plowing his neighbors' driveways. He doesn't own a plowing business per se. He's like a lot of plowers in this part of the country. A guy looking for a little extra cash who happens to own a pickup.

It came with a plow and I started to do my own driveway with it and then a friend of mine asked if I could do a couple driveways and it turned into like four driveways. Lenart grew up around here about 40 minutes southeast of Cleveland and he says these days snowy seasons are a lot shorter than they used to be. I started doing this you know 12, say 12 times a. And now the last three years, I've only been out four or five times. The last two winters here have been unusually warm. Snowfall was way below average.

You start talking about global warming and that, but it's like, it's real. I'm convinced, you know. It's, I have facts, you know. It's written down on my charts, you know, it's, it's, I have facts, you know, written down on my, my charts, you know, when I, when I do this. Now, thing is, when you live this close to Lake Erie, climate change doesn't automatically equal less snow. It's not that straightforward. It's hard to tell because being in Northeast Ohio every season is so different. Meteorologist Salix Iverson with

the National Weather Service in Cleveland says the biggest snowstorms here happened before Lake Erie freezes and after it thaws. So as the climate warms... It freezes over later than it has been in years past. That would essentially give the region a longer window of time where lake effect snow would be possible. Which means gentle winter wonderland dustings become less common, but the school-cancelling lake effect blizzards can actually happen more frequently. Even drought-ridden Californians

know this climate story. A warming climate makes giant precipitation dumps more frequent and more intense. Not exactly great news when you're Andy Lenart, a guy with a truck who can only plow when there's room in a schedule. I got a main job so I can't devote a whole lot of time to this. And he charges per plow, so occasional giant snow dumps are less lucrative than consistent dustings. It's not great news for the folks who do this full-time, either. Michael Supler of Great Lakes Snow and Ice Management plows hospitals and shopping mall parking lots.

He's got employees in those parking lots monitoring the weather, ready to serve his clients at the first sign of snow. They demand constant service. They want no chance of a slip and fall there. It takes a lot of time, a lot of material, and they pay for it. And here's how the numbers worked out for one of his clients during last year's warmer than average winter. I think last year we did maybe $300,000 of time and material charges to them.

You know, in a good winter that could be approaching $800,000. For his biggest customers, Supler doesn't charge per plow, but per season. That's good value when it snows consistently, but fewer storms means every plowing is more expensive for his clients. And long-term, that's not an attractive model. Nobody's canceling or demanding he create a new business model just yet, but it's still on his mind. Does it make me nervous? Yes, but I think it's going to be over a much longer range.

I don't see that happening, you know, in the next 10 years. At least for him, adapting is pretty straightforward. He also runs a landscaping company, so a shorter snow season means more money for his other business. In Bainbridge, Ohio, I'm Kayleigh Wells for Marketplace. With home prices and mortgage interest rates as high as they are right now, right around 7% for a 30-year fixed, a lot of young home buyers are getting help. We know that, right? From parents maybe or a wealthy benefactor perhaps or how about just a really good friend. Last year we told you about two best friends

who ditched their apartment in New York City and bought a house together in Barrie City, Vermont. We called them back this week to see how communal homeownership is going. Hi, I'm Cass Lang. I'm Jordan Hayden. And we've been homeowners in Berry City for two and a half years. Was I supposed to also say it? I thought you were going to finish it off. Okay. Berry City is very much small town vibes. We've gotten involved like on a local level and you know, we go to city council meetings,

which is something we never did in New York City. We've been able to really like settle and grow roots. We see it as a partnership and we're you know having a home. Here in Vermont we both make more money in our jobs that we currently have and what we pay for our mortgage is less. Like if you're just comparing rent to mortgage, we pay less now than we did. And we're happier. Right.

Which is priceless. Yes. I think one of the biggest things we've done is we've added solar panels to our roof. That was definitely the biggest one. I mean, we've like built some gardens outside. Things will break and then we have to replace them. Yeah, so there's been some of that, which has kept us from doing the more like exciting things that we're looking forward to doing, but that's just

homeownership I hear. We also have two cats ownership, I hear. We also have two cats who tend to cost us a little bit of money as well. They love to spend our money. They love to spend our money. I think there are some short-term goals of weatherization and heat pump things that we want to do for- I love a deck. You can dream big, right? But I think those feel more attainable. Those are things that we can do in the next few years. But I think big term, we are seeing the value in community building and what that

has done for us. And talking to other people and having them kind of be like, oh, it's kind of awesome what you guys are doing living together as best friends and building this community. Like how cool would it be if we just purchased a bigger plot of land where we had more space to grow food, have friends. And I know that sounds so much like a like a hippie commune type thing, but I think there's some real value and utility in that. I think we're thinking about what that could look like in the future, but in the long term. Not right now.

Not right now. We're happy with how it's going right now. I'm excited about whatever we plan to figure out in the future. Yeah. It's unwritten. Cass Lang and Jordan Hut and Barry City, Vermont. You can tell us about your adventure in housing at marketplace.org. This final note on the way out today, let me circle back the bonds here for a second as promised. The yield on the 10-year T-note was up, as I said, in no small part because of the Joltz

numbers out today. Job openings and labor turnover survey, of course. We learned this morning the number of job openings in this economy rose in November, more than 8 million, about 8.1 million, should you be curious. That is a good thing macro-economically speaking because it means people who are looking for them can usually find jobs. The catch is it's also a sign that inflation could prove stickier than we thought it might be. And you know what that means, right? You do, right? You do? All right. Our digital and on-demand team includes Kerry Barber, Jordan Mangy, Jonathan Yetinen, Janet

Nguyen, Olga Oxman, Ellen Rolfus, Virginia K. Smith, and Tony Wagner. Francesca Levy is the executive director of Digital and On Demand. I'm Kyle Rizdall. We will see you tomorrow, everybody. [♪ music playing.