Marketplace - Automation on the waterfront

Episode Date: October 1, 2024

About 45,000 members of the International Longshoremen’s Association went on strike today over pay, yes, but also the automation of their jobs. We take a look at mechanization on the docks and how truckers feel the pain of shipping delays and slowdowns. Plus, the U.S. increased the number of available jobs in August, data centers are going higher and sleeker, and learning about white labels the hard way.

Hi, I'm Kyle Rizdal, the host of How We Survive. It's a podcast from Marketplace. In 1986, before I was a journalist, I was flying for the Navy. Mr. Gorbachev, tear down this wall. It was the Cold War and my first deployments were intercepting Russian bombers. Today though, there's another threat out there, climate change. This could be the warmest year on record. Climate change is here.

Temperatures here are warming faster than anywhere on earth. And while the threat seems new, the Pentagon's been funding studies on climate change since the 1950s. I think we will put our troops and our forces at higher risk if we don't recognize the impact of climate change. This season, we go to the front lines of the climate crisis to see how the military is preparing for the threat. Listen to how we survive wherever you get your podcasts.

Today is one of those days where you got to understand the economy to understand the headlines. From American public media, this is Marketplace. In Los Angeles, I'm Kyle Rizdal. It is Tuesday today, the very first day of October. Good as always to have you along, everybody. The two big news stories of this first day of the third quarter are a reminder of something that can get lost in the hurly burly of the everyday. We live in a global economy. Look no further than the price of a barrel of crude oil today for confirmation, up more

than 3% at the close in New York. That's after spiking 5% when news of the events in the Middle East broke oil, naturally the most global of all commodities. Item number two, of course, the port strike along the East Coast of the United States. Virtually nothing coming in or going out for that matter at 36 ports from Boston to New Orleans. The longshoremen want better pay and benefits, but also they want protection from something that's arguably a bigger deal. Automation. Dockworkers want language in their next contract that protects them from the robots and the software and now the AI that threaten to do a lot of what

they do. Everything from moving and stacking containers to checking in the trucks that bring those containers and take them away. Marketplace's Matt Levin gets us going with some more on the state of automation on the waterfront. Outside the port of Baltimore, about 80 members of the International Longshoremen's Association were picketing in the rain today. Some ports on the eastern seaboard are what's known in the shipping industry as semi-automated. Geraldine Nats is the former director of the Port of Los Angeles. That means that a longshore worker will still move the container from the ship to the backland, the storage area.

But for some ports on the west coast and a growing number of ports in Europe and East Asia, an autonomous machine does all of that. No human required. Jason Miller is a supply chain professor at Michigan State. This is one sector where we are woefully inefficient. We've resisted essentially

as many efforts at automation as possible in comparison to our peers in China or in Europe. Miller says the U.S. consumer bears the cost of that inefficiency in the form of higher import prices. Port operators have typically tried to reassure longshoremen that they can be reassigned to a different role once the robots arrive, says Jim Cruz at the Texas A&M Transportation Institute. That's easier said than done.

Jim Cruz, Texas A&M Transportation Institute, Director, Texas A&M Transportation Institute You can say, well, they could just learn how to maintain and fix automated equipment. Well, no, you can't just walk over and do that. You have to be trained to do that. You have to know how to do those things. Josh Birk, Texas A&M Transportation Institute, Director, Texas A&M Transportation Institute Cruz says ports will have to figure out some way to be more efficient. He's seen forecasts of seaport trade volume doubling by 2050.

At the same time, they're also under pressure to emit less greenhouse gases. Again, former LA Port Director Geraldine Nats. One way to electrify your operation is to go to fully automation. So that's another driver. One that may be in conflict with keeping longshoremen working. I'm Matt Levin for Marketplace. Your average container ship has a capacity of about 15,000 TEUs. That's short for 20-foot equivalent units, the standard measure of a shipping container. The ship pulls in,

all those containers come off, and they got to go somewhere. The way they get where they're going is by truck. Thousands of trucks and drivers that move them to warehouses or distribution centers so they can make their way eventually to us. And with those 36 ports on the Eastern Seaboard shut down, trucking is feeling the pain as Marketplace's Elizabeth Troval reports. It hasn't exactly been a chill day for Kyle Kristinek, president of Houston area trucking company Jetco Delivery. When I caught up with him around noon, he was... Trying to figure out if it's five o'clock somewhere yet, you know? He worries about his drivers, many of whom pick up containers from now closed terminals

at Port Houston every day and own and operate their own trucks. They're independent contractors, a lot of them, and so they don't have PTO. They're sitting without a paycheck, basically. The industry across the country counts on many of these independent contractors and small business owners. American Trucking Association's President Chris Spear says the vast majority of his members own less than 10 trucks. These are very small businesses that aren't able to shift in a strike.

They're going to have to wait it out. And the longer it goes, those folks are going to be really hung out to drive. The trucking industry is, it operates off very thin margins. John Esparza is with the Texas Trucking Association. It definitely tests the metal of a trucking industry. Kasey Panetta Trucking companies are adjusting. Story Conrad with Gulf States Trucking says they tried to bring in as many containers

as they could ahead of the strike. And now? Story Conrad We have been trying our best to reposition our drivers to handle vans and flatbed beds just so that they are able to generate a paycheck. And Kyle Kristanek in the Houston area says for now, he's making the most of the fact that a lot of trucks and trailers are parked. We're getting caught up or getting ahead really on maintenance.

Because once ports reopen, he says, they'll need every truck back on the road to catch up on orders. I'm Elizabeth Troval for Marketplace. Wall Street, today, I'll tell you what. You take a potentially really impactful work stoppage, add in some global instability, and traders get really cranky. We'll have the details when we do the numbers. Today's headline macroeconomic data wasn't actually very headlining. Joltz came out this morning, the monthly job openings and labor turnover survey from the Bureau of Labor Statistics.

Not a whole lot has changed in the labor market since last month. But if you dig into the details, as we hear our want to do, there are some signs the job market is continuing to cool, which is not necessarily a bad thing. Marketplace's Kaylee Wells spoke to some economists who were taking the chilly numbers as good news. One of the signals that economists look for in joltz is job openings, the number of vacant positions that employers want to fill. Job openings might have bounced back up in August, but Pavlina Cherneva isn't ready to call it a turnaround. She is president of the Levy

Economics Institute at Bard College. The job openings have been on a steady decline since 2022. And that uptick does not suggest any change in that trend. Plus, that job openings number is kind of a squishy figure, she says. Who knows if those jobs all get filled or when? Tjernet prefers harder, indisputable numbers like quits and hires, which were down again in August. I think it just corroborates what we've been seeing for a few months now, that the labor market is cooling. I don't necessarily see that as a bad thing.

Ari Schweder teaches economics at the University of Michigan. He says the hiring boom we're coming down from wasn't sustainable anyway. People were switching jobs. And so that felt really good to a lot of workers. And now we're sort of back down to what I would think of as a more normal economy, which is great, but feels less good than it did two years ago. That might be because since so many people switched jobs a couple years ago, they're not looking to switch jobs now, says senior U.S. economist Josh Hurt with Vanguard.

People are sort of working in those positions. It does take some time to get acclimated. And so that that could be a leading cause for why you're seeing some of that overall quits reduced currently. People are staying in their jobs and if you looked at just the quit rate you might think the labor market is worse than it really is. The current rate that we're seeing quits would probably be associated historically with an unemployment rate that's above 5% rather than the low 4% which we're seeing now. Hertz says he expects the unemployment rate to rise a bit more before leveling off, but

not to the point of causing any broader concern, at least in the near term. I'm Kayley Wells for Marketplace. One more labor market thing before we move on. September jobs report comes to us on Friday. And while I've got you, if you happen to miss something on the air, we get it. It happens. Can't always make it. We appreciate that.

We have a podcast though. It's available at marketplace.org or just subscribe on the platform of your choice. There was a report out from a real estate company called JLL not too long ago that said over the past two years data center construction in the United States has increased by a factor of seven. AI, obviously, and its voracious demand for computing power is what's going on there. And that is changing where and how those data centers are being built. Bell-Lynn wrote about the changing architecture and aesthetics of data centers in the Wall Street Journal the other day.

It's good to have you on. Thanks for having me. These data centers that are now being built increasingly because of AI and all of that, they are not like they used to be, right? You can't just do a plain box anymore. That's right. And not only are they plain boxes, but often compared to these kind of prison-like sprawling structures over vast tracts of often rural land.

What's happening now, as you rightly mentioned, AI is one of the factors that's pushing these data centers higher, especially in these urban locales. So cities like New York and Chicago, they're getting a lot higher and kind of starting to look like the skyscrapers that surround them. Is there a technical reason why you'd want your data center to be in the urban center? So when we think about internet connected devices, for example, a lot of those are really low latency, meaning that they can't have this kind of lag that makes the connection speeds really slow.

And so for people who live in cities, local companies that depend on these fast connection speeds, the data centers need to be located very close to them. And that's often in the city centers. City centers are, of course, and however come, way more expensive than building out in farmland somewhere. Yeah, that's right. So just as it's a lot more expensive to buy and rent a one-bedroom apartment in the heart of New York,

that's something I'm experiencing myself. It's a lot cheaper to have the vast acres of land in a rural area. So data center developers are thinking about those same economics where they're very land constrained in places like New York and Chicago, but they still need the same sort of power density and power requirements. And so they're building up. And building up of course gets more expensive, right? Because you have to connect to the piping and all of that just construction stuff.

Exactly, costs like the cement to build the data centers higher, the cost of copper piping, the cost of equipment, all of these things developers have to take into account. But at the same time, they need to provide the same or more amount of power. This is kind of a loosey-goosey question, but are data centers good neighbors, if you know what I mean? I mean, if you build one like in Park Slope, Brooklyn or downtown Manhattan where all the

lofts are or whatever, is that a pain in the butt for the people who live nearby? Data centers are not great neighbors. That's especially felt in suburban areas where in the past two years, these high rise data centers have really started pushing out too. And so that's where you see a lot of this kind of not in my backyard, these protests and because data centers are loud, they produce a lot of noise. And also if you live in a desert environment like Phoenix, you don't want data centers to be sucking up local resources like water.

But in cities, we're friendlier, I would say, with data centers. They're not quite the kind of hulking beasts that they are in the suburbs and beyond. They're really more like kind of slick urban dwellers because they often have these nice looking facades. They might have a green exterior, green walls, maybe even a greenhouse on the roof. So the look and feel of these data centers is changing too. And honestly, we should all just get used to it because it's not like computing needs

are going to go down anytime soon. That's right. They are expected to increase exponentially, largely driven by AI over the next decade and more. And so data centers are here to stay. They are here to stay. Belle Lynn at the Wall Street Journal. Belle, thanks a lot. Appreciate your time. Thanks so much. Coming up.

When I told my friends and family that I was opening a Swedish candy store, they definitely thought I was crazy. I mean, yeah, I get that. First, though, let's do the numbers. Dow Industrial is off 173 points today, 4 tenths percent, 42,156 for the blue chips. The Nasdaq subtracted 278 points. That's about a percent and a half, 17,910. The S&P 500 dipped 53 points, nine tenths percent, 57.8 there.

Damages from Hurricane Helene could amount to as much as $34 billion. That's according to an estimate from Moody's Analytics. It's counting for property damage and business interruptions, but does not yet factor in additional costs. Fatalities, of course, healthcare and worker productivity. Oil prices climbed today, I mentioned that. Brent crude, the international benchmark for oil prices increased three and a half percent. US oil stocks, ConocoPhillips jumped three and nine tenths

percent, Marathon Oil climbed three and eight tenths percent, ExxonMobil added 2.3 percent. Workers are now unionized at 500 Starbucks stores. Baristas in Bellingham, Washington just voted to unionize, joining some 11,000 of their colleagues. Shares of Starbucks ticked down less than a tenth percent today. Tom Brady is selling some personal and sports memorabilia at a Sotheby's auction, the estimated value of the collection of watches and jerseys and helmets from the NFL quarterback who played in seven winning Super Bowls, somewhere between six and $11 million.

Two questions, why? And number two, does Tom Brady need more money? You're listening to Marketplace. Some of the toughest moments we'll experience in life often come with the hardest financial decisions. Like how much to spend when your pet is dying. Or what to do if you uncover a loved one's financial secrets after they've passed. It's like having this albatross, this monkey on your back that you don't want amongst everything else. I'm Rima Grace, host of This Is Uncomfortable, a podcast from Marketplace.

This season, we've got a wide range of stories about life and how money messes with it, including the unexpected ways money can shape our journeys through loss and grief. Listen to This Is Uncomfortable wherever you get your podcasts. This is Marketplace. I'm Kai Rizdal. You have, almost certainly in your shopping life, bought some private-label products. Store brands of cereal or shampoo or bath towels or what have you. The retailer works with a manufacturer to create them and so gets to make the decisions about whatever design or features they want to offer. Other times, though, a retailer buys a product off the shelf, if you will, from a manufacturer,

slaps its own label on it, its own price tag as well, and other retailers might be doing the exact same thing with the exact same product. That particular practice was new to Marketplace's Stephanie Hughes, who recently learned about it the hard way, as they say. Earlier this year, I was shopping online for an outdoor table. I found a round wooden one. It looked nice, around $300. I texted the link to my husband.

Then I found another one. Also round, same kind of wood from a different retailer. $479. I sent him that link too. It was the exact same table. That's my husband, Mike Biondi. The only differences were the retailer and the significantly different prices. What I found deeply funny was that you apparently did not notice when you sent me these links that they were the same table.

I'd been confused by white labeling, which lets a bunch of retailers sell the exact same product under their own name. It's more common than you think it is. Natalie Cutler follows retail trends for the advisory firm BDO. White labeling happens across vastly different categories. Clothing, packaged foods like ketchup, soap, as well as furniture and stuff for the household. Cutler says it's a way for retailers to add, say, an outdoor table to their inventory without doing the work of actually developing one. They didn't spend the money or the time from an R&D perspective. They can design the label the way they want to. So

this way it looks like one of their own products. But in these cases, the retailer doesn't have any control over the quality of what they're selling. There is a risk of if the product is isn't any good, that can damage your brand. There can be advantages to scale though. Because the manufacturer is making a whole lot of tables, it can sell them to retailers at a lower price. Cutler says the retailers, in turn, they can offer a less expensive alternative to their

customer base. That is, if they want to. Suresh Asheria studies pricing and retail operations as a professor at the University of Maryland. He points out stores set prices based on what their customers are willing to pay. What is the customer's perception of the value of what you're selling? And depending on the store, the consumers may have a different perception of the value. And for purchases like furniture, which are meant to last a while,

Osharia says people are more willing to go with a brand they associate with being high quality. For things that you don't buy very often, you don't want to not buy the right thing. And so the brand can then carry a premium. A couple years back, when Dane Herdabees found he'd paid a premium for a bunch of white-labeled furniture, he couldn't stop thinking about it. Because now, all of a sudden, everything I see,

I'm wondering, is this something that was white-labeled, something that I can get someplace else for less. So, Herdabees, who was already an entrepreneur, decided to create a business to help people figure that out. His startup's website is spoken.io. It lets users upload a picture or a URL of a product, a piece of furniture or home decor. And if it's white labeled, it'll show a bunch of different retailers selling the same item.

You see these really wild price spreads. You see a couch that retails for $4,000 one place and $1,500 at another place. And Herdaby says sometimes shoppers will end up buying a more expensive option, even if they know they could get it somewhere else for less. They might have a better return policy. They might have better customer support. Or, he says, maybe shoppers prefer to buy from a retailer they know. Maybe the least expensive option is a store they haven't heard of yet.

As for me and my husband and our table search, we decided on our own to buy the cheapest white-labeled option we could find. Cost? $211.28. It's been a good table. This summer, we had a lot of grilled hot dogs and years of corn around it. There's a but, though. A few months after we got it, we discovered it had gotten infested with termites. And that probably would have happened no matter where we bought it. I'm Stephanie Hughes from RKPLACE. We are in October, people, the spookiest month of the year. And when it comes to Halloween, candy is on the brain. Outside the usual chocolate bars and fun-sized packets of Skittles, Swedish Candy has been making the rounds on TikTok with their unique

sweets in the stores that sell them going viral. Well that brings us to today's installment of our series, My Economy. My name is Tyler Grabeel and I'm the owner of Sweetish, a Scandinavian candy store based in Lancaster, Pennsylvania. My business started in 2019. It was starting as a retail store, just kind of a localized specialty store focusing on Swedish candy and Swedish imports. When I told my friends and family that I was opening a Swedish candy store, they definitely thought I was crazy.

We ordered four pallets of candy and everyone thought, you have way too much inventory. It has a best-by date. How are you going to move all of that in time? And we sold everything in three weeks and I proved them wrong, which I did not expect to. I like to pride myself in that I have tasted almost everything we have. Really understanding that has really helped. I feel like if I didn't have that background and gained all that knowledge that a lot of

people probably wouldn't trust me in business, especially when you're buying a pallet full of salty licorice that's not a really big seller in the US, you have to assure them that you know what you're doing. In January of 2024, we went viral on TikTok. When we saw the traffic coming from the viralness at the beginning was definitely daunting and we were really not sure what to expect and it dramatically changed the business to where we went from approximately 30 to 50 orders in our Q1 average every day to skyrocketing to a couple thousand at one point to 10,000 orders within a few days.

It hasn't slowed down but our production's gone up. We went from about five employees to almost 30 employees and have added a little bit of automation. Warehouse has expanded, so we can finally actually keep up with demand. It takes a lot. I jokingly say, I mean, it might not even be a joke, it's probably taken some years off my life. But I think overall, having a great team and building a team along has been really great. And it's also been able to help us bring in more key players to our team

that originally we would have never been able to afford. And now we can pay a decent salary to some really knowledgeable people to help grow it even further. Tyler Graybill, the proprietor of Sweetish in Lancaster, PA. Whatever your sweet tooth craves, take a second, let us know what's going on in your economy, would you? Marketplace.org slash my economy is where you can do that. This final note on the way out today, the Federal Reserve is doing pretty well getting inflation back down to its target, 2% as you know. You know who's doing better? The Europeans, the Eurozone Europeans to be precise.

Inflation in the 20 countries that use the single currency was 1.8% in the year that ended yesterday, first time since June of 2021 that inflation over there has been below target. Our digital and on demand team includes Carrie Barber, Jordan Mangy, Dylan Mietinen, Janet Nguyen, Olga Oxman, Ellen Rolfus, Virginia K. Smith and and Tony Wagner Francesca Levy is the executive director of digital and on-demand and I'm Kai Rizdal we will see you tomorrow buddy

This is APM. Hi, I'm Kai Rizdal, the host of How We Survive. It's a podcast from Marketplace. In 1986, before I was a journalist, I was flying for the Navy. Mr. Gorbachev, tear down this wall. It was the Cold War and my first appointments were intercepting Russian bombers. Today though there's another threat out there, climate change. This could be the warmest year on record. Climate change is here. Temperatures here are warming faster than anywhere on earth. And while the threat seems new, the Pentagon's been funding studies on climate change since

the 1950s. I think we will put our troops and our forces at higher risk if we don't recognize the impact of climate change. This season, we go to the front lines of the climate crisis to see how the military is preparing for the threat. Listen to How We Survive wherever you get your podcasts.