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Get ready for more supply chain chaos

The Ever Given stuck in the Suez Canal. The chip shortage. Hundreds of ships lined up in the Pacific Ocean waiting for a parking spot.

Americans have been trained to deal with many supply chain disruptions over the past few years, and they may be hit imminently with another whopper: Roughly 45,000 dockworkers at 36 ports on the East and Gulf Coasts could go on strike as soon as 12:01am ET tomorrow if they and marine operators don’t agree to a new contract today.

The damage of closing ports that handle an estimated 60% of US shipping traffic would be devastating and widespread across economic sectors, from retail to automobiles to produce. JPMorgan analysts say a work stoppage could cause $5 billion in economic damage to the US per day. Freight costs for businesses have already risen by up to 20% in anticipation of the strike, and the increases will likely be passed on to consumers in the form of higher prices on store shelves.

What do the dockworkers want?

The port workers, who load and unload those boxy containers that underpin international commerce, want higher wages and protections against automating port operations.

The pay issue: The International Longshoremen’s Association, the union that represents the dockworkers at East and Gulf Coast ports, is reportedly holding firm on a 77% pay increase over six years. That may sound like an extreme demand, but workers would point out that wages for veteran dockworkers have increased 11% since the start of the last six-year contract, while inflation has jumped 24% in the same period. The top wage for union dockworkers is $39/hour.

Automation: If East Coast dockworkers and Hollywood actors have anything in common, it’s that they view recent technological advancements as an existential threat to their livelihoods. Protecting human jobs from robots that move cargo is the “signature issue” of union president Harold Daggett, per Axios.

Big picture: If a strike is resolved within a week, experts anticipate minimal economic damage. But the longer it went on, the greater the chaos and potential for shortages and price hikes. The small piece of good news? Retailers have been preparing for a potential strike for months, and some have probably already shipped your holiday gifts to the United States.—NF

Has the gavel come down on fine art auction houses?

In 2017, Leonardo da Vinci’s “Salvator Mundi” became the most expensive painting ever sold at auction at $450m.

But record-breaking sales like that one are now a distant memory for an industry that’s feeling the pressure of rising prices, interest rates, and inflation, per The Wall Street Journal.

Sotheby’s, one of the world’s most famed auction houses, is not immune to the downswing:

While it previously earned $7B+ in sales annually, the company’s auction business saw a $115m loss and just $3m in profit for the first half of 2023.
Despite holding $1.8B in debt, the company paid $100m+ for New York’s Breuer building on Madison Avenue last year.

And while the price of Sotheby’s bonds tanked this summer, the announcement of a $1B infusion from Abu Dhabi sovereign-wealth fund ADQ fueled a rebound in August.

But, until that lifeline kicks in, insiders told WSJ that the company is delaying payments for its conservators and art shippers by as much as six months and dishing out IOUs in place of incentive pay for senior staffers.

Not-so-fine art

Sotheby’s is far from alone in its plight.

Sales at Christie’s, Sotheby’s, and Phillips totaled $1.2B-$1.8B this spring season, down from the 2022 peak of $2.8B.

And the average price of art sold at auction decreased 32% in 2023 — the largest single-year decline in more than seven years, according to data from ArtTactic via Bank of America.

Adding salt to the wound, Christie’s was hit by a cyberattack in May, with hackers stealing sensitive personal information from the auction house’s clients.

Scared you’ll have nowhere to spend your millions? Fret not. Christie’s sold a Mark Rothko painting for $100m+ in February to hedge fund billionaire Ken Griffin.

DirecTV’s buying its rival for $1 (kinda)

In the satellite TV equivalent of Godzilla and Kong teaming up against Skar King, DirecTV announced it’s buying longtime rival Dish for $1 in a deal that unites the two providers as they fight to maintain relevance in the age of streaming.

The complex deal entails DirecTV buying Dish (and Sling) from its parent company, EchoStar, for $1 and the assumption of nearly $10 billion in debt. At the same time, private equity firm TPG will buy AT&T’s 70% stake in DirecTV for $7.6 billion, giving TPG full ownership of the combined company (it bought the other 30% of DirecTV from AT&T in 2021).

It’s a bid to save the satellites. The two companies have lost a combined 63% of their customers since 2016. The merger will make DirecTV the largest US TV distributor, with 18 million subscribers—a number that CEO Bill Morrow hopes will help it negotiate better deals and offer smaller packages, so customers aren’t forced into paying for the Bob Ross Channel and Disney Junior.

Looking ahead…the deal is subject to regulatory approval—though Morrow said he’s confident that regulators won’t block the merger (which they did the last time the companies tried to merge in 2002)—before DirecTV upholds its promise to investors to cut $1 billion in costs annually. That’s typically corporate speak for layoffs.—CC

Forecast calls for raining satellites

There are ~10k active satellites currently orbiting Earth— but what happens when they start dropping on us?

That’s what the European Space Agency (ESA) hopes to find out with a new project called the Destructive Reentry Assessment Container Object (or DRACO, with that handy acronym explaining why it’s both a “container” and an “object”).

DRACO will be a 441-pound, washing-machine-sized box of sensors and cameras.
The ESA will launch it into orbit in 2027 and watch as DRACO plummets to Earth ~12 hours later.
DRACO will deploy a parachute during reentry, slowing down just long enough to transmit data about its brief and painful life.
Scientists will use the data to design future satellites that don’t break up.

This is all in pursuit of the ESA’s goal to eliminate the creation of space junk by 2030. There are ~30k pieces of trackable garbage floating around in space, any one of which could hit something important and cause problems.

This isn’t the first time…

… that people have watched something fall from orbit with baited breath.

In 2001, Taco Bell offered to give everyone in the US a free taco if a piece of the Russian space station Mir landed on a target near Australia.

The station’s core hit somewhere closer to Chile, saving Taco Bell ~$10m.

Hopefully a brave European fast-food chain will make a similar offer and try to catch part of DRACO.