Shipping containers are transported by Automated Guided Vehicles (AGV) alongside gantry cranes on the quayside of the Delta Terminal, operated by Europe Container Terminals BV (ECT), at the Port of Rotterdam in Rotterdam, the Netherlands.
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The sight last year of dozens of gigantic container ships anchored for weeks off Los Angeles shook the shipping industry and amplified the global disruption to supply chains. Most of the ships, mostly from Asia, were waiting to enter the already jammed ports of Los Angeles and Long Beach and unload tens of thousands of multicolored containers filled with everything from toys to Toyotas. More than 30% of all US containerized maritime imports pass through these two facilities, which together make up the largest port complex in the country.
Lifting this cargo, from ship to shore and to eagerly awaiting destinations near and far, is the job of dockworkers belonging to the International Longshore and Warehouse Union (ILWU) – and who are currently mired in their own dead end. The union represents over 22,000 stevedores at 29 ports and terminals along the West Coast; approximately 13,000 people are employed at 12 ports along San Pedro Bay in Southern California. Since early May, the ILWU has been deadlocked in contract negotiations with the Pacific Maritime Association (PMA), which represents 70 shipping companies and port and terminal operators.
The current ILWU contract, signed into law in 2015, expired on July 1. As talks continue, the two sides have at least allayed fears of a potential slowdown or work stoppage – which would only add to the ports’ lingering backlogs – by jointly declaring in mid-June that “Neither side is preparing for a strike or lockout.”
Typical of labor negotiations, wages are an issue, though ILWU members are among the highest paid union workers in the country, averaging $195,000 a year plus benefits, according to the PMA. More controversial is the issue of automation of container handling machinery, an emerging trend in ports and terminals around the world.
The PMA wants to expand the previously agreed use of remotely operated cranes, which lift containers from and onto ships and transfer them to and from landside stacks, and yard tractors which transport containers around terminals, including onto and excluding semi-trailers and wagons. The association released a related study in May, saying “increased automation will help larger West Coast ports stay competitive, facilitate cargo and job growth, and reduce emissions.” of greenhouse gases to meet strict local environmental standards”.
ROTTERDAM, NETHERLANDS – OCTOBER 27: A general view of shipping containers and the cranes that move them at the Port of Rotterdam on October 27, 2017 in Rotterdam, Netherlands. The Port of Rotterdam is the largest port in Europe covering 105 square kilometers or 41 square miles and stretches over a distance of 40 kilometers or 25 miles. It is one of the busiest ports in the world, handling thousands of cargo containers daily. (Photo by Dean Mouhtaropoulos/Getty Images)
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A report prepared by the Economic Roundtable and endorsed by the ILWU’s Coast Longshore Division, released on June 30, disputes many points in the PMA study, including saying that port automation kills jobs. “We often think of technology and automation as synonymous with progress, but after looking at the evidence from ports around the world, it’s not a win-lose question, but rather a lose-lose question for workers and the American public,” Daniel Flaming, chairman of the economic roundtable and co-author of the report, said in an email to CNBC. “Automating marine terminals is neither cost-effective nor more productive, but it allows foreign shipping giants to avoid the inconvenience of dealing with American workers and the union that represents them.”
The divergent reports not only document ongoing ILWU-PMA contract negotiations, but more broadly rehash arguments for and against automation dating back to the dawn of America’s Industrial Revolution in the late 1700s, when mechanized textile mills opened, purging dozens of workers. Three centuries later, the issue of machines replacing human workers continues to impact most industries, from automobile manufacturing to zoo maintenance.
The most rudimentary—and universally adopted—type of automation in seaport and terminal operations is the computerization and digitization of forms, data, record keeping, and other administrative functions. This innovation supplanted clerks who manually wrote or typed this information, but also created new computer jobs. Just as electronic medical records have become ubiquitous in the healthcare industry, process automation is the norm in shipping.
The implementation of automated container handling and transportation equipment, including operating software and, more recently, augmented reality and virtual reality technologies, is relatively nascent. In 2020, the United Nations Conference on Trade and Development declared that there were 939 container ports in the world. Yet last year, according to a report by the International Transport Forum, only around 53 were automated, representing 4% of the world’s total container terminal capacity. Most of them have emerged since the 2010s and more than half are located in Asia and Europe.
There is a distinction between fully and semi-automated terminals. Fully automated refers to the various equipment that handles containers, primarily cranes and construction tractors. They do not require human operators on board, and are instead operated remotely by humans in control towers, monitor screens and cameras. Although dockers may be required to manually attach the hooks of a crane to a container or container to a truck chassis or railcar. A semi-automated terminal typically has remote-controlled cranes and human-driven construction tractors.
In 1993, the Dutch port complex in Rotterdam was the first to introduce machine automation and has since become the model for a fully automated terminal. Today, several of the world’s busiest foreign ports have some degree of machine automation, including those in Shanghai, Singapore, Antwerp and Hamburg.
Operators in the US have been slower to automate, for many reasons, but union resistance remains the main one. In its 2002 contract, after the PMA authorized a 10-day lockdown, the ILWU agreed to computerized process automation. In 2008, in return for an addition of almost $900 million to its pension fund and other retirement benefits, the union agreed that operators, at their discretion, could implement automation of machinery.
West coast longshoremen also have a significant financial safety net. The current employment contract includes a wage guarantee plan that provides up to 40 hours of weekly income if an eligible ILWU member is unable to obtain full-time work for any reason. , including automation. This weekly income is guaranteed until retirement.
In 2016, the TraPac terminal in Los Angeles became the first US port to fully automate. More recently, part of the facilities at the APM terminal in Los Angeles and the Long Beach Container Terminal (LBCT) have also been fully automated.
In this latest round of talks, the ILWU is asking operators to suspend further automation at ports in San Pedro Bay. Its objections are set out in the economic roundtable report and are being countered in the LDCs. To date, neither side has backed down and mutually initiated a media blackout during the negotiations.
Meanwhile, there are three semi-automated ports on the east coast — two in Norfolk, Va., and one at the Port of New York and New Jersey terminal in Bayonne, New Jersey. Dockworkers at these facilities are members of the International Longshoremen’s Association (ILA), which represents nearly 65,000 members in ports on the East Coast and Gulf of Mexico. The ILA is not part of the ILWU negotiations, but also opposes further automation.
It is quite normal for dockers’ unions to protect the jobs of their members. “A conservative analysis of job losses shows that automation eliminated 572 full-time equivalent jobs per year at LBCT and TraPac in 2020 and 2021,” said the ILWU-funded study.
Similarly, port and terminal operators want to increase their efficiency and productivity through automation, especially in high-volume ports that have limited future cargo capacities and where truckers are frustrated with long delivery times. waiting to load and unload containers. Operators argue that job losses can be offset by retraining and upskilling current workers to operate automated systems, leading to higher wages and improved safety. In fact, the PMA is building a 20,000 square foot training facility for ILWU workers. Additionally, new technology-related jobs, such as data analysts and software developers, will need to be filled.
“The concern that automation will hurt unionized workers is understandable, but it is not that it will cause significant job loss,” said Michael Nacht, professor of public policy at the University of California at Berkeley and co-author of the PMA. report. “A direct comparison of the data shows the same number of workers in automated and non-automated facilities,” he said, citing separate reports on automation from McKinsey and Company and the Massachusetts Institute of Technology.
On the other hand, not all ports are candidates for automation, in terms of cost-benefit analyses. Initial capital outlays can run into the billions for new equipment and infrastructure, whether upgrading an existing terminal or building a new one from scratch. And depending on the geographic location of the port, the type of cargo it handles, and the volume of inbound and outbound containers, improving manually operated systems might be more cost-effective.
Automation, in all industries worldwide, has historically proven to be an inexorable force, so its expansion in ports and terminals over the next five to 10 years seems inevitable. “One thing the Covid-19 pandemic has revealed is how fragile some supply chains are inside and outside of ports,” an operating company executive said. of terminals, who requested anonymity due to relations with unions and operators. “For us to be responsible service providers, we need to find more resilience, and automation can do that. Hopefully, we can find our way through [the ILWU-PMA contract negotiations] collectively and make things better for everyone. It would be a good result.”