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The sight of dozens of giant container ships moored for weeks off the coast of Los Angeles last year shook the shipping industry and added to the global disruption of supply chains. Most of the ships, bound primarily from Asia, were waiting to enter the already subsidized ports of Los Angeles and Long Beach and unload tens of thousands of multi-colored containers filled with everything from toys to Toyotas. More than 30% of all containerized US marine imports pass through the two facilities that together make up the country’s largest port complex.
Lifting that cargo, from ship to shore and to eagerly awaited destinations near and far, is the work of ILWU port workers – who are currently embroiled in their own predicament. The union represents more than 22,000 dump workers at 29 ports and terminals up and down the West Coast; About 13,000 operate at 12 ports along San Pedro Bay in Southern California. Since early May, ILWU has been deadlocked in contract negotiations with the Pacific Maritime Association (PMA), which represents 70 shipping companies and port and terminal operators.
ILWU’s current contract, enacted in 2015, expired on July 1. And while talks continue, both sides have at least allayed fears of a potential slowdown or halt to work – which will only exacerbate the ongoing backlog at ports – with a joint announcement in mid-June that “neither side prepared for a strike or shutdown”.
For labor negotiations, wages are an issue, even though unionized workers are among the best-paid union workers in the country, averaging $195,000 a year plus benefits, according to the PMA. More controversial is the issue of automating container handling machines, an emerging trend in ports and terminals around the world.
The PMA would like to expand the previously agreed use of remote controlled cranes, which lift containers to and from ships and move them to and from land piles, and yard tractors that move containers around stations, including on and off trailers for tractors and trains. The association released a related study in May, claiming that “increased automation will enable the largest West Coast ports to remain competitive, facilitate merchandise and job growth, and reduce greenhouse gas emissions to meet stringent local environmental standards.”
Rotterdam, Netherlands – October 27: A general view of shipping containers and cranes transporting them at the port of Rotterdam on October 27, 2017 in Rotterdam, the Netherlands. The Port of Rotterdam is the largest port in Europe covering 105 square kilometers or 41 square miles and extending over a distance of 40 kilometers or 25 miles. It is one of the world’s busiest ports, handling thousands of containers of cargo every day. (Photo by Dean Motaropoulos/Getty Images)
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A report by the Economic Roundtable and included by ILWU’s Longshore Division, released on June 30, questions many points in the PMA study, noting in particular that port automation is eliminating jobs. “We often think that technology and automation are synonymous with progress, but after looking at the evidence from ports around the world, this is not a lost cause, but a lost cause for both workers and the American public,” he said. Daniel Fleming, chair of the Economic Roundtable and co-author of the report, in an email to CNBC. “Automating charging stations is not cost-effective or more productive, but it enables foreign shipping giants to avoid the inconvenience of dealing with American workers and the union that represents them.”
The mixed reports document not only the ongoing negotiations for the ILWU-PMA contract, but more broadly the arguments for and against automation dating back to the dawn of the American Industrial Revolution in the late 18th century, when mechanized textile mills opened, purging large numbers of workers. . Three centuries later, the question of machines replacing human workers still affects most business sectors, from car manufacturing to zoos.
The most rudimentary – and globally adopted – type of automation in port and marine terminal operations is the computing and digitization of models, data, record-keeping and other administrative functions. This innovation replaced clerks who typed or typed this information by hand, but it also created new jobs in the field of information technology. In as much 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 drivers and, more recently, augmented reality and virtual reality technologies, is relatively nascent. In 2020, the United Nations Conference on Trade and Development stated that there are 939 container ports in the world. However, according to a report by the International Transport Forum last year, only about 53 have been automated, which is 4% of the total global container terminal capacity. Most of them have appeared since 2010 and more than half of them are in Asia and Europe.
There is a difference between full and semi-automatic terminals. Fully automatic refers to the various equipment that handles containers, especially cranes and yard tractors. It does not require human operators on board, instead it is operated remotely by humans in control towers, monitors and cameras. Although dockers may be required to manually secure crane hooks to a container, truck chassis, or railcar. The semi-automatic station generally has remote-controlled cranes and human-driven yard tractors.
In 1993, the Dutch port complex in Rotterdam became the first to introduce automated automation and has since become a model for a fully automated terminal. Today, many 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 key. In its 2002 contract, after the PMA authorized a 10-day shutdown, ILWU agreed to automate computerized processes. In 2008, in exchange for adding nearly $900 million to its pension fund and other retirement benefits, the union agreed that operators, at their discretion, could implement machine automation.
West Coast stevedoring workers also enjoy a significant financial safety net. The current employment contract includes a Payment Guarantee Scheme that guarantees up to 40 hours of weekly income if an eligible ILWU member is unable to obtain full-time employment for any reason, including automation. This weekly income is guaranteed until retirement.
In 2016, the TraPac terminal in Los Angeles became the first fully automated US port. Recently, part of the APM Terminal facility in Los Angeles and the Long Beach Container Terminal (LBCT) were also fully operational.
In this latest round of talks, ILWU is asking operators to delay further automation at the San Pedro Bay ports. His objections were presented in the report of the Economic Roundtable, and they were answered in the Palestinian Monetary Authority. So far, neither side has conceded, and both sides have initiated a media blackout during the negotiations.
Meanwhile, there are three semi-auto ports on the East Coast – two in Norfolk, Virginia, one in New York Harbor and a New Jersey terminal in Bayonne, New Jersey. Port workers at those facilities are members of the International Longshoremen Association (ILA), which represents approximately 65,000 members at ports along the East Coast and Gulf of Mexico. ILA is not part of the ILWU negotiations, but is similarly opposed to further automation.
It is perfectly normal for dock workers’ unions to protect the jobs of their members. “A conservative analysis of job losses shows that automation eliminated 572 full-time equivalent jobs annually at LBCT and TraPac in 2020 and 2021,” the ILWU-funded study said.
Likewise, port and terminal operators want to enhance efficiency and productivity through automation, particularly in large-scale ports that have limited cargo capacity in the future and where truck drivers are frustrated by long waiting times to load and unload containers. Operators assert that job losses can be compensated for by reskilling existing workers and increasing their skills to operate automated systems, leading to higher wages and improved safety. In fact, PMA is building a 20,000 square foot training center for ILWU workers. In addition, new positions related to technology, such as data analysts and software developers, must be filled.
Michael Nacht, professor of public policy at the University of California, 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 MIT.
On the other hand, not every outlet is a candidate for automation, in terms of cost-benefit analytics. Upfront capital expenditures can amount to billions of new equipment and infrastructure, whether it’s retrofitting an existing plant or building a new plant from scratch. Depending on the geographical location of the port, the type of cargo it handles, and the volume of containers entering and exiting, it may be more cost-effective to improve manually operated systems.
Automation, in all global industries, has historically proven to be an relentless force, so its expansion into ports and terminals over the next five to ten years seems inevitable. “One of the things that the COVID-19 pandemic has revealed is how fragile some supply chains are in and out of ports,” said an executive at the terminal operations company, who asked not to be identified due to ties with unions and operators. “To be responsible service providers we need to find more flexibility, and automation can do that. Hopefully we can find our way through [the ILWU-PMA contract negotiations] Collectively and making things better for everyone. That would be a good result.”