Shipping containers are transported by driverless transport vehicles (AGV) alongside gantry cranes at the port at 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 of dozens of gigantic container ships anchored off the coast of Los Angeles for weeks last year rattled the shipping industry and compounded global supply chain disruption. Most of the ships, mostly from Asia, were waiting to pull into the already congested ports of Los Angeles and Long Beach and offload tens of thousands of colorful containers packed with everything from toys to Toyotas. More than 30% of all containerized US maritime imports pass through the two facilities, which together form the country’s largest port complex.
Lifting that cargo from ship to shore and to much-awaited destinations near and far is the job of dockworkers affiliated with the International Longshore and Warehouse Union (ILWU) — who are currently embroiled in a blockade of their own. The union represents more than 22,000 dockers in 29 ports and terminals along the West Coast; approximately 13,000 are employed at 12 ports along San Pedro Bay in Southern California. Since the beginning of May, the ILWU has been in contract negotiations with the Pacific Maritime Association (PMA), which represents 70 shipping companies as well as port and terminal operators.
The current ILWU contract, which came into effect in 2015, expired on July 1st. As talks continue, both sides have at least allayed fears of a potential work slowdown or disruption – which would only exacerbate the ports’ ongoing backlog – by jointly declaring in mid-June that “neither party is preparing for a strike or lockout. “
Wages are typical of labor bargaining, although 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 automating container handling machinery, an emerging trend in ports and terminals around the world.
The PMA would like the previously agreed use of remote-controlled cranes to lift containers off and on ships and transport them to and from shore-side stacks, and yard tractors to move containers around the terminals, including on and off articulated lorries and railcars. The association released a related study in May, in which it claimed that “increasing automation will enable the West Coast’s largest ports to remain competitive, boost both cargo and employment growth and reduce greenhouse gas emissions to meet the stringent… meet local environmental standards”.
ROTTERDAM, NETHERLANDS – OCTOBER 27: A general view of shipping containers and cranes that move them at Port of Rotterdam on October 27, 2017 in Rotterdam, Netherlands. The Port of Rotterdam is the largest port in Europe, covering an area of 105 square kilometers or 41 square miles and stretching a distance of 40 kilometers or 25 miles. It is one of the busiest ports in the world, handling thousands of cargo containers every day. (Photo by Dean Mouhtaropoulos/Getty Images)
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A report prepared by the Economic Roundtable and signed by the ILWU’s Coast Longshore Division and released June 30 disputes many of the PMA study’s points, noting in particular that port automation is killing jobs. “We often think that technology and automation are synonymous with progress, but after looking at the evidence from ports around the world, this isn’t a win-loser problem, it’s a loser-loser problem for both workers and workers for the American public,” he told Daniel Flaming, president of the Economic Roundtable and co-author of the report, in an email to CNBC. “Automating shipping 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 dissenting reports not only document the ongoing treaty negotiations between the ILWU and the PMA, but more broadly address arguments for and against automation that date back to the dawn of America’s Industrial Revolution in the late 17th century. Three centuries later, the question of whether machines will replace human labor continues to affect almost every sector of the economy, from car manufacturing to animal husbandry.
The most rudimentary – and most widespread – type of automation in seaport and terminal operations is the computerization and digitization of forms, data, records and other administrative functions. This innovation has displaced employees who manually wrote or typed such information, but also created new IT jobs. Just as electronic medical records have become ubiquitous in the healthcare industry, process automation is standard in shipping.
Implementation of automated container handling and transport equipment, including operating software and more recently augmented reality and virtual reality technologies, is still in its infancy. In 2020, the United Nations Conference on Trade and Development stated that there are 939 container ports worldwide. But last year, according to a report by the International Transport Forum, only about 53 were automated, accounting for 4% of total global container terminal capacity. Most of them have emerged since the 2010s and more than half are located in Asia and Europe.
A distinction is made between fully and semi-automated terminals. Fully automated refers to the various equipment that handles containers, mainly cranes and yard tractors. They don’t require human operators onboard, instead being remotely controlled by humans in control towers, surveillance screens, and cameras. Although dockers may be required to manually attach a crane’s hooks to a container, or a container to a truck chassis or rail vehicle. A semi-automated terminal generally has remote-controlled cranes and human-powered tractors.
The Dutch port complex in Rotterdam was the first to introduce mechanical automation in 1993 and has since become the model for a fully automated terminal. Today, some of the world’s busiest international 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 a number of reasons, but union resistance remains a primary one. In their 2002 contract, the ILWU agreed to computerized process automation after the PMA approved a 10-day lockdown. In 2008, in exchange for nearly $900 million in contributions to its pension fund and other retirement benefits, the union agreed that operators could implement machine automation at their discretion.
West Coast dockers also have a significant financial safety net. The current employment contract includes a guaranteed salary plan that provides up to 40 hours of weekly income if an eligible ILWU member is unable to find 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 US port to be fully automated. More recently, part of the Los Angeles APM terminal facility and the Long Beach Container Terminal (LBCT) have also been fully automated.
In this latest round of talks, the ILWU is asking operators to withhold further automation at San Pedro Bay ports. Their objections are set out in the Economic Roundtable report and refuted in the PMAs. So far, neither side has caved in and initiated a media ban on each other during the negotiations.
There are now three semi-automated ports on the East Coast — two in Norfolk, Virginia, and one at the Port of New York and New Jersey terminal in Bayonne, New Jersey. Dockers at these facilities are members of the International Longshoremen’s Association (ILA), which represents nearly 65,000 members in ports along the East Coast and Gulf of Mexico. The ILA is not part of the ILWU negotiations, but also rejects further automation.
It is perfectly normal for dockworkers’ unions to protect their members’ jobs. “A conservative analysis of job losses shows that automation eliminated 572 full-time equivalents annually at LBCT and TraPac in 2020 and 2021,” the ILWU-funded study said.
Likewise, port and terminal operators are looking to increase efficiency and productivity through automation, particularly in high-volume ports that have limited future cargo capacity and where truckers are frustrated by long waiting times loading and unloading containers. Operators claim job losses can be offset by retraining and upskilling existing workers to operate automated systems, leading to higher wages and improved safety. In fact, the PMA is building a 20,000-square-foot training center for ILWU workers. New technology-related positions such as data analysts and software developers also need to be filled.
“The fear that automation will hurt unions is understandable, but it’s not as if it will lead to major job losses,” said Michael Nacht, a professor of public policy at the University of California Berkeley and a 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 every port is a candidate for automation from cost-benefit analysis. The upfront investment in new equipment and infrastructure can run into the billions, whether it’s upgrading an existing terminal or building an entirely new terminal. And depending on the geography of the port, the type of cargo being handled, and the volume of containers in and out, upgrading manually operated systems may be more cost-effective.
Automation has historically proven to be an unstoppable force across global industries, making its expansion in ports and terminals seem inevitable over the next five to ten years. “One thing the Covid-19 pandemic has shown is how fragile some of the supply chains in and out of ports are,” said an executive at a terminal operating company, who asked not to be identified due to ties with unions and operators. “In order for us to be responsible service providers, we need to find more resilience, and automation can do that. Hopefully we can find our way [the ILWU-PMA contract negotiations] together and make things better for everyone. That would be a good result.”