Shipping containers are transported by automated vehicles (AGVs) alongside gantry cranes at the berth of the Delta Terminal, operated by Europe Container Terminals BV (ECT), at the Port of Rotterdam in Rotterdam, the Netherlands.
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Last year, the sight of dozens of giant container ships anchored for weeks off the coast of Los Angeles shocked the shipping industry and exacerbated disruption to supply chains around the world. Most of the ships, heading mostly from Asia, were waiting to enter the already blocked ports of Los Angeles and Long Beach to unload tens of thousands of colorful containers crammed with everything from toys to Toyotas. More than 30% of all U.S. containerized seaborne imports pass through these two facilities, which together make up the country’s largest port complex.
Lifting this cargo from ship to shore and to anxiously awaiting destinations near and far is the work of dock workers belonging to the International Port and Warehouse Union (ILWU) who are currently stuck in the jam themselves. The union represents over 22,000 longshoremen in 29 ports and terminals along and across the West Coast; about 13,000 people work in 12 ports in San Pedro Bay in Southern California. Since early May, ILWU has stalled in contract negotiations with the Pacific Maritime Association (PMA), which represents 70 shipping companies and port and terminal operators.
The current contract with ILWU, which took effect in 2015, expired on July 1. As negotiations continue, both sides have at least allayed fears of a potential slowdown or shutdown that would only exacerbate persistent backlogs in ports, jointly stating in mid-June that “Neither side is preparing for a strike or lockout.”
Typical labor negotiation is wages, according to the PMA, although ILWU members are among the highest paid union workers in the country, averaging $195,000 a year plus benefits. More controversial is the issue of automating container handling equipment, which is a new trend in ports and terminals around the world.
PMA wants to expand the previously agreed use of remotely operated cranes, which lift containers off and on ships and move them to and from stacks, and yard tractors, which move containers around terminals, including on and off tractor trailers. wagons. In May, the association published a study stating that “increasing levels of automation will allow the West Coast’s largest ports to remain competitive, boost cargo and jobs, and reduce greenhouse gas emissions in line with stringent local environmental standards.”
ROTTERDAM, NETHERLANDS – OCTOBER 27: General view of cargo containers and cranes that move them in 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 for 40 kilometers or 25 miles. It is one of the busiest ports in the world, handling thousands of cargo containers daily. (Photo by Dean Mutaropoulos/Getty Images)
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Released on June 30, a report prepared by the Economic Roundtable and signed by the ILWU Coastal Shore Unit disputed many of the points in the PMA study, notably stating that port automation is cutting jobs. “We often think that technology and automation are synonymous with progress, but looking at the evidence from ports around the world, this is not a win-win issue, but rather a lose-lose issue for both workers and the American public,” he said. Daniel Flaming, president of the Economic Roundtable and co-author of the report, in an email to CNBC. “Automating shipping terminals is not cost-effective or more productive, but it does allow foreign shipping giants to avoid the inconvenience of dealing with American workers and the union that represents them.”
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 the Industrial Revolution in America in the late 1700s, when mechanized textile factories opened, laying off many workers. Three centuries later, the question of replacing humans with working machines is still relevant in almost all business sectors, from the automotive industry to the keeping of animals.
The most rudimentary and widely accepted type of seaport and terminal automation is the computerization and digitization of forms, data, record keeping and other administrative functions. This innovation displaced the clerks who manually wrote down or typed such information, but it also created new IT jobs. Just as electronic health records have become ubiquitous in healthcare, process automation is standard in shipping.
The introduction of automated container handling and transport equipment, including operating software and, more recently, augmented reality and virtual reality technologies, is relatively in its infancy. In 2020, the United Nations Conference on Trade and Development stated that there are 939 container ports in the world. However, last year, according to a report from the International Transport Forum, only about 53 were automated, representing 4% of the total capacity of container terminals in the world. Most of them have appeared since the 2010s, and more than half of them are located in Asia and Europe.
There is a distinction between fully and semi-automatic terminals. Fully automated refers to the various equipment that handles containers, mainly cranes and yard tractors. They do not require human operators on board, instead they are controlled remotely by people in control towers, surveillance screens and cameras. Although dockers may be required to manually attach the crane hooks to the container, or the container to the chassis of a truck or rail car. A semi-automatic terminal usually has remote-controlled cranes and human-operated yard tractors.
In 1993, the Dutch port complex in Rotterdam was the first to implement machine automation and has since become the benchmark for a fully automated terminal. Today, several of the world’s busiest foreign ports are automated to varying degrees, including those in Shanghai, Singapore, Antwerp and Hamburg.
Operators in the US are slower to automate their operations for many reasons, but union resistance remains the main one. In their 2002 contract, after the PMA authorized a 10-day lockout, ILWU agreed to computerized process automation. In 2008, in exchange for a nearly $900 million increase in its pension fund and other pension payments, the union agreed that operators could implement machine automation at will.
West Coast longshoremen also have significant financial insurance. The current employment contract includes a guaranteed wage plan that provides up to 40 hours of weekly income if the eligible ILWU member is unable to secure a full-time job 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. More recently, part of the Los Angeles APM Terminal and the Long Beach Container Terminal (LBCT) have also been fully automated.
In this latest round of negotiations, ILWU is asking operators to refrain from further automation in the ports of San Pedro Bay. His objections are outlined in the Economic Roundtable report and rebutted by the PMA. To date, neither side has relented and mutually initiated the blackout of the media during negotiations.
Meanwhile, there are three semi-automatic ports on the East Coast — two in Norfolk, Virginia, and one at the Port of New York and the 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 East Coast and Gulf of Mexico ports. The ILA is not involved in negotiations with ILWU, but also opposes further automation.
It is perfectly normal for dockers’ unions to protect the jobs of their members. “A conservative analysis of job loss shows that automation cut 572 full-time jobs at LBCT and TraPac annually in 2020 and 2021,” the ILWU-funded study says.
Likewise, port and terminal operators want to increase efficiency and productivity through automation, especially in high-volume ports that have limited cargo capacity in the future and where carriers don’t like long waiting times to load and unload containers. Operators argue that the loss of jobs can be offset by retraining and retraining current workers to work with automated systems, leading to better wages and improved safety. In fact, the PMA is building a 20,000-square-foot training center for ILWU workers. In addition, new technology-related jobs, such as data analysts and software developers, will need to be filled.
“The fear that automation will harm union workers is understandable, but it’s not that it results in big job losses,” 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 automation reports from McKinsey and Company and the Massachusetts Institute of Technology.
On the other hand, not every port is a candidate for automation in terms of cost-benefit analysis. Upfront capital costs for new equipment and infrastructure can run into the billions, whether it’s 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 containers in and out, improving manual systems can be more cost-effective.
Automation in all global industries has historically proven its unrelenting power, so its spread to ports and terminals over the next five to ten years seems inevitable. “One thing that the Covid-19 pandemic has shown is how fragile some of the supply chains are to and from ports,” said a terminal operating company executive who asked not to be named due to relations with unions and operators. “In order for us to be responsible service providers, we need to find more sustainability, and automation can do that. Hope we can find a way out [the ILWU-PMA contract negotiations] collectively and do better for everyone. That would be a good result.”
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