Commentary: The tides of unionization and container port automation – FreightWaves

Automationtends to make some people nervous. Ever since the invention of the steam engine,common carriage has since been expected to become ever faster, more reliable,and offer larger carrying capacity. Couple this with cheaper and faster accessto information. That, too, makes some people nervous from the original printingpresses (which displaced medieval scribes) to the one-click-away Uber/Lyftdrivers (who are now displacing traditional taxicab companies). In each ofthese cases, markets became more efficient (i.e., using fewer inputs togenerate higher-value outputs). As a result, jobs were lost and those remainingwere re-tasked to utilize the latest technologies. These structural changes arerarely smooth but, at the same time, they are hard to stop.

Automation is now being widely discussed at container ports. It is more accurate to say that a new form of automation is under brisk discussion because the process of automation is never-ending. The shipping container itself exemplified by the pioneering work of Malcom McLean changed the nature of dock work forever by making it less labor-intensive and more efficient. Locked and sealed intermodal containers move from origin to destination by way of various transfer points. Avoiding the unloading and re-loading of the cargo at those points save time, money and lower the risk of theft, damage and terrorist tampering. Today, the tide of automation is leading to driverless container carriers and remote-controlled gantry cranes.

The July2019 study by Toronto-based Prism Economics and Analysis noted job loss as partof the economic impact of partial to full automation of port activities inBritish Columbia. The report was sponsored by the International Longshore andWarehouse Union (ILWU). Naturally, the ILWU is concerned with activity thatmight lead to job loss among its membership. It has taken a strong standagainst increased automation at the Port of Los Angeles, though that effort wasunsuccessful and APM Terminals deployed its first set of automated straddlecarriers last August. However, the ILWU and APM Terminals did reach anagreement on worker retraining. This is the sort of push-back to be expected fromtrade unions in the coming years because the number of unionized jobs will surelydecrease. Unfortunately, labor is the highest variable cost in port operations.

While the Prismreport suggests that productivity may decline and the return on capital investedmay be lower than otherwise, it also notes that the number of fully/partiallyautomated ports in the world is likely to increase beyond the 60 today. If thisis so then the risk vs. return on capital does not seem to be a strongdeterrent to at least some investors and governments. Still, of concern is theupfront capital expenditures necessary to move to more automation. Of course, somein the 1950s made that same argument when they contemplated the upfrontexpenditures on gantry cranes. In due time it became widely understood thatsuch cranes were a necessary price to pay before ports could realize the full benefitof lift-on, lift-off (LO-LO) containerized shipping. A further benefit fromcontainerization was the spurring of intermodal transportation. Using gantry cranesto speed loading/unloading of containers incentivized investment in more trucksand trains to handle the extra demand for inland container transport. In likemanner, we can expect the largest ports to invest in the newest technologiesbecause of their economies of scale.

Remote-controlled gantry cranes mean the operator does not deal with the physical movements and equipment noise and vibrations that come with operating the crane in a sealed compartment. The remote operator, sitting in a more comfortable work space, could be moved from one crane to any other across the terminal by the push of a button to call it up on his monitor. The future could see an operator handling more than one crane simultaneously. The Port of Rotterdam, an early flashpoint in this drive, had a wildcat strike on this very issue in 2013 with further strikes occurring in 2015 and 2016. Thus, it will take some time to implement the latest automation because some degree of union buy-in, or at least their reluctant resolve, will be necessary. There will be fewer jobs; but they will be more comfortable and dependent on computerized technology. At the same time, trade unions at the ports will be under increasing pressure as new labor-saving technologies become available. Caught in the middle will be the state and local governments which oversee the major U.S. ports. If the aphorism all politics is local still holds true we can expect a lot of lobbying and counter lobbying on the future-of-work in the years ahead.

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Commentary: The tides of unionization and container port automation - FreightWaves