The words “technology” and “automation” are troubling to longshoremen because they signal a loss of job opportunities. But the landmark West Coast waterfront contracts of 2002 and 2008 indicate the subject is complex, and the outcome of such watershed contracts isn’t as bad for labor as many workers think.
The International Longshore and Warehouse Union in its 2002 contract negotiations forcefully resisted employers’ attempts to introduce technology. The dispute led to bitter contract negotiations, crippling work slowdowns and a 10-day employer lockout of longshoremen that industry analysts estimated cost the U.S. economy $1 billion a day.
Ten years later, however, the ILWU’s registered work force has actually increased 34 percent, according to the Pacific Maritime Association’s annual report. Some of the increase was due to the PierPass extended gates program in Southern California. At the same time, marine clerk hours as a percentage of total ILWU man-hours on the coast has declined steadily, from 21.4 percent in 2006 to 17.7 percent in 2011.
The employers’ message — an argument many longshoremen still reject — is that efficiency-enhancing technology and automation eliminate some types of work on the waterfront, but they ultimately result in new and more jobs. New jobs result from skilled positions evolving from technology. More jobs result from marine terminals’ ability to handle twice as much cargo on the same footprint.
Terminal operating engineers distinguish between technology and automation. The 2002 ILWU contract called for a free flow of information to and within marine terminals. This documentation flow, driven by advances in information technology, indeed eliminated a number of marine clerk functions.
In reality, those functions had become outdated, so it was just a matter of time before they ceased to exist. Optical character readers, global positioning satellites and electronic data interchange had reduced many of the functions of marine clerks to rekeying information that was already being fed electronically into the terminals’ computerized systems.
Employers’ introduction of technology came about quickly and relatively painlessly. By 2005, most container terminals on the West Coast were using OCRs, GPS tracking devices and computerized yard management systems, said Mark Sisson, leader of the marine analysis group at the Oakland, Calif.-based engineering firm AECOM.
These technologies, some developed by marine terminal engineering companies in the U.S., had been in use for years in Europe and Asia where dockworkers didn’t resist technology. Technology also is relatively inexpensive to introduce and quickly results in a return on investment.
Automation, however, is a different story. Automation is defined as the use of advanced cargo-handling equipment such as dual-hoist cranes, automated guided vehicles and automated stacking cranes. These machines are expensive and require a huge increase in volume to pay for the investment. Only a handful of U.S. ports are expected to generate the container volume needed to justify a full-blown investment in automation.
“Ten years from now, there will still be a lot of manual operations,” Sisson said. Right now, Los Angeles-Long Beach and New York-New Jersey may be the only ports capable of accommodating a complete program of automation, and some terminals at those ports may be decades away from having enough container volume to justify such an investment.
The investment is huge. Orient Overseas Container Line recently signed an agreement with the Port of Long Beach to automate its Middle Harbor facility. OOCL’s terminal operator, Long Beach Container Terminal, will invest $500 million in equipment. The port will construct $1 billion in infrastructure, which OOCL will pay back through its lease agreement with the port.
Middle Harbor will have an annual throughput capacity of 3 million 20-foot container units, about one-fifth of all the volume now handled each year at Los Angeles-Long Beach’s 13 container terminals.
Some terminals, however, may choose a lesser degree of automation. APM Terminals in Portsmouth, Va., installed an advanced information technology system and automated stacking cranes in the yard.
The minimum volume needed to support an investment of that size is about 500,000 TEUs a year, Sisson said.
A terminal operator that commits to a full level of automation must realize a significant increase in container volume and terminal productivity. “In the long run, you want to do more with the same number of man-hours,” Sisson said.
Being able to push more containers through the same terminal on costly waterfront land is also a key goal, PMA President Jim McKenna said. “The footprint is the footprint,” he said. In a manual environment, Middle Harbor wouldn’t be able to handle 3 million TEUs a year on its existing acreage.
Automation will eliminate some types of longshore work. Moving containers from the wharf to container stacks in the terminal yard is labor-intensive. Longshoremen move the containers with yard tractors, with one driver per “bomb cart,” as the tractors are known on the West Coast.
Some European terminals replaced yard tractors more than 10 years ago with automated guided vehicles. These driverless carts move the containers from the wharf to the landside of the container stacks, which are positioned perpendicular to the wharf. Automated stacking cranes, which are also driverless, move the containers to their place of rest in the stacks.
The use of AGVs and ASCs eliminates dozens of jobs at marine terminals. The machines, however, are also extremely costly, and they require the use of the latest computerized systems to manage the flow of cargo, Sisson said.
To achieve a return on investment, employers must have flexible manning requirements. The West Coast waterfront contract provides that flexibility because it specifies “men as needed,” McKenna said.
Manning requirements could be a problem in the East and Gulf Coast contract negotiations because the ILA contract calls for specific gang sizes. In a letter to the ILA membership in late May, President Harold Daggett indicated his displeasure that employers were unwilling to accept the union’s demands for job guarantees in exchange for the introduction of technology and automation.
The end game for management and labor, of course, is money. Terminal operators want to reduce the total cost of their operations. The results of the 2002 contract on the West Coast demonstrate that the use of computers and information technology will achieve this goal.
According to the PMA annual report, ILWU payrolls peaked at $1.56 billion in 2006. The annual payroll plunged to $1.24 billion at the trough of the economic recession in 2009, and had climbed back to $1.45 billion in 2011.
Terminals no longer have a marine clerk at each gate. Positions also have been eliminated in the central control area at each terminal. Because of technology and automation, annual payrolls could stay below the 2006 amount for some years after cargo volumes return to the 2006 level, employers say.
ILWU man-hours, as measured in the PMA report, tell a more dramatic story. Man-hours peaked at 33.9 million in 2006, bottomed out at 24.3 million in 2009 and rose to 27.9 million in 2011. Man-hours are back to only 83 percent of the 2006 level, while payrolls are back to 93 percent of the 2006 level.
Furthermore, the hourly wage of West Coast longshoremen continues to increase each year, and average annual earnings are rising, especially because of skill bonuses tied to certain jobs.
According to the PMA report, the average Class “A” longshoreman’s pay for working 2,000 or more hours in 2011 was $129,392, up from $127,304 in 2006. The average annual marine clerk earnings for working 2,000 or more hours in 2011 was $146,162, up from $145,219 in 2006.