Marine terminal digitization and automation at the ports of Vancouver (above) and Prince Rupert could reduce dockworker jobs by 50-90 percent, according to a new study. Photo credit: Shutterstock.com.

Marine terminal digitization and automation at the ports of Vancouver and Prince Rupert could reduce dockworker jobs by 50-90 percent, according to a study performed on behalf of International Longshore and Warehouse Union (ILWU) Canada.

The study by Prism Economics and Analysis comes as longshore unions and employer organizations in the US and Canada grapple with creeping automation. ILWU Canada in June signed a new five-year contract with British Columbia employers which included a framework for automation, and last month ILWU Local 13 and APM Terminals agreed upon a training program for longshore workers who will be impacted by automation at Pier 400 in Los Angeles.

These frameworks for automation attempt to balance the goal of terminal operators to reduce operational costs with the unions’ goal of protecting as many existing jobs as possible while ensuring that dockworkers are trained to handle the new, but fewer jobs created by automation.

Prism’s methodology is relevant to ports in North America in that it benchmarks terminals in Vancouver and Prince Rupert with similar-sized terminals in Australia that experienced job losses after operators there developed automated or semi-automated projects over the past decade. In the US, TraPac and Long Beach Container Terminal in Southern California are completing full-automation projects, while terminals in New York-New Jersey and Virginia have engaged in semi-automation, where the job losses are fewer yet still significant.

Job losses at automated terminals

The report notes that the single, conventional container terminal in Prince Rupert last year handled 1 million TEU with a total longshore workforce of 525. Port Botany, a semi-automated terminal in Sydney, Australia, with a capacity of about 1.6 million TEU, has a workforce of 213. Victoria International Container Terminal, a fully automated facility in Melbourne, has a 1 million-TEU capacity but employs a longshore workforce of only 150.

Terminal operators in Vancouver and Prince Rupert will most likely face decisions on automation in the mid-to late-2020s when growing container volumes will necessitate construction of new terminals on greenfield sites. The Deltaport, Vanterm, and Centerm container terminals in Vancouver and the Fairview terminal in Prince Rupert over the next few years have plans to incrementally increase container throughput capacity while continuing cargo-handling operations. Both ports are planning for construction of large new terminals on greenfield sites, but the environmental, permitting, and construction phases will require up to a decade to complete.

The Prism report also performed a detailed analysis of the impact of job losses from automation on the seaport communities in British Columbia, especially because average annual earnings for longshore jobs range from $70,000 when casual (part-time) workers are included to more than $100,000 for full-time longshore workers. Longshore employment accounts for 26 percent of all jobs paying more than $70,000 and 66 percent of $100,000-per-year jobs in Prince Rupert, though just 2 percent of the $70,000-per-year jobs and 3 percent of the $100,000-per-year jobs in Vancouver, the report stated.

A terminal operator’s decision to fully automate, such as the Southern California terminals did, or go the semi-automation route such as the East Coast terminals chose to do, is based on factors such as initial upfront investment costs, return on investment, and whether the operator has access to a greenfield site or a brownfield site. It is easiest to build a fully automated terminal on a greenfield site because no demolition of existing facilities is required and there is little to no interference with ongoing cargo-handling operations.

Density of operations is also a factor as container throughput increases at high-volume gateways. A fully automated terminal can have an annual throughput capacity of 2-3 million TEU on a site of about 300 acres. Because large port complexes such as Los Angeles-Long Beach are almost fully built out, and the existing annual cargo volume of 17.5 million TEU is projected to double over the next 20 years, some of the 12 container terminals may have no choice but to automate.

A terminal is fully automated when it deploys automated stacking cranes (ASCs) in the yard and the horizontal ground transportation is handled either with automated guided vehicles (AGVs) or automated straddle carriers to move containers from the vessels to the stacks. Because those pieces of equipment are autonomous (driverless), fully automated terminals eliminate the largest numbers of jobs. According to the report, fully automated terminals can eliminate 90 percent of the longshore jobs.

Semi-automated terminals such as Global Terminals in New Jersey and two terminals in Portsmouth and Norfolk also deploy automated straddle carriers in the yards to deliver containers from the stacks to trucks. However, they use yard tractors with longshore drivers, rather than automated ground transportation, to shuttle containers between the vessels and the stacks. The International Longshoremen’s Association on the East and Gulf coasts has accepted semi-automation, but remains adamantly opposed to fully automated terminals.

Automation coming to high-volume ports

High-volume ports and marine terminals in Europe, Asia, and North America say automation of cargo-handling activities is an option that must be considered as vessels increase in size to more than 20,000-TEU capacity and the global container trade continues to grow. “In 2018, 60 container terminals around the world were either fully or partially automated,” the report stated. “The number of automated container terminals is projected to continue to increase, with fully automated terminals becoming more common within the industry.”

In addition to allowing greater density of operations to accommodate larger container volumes, terminal operators will also turn to automation to reduce operating costs, specifically labor costs. Labor cost reductions come from eliminating 50 percent of the workforce at semi-automated terminals, and up to 90 percent at automated terminals compared with conventional terminals, the report stated.

Labor accounts for more than 50 percent of a terminal’s total costs, according to a study this summer by Moody’s Investors Service. Although automation creates new jobs such as maintenance and repair and backroom positions, “the jobs created from automated equipment are unable to offset the high number of longshore jobs lost as a result of automation,” the report stated.

Contact Bill Mongelluzzo at bill.mongelluzzo@ihsmarkit.com and follow him on Twitter: @billmongelluzzo.