Port automation clash brewing between ILWU, employers

Port automation clash brewing between ILWU, employers

Several sources believe labor and management remain on a collision course over the issue of labor-saving automation at West Coast marine terminals. Photo credit: Shutterstock.com.

Two years before the expiration of the current West Coast longshore labor agreement, the risk of major port disruption akin to what was last experienced five years ago has not abated, despite the pandemic that has sent the US economy into its worst freefall since the Great Depression.

Several knowledgeable sources believe that labor and management remain on a collision course over the issue of labor-saving automation at West Coast marine terminals, particularly at Los Angeles and Long Beach ports, by far the largest West Coast container gateway. The issue first flared last year when dockworkers publicly protested plans by APM Terminals at the Port of Los Angeles to automate a section of its Pier 400 terminal, shocking the maritime industry by revealing the dockworkers’ willingness to ignore the letter and spirit of signed collective bargaining agreements that union members have benefited handsomely from over many years.

For a number of reasons, some observers believe that employers will be unwilling to concede to any rollback of their rights to automate when the current agreement expires on July 1, 2022. The primary reason is that cargo handling costs on the West Coast are going up owing to regulation and as the port range continues to lose market share to Canada and the US East and Gulf coasts. Automation, although expensive to implement, is an option terminals need in order to address rising costs.

“We’re losing cargo every single day,” Jim McKenna, president of the Pacific Maritime Association (PMA), the West Coast employer group overseeing longshore labor, told JOC.com. “There are a lot of [routing] options now, and as you lose cargo, your costs for every box you handle go up, because you have to pay for benefits, health care — all those costs still stay there.”

On top of that, there is the estimated $4 billion marine terminal operators will have to spend to install zero carbon cargo handling equipment at LA–Long Beach terminals in compliance with the 2030 Clean Air Action Plan. Pointing to the $800 million already paid to dockworkers in 2018 in return for the right to automation, some employers see a retreat as throwing money out the window. “The discussion regarding automation on the docks was settled 12 years ago,” one source said.

The existential threat of automation

From the union’s perspective, automation is an existential threat, given that the technology needed to eliminate many dockworker jobs exists today and is in use in various forms at many terminals around the world. The International Longshore and Warehouse Union (ILWU), with a long, militant history going back to its founding and seen in disruption tied to every recent contract negotiation, sees itself as the last defense against an all-out assault from robots on well-paying blue collar jobs.

However, depending on how mired in troubles the economy remains in two years’ time, the public may not welcome another economically devastating meltdown such as the ones in 2014 and 2015 during the last ILWU-PMA contract negotiation. “If the union suddenly reneged on the agreement from 2008 and attempted to disrupt commerce, it would backfire,” the source said.

Knowledgeable sources say there is little doubt that automation will be a major issue for the union when negotiations begin, likely in early 2022. The question is how hard it will press the issue. That, in turn, will depend on who is leading the union at that time, given that the ILWU is scheduled to elect a new leader in September 2021.

“If the incumbent is re-elected, it could be considered as a signal that the industry wants to focus on retaining West Coast market share. If the union elects a firebrand, then it could be considered as a potential disruption to commence,” the source said.

Should the union enter the negotiations guns blazing, the ultimate question for employers, including heads of container carriers based in Europe and Asia, would be whether to give in and keep cargo moving, or dig in their heels, absorbing a short-term financial and operational hit in pursuit of a larger strategic goal. There is precedent for both responses; for example, the employers were willing to engage in a costly lockout of the union for 10 days in 2002 to obtain the right for data to flow into marine terminal systems without having to be keypunched by dockworkers.

Another source said, “There is going to come a point where the PMA is going to have to turn to its board members and the employers and say, 'what position do you folks want to take on this?'”

According to a longtime executive with experience in West Coast labor, the day may — repeat may — be approaching when the union realizes it needs to keep the peace. “I have always believed that they would some day come to their senses,” the executive said. “I have thought that one day they would get there, but when that day comes it might be too late. It is very possible that in 2022 [a meltdown] would further deteriorate the shipping public’s perspective of the West Coast. It is 50-50 if they dig in their heels again, piss off their ultimate customer, and continue the downward trend of the West Coast. Is it certain that will happen? No, but it’s a possibility.”

Contact Peter Tirschwell at peter.tirschwell@ihsmarkit.com and follow him on Twitter: @petertirschwell.