The months-long dispute between APM Terminals and Los Angeles dockworkers revealed deeply entrenched and diametrically opposed views over automation, boding poorly for labor peace along the US West Coast when the current contract comes up for renewal in 2022.
Although the International Longshore and Warehouse Union (ILWU) agreed in 2008 to allow terminals to automate, activist union members sought to pressure the Port of Los Angeles to deny a permit to install hybrid electrical equipment that would recharge batteries used to power automated operations.
What normally would have been an uncontroversial construction permit for the Pier 400 facility became a six-month campaign that escalated to the LA mayor’s office and alerted terminals, carriers, and the larger supply chain to two new realities. The first is the willingness of the union to undermine the letter of a signed collective bargaining agreement through political activism; the second is the possibility that the union would seek in the next negotiation to roll back the terminals’ right to automate. Those realities dispelled any sense of optimism tied to a rare contract extension agreed to by the union in 2017.
For several reasons, among them that by 2022 employers will have already paid the union some $800 million in incremental benefits in return for the right to automate, employers are disinclined to reopen the question of automation. Additionally, due to factors such as consolidation among ocean carriers, they may be better able to achieve the consensus needed to take a harder line against union demands, should they desire. That is why, although the current agreement doesn’t expire until July 2022, close observers of labor-management relations at West Coast ports already see the potential for conflict, reviving memories of the 10-day lockout in 2002, widespread job actions in 2008, and six months of continuous disruption in 2014 and 2015.
“Our biggest concern is that we're headed for a lockout. Or we're headed for a strike. I don't know what the resolution is, but from an outsider's perspective, both sides seem pretty dug in,” Weston LaBar, chief executive of the Harbor Trucking Association (HTA), told JOC.com.
Zero-emission push ‘changed the game’
The issue could heat up well before 2022. Based on their ability to automate under the 2008 coastwide contract, two terminals in the LA-Long Beach complex — TraPac and Long Beach Container Terminal — have installed automated container handling equipment. APMT will be the third. At least one other terminal has plans to automate, sources say, and others in Southern California are exploring to drive down costs. Those plans are partly driven by the need to comply with a 2030 mandate under the Clean Air Action Plan to install zero-emission equipment at an estimated total cost of $2.6 billion to $4.3 billion.
“The Clean Air Action Plan changed the game in the sense that those terminals have to figure out how to electrify and, in many cases, it’s now cheaper for them to electrify with automation than it is for them to electrify with [human-operated] equipment,” LaBar said.
West Coast terminal operators, many of which are controlled by ocean carriers, have traditionally given in to dockworkers’ demands due to the excessive costs associated with any disruption, making the dockworkers among the highest-paid blue-collar workers in the United States. The 2002 negotiations between the ILWU and the Pacific Maritime Association gave employers the right to use computers to perform functions handled by ILWU marine clerks. The 2008 contract opened the door to automated cargo-handling equipment, which directly impacts general longshore workers.
Excluding importers and exporters, the employer lockout during the 2002 contract negotiations cost the maritime industry an estimated $1.2 billion. Due to carrier consolidation over the past four years that cut the number of major container lines in half, some believe employers may be more unified in the next negotiation. The ILWU and PMA declined to comment.
That said, there could also exist the basis for compromise. The APMT agreement called for the re-training of longshore mechanics to maintain and repair the automated equipment that APMT will deploy at Pier 400, thus precedent now exists for any other terminals seeking to find common ground with longshore workers. Regarding the 2022 negotiations, West Coast dockworkers separately could follow the lead of the International Longshoremen's Association (ILA) on the East Coast, which agreed to deliver higher levels of productivity in return for terminals’ agreeing to limits on their ability to automate. Terminals long frustrated by low productivity — well below 30 moves per hour — at West Coast ports could conceivably consider such an approach.
For West Coast ports, which have steadily lost market share to ports in Canada and the US East and Gulf coasts due in part to earlier bouts of labor disruption, any further labor action could only accelerate the loss. In the first half of this year, the LA-LB port complex handled 46.6 percent of all US imports from Asia, compared with the same period in 2005 when 54.7 percent of such cargo moved through Southern California, according to data from PIERS, a sister company of JOC.com within IHS Markit.
“It’s all about competitiveness. We have to be all rowing in the same direction to address the deep market share erosion that has plagued us for 17 years,” Gene Seroka, executive director of the Port of Los Angeles, told JOC.com. “We have to become the gateway of choice for the cargo owner and liner companies and that means everyone solving the equation of supply chain optimization and effectiveness.”