Port automation debate flares ahead of USWC labor talks

The temperature around terminal automation — long anticipated to be the most contentious issue in upcoming West Coast longshore labor talks — is heating up on the eve of the launch of formal negotiations.

Diametrically opposed views of management and labor as to the use of automated cargo handling equipment at US West Coast ports have emerged in a series of statements in recent weeks that, taken together, show this: how a substantial change made in the 2008 contract — allowing automation — that was signed with little disruption has evolved since then into a philosophical clash whose potential to disrupt this year’s negotiations has led to the diversion of tens of thousands of containers to East and Gulf coast ports in recent months.

No one knows, or is willing to predict, the extent to which disruption will accompany the upcoming talks, if at all. The all-time record profits earned during the pandemic by the container lines, which dominate the Pacific Maritime Association (PMA) board, provide an ample war chest to fund a significant expansion in pay and benefits that could enable both sides to get a deal while sidestepping volatile issues such as automation. The talks, which begin Tuesday in San Francisco, will also take place under the watchful eye of Biden Administration officials who see continued port disruption and its impact on inflation as a major political liability ahead of the midterm elections later this year.

Just over a week before the start of those talks, the PMA on May 2 released a study noting that automation “will figure prominently in coming labor talks” with the International Longshore & Warehouse Union (ILWU). The study sought to highlight the PMA’s main point that only through automation will it be possible to expand capacity of marine terminals at ports such as Los Angeles and Long Beach that, due to their urban location, can’t be physically enlarged.

“With virtually no potential to expand, the principal strategy to accommodate higher volume must be densification — or increasing container capacity on the existing port footprint,” said the study, pointing out that throughput per acre at the two automated terminals in Southern California — TraPac at Los Angeles and Long Beach Container Terminal — has been 44 percent higher on average than at non-automated facilities.

“The dense pack you achieve with an automated facility is really quite amazing,” PMA President Jim McKenna said during a press conference Friday at the Port of Los Angeles. “The reality of the situation is that these facilities are in urban areas. There is no room to expand the facilities themselves, so you need to go up. Automation gets you the ability to handle more in a single terminal.”

That came after McKenna in early April told Yahoo Finance that, “automation is the future of our ports.”

That idea has met with an increasingly cool reception from dockworkers, who responded vocally to the release of the study and in general to the viability of automation, most recently in a letter from ILWU President Willie Adams released on Facebook on Friday.

“Some of these shipping companies are…attempting to automate the US terminals they lease — using robots instead of American workers to operate the heavy equipment that moves cargo,” Adams wrote. “Other ports have tried this and found that automation not only kills good jobs but does not move more cargo. In addition to a loss of jobs, automation poses a great national security risk as it places our ports at risk of being hacked as other automated ports have experienced.”

Responding to the PMA study, ILWU Coast Committeeman Frank Ponce DeLeon told JOC.com that automation has destroyed longshore jobs.

“Container volume has increased at the automated terminals, but this has been at the expense of other terminals that have had an offsetting drop in container volumes,” he said. “The increased productivity that the PMA is claiming at the two automated terminals has meant less work at other terminals and an overall loss of employment for longshore workers.”

Preemptive move by PMA?

Sources interpreted the release of the study as the PMA, which represents West Coast marine terminal employers, anticipating the potential for the automation debate to gain widespread attention in the media, especially if disruption breaks out and automation is fingered as the cause.

The trajectory of the automation issue from 2008 to now shows a clear trend of a union that accepted automation in a contract that was mostly focused on other issues, such as jurisdiction for maintenance and repair, to automation becoming a defining issue between the two sides.

The automation allowed in the 2008 contract led to automated cargo handling at TraPac and APM Terminals at Los Angeles and at the Long Beach Container Terminal. It was during the planning for the APM Terminals project that the union’s emerging opposition to automation first burst into the open.

In 2009, Southern California ILWU locals organized a vocal rally to pressure the Los Angeles Board of Harbor Commissioners to deny what would normally have been a routine construction permit needed by APM Terminals to install automation equipment at its Pier 400 Terminal at Los Angeles, in effect doing an end-run around the contract, which had permitted automation projects. The permit was approved by the port and APM Terminals went forward with the project.

Then in May 2021, three Southern California ILWU locals went public with a press release denouncing automation after being informed in private by the TTI terminal at Long Beach of its plans to automate. The union said the 80 percent Mediterranean Shipping Co.-owned facility “needs to remember that the ports exist for the benefit of the US and local economies, not the destruction of jobs and maximum extraction of foreign profit.”

The ILWU, meanwhile, has always been aware that its East Coast counterpart, the International Longshoremen’s Association (ILA), has limited the terminals’ right to automate, a point ILA President Harold Daggett has not been shy about repeating. In a video greeting to an ILWU convention in 2021, Daggett encouraged his West Coast brethren to vigorously resist automation. “There’s no nice way to say it. Automation means the elimination of your jobs, forever,” Daggett said.

The ILWU has recently questioned management’s claim of its right to automate. Terminals only gained that right in 2008, the union argued last month, in return for protecting ILWU maintenance and repair jobs against claims by competing unions, and then failed to follow through with that commitment in a dispute at a Seattle terminal, thus negating the quid pro quo that allowed automation in the first place.

The ILWU’s opposition to automation has become part of its mainstream view. In March, the three Southern California ILWU locals, providing comments about the Port of Long Beach Master Plan, said “human-operated equipment is superior to automated equipment for many reasons.”

That is why, observers believe, the negotiations will take time, likely extending beyond the July 1 expiration date of the existing contract, the PMA’s McKenna said Friday. As Maersk CEO Soren Skou told Shipping Watch on May 5, “I expect challenging negotiations.”

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

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