It’s easy to paint stories about port automation as black-and-white, heroes-and-villains struggles, although which side is the hero and which is the villain is largely in the eye of the beholder. Depending on your perspective, you might side with labor unions fighting to preserve jobs, or you might side with port operators, who present automation as efficient, environmentally friendly, and ultimately inevitable. However, this narrative oversimplifies an issue that is deeply complex, and in which the costs and benefits of automation vary significantly from port to port. To understand why the pace of port automation around the world has been so uneven, one must first surrender the notion that either side is wholly right or wrong.
The Efficiency Angle
At this point in the 21st century, most people operate on the assumption that automated processes are always more efficient than human labor. For port operations, however, this is far from universally true. In its 2018 report on port automation, McKinsey found that fully automated ports are actually less productive than their conventional counterparts. According to their estimate, to justify the huge price tag of port automation projects, operating expenses would have to be 25 percent lower than conventional ports, and productivity would have to increase by 30 percent. Instead, they found that “these expectations generally aren’t realized,” with operating expenses only falling by 15-35 percent, and productivity falling by 7 to 15 percent.
McKinsey attributes the limited value of automation in ports (especially when compared to comparable industries such as mining and warehousing) to four major barriers: “capabilities, data quality, siloed operations, and the handling of exceptions.” When ports attempt to automate without first simplifying their existing processes, the result is waste. Ports that spend billions of dollars on new automated equipment could increase efficiency at a much lower cost by upgrading their software and improving data collection and sharing. Yvo Saanen, founder of terminal design company TBA, argues that standardized data needs to be the priority, since “the technology is out there that could facilitate seamless connection between shippers, terminals, shipping lines,” but that resistance to IT-based solutions is high in port management. “It’s a manual world,” he says. “A lot of senior staff…prefer more equipment over intelligent IT.”
Even though automation doesn’t always deliver increases in efficiency, ports have other motives for embracing it. As JOC reports, meeting environmental goals is also a factor, especially in places like California, with its increasingly strict emissions requirements. Larry Nye, director of port planning at Moffatt & Nichol, voiced the rationale of many terminal operators, who are asking themselves: “‘I have to spend a bunch of money on equipment in the next 11 years, so is this the time to consider automation?’” The other factor influencing their thinking is labor.
The Labor Angle
Unsurprisingly, the fiercest resistance to automation has come from labor unions that represent port workers. The International Longshore and Warehouse Union is digging its heels in to stop the automation of a Los Angeles terminal, despite the fact that the union’s contract stipulates that they “will not interfere with automation.” In a heated statement to the Los Angeles Board of Harbor Commissioners, ILWU’s local Vice President, Gary Herrera, said: “Robots do not pay taxes. Robots do not shop in our communities. Robots do not vote!” On the East Coast, rival longshoremen’s union ILA has successfully bargained for contracts that prohibit fully automated equipment. In exchange, ILA president Harold Daggett promised an increase in productivity to 30 moves an hour. Meanwhile, in Australia, longshoremen at several box terminals have been engaging in rolling strikes since January in response to automation and benefit cuts.
The union response to automation is a calculated mix of genuine outrage and political theater. Undoubtedly, many labor leaders privately regard automation as inevitable, but are attempting to negotiate the best deal for their members in the meantime, a strategy that has paid off in the past. However, the assumption that automation inherently means job losses may be false. According to JOC, “even though the two automated terminals in Los Angeles-Long Beach experienced general longshore and marine clerk job losses at first, overall ILWU employment in the harbor has increased by 1,061 longshore jobs and 97 marine clerk jobs since 2015.”
Labor issues also vary around the world. In much of the developing world, for example, labor costs are low enough that automation will not be a money-saver for the foreseeable future. And while in the United States, a position as a unionized Longshoreman is among the most coveted and lucrative blue-collar jobs available, the same does not hold true everywhere. In the port of Hong Kong, for example, automation was largely a response to the perception among local workers that frontline jobs were undesirable, despite paying well. Throughout Chinese ports, worker turnover is very high, and for terminal operators, automation is ultimately cheaper than training workers in technical jobs, only to have to replace them months later.
The Outlook Ahead
In the long-term, fully automated ports may indeed be the best choice in certain places. In the meantime, though, ports will have to become more efficient using the tools at hand: AI-powered software, digital record keeping, and their human employees. In the words of Dean Davison, a maritime technical director: “Automation is not a panacea. There’s no point having an efficient automated terminal if the gate or the truck becomes the logistics bottleneck.” Embracing efficiency will require ports to overcome some of their stubbornest habits–an aversion to data sharing and the long-standing mistrust between union leaders and operators–but compromises are possible, when they are tailored to the unique realities of individual ports.
Red Arrow Logistics has the scale and scope to meet the budget and schedule requirements of the largest and smallest companies alike. If we can be of assistance, please email me at liz.lasater@redarrowlogistics.com or give us a call 425-747-7914.
