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Port Union Shouldn’t Cling to an Inefficient Past

During the pandemic, shortages of workers plagued the logistics chain, except for one link. Trucking companies, railroads, warehouse operators— all struggled to find enough employees to keep goods moving. Maritime ports were the exception.

Once workers join the International Longshore and Warehouse Union, they don’t easily walk away from the job. The was no Great Resignation or quiet quitting at the West Coast docks. The pay and benefits rank among the best in the nation for work that doesn’t require education beyond a high school diploma. A journeyman mechanic on the third shift makes $88.77 an hour, and the hourly wage for a crane operator on the second shift is $67.52. In addition to about 15,000 unionized port workers, about 7,000 so-called casuals show up in case they’re needed. They try to accumulate hours and impress union bosses in a bid to be hired on eventually as full members of the ILWU.

The West Coast port union has real power because it can shut down the nation’s supply chain and has wielded this advantage to increase wages and lock in job security for its members. Looking out for workers is laudable, of course, but the union is also throwing up obstacles that could improve efficiency at the ports. It has dug in its heels to stop port operators from introducing automated equipment, a chief sticking point to renewing a labor contract that expired in July.

The ILWU is now free to call a strike and shut down 29 Pacific Coast ports. There’s little concern this will happen before the midterm elections, but a strike afterward is definitely in the cards. There have been port disruptions in the past over labor negotiations; the last one began in 2014 and ended after the Obama administration intervened.

The union needs to drop its resistance to automation and instead manage the introduction of technology while ensuring that its workers will be operating it. The ports at Los Angeles and Long Beach will fall behind competing ones in Canada and on the US East Coast if stymied from adopting machinery to improve efficiency.

This doesn’t mean that all the ports would suddenly purchase automated cranes and become ghost towns for workers — far from it. Automating ports is difficult and expensive. None have been fully automated, and it’s just not possible or even economically feasible now. The job of lashing down the containers on the ships with metal rods, for example, isn’t going anywhere. The world has 53 container terminals with automation, and most were built that way from the start, according to the International Transport Forum, an intergovernmental organization with 63 member countries. About a third are in Asia, 28% are in Europe and only 11% in the United States.

Only ports with large and steady volume are good candidates for automated equipment. That includes the ports on San Pedro Bay in Los Angeles and Long Beach.  The terminal operators there, which are mostly owned by large foreign maritime shipping companies, are eager to invest in projects that they say make moving maritime containers more productive and add capacity to the two huge ports hemmed in by the city.

Most ports start automation with the yard cranes, such as a rail-mounted gantry, that take the containers off trucks and stack them to be loaded on a ship. That same crane then picks up an outgoing container and places it on the truck chassis to be hauled away. Another popular technology consists of automated vehicles that can tug containers and park them away from where more containers are being set down by the large overhead cranes that unload the ships. 

TraPac LLC, controlled by Tokyo-based Mitsui OSK Lines Ltd., and Long Beach Container Terminal, part of Macquarie Asset Management, are the most automated port operators at San Pedro Bay. For the two years ended February 2022, these terminals were able to handle an average of 510 so-called twenty-foot equivalent units per acre, a standard measure used in the freight industry, compared with about 350 at San Pedro Bay’s conventional container terminals, according to a study led by Michael Nacht, a professor at the University of California Berkeley’s Goldman School of Public Policy.

The argument against further automation goes beyond displacing workers, the union says in an economic study it commissioned. The cost savings from such projects line the pockets of foreign shipping companies at the expense of the US economy, it says, while at the same time lowering the friction of imports, which exacerbates the country’s trade imbalance.

Ports, though, shouldn’t be inefficient by design as a hidden tax on imports. If tariffs are needed to correct unfair market practices, there are mechanisms under trade agreements to do that. The US imposed tariffs on billions of Chinese goods, and that hasn’t had any impact on correcting the trade imbalance with China.

The union accepted in 2008 that automation would be required at the ports, but the Pacific Marine Association, which represents the port operators, is having a hard time holding the union to that agreement. Instead of fighting the future, the union should devise a strategy to work with the new technology and turn it to their favor, perhaps by sharing in the profits from productivity gains or even rethinking how the ports operate. For example, the port authority in Virginia controls the trucking fleet that moves containers and can react when there are shortages, whereas private companies serve the Los Angeles and Long Beach ports.

Without a doubt West Coast port workers owe their high wages, benefits and job security to the ILWU. The union, though, shouldn’t use its bargaining power to cling to an inefficient past. There was resistance to cargo containers, which were invented in the mid-1950s and revolutionized trade. If critics had dug in their heels then as they are now, dock workers would be unloading gunny sacks and crates full of freight by hand.More From Bloomberg Opinion:

• Want to Slash Your Tax Bill? Buy a Container Ship: Chris Bryant

• Rising Seas Are Next Crisis for World’s Ports: Francis Wikinson

• P&O Ferries Is a Global Scandal: Adrian Wooldridge

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Thomas Black is a Bloomberg Opinion columnist covering logistics and manufacturing. Previously, he covered U.S. industrial and transportation companies and Mexico’s industry, economy and government.

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