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Saturday, August 13, 2022

SHIPPERS BEWARE: ILWU & PMA Automation Fight Already Starting

Countdown ‘To ILWU Slowdowns Contract Negotiations

The countdown is at nine days.

This isn’t an exciting countdown like counting down the days’ til Christmas or the seconds’ til the New Year, or the hours’ til the Super Bowl – which for Detroit Lions fans, like myself, is actually the NFL Draft, unless you count your quarterback winning the Super Bowl for another team. This is the countdown ’til the Pacific Maritime Association (PMA) and the International Longshore & Warehouse Union (ILWU) start contract negotiations, which tend to be even more disastrous for shippers than the draft has traditionally been for the Lions.

I’ve been warning shippers for close to a year that contract negotiations between the ILWU and PMA are likely to be contentious over the issue of automation. We all remember when the contentious contract negotiations of 2014-15 resulted in labor slowdowns causing such port congestion that goods did not make it to store shelves for the holiday shopping season, agricultural exports rotted on the docks, and the US economy was damaged by the billions of dollars.

The last thing we need is a repeat of that kind of labor strife after all the supply chain disruption there has been for the last two years, but it sure looks likely thats what we’re going to get.

Automation Fight News

Not surprisingly, I was not happy to see news articles yesterday about the ILWU and PMA already fighting about automation with a bit more than a week still left before negotiations even open. Then again, anyone who regularly reads this blog would be expecting such news stories to surface anytime. And what else should anyone expect? After all, the ILWU, along with the International Longshoremen’s Association (ILA) on the East Coast, have fought against automation for years, causing US ports to fall behind their counterparts around the world in efficiency, which greatly contributed to the supply chain bottlenecks we ‘ve been suffering.

Yesterday, the PMA and ILWU went public with the automation fight, as the PMA released a study that it says shows automation helped increase ILWU jobs and the ILWU bit back with, Nuh-uh (paraphrased)!

Bill Mongelluzzo reported in the Journal of Commerce (JOC):

Terminal automation at the ports of Los Angeles and Long Beach has contributed to an increase in dockworker jobs since 2015 by expanding terminal capacity and improving cargo velocity, according to a study released Monday that was commissioned by West Coast waterfront employers.

However, ILWU Coast Committeeman Frank Ponce De Leon said 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 in a statement to JOC.com. “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.

Wait a minute, Frank. Are you telling me more containers go through the more productive port terminals with automation than the less productive ones without it? That’s a shocking revelation.

Yes, ports and port terminals with more automation and, therefore, more productivity will attract more cargo than lower productivity ports and port terminals where the unions have succeeded in blocking or slowing automation. Maybe if you did not fight technological advancement and productivity at other port terminals, they would not fall so behind and would be competitive enough not to lose cargo volume to the more productive terminals.

ILWU Creates Bigger Threat to Itself Than Automation

The unions represent automation as an existential crisis for jobs at the ports. However, automation at the ports often means a shift in the jobs at the ports rather than elimination of the jobs. And, PMA argues with its study, automation can actually create more jobs by increasing the volume and speed of cargo containers shipped through a port terminal. I’m not going to dismiss the possibility of bias in PMA’s study’s findings. There is ample motivation for them to find positives in automation for dockworkers ahead of contract negotiations when by definition, automation means certain operations are being done automatically by machine rather than by a person, such as a dockworker. However, the much bigger crisis for jobs at the ports is the power games the unions play there.

Dockworker and cargo containers
Dockworker and cargo containers

The ILWU got mad about not controlling two jobs plugging and unplugging reefer (refrigerated) containers, which had always been handled by International Container Terminal Services Inc (ICTSI) at the Port of Portland, that the ILWU took advantage of its contract lapse in 2014- 15 to slow operations at the port so much, carriers had to stop calling at Portland altogether with container ships.

The ILWU had actually already been slowing the import and export of goods through the Port of Portland before those slowdowns could blend in with the slowdowns at the rest of the West Coast ports during the contentious negotiations, and a judge ruled in June of 2014 they purposely slowed operations there.

Did these slowdowns hurt the port? Obviously. Did they hurt ocean carriers? Yes. Did they hurt shippers? Very much so. But here’s the kicker: it hurt ILWU jobs, destroying many. All the dockworkers who were part of loading and unloading container ships at the Port of Portland no longer had containers ships to load or unload. How many ILWU jobs were lost because the union decided to play power games over two jobs that never belonged to the union in the first place?

Frankly, if an employer could find any way to never work with the ILWU again after that, it would have to be out of its mind not to pursue that path.

Cause for Hope

Despite all the doom and gloom feelings the above might cause in shippers, there is good reason I can end this post on an optimistic note. Negotiations are scheduled to begin on May 12th. The current contract does not expire until July 1st.

Traditionally, both the ILWU and ILA refused to start negotiating new contracts until the previous one expired. This really opened to the unions their leverage tactics of port slowdowns, strikes, and threats of strikes.

After there was so much shipper backlash because of the 2014-15 damaging labor strife at West Coast ports, sending container shipping market share to East and Gulf Coast ports, the last set of negotiations for both the ILA and ILWU and their respective employers went uncharacteristically smoothly.

Like ever-optimistic Lions fans, after Brad Holmes came into the organization and put together two good-looking draft classes, hope for a winning team but prepare themselves for the SOL (same old Lions), let’s hope we’ve turned a corner for into a future where dockworker union contract negotiations aren’t damaging to shippers, and everyone else, but prepare for ourselves for the SOS (same old – you know what the S stands for).

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