Commentary: ILWU could kill the golden goose

  Well, it’s another peak shipping season and wouldn’t you know it, we’ve got labor strife again at U.S. ports putting the business community on edge leading up to the most crucial sales period of the year for retailers.
   Two years ago, stalled dock labor negotiations on the East Coast appeared to be destined for a shutdown before cooler heads prevailed. 
   In late October, members of the International Longshore and Warehouse Union began a work slowdown at marine terminals in Seattle and Tacoma. The union characterized the situation as an organic, spontaneous reaction by dockworkers frustrated by five months of mostly fruitless negotiations on a new multi-year labor contract. Reading between the lines of ILWU statements, it’s clear the job action was orchestrated to try and gain leverage at a critical moment, when retailers are desperate to get their hands on cargo and route it to stores in time for the holidays. 
   According to the Pacific Maritime Association, the bargaining group for the terminal operating companies, the ILWU stopped dispatching its most qualified workers to man the cranes and other yard equipment. Without containers to move, other longshoremen sat around with little to do.
   The nagging sense, though, is that much of the foot-dragging has to do with lingering union resistance to automation. In the last contract that expired July 1, the ILWU agreed to allow marine terminal operators to introduce technology as long as new jobs to operate and maintain the IT systems went to union members.
   The catch is that terminals must bring the union in to negotiate how to implement the technology for each project. Hong Kong-based OOCL’s Long Beach Container Terminal has supposedly negotiated ILWU acceptance for the transition to technology related to the $1.2 billion expansion and reconfiguration of property in the Middle Harbor area. The new LBCT is to include semi-automated, electric rail-mounted gantry cranes for transferring boxes to and from truck chassis and railcars. Computers will handle the lifts until the last five feet, when a technician sitting in a central office will use a joystick to maneuver the spreader and latch onto or release a container. But work is not scheduled to be completed until 2017, so we won’t absolutely know for a while whether the union is on board with the project.
   Meanwhile, the Trans Pacific Container Service terminal (TraPac) at the Port of Los Angeles is also being redeveloped, but the ILWU so far hasn’t endorsed any of the planned automation of cargo-handling equipment. 
   Whatever the reason for the labor slowdown, it’s shocking the ILWU is being so shortsighted. Doesn’t anyone learn from past experience?
   It isn’t the 1970s anymore. We live in a globalized world and there are other U.S., Canadian and Mexican ports eager to take more cargo from the L.A./Long Beach market. We’ve already seen a fair amount of cargo diverted this year to East Coast ports such as Norfolk in anticipation of potential West Coast port disruptions. And many shippers permanently redirected some of their import traffic to East and Gulf coast ports after the costly shutdown of the West Coast ports in 2002. The Panama Canal is being expanded to take bigger ships in 2016 and some of them could opt to bypass Southern California and deliver direct to the other coast. 
   That would cost the union many more jobs than displacement by IT.
   Perhaps the ILWU should take its cue from autoworkers, forced by economic reality, who became partners of American manufacturers to help rescue a moribund industry and dockworkers unions in the United Kingdom.
    In 1989, Prime Minister Margaret Thatcher’s conservative government abolished the regulatory system that essentially guaranteed work for thousands of longshoremen nationwide. The National Dock Labor Scheme was established 40 years earlier to ensure adequate supply of labor after World War II, with registries of workers kept by joint boards of employers and unions. The system gave unions absolute veto power over dismissing workers and total control of recruiting.
    Ports like Liverpool basically self-destructed through inability to change working practices and an unwillingness to modernize. Liverpool gradually lost market share and jobs to ports in southern England, contributing to two decades of economic stagnation in the city.
   The new law gave port employers the right again to hire casuals.
   Eventually, automation became the norm in European ports and now is becoming accepted in the United Kingdom as the way of modern business.
   The Peel Ports Group is developing Liverpool2, a deep-water container terminal scheduled to open next year to handle the bigger vessels currently unable to reach the inner harbor terminals through existing locks. The facility will have automated truck gates and semi-automated, rail-mounted gantry cranes for stacking and handling of containers.
   “We’re making that investment with the blessing, with the support of the unions without any kind of limitations or restrictions whatsoever,” Peel Ports CEO Mark Whitworth told me during a visit to New York.
   “Bear in mind, this automation is not going to disrupt existing jobs, it’s going to create more. The mindset of the union has recognized how limiting they were on Liverpool’s development. It once was a powerhouse port,” he said.
   The ILWU claims its primary focus is on safety, but if that’s the case it should embrace automation because it presents a much safer workplace without the chance for human error. 
   If the union continues to create the perception that Southern California is an unreliable gateway, then cargo will relocate and there will be less work for longshoremen, and less money for the regional economy.

This commentary was published in the December 2014 issue of American Shipper.