The Los Angeles Board of Harbor Commissioners narrowly approved a permit that would allow Maersk’s (Nasdaq OMX: MAER) terminals subsidiary to automate container moves at the largest marine terminal on the U.S. West Coast.
The board voted three-to-two against an appeal of the permit filed by the local chapter of the International Longshore and Warehouse Union (ILWU). ILWU Local 13 opposes the move saying it would put jobs for yard drivers at risk.
The permit request by Maersk’s APM Terminals has been a fraught issue for the Port of Los Angeles. The Board of Harbor Commissioners deferred two votes on the ILWU’s appeal of the permit, which had the support of Port of Los Angeles staff, while the Mayor of Los Angeles tried to broker a peace deal with the ILWU and Maersk.
APM asked the port for permission to install electric charging stations, scaffolding and fencing at the 484-acre Pier 400 facility. The $1.5 million project would allow APM to use automated straddle carriers to ferry containers from Pier 400’s ship-to-shore cranes to container yards.
APM said the move to automate and reconfiguration of its container yard would help relieve the long turnaround times experienced by drayage drivers at Pier 400.
But the ILWU’s concern centers chiefly around the 150 and 200 union and casual laborers that ferry containers at Pier 400.
“This is the beginning of the process of automation at our port,” said Commissioner Lucia Moreno-Linares during today’s hearing.
She voted against the ILWU’s appeal, despite being a long-time resident of the district where many ILWU members live. In her support of the APM permit, she said Port of Los Angeles Executive Director Gene Seroka and his staff “acted properly and in accordance with Port Master Plan” in approving the original permit.
Moreno-Linares also supported Seroka’s call for a dialogue with the ILWU over how automation will affect jobs at the nation’s busiest port.
“We can take steps to be prepared for the future,” Moreno-Linares said.
Commissioner Anthony Pirozzi voted in favor of the appeal, citing flaws in APM’s permit and Los Angeles’ own master plan for upgrades and future developments at the port.
“It appears that there is an opportunity to update the port master plan and go through a resubmitting process,” Pirozzi said.
Commissioner Ed Renwick, who voted against the appeal, acknowledged the concerns of the ILWU and what the future will hold for its members. But he reminded the ILWU audience that the port itself has lost about 20 percent of its market share and “every year we are losing more and more boxes to other ports.”
He said the only thing he could decide on was whether the Port of Los Angeles acted properly in issuing the permit, and “the answer is yes.”
But Renwick did chide APM for failing to include in its permit the potential impact on jobs due to the project.
APM”s “testimony that we have no idea how this is going to impact jobs is preposterous,” Renwick said.
Commissioner Diane Middleton also cited deficiencies in APM’s permit in her support of the ILWU’s appeal.
“APM has not done an analysis on the effects of employment,” Middleton said.
She also took issue with the claims of productivity through automating Pier 400. She said the straddle carriers would require stacking containers three high and deep, instead of the six high and deep as currently done.
Middleton noted that APM pays $70 million in rent for the space, plus an amount based on total container throughput. Middleton said APM paid an additional $10 million in 2017 based on throughput.
“Capacity is cut in half,” Middleton said. “This is not a good decision for the Port of Los Angeles.”
She suggested the port should look at what rent APM is paying for the space, noting that the Long Beach Container Terminal is paying roughly $270 per acre to the Port of Long Beach for its site. But APM is paying about $144 per acre for the Pier 400 site.
Board President Jamie Lee, who cast deciding vote against the appeal, said the Commission’s only job is “to judge the appeal on the merits.”
She said the permitting deficiencies cited by Commissioner Pirozzi have largely been addressed. It was not up to the commissioners to decide whether the project is a good business decision and there is no requirement in the permitting process for job creation.
“Does the permit comply with the port master plan?” Lee said. “I believe it does.”