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Port of Long Beach will study automation’s impact on city

Concern about the “future of work” at ports has sparked several pieces of legislation and studies in California.

(Image: Jim Allen/FreightWaves) Long Beach Container Terminal

The Long Beach City Council has directed the city’s harbor department to conduct a study on the economic impact of port automation on the city.

The council voted 8-0 to order the study at its Aug. 20 meeting. It’s the latest in a series of studies and legislation proposals having to do with automation in the wake of a failed effort by the International Longshore and Warehouse Union (ILWU) to prevent APM Terminals from installing robotic equipment at its terminal at Pier 400 in the neighboring Port of Los Angeles.

Long Beach Councilman Rex Richardson noted that the Port of Long Beach, the second-largest container port in the U.S. in 2018, is an economic driver for the region and that the transition to automation at the port “has a lot of people on edge.”

The massive Long Beach Container Terminal in the port’s middle harbor is one of the most automated in the United States. In April it was acquired by a consortium led by Macquarie Infrastructure Partners after the U.S. government required the sale of the terminal as a condition of COSCO Ship Holding’s purchase of Orient Overseas Container Line and its parent company.

Richardson said the city wants to know if higher levels of automation at the Port of Long Beach is likely to be a “five- or 40-year conversation” and “if automation were to be fully realized, what does that mean? … Are we looking at a port that doesn’t have very many connections to local jobs?”

He said the study should be funded by the port, academic in nature and independent and fair.

Mayor Robert Garcia said there was no industry more important to Long Beach than the port and that the discussion about port automation “is really about a broader discussion of what the future of work in this country and in this world actually looks like. We are in grave danger as a nation of getting so far ahead with the way technology is automating all of our jobs that we could hit, as a country, a major crisis when it comes to people’s ability to find work to put food on the table for their families.”

He said academics view the “future of work” as an issue second in importance only to climate change.

While automation is affecting many industries, he said the issue of port automation is particularly important to Long Beach because it provides workers with good-paying jobs with good benefits.

Mario Cordero, the executive director of the Port of Long Beach, said ” The City Council has considered the matter and directed staff to develop a report on the issue. We stand ready to assist and facilitate that process in any way that we can. In the meantime, we remain focused on day-to-day operational excellence, as we are committed to making the Port an even stronger economic engine for the city, state and the U.S.”

Chad Lindsay, vice president of labor relations at the Pacific Maritime Association, which represents employers of ILWU members, said the study should consider issues such as the impact of automation on the competitive standing of the ports of Long Beach and Los Angeles, particularly for “discretionary cargo” that can move through more than one port to its eventual destination. He said a PMA study showed the jobs of 68,000 workers rely directly on discretionary cargo.

Economist Jock O’Connell said this week in an article published in the Pacific Merchant Shipping Association’s monthly newsletter West Coast Trade Report that the share of containerized imports from East Asia moving through West Coast ports has diminished over the past 15 years even as cargo volumes have increased.

Citing U.S. Department of Commerce figures, he said in 2003 57.4% of U.S. imports from East Asia by weight and 63.2% by value moved through the combined Ports of Los Angeles and Long Beach, but last year that share had declined to 45.4% as measured by weight and 53.5% by value. The decline is also reflected if one looks at the two port’s collective share of containerized imports at mainland U.S. ports from all trading partners worldwide: 32.2% by weight and 44.1% by value in 2013 and 29.5% by weight and 37.4% by value in 2018.

Lindsay also urged the port to study how a decline in market share might create financial risk to the city and port in relation to the Alameda Corridor and the bonds issued for its construction.

He also said the study should look at automation’s role in helping the ports of Los Angeles and Long Beach comply with environmental goals.

Rich Dines, an ILWU marine clerk and former member of the Port of Long Beach Harbor Commission, said the claims that automation is necessary to meet the goals of the two ports’ Clean Air Action Plan were false and that renewable natural gas could be used to power port equipment instead of electricity and meet zero-emission standards adopted by the California Air Resources Board.

He and other speakers contended that automated terminals are not more productive than those that use ILWU members to operate equipment. Some speakers pointed to a 2018 McKinsey survey that the management consultants said “indicates that operating expenses at automated ports do indeed fall, but only by 15 to 35%. Worse, productivity actually falls, by 7 to 15%.”

John McLaurin, president of the PMSA, noted there are several other studies about port automation in the works:

•         Los Angeles Mayor Eric Garcetti and Councilman Joe Busciano announced plans last month to create a commission to study “the future of work at the Port of Los Angeles as part of an agreement between the ILWU, PMA and APM Terminals to establish a workforce training program for port workers.”

•        The Los Angeles County Board of County Supervisors also last month approved a proposal by one of its members, Janice Hahn, to have the county study the potential economic impact of automation at the Port of Los Angeles. Hahn is a former U.S. congresswoman who led the creation of the PORTS Caucus in the U.S. House of Representatives in 2011.

•         California Assembly Bill 639,  introduced by Assembly Member Sabrina Cervantes, would create a “Task Force on Addressing Workforce Impacts of Transitioning Seaports to a Lower Carbon Economy” in order to “advise state agencies on the most effective ways to expend clean energy and greenhouse gas moneys and to implement policies and programs to mitigate the impacts of transitioning seaport operations to low- and zero-emission operations on incumbent workers.”

•         Another bill in the California legislature, AB1321, introduced by Assembly Member Mike Gipson, would require California’s State Lands Commission in collaboration with the Governor’s Office of Business and Economic Development to hold a series of meetings at or near California ports that operate on granted public trust lands to consider the impacts of automated technology at California’s ports and prepare two reports, one in 2021 and one in 2023. An earlier version of the bill included a provision, now removed, that would have required the State Lands Commission to approve on a case-by-case basis the use of automation at coastal ports within the commission’s jurisdiction.

•         On May 1, California Gov. Gavin Newsome also created a Future of Work Commission that will broadly look at employment issues in California, and, among other things, “identify and assess the new and emerging technologies that have the potential to significantly affect employment, wages, skill requirements and organization of work in the near and medium future.”

Chris Dupin

Chris Dupin has written about trade and transportation and other business subjects for a variety of publications before joining American Shipper and Freightwaves.