Global Supply Chain News: Automation Emerging as Key Issue in West Coast Port Negotiations "The good news is that the peak season for 2014, when manufacturers and retailers bring in merchandise for Christmas shoppers, is just about over."

Global Supply Chain News: Automation Emerging as Key Issue in West Coast Port Negotiations "The good news is that the peak season for 2014, when manufacturers and retailers bring in merchandise for Christmas shoppers, is just about over."
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- Sept. 25, 2014 -

Global Supply Chain News: Automation Emerging as Key Issue in West Coast Port Negotiations
With Tough Health Care Issue Apparently Resolve, Talks Now Hinge on Resolving Automation and Jobs Conundrum

With the International Longshore and Warehouse Union now is working without a contract at West Coast ports for coming up on three months, new insight into the key issue holding up a deal.

New technology at the TraPac terminal at the Port of Los Angeles is likely to reduce the number of workers needed per crane by about 53 percent, for example.

Earlier, the ILWU and the Pacific Maritime Association, which represents West Coast ports and terminals in the negotiations, announced they had reached a tentative deal on what most thought would be the most contentious issue, relative to the union's generous health care plan.

As constituted now, that coverage would be designated as a "Cadillac" plan under the Obamacare law, subjecting the PMA to more than $100 million in annual penalties starting in 2018.

The ports would obviously like to shift more of the costs onto the workers, so that the plan no longer hits Cadillac status. The union would probably want additional compensation to cover the healthcare hit to its members.
Details of the tentative deal on the health care plan have not been released, and both sides said even that deal was subject to reaching an accord in all the other areas.

But last week, reports came that the lynchpin issue now relates to port automation.
The two sides are discussing how to retrain and preserve jobs for dockworkers as automation reduces the number of positions at one Los Angeles terminal by 40-50%, after projects are completed in 2016, according to a recent Bloomberg article.

But under the union arrangement, "Employers aren't simply free to decide to reduce jobs. In addition, it depends on the nature of the automation," saysNeil Davidson, a senior analyst at Drewry Maritime Research.

In recent years, the ILWU has been fairly complacent with regard to automation at West Coast ports, in part in recognition that US ports do need to add more automation to remain competitive.

In fact, of the top ports in terms of productivity across the globe, only one US port - Long Beach - ranks in the top 20, and it barely made it, coming in at the last spot on the list, as shown below.

Source: Journal of Commerce

But to date, that growing automation at West Coast ports hasn't had much of an impact in terms of jobs. That is changing - and the union may now feel the need to push back hard.
New technology at the TraPac terminal at the Port of Los Angeles is likely to reduce the number of workers needed per crane by about 53 percent, for example, and by 85% in the area where containers are loaded on to trucks and rail cars.

This one may be very tough to resolve. Keep your port options open for now, in case this does turn into a strike or work stoppage.

The good news is that the peak season for 2014, when manufacturers and retailers bring in merchandise for Christmas shoppers, is just about over.