Moody’s published a report focusing on the value of container port automation in all applications, warning that the high capital investment, uncertain productivity gains, the potential disruption to ongoing operations and the concerns of labour unions all pose risks to automation projects.
The automation in ports, which is steadily increasing in the shipping industry, results to labor-savings, which may have between 40-70% lower labor requirements than traditional facilities. Thus, the US West Coast ports are considering automation, keeping in mind that wages are to be increased by more than $45 per hour by 2022, but there’s also the matter of skill differentials, overtime pay, health care and pension packages.
Although port automation seems to have many benefits, concerning less jobs meaning less wages, Moody’s warns that a reduction in on-terminal jobs or hours means the potential for conflict with unions; In the meantime, on the US East Coast and Gulf Coast, the International Longshoremen’s Association (ILA) has recently negotiated a prohibition on automated container terminals altogether.
Yet, the above political risks extend to port authorities, which are seen as job creators for their communities.
Even if not explicitly stated, there is likely a limit to the willingness of many port authorities and their parent governments to support automation initiatives that result in meaningful job losses. Managing the employment impact resulting from automation, without concessions that compromise the economic potential of the technology, remains a key challenge.
An example of automation’s political cost is the Port of Los Angeles, which announced its plans on adding electric automated straddle carriers to its Pier 400 facility in the Port of Los Angeles. Its announcement resulted to protests by union leaders supporting that longshoremen will lose hundreds of shifts per day, because of the new technology.
The cost is high and the assessment is continuing, aiming to see whether the benefits are big enough to pay it back and bring balance.
Concluding, automated systems are set up to work with a specific terminal configuration – and changing the port’s operations to adapt to changing commercial circumstances, different cargo mixes, different shoreside transport modes, etc, may be more challenging.