Dockworkers' Unions Try to Hold the Line on Automation

I think most of us were caught off guard when the East and Gulf Coast port strike was declared over after just three days. The U.S. Maritime Alliance, which represents terminal operators and global shippers, and the International Longshoremen’s Association (ILA) had been pretty far apart on wages, and even further apart on automation.

So when they released a joint statement saying that they had agreed to a wage increase of $4 per hour annually for 6 years, it left me with more questions than answers. Most pointedly - what about automation?

There is hardly a role or a function that is not being affected by the advance of automation, whether that means robotics or digital capabilities like generative AI. Trust me, after spending the first half of this year hearing that writers were all going to be out of work thanks to ChatGPT, I can sympathize with the longshoremen. 

At the same time, you can’t halt progress forever, and some productivity opportunities are just too good to pass up. Like it or not, automation has arrived in U.S. ports. To read more about the parties involved in the negotiation, read East and Gulf Coast Port Strike - Part 1 on Art of Procurement.

Show me the money!

Naturally, wages were a top priority for the ILA in this negotiation; some even described it as ‘the’ main issue. West Coast port workers got a 32 percent increase in their last negotiation, so when the ILA insisted on 77 percent over 6 years, more than a few eyebrows went up.

As reported by Jacobin, that 77 percent increase worked out to around $5 per hour per year. The U.S. Maritime Alliance had initially offered 50 percent ($3 increase per hour per year), but after some ‘soul searching’ found it in their hearts and their wallets to go to 62 percent, or $4.

Those percentages are large, but so are the starting salaries we are talking about. Full time ILA members in Savannah, Georgia, earn an average salary of $180,000, while those in Houston, Texas, and Charleston, South Carolina make an average of $170,000. After the 6 years worth of raises, $170,000 becomes $275,000 and $180,000 becomes $291,000.

I suppose you can say the union is doing their job, advocating for workers in a time of high inflation (and equally high leverage), but how many office jobs do you think would be kept at those salary levels if an enterprise application could make the positions redundant?

I’ll answer for you: none.

Is automation inevitable?

I believe automation is actually the main issue in this negotiation, and it is the point we currently know the least about.

It is true that the number of employed dockworkers has dwindled as automation has been introduced. In fact, the 2023 West Coast port union negotiations, automation was acknowledged as a bigger issue than pay, and I believe the same is true here.

The ILA says that some ports are using an automated system to process trucks in violation of their current (and extended) labor agreement. The most frequently cited example of this is the auto gate system in use at the Port of Mobile, Alabama. ‘Discovery’ of this gate led to a breakdown in talks over the summer.

Europe and China both have more automated ports than the U.S. because they don’t have to deal with labor unions, and automation is not just ‘automation’ if you ask the ILA.

Full automation replaces workers one-for-one (or one-for-many), but there is also semi-automation, for instance conveyor belts or other systems that work with humans to make their jobs easier and more efficient. The fact that some of the equipment already in place is ‘hybrid’, meaning it can be either automated or human-operated, clearly represents a threat to the union.

The ILA, as represented by their colorful President Harold Daggett, has drawn a line in the sand. Automation is the hill the union is going to die on, and they have 100 days to figure it out or go on strike again.

But how realistic is it to have zero automation?

A WSJ opinion piece that ran on Monday October 7th summed up the tension nicely: 

"What they mean is they don’t want any technological advances that would make loading and unloading ships faster, safer and more efficient—e.g., smarter cranes, gates, and container-moving trucks that require fewer workers to operate. In other words, they want higher pay with no productivity gains, which is unsustainable in a competitive global economy."

There is data to support the point about productivity and competition. The iron fist of the unions is making the U.S. an outlier.

The Container Port Performance Index ranks ports by the amount of time a ship spends there. As of the 2023 data (the newest available), not a single American port was ranked in the top 50 worldwide. Charleston, South Carolina is the top U.S. port, ranked #53. Yangshan in China holds the top spot, and many of the other top ports are located in China as well.

U.S. dockworkers have a history of fighting progress in ways we wouldn’t naturally think of today. In the 1960’s the longshoremen fought the use of shipping containers, preferring the time and effort it took to load ships the way my kids load their backpacks for school. But that change eventually moved in and it is hard to imagine going back. Will port automation be introduced the same way?

Winning the Battle, Losing the War

As the negotiation stands today, the ILA secured a $4 per hour raise for each year of the 6 year contract. That temporary extension is expected to hold until January 15, 2025 - just days before the next president is sworn in. The deal will still have to be ratified by the members. If they don’t like the final terms, they could opt to return to the picket lines.

I question the strategy of setting wages without coming to an agreement on automation at the same time. Rather than being able to adjust and rebalance exchanges of wage increases for levels of automation, the rates are fixed - and automation remains completely unaddressed. In theory, the parties are as far apart as ever, and the next time they sit down to negotiate, there won't be the added pressure of a pending presidential election to intervene on the union's side.

When I posted about the strike coming to an end on LinkedIn one week ago today, many of the comments I received were focused on the inevitability of progress in the form of port automation. If the U.S. Maritime Alliance is unable to gain concessions from the union on automation despite paying higher wages per person, they will either have to absorb the added cost or pass it along to shippers, and then down along the supply chain to each of us.

The other possibility is that the U.S. Maritime Alliance is able to make the case that they can only afford the increase in hourly wages with the help of automation, and therefore fewer workers. I doubt the ILA will accept that quietly.

It is easy to make the case that automation costs jobs, and that jobs at the port are important to the people that hold them. It will be much harder to hold the line on a zero-tolerance policy for automation in a world where it is everywhere.

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