The tumultuous strike by dockworkers at ports along the U.S. East Coast and the Gulf of Mexico has temporarily subsided. The International Longshoremen's Association (ILA) and the United States Maritime Alliance (USMX) have reached an agreement on wage issues, but the game between labor and capital over port automation is ongoing.

In terms of compensation, USMX has agreed to raise the average hourly wage of dockworkers from $39 to $63 over six years, an increase of 62%. In addition, the ILA has demanded that the contract explicitly stipulate that automation or semi-automation will not be adopted, while USMX, representing shipping companies, terminal operators, and port authorities, holds a different view.

The extension of the contract between the two parties until January 15th next year means that there is less than 90 days left for negotiations.

It is understandable for workers to discuss wage increases, but improving automation levels and reducing the negative economic impact of port and logistics congestion is also a demand for social progress. How to achieve increased efficiency in dock operations while ensuring job security for workers? Xu Jianhua, an international maritime expert, former director of the Urban Modern Logistics Planning Research Institute and professor at the Institute of Waterway Economics at Shanghai Maritime University, said in an interview with First Financial Daily: "Referring to the history of container promotion, the process of U.S. ports achieving automation may take more than a decade, and it can only be solved with the pressure from related parties such as shipping companies and importers and exporters."

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Preserving high-paying job opportunities

In 1993, the ECT terminal in the Port of Rotterdam, the Netherlands, built the world's first automated container terminal. More than thirty years later, only three terminals in the United States have achieved full automation, namely: the Long Beach Container Terminal (LBCT) and the TraPac and APM terminals located in the Port of Los Angeles, with another three terminals operating semi-automatically.

In terms of operational efficiency, the "Global Container Port Performance Index" jointly released by the World Bank and S&P Global Market Intelligence in June this year shows that among the 405 container ports worldwide, the Port of Philadelphia, which scored the highest among U.S. ports, only ranked 50th, while China's Yangshan Port took the lead.

Why is the transformation of U.S. port automation difficult to advance? Many experts interviewed by First Financial Daily all said that a strong union is the main reason. In the face of round after round of technological innovation, unions have always been conservative.

There are two main union organizations for U.S. dockworkers: one is the International Longshore and Warehouse Union (ILWU) representing dockworkers on the West Coast, and the other is representing dockworkers at ports along the East Coast and the Gulf Coast.

Xu Jianhua introduced that the container was invented in 1956 by an American car transporter named Malcolm McLean, but this new technology was opposed by U.S. dockworkers in the 1950s and 1960s, and was quickly accepted and promoted in Europe and Asia.It is understood that even by 2002, the International Longshore and Warehouse Union (ILWU) believed that the computerization of dock operations would affect the jobs of clerical staff, leading to a go-slow strike until then-President George W. Bush intervened, allowing the docks to resume operations.

Several shipping experts have indicated that the remuneration level for American dockworkers is already high, and naturally, they are unwilling to let automation take away their jobs.

According to First Financial Daily reporters, American dockworkers are mainly divided into three categories: Longshore Workers who are responsible for handling cargo between the dock area and on and off ships, Clerks who record the movement and stacking of containers, and Foremen from different departments.

Taking the West Coast as an example, data from the Pacific Maritime Association (PMA), the dock employers in the area, shows that in 2022, full-time dockworkers (working more than 38.4 hours per week) registered with the ILWU had an average income of $198,000 (approximately 1.4 million RMB), excluding benefits. Full-time clerks and foremen earned $220,000 and $300,000, respectively. Management salaries are even higher; data from the U.S. Bureau of Labor Statistics in 2022 shows that dock supervisors earn 24% more than the average annual salary of American CEOs and 20% more than neurosurgeons.

Harold Daggett, President of the International Longshoremen's Association (ILA), once stated that the fully automated docks at the Port of Los Angeles destroyed 800 dockworker jobs. He claimed that shipping companies from "overseas" want to "enter the United States, build fully automated docks, and take away American jobs. These job opportunities are high-paying and can provide families with healthcare, pensions, and annuities."

On the other hand, Kent Gourdin, a professor at the College of Charleston's Global Logistics and Transportation Program, stated that although operating heavy machinery is not as physically demanding as carrying boxes, almost all dockworkers "are exposed to harsh weather conditions to varying degrees and work in environments surrounded by heavy equipment."

Xu Jianhua also stated that currently, both American political parties need to win the votes of dockworkers, and the U.S. government naturally chooses to actively support the union's stance.

He added that although European ports also have a tradition of unions, the geographical proximity of ports means that freight and shipping companies have many alternative transshipment ports to choose from, making them competitive and actively pursuing automation reforms.

"In contrast, although the Ports of Los Angeles and Long Beach have also undergone automation upgrades, they are not as urgent as European ports and do not face much competitive pressure."

Tan Yinliang, a professor of Decision Sciences and Management Information Systems at China Europe International Business School, told First Financial Daily reporters that the lack of unemployment protection and the difficulty of skill transfer have also led to a conservative attitude towards automation among American dockworkers.He explained that the social security system in the United States is relatively weaker than in Europe, and unemployment has a greater impact on workers. In addition, the skills of many dockworkers are more specialized, making it difficult to quickly adapt to other industries, so they are more resistant to changes that may lead to unemployment.

High investment and safety risks add to the resistance

The return on investment in port automation is also a "difficult" issue.

Wan Zheng, a professor in the Department of International Shipping at Shanghai Maritime University, said that the advancement of port automation, especially the renovation of old ports, requires a lot of upfront investment, including equipment renewal and software upgrades, which are costly, and also involve coordination in many aspects such as laws and regulations, environmental protection standards, etc.

A report from the U.S. Government Accountability Office (GAO), an independent agency under the U.S. Congress, stated that some stakeholders believe that the freight throughput of the dock needs to exceed a minimum threshold, about 2.5 to 3 million standard containers (TEU), and the investment in port automation renovation is expected to yield considerable potential returns. The report also shows that the container throughput of the vast majority of U.S. ports is below this level.

In addition to the above reasons, safety risks are also within the consideration of the U.S. government.

Wan Zheng said that when U.S. port authorities choose automation solutions, they will conduct strict supplier screening and equipment review, and the lack of ability of local equipment and technology suppliers also limits their choices.

A joint investigation report released last month by the U.S. House of Representatives and the Homeland Security Committee clearly pointed to the Chinese company Zhenhua Heavy Industry. The report said that nearly 80% of the cranes used in U.S. ports are produced by Zhenhua Heavy Industry, and the United States does not have enterprises that produce such equipment. The report believes that this constitutes a serious safety risk.

Wan Zheng believes: "The automation transformation of U.S. ports is a long-term trend, because the global supply chain's demand for efficiency is continuously increasing, and international competition is intensifying. However, this process is destined to be difficult, because it needs to find a balance between technological innovation and social impact."

How should dockworkers deal with automation?One of the 2024 Nobel laureates in Economic Sciences, Professor Daron Acemoglu from the Massachusetts Institute of Technology, has indicated that over the past 30 years, automation has led to the loss of approximately 700,000 jobs in the United States, with many of these in manufacturing and other blue-collar sectors.

Wan Zheng stated that the operation of automated ports typically requires fewer workers, especially in highly automated processes such as loading and unloading, and handling. However, automation does not equate to complete "dehumanization"; new positions are also continuously emerging. For instance, there is a significant demand for employees with technical expertise in areas such as the maintenance, monitoring, and data analysis of automated systems, as well as in cybersecurity. Some of the original dockworkers can transition to higher value-added positions such as technical support and equipment maintenance after receiving training.

He believes that effectively managing this transition is crucial. For example, the Port of Brisbane in Australia has worked with unions to provide workers with skills retraining, enabling them to take on new technical jobs; the Port of Rotterdam has also adopted a similar approach.

The non-profit organization "Rotterdam, Maritime Capital of Europe" announced early last year that there are over 8,000 vacant positions in the Port of Rotterdam. With the energy transition and changes in the port labor market, it is expected that an additional 10,000 to 15,000 jobs will be created in the coming period.

Can the "win-win" of improving port operational efficiency and ensuring job positions be achieved? Tan Yinliang is optimistic about this. He suggests that automation technology should first be introduced gradually in phases, giving workers ample time to adapt. Secondly, new skills training should be provided for workers. In addition, a reasonable profit-sharing mechanism is needed to allow workers to also benefit from the increased efficiency generated by automation.