Strike Action Threatens to Put U.S. Ports Even Further Behind in Terms of Automation, but This Doesn’t Need to Be an Issue

By Ryan Wiggin | 4Q 2024 | IN-7583

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Ports on the East and Gulf Coasts were shut down for 3 days at the start of October due to strike action, but that was brought to a relatively swift end when the International Longshoremen's Association (ILA) and the United States Maritime Alliance (USMX) came to a tentative agreement, delaying further strike action until January 2025.

The initial agreement was successful in terms of meeting wage demands, with members of the ILA getting an immediate raise of just over 10%, with the raise occurring annually over the 6-year contract term. While wage demands were met, the demand for a total ban on automation (including cranes, gates, and container moving vehicles) has yet to be met and remains an outstanding issue.

• Relative to large ports in Asia and Europe, U.S. ports are lagging behind when it comes to the adoption of automation, and other advanced solutions such as 5G networks, digital twins, and blockchain-based platforms. While the United States leads in automation in other areas, such as warehousing and fulfilment, playing host to many of the major industrial automation solution providers, port automation is not an area that has seen significant innovation, on either the supply or buy side.
• A recurring issue has been put back into the spotlight. Port automation was a key issue in the negotiations between the Pacific Maritime Association (PMA) and the International Longshore & Warehouse Union (ILWU) in 2022, as it also was in 2008. While measures were put in place back then to allow terminal operators to implement automated handling systems, the union fought back when measures began to be implemented in 2019.
• The answer and best outcome of the negotiations remain unclear. Following the previous union resistance, studies were conducted by various bodies into the effects of terminal automation on labor. Findings were mixed, with one study finding that the adoption of automation at terminals in Los Angeles and Long Beach eliminated nearly 5% of jobs (study commissioned by the ILWU); another suggested that automation had no effect on labor, and actually had positive effects for shippers, consumers, members of the ILWU, and the environment (study commissioned by the PMA); while another more unbiased study of ports globally found job roles were changed, rather than fully eliminated.
• Automating may not be the right approach for U.S. ports. In a number of cases, ports haven't become more productive with their first adoption of automated systems. It takes time for terminal operators to understand and best utilize the automation, and it often requires high volumes for port operators to realize significant Return on Investment (ROI). It must be considered that the highly automated ports like the Port of Rotterdam (Netherlands), Antwerp-Bruges (Belgium), Busan (South Korea), and Singapore handle much greater volumes than the U.S. ports, justifying the investment.

The technologies adopted by different ports remain incredibly mixed. Ownership status, types of cargo handled, and total throughput are just a few of the factors that affect which solutions are adopted, even before union and workforce pressure comes into play. And while U.S. ports are facing unique union pressure on ports that other parts of the world haven't had to worry about, it does represent a unique opportunity for other advanced technologies that focus more on augmenting current manual processes, and digitalizing areas that don't often receive as much investment:

• Better connectivity with advanced private wireless networks, for example, can improve worker productivity through real-time task management; develop port analytics and create real-time digital twins of operations through connectivity with cameras and sensors; and enable remote operation of equipment that achieves similar benefits of automation, while maintaining jobs. Leading providers, including Nokia and Ericsson, have seen significant productivity improvements with customers, and networks are also becoming more accessible, with Boldyn Networks, for example, recently launching its tiered Private 5G as a Service offering.
• Blockchain is another technology that hasn't received much attention, but has strong applications for the port sector. In Morocco, the Tanger Med Port Authority (TMPA) recently partnered with Banque Centrale Populaire (BCP) to introduce a blockchain-based payment gateway. The partnership was signed in September and aims to gradually roll out the platform to importers, freight forwarders, and transport companies. Streamlining and securing payment processes can have knock-on effects to operations by speeding up transactions and ensuring that goods are moved on in a timely manner.

Providers looking to expand their "port"-folio need to understand what type of port their solution best suits, and in what part of the world. Adjusting go-to-market with "as-a-Service" offerings is one way to tap into more of the private market, but ports with public funding are more likely to invest on a Capital Expenditure (CAPEX) basis and opt for technologies that support sustainability initiatives. On-premises systems are still preferred by larger ports that fear downtime and lack of control, but cloud-based solutions are seeing more traction in smaller ports that need to upgrade but can't afford deploying servers on-site. And there is a trend of more ports being acquired and falling under a global Port Managing Body (PMB), taking away the buying power from the port operator and centralizing the decision-making.

Upcoming research by ABI Research will dive deeper into the port investment trends by region and assess where opportunities exist for technology providers as a result of current challenges and shifts in the market.