07/01/2021

What the Approaching ILWU-PMA Contract Renewal Means for Shippers

Shippers concerned about backed up shipping containers at port

After a year marred by congestion, skyrocketing cargo handling costs, increased demand as a result of the pandemic, and looming clean air mandates, West Coast marine terminal operators have had all the more reason to explore productivity improvements and cost-saving options like automation. 

Historically, concern about displacing and replacing employees with robotics had prompted the International Longshore and Warehouse Union (ILWU), a labor union which primarily represents dock workers on the West Coast of the United States, to launch hard-fought negotiations with the Pacific Maritime Association (PMA) against automation of any kind. However, as time has progressed, concessions have been included to thoughtfully introduce automation into North America’s busiest ports. A once under-capitalized inclusion, intentions to build a fourth automated terminal at the ports of Los Angeles and Long Beach have experts anxious that the upcoming ILWU-PMA contract renegotiation in mid-2022 could be the most contentious to date. 

With market share being lost to more competitive, less congested markets on the East and Gulf Coasts, terminal operators are in a hurry to solve the woes of West Coast operations. At the same time, many believe the ILWU is ramping up an attempt to negotiate a roll back of automation allowances. A history of ILWU-PMA contract negotiations dating back to 2002, when employers first were granted the right to use computer technology, paints a picture that may indicate troubled waters for 2022:

2002: The Right to Use Computer Technology

In 2002, jawing began months before the two parties even sat down to negotiate. The biggest issue in those negotiations was the computerization of port operations, which impacted marine clerks as well as other port employees. The PMA and ILWU continued to go back and forth at one another, both at the table and in the press, until the PMA locked out dockworkers for 10 days. President George W. Bush invoked the Taft-Hartley Act, ports went back into operation, and the negotiations continued until December 2002, when a new contract was signed. [1]

The 2002 master contract gave the marine terminal the ability to employ technology to eliminate marine clerk jobs.[2] It afforded employers the ability to implement a free flow of automated cargo information from the terminal gate, through the yard, and on to the vessel without need for re-keying by an ILWU marine clerk. The use of computers to transmit data affected marine clerk jobs but had very little impact on longshore equipment operators.[3] The 2002 contract opened the door for unlimited use of computerization and information technology at marine terminals. ILWU marine clerks fought those changes because they knew that loss of jobs would result. Employers were equally adamant that productivity could not advance without the use of computers and a free flow of information.[4]

2008: Rights to Introduce Automation

Despite beginning early — the PMA and ILWU sat down at the table in mid-March 2008 — the negotiators missed the contract deadline yet again. Although this time there was no lockout, there were reports of slowdowns until a new pact was agreed to in August.[1]

The 2008 contract was potentially the most revolutionary of the previous three contracts. It gave individual terminals the unrestricted right to introduce automation —computer-controlled ship-to-shore cranes, unmanned horizontal ground transportation, and automated stacking cranes in the yard — that could eliminate 40 to 50 percent of the ILWU general longshore jobs. The negotiations were relatively peaceful.[5]

2014-2015: Contentious negotiations cause gridlock, administration intervention, loss of market share

The lengthy and contentious West Coast negotiations that began in May 2014 and reached a tentative agreement in February 2015, only after intervention by the Obama administration, were bogged down on issues involving jurisdiction and arbitration. The 2014-15 contract negotiations resulted in crippling ILWU work slowdowns and a PMA response that included cessation of lucrative night and weekend work for longshoremen. West Coast ports went into gridlock for almost four months. Exporters, especially agricultural exporters who must ship their perishable cargo through the closest port, were hurting from the loss of business, some of which was lost indefinitely.[6] 

Loss of market share was a major concern for terminal operators after 2014-2015 contract resolutions. The pain of the previous year was so severe, and costly, that terminal operators that were on the fence about automation were now deciding to move forward with the costly introduction of automated machines that require little if any human intervention. The TraPac terminal in Los Angeles had just completed the first phase of its automation project and the Middle Harbor Terminal in Long Beach was scheduled to open the first phase of its automated terminal the following spring.[7] 

2017: ILWU contract extension vote promises five years of US West Coast labor peace

Wanting to avoid the crippling effects of work slowdowns and stoppages that occurred with the 2014-2015 negotiations, the ILWU approved a three-year contract extension through July 2022 after a vote in which every registered West Coast longshore worker had the opportunity to cast a ballot.[8]

2022: Automation likely a main topic of contention in 2022 negotiations

The combustible element in 2022 is that despite contract language allowing automation, and the fact three terminals have implemented automation since 2008, the ILWU has increasingly come to see automation as an existential threat and a microcosm of the larger threat of robotics displacing human labor. That is a marked shift from earlier years when they accepted terminals’ right to automate in return for various concessions, including lifetime income for any dock worker whose job is eliminated by automation.[9]

That was demonstrated in a series of actions over the past two years beginning in 2019 when the union sought to prevent APMT from automating a portion of its Pier 400 terminal in Los Angeles by petitioning the port board to deny a necessary permit. The effort was unsuccessful, but delayed the project by several months.[9] 

Some observers believe that employers will be unwilling to concede to any rollback of their rights to automate when the current agreement expires on July 1, 2022. The primary reason is that cargo handling costs on the West Coast are going up owing to regulation, and as the port range continues to lose market share to Canada and the US East and Gulf coasts. Automation, although expensive to implement, is an option terminals need in order to address rising costs.[10]

Automated marine terminal operation involves replacing manually operated stacking cranes, yard tractors and other cargo-handling equipment with driverless machines. Pier T in Southern California would become the fourth automated terminal at the ports of Long Beach and Los Angeles, including the Long Beach Container Terminal, one of the most advanced facilities in the world.[11]

On top of that, there is the estimated $4 billion marine terminal operators will have to spend to install zero carbon cargo handling equipment at LA–Long Beach terminals in compliance with the 2030 Clean Air Action Plan. Pointing to the $800 million already paid to dockworkers in 2018 in return for the right to automation, some employers see a retreat as throwing money out the window.[10] 

Should the union enter the negotiations guns blazing, the ultimate question for employers, including heads of container carriers based in Europe and Asia, would be whether to give in and keep cargo moving, or dig in their heels, absorbing a short-term financial and operational hit in pursuit of a larger strategic goal.[10]

workers loading container on truck

Impact on Shippers

While 2022 ILWU-PMA contract negotiations begin to kickoff, shippers are apprehensive about what the jockeying between the two entities could mean for business and shipping times. In combination with already congested ports and 2021’s peak season around the corner, organizations are strongly invested in finding solutions to diversify their port strategy. 

NFI Cal Cartage is the long-standing expert for port drayage solutions around Southern California and North America. A team of experts, with deep industry ties and a presence at all major points of entry across the United States, help design solutions that meet and transport products from wherever they land. As upcoming port conditions are taken out of shippers’ control, it’s important for shippers to partner with a provider like NFI Cal Cartage that can accommodate shifting import-export dynamics.

[1]https://www.joc.com/port-news/longshoreman-labor/international-longshore-and-warehouse-union/us-west-coast-labor-negotiations-frequently-asked-questions_20140523.html
[2] https://www.freightwaves.com/news/ilwu-blasts-plan-to-automate-los-angeles-terminal
[3] https://www.joc.com/ilwu-pma-prepare-bargain_20070304.html
[4]https://www.joc.com/port-news/longshoreman-labor/international-longshore-and-warehouse-union/ilwu-pma-contract-no-gamechanger-west-coast-productivity_20150523.html
[5]https://www.joc.com/port-news/longshoreman-labor/international-longshore-and-warehouse-union/ilwu-pma-contract-no-gamechanger-west-coast-productivity_20150523.html
[6]https://www.joc.com/maritime-news/labor/ilwu-moves-forward-contract-extension_20170428.html
[7]https://www.joc.com/port-news/longshoreman-labor/international-longshore-and-warehouse-union/ilwu-pma-contract-no-gamechanger-west-coast-productivity_20150523.html
[8]https://www.joc.com/port-news/longshoreman-labor/international-longshore-and-warehouse-union/ilwu-vote-promises-three-years-us-west-coast-labor-peace_20170728.html
[9]https://www.joc.com/port-news/longshoreman-labor/automation-revs-ilwu-tensions-ahead-contract-talks_20210525.html
[10]https://www.joc.com/port-news/longshoreman-labor/port-automation-clash-brewing-between-ilwu-employers_20200515.html
[11]https://lbbusinessjournal.com/union-leaders-are-fighting-terminal-automation-at-long-beachs-pier-t