Western Canadian Port Deal Should Ease Automation

August 06: Terminal operators and longshoremen in Vancouver and Prince Rupert are preparing for the arrival of automation in the coming decade, and believe they have fashioned an agreement that will allow for growing container volumes while protecting dockworker jobs.

After difficult contract negotiations that lasted more than a year, International Longshore and Warehouse Union Canada and the British Columbia Maritime Employers Association are looking ahead to greenfield projects that will come on line in the mid- to late-2020s. They are preparing for a port environment in which conventional operations will not be able to handle the container volumes projected 10 years hence.

“Our goal is to remain competitive and grow the ports,” Jeff Scott, BCMEA chairman, told JOC.com. 

“If an employer decides to automate, we have to address job losses and a possible mitigation plan,” said Rob Ashton, ILWU Canada president. 

Ashton pointed to the unique environment in the port industry. If an automobile plant is considering automation, workers have two options. They either accept automation and some job losses, or the employer moves to China. “You can’t do that with ports,” he told JOC.com. “You can’t move them.” 

ILWU Canada found itself in a negotiating position that called for recognizing the likelihood of future automation, which longshore unions throughout North America instinctively oppose, or stunt cargo growth — and therefore job growth — at two of Canada’s busiest ports, which combined handle 4.4 million loaded and empty TEU. A study by Black Quay Consulting said the ports are utilizing 82.4 percent of their combined capacity, which is already high by industry standards.

Automation a challenge for unions in many countries

Automation is a challenge longshore unions in North America, Europe and even Asia, where labor is cheaper than the West, are coming to grips with. A study this year by Moody’s Investors Services concluded that some degree of automation is becoming necessary at high-volume terminals. Those operators — which total 46 terminals in 22 countries — have automated to gain operating efficiencies, improve their competitive position in the industry, maximize land-use efficiency and capacity, lower labor costs, and meet stricter environmental standards.

Terminal operators generally acknowledge that in terms of “peak productivity,” conventional terminals generate a greater number of container moves per hour than automated facilities. However, it is humanly impossible to maintain peak productivity around the clock. In high-volume ports where 10,000-TEU-plus ships call regularly, steady and reliable productivity measured on a 24/7 basis is a necessary metric. “Machines are not restricted by time of day, which can add the equivalent of a third shift at little incremental cost,” Moody’s stated.

The new labor contract covering the British Columbia ports ensures longshoremen will be protected in the new environment, Ashton said. It addresses the issue through a combination of guaranteed pension benefits for older workers who choose to retire, and the retraining of younger workers so they can perform maintenance and repair on automated cargo-handling equipment and battery and electric-powered equipment. Also, marine clerks have been, and will continue to be, trained to interact with and process digitized programs in the terminal operating systems.

“Our industry continues to evolve. “We consider the language in the contract to be strong enough that we will be brought along,” Ashton said. 

Waterfront employers have been investing in modern technologies for the past decade in order to remain competitive on the West Coast of North America, Scott said. With direct intermodal rail service to Chicago and beyond, Vancouver and Prince Rupert rely on the US market for a significant portion of their growth. “We must maintain the option and flexibility to automate in order to grow the ports. We want to keep those jobs in Canada,” he said.

A study by Mercator International found that US-origin and destination cargo represented 27.4 percent of Vancouver’s container volume, up from 23.7 percent in 2015. About two-thirds of Prince Rupert’s volume is US cargo.

Growing container volumes have enabled the ports to increase longshore man-hours despite modernization efforts over the past decade. Ten years ago, the ports generated about 6 million man-hours a year; that is now 9 million, Scott said. 

The only automated cargo-handling process to come on line so far was at the on-dock rail facility at GCT Canada’s Deltaport terminal in Vancouver. “We protected quite a few jobs there,” Ashton said. 

Automation best suited for greenfield sites

Automating container-handling operations at working terminals can be quite disruptive, so operators prefer to introduce automation on greenfield sites. BCMEA and ILWU Canada, therefore, see the true test of automation coming with proposed new facilities at Roberts Bank Terminal 2 in Vancouver and a new berth planned on South Kainen Island in Prince Rupert.  GCT Canada may also add a berth at Deltaport. 

There are two automation models in North America that terminal operators in Vancouver and Prince Rupert may consider. In Southern California, Long Beach Container Terminal and the TraPac terminal in Los Angeles are fully-automated, with all horizontal ground transportation handled by driverless automated guided vehicles or automated straddle carriers.

On the East Coast, Global Container Terminals in New York-New Jersey and two terminals in Virginia are semi-automated. Like the Southern California terminals, they feature automated stacking cranes in the yard. However, the use of yard tractors driven by longshoremen make  those terminals semi-automated.

Fully-automated terminals are quite costly — $1.4 billion at LBCT’s Middle Harbor and $700 million at TraPac — so operators of these high-volume terminals seek an adequate return on investment through significant cuts in labor costs. The loss of jobs can be 40-70 percent at fully-automated terminals. 

For all types of automated terminals, however, increased container throughput per acre is crucial, and is achieved through densifying the operations. This is often accomplished by stacking containers higher and wider, and also by maintaining container handling in the yard around the clock. The reduced container moves per hour of 20-25 at automated terminals end up surpassing the 30-35 moves during peak performance at conventional terminals by maintaining the same productivity 24 hours a day without interruptions for lunch breaks and shift changes.

Prince Rupert, which has inherently efficient operations because the vast majority of containers are loaded directly on to trains, nevertheless sees automation as an option down the road. Automation could help the port to accommodate growing container volumes in a community of only 14,000, Brian Friesen, vice president of trade development and communications, told the JOC Canada Trade Conference in May.

Although decisions involving automation at Vancouver and Prince Rupert may be almost a decade away, BCMEA and ILWU Canada feel they have a framework in place that is flexible enough to make the difficult decisions when the time comes. 

“We will do this through creative collaboration with the union,” Scott said.

Source: JOC / Bill Mongelluzzo

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