Materials handling technology still critical in port talks

Negotiations between union and management are starting early at the West Coast ports. That's a good sign, but technology is still a bone of contention.

By Tom Andel, Editor in chief -- Modern Materials Handling, 8/9/2007

Retailers are hoping history doesn’t repeat itself as port terminal operators and shipping lines along the West Coast enter into contract negotiations with the International Longshore and Warehouse Union (ILWU).

In 2002, a 10-day lockout of the union’s 14,000 members caused a nightmare for supply chain managers across the country. A bone of contention in those days was the desire of shipping lines and terminal operators to use automated materials handling systems to move cargo faster and more efficiently.

 There were concessions made then that would allow global positioning systems (GPS) and radio frequency identification (RFID) technologies to be used, but under certain conditions that would protect jobs. One condition is that management would write a “technology letter” to the union whenever a terminal wanted to add new technology. This would give the union a chance to examine the labor implications of this technology.

Mike Zachary, senior vice president of ports and maritime for Tompkins Associates, Raleigh, N.C., based supply chain consultants, expects technology to be a source of squabbles for years to come, however the 2002 debacle taught both sides some important lessons.

“Technology is here to stay,” Zachary says. “The union has to accept technology because it was written into the 2002 labor agreement. There was 26% diversion from the West Coast ports in 2002 and they didn’t get back 14% of it. Cargo is like the flow of water. It will travel the path of least resistance. Least resistance is better service time, better reliability, higher accuracy, lower cost. And that’s what’s scaring the west coast ports. There are new terminals opening up elsewhere. Maersk is opening a new terminal in Norfolk, Va. They’ll have the International Longshoremen’s Association (ILA)to contend with but they’ll have a separate local and a separate contract. They’ll get a better return on that than operating the Maersk terminal of Tacoma.”

Jim McKenna, president and CEO of the Pacific Maritime Association, says the fact that negotiations are starting early is a good sign for the West Coast.

“The outcome in 2002 was disastrous from everybody’s perspective,” he says. “The unions lost, the employers lost and the country lost through slow-downs and lock outs. Starting these discussions early is a positive.”

McKenna agrees that technology can be a positive, but there has to be sensitivity to how it affects labor. The next area of concern is the handling of intermodal containers. He says the union wants to make sure any work that’s eliminated is duplicate work.

“The question is, is technology performing the work of somebody someplace else?” McKenna continues. “We continue to deploy technology throughout terminals and information flow is more efficient. The next step is to eliminate what you do from an operator perspective. That includes stacking containers in the yard. Those are individual decisions that companies make as they look into their own futures. Contract negotiations are tactical in nature. Anything can happen in that kind of discussion.”

Zachary contends that the maritime industry has a lot of catching up to do when it comes to materials handling state of the art.

“The materials handling industry has been improving productivity, safety and efficiency for decades,” he says. “Why can’t the maritime industry catch up with it? It’s the labor issues. We have to have more technology. From a security perspective the more visible the supply chain, the faster it moves, the safer it is from threat and theft. Ports are waking up to that fact kicking and screaming.”