How Automation Can Improve US Port OperationsHow Automation Can Improve US Port Operations

Approximately 45,000 dockworkers went on strike at US ports on the East and Gulf coasts last fall — the first strike for The International Longshoremen's Association since 1977. ILA members who went on strike stopped operations at 36 ports due to failed contract negotiations with the US Maritime Alliance.

ILA dockworkers were fighting for higher wages, as well as a stop to the ports’ automation projects that could threaten jobs.

This first strike only lasted a few days, with The International Longshoremen’s Association and the US Maritime Alliance agreeing on a tentative deal for wages and a contract extension through January 15, 2025.

On January 10, a second strike was averted when the International Longshoremen's Association and employers reached a tentative 6-year deal.

We talked with Brian Lynch, the Americas Transportation Sector Leader and an executive director in the Transaction Strategy and Execution practice at EY-Parthenon, about the recent strikes at US ports and the future of automation used at US ports.

Lynch, who previously spent several years in the transportation industry, including leadership roles at two logistics companies and a leading port authority, believes that automation is a challenge for the stakeholders involved, and it raises concern that it will threaten jobs.

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PBS: Why do you believe there is such an issue with automation being adopted?

BL: Port operations are complex and involve various stakeholders, including shipping companies, labor, Homeland Security and logistics providers. Thus, integrating automated systems into the existing processes within these stakeholders can be challenging. Automation adoption has faced resistance as concerns that new technologies will threaten jobs, especially in traditionally labor-intensive industries like port operations.

Organizational culture can play a significant role in the adoption of new technologies. There may be a need for skilled workers to operate and maintain automated systems, which highlights the importance of retraining existing staff or bringing in new talent to support the transition.

Implementing automation requires significant investment in technology and infrastructure. Ports may be hesitant to allocate funds for automation, especially if the return on investment is uncertain.

What’s more, automation must comply with various regulations and safety standards. Navigating these requirements can slow down the adoption process. Economic factors and conditions can also influence the willingness of ports to invest in automation. During downturns, ports may prioritize cost-cutting over technological advancements. While automation may boost efficiency and help companies stay competitive, there’s a fine line between adopting new technology and ensuring job security.

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PBA: How do you think AI/automation will help port workers?

BL: AI and automation could be a game-changer by improving and maximizing efficiency in areas such as scheduling, predicting vessel arrivals, and managing resources. With predictive analytics and machine learning, potential bottlenecks can be anticipated in advance, so workers can plan ahead, cut down on downtime, and boost overall productivity — leading to a smoother, more efficient workflow.

AI and automation can greatly benefit ports by enhancing efficiency through technologies like automated cranes and container handling systems, which reduce loading and unloading times. Predictive maintenance powered by AI can forecast equipment needs, minimizing downtime and allowing workers to focus on critical tasks.

Safety is improved as automation takes over dangerous operations, reducing the risk of accidents. Additionally, AI enables data-driven decision-making, helping port managers optimize resource allocation and performance.

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As automation is introduced, workers will have opportunities to learn new skills related to these technologies. Implementing these solutions involves investing in advanced technologies and establishing training programs to ensure a smooth transition, with collaboration among stakeholders to meet the specific needs of each port.

PBS: How will modernizing supply chains work to make ports safer?

BL: Perception is that automation and advanced technology, like container handling and scheduling, reduces the potential for human error and improves material flow and traffic management, and is, therefore, safer and more operationally efficient than more manual operations. However, opponents argue that, to-date, there is limited empirical data to demonstrate significant improvement of outcomes.

PBS: Will the tentative agreement between dockworkers/union and the shipping companies stick, or will there be further distress between the two? What needs to happen for a permanent resolution?

BL: The contract should stick through the duration, however posturing and related friction between the parties will continue as it has for decades. The parties must continue to strike a balance to embrace appropriate automation while also protecting jobs. Technological advances are needed, but it can’t come at the expense of job security.

PBS: Talk about the US port competitiveness and how that will come into play, turning to competing globally instead of with each other.

BL: While the use of automation is just one among several contributing factors to a less-than-stellar US port performance ranking, it’s hard to look at automation in isolation. For example, many Asian ports are open 24/7. US ports are not. As a result, Asian ports may appear more efficient. Also, the logistics supply chain infrastructure has suffered from a lack of investment.

There are also challenges outside ports that have great impact on their efficiency and supply chain, like truck driver shortages or legislative acts like The Jones Act, which impacts our port operations and how freight moves around the country.

PBS: Any last thoughts?

BL: Introducing automation into port operations is not a simple feat. And, in addition to labor, there are several considerations that must also be considered, including: (a) high capital outlay and one-time costs, (b) implementation time / time to value, (c) technology integration, and (d) change management.

Additionally, industries that rely on East and Gulf Coast ports, like automotive, consumer goods, and chemicals, need to keep potential strikes in mind when planning. Disruptions can have a ripple effect across many sectors, so it’s important for companies across industries to be prepared. By thinking ahead, they can ensure that their operations continue as smoothly as possible, even if delays happen again in the future. This means building resilience into their supply chains and adopting logistics strategies that can handle unexpected challenges.