Yes, America Should Automate Dock Work

As the global economy has grown in recent decades, so too have the container ships that transport cargo to and from the world’s ports. They are growing in numbers and in size. And to keep up with all those containers, ports have introduced advanced automation. In fact, the world’s first fully automated port terminal—the Delta Dedicated North Terminal operated in The Netherlands by Hutchison Ports ECT Rotterdam (ECT)—is now more than 30 years old. ECT has used technologies such as automatic guided vehicles and automatic stacking cranes to whisk containers to and from the port’s quay in a constant rhythm since the summer of 1993. As the company noted in marking the port’s 30-year anniversary, “Any staff who joined ECT in the 21st century does not know any better. All this is thanks to a large group of ECT employees who started working on automation in the 1980s.”

But here in the United States, a different story is unfolding. To this day, only three U.S. port terminals are fully automated, only three more are classified as semiautomated—and if the International Longshoremen’s Association (ILA) get their way, that’s how the story will end. With 45,000 dockworkers on strike from Maine to Texas, ILA President Harold Daggett joined a picket line on October 1 in North Bergen, New Jersey, and said defiantly: “We are now demanding $5 an hour increase in wages for each of the six years of a new ILA-USMX Master Contract. Plus, we want absolute airtight language that there will be no automation or semi-automation, and we are demanding all Container Royalty monies go to the ILA.” The ILA and the ports’ employer group, the United States Maritime Alliance (USMX), reached a temporary deal on October 3, extending the dockworkers’ contract until January 15, 2025. Dockworkers reportedly will receive a 62 percent wage hike over six years—but the automation issue remains unresolved.

This is bad news. Another strike could trigger shortages and a near-term spike in retail prices if it drags on. But even if the next round of negotiations is settled quickly, giving in to the dockworkers’ demand not to automate ports will cost consumers and the economy in the long run, because dockworkers are asking for higher wages without higher productivity. It doesn’t add up. This is a basic rule of economics: To earn more, workers need to be more productive—and the biggest factor in driving productivity growth is technological innovation, automation in particular. For port workers, that means using advanced technology and logistics to move steadily increasing numbers of containers through ports faster and more efficiently. Conversely, if labor costs go up while productivity stalls, as U.S. dockworkers are effectively demanding, then those costs will be passed down the line, hitting consumers and the other 160 million U.S. workers in industries tied to imports or exports. And make no mistake: That is the path the United States is already on. No American port ranked among the top 50 ports in the World Bank’s 2023 Container Port Performance Index, which assesses ports’ efficiency. Charleston came closest, ranking 53rd, followed by Philadelphia, ranking 55th.

Other nations don’t put up with the kind of extortion the ILA is attempting. China has vastly more modern ports than the United States, as do most other advanced economies. And yet U.S. dockworkers are feeling confident about their position. As the Associated Press reports, “Organized labor enjoys rising public support and has had a string of recent victories in other industries, in addition to the backing of the pro-union administration of President Joe Biden.” Meanwhile, the ILA also has touted a “productive meeting” Daggett had last November with former President Donald Trump, during which Daggett expressed to Trump “the threat of automation to American workers,” and “President Trump promised to support the ILA in its opposition to automated terminals.”

It’s time for all concerned to snap out of their denial. U.S. productivity growth is already close to stagnant. A victory for dockworkers would signal to other unions and policymakers that it is not just okay to oppose automation, but a noble cause. It’s not. It’s an example of false alarmism that misrepresents how automation affects employment. America didn’t become the world’s leading economy by giving in to rent-seeking special interests, which is the role dockworkers are now playing. Caving to their demands would set a dangerous precedent.

Last updated: October 7, 2024.