On October 1st, 47,000 members of the International Longshoremen's Association (ILA), primarily dockworkers on East and Gulf Coast ports, went on strike after failing to agree contract terms with USMX, an alliance of port operators and employers.
Great article. One thing that I learned from studying military logistics in World War II is that the key to port efficiency is how quickly they can get shipments out of the port. People tend to focus on how much cargo a port can accept, but the true gating factor is how much it can get out or discharge. Otherwise, all the cargo piles up in the ports getting in the way of all the other cargo.
It may be that the real cause of lower inefficiency in American ports is with the trucking and rail system not being able to discharge fast enough.
when I visited a Toyota plant in Japan I was surprised by how much of the emphasis was on improving human productivity rather than automating it away. so they had all sorts of gadgets for making sure people had the right tools at the right moment.
Correct. Kaizen (continuous improvement process) and other lean manufacturing concepts are key to Japanese manufacturing and have been adopted by many nations worldwide. In my experience, their other business processes are not as robust.
"A McKinsey survey from 2017 found that while port automation reduced labor costs, it actually reduced port productivity between 7 and 15%, and the labor savings weren’t necessarily enough to justify the investment.
Which raises the issue of what is going on with China's fully automated ports, which it likes to brag about. Given that China has a huge supply of extremely low-cost labor by Western standards, how can automation like this (or in Chinese automobile assembly plants) possibly be justified?
Is it a case of China showing off its engineering talent to the rest of the world, which is undoubtedly impressive? Or just one more example of a gross misallocation of capital in centrally planned areas of the Chinese economy?
Thank you for these great and important points! What do you think about the analysis in this paper https://savannahceo.com/news/2015/10/why-arent-americas-shipping-ports-automated/ which compares the largely automated port of Rotterdam with the largely non-automated port of Oakland, and finds that each gantry crane in Rotterdam handles at least 80% more TEUs? There are many other factors at play than just automation, absolutely, but wouldn't automation contribue to the higher efficiency of the Rotterdam cranes, especially as they handle very large volumes?
The shading on figure 11 of the Knatz paper seems pretty misleading. Exceeded expectations is blue. Failed to meet expectations is red. Met expectations is… a slightly friendlier red? Am I missing something here? It looks like ports had realistic expectations on automation and they were met. That’s not the narrative of the graph though.
Umm... According to your map the US (pop. 333 million) has 4 automated terminals and also Australia (pop. 26 million, less than 10% of that) has 4 automated terminals?
And in terms of unloading rate by weight, your chart shows that Australia is #1 in the world. I'd say that's pretty telling.
What are Australian ports doing that's so efficient?
(I don't think ship waiting times are a reliable metric as that's impacted by the amount of traffic, not just the efficiency of the port)
The issue for the longshoremen union is not blind opposition to automation, but what is the actual reason for implementing automation and who benefits from the claimed productivity gains. As your article itself states, automation does not always translate into productivity gains, but it always translates into reduction in the human labor force.
Ask yourself did any grocery chain reduce their prices after implementing self checkout and reducing their human labor costs? Is automation whose only reason for implementation is reducing the human labor force always a good idea?
Highly recommend the Blood in the Machine by Brian Merchant for a better understanding of organized labor's opposition to automation.
Into the 1960s, Manhattan and Brooklyn were lined with wharves. You couldn't even get down to the rivers. It was all breakbulk shipping. Then the industry restructured with containerization. Now, Manhattan is lined with river parks. The deal with the union, after the strike, was to pension off longshoremen who lost their jobs. Given the performance improvements, it was a cheap settlement. When port automation improves enough to give a real advantage, it will be cheap enough to buy off the unions. Right now, automation is no magic bullet, at least if this article is to believed. It can't handle cranes as well as human operators nor under as adverse conditions. It moves cargo around the yard more slowly than humans. There are loading and unloading jobs that still require humans.
This article makes me wonder if Amazon engineers could improve port automation performance. Seems like an Amazon warehouse shares many characteristics with a port, just at a smaller scale.
It appears that going to 24/7 schedules is a low-cost option for improving port productivity. What if trucking companies were incentivized to shift to night-time pickups by reducing or eliminating their taxes for doing so. This would reduce congestion on roadways as well. In Oregon, where tuckers pay a weight-mile tax, it would be relatively easy to waive taxes owed for night time travel. In other states, other methods would be needed to refund gas taxes paid for night-time pickups and travel.
As a software industry person, I would be interested to see what could happen if an incredible founding team was able to attract power-law levels of VC dollars (think $200M) to eat in to this.
Start with software to manage truck reservations, built by a company that can obliterate other software competitors quickly via being highly capitalized - which can bring super-levels of sophistication & integration with existing systems with low adoption barriers. Take over that step.
Then pick the next step that doesn’t affect too-many union jobs, but extends the value into some material part of container movement - again with capital power to effect impact. Then, once integrated deeply into container flow, grow teeth. Go after the manual (union) jobs using $100M of PR, painting the unions & workers as somehow evil to the non-union US populous. ($100M is chump change to Andreesen Horowitz.) Assume the software company uses value-based / business impact pricing; if it succeeds in whacking significant union jobs, it scores huge.
This is a model Silicon Valley knows how to use.
I’m waiting for the entrepreneur with big enough b***s to try this.
$200M would be pocket change. Sure, some better software might improve things, but that would mean getting the various port users to agree on systems and protocols. Boston, Seattle and Baltimore, for example, couldn't even agree on a unified rail system in the early 20th century. (I'm guessing the Feds fixed this by fiat during World War II.) Worse, we've seen how well the private sector handles software with massive overruns, garbage unusable web sites, ridiculous cost overruns and so on.
Also, the unions have already been demonized. The problem isn't the unions. Automated ports aren't more efficient than those without automation. It isn't union work rules that are causing the problems. As the article points out, dock work requires a lot of skills that are hard to automate. Maybe in ten or twenty years, they'll have remote control cranes that can operate on foggy or high wind days and quicker automated cargo movers, but until then they need skilled people. You don't get skilled people by busting unions. Look at how well that worked for Boeing. In fact, existing ports would do better if they followed the Japanese model and listened to the gripes from the shop floor. Management gets the clue last, and the central planners of Silicon Valley are guaranteed impervious.
My guess, which is similar to that of others here, is that the problem is an impedance mismatch. The real fixes would involve building new roads and rail lines to better match the ability to load and unload ships with the ability to move stuff in and out of the port. Most US ports were built to match rail capacity. The Port of Seattle, for example, was built for James J. Hill's Great Northern line that linked the iron mines and winter wheat of the US north to Pacific shipping. Rail capacity is still important, but a lot of cargo gets moved by truck, and trucks are limited by their need for individual drivers and the local road system.
NYC does surprisingly well because it built a completely new port facility in the 1960s tied into an incredibly dense network of interstate highways and railroads. It can almost completely avoid city traffic, unlike the ports in many other US cities. If you've ever driven around that part of New Jersey, it's pretty impressive. That's what the Chinese did, and I'm guessing there are parts of China that look like New Jersey with Chinese signs.
This article reminds me just how marvelous, dynamic and capable humans are in a variety of adverse conditions, environments and scenarios, albeit flawed.
Want a perception system that can with reasonable confidence recognize discrete features under a variety of weather and lighting conditions, at various distances, even accounting for reflective surfaces? I present you human stereoscopic vision coupled with the posterior parietal cortex.
Need a transport mechanism capable of tactile manipulation that can navigate various terrains, traverse obstacles, scale small structures, and manipulate objects of various characteristics? I present to you humans, capable of bi pedal locomotion and naturally armed with manipulators, hands.
There are some complex, dynamic problems in physical spaces that humans are uniquely suited to doing - or at least the jury is still out on this. My point being that - despite working in robotics - I am still amazed by the human body and mind, flaws and all. We ourselves are a continous source of wonder and inspiration for the machines we build.
Great article. One thing that I learned from studying military logistics in World War II is that the key to port efficiency is how quickly they can get shipments out of the port. People tend to focus on how much cargo a port can accept, but the true gating factor is how much it can get out or discharge. Otherwise, all the cargo piles up in the ports getting in the way of all the other cargo.
It may be that the real cause of lower inefficiency in American ports is with the trucking and rail system not being able to discharge fast enough.
when I visited a Toyota plant in Japan I was surprised by how much of the emphasis was on improving human productivity rather than automating it away. so they had all sorts of gadgets for making sure people had the right tools at the right moment.
Correct. Kaizen (continuous improvement process) and other lean manufacturing concepts are key to Japanese manufacturing and have been adopted by many nations worldwide. In my experience, their other business processes are not as robust.
"A McKinsey survey from 2017 found that while port automation reduced labor costs, it actually reduced port productivity between 7 and 15%, and the labor savings weren’t necessarily enough to justify the investment.
Which raises the issue of what is going on with China's fully automated ports, which it likes to brag about. Given that China has a huge supply of extremely low-cost labor by Western standards, how can automation like this (or in Chinese automobile assembly plants) possibly be justified?
Is it a case of China showing off its engineering talent to the rest of the world, which is undoubtedly impressive? Or just one more example of a gross misallocation of capital in centrally planned areas of the Chinese economy?
Thank you for these great and important points! What do you think about the analysis in this paper https://savannahceo.com/news/2015/10/why-arent-americas-shipping-ports-automated/ which compares the largely automated port of Rotterdam with the largely non-automated port of Oakland, and finds that each gantry crane in Rotterdam handles at least 80% more TEUs? There are many other factors at play than just automation, absolutely, but wouldn't automation contribue to the higher efficiency of the Rotterdam cranes, especially as they handle very large volumes?
I have literally zero knowledge about port logistics and I enjoyed this article.
Why is USMX allowed to operate as a cartel. Each port should negotiate it's own contract with it's own union.
The shading on figure 11 of the Knatz paper seems pretty misleading. Exceeded expectations is blue. Failed to meet expectations is red. Met expectations is… a slightly friendlier red? Am I missing something here? It looks like ports had realistic expectations on automation and they were met. That’s not the narrative of the graph though.
Umm... According to your map the US (pop. 333 million) has 4 automated terminals and also Australia (pop. 26 million, less than 10% of that) has 4 automated terminals?
And in terms of unloading rate by weight, your chart shows that Australia is #1 in the world. I'd say that's pretty telling.
What are Australian ports doing that's so efficient?
(I don't think ship waiting times are a reliable metric as that's impacted by the amount of traffic, not just the efficiency of the port)
What are Australian ports shipping? Bulk materials from mining? I could see that being more automated.
Umm it seems its not that automation does not improve performance. It is the hamstrung and poorly implemented automation which is the problem
The issue for the longshoremen union is not blind opposition to automation, but what is the actual reason for implementing automation and who benefits from the claimed productivity gains. As your article itself states, automation does not always translate into productivity gains, but it always translates into reduction in the human labor force.
Ask yourself did any grocery chain reduce their prices after implementing self checkout and reducing their human labor costs? Is automation whose only reason for implementation is reducing the human labor force always a good idea?
Highly recommend the Blood in the Machine by Brian Merchant for a better understanding of organized labor's opposition to automation.
Into the 1960s, Manhattan and Brooklyn were lined with wharves. You couldn't even get down to the rivers. It was all breakbulk shipping. Then the industry restructured with containerization. Now, Manhattan is lined with river parks. The deal with the union, after the strike, was to pension off longshoremen who lost their jobs. Given the performance improvements, it was a cheap settlement. When port automation improves enough to give a real advantage, it will be cheap enough to buy off the unions. Right now, automation is no magic bullet, at least if this article is to believed. It can't handle cranes as well as human operators nor under as adverse conditions. It moves cargo around the yard more slowly than humans. There are loading and unloading jobs that still require humans.
This article makes me wonder if Amazon engineers could improve port automation performance. Seems like an Amazon warehouse shares many characteristics with a port, just at a smaller scale.
Great article!
great read!
It appears that going to 24/7 schedules is a low-cost option for improving port productivity. What if trucking companies were incentivized to shift to night-time pickups by reducing or eliminating their taxes for doing so. This would reduce congestion on roadways as well. In Oregon, where tuckers pay a weight-mile tax, it would be relatively easy to waive taxes owed for night time travel. In other states, other methods would be needed to refund gas taxes paid for night-time pickups and travel.
Wasn't Biden pushing for this during the COVID backlogs?
As a software industry person, I would be interested to see what could happen if an incredible founding team was able to attract power-law levels of VC dollars (think $200M) to eat in to this.
Start with software to manage truck reservations, built by a company that can obliterate other software competitors quickly via being highly capitalized - which can bring super-levels of sophistication & integration with existing systems with low adoption barriers. Take over that step.
Then pick the next step that doesn’t affect too-many union jobs, but extends the value into some material part of container movement - again with capital power to effect impact. Then, once integrated deeply into container flow, grow teeth. Go after the manual (union) jobs using $100M of PR, painting the unions & workers as somehow evil to the non-union US populous. ($100M is chump change to Andreesen Horowitz.) Assume the software company uses value-based / business impact pricing; if it succeeds in whacking significant union jobs, it scores huge.
This is a model Silicon Valley knows how to use.
I’m waiting for the entrepreneur with big enough b***s to try this.
$200M would be pocket change. Sure, some better software might improve things, but that would mean getting the various port users to agree on systems and protocols. Boston, Seattle and Baltimore, for example, couldn't even agree on a unified rail system in the early 20th century. (I'm guessing the Feds fixed this by fiat during World War II.) Worse, we've seen how well the private sector handles software with massive overruns, garbage unusable web sites, ridiculous cost overruns and so on.
Also, the unions have already been demonized. The problem isn't the unions. Automated ports aren't more efficient than those without automation. It isn't union work rules that are causing the problems. As the article points out, dock work requires a lot of skills that are hard to automate. Maybe in ten or twenty years, they'll have remote control cranes that can operate on foggy or high wind days and quicker automated cargo movers, but until then they need skilled people. You don't get skilled people by busting unions. Look at how well that worked for Boeing. In fact, existing ports would do better if they followed the Japanese model and listened to the gripes from the shop floor. Management gets the clue last, and the central planners of Silicon Valley are guaranteed impervious.
My guess, which is similar to that of others here, is that the problem is an impedance mismatch. The real fixes would involve building new roads and rail lines to better match the ability to load and unload ships with the ability to move stuff in and out of the port. Most US ports were built to match rail capacity. The Port of Seattle, for example, was built for James J. Hill's Great Northern line that linked the iron mines and winter wheat of the US north to Pacific shipping. Rail capacity is still important, but a lot of cargo gets moved by truck, and trucks are limited by their need for individual drivers and the local road system.
NYC does surprisingly well because it built a completely new port facility in the 1960s tied into an incredibly dense network of interstate highways and railroads. It can almost completely avoid city traffic, unlike the ports in many other US cities. If you've ever driven around that part of New Jersey, it's pretty impressive. That's what the Chinese did, and I'm guessing there are parts of China that look like New Jersey with Chinese signs.
This article reminds me just how marvelous, dynamic and capable humans are in a variety of adverse conditions, environments and scenarios, albeit flawed.
Want a perception system that can with reasonable confidence recognize discrete features under a variety of weather and lighting conditions, at various distances, even accounting for reflective surfaces? I present you human stereoscopic vision coupled with the posterior parietal cortex.
Need a transport mechanism capable of tactile manipulation that can navigate various terrains, traverse obstacles, scale small structures, and manipulate objects of various characteristics? I present to you humans, capable of bi pedal locomotion and naturally armed with manipulators, hands.
There are some complex, dynamic problems in physical spaces that humans are uniquely suited to doing - or at least the jury is still out on this. My point being that - despite working in robotics - I am still amazed by the human body and mind, flaws and all. We ourselves are a continous source of wonder and inspiration for the machines we build.