Dive Brief:

• Talks between the International Longshoremen's Association (ILA) and the United States Maritime Alliance (USMX) broke down Wednesday over a proposal for fully automated ports, JOC.com reports.
• The negotiations that began this week sought to extend the current contract between East Coast dockworkers and ports for five more years, 10 months ahead of the Sep. 30, 2018 expiration date.
• However, the two parties reportedly disagreed over what defines a fully automated port. The USMX seeks to negotiate in favor of unmanned vehicles on terminals, but the ILA protests any automation that would remove labor from operations.

Dive Insight:

Talks between port employers and dockworkers are like most other union battles — employers are looking to maintain a business advantage, while workers worry it is at their expense.

But unlike most negotiations, talks between either coast's port representatives and their dockworkers are more likely to result in bitter battles than a strong consensus, up until the labor contract nears expiry. Most often, the negotiations are seen as "talks for labor peace" rather than a fight for increased pay or benefits.

The reason is that dockworkers have incredible leverage over the U.S. economy. Two labor unions control most of the labor present at U.S. ports, and as a result, have a remarkable ability to mobilize against their employers. Meanwhile, ports — while still businesses — are mere middlemen in supply chains who may be punished by shippers, carriers and logistics providers alike for shipment delays. When dockworkers strike, as they did under the Obama administration, it can cost the economy billions of dollars.

It's a precarious position to be in for ports and a great one for dockworkers who to this day may receive six-figure salaries. Dockworkers benefit from delaying talks as long as possible in order to place pressure on their employers, while port associations benefit most from securing long contract terms as early as possible in the process.

JOC.com reports the negotiations broke down over a definition of fully automated terminals, or rather, the concept of fully automated terminals existing in the United States. Such facilities are hailed worldwide for their efficiency, but the ILA reportedly refuses to consider it, as it would open the gateway to two-or-three-staff terminals, which would threaten longshoremens' livelihoods.

@ILAUnion President Harold Daggett reaffirms union’s opposition to fully automated terminals.

— Int'l LongshoreAssoc (@ILAUnion) December 5, 2017

Ports, meanwhile, are facing pressure from shippers to find innovative ways to increase throughput and visibility in order to make the U.S. supply chain more competitive. In theory, if the Port of New York and New Jersey cannot keep up, shippers could choose to ship through a Canadian port instead, which may have fewer labor restrictions.

Perhaps that's why USMX chose to broach the issue of automation by proposing to allow unmanned vehicles at terminals. The strategy may be to slowly allow more and more automation at ports to increase global competitiveness. But the topic is a sore point for the ILA, who "abruptly" ended the talks according to the report.

Shippers need not worry yet — nor the next few times talks break off — but the reasons behind the breakdown illustrate the challenges ports face as they seek to modernize their operations, in line with supply chain demands.