23. Automated Container Terminals
Author: Dr. James A. Fawcett, USC Sea Grant Maritime Policy Specialist/Extension Director (retired)
Media Contact: Leah Shore / lshore@usc.edu / (213)-740-1960
The movement of marine freight has evolved over the past sixty years. Once a slow, labor-intensive process where crates and barrels were individually moved by stevedores and longshoremen[1] onto the wharf and in cargo holds of freighters—so-called “break-bulk” shipping— we now see thousands of identical intermodal cargo containers carrying a plethora of products moving to and from ports to warehouses, stores, and factories throughout our nation.
The Container Revolution
As the inventor of the intermodal shipping container, Malcolm McLean’s vision in 1956 of a faster and more efficient goods movement has become a standard worldwide. Now a faster and less labor-intensive process, we see these large intermodal containers stacked at shoreside terminals. On their way to or from huge gantry cranes, the “boxes” are loaded onto equally huge containerships that swiftly sail between continents. This container revolution has accompanied and facilitated international trade, where manufacturing now chases low-cost labor to produce goods that are largely international in nature. Everything from cell phones to clothing to hardware is frequently made overseas, where the cost of production brings us goods at prices reflecting cheaper overseas labor.
Yet, cheaper labor costs do not always reflect non-market costs that are less visible, such as the loss of U.S. jobs and the environmental impact of transporting both finished and intermediate goods across oceans, often to the North American continent. The focus of this article will be on the latest dimension in moving containers when they arrive at our shores, the automated container terminal, designed to further speed the transfer of boxes to and from ships. In a future article, we’ll address the consequences of maritime labor.
Reliance on Port Labor
Evolving as international trade boomed, the seemingly sleek movement and transfer of containers from ship to shore has inspired advocates to seek faster movement and lower costs. As manufacturing sought to reduce the cost of labor, it looked to offshore labor, creating the need for both timely and efficient means of moving these goods produced overseas to U.S. markets. Both goods production efficiency and goods movement efficiency are partners in a system that continues to seek low labor costs. Thus, causality is muddled: which came first, cheap labor or the ability to move vast volumes of cargo quickly and cheaply from one offshore country to another? Clearly, they are intertwined.
What we call “traditional” container terminals are those where dockworkers both operate the equipment that physically move containers and manage the administrative functions that document the container’s identity and location on vessels, the container terminal property, and beyond. Digitization and cutting-edge software have replaced some of those functions, but until now, physical movement of the boxes has remained a labor-intensive job, albeit less intense than with break-bulk shipping and with far fewer dockworkers (most of whom in earlier times were unskilled). However, with new technology, even that aspect of the process is becoming more automated. Writing in the online magazine, Container Xchange, Marketing Lead Florian Frese says:
Automation involves the mechanic, hydraulic, pneumatic, electric, electronic, and computerized elements or systems to control equipment and processes…. [we] can categorize two levels of automation in container terminals into fully automated and semi-automated. When the stacking yard and horizontal transfers between the quay [wharf] and the yard are all automated, the container terminal is considered to be fully automated. Automation that has begun in the stacking yard but has not reached the quay all-in-one process is considered to be semi-automatic. Quay cranes [ship-to-shore cranes] are the operational element whose automation is least developed, so accordingly, it is predicted that they will be the equipment with the greatest technological advancement during the coming years.[2]
Hence, prototype automated operations of ship-to-shore (s-t-s) cranes are starting to be tried. In an interesting analysis of the speed of automated container handling, Liu-Liu Li, Young-Joon Seo, and Min-Ho Ha[3] cite examples from the 20 busiest Chinese ports showing a transfer efficiency rate as great as 39.6 containers per hour from ship to shore utilizing automated s-t-s cranes. The established optimum efficiency in human-operated s-t-s cranes is 30 movements per hour. It should be noted that speed is important, but safety is more important since dockworkers must be on the shipboard to unlock containers from those below when unloading and vice-versa when loading.
Modernizing the Container Terminal
The upshot of technology is that it now makes it possible to automate the most visible shoreside component: the container terminal. If containerization in the 1960s was a game-changing evolution in technology, automation of container terminals is now seeking a similar transformation for dock operations. Beginning at the Port of Rotterdam, Europe’s largest and busiest seaport, the terminal operator European Container Terminals (ECT) opened the first automated terminal almost 30 years ago.[4] Since then—slowly—terminal operators worldwide have explored this most recent technological transition in the industry. And, in 2021, after a decade of construction and prior years of design, planning, and permitting, the first major automated terminal has opened in the Port of Long Beach. Titled the “Middle Harbor Redevelopment Project,” it is referred to as the Long Beach Container Terminal (LBCT).
Port of Long Beach: The Long Beach Container Terminal
Created from two, much older container terminals at Pier E in Long Beach, the LBCT was created by adding 55 acres of landfill to obsolete slips, producing a 345-acre (140 ha)[5] terminal with 4,200 feet of wharf in three large berths and 10 ship-to-shore cargo gantry cranes that are able to accommodate some of the largest containerships in service.[6] As a landlord seaport, the Port of Long Beach leases terminals to operators on long-term leases. The previous operator of LBCT was Orient Overseas International Ltd. (OOIL), a Hong Kong-based company, owner of Orient Overseas Container Line (OOCL) with a long history of serving the POLB. However, the agreement to build the LBCT under a 40-year lease created a dilemma for China Ocean Shipping Corporation (COSCO), the mainland Chinese company seeking to purchase OOIL (a private Hong Kong company). As reported by the Institutional Investing in Infrastructure website[7]:
The Hong Kong-based shipping line last year said it would sell the container terminal after it was taken over by China’s COSCO Shipping Holdings Co. The U.S. government, which can regulate mergers for antitrust and security reasons, stated that COSCO must sell its rights to the Container Terminal before it could buy OOIL.
The North American arm of the Australian firm, Macquarie Infrastructure and Real Assets, purchased the terminal in 2019 for US $1.78 billion. Now in operation, the terminal is the first fully-automated terminal to be built in the U.S.
By automating the movement in container terminals, the capacity of the three berths is estimated at 3.3 million TEUs per year. In 2020, the port’s busiest year on record, it moved 8.11 million TEUs[8] and the LBCT was not even fully operational yet; thus, the expanded capacity of the terminal is anticipated to increase the port’s throughput in future years.
Port of Los Angeles: TraPac Los Angeles Container Terminal
Following in the wake of the LBCT and squeezed into 220 acres (89 hectares), the TraPac[9] container terminal became a tenant on the Los Angeles side of the port complex at Berths 136-147 in 1987 and is located at the northeast end of the West Basin. Its four berths, two of which are automated, are spread along a 4,630-foot wharf. Unique to the Port of Los Angeles, the terminal also hosts an automated intermodal container transfer facility (ICTF), an adjacent railyard facilitating the convenient movement of domestic rail cargo to other parts of the nation. By virtue of its proximity to the terminal of which it is a part, containers move directly from the container yard waiting for railcars without the necessity first to be loaded on chassis’ and hauled by a Utility Tractor Rig[10] (truck) to a distant ICTF for loading onto rail. The company estimates a capacity of 1.6 million TEUs per year in its 2019 Sustainability Report[11].
The terminal is leased from the Port of Los Angeles by the Japanese line, Mitsui O.S.K. Lines, a long-term port tenant. Despite its constrained location, where only two of the four vessel berths are proximate to the automated structure, the adjacent ICTF provides efficiency in loading railcars for distant transport.
Assessing the Benefits of Automated Containers at our Ports
Both sides of the port complex now have an opportunity to assess the benefits of automated container loading and discharge over the next few years. Both terminals are about middle-sized—325 and 220 acres—in a port complex with larger terminals such as the Maersk terminal in the Port of Los Angeles (covers 484 acres) and others such as the Total Terminals Incorporated in Long Beach (covers 380 acres). One metric of success to shippers and carriers, as well as the terminal itself, will be whether the cost of automation will compensate for increased throughput because of efficiencies of speed and whether the ultimate delivery end of the supply chain, either local or distant, will greatly benefit from the increase in speed provided by the terminals. Time will tell.
However, the other dimension of automation is the direct and indirect costs that it imposes on the labor force and the community. This is a classic example of factor substitution where capital is invested in reducing the cost of labor, a decision that will have impacts in the region where labor (and by that, we mean on-dock truck drivers, heavy equipment operators, mechanics, longshore labor, maritime clerks, and other employees at the two ports) is forced to seek other employment.
Measuring Air Quality Impacts
And it goes beyond even that. The region currently does not meet federally mandated air quality standards, therefore it raises the questions of (1) will increased operations at the ports cause additional deterioration? (2) will local (within 500 miles) freight delivery by truck increase both air pollution and road congestion? and (3) Will additional trains moving from the port be able to utilize new technology to reduce their impacts on the air basin as they move goods to the Midwest for additional distribution?
The ports have developed and strengthened their Clean Air Action Plan to respond to calls for cleaner operation and to incorporate the results of data indicating opportunities for further remediation. This includes considering the new sources of electric power that will soon be locally available as retrofits to some of the port heavy equipment (new battery and perhaps fuel cell local power supplies). This raises additional questions: Will an automated facility be able to take advantage of these technological improvements? And most of all, will the demand for increased cargo handling capacity at the ports justify the costs of automated cargo handling equipment?
All of these are inevitable questions when a major change in technology emerges, to which we do not yet have answers. But a big change is upon the goods movement industry. It will take years to assess the impact of these changes, and the ports are aware that their actions will have impacts on the regional labor market and the environment. As members of the public, the outcome will be ours to assess in the coming years.
References
[1] Before containerized shipping, stevedores were the laborers who worked aboard ships to manually load and unload cargo. Longshore dock workers at that time worked the cargo once it was on the docks. Since the advent of containerized shipping, longshore dock workers have become skilled laborers as heavy equipment operators, mechanics, truck drivers, clerks, and other skilled occupations handling cargo both on shipboard and on the docks.
[2] Frese, F. (08.01.2019). Container Terminal Automation and its Benefits explained. Container Xchange. https://container-schange.come/blog/container-terminal-automation.
[3] Li, L-L., et al. (06.02.2021). The efficiency of major container terminals in China: super-efficiency data envelopment analysis approach. Maritime Business Review, (06:2:2021), 173-187.
[4] Witschge, L. (07.10.2019). Wired: Rotterdam is building the most automated port in the world.https://www.wired.co.uk/article/rotterdam-port-ships-automation.
[5] Ship Technology. (04.28.2013). Port of Long Beach Redevelopment Project, California. https://www.ship-technology.com/projects/port-of-long-beach-middle-harbor-redevelopment-project-california/.
[6] Moffatt & Nichol. N.d. Middle Harbor Container Terminal. https://www.moffattnichol.com/project/middle-harbor-container-terminal. Moffatt & Nichol is a major marine infrastructure engineering firm based in Long Beach.
[7] Zander, A. April 30, 2019. Macquarie buys Long Beach terminal for $1.78b. https://irei.com/news/macquarie-buys-long-beach-terminal-1-78b/.
[8] Watkins, E. 19 Jan 2021. Lloyd’s List, Maritime Intelligence: Port of Long Beach sets annual container throughput record. https://lloydslist.maritimeintelligence.informa.com/LL1135464/Port-of-Long-Beach-sets-annual-container-throughput-record.
[9] TraPac. N.d. TraPac History. https://www.trapac.com/history/. TraPac was founded in 1985 as a wholly owned subsidiary of the Japanese container line, Mitsui O.S.K. Lines, Ltd. (MOL), and is based in Wilmington, CA. It operates container terminals also at Oakland, CA (Berths 30-32) and Jacksonville, FL (JaxPort) at Dames Point.
[10] Utility Tractor Rig. A tractor used to haul containers on chassis short distances, often on container terminals.
[11] TraPac Los Angeles. (2019). Sustainability Report 2019. https://www.trapac.com/wp-content/uploads/2021/03/TraPac-2019-Sustainability-Report.pdf#:~:text=TraPac%20was%20the%20very%20first%20container
%20terminal%20in,capacity%20from%20882%2C000%20TEUs%20annually%2C%20to%201.6MM%20TEUs.