SAN FRANCISCO (CNN/Money) -
With the West Coast port shutdown now into its second week, Robert Parry, president of the Federal Reserve Board of San Francisco, has suggested that the strike costs the nation's economy about $2 billion each day. President Bush has now intervened, because management and labor can't seem to hammer out a key issue: technology.
The Pacific Maritime Assn. (PMA) wants to introduce common supply-chain innovations such as bar-code readers and centralized databases to speed the flow of containers. The International Longshore and Warehouse Union (ILWU) worries that those will eliminate jobs, and it wants to make sure the jobs that management is offering in return are under union jurisdiction.
Frankly, the upgrade is long overdue. The warehouse systems in place in ports today -- cargo data entered by hand, monitored on chalkboards, and reentered several times along the way -- are essentially unchanged from when they underwent their last technological revolution, in 1960.
That year, shore crews stopped loading materials onto ships using pallets, and instead packed them into larger, standardized containers. It was a brutal year for the union, whose ranks were decimated, dropping from 100,000 to 10,000 after the switch, according to Bob Goodwin, a transportation analyst with Gartner Group.
Problem is, U.S. ports are falling behind their technology-enabled foreign competitors, says John Pachtner, spokesperson for the PMA. Pachtner cites statistics using the industry's standard measurement of the number of containers moved per acre (of port space) per year.
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KaoHsiung in Taiwan leads the world with 19,000. Singapore and Hong Kong ship 18,000 and 13,000 containers per acre per year, respectively. The leading U.S. port -- Los Angeles/Long Beach -- ships only 4,000, and Oakland, less than 3,000. "Other ports, outside the U.S., can process cargo much more quickly than we can because of the information technology they have," Pachtner says. "We don't want to be left in the dust."
"Shipping is a hopelessly antiquated industry," Eric Bunger, a Forrester analyst, says in a report. "Importers, exporters, and shippers desperately need tools like bar-code scanners and logistics apps just to break even."
Representatives from neither labor nor management would specify the companies whose technologies are on the table, but possible candidates include Elex, FedEx, Maersk, Ryder Logistics, and UPS, according to Barry Jacobs, publisher of ASCET, a supply-chain research publication.
The technology would most likely be rolled out on two fronts. The first would be the implementation of Web-based cargo portals, where shippers and ports could coordinate manifests, track routes, and report delays.
The second would be the introduction of drive-through scanners, bar-code readers, and other dockside efficiency tools. Both would result in the loss of jobs, according to Goodwin, but nothing approaching the scale of what occurred in 1960. Moreover, all these tools are already in use in market-leading ports in Asia and other regions.
Gartner's Goodwin believes that the ILWU has proven "adaptable" to technology in the past, and that, inevitably, the technology will be used. "It's just a matter of how it rolls out and at what speed," he says. For America's importers and exporters, the sooner the better.
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