Improving Productivity in U.S. Marine Container Terminals (1986)

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U.S. MARINE TERMINAL TECHNOLOGY AND OPERATION Technology Development and Application in U.S. Marine Terminals FRANK NOLAN, JR. The traditional marine terminal, equipped with labor, rope- nets, slings, crowbars, and hand trucks, was phased out during the 1940s as the wood pallet and forklift truck came into general use. This was just the step in the rapid evolution of cargo handling. It was followed by the through shipment of unitized loads, the introduction of roll-on/roll-off systems, and finally the onset of containerization. Each change evolved from a primitive form to the more sophisti- cated result: the pallet from the cargo tray; the modern container from the many reusable military containers in use during World War IT; the straddle carrier from the lumber carrier of the 1930s; Frank Nolan, Jr., is associated with Container Transport Technology Corp. He worked for International Terminal Operating Co., Inc. for many years and retired as vice-president of engineering. Mr. Nolan recently chaired a subcommittee of the Marine Board, which appraised technology development and application in marine terminals. His paper summarizes the work of that group. 104

105 and the container crane from the many earlier shipside gantry crane types. The overwhelming motivation for the evolution was profit and the need to remain competitive. Skyrocketing labor costs de- manded technological changes to improve productivity. In this perspective one may conclude that there is nothing new under the sun, but each change along the way required departure from tradition and a willingness to step into the unknown or at least the unproven. - The energy crises of the 1970s followed by high-interest rates, the strong dollar with resultant trade imbalances, and the reces- sion of the late 1970s that brought on intense competition forced the maritime industries to reduce staff, eliminate research and de- velopment (R&D), and even cut back on maintenance and repair in order to survive. Unfortunately, these are the very expendi- tures that are necessary to sustain and advance technology, and to maintain a competitive posture. Not only had private industry curtailed R&D expenditures, but the Maritime Administration (MarAd), a significant contributor to R&D, has been under severe government pressure to pare expenditures in the wake of enormous budget deficits. To aid MarAd in assessing the present status of the maritime in- dustry, the Marine Board of the National Research Council formed the Committee on Strategies to Improve R&D in the Maritime In- dustry, which in turn formed work groups to evaluate each segment of the industry. The objective of the Marine Terminal Work Group was to doc- ument R&D and to identify opportunities for improvements. To carry out this assignment the work group developed four general tasks and assigned each task to one or more individuals. Eight papers were prepared, discussed in committee, revised, and finally worked into a single preliminary committee report. The report includes the following: . rail operator's intermodal assessment; . civil engineering aspects, vis-a-vis deep-water requirements; labor productivity and manning levels; equipment and facilities; . management systems; and bulk cargo terminals—state of the art, and R&D assessment.

106 Until recently the shipper or freight forwarder had little from which to choose in determining the routing of cargo. Various gov- ernmental regulations were responsible for the establishment of artificial rate structures, and limited the degree to which an en- trepreneur could provide through service. Deregulation has elim- inated these roadblocks and now permits a single entrepreneur to provide door-to-door transportation. This will intensify compe- tition among all transport segments along alternative routes and will tend to align transport along the least-cost path, thus opening the door to the systems approach to transportation. THE RAIL PERSPECTIVE The recent introduction of double-stack cars has opened new vistas for long-haul, heavily traveled rail routes. Rates have come down about 30 percent in these operations. Most double-stack volume has been the result of marketing by steamship carriers. Railroads have not encouraged its growth as profit margins are very small. Problems foreseen include right-of-way maintenance costs, bridge clearances, equipment service life, and cost of in- stalling interbox connectors on some types of cars. As growth of double-stack service takes place, there will be pressure for con- struction of new, efficient intermodal rail terminals, designed to handle the rapid high-volume through-put associated with the marine interface. CIVIL ENGINEERING ASPECTS Government cost-sharing policy for harbor improvements, as well as the economic pressure for deeper ships, will affect marine terminal costs. There are existing techniques for protecting ter- minals against subsidence when berths are dredged beyond their design depths. In the future, marine terminals wit} be expected to bear the cost of structural improvements as well as the cost of initial and maintenance dredging. These costs will likely be a factor in defining the least-cost route in the transport chain.

107 LABOR PRODUCTIVITY AND MANNING LEVELS Generally speaking, labor has not impeded the development and application of most competitive technology. However, in those ports served by the International Longshoreman's Associa- tion (ILA), longstanding labor and management agreements have denier! much of the cost-saving benefits of new technologies to the terminal operators. Manning levels of shipside gang units in these areas are two to three times the size of those in most areas of the world, and crane productivity in all areas is confined to a narrow band. In spite of this disadvantage terminal operators have contin- ued to be innovative. The resultant loss of potential profitability has made it impossible to pass savings along to the terminal user. This, too, will affect the least-cost route determination. EQUIPMENT AND FACILITIES Container size and capacity changes that introduced the 45- foot container and the 24-ton, 20-foot container provide shippers with optimum equipment for certain cargoes, but an entire series of problems develops down the line with existing equipment designed to prevailing international standards. It is expected that these new containers will continue to be used in closed systems that are economically justified. High- and intermediate-density, yard-stacking systems have been introduced, employing straddle carriers with three-high stacking capability, rubber-tired yard gantry cranes, and rail- mounted yard gantry cranes. Some of these systems will permit a high level of yard automation, such as that employed by Matson at Los Angeles. Improvements have been made in gate design, perrn~tting effi- cient document transfer and voice link from truck to tower. Deck- lashing systems, though underutilized, can eliminate the costly installation and removal of lashing and securing devices. Equip- ment has been developed to permit the radio transmission of data from portable units to update computer data files.

108 MANAGEMENT SYSTEMS The most significant progress in recent years in marine termi- nal operations has been in computer application of management systems. Even so, technology is available to make greater strides in the near future. Tests are under way to determine the e~ec- tiveness of machine-readable labels to identify equipment and its cargo at selected stations. In time it is expected that a complete, three-dimensional yard location plan can be automatically taken to locate every piece of equipment in the container yard. Auto- matically logging equipment in and out of the gate, as well as on and off ships, is also envisaged. Standards must be developed and established for the coding of required information to facilitate its transfer along the transport chain. This, however, is outside the control of the marine ter- minal operators. It is a problem that can best be addressed by the maritime industry as a whole in cooperation with standards · , — organizations. BULK CARGO SYSTEMS Most of the technical problems uncovered in the analysis of the intermodal marine container terminal were found to be present in bulk terminals huge capital requirements, no dependable future volume to amortize investment, and curtailment of R&D funds when profits are squeezed. Enormously expensive facility expan- sion during the recent energy crisis is now surplus as world coal trade stumped after the crisis. Vast strides have been made in improving productivity in recent years, but little is being done now to expand the application of technology or to develop new technology. SUMMARY The Marine Terminal Work Group envisions the need for contin- ued and expanded development and application of existing tech- nology in pursuing the system concept. The historical parochial outlook within the marine terminal industry must give way to the overall economics of the transport chain. Recent government deregulation of the transportation industry has opened the door

109 for the transportation entrepreneur to provide door-to-door ser- vice. The marine terminal industry must be prepared to react to dislocation brought about by competitive adjustments in other links of the transport chain that might directly affect the routing of cargo. Innovative operators will be able to control their destiny by influencing system economics in their favor. The single greatest deterrent to innovation is the huge capital outlay required to reach the ultimate level of automation, and the uncertainty of the end result. - While the marine terminal industry is a highly competitive one, its economics are borne equally by all operators, foreign and domestic. However, any inefficiencies suffered in U.S. ports may adversely affect the competitive position of exporters competing for Third World business. Technology available to marine terminals in the United States is as advanced as that available to the world as a whole. Marine Terminal Operations in the United States DAN RAYACICH Born in the U.S.A." is the theme of a popular song, and most certainly a true statement about containerization. Cargo-handling costs were the largest single expense in the carriage of ocean-borne cargo, and containerization was the made-in-the-U.S.A. solution. The new technology was soon exported overseas, and its inherently superior productivity led to worldwide acceptance. It is ironic that we are meeting here out of concern that container-handling productivity in U.S. ports may have declined below levels achieved overseas, that the teachers may have been outstripped by their former pupils. Containers cannot normally be delivered directly from shipside to the next link in the intermodal transport chain (truck, rail, onsite CFS [container freight station; or rail facility), and vice versa. The container terminal is the temporary repository for in- transit storage of containers while notifications are being sent to Dan Rayacich is president of Rayacich Maritime Consultants.

110 consignees, containers arrayed for orderly delivery, Customs pro- cedures satisfied, documentation completed, arrangements made for pickup, and the like. In the export direction, assembling containers at the terminal in a well-planned array so that ship- loading operations can be done swiftly and efficiently, thereby avoiding ship delay at the berth, is also an important function of a container terminal. The operating productivity, as containers are handled and rehandled in the course of passing through the terminal, is usually stated in terms of containers handled per shift, per crane, or in terms of annual container throughput. CONTAINER-HANDLING SYSTEMS From the earliest days of containerization, not much more than 30 years ago, the pioneering American container carriers devel- oped different container-handling systems. Sea-Land decided on the chassis system, and it is still its method of choice. Matson Navigation Company preferred a stacking system using strad- dIe carriers, and that is still its principal mode of operation. Equipment manufacturers promoted still different systems by de- veloping specialized machines for handling containers. PACECO's transtainer was the basis for a high-density stacking system com- monly called the transtainer system. Comparable machines pro- duced by other manufacturers are called transfer cranes, rubber- tired gantry cranes, yard cranes, and so on. Forklift manufac- turers have equipped their very large forklifts with spreaders to handle containers from their upper corner castings and with high- lift capability to enable stacking of containers three high. The corresponding container-handling systems are called port packer systems, top-lift systems, and the like. The sidepicker, another variation of the forklift, came into common acceptance as a sup- plementary machine to handle the stacking of empty containers. Also, there are combination systems; for example, one Bay Area terminal uses port packers for the ship operation, transtainers for receiving and delivery, and a sidepicker for stacking empties. The latest development is based on rail-mounted yard cranes that span 20 container rows and operate in semisutomated mode by means of computer control systems, as exemplified at the Port of Richmond.

111 - ~ ~ - ~= =~ - SHIP STORAGE CRANE TRUCK & CHASSIS (ON CHASSIS) TRUCK FIGURE 1 Truck and chassis container-handling system. fat ~ STRADDLE SHIP CRANE CARRIER FIGURE 2 Straddle carrier container-handling system. ~~--,ua~.,=~ GROUND STRADDLE STORAGE CARRIER TRUCK Currently, chassis systems are used in 46 percent of the con- tainer terminals in the United States, and 54 percent use stacking systems that are quite widely distributed among the types just discussed. Which System Is Best? Figures 1 through 5 depict typical container-handling systems. Each has advantages and disadvantages. If one should ask hands- on operating personnel which system is best, they tend to support whatever system is provided in the terminal in which they work. Often, generalizations are made concerning the basis for selec- tion of a given system. For example, if backup land is cheap and plentiful and paving costs are moderate, a chassis system is said to be the most advantageous. If land is costly and limited, a stacking system might be the choice.

112 Of, ^___^ _ ~4) SHIP CRANE ~4 ':. ,~'t1~_ GROUND YARD TRUCK TRAVEL CRANE STORAGE FIGURE 3 Travel crane container-handling system. ¢~_~1 l~ 111111~11111 TRAVEL CRANE TRUCK BRIDGE GROUND SHIP CRANE . TRUCK & CHASSIS CRANE STORAGE TRUCK FIGURE 4 Bridge crane container-handling system. CONTAINER SHIP ll Ion,, ~~ 11 · ~ ~ ~ 1 111 ~ ~ \~C~E 1 k ~~ , Y~G~Y rim - ;~ f1 1[ ~ ~ __ . . ._ F.. ... I I Van CONTAJNER ~ CONVEYOR FIGURE 5 Overhead container-handling system. , ~ YARD GANTRY 1 ~11 ~ ~~] TRANST~NER The logical approach in determining the most suitable con- tainer-handling system is to apply cost minimization techniques, taring account of the following factors: 1. Equipment expense initial capital cost . annual operating costs annual maintenance and repair costs

113 2. Land and infrastructure expense . initial capital cost . construction costs . annual maintenance and repair costs 3. Labor expense and overhead Other considerations are the expected cargo (container) flows, traditional labor practices, safety, and capital requirements and limitations. All these factors affect the economic feasibility, which should be the basis for selecting a particular system. It follows that the traditional measure of productivity should be used; namely, productivity = cost/containers handled. Public Versus Private Container Terminals Notwithstanding that we consider the United States to be a bastion of free enterprise, about 88 percent of the container terminals in this country are provided by a public body, a port authority at the city or state level. When at the state level, in Hawaii for example, a single port authority controls all ports in the state. More commonly, the port authority's jurisdiction is at the city level. For example, all of the following port authorities in the San Francisco Bay Area are independently functioning port bodies, despite their proximity: Port of San Francisco Port of Richmond Port of Sacramento Port of Benecia Port of Oakland Port of Redwood City Port of Stockton Port of Alameda Comparable groupings of autonomous port bodies can be found in Puget Sound, Los Angeles/Long Beach, Chesapeake Bay, Gal- veston Bay, and the Mississippi River. A container terminal within a given port can be: a common use facility, available to any vessel; ~ a preferential use facility, usually available to several spe- cific lines, but available to others if not fully occupied by the preferential users; and . an exclusive use facility, usually placed under the control of one line. However, that line often has the option of bringing in others as customer accounts. An exclusive use facility can be very

114 near to a private facility, with only minimal involvement by the port authority. OVERVIEW OF OPERATING PROCEDURES The description of operating procedures that follows is quite general, describing operations activities that most container ter- mina] operators would find familiar, while probably not applying entirely to any particular terminal. The hypothetical terminal is assumed to use a stacking system and to have a current type of interactive real-time computerized information system with com- puter displays and terminals at key operating positions. Operations Control Center The necessary coordination and control of all container termi- nal activities are handled by personnel at the operations control center (OCC). There is a flow of information between OCC and all other functions of the container terminal concerning container movements and status. Often, key personnel of OCC are located at elevated offices or in an operations tower well above the con- tainer stacks, for unobstructed views of the container terminal. From that vantage point, they are readily able to confirm by visual observation the container-handling activities that are being reported to them by telephone, pneumatic tube, radio, computer, and other means of communication. Export Container Flow to Terminal Well in advance of a vessel's scheduled arrival, the steamship company will set up its documentation for export movement of containers to be loaded on that vessel, and corresponding doc- umentation will be organized at OCC. Booking information is sent to the terminal, accompanied by requests to release empty containers and chassis to shippers. Prior to the vessel's arrival, the steamship company sends an inbound stow plan to the termi- nal that identifies the containers to be discharged from the ship and consequently indicates which container slots on the ship will be available for loadback. The freight projection (provided by the booking department) identifies expected container types, the

115 length, and the weight of the export containers to be received from the shippers for that voyage. This flow of information enables OCC to implement its plan- ning program toward efficiently managing the expected flow of export containers through the terminal and onto the ship. Space is reserved in the outbound marshalling area for the planned ex- port load. The gate is advised to route truckers bringing export containers for that sailing to that portion of the stacking area set aside to receive these containers. The plan is updated as changes take place. Export CFS and rail containers are coordinated into the plan. An outbound stow plan is prepared which relates yard container locations to ship stowage positions, after which all is in readiness for the ship-Ioading operation. There is a point where a ship outbound stow plan should be stabilized especially when a terminal is handling several vessels concurrently by instituting a cutoff time, after which no further export containers should be received for that ship's sailing. Vessel Discharge Planning With the ship inbound stow plan as reference, Operations Plan- ning will develop a ship discharge plan, assigning containers to be discharged to specific locations in the stacking area. Also, the unloading sequence is formulated, with due regard for containers requiring special handling. If there are overstow containers, they must be removed or relocated to gain access to the containers to be discharged. They are included in the new ship outbound stow plan to minimize outturn problems at subsequent ports of call. Seaworthiness Aspects The outbound load plan provides for the shipboard positioning of the export containers with due regard for the seaworthiness of the ship and its cargo, as well as for the efficiency of cargo- handling operations at succeeding ports of call. The seaworthiness factors are: . ship stability, as defined by the location of the center of gravity;

116 ship's trim, both longitudinal and transverse; ship's bending moment; ship's deck strength; racking strength of ondeck containers; lashing strength; container support on all four corners for ondeck containers ,, and ~ special requirements: placement of reefer containers, loca- tion of hazardous cargo containers, adequate column height of below-deck containers to ensure hatch cover clearance, and maxi- mizing containers for maximum revenue. The Gate Complex The gate complex is the control center for containers entering or leaving the terminal by truck. In-gate truck lanes are equipped with platform scales for weighing containers. In an up-to-date terminal, the weight readings would go directly to the gate clerk's video display terminal. The gate clerks ascertain that the trucker's documentation is In good order, inspect the container and chassis for damage, and prepare the equipment interchange report. En- ter~ng truckers are directed to dro~off or pickup areas for their containers. Exiting truckers are required to show their author- ization to haul away containers or equipment and that Customs requirements have been met. Ideally, gate clerks use the interac- tive capabilities of their computer terminals to verify container availability, to ascertain locations of containers and equipment in the yard, and to determine whether charges or assessments are to be collected. In general, the gate clerk uses the computer system to key in data and extract information toward accomplishing an orderly transfer of containers and equipment between truckers and the terminal. During peak periods, most gate systems cannot process trucks fast enough to prevent long truck lines and extended truck waiting time. A great deal of gate delay relates to truckers arriving with inadequate documentation. A precheck activity would rapidly determine such documentation deficiencies, and those truckers could be turned around or separately processed and taken out of the truck queue, thereby reducing delay time of other truckers at the gate.

117 Container Flow Having developed detailed plans for discharging import contain- ers from the ship and loading back export containers, the actual physical act of making these container moves is quite straightfor- ward. Likewise, once procedures are established for receiving and delivery of containers, and proper planning methods are followed, the interchange of containers between truckers passing through the gate and the stacking area is not complex. Details concerning the physical handling of containers will not be presented here. The primary container flows are: . import container flow; . export container flow; and . flow of recirculating empty containers, from consignee to the terminal and then to the shipper. Also, there would be container flows to and from an onsite CFS and an onsite raid facility, if the terminal is so equipped. THROUGHPUT Throughput is the volume of container flow from shipboard, through the container terminal, and out the gate, and vice versa. If throughput per crane is used as a criterion, American container terminals would compare poorly with overseas terminals. For example, a study by the Port of Seattle showed the following per-crane throughput for leading California ports: Oakland—39,000 TEUs; . Los Angeles 38,000 TEUs; and . Long Beach 32,000 TEUs. By comparison, the container terminal at Pusan, Korea (a four- berth, eight-crane facility) has a per-crane throughput of about 100,000 TEUs per year. What accounts for this vast difference? The basic cause is that American container terminals are under- used, sometimes grossly so, because we have such an abundance of terminals for the volume of cargo available. Primarily, this situation resulted from the intense competition among ports in the same region for what each perceived as their share of the container market. Remember, each of several port authorities in a given port region is autonomous.

118 Certain container volume forecasts by well-regarded economics consultants presented optimistic growth scenarios that were not realized. Port authorities may have built container facilities to meet a perceived demand that has not yet become a reality. To some degree, port officials may be motivated by goals other than profits. They may be charged with generating economic activity. Perhaps, desire for the right image for their port is the motivator- comparable to the lengths some cities go to attract (or retain) a major sports franchise. These are among the circumstances that may have led to overbuilding and, consequently, underuse. Korea, on the other hand, has a single port authority for all ports, the Korea Maritime and Port Administration (KMPA). The KMPA's centralized planning division has done a good job of matching container terminal construction with container volume passing through the Port of Pusan. The Pusan container terminal is a common-use facility, and most container ships calling there are routed through that terminal. The result has been excellent use of their container terminal and high throughput. No doubt, like comparisons can be made of European and other major overseas ports, but that information will be presented by other participants of this symposium. It is fair to point out that for the first 20 years of the con- tainerization revolution, the rapid growth of container volume exceeded forecasts year after year, and container port facilities were strained to cope with those volumes. Although some of the rosier growth forecast scenarios have not been realized in recent years, and the momentum of building container terminals may have gone beyond today's demand, there is a definite bright side to our current situation. American ports now have the reserve capability of absorbing a substantial increase of container volume without a large amount of additional building. When growth catches up with capacity, as it inevitably will, the improvement in per-crane (or per-berth) throughput should be considerable. CONTAINER TERMINAL COST BREAKDOWN The variety of systems used, the degree of use, local labor practices, and the like, all tend to produce cost differences among the various terminals. Nevertheless, there is a general cost trend, as is apparent from the tabulation in Table 1. This tabulation

119 TABLE 1 Proportional Cost Breakdown of 11 West Coast Terminals Cost Category Average Range Labor 38% 3~51% Terminal lease 26 19-34 Gantry crane rental, capital cost of handling equipment, maintenance and repair, utilities and fuel costs 24 18-40 Overhead 12 7-14 was based on a recent analysis of 11 major West Coast terminals, of which approximately half were wheeled (chassis) operations and half grounded operations (using a container stacking system). Thus, the analysis reasonably matches the distribution of the various systems throughout U.S. ports. As can be seen from Table 1, labor costs are the largest single entry, and they are the most likely to be variable. THE EFFECT OF WORK RULES ON PRODUCTIVITY One hears a great deal these days about the need for greater technological development and mechanization in our basic indus- tries in order to improve productivity, and for greater freedom from work rules that inhibit the most efficient use of the work force. Understandably, labor tends to resist such changes because of the resultant erosion of their members' work opportunity. On the waterfront, labor generally has accepted the various changes presented by management in equipment systems, com- puterized information and control systems, and methodology of handling containers. However, manning and work rules continue to be controversial issues and these vary from region to region. Traditionally, employer groups want more say in the process of selecting steady men for the skilled positions, while the union lead- ership strives to broaden the opportunity for such assignments by means of work pools from which personnel must be drawn. For many years, there have been different container gang sizes in different ports for the same ship. Arguments could be made for the larger or smaller gang size, depending on one's point of view. However, in most cases neither party is anxious to bring the

120 matter to a head as a given agreement has good and bad points for each party, and, often, neither wants to risk the good aspects for an unknown result. Well-known negotiators and arbitrators have considered these issues over the years, and it would be impossible to give a brief summary that would be considered objective by both sides. Rec- onciliation of differences will come from the collective-bargaining process. Work rules do indeed affect productivity, and this is particularly apparent if comparison is made with overseas ports having dras- tically different laws and traditions than we have in the United States concerning labor and management relationships. VIEWPOINTS CONCERNING PRODUCTIVITY While in the final analysts productivity is defined by cost/ containers handled, the indeterminable question is "Whose cost?" From the steamship company's viewpoint, the hourly cost of its ships alongside a berth is the overriding factor, while the stevedoring company is concerned about its direct costs. The friendly wrangles between the stevedoring company and the shipping line are a familiar waterfront scene. Initially, the parties reach an agreement concerning the rates for loading and discharging cargo. Thereafter, the stevedoring company officials strive to perform that work in the most economical manner, within the bounds of their contractual obligations concerning cargo protection, safety, vessel schedule integrity, and the like. The shipping line, on the other hand, is concerned with vessel dispatch, special handling for valued customers, and so forth—in other words, in those aspects that would provide the most benefits for the shipping line, although they might unfavorably affect the stevedoring company's profitability and productivity. To the port authority, the measure of productivity would be in terms of throughput per year, as port revenue is proportional to the throughput. The trucker would be concerned with truck turnaround time at the container terminal, as that would directly affect his productivity. Shippers and consignees view the matter in terms of the quality of service received from all concerned the shipping line, stevedoring company, and trucker and the cost of that service.

121 In conclusion, all participants involved in the carg~handling process, or affected by it, have different definitions of productivity, reflecting their individual interests. Application of Information Systems to Marine Terminal Operations and Productivity NANCY FRIEDMAN Advanced technology exists today that can substantially in- crease the productivity of marine terminals. These technological systems when applied to the gate, yard, apron, and container freight station (CFS) can significantly increase the efficiency of . . .. ~ . . operations and allow for faster processing with greater safety. Today's competition between carriers, and the limited annual increase in freight volume, require management to evaluate thor- oughly the impact of employing these new technologies. There Is an understandable reluctance on the part of ma- rine operators to allocate resources for the development of new systems. Return on investment is typically uncertain. Market changes or dips in the economy can drastically change the results of cost/benefit analysis of any major system. At the same time, today's economics demand] these innovations. Rationalization, intermodalism, and large 2,000+ TEU container ships require carriers to look hard at productivity-enhancing technology that allows them to reduce unit costs. Barriers to innovation go beyond the capricious nature of the economy. The perceived resistance of labor Is often used as an excuse for lack of innovation. On numerous occasions both East and West Coast longshore labor have worked with management to foster innovation, but in some cases new technology must be seriously considered even if no reduction in labor will result. Another barrier to the adoption of new technology has been the Inability of management to evaluate the lif~cycle system cost and Nancy Friedman is a program director with Advanced Technology, Inc. She currently is the program manager of the Cargo Handling Cooperative Program, a collaborative research and development program sponsored by U.S. liner companies and the Maritime Administration.

122 the effect that the new technology would have on other systems currently in place. Management is now employing sophisticated microcomputer-based modeling to assist in accurately assessing life-cycle costs. Cooperative research and development (R&D) has also had a positive effect on accurate cost appraisals. Combining R&D resources from the various carriers has resulted in more thorough research and more prototype system testing than would have otherwise occurred with a single carrier. Sacrificing daily operations for system testing has been a problem in the past for individual companies. With one carrier testing a system for several other carriers, however, there is only a minor impact on operations. In many industries the "automated data processing (ADP) mystique has provided a roadblock to operational innovation. Traditionally ADP is a service arm of the line organization, but this is changing. Data processing managers often control major business decisions primarily because the operations managers do not have the experience to evaluate thoroughly the position of the data processing department on new technology. This is changing as well. Most operational managers are now sufficiently well versed to challenge or question costs and timeframes set by their data processing counterparts. User friendly personal computer- based models allow non-ADP managers to evaluate a proposed system thoroughly. Finally, the day-to-day challenges facing the maritime manager create a workload that allows for limited strategic planning and testing of innovation. The new project of today quickly takes a back seat to the operational problems of today. Confronting these impediments, the maritime industry is forg- ing ahead to identify and evaluate emerging technologies. In the remaining pages, ~ discuss four major areas where information technology advancements, proven in other industries, are being applied in U.S. marine terminals. In most cases, the proposed systems are introduced into operations through a series of evalu- ations and reviews. Figure 1 on the following page outlines the approach taken most often. Those who successfully employ the innovations adapt new ideas arising from day-to-day operations or transfer technology from other industries. The systems are then modeled, and if they show promise, a preliminary design is made. The design is evaluated and further modeled ~ part

123 PROTOTY PE WEST ~- MODEL mmra I! Irk MAN UFACTU R E/ ACQ Ul R E EVALUATE ~1 FIGURE 1 Technology introduction. h OPERATE it\ NEW APPROACH \ MODEL DESIGN Cat .) _ O of an integrated system. When a decision is made to proceed, the system is manufactured or acquired and prototype tested. If the testing and associated cost/benefit analyses are favorable, the system is put into full-scale operation by the terminal operator. AUTOMATIC EQUIPMENT CONTROL In a modern marine terminal a ship may discharge and Toad 1,000 containers in a period of 24 hours. During that time there may also be 900 gate moves, 200 containers moving through the CFS, 100 containers moving into or out of maintenance, and 1,500 moves to and from parking locations in the yard. Conser- vatively, that would account for 3,700 transactions occurring in the terminal in a 24-hour period. As a result there would be

124 3,700 opportunities for productive movement of equipment; con- versely there would also be 3,700 opportunities for mishandling, loss, or delay. In this example, the terminal operator would need] the capability to identify the equipment number associated with the 3,700 transactions. In many cases additional data concerning such factors as location, destination, size, hazard, or internal tem- perature are also required. Automatic identification systems are available to provide the reliable equipment identification data just described. The benefits of automatic identification to the marine operators include: improved gate flow; quicker freight turnover and response time; more efficient land usage; quicker document generation; more accurate inventory control; and improved customer service. Information technology to improve equipment and product con- tro! has been developed in many sectors of U.S. industry. For instance, blood banks use highly reliable bar code technology to segregate blood types. Bar code systems operate most effectively in controlled environments when relatively small amounts of data need to be captured. Optical character recognition is used exten- sively in documentation handling. The Internal Revenue Service has employed the technology for the 1040 EZ forms. Bar code and optical character recognition are two automatic identification systems that have been tested in the marine environment. They have been proven to be environmentally sensitive and application restrictive. They do not justify the significant financial invest- ment required to support an equipment control system for the maritime industry. From these tests the industry has better de- fined the specific requirements for a system that would provide real-time identification of all marine equipment. Radio frequency (RF) microcircuit systems may meet these requirements. Among other objectives, the RF automatic iden- tification systems were developed to address the environmental issues faced by marine operators. The systems are ideally suited for operation in a harsh, outdoor environment. Nonconductive materials such as grime, snow, and rain, which intrude between

125 REMOTE ANTENNA \ READER CODED ITEM STAG _ ~ 7 ID# 247896 FIGURE 2 Radio frequency system components. the interrogator and transponder, do not appear to affect op- eration of the system. The readers or antennas can be buried beneath asphalt to keep them free from vandalism, accident, and weather. The tags are rugged and not affected by dirt, and the life of the equipment is estimated at over 10 years. RF systems offer high-speed, remote electronic identification of equipment. The system consists of transponders, or tags, an interrogator with an antenna, and a computer interface. The heart of the system is the tag, powered either by a battery or an RF beam from the antenna. This RF power is converted to run a custom integrated circuit chip. Each tag can have a unique code that is related to the object to which the transponder is attached (see Figure 2~. The electronic components of the transponders are enclosed in rugged packages that may be as small as a credit card. Because of the small number of parts used in the transponder, its rugged construction, and the Tow power level at which it operates, the transponder's life should equal the shelf life of its components. The physical characteristics of the interrogator and antenna vary

126 from vendor to vendor. One interrogator can drive a multiple number of antennas via coaxial cable.* High-speed requirements appear to present no difficulty; trans- ponder-equipped objects can be identified as they move by the interrogator at speeds over 100 mph. For system applications such as containers, RF power levels are 1,000 times below the limits established by the Occupational Safety and Health Admin- istration for employee exposure. In the past, a primary obstacle to implementation of an RF system has been the price of the transponder. However, the price has dropped dramatically in re- cent years from $1,200 per unit to under $20 per unit in large quantities. It is expected that another significant reduction in the price of the transponders would occur if RF systems were adopted for industry-wide use. One application for RF systems is monitoring containers. The system can track containers entering and leaving the terminal through the gate or as they pass scanning points in the yard. Mobile operators can be used to conduct a secondary check of container locations. Antennas may be mounted in the ground or overhead on straddlers, gantry cranes, transtainers, and portain- ers. RF systems can also be used for inventory control of chassis, motor generator sets, or yard equipment. Not only will the data collected be accurate, but it is virtually assured that the data will be collected. This is a significant problem in marine operations. Recent advances in microwave technology include a tag that can be read or written to. These tags contain 4,000 characters of data and can be updated as they pass antennas. This capability is beneficial when a prepositioned data base does not exist or when product data such as history, maintenance requirements, or quality assurance procedures are best kept with the product. This capability could also be used to identify the contents of a container or to identify which container is on a chassis when only chassis are tagged. Another near-term system that may address equipment identi- fication requirements is voice recognition technology (VRT). VRT may be used as a stand-alone system or integrated with other technologies. Voice systems use pattern recognition similar to that in bar code systems, but instead of an image, the computer * Proceedings, Scan-Tech '84, The Material Handling Institute, Pittsburgh, Pennsylvania, October 1984.

127 recognizes words in a preprogrammed vocabulary. In operation, a user speaks into a microphone. The machine recognizes words or phrases and then converts them into electronic impulses for the micro- or host computer. Observers of this technology foresee a continual evolution of product capability. Discrete and connected-word systems are economically viable today, and continuous word systems are be- coming less expensive. The accuracy of these systems is also improving, with even the less expensive units having the accuracy rate of 85 percent. High-performance units operate at an accuracy rate of 99.5 percent. Figure 3 shows a wide variety of equipment control technology currently under evaluation by marine opera- tors. When properly integrated these systems can greatly assist in the automatic capture and processing of marine terminal data. Even when the costs remaining and technical issues relating to automatic identification have been addressed, one major bar- rier still remains- that of standardization. We are rapidly am preaching the time when standards for automatic identification equipment (ATE) will be essential. In the maritime industry, the benefits of AIE would be significantly reduced if each carrier's system was not compatible. To achieve the maximum benefit from the technology it is necessary to have compatibility between transportation modes as well. There are numerous examples of successful equipment stan- dardization in the container industry. A fundamental requirement for standardization of automatic identification equipment in the transportation industry is the development of hardware standards and tag data operational requirements. This advance can occur only after management has thoroughly proven the technology in the marine environment. Since 1984, U.S.-flag carriers have been evaluating the reliability and economics of automatic equipment identification through several prototypes being developed by the Cargo Handling Cooperative Program (CHCP), a U.S.-flag coop- erative R&D group. Once the marine operator knows what container equipment is available through the use of automatic identification systems, he must then be told precisely where that equipment is located in the terminal. Several technologies, available in manufacturing, are being evaluated for their application to location sensing in a

128 Am< HAND HELD TERMINAL ~7 / CARD/ L' I 1 ~ ~ VOICED ~ ~ , r ~ ANTENNA FIGURE 3 Source data automation technologies. 1 ~ Cat LO MICRO.CHIP marine terminal. These systems would marry the identification of the equipment with the location. Such technologies include: meet; Radar employing radio waves to detect location and move- ~ Satellite systems~uch as Geo-Star where the satellites pro- vide a key location coordinate to a ground-based station that analyzes the location data; ~ Infrared triangulation where three infrared beams track particular coordinates of a piece of equipment; and Talking stones microcircuit based, grid-monitored systems. If any of the location-sensing systems prove economically and operationally viable, computer-controlled stacking systems may then become a reality. Logistics control and priority require- ments could ultimately be monitored by optimization algorithms

129 programmed into the systems. This technology integrated with a reliable automatic equipment identification system would produce a level of terminal efficiency unmatched by an individual system approach. U.S. terminals have only recently begun to evaluate the poten- tial benefits of advanced information technology. One example is the hand-held computer system currently under evaluation in Savannah, Georgia. Yard inventories, previously recorded on the back of an envelope' today are being conducted with wireless data transmission systems. Longshoremen are using portable comput- ers to conduct inventories and validate ship load and discharge. Equipment identification numbers are transrn~tted in real time to the carrier's host computer. Through this approach, keypunch and verification costs are eliminated and real-time, accurate data are instantly available to the operator. At a cost of approximately $80,000, a 200-acre facility can be outfitted with hand-held termi- nals to support gate, yard, and apron operations. Software costs are minimal. Only the interface software between the hand-held system and the operators terminal control system needs to be developed. Through the employment of this proven information technology, carriers need not be plagued with ship delays caused by misplaced cargo. These types of systems are also prevalent in European and Asian ports. Hamburg Hafen und Lagerhaus instituted a wireless data transmission program last year to provide online communi- cations between 47 terminal straddle carriers and terminal man- agement. Bremer Lagerhaus Geselischaft is also evaluating the introduction of this technology.* HHLA is planning to extend the system into its stacking crane and forklift truck fleet. Europe Container Terminus uses a wireless infrared data transmission system to send container information from its central computer to straddle carriers. TRAINING TECHNOLOGY This paper has addressed the volume of transactions that need to be managed in a container yard and technology that shows promise of being able to control that inventory. The diverse * Efficiency drive. Cargo Systems (June 1985~.

130 labor component in marine terminals demands fully integrated information systems to employ this technology effectively. When a ship is in port, there are several work groups operat- ing in the terminal, each performing its own function, sometimes independently, or sometimes in loose concert with other work groups. For instance, a trucker, following his own schedule, may appear at the terminal to deliver or pick up a specific container. Concurrently one longshoreman group may be performing a yard inventory while another gang works independently servicing a ship. In each group, it is through the marine clerk that all of these transactions are being conveyed. Under the overall guidance of the terminal manager, the clerks must provide information for spotting cargo and instructing equipment operators over a wide expanse of area in a constantly changing environment. There is very little consistency of skill between marine clerks. With- out an adhered-to systems approach, there is no assurance that appropriate and accurate data are being collected. In the 1980s marine transportation involves much more than the activities encompassed by the boundary of a terrn~nal. In- termodal operations are accounting for a significant amount of U.S.-flag carriers' revenue. With this expansion goes an increased information flow, expansion of the work and influence of a marine clerk, and potential for a proliferation of inaccurate data. Al- though systems such as sophisticated container cranes and yard- handling equipment have improved the productivity of longshore work significantly, no major systems have been developed to im- prove the efficiency of marine clerks. It is this very function that is in most need of technological innovation. As Figure 4 illustrates, longshore productivity over the past decade has increased at a much more rapid pace than marine clerk productivity. Because of the operational intelligence handled by these clerks, technological improvements in this area will greatly increase productivity for the terminal operation as a whole. Training aids are available to address marine clerk productivity. State-of-the-art data processing technology exists to provide the clerks with timely information and job performance tools that can be inexpensively developed. One example ~ the use of hand-held computer terminate for container inspection. Prompts can be given to the clerk to direct him to perform a thorough equipment inspection. Through the use of bar-coding labeling, the clerk need

131 1 00% 95% good 85% . 80% . 75% . 70% . 65% . 60% SOURCE: I PaA TOME ~ RAN . HR REPORT | 1977 THROUGH ·9114 1 ~~- . . . . . . 1977 1978 1979 1980 · LONG SHORE --- 1981 1982 1983 1984 ~0 MARINE CLERK FIGURE 4 Change in man-hours/ton (relative to 1977) on the West Coast. Only enter a minimum amount of data. Under such a scenario the inspection/custody information scanned from bar codes would go directly from the hand-held terminal to the mainframe computer, allowing terminal management to access inspection and custody information minutes after the equipment has entered the yard. The result—more efficient and timely handling of data, faster throughput at the gate, elimination of containers used for the storage of interchange documentation, and of utmost importance, an accurate data base on which management can rely. In recent years, American industry has begun to realize the full benefits of proper training. Training technology for the more skilled jobs has repayed its investment in reduced accidents and greater productivity. This technology has direct application to the marine industry. In a recent study of U.S. marine training, 214 longshore and clerk courses were identified. Most courses are repetitive classroom training with extensive on-thejob exercises. Simple audiovisual aids are available for most courses, but there is limited use of sophisticated structured tools or any type of motivational training. As a whole, the maritime industry invests substantial amounts of resources in training. The exact amount of that investment can- not be easily determined because a wide variety of organizations,

132 such as the operating and stevedoring companies, unions, and maritime associations, are all involved in the process. Addition- ally, many of the costs of training are accounted for in on-thejob training, lost productivity, and damage as a man learns to operate a piece of equipment, and are not easily visible as training costs.* All marine terminal personnel receive some training during their career. On the East Coast, the training is carried out primarily on the job, except for the crane-rated equipment training that is conducted by the operators and port authorities. On the West Coast, the Pacific Maritime Association (PMA) has the respon- sibility for the training of the equipment operators and clerks. However, despite PMA's $5 million budget for formal training there is still a healthy component of on-thejob training on the West Coast. Computer-aided instruction, motivational training, video disc simulation, electronic blackboard, and multimedia presentations are used successfully in other industrial environments. They also have direct application to the marine industry, but they are not being employed here. For example, there are 23 crane opera- tor training courses in the United States; none have available to them a crane simulator. Video technology now makes equipment simulators affordable. The most efficient use of training dollars would dictate the use of tools such as simulators before a com- pany places an inexperienced operator in control of a piece of multimillion dollar equipment. MATERIAL-HANDLING SYSTEMS In a recently completed study of West Coast crane opera- tions, documented observations show considerable potential for improved technology in crane activities. Some improvements re- late back to better yard operations, but other improvements can be gained by applying proven technology to the crane. In most cases it is information that is needed. For example, the study has * Inventory of Maritime Training, unpublished report of the Cargo Handling Cooperative Program, U.S. Maritime Administration, Washington, D.C., November 1985.

133 shown that the crane travel times to the two closest ship positions are greater than to the more distant positions.* In most cases these delays are caused by lack of information. The operator must have available to him real-time data in order to answer the following questions: . Has the box safely passed over the ship rail? . Is the load clear of obstructions? . Can the crane increase speed or reduce the arc safely? There are systems currently used in manufacturing that can ad- dress these problems. For instance, the speed, arcing, and posi- tioning movements of the crane could be microcomputer assisted. Many industries economically employ microprocessor pick-and- place systems along with visual assist systems for the operator. Current crane operations frequently require the operator to sight all movements from a Biscuit vantage point. Not only may the operator's visual perception be a potential cause for delay and accident, but the physical position of the operator may cause excessive fatigue. Ergonomic engineering has produced vision technology that would allow the operator to sight his processes from a more advantageous perspective while maintaining a more natural posture. Laser-based technology exists that would in- dicate to the operator when he is clear of obstacles during the traverse actions. In the study previously mentioned, hostler positioning under the crane was also evaluated. The study revealed that two factors account for the majority of delays in this area. First, the crane operator frequently lacks a waiting positioned hostler. The crane operator is thus less likely to use maximum crane speed, and therefore crane productivity declines. Second, there are significant delays associated with locating the hostler in the precise position under the crane. Laser-positioning devices such as those used in manufacturing may be inexpensively employed to assist the hostler driver in properly positioning the hostler. All of these systems may someday service a high-rise container storage facility. The feasibility of high-rise storage for marine containers is under analysis by most large terminals. At this time, * Crane Cycle Improvement Study, unpublished report of the Cargo Han- dling Cooperative Program, U.S. Maritime Administration, Washington, D.C., November 1985.

134 the extremely high first-cost and unresolved technical issues, such as heavy loads and various new handling equipment, still outweigh the benefits of random access and potential for reduction in labor and damage costs. DECISION SUPPORT SYSTEMS A major mistake made in introducing new technology is the tendency to develop disbands of automation"; for example, mak- ing improvements in ship loading and discharge systems without thoroughly analyzing the impact these systems will have on gate or yard operations. Quantitative decision-support models where solutions are arrived at mathematically can provide the sensitivity analyses required to generate appropriate marine terminal system decisions. These models are now being employed in the maritime industry. Management in this industry can validate its experience and good judgment through the use of computer decision-support models. Proper use of these models will ensure that the ma- rine operator will not create productivity enhancing systems for one module of a terminal while detracting from productivity in another module. The CHOP Is developing several simulation models for the U.S.-flag carriers. Last year the CHOP developed a container terminal simulation mode! designed to assist carriers in long-range planning for major terminal acqu~sitioning projects. A day-t~day operations evaluation mode! is currently under development. CONCLUSION In order for the maritime industry to receive the maximum benefit from advanced information technology the industry will be required to develop compatible data networks and data base management systems. Once these networks are in place, trans- mission of, for example, container location information from one operator's terminal to the next or from one mode to the next will be fast and efficient. Advances in information systems, how- ever, will not relieve management of its broader responsibility to support new and innovative technology. Regardless of the degree of automation that exists, management must still motivate and

135 train personnel, and must control operations. As technology ad- vances, the challenges In these areas wiD become even greater, but the tools available through this advancement will change the direction of container terminal operations as drastically as the container itself did. The Human Element in Marine Terminal Productivity MICHAEL GAFFNEY and JOEL FADEM The subject of productivity has received considerable national attention in recent years, even in the popular press. It could not have been lost on even the most casual observer that the rate of U.S. productivity growth hap substantially slowed and is considerably out of line in comparison to the most progressive European and Asian nations, particularly Japan. Even more immediate has been the awareness of loss of Ameri- can manufacturing jobs and profits to higher-quality, Tower-priced imports. This fact has certainly not escaped the attention of American port interests that have both welcomed the surge of imports and worried about the lack of exports especially the West Coast marine terminal industry, which has the good for- tune to be situated at one edge of the ocean that separates the manufacturing citadel of the Far East from the worId's principal consumers. What may not be so obvious, however, is the manner in which industrial organizations worldwide are attempting to mobilize their human resources to prosper (or just survive) in difficult economic times. These efforts have entailed deliberate (and some- times radical) departures from business as ususal. The broad flavor of this shift in human resource strategy is contained in such Michael Gurney is with the Cornell University School of Industrial and Labor Relations. Trained as an anthropologist, Dr. Gurney is concerned with improving the quality of work and working life in the maritime industries. Joel Fadem is with the Institute of Industrial Relations, University of California, Los Angeles. He has an international background of research into longshoring and in assisting joint union-management productivity im- provement efforts.

136 phrases as The new industrial relations" and "Japanese manage- ment style." What is referred to is an organizational structure and climate that provides for expanded use of the technical and problem-solving skills of employees at all levels. This paper highlights the main components of this new am proach to human resource management and considers their appli- cation to the U.S. marine terminal industry. To accomplish this it will be helpful to review what is taking place in other countries and in other industries. First, it is important to clear up some confusion regarding the term "productivity." Productivity is frequently measured as a ratio of labor input to product/service output. That's fine as one gauge of productivity, but the term is sometimes interpreted too literally as a measure of the contribution of labor (how hard employees are working). That isn't always the case. For example, the ratio may show an increase or decrease in productivity due exclusively to the contribution, or failure, of machinery or systems. Therefore, although productivity (of labor) is one measure of economic health, the true bottom-line indicator of industrial performance is one that measures trends in the financial rewards provided to owners, management, and labor. Factored into this financial equation is the matter of safety, which has nonfinancial value as well, but directly affects the bottom line of this industry in the form of substantial insurance prern~ums. Therefore, the authors' purpose is to illustrate how human resource innovation might improve the total output/input ratio. WHY CHANGE? Competition Although American ports are generally not in competition with foreign ports, they are clearly in competition with one another— and the competition is getting stiff. Competition between the West Coast and East/Gulf Coasts is increasing, fueled largely by the success of minibridge (especially with the introduction of double-stack trains). Within coasts, in- terport competition is also becoming more heated, especially on the harder-pressed East and Gulf Coasts where multiemployer bargaining appears to be on the wane. Stevedores under contract with traditional longshore unions more frequently find themselves

137 competing with firms employing alternative union labor or unrep- resented labor. Indeed, as intermodalism redefines the meaning of the term "port," the marine terminal industry itself is facing growing competition from alternative union or nonunion container freight stations situated well inland. In sum, intermodaTism and deregulation appear to be breaking down earlier geographical and regulatory-based barriers to com- petition. Containerized cargo can now move to most locations at a competitive cost. Safety Safety has always been a concern in the marine terminal in- dustry, but has recently become a more significant issue due to several deaths in Southern California. Perhaps the situation there is somewhat unique given the rate of expansion and consequent degree of reliance upon casuals, but it may also reflect what is taking place elsewhere in the industry. It appears that traditional work rules, training, and safety practices may not be adequate given the altered nature of work on the docks today. The question is, does the solution lie in the development and enforcement of additional rules by safety experts? Or does it lie in providing the employees themselves with an opportunity to investigate and analyze the safety problem, and to recommend appropriate solu- tions to a joint labor-management committee solutions that may entail the development of a new or revitalized work organization in which employees take on more responsibility and authority to ensure their safety? DIRECTION OF CHANGE Work Force Reduction Reduction in the labor content of products and services has been, and continues to be, a fact of life. This is true both for industries that face competition from low-labor-cost nations (ship- ping, shipbuilding) and for industries that are not in international competition, but are undergoing significant technological change. In the marine terminal industry, refinement of cargo-handling and information systems technologies has cut into the size of both the blue and the white collar terminal work force. In industrialized

138 nations, longshore employment has been halved in the past 2 decades in spite of a fourfold increase in tonnage handled. Given the likelihood that the size of the work force in these industries will continue to diminish, two issues are raised: 1. How can this reduction be managed so as to ameliorate the effect on the existing work force and its organizations (unions)? 2. How can work be redesigned to maximize the effectiveness and safety of a smaller work force? The first issue, that of softening the blow to existing workers and their organizations, is a humanitarian concern. With few exceptions, individuals and their organizations have survival as a first priority. It is unrealistic to expect anything but strong resistance to activities that threaten their continued livelihood and existence. Especially in those industries in which labor is organized within powerful unions, employment (or at least income) security guar- antees have been negotiated. The marine terminal industry is a very early and dramatic example. Reductions have been ac- complished through a combination of attrition, work sharing, and income guarantees for existing workers. The second issue how to redesign work and work organization to correspond to a smaller work force—is one that is sometimes given short shrift within those same industries that have powerful unions. There are several contributing reasons: 1. Union attention is concentrated on the first issue, which is of greater importance to them preservation and equitable sharing of jobs and income for their members. 2. Some hiring rules and work rules, designed to preserve and share jobs, are in apparent conflict with the objective of increasing the efficiency and safety of remaining workers. 3. Management is primarily concerned with maintaining the head-count reduction and is not inclined to risk that easily quan- tified cost savings in an effort to achieve less quantifiable produc- tivity improvements through adjustment of the organization of work.

139 Stability of Employment It is difficult to achieve an efficient and safe work force in an environment in which there is little employment stability within the industry, within firms, or within work groups. Efficiency and safety is not strictly a matter of individual competence when the nature of the work is such that it is accomplished by people working in groups and through the coordination of groups (and that is certainly the case in the marine terminal industry). Larger Japanese firms achieve employment stability by means offs core group of employees hired for life, supplemented in labor demand peaks by subcontract labor. British shipyards are now guaranteeing the wages of their employees, and are assigning the workers to stable membership production teams. European ship- yards are also hiring core employees with employment guarantees honored during periods of shipbuilding downturn by contracting out these workers to other steel-fabricating companies. Through- out the shipbuilding world, employees are no longer being casually assigned work within yards. More commonly, they are assigned to fairly stable teams that work in the same general area of a yard on specific construction modules. Seamen around the world (licensed and unlicensed) are now being hired by individual firms on a contractual basis and are assigned to individual ships for time durations of several years. It is reported that Saturn workers will have lifetime employment guarantees; currently autoworkers have achieved 3-year job secu- rity. In longshore work, the issue of industry-wide employment sta- bility has a long history. Dock workers in Britain are registered under a National Dock Labour Scheme and are guaranteed a weekly Manhour minimum wage. A similar scheme is in effect in Australia. In the United States, collective bargaining has provided the means by which longshore employment has been stabilized and regulated. For many years on the East and Gulf Coasts, Interna- tional Longshoreman's Association (~LA) members have worked under full-year minimum payment guarantees that provide up to 2,080 hours of straight-time compensation. On the West Coast, class A longshoremen also benefit from substantial income se- curity protection, with employer assignment made through the union hiring hall.

140 Employment stability within stevedore firms is less common. British dock workers are a notable exception in that they are assigned to port employers on a permanent basis. When redun- dant workers cannot be transferred to other port employers, they are assigned to a temporary unattached register (labor pool) and paid a lesser weekly amount by the National Dock Labour Board. Australian waterside workers have less continuity in that they are assigned to employers on a weekly basis by the Australian National Stevedoring Industry Authority. In the United States, even less within-firm continuity is achieved due to the operation of rotary hiring halls, although permanent assignment was a de facto reality for certain specially trained longshoremen in the early days of containerization. The expansion of container traffic and specialized gear has suggested the need for greater continuity of dock worker assignment. The "steady mane issue has haunted West Coast labor relations since its original acknowledgment in the 1960 Mechanization and Modernization Agreement. Employers cite the expansion of container traffic and special- ized equipment and the need for more steady assignment of dock workers. They wish to increase their use of capital through the services of a reliable skilled manpower base. ~ contrast, union officials—whether they are the ILA, the International Longshore- men's and Warehousemen's Union (~LWU), Transport and Gen- eral Workers Union (Great Britain), or Waterside Workers Fed- eration (Australia) remember the abuses of favoritism in hiring, and preserve the hiring hall to achieve equity, homogeneity, and solidarity among its members. American seafaring union leaders have similar memories of hiring abuse, but are holding to their rotary shipping hall system for an additional reason. Unlike the longshore industry, they have not stabilized the seagoing work force, and employ the hiring hall to spread available work among a too-numerous membership. As effective as the hiring hall may be in spreading employment opportunities, it has its shortcomings. Terminal operators are less willing to make training investments in short-term employees. Short-term employees are less likly to become familiar with specific pieces of machinery, company operating practices, or even the work habits of fellow workers. It is difficult to form a cohesive team when the faces are continually changing.

141 Employee Involvement in Problem Solving In traditional industrial organizations, very few employees are hired to solve problems. Those few are generally referred to as "management," or in many instances, as "top management." The dramatic quality and productivity accomplishments of the Japanese brought home to the United States the fact that all employees, not just managers, have problem-solving capability- especially regarding their immediate work responsibilities. A number of American industries have, in the last 5 years, developed new organizational structures to encourage employee problem solving at all levels. Known variously as "quality cir- cles," "labor-management participation teams" (steel), or "em- ployee involvement teams" (auto), these problem-solving groups are formed of 8 to 12 hourly and management employees that work an hour or two per week, occasionally full time, on detailed data collection and analysis related to problems that they have identified themselves or that have been recommended to them by management or a joint labor-management committee. Rec- ommendations proceeding from these groups are given careful consideration by high levels of management and union, and the process itself is sanctioned and monitored in unionized settings by joint labor-management committees. Problem-solving teams of this nature generally deal with non- contractual issues relating to productivity, quality, and safety. Given the significance of safety to the marine terminal indus- try, it is instructive to note the accomplishments of employee involvement in the Japanese shipbuilding industry. The Japanese have been very frank in admitting that the pro- ductivity of their shipyards during the tanker-factory era of the mid-1960s was built "on the backs of the workers." One fallout of this speedup was an unusually steep rise in the frequency and severity of accidents. These shipyard safety statistics were so out of line with the record of other Japanese industries that the gov- ernment established special teams to enforce safety regulations in shipyards. This group was empowered to arrive at a yard unan- nounced and shut down production if they found any violations at all. At this same time, Japan was in the process of spreading their new human resource innovation, quality circles, throughout a number of industries. The shipyards, faced with their safety

142 problem and close government enforcement, chose to put their initial quality circles to work, not on efficiency or quality issues, but on the matter of safety. The result was a phenomenal improvement in yard safety. By way of international comparison, there were, in 1980, less Toss time accidents in all of the Japanese shipyards combined than in one single American yard- and the Japanese produced 10 times the U.S. tonnage in that year. Japanese shipbuilders give full credit for this accomplishment to the activities of shopfloor quality circles. If there are any employee involvement activities under way within the marine terminal industry, they have not been publi- cized. It is likely that there are few, if any, given the constantly changing composition of the work force within firms. Problem- solving teams require time bow their tools" to do this sort of work (paid for by management), and a long enough period of associ- ation to collect and analyze data opportunities that do not fit well in an environment of temporary work assignment. Decentralization Just as corporations are more frequently setting up their di- visions as semiautonomous profit centers, so too are functions within firms becoming less centralized and more integrated into the primary business of the enterprise. The underlying logic is that employees are often the best qualified to make decisions in their immediate sphere of work, and that organizational bureau- cracies (layers of supervision and staff) not only extract a cost in terms of higher overhead, but also prevent, rather than facilitate, the productivity of the employees they are supposed to help. Many ship operators are reorganizing their shoreside operations in a manner that gives primary decision-making responsibility to a group of senior officers aboard each ship. These shipboard- management teams, in turn, are supported by a single point of contact with the shoreside office, a multifunction ship manager or line manager. And to make adjustment for the increase in management content of the jobs of ship officers, much of the planning and daily decision-making related to the maintenance of these vessels now rests in the hands of the unlicensed work force. This is quite different from the traditional structure of

143 ship operation in which shoreside functional specialists, such as marine superintendents and port engineers, closely directed the shipboard officers within their respective disciplines, who, in turn, directed the unlicensed in their separate departments. Similar changes are under way in shipbuilding. Engineering, planning, and scheduling functions are being pushed down from main administration into the production workshops. Within pro- duction, the hourly work force is more likely to be formed into small teams with responsibility for meeting a schedule within budget, and with the authority to make decisions that will permit them to be successful. Previously, hourly workers were reassigned as individuals to various jobs within the yard on a day-to-day basis, with minimal responsibility and no authority. In the marine terminal industry, it appears that the trend may be in the opposite direction. In the days of break-bulk operation, longshoremen usually worked in the context of fairly self-managing work groups (gangs). In the age of containerization and mechanization, although the term ~gang" may have survived, longshoremen work in more isolated fashion (men in cranes, driv- ing straddle lift carriers, and lashers working 20 to 40 feet apart atop the boxes), and have less control over their work. Even the role of first-line supervisor, the "walking boss," has been dimin- ished, as detailed directions are now more likely to come from terminal superintendents. Part of the safety problem may be related to the distintegration of the traditional gang system. The argument might be made that intermodalism and infor- mation systems require more centralized (rather than decentral- ized) control in marine terminal operation. The same argument has been used in the defense of centralized control of engineer- ing, planning, and scheduling within zone construction shipyards (which is the construction equivalent of intermodalism), and in the defense of centralized control of ship management (also a link in intermodal systems). Experience indicates, however, that the best use of information system advances is in the facilitation of communication between self-managing activities. The facts demonstrate that interim- product modules fit together on the ways best in those shipyards that have made engineering, planning, and scheduling functions the responsibility of individual production workshops, and that ship operators who support but do not direct the activities of

144 shipboard management teams aboard individual vessels, achieve substantial cost savings. Just because large intermodal firms are replacing smaller steve- doring companies does not mean that they have to operate as monolithic bureaucracies. In fact, one of the advantages of so- phisticated information systems is that they allow elements of large organizations to be more self-managing, because they have access to a much wider range of information (they can see the Wig pictures), and because they do not have to wait for information to be routed to them. Multiskilling Providing workers with a greater range of skills, and the op- portunity to use them, is a clear trend in a number of industries today. In some instances, this multiskilling can be seen as a neces- sary adjunct of work force reduction (fewer people accomplishing the same range of tasks). This is certainly the primary stimulus for the creation of general purpose (dual purpose or multipurpose) seamen and semi-integrated officers aboard merchant vesseb. Multiskilling also permits a greater degree of employment and work group stability, such as in shipbuilding, where workers no longer have to be moved in and out of the yard, or work areas, with every change in the stage of construction. The practice has also been introduced for the purpose of im- proving job satisfaction of workers through provision of a variety of tasks (especially in assembly-line production operations. ~ .. .. ~ Frequently, multiskilling is accompanied by additional compen- sation schemes that reward employees for the greater range of skills they possess. In some instances this takes the form of a premium rate for a single multipurpose job classification (gen- eral purpose seamen). In other cases, a sliding scale is provided that corresponds to any number of skill combinations. Individuals working under these "pay for knowledge schemes are reimbursed at a rate reflecting their range of knowledge or skills, regardless of the capacity they may be working in at any particular point in time. For the marine terminal industry, multiskilling may be of value for its contribution to the composition of smaller sized gangs,

145 or simply in providing the appropriate skills when needed. Un- der current arrangements there is frequently a mismatch between skills and requirements, due, in part, to narrow job specializa- tions and on-and-off multiemployer training schemes. It should be emphasized that where multiskilling arrangements have been instituted without additional training for employees (who are mul- tiskilled in name only), results have been disappointing in terms of productivity, quality, and safety. Incentive It is possible to achieve a highly productive work force through intrinsic rewards alone (job satisfaction, pride, and dignity) that often accompany the introduction of the sort of human resources innovations that have been described. Eventually, these pro- ductivity gains are translated into extrinsic rewards (improved employee financial gains) through negotiated wage improvements. A more powerful incentive arrangement is one in which the efforts of the work force translate more directly and immediately into financial rewards. Putting aside individual incentive systems (piece-rate) that have been tried for years and are now fading in almost all industries (even in apparel), these more immediate extrinsic incentives fall into two main categories: profit sharing and gainsharing. Profit sharing is a concept that ~ familiar to most. Employees share in an established portion of any profits generated by their firm. This financial reward is a bit more immediate and direct than periodic wage and salary increases, but its shortcoming lies in the fact that a firm's profit does not necessarily reflect productivity gains achieved through the efforts of the work force. Profit in any period can be exaggerated due to sale of assets, or can be minimized through capital acquisitions or other conversions of funds. For an incentive system to work well, it should directly reflect the productivity of the work force, not the internal financial manipulations of the firm. Gainsharing, like profit sharing, is a group incentive arrange- ment, but one in which concrete productivity gains, not illusory profits, are shared between shareholders and labor. There are several variations on the gainsharing theme, but they share a com- mon thread. A productivity base is established, usually through

146 historical or engineered time standards. Any improvement in pro- ductivity over this base is shared between employees (salaried and hourly) and shareholders. Payout is frequent (monthly). Gain- sharing arrangements are frequently associated with employee involvement structures that allow workers to offer suggestions (or make decisions) that permit them to achieve productivity gains. Although gainsharing is found primarily in manufacturing set- tings in which productivity is fairly easily measured, it is now being tried in a U.S. shipyard environment in which productivity standards are very difficult to establish. Kaiser Steel Fabricating and the Boilermakers have entered into an agreement in which both parties jointly work up each bid for the construction of offshore of! platforms. In this depressed market, and in direct competition with low labor cost Asian nations, the company and union have agreed to bid these jobs at a labor rate substantially less than that agreed-to in their 3-year labor agreement. When a contract is won, and if a platform is built for less hours than bid, 100 percent of this gain goes directly to the work force until they are made whole with the 3-year agreement. If further productivity gains are made, additional gains are split 50/50 between the work force and the company. The lesson of the Kaiser/Boilermakers case is that a gainsharing base can consist of an agreed-upon bid, rather than an historical or engineered time productivity standard. The authors know of no gainsharing application within the marine terminal industry, but it can certainly be tried where a productivity and safety baseline or bid baseline can be established. What would complicate a gainsharing scheme in this industry (at least for longshoremen) is the lack of employment stability within firms. Another organizational innovation related to incentive is that of the employee-owned firm. Although found overseas (Swedish seafarers have been pooling their resources to purchase ves- sels from their now-bankrupt former employers), employee-owned firms have largely been an American phenomena, due in part to U.S. legislation that provides very favorable tax advantages to participating banks. Since deregulation, a number of trucking firms have made use of employee stock ownership plans (ESOPs) to remain in business. However, formal employee ownership does not automatically guarantee a structure of management style that

147 motivates workers to improve the productivity of their firm. In some cases, industrial relations actually deteriorate as employees are disappointed to find that although they are now owners, they have no greater role in decision making than prior to the buy-out. The most successful employee buy-outs have incorporated a high degree of employee involvement. Some firms are now sharing with their employees gains achieved through savings in health and safety costs. Although health care gains are commonly distributed through an individual incentive arrangement (appropriate since health costs are frequently the result of individual life-style), a group incentive arrangement does make sense for safety-related savings, as safety is not strictly a matter of individual behavior. Labor-Management Cooperation There are certainly issues over which labor and management should, and will, continue to interact on an adversarial basis. These are issues in which one side's immediate gain is necessarily the other's immediate loss. The overall size of the economic package is an example. However, there are many other workplace issues that do not constitute such a zero-sum exchange—those in which both parties may gain. The operation of employee involvement groups is a case in point. It is in this arena that labor-management cooperation is proving to be of value in other industries. Labor-management cooperation in the United States generally takes the form of parallel structures of labor-management commit- tees, from the highest levels of management and union leadership down to joint shopfloor activities. The value of this form of cooperation lies in the fact that it pro- vides an opportunity for both sides to think through jointly, and experiment with, new and unfamiliar structures of work. Rather than rushing to judgment with collective-bargaining positions, la- bor and management (and their members/employees), through these joint committees, are first able to gather some data and · ~ gain experience. All of the innovations mentioned in this discussion are rooted in collective bargaining. But many of them have been stimulated and fleshed-out by means of various structures of labor-management

148 cooperation ranging from union representation on boards of di- rectors to quality circles. RECOMMENDATIONS The recommendation of the authors is for the marine terminal industry to attempt, through collective bargaining and labor- management cooperation, to increase the efficiency and safety of its work force by developing, experimenting with, and implement- ing new forms of work. The details of these new work structures will be deterrn~ned in the process. However, it is likely that they will include some of the following features: . greater use of the existing and potential technical skills of employees (multiskilling); . greater use of the potential problem-solving skills of employ- ees (employee involvement teams) these teams should probably be put to work initially on the safety issue; . provision for sharing of efficiency and safety gains; . return to more decentralized decision making (self-managing gangs); and ~ greater stability of employment within firms and within work groups (in a manner that will not result in inequitable sharing of work) the hiring hall could still be used to make assignment to more permanent positions in the larger firms that can pro- vide regular employment, to make more frequent assignment to smaller firms that cannot maintain a regular work force, to handle reassignment in all cases, and to assign casuals.