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Improving Productivity in U.S. Marine Container Terminals (1986)
Commission on Engineering and Technical Systems (CETS)

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51
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IMPLICATIONS OF TECHNOLOGICAL AND OPERATIONAL FACTORS FOR COMPETITION AND TRADE The implications of marine terminal technological and opera- tional factors for U.S. competition and trade were appraised by ad- dressing the following issues in a way that identified their relative importance and areas requiring further study, so that impediments or barriers to improving productivity would be identified. A. Domestic Technology and Engineering 1. Is there a demonstrable link between technology and design and productivity? 2. What, in general, is the state of the art in the United States? Is it improving? 3. What can be said about the rate of productivity growth? Is there a role for research and development (R&D)? 4. Are we "farming as well as we know how to farm?" What are the impediments, if any? 5. Are there significant differences among U.S. ports? Can they be related to differences in technology and design or other factors? 6. What is the role of the competitive balance between in- land modes of transportation? What is the state of their technologies? Workshop participants are listed in Appendix D. 51

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52 B. Foreign Technology and Engineering 1. What are the principal differences between U.S. and foreign marine terminal technologies and designs? 2. Is the United States ahead, behind, or an equal among equals? 3. What is the state of the art among U.S. trading partners and competitors, including their infrastructure? 4. What can be said about their productivity and its growth rate? In what ways do foreign ports and terminals compete with U.S. ports and terminals? 6. Does government abroad play a different role in the devel- opment of technology and design? What impact, if any, does this have? C. Capital, 1,abor, and Management Requirements 1. How do America's basic inputs of capital, labor, manage- ment, and labor-management relations measure up? 2. Is there an appropriate balance between the cost of labor and the cost of capital? Do new investments create jobs or eliminate them? 3. What are the impediments, if any, to the flow of capital? 4. How is labor productivity tied to overall results? Is it im- proving? What are the impediments, if any, to productivity growth? 5. Is there a white collar productivity problem? Are we man- aging information well? 6. What is the general state of labor-management relations at home and abroad? D. Implications for Import and Export Trade 1. How does marine terminal technology and operation affect U.S. import and export trade? 2. Who are the customers of general cargo marine terminals? What choices do they have in the marketplace? What are their needs? 3. To what extent do inland transportation options dictate marine terminal technology and operations? 4. Just how important is marine terminal productivity in mak- ing the United States an effective international competitor?

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53 How can the marine terminal's customers' needs be more effectively met? Is there a relationship between quality and productivity? 6. Is there a role for quality technologies in marine terminal operation that could affect U.S. import and export trade? PRINCIPAL FINDINGS The differences between U.S. and foreign operations are more in degree than in kind. Any shortcomings in performance in U.S. terminal operations compared to foreign operations of similar ca- pability are due more to the performance of people—management, dockside labor, and their organization and work practices than it is to a need for new technological development. There are no significant technological limitations at present that impede productive terminal operations. Most modern container terminal operators appear to be aware of and use the latest tech- nologies when their use is cost-effective. There do not appear to be any major new technologies just over the horizon which, if implemented, would provide significant productivity gains. The expectation that somehow technology can be used to make employees in U.S. terminals less of a con- trolling factor in productivity is not realistic. Even if there were some major technological innovations on the horizon, they would have little effect on the improvement of terminal productivity and revenues without first addressing the employees and their perfor- mance. The substitution of capital for labor does not promote economic efficiency because of institutional barriers. In the case of middle management and much of the white col- lar activity in terminals, the same trends are apparent that are apparent in the rest of industry. Increased use of electronic data systems and other modern management techniques will greatly increase productivity and reduce personnel costs. This has been recognized by most terminal operators and is being accomplished. Apparent productivity at some U.S. terminals has decreased since the introduction of modern container operations. This is due more to the increasing complexity of the modern terminal than it is to slower loading or unloading at the ship/terminal interface.

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54 With respect to other elements of the cargo or container traffic system outside of the vessel and the terminal, there appear to be no significant technological limitations in these operations. However, free market forces, some of them stimulated by the trend toward deregulation in the transportation system, have had a significant impact on productivity for these sectors of the system. In exarn~ning the competitive nature of U.S. versus foreign ter- minal operations, where it exists, higher foreign terminal produc- tivity and better efficiency are due to many factors, which may include geography, the market served, and the available infra- structure. Major positive factors where any advantage exists are generally associated with a more cooperative and hence favorable labor and management operating environment, and the high pro- ductivity that results. The role that foreign governments often take as a positive partner in the development of policy, capital formation, and the operational implementation of seaports is also important. With respect to the question of whether or not poor terminal performance or productivity has an impact on U.S. import trade, it can be argued that the effect may be minimal with respect to trading partners who also have to use U.S. terminals. Poor per- formance does have an adverse effect where U.S.-based trade is competing with other trading nations to serve Third World export markets. In these trades, higher port costs put the U.S. shipper at a disadvantage. Additionally, nations contiguous to the United States can be the beneficiaries of unproductive or noncompetitive performance in nearby U.S. marine terminals through economi- cally inspired cargo diversion. In the context of this study, the work group concluded that technology should encompass machines, systems, and people. In short, productivity is a function of hardware, systems, and people. Management of people in U.S. terminals ranges from good to very bad. Market forces have improved other portions of the trans- portation network outside the terminals. It is not clear in what way those market forces will eventually be applied to terminal operations. Current trends in other U.S. industries such as the airlines, the auto industry, and seagoing labor suggest that in time there will have to be some fundamental changes in longshore labor and management practices. The ingrained habits of several decades will be hard to change, harder in some places than others,

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55 but change they will. U.S. import and export trade will be mod- erated by many factors, as noted before, but lack of technology is not a U.S. problem. Technology has been and will continue to be applied wherever economic efficiency can be achieved. The ma- jor impeding factor is the achievement of cost-e~ectiveness from better employment of people. Temporizing factors that may apply to maritime industries, but perhaps do not apply to domestic segments of the transportation system, are government trade, political, and military policies. In domestic transportation modes, for example, productivity gains have been driven largely by market forces, resulting in substantial institutional rearrangements. On the international front, trade often takes a back seat to political and military considerations. Even in the matter of trade, governments may be prone to support or subsidize unproductive practices as matters of strategic concern. Those realities cannot be ignored. Improvements in productivity of marine terminals may be ame- nable to improved techniques that involve performance incentives and concepts of self-management. Both labor and management have a part to play in improving productivity in U.S. container terminals. Both sides need to work together for the common interest.

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Representative terms from entire chapter:

terminal operations