SIC 4491
MARINE CARGO HANDLING



This category covers establishments primarily engaged in activities directly related to marine cargo handling from the time cargo, for or from a vessel, arrives at shipside, dock, pier, terminal, staging area, or in-transit area until cargo loading or unloading operations are completed. Included in this industry are establishments primarily engaged in the transfer of cargo between ships and barges, trucks, trains, pipelines, and wharfs. Cargo-handling operations carried on by transportation companies and separately reported are classified here. This industry includes the operation and maintenance of piers, docks, and associated buildings and facilities, but lessors of such facilities are classified in SIC 6512: Operators of Nonresidential Buildings.

NAICS Code(s)

488310 (Port and Harbor Operations)

488320 (Marine Cargo Handling)

Industry Snapshot

More than two billion tons of foreign and domestic commerce move through U.S. ports each year. Port and harbor facilities provide employment for companies that load and unload ships, transfer cargo from one mode of transport to another, or provide storage facilities. In recent years, some 800 U.S. firms employing more than 21,000 workers participated in marine cargo-handling operations.

Ports on the U.S. West, East, and Gulf Coasts include both public facilities governed by port authorities and privately held terminals. Companies employ stevedores or longshoremen to load and unload break-bulk, bulk, or container ships. Most of these workers belong to a longshoremen's union. The goals of these unions are to preserve longshore employment and to raise the wages of members. The West Coast trade has represented about 50 percent of the total containerized waterborne trade in the United States, supported by high-growth markets in the Asia-Pacific region.

Containerization, or the use of standardized containers to ship bulk cargo, was one of the most important innovations in the marine cargo handling industry. This standardization of cargo handling produced both increased productivity and reduced labor needs. Another fundamental change in the industry was the growing usage of computerization in nearly every aspect of work, both in the office and on the wharf. The development of automation and containerization, including the growing use of robotics, could eventually make marine cargo handling completely automated.

Organization and Structure

America's busiest ports, by tons of cargo, were the ports in South Louisiana, Houston, New York, New Orleans, Baton Rouge, Corpus Christi, and Valdez, Arkansas. Port authorities were created from the 1920s to the 1950s, when port cities realized the economic impact shipping had on not only their city but also the general public. During that 30-year period, large amounts of public funds were spent to repair and replace cargo and port facilities. But by the start of the 1990s, many were found to be in poor financial shape. Only 33 percent of the ports on the North Atlantic coastline showed a profit before tax support, and only the Pacific ports—especially those in Southern California—consistently reported profits prior to subsidy. Privatization of the industry has been contemplated by several port authorities, particularly in Washington, but most of the industry remained in the hands of private sector interests.

Companies that handle cargo at the ports, generally referred to as terminal operators, provide a variety of services to incoming and outgoing shippers. Usually these include loading and unloading ships, transferring cargo from one mode of transport to another, and storing cargo. Employees of marine cargo handling companies that actually perform the loading and unloading are called stevedores or longshoremen. Many employees belong to one of two unions, the International Longshoremen's Association (ILA) or the International Longshore and Warehouse Union (ILWU).

On the shipping end of the industry, as of 2003, the Pacific Maritime Association represented more than 70 stevedore companies, terminal operators, and shipping lines on the West Coast. The American Shippers Association reported roughly 700 members in recent years. These associations provide a unified front for negotiating favorable rates and services, promoting fair competition, and bargaining with the longshoremen's unions.

Background and Development

Since the 1960s, the cargo-handling industry experienced tremendous changes. As early as the 1940s, mechanized cargo handling began in North America. However, its growth during the 1960s and the containerization movement during the 1970s resulted in great changes in worker activities, costs, and productivity levels.

The three kinds of cargo handled by stevedores included break-bulk, bulk, and containerized. Break-bulk general cargo vessels totaled 21 percent of the world's shipping by gross registered tonnage (GRT). Break-bulk general cargo ships were self-sustaining in cargo handling, meaning that they did not need on-shore handling equipment. Many ships even carried their own containers in order to operate at ports lacking adequate handling facilities. These kinds of ships included coasters, tramps (cargo vessels lacking a regular schedule), and cargo liners.

Handling break-bulk cargo was normally labor intensive and time consuming, requiring the movement of sheds close to the berth and the availability of equipment for lifting and moving cargo. On the ship, moving cargo usually involved making slings or trays and carrying or hauling heavy cargo into the center of the hatch to remove it from the ship. Movement of break-bulk cargo required extra caution when pipes, plates, and other awkward loads or dangerous materials had to be transported. Work on the wharf included making up slings and landing loads onto vehicles. Use of forklift trucks and mobile cranes, both introduced to most ports during the 1960s, was fundamental in removing much of the hard labor from onshore cargo handling.

Bulk cargo vessels ranged from 50,000 to 150,000 deadweight tons (DWT), and most of the larger modern vessels were without cargo-lifting equipment. These kinds of vessels included bulk carriers, ore carriers, timber carriers, and combination carriers for ore and oil, and for ore, dry bulk, or oil. Bulk cargoes such as ore, coal, coke, bauxite, sand, and salt once were handled using buckets, scoops, and baskets. However, the loading and unloading of bulk cargo was mechanized long ago. Bulk terminals handled a combination of commodities such as grain, wood chips, and scrap metal, while others housed a single commodity such as iron ore, copper ore, or minerals. Liquid bulk cargo such as crude oil and petroleum products accounted for more than 40 percent of the cargo engaged in seaborne trade. Handling of liquid bulk was almost entirely automated, thus requiring limited manpower.

The development of standardized modular containers for transporting bulk goods became known as containerized cargo. Standardization included the maximum weight of individual containers, specific lifting points, and uniform shapes. Due to containerization, much of the handling equipment in ports around the world also became highly standardized. Most manufactured goods and primary products were carried by containers. Only very large items were excluded, but even logs and timber could be carried in specially designed containers. Although standard in size, containers were built using a variety of materials and could be refrigerated, heated, ventilated, or specially equipped to handle virtually any kind of cargo. The use of standardized containers reduced the time it took to load or unload a vessel, thereby increasing productivity and reducing port labor needs. The speed and volume of cargo handling continued to increase during the 1990s, as container systems become more widely accepted.

Due to these technological advancements in cargo movement, the job of stevedoring has changed over the past 70 years. What used to be laborious, physically demanding manual labor was replaced with handling diverse materials and operating highly technological equipment. The expansion of containerization also modified cargo-handling operations, as ports had to be equipped with special cranes capable of lifting these containers.

Having the most profound impact on containerization and cargo-handling operations were the number of huge containerships that came on line in the mid-1990s. To replace inefficient ships, meet shippers' demands, and maximize loads, larger, faster, and more efficient containerships began to be introduced on certain trade lanes. The largest, dubbed supercontainers or post-Panamax vessels, were engineered to carry 4,000 to 5,000 20-foot equivalent units (TEUs), rather than the most prevalent generation capacity of 3,000 to 3,400 TEUs. Such huge vessels impact land operations such as on-dock rail facilities and intermodal connections. In addition, cranes must have a broad enough reach to stretch across six containers.

Ports, such as the major U.S. West Coast gateways of Los Angeles and Long Beach, California, positioned their operations to accommodate these huge supercontainer ships. In 1995, the Port of Los Angeles embarked on a $600 million expansion plan. At the close of 1996, the Port of Long Beach and Chinese steamship line China Ocean Shipping Co. (COSCO) finalized plans for a $200 million marine terminal to accommodate post-Panamax ships. Six cranes with the capability to reach across 18 to 20 rows of containers were ordered for the terminal. Since 1994, the port had undergone more than $1.35 billion in property purchases and capital projects to expand and upgrade its cargo-handling capabilities. It would become the largest container terminal in the United States.

Other port volumes reflected not the importance of containerized cargo but the difficulty they had in sustaining its business. On the West Coast, the Port of Long Beach accounted for 31.4 percent of all West Coast containerized volumes. On the East Coast, the Port of New York and New Jersey remained the busiest container port with some 40 percent of the North Atlantic business.

A more current problem facing all U.S. ports is the ongoing controversy about how to dispose of the muddy silt dredged to keep the harbors navigable. Much of the silt contains environmentally hazardous pollutants, which creates dredging permitting delays. Through the lobbying efforts of the American Association of Port Authorities, amendments to the Water Resources Development Act (WRDA) were proposed to Congress. They called for a national dredging policy that would enable the U.S. Army Corps of Engineers to dredge more efficiently. Provisions in the act called for authorizing equitable federal cost sharing and dredged material disposal facilities, the prompt removal of obstruction to navigation, and capping of local cost sharing during the feasibility stage of project development. Until a solution could be agreed upon by all concerned parties, the heightened environmental issues about pollution in dredged materials was expected to create additional delays, increased costs, and lost business for American ports. The ports began looking for ways to share the costs of dredging, claiming they were the cause of the problem, but a solution had yet to be finalized.

Facing their own financial constraints, terminal operators explored the idea of forming partnerships among themselves, a process dubbed by the shipping industry as "rationalization." By forming regional port authorities, terminal operators working with a shipping line in one port could form a partnership with operators in other ports that served the same shipper. The operators would divide the revenue generated for the work done in all the ports under an agreed-upon formula. Using this arrangement, the shipping line would benefit by receiving a volume discount, while the terminal operators would gain additional business without investing in equipment, office space, and labor. Several examples of regional port authority alliances included the Virginia Port Authority, the Port Authority of New York and New Jersey, and the Delaware River Port Authority. Prior to forming the Virginia Port Authority, competition between Norfolk, Portsmouth, and Newport News was so intense, steamship lines decided to call on other East Coast ports.

Many of the major container shipping lines began taking their stevedoring and terminal work in-house, virtually squeezing independent stevedoring operations out of the market. Edward DeNike, senior vice president of Stevedoring Services of America in Seattle, Washington, suggested in the Journal of Commerce and Commercial that independent operators should expand their services and embrace intermodal operations—the combination of different modes of transport. Working with 25 steamship operators, Stevedoring Services has become an intermodal operator with its 22 rail ramps, nine chassis pools, and a computer services division. Direct Container Line, Inc. also launched an intermodal container service between Japan and Mexico. The company offered Japanese shippers and Mexican importers door-to-door service that took 14 to 16 days, nearly 20 days faster than all-water cargo transportation.

Often companies that offered intermodal services were classified as non-vessel operators (NVOs). These companies did not own any vessels; instead, they either coordinated the transportation of several shipments in one container and were called "consolidators," or they handled the complete transportation of full box loads and were called "multimodal operators." Combined transport, such as the marriage of rail and trucking, generally was most developed within the North American market, followed by the European community. Intermodalism had yet to pick up in Asia.

On May 1, 1999, the ocean and inland container transportation industry became deregulated under provisions of the Ocean Shipping Reform Act of 1998 (OSRA). The Act's provisions intended to open competition in the industry. One of the key changes under the new law was the elimination of filing requirements with the Federal Maritime Commission of all contracts between container ship operators, importers, and exporters. Under OSRA, such contracts may remain confidential and unavailable to competitors' inquiries. Although intended to challenge price-fixing and favoritism, smaller shippers feared that it would promote unequal bargaining power among shippers. Small to medium-sized companies began to form alliances in order to leverage their negotiating power and keep them competitive in the market. In September of 1998, three California consolidators—Direct Container Line, Brennan International, and Conterm Consolidation Services—formed the New American Consolidators Association (NACA) to combine their buying and negotiating power. In early 1999, the National Customs Brokers & Forwarders Association of American Shippers Association (NCBFAASA) was formed and was already up to 90 members by July of 1999.

Contract negotiations between the Pacific Maritime Association and the International Longshoremen and Warehousemen's Union during the summer of 1999 caused slowdowns and backups at the Ports of Long Beach and Los Angeles, creating a ripple effect along the entire coast. At one point, crane drivers shut down the Port of Oakland, California, on July 7, further exacerbating the tense bargaining. A three-year contract was finally agreed upon in November of 1999, with voting approval by more than 80 percent of the union's members (only 60 percent was required). In 1998, average earnings for West Coast union workers were between $99,000 and $125,000 annually, including overtime and shift differential. Average hours worked per week were 54 hours.

In other industry news, the Port of Galveston (Texas) reported a 172 percent increase in net income for the first half of 1999, compared to the same period in 1998. The Port of Tacoma (Washington) and Hyundai Merchant Marine announced the opening of Hyundai's 60-acre container terminal, which features on-dock ship-to-rail transfer capability for auto shipments.

In December of 1999, workers at the Long Beach port rejected a proposed automated computer system intended to facilitate job dispatching to allow longshoremen to start work on time. The union has generally been wary of automation, fearing job elimination and general cutbacks. However, the Port of Savannah (Georgia) announced in 1999 that it would install integrated computer software for its container-management operations, ranging from gate operations to bookings, billings, and work-order tracking.

Current Conditions

Labor issues have always impacted the marine cargo handling industry. However, during the early 2000s their effects were felt across America and throughout the world. When the International Longshore and Warehouse Union (ILWU) failed to come to terms with the Pacific Maritime Association (PMA) in the fall of 2002, more than 10,000 dockworkers at 29 coastal ports staged a lockout that lasted 11 days. The lockout created a number of significant problems. Hundreds of ships were stranded, leading to congestion at area seaports. In addition, some industry observers estimated that losses would cost shipping companies anywhere from $400 million to $600 million.

The lockout arguably had its most significant impact on the larger U.S. economy. For example, while the lockout was underway JoC Online reported that industry analysts were anticipating "a noticeable increase in plant closings, job losses, and financial market turmoil." The publication reported that "storage facilities at beef, pork and poultry processing facilities across the country are crammed with produce that can't be exported." Several weeks after the lockout ended, Fortune revealed some of its effects, including a loss of 181 million work hours and an estimated loss of $693 million in tax revenues.

Because of the havoc it was wreaking on the nation's economy, President Bush ended the lockout on October 9, 2002, by invoking the Taft-Hartley Act of 1947. After a federal judge ordered a brief "cooling off period" so that a federal mediator could help to resolve the matter, the two parties finally came to terms on a new contract in late November. The agreement was subsequently ratified by both organizations and finally approved on February 1, 2003. According to the PMA, "The agreement provides ILWU members with substantial wage and benefits increases. This includes fully employer-paid health care, a 58 percent hike in pension benefits, and job protection guarantees to ensure that no currently registered worker will lose a job as a result of technology." Disagreements over the use of technology were at the forefront of discussions. While workers feared technological improvements could lead to workforce reductions, employers wanted to modernize their operations via the introduction of technologies like bar code scanners, global positioning satellite (GPS), and electronic messaging.

Industry Leaders

In the early 2000s, the nation's leading marine terminal operator was Seattle, Washington-based Stevedoring Services of America (SSA). With roots stretching all the way back to the late 1800s, the company's present owners became involved with the company in 1949, when the Bellingham Stevedoring Company was founded. Since that time, SSA has grown by acquiring other terminal operators, including Ryan-Walsh, Inc. Ryan-Walsh became well known throughout the maritime industry as a bulk cargo and container handling company. It was a subsidiary of Pittsburgh-based Vectura Group, Inc., a holding company that also owned National Marine, Inc., a barge transportation company based in New Orleans. In 2002, SSA had estimated annual sales of more than $1 billion and some 10,000 employees. In addition to having a presence in all of the United States' major coastal shipping zones, SSA was involved in river operations and rail management. In addition, it operated abroad via some 150 international operations.

Direct Container Line (DCL), based in Carson, California, became the leading U.S. export non-vessel operating common carrier (NVOCC), specializing in the movement of less-than-container load (LCL) freight. Although focused on service to the Pacific Rim, DCL worked with export shippers and freight forwarders to ship and consolidate freight from virtually any U.S. port to most major markets. Company chairman Owen G. Glenn founded Pacific Forwarding Group in Australia in 1975 and formed DCL in 1978. In 2003, DCL employed 500 workers and operated 13 offices and 25 receiving terminals in the United States. In addition to its domestic operations, the company had a presence in 86 countries.

International Terminal Operating Company, Inc. (ITO) was founded in 1921 by Captain Franz Jarka. Originally called The Jarka Corporation, the company specialized in handling freight and passengers in the Port of New York. Soon, The Jarka Corporation expanded its services to encompass the ports of Boston, Philadelphia, Baltimore, and Hampton Roads, Virginia. In 1962, ITO was acquired by Ogden Corporation. In 1983, the company merged with John W. McGrath Corporation, which included Atlantic and Gulf Stevedores, Inc. and integrated their North Atlantic and Gulf Coast operations. Ogden and McGrath continued to share ownership of ITO.

ITO opened its first public container handling facility in 1967, and it was among the first to utilize computers in its terminal operations. The company used the latest technology to coordinate all its port activities, including receiving and delivery functions, cargo documentation, and terminal security. ITO worked with many of the largest container, break-bulk, and specialized cargo carriers in the world and became one of the largest stevedores and marine terminal operators in the United States. In 1999 the United Kingdom-based Peninsular and Oriental Steam Navigation Co. (P&O) acquired ITO. The company then became part of P&O Ports, one of P&O's many subsidiaries. P&O Port's operations spanned 17 countries around the globe. In all, P&O Ports ran 24 container terminals in 84 ports.

Workforce

Crews of stevedores or longshoremen typically loaded and unloaded ships and moved cargo in and out of warehouses. Longshoremen employment began to decline in the 1950s, and most workers depended on the International Longshoremen's Association (ILA) or the International Longshore and Warehouse Union (ILWU) to preserve existing longshore jobs. The ILWU represented more than 42,000 longshoremen working in California, Oregon, Washington, Alaska, and Hawaii. The ILA had about 65,000 members, although the number working at any given time was much smaller.

Longshoremen labor disputes dominated the maritime industry. In the past, tremendous pressure was placed on shippers by the unions due to their competitive rivalry. Faced with declining memberships, each tried to obtain higher settlements, an accomplishment that could be used to attract new union members. These continual attempts to raise wages and protect a declining number of jobs resulted in several major strikes during the 1960s, 1970s, 1990s, and early 2000s.

Earnings for longshoremen remained relatively high compared to the average earnings in American industry. For example, full-time workers of the International Long-shore and Warehouse Union at the ports of Long Beach and Los Angeles recently earned an annual salary of $99,000, including shift differential and overtime. Wages also varied according to the kind of cargo handled. Moving distress cargo and explosives brought in double the hourly rate of general cargo. Workers handling cargo that was 32 degrees Fahrenheit or below also received a slightly higher hourly rate than those dealing with general cargo.

America and the World

Many ports throughout the world have prepared for the anticipated growth in container traffic, which is projected to increase for all of the world's major trades. Trade with Asia and Latin America has been projected to grow the fastest. Container traffic between Europe and Asia should expand at a faster rate than the U.S./Asian route. A more uncertain region was South America. Many ports located there lack planning, financing, or room for expansion. These factors, coupled with a recent trade boom, caused a shipping "bottleneck." However, North American/South American volumes were expected to continue to grow at a respectable rate. In particular, American shippers saw an end to the double-digit growth in cargo traffic to South America, due to the anticipated entry of global carriers, accompanied by fears of overcapacity and falling freight rates. Unlike the South American ports, those in the United States and Europe are well equipped to handle increased container traffic and should not require large investments. However, some observers foresee increased competition among the European ports.

In the meantime, the labor unions geared up for the "internationalization" of shipping lines and increased containerized cargo traffic. Since both of these factors posed a formidable threat to future longshoremen employment, ILWU officials met with labor delegates from 15 Pacific Rim nations in San Francisco in April 1993 to explore the possibility of international solidarity among shipping employees. One suggested way of showing international labor support was that when one union came under attack by a particular company, other unions—through their operations with that company—would send a message of protest. "Sympathy strikes" and boycotts are generally prohibited in the United States, but other forms of protest are permitted.

Research and Technology

Widespread introduction of computers affected all forms of port activities and extended into every sector of cargo handling. A number of ports in North America and Europe introduced computers for office administration tasks, such as payroll and accounting. Several ports applied computers to the actual work of container control and cargo clearance, and they also developed their own information retrieval systems. Computers eventually were used for all aspects of port operation, and in the nottoo-distant future, containerized cargo might be electronically inspected for damage, logged in by some type of electronic or laser-sensing device, coded, and recorded by computer.

One example of advanced computer technology is the development of Automated Guided Vehicles (AGVs). These unmanned, computer-guided, chassis-like carriers were introduced by Europe Combined Terminals BV and Sea-Land Service, Inc. in the Port of Rotterdam in 1993. An AGV is capable of performing much of the work commonly done by a driver pulling a chassis by positioning itself under the quayside gantry crane while being loaded or unloaded. When fully loaded, it proceeds to the stacking crane where the box is removed. The AGV receives directions from the terminal's Process Control System (PCS), which controls all the computerized operations at Delta/Sea-Land. The ECT-Delta/Sea-Land facility in the Port of Rotterdam cost $275 million and took 10 years to complete. However, the system would be able to accommodate an increase in the terminal's capacity over the next 10 to 15 years.

An even more recent invention is the Robotic Machine, created by Paul Dunstan, president of Robotic Container Handling Co., of Bellevue, Washington. This dockside machine consists of a rack system with a computer-controlled container handler similar to a straddle carrier that stores and unloads containers. Its biggest advantage is its design to load and unload 1 million cargo containers a year in a terminal area covering only 50 acres. Each custom-built machine is 2,000 feet in length and capable of processing more than 50,000 cargo containers a month; it can reduce ship time in port by more than 50 percent. North American ports had often been criticized for lagging far behind international ports for container utilization per terminal acre. Singapore, for example, averages some 20,000 container moves an acre each year. (In the United States, that figure is 5,000 moves.)

In the face of continued automation and computerization throughout the marine cargo handling industry, labor unions began trying to prevent the elimination of jobs. Now the unions faced "a new, more sophisticated menace" with the industry's push toward further computerization and the introduction of robotics. Yet, employers claimed that to match their competitors, they must invest in the new equipment and advanced technology. Recognizing that reality, the ILA took the position of not blocking progress in its entirety, but instead claiming jurisdiction over the automated jobs.

Further Reading

Bechard, Theresa. "Ocean Shipping Deregulation to Start." Pacific Business News, 30 April 1999.

Brown, Eryn. "Fallout." Fortune, 28 October 2002.

Burnson. "Terminal Operators Stand United in Contract Talks." Logistics Management & Distribution Report, November 1999.

"Bush Takes First Steps Toward Intervening in Port Dispute." JoC Online, 7 October 2002.

Direct Container Line, Inc. (DCL), 1999. Available from http://www.dclusa.com .

Dupin, Chris. "On the Rocks: Fallout from West Coast Lockout May Not Sink Shipping Lines but It's Denting Their Bottom Lines." Traffic World, 18 November 2002.

Gallagher, John. "Back on Board: Tentative ILWU Contract Awaits Ratification; 6-Year Pact Will 'Modernize' West Coast Ports." Traffic World, 2 December 2002.

Gibbs, Al. "Crane Drivers Shut Down Oakland, Calif. Port." The News Tribune, 7 July 1999.

International Longshore and Warehouse Union, AFL-CIO. "ILWU Objectives." 28 March 2003. Available from http://www.ilwu.org .

International Longshoremen's Association. "About the ILA." 28 March 2003. Available from http://www.ilaunion.org .

"International News Notes." Logistics Management & Distribution Report, September 1999.

Kamhix, Jacob. "Matson Boosts Cargo Capacity in Case of Strike." Pacific Business News, 11 June 1999.

Mongelluzzo, Bill. "Longshoremen Reject System to Automate Job Dispatching." Journal of Commerce, 14 December 1999.

Pacific Maritime Association. "Waterfront Contract Wins Dual Ratification Votes; Miniace Hails Start of 'A New Era at West Coast Ports."' 22 January 2002. Available from http://www.pmanet.org .

Roman, Monica. "Good to Go at West Coast Ports." Business Week, 21 October 2002.

"Strength in Numbers." Logistics Management & Distribution, July 1999.

The Transportation Institute. "Industry Profile." 22 March 2003. Available from http://www.trans-inst.org .

"USA Industry: NIT League Asks for Jones Act Waiver." Country Views Wire, 28 October 2002.

"USA Industry: Sailors' Union Opposes Jones Act Waiver." Country Views Wire, 29 October 2002.



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Sep 26, 2011 @ 5:17 pm
I want to know more than this on marine cargo handling and description markets prospects

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