Chapter 3.7 – Port Labor

Author: Dr. Theo Notteboom

Dockworkers are essential to terminal performance and overall port competitiveness. They are challenged by changing market requirements, which results in dock labor reform and adaptations in working practices.

1. Employment Effects of Cargo Handling

Cargo handling operations at terminals lie at the core of the function of ports. They create jobs for terminal and stevedoring companies in the form of dockworkers, management, and administrative positions. Dock labor needs are very dependent on the cargo flows handled in the port. Other cargo service-related jobs include cargo survey, land transport and storage, port-related storage, and conveyor/pipeline transfer between berths and storage facilities. Generally speaking, the handling of break bulk typically has the highest dock labor intensity. This is also confirmed when analyzing the intrinsic cargo handling tonnes.

Many service companies involved in the booking, consolidation, and tracking of vessels and cargo, such as freight forwarders and ship agents, are located in the seaport area. The consolidation of cargo is an important port activity, which generates added value and employment and contributes to efficiency improvements in terms of loading rates and the balance between incoming and outgoing goods flows. Ports often act as consolidation points for partial loads, such as Less than Container Load (LCL) cargo and groupage activities. However, disintermediation in the supply chains and the increasing globalization of the maritime and port industry can imply that some ports face a relocation of some of the decision-making power over cargo flows to inland centers or major (maritime) cities. When cargo control centers are set up outside the port area, the role of the local service providers is narrowed down to specific operational tasks or back-office functions.

Employment and added-value per ton increase when goods undergo logistics or industrial transformations in the port area. For example, the stuffing and stripping of containers are up to five times more labor-intensive than the loading or discharging from a vessel. Storage, distribution, and other logistics activities in industrial subcontracting or postponed manufacturing in the port area also boost employment levels for a given cargo throughput level. The gateway position of major seaports offers opportunities for the development of value-added logistics (VAL). Many seaports have evolved from pure transshipment centers to key nodes within a logistics system. The rise of port-based activities in the hinterland can pressure logistics activities in ports and spread logistics job creation from the port to the wider hinterland.

Rules for Determining the Intrinsic Cargo Handling Values

2. Dock Labor

Port labor can be defined in different terms. Within a narrow definition, port labor refers to the loading or unloading of ships. Broadly defined, port labor refers to all forms of cargo handling in a port zone, including the stuffing and stripping of containers, the loading and unloading of inland waterway vessels, lorries, and railway wagons, and the storage and semi-industrial processing of goods in warehouses and logistics areas.

The term port/dock worker is a generic term that includes general workers (operatives) working on board ships as well as those on land, and specialized workers. Specialized workers are operators (or drivers) of various types of machinery such as forklifts, straddle carriers, reach stackers, bulldozers, bobcats, conveyor belts and cranes (also called winchmen); signalmen (hatchmen, hatch tenders, or deckhands); lashers; tallymen (also called tally clerks or checkers); (gang) foremen, and chief tallymen and chief foremen (supervisors). Signalmen are stationed at the hatchway opening, give the necessary signals to the winchman and supervise the raising and lowering of slingloads. Lashers are men who lash, unlash, secure and release cargoes stowed in the ship’s hold or on deck. Checkers or tallymen keep a tally of quantity or weight of goods shipped or received and check for apparent damage and shortages. Foremen are responsible for the management and supervision of a gang of workers. Typically, one gang of workers is used per ship’s hatch or hold or per shoreside crane. In many ports, cargo handlers also employ mechanics (also called maintenance or repairmen, including electricians) responsible for keeping equipment in running condition; these workers often have the same or similar status as port workers proper. Cargo handling companies also employ office staff involved in administration, sales, marketing, information technology, and legal matters.

Port workers are employed by a variety of employers, including private terminal operators, and public port authorities (especially crane drivers), or by companies controlled by a state-owned entity. Other port workers are self-employed and hired by ship owners or their agents. These workers may at the same time act as employers of other workers. Port workers include permanent workers employed under an employment contract for an indefinite or a definite term that is fully governed by general labor law and permanent workers registered as port workers under specific port labor arrangements. Many ports rely on registered pool workers who are hired on a daily basis (or for a shift or a half shift) and who are entitled to an unemployment benefit while they are not working. Finally, many ports use various categories of more or less irregularly employed supplementary workers (occasional or auxiliary workers, including, in some ports, seasonal workers and/or temporary agency or interim workers).

A. Market requirements

Dock labor is a key production factor for terminal operators, next to terminal land and capital goods such as cranes, yard equipment, and terminal management system hardware and software. While the dock labor force typically represents a modest portion of total direct jobs in quite a number of ports, it is a key production factor of port terminals. Dock labor is part of the supply profile of the port or terminal. Dockworker relationships are listed as a separate port/terminal selection criterion. However, dock labor performance also has an impact on several other criteria. For example, impacts might be found concerning supply profile factors such as container handling rates, service reliability, vessel turnaround speed, and berth availability. Factors related to the market profile of the port can also be strongly affected by dock labor performance. A dock worker strike negatively affects the factor port reputation. Furthermore, dock labor can affect inland transportation, particularly in ports where registered dock workers handle rail and barge cargo. Large port customers and large cargo handling companies can significantly impact dock labor arrangements as they try to apply best practices throughout their terminal network.

Shippers, third-party logistics service providers, and shipping lines exert pressure on terminal operators to meet their market requirements. The requirements of these market actors push terminal operators towards the maximization of the performance of dock workers. This objective can be deconstructed into three underlying dimensions, such as labor productivity, cost efficiency, and more qualitative aspects of labor performance. These dimensions are part of the ‘internal’ organization as they are largely under the control of dock labor management actors.

The impact of changing market requirements on dock labor

Dock labor arrangements and systems should be designed so that dock workers meet the market needs. However, these internal dimensions related to the organization of dock work take place within a wider set of legal and social conditions and the current and future state of technology. These more external dimensions form framework conditions for the development of dock labor systems.

B. Productivity

Labor productivity is an economic interpretation of labor performance and can be defined as the total output divided by labor inputs. Labor productivity captures the extent to which the human capital is delivering value to the firm.

The dock labor input quantity can typically be expressed in the number of person-hours worked and or the size of the docker workforce deployed to handle cargo. The output quantity can relate to the cargo volume handled per time unit (i.e. an hour, shift, week, month, or year) or the created value-added for the terminal operating company. In a supply chain context, the value-added of dock labor is the enhancement added to the supply chain by the workforce of the terminal operating company. From an accounting point of view, value-added is the sum of wages, amortizations of capital goods, and loss/profits. With the increasing importance of integrating ports and terminals in value-driven supply chains, many ports and terminal operators have developed a stronger interest in creating value-added, next to the more traditional approach aimed at maximizing cargo tons handled.

When using the output per person-hour or tons per gang shift, one should consider the technology used to handle the cargo and the nature of the cargo. Benchmarking dock labor productivity thus requires indicators that combine handling rates with the technology used, for instance, by looking at output per person-hour produced with a certain stock of fixed capital of a given technology and operational characteristics. The identification and use of relevant measures and key performance indicators (KPIs) on labor productivity also pose challenges in other industries where capital-intensive assets are used to produce outputs in the form of products or services.

C. Cost efficiency

Cost efficiency is the second dimension of labor performance. Dock labor costs (blue-collar) typically represent between 40% and 75% of total terminal operating costs of general cargo terminals. Next to a base wage, the labor costs include bonuses and wage supplements widespread in the port industry. Even in the capital-intensive container handling industry, the share of dock labor costs in total operating costs can be as high as 50%. The handling of dry bulk (i.e. major bulks such as iron ore and coal) requires less dock labor due to the presence of conveyor belt systems throughout the bulk terminals. Therefore, the share of labor costs at dry bulk terminals typically ranges between 15% and 20% of total operating costs.

Cost recovery is an important consideration for terminal operators in the context of labor cost efficiency. To reach cost recovery, terminal operators should design terminal pricing schemes that generate revenues above the total fixed and variable terminal operating costs related to capital, land, and labor (i.e. dock workers and white-collar workers involved in terminal management and administration).

D. Qualitative aspects of labor performance

The performance dimensions of labor productivity and cost efficiency are affected by the more qualitative aspects of labor flexibility and service reliability, quality, and dependability. Low service reliability, quality, and dependability (i.e. the quality of being counted on or relied upon) of dock workers expose terminal operators and the wider maritime and logistics community to all sorts of indirect and unanticipated costs. It can negatively affect productivity and cost recovery targets:

  • The service reliability is undermined when there is a shortage of gangs or dock workers, leading to substantial delays in vessel loading and discharging operations. Shortages can be caused by sudden non-anticipated peaks in demand or a (short-term) significant drop in the availability of dock workers (due to holiday periods, weekends). Structural long-term shortages are an incentive to enlarge the docker workforce.
  • Service quality is partly reflected in damage-free terminal operations. Cargo damage incidents at the terminal can result in an interruption of normal operations and generate costs for the cargo owner. A high incidence of damage cases might point to a lack of training or a low commitment of the dockworker (i.e. the absence of a ‘we care’ attitude).
  • Strikes negatively affect service reliability, quality, and dependability. Short isolated strikes and long port-wide strikes by dockworkers reduce labor productivity (sometimes to zero) and impose costs on the port and logistics community, trickling down to an entire economic system. Strikes cause port deviation costs for ship-owners, time costs for ships in port, lost revenues for inland transport operators and other port-related companies, time costs and broader logistics costs for cargo owners, and potentially high costs to factories linked to major disruptions in the production line (stock-out). Strikes are typically a result of disputes about labor conditions with potentially detrimental long-term effects on the port’s reputation. Labor disputes have been endemic in the history of the port industry. Most of the time, strikes resulted from disputes between labor unions (representing the interests of the dockworkers) and employer organizations concerning the terms and conditions for the renewal of collective bargaining agreements.
  • Accidents and absenteeism can confront a port or terminal with service reliability challenges, lower productivity, and additional costs. The reasons for absenteeism can be company-related (e.g. ineffective selection and placement procedures, excessive fatigue, ineffective use of skills, poor supervision, inadequate training or promotion programs) or personal causes (e.g. dual occupation, alcoholism, or drugs). As in other industries, absenteeism can relate to job satisfaction and an indicator of a worker’s responsibility in fulfilling his/her contractual obligations.
  • Lower service quality can also result from operational inefficiencies due to a lack of communication between the vessel and the terminal, possible breakdowns of equipment, or the late reception of the load plans. These will, in the end, affect cost efficiency and labor productivity.
Societal status of the dockworker

Next to service reliability, quality, and dependability concerns, there are the needs of terminal operators in terms of labor flexibility which takes several forms:

  • Flexibility in working hours. A distinction should be made between passive and active flexibility. Passive flexibility implies that the employer establishes schedules considering legal provisions and breaks, and holidays. Active flexibility gives employees much flexibility. A dock labor employment system with many casual workers typically generates a high degree of operational flexibility. The dockworkers have, within certain limits, freedom of choice for specific tasks. When the dock labor employment system does not impose a work obligation at specific moments in time (for example, for weekend work or work on holidays), finding enough volunteers is often a matter of providing generous bonuses for performing such tasks.
  • Flexibility in terms of total labor quantity. This refers to the possibility of adapting the size of the workforce to the amount of work that needs to be done. In terminal operations that suffer from peaks in cargo handling demand, this kind of flexibility is crucial for a good business operation. Another flexibility is linked to recruiting workers outside dockworkers pools (for instance, via temporary labor offices) when there are shortages.
  • Operational deployment of dock workers or the extent to which dockworkers can be used for different tasks (multi-skilling or multi-tasking). When dockworkers are assigned to specific job categories, such flexibility is only guaranteed when a system of qualifications (based on certification or training) allows dockworkers’ mobility between categories. When dock workers strictly adhere to their specific professional category, then the multi-skilled nature of the categories is typically low. This can lead to discrepancies whereby shortages in one category cannot be compensated by surplus dockers in other (higher-ranked) categories.
  • Flexibility in the assignment of gangs/teams, the size of the gangs, and the shift system in place. In principle, the employers benefit most when they have the widest possible freedom in switching gangs between vessels during a shift, vary the size of the gangs to match the desired productivity per hour, and deploy every dock worker to work in the most appropriate shift. In practice, there are limits to such forms of flexibility.

E. Legal and social conditions and state of technology

The internal organization of dock labor is taking place within a wider setting involving legal and social conditions and the state of technology.

The legal constraints are embedded in regulation and legislation and industry-wide labor and safety regulations. Both national governments and international/supranational organizations, such as the International Labour Organization (ILO), have a role to play. For example, the Dock Work Convention (No. 137) of 1973 is a convention on the social repercussions of new cargo handling methods in docks. This convention assigns great importance to the worker-technology relationship in ports, particularly regarding efficiency and training. Article 6 stipulates that each member shall ensure that appropriate safety, health, welfare, and vocational training provisions apply to dockworkers. The ILO Occupational Safety and Health (Dock Work) Convention (No. 152) of 1979 includes several mandatory training requirements. ILO also brings out recommendations that set out guidelines that can orient national policy and action and often complement corresponding conventions.

The theme of social conditions, including labor relations, is complex, difficult to delineate, and hard to measure. Dockworkers have a strong preference for employment systems that combine job freedom with labor conditions that are found in permanent contracts (such as job security and guaranteed wages).

The overall state of technology determines to what extent terminal operators can deploy new technology to improve the three dimensions of dock labor performance. These new technologies can be applied in terminal management, terminal equipment and automation, performance measurement and management, and human resource management (e.g. electronic hiring systems for dock workers).

3. Meeting Market Requirements

A. Deployment of new technology

The use of advanced terminal equipment and planning technology is one way for terminal operators to increase terminal performance and meet market requirements. Technological advances in cargo handling facilities have led to labor productivity increases and quality improvements but also brought new requirements in terms of the skills and qualifications of the workforce. Technological innovations and developments in cargo handling increase labor productivity expressed in tons handled per docker per time unit. The unloading of bananas is a good example. With the introduction of pallet cages and containerization, the number of banana boxes handled per minute per crane increased from 50 when using a spiral unloader to 385 for the pallet cage and 480 when pallets are containerized.

The willingness of stevedoring companies to invest in new cargo handling technology and automation is partly related to the perceived labor productivity benefits and cost savings at the level of dock labor. If a technical innovation would, in principle, reduce the workforce per gang (or, in the case of full automation, even eliminate workforce), the terminal operator will only benefit from the labor cost savings if the gangs are indeed reduced in size. If such a reduction in workforce is not possible within the contours of the dock labor employment system, then the stevedoring company will be far less eager to introduce technological innovations.

Handling equipment at a banana terminal
Freight Terminal Automation

B. The legal status of dockworkers

Dockworkers can be civil servants in state-owned service ports, directly employed by a private terminal operating company, or employed through dock labor schemes. Quite a few dock labor employment systems require that only registered dock workers perform dock work in the port. This obligation can be imposed by national or regional legislation or is the outcome of collective bargaining agreements between port employers and trade unions.

Though not ratified by many Member States, Article 3 of ILO Convention 137 makes explicit reference to the registration of dockworkers:

“Registers shall be established and maintained for all occupational categories of dockworkers, in a manner to be determined by national law or practice” and “Registered dock workers shall have priority of engagement for dock work”.

Where employers must use registered dock workers, the criteria for recognizing dockworkers and the entities involved in the recognition process might differ between ports. Port reform processes often envisage loosened preferential relations between registered dockworkers and port employers and introduce competition among registered dock work services providers.

C. Open and autonomous labor pool systems

A large variety of dock labor schemes can be observed among ports. Dock labor schemes are in some cases based on a centrally managed pool of registered dock workers. The use of registered dockers through such a pool can be mandatory, or not. This obligation can be de facto or imposed by law. Dock labor pool schemes generally involve three elements:

  • The designation of an “in-group” of officially registered (in effect, licensed) dockworkers.
  • Registered workers are not permanently employed at particular stevedoring enterprises but hired through a central pool or hiring hall, which stevedores are obligated to use for their primary source of casual labor.
  • A system of minimum pay guarantees or unemployment benefits for registered dockworkers who are left idle by a shortage of ships to be worked during a particular day, week, or month.

One of the main incentives behind the establishment of dock labor pools in quite a few ports is to guarantee flexibility in labor quantity. Employers and employees then jointly determine the size of the docker workforce based on current and future needs.

In an increasing number of ports, dock workers are directly employed by terminal operators instead of contracted via pools. In some cases, such as in Germany and the Netherlands, employers can hire permanent company employees directly from the external labor market. Still, any additional (casual) labor must be hired from a regulated labor pool.

There is a general trend towards open and autonomous pool systems with the back-up of temporary employment agencies. Over the last 50 years or so, the collective bargaining process in many ports has progressively been decentralized to the company level.

3. Improving Port Work Conditions

A. Increased training initiatives and modalities

Labor performance is impacted by training and experience levels. A customized training plan can provide dock workers with a future career path based on experience and proven competence. Many ports use occupational categories of dock workers combined with clear rules regarding the flow from one category to another higher category. The regulation of the influx of new dockers is also relevant in this context. Key issues in this respect relate to the ‘screening’ of potential candidates, training facilities, the modalities for trial periods, and the characteristics of labor evaluation systems.

Many ports have set up dedicated training centers for dock workers. These training centers offer voluntary or obligatory professional training courses for newly registered dockers and special schooling for dockers willing to move to another job category.

B. A push for continuous work

Terminal operators are pushing for changes in labor arrangements in view of boosting labor productivity, cost efficiency, service quality, and labor flexibility:

  • Continuous work. The high time costs of vessels make high quay productivity and 24/7 operations indispensable.
  • Performance improvements in terminal operations. There is a general tendency towards individual rather than collective breaks, flexible start times, and variable shift lengths.
  • Dock labor schemes show various ways of dealing with overtime, night shifts, and weekend work. For example, in some ports, weekend work is, to some extent, considered a normal shift. In contrast, dockers in other ports have the freedom to accept weekend shifts (voluntary basis) with provisions in place for overtime money if they do.
  • Implementation of the so-called ‘hot seat’ change or the seamless transition from one shift to another, resulting in continuous work on a ship which thereby reduces the idle time of the handling equipment.

C. Composition of gangs or teams

A competitive spirit between dock worker gangs and a strong social control within a gang enhance labor performance per shift. Strong and highly motivated supervisors typically create an atmosphere of coherence and a focus on solid teamwork. High flexibility in the deployment of gangs (e.g. movement of a gang between vessels during a shift) also contributes to optimal use of available dock workers.

Ports show a large variety in how the respective dock labor employment systems deal with the composition of and flexibility within gangs or teams of dockers. There are systems advocating semi-autonomous and multi-skilled team working with a high degree of freedom given to allocating tasks within specific shifts and over longer shift cycles. Other ports strongly rely on rather fixed gangs as the central entities responsible for achieving high productivity through experience, teamwork, and a spirit of competition among the gangs.

D. Changes in hiring systems

The hiring methods are guided by the provisions of local dock labor schemes. Even in ports with a pool of registered dock workers, hiring systems can vary greatly in terms of:

  • The hiring moment, such as hiring at fixed moments per weekday or continuously.
  • The persons involved in the hiring process such as foreman and company officials.
  • The characteristics and governance of the supervisory system.
  • The interaction between docker and hiring person/entity such as physical in a hiring hall or by electronic systems.
  • The control given to the docker, such as matching voluntarily or controlled externally with or without taking into account the preferences of dockers.

Technological advances in mobile communication have facilitated the modernization of job assignment systems towards electronic dispatching of dockworkers in ports or terminals, which have a high demand for a flexible workforce.

E. Specialization, categorization and qualification

Dockers in ports are generally not a homogenous group. Significant differences between their members can relate to the tasks carried out, the required skills, the way they are hired, the training arrangements, and career planning.

One of the foundations for the categorization of dockworkers is the division between permanent and non-permanent workers. Global terminal operators, particularly in the container business, increasingly demand direct employment for many of their own workers, especially crane drivers and other heavy yard equipment operators (the regulars). Casual workers are deployed during periods of peak demand. Even when a labor scheme is in place that includes a pool of registered casual workers, local port employers often hire a large proportion of dockers on an almost continual basis (the quasi-permanent workers or semi-regulars). Labor schemes often include a continuity rule where a docker hired on a particular day can be rehired for the next day(s) without having to be rehired every day in a central hiring place. The rule also gives new dockworkers the chance to become acquainted with the routines in a gang.

Some labor systems rely on the job categories of dockers, with varying degrees of labor mobility between categories. Other employment systems are based on job qualifications, allowing a (casual) docker to be deployed for any dock work, subject to them having the right qualifications. Dock labor employment systems show various types and degrees of multi-skilling among dockers. Multi-skilling programs can be organized at the company level, by the pool, or provided by the state. In some cases, multi-skilling arrangements allow functional combinations of several jobs to be performed within the same shift, which adds to labor flexibility.

There is a push for terminal operators to move away from job categories and opt for job qualification systems.

F. Enhancing motivation and commitment

Some intrinsic and extrinsic motivators that can be used in a dock labor context to promote motivation, a high labor spirit, and commitment:

  • Extrinsic motivators include wage levels and a performance-based bonus system in view to stimulating labor performance and job loyalty. For example, the most straightforward way to increase labor flexibility is to increase the remuneration of dockworkers through higher base wages or, more commonly, by installing bonus systems linked to flexible tasking and irregular working hours.
  • Intrinsic motivators include non-financial employment motivation and mental well-being aimed at increasing job satisfaction. When the societal status of the profession and professional pride are low, the port might face difficulties in finding motivated dockworkers.
Examples of art dedicated to dock workers

Industry relations between employers and employees also impact the motivation and commitment of workers. Consultation and social dialogue enhance employee-employer relationships. Labour unions are typically very visible at the dock labor front, although major differences in union power can be observed across seaports and countries. Most ports have a long tradition of social dialog, via both formal and informal channels. In case of disputes, a dispute-resolution procedure sets in to resolve problems and to avoid strikes. Through effective joint consultation bodies, social dialog is considered the key to a sustainable relationship between employers and trade unions. A climate of constructive dialogue enhances social peace in ports. In 2005, the International Labour Organization published a practical guide to social dialog in the process of structural adjustment and private sector participation in ports.

Related Topics

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