Even Management Consultants Have Figured Out That Port Automation Is Chronically Overrated

Published: 12 Jan 2019

A new report into port automation by a prominent management consultancy used by rightwing bosses and governments worldwide has shown what unions have known for years – that automation always costs a fortune but rarely delivers forecast profits and productivity gains.


The global survey of port stakeholders by leading right wing management consultancy McKinsey & Co found that container terminals are accelerating their investments, but many are not able to generate projected cost or performance benefits.


Respondents expected automation to cut operating expenses by 25-55 per cent and to raise productivity by 10-35 per cent.

However, it reality, the survey found operating expenses at automated ports fell by 15-35 per cent while productivity actually fell by 7-15 per cent.

Maritime Union of Australia (MUA) National Secretary and International Transport Workers’ Federation (ITF) President Paddy Crumlin said workers had known all along that the shift to automation was ideological rather than practical.


“We have been saying for years that the business case for automation doesn’t stack up but this time it isn’t just unions saying it but right wing bean counters as well,” Crumlin said.


“Too often we have seen snakes in suits who think they can remake the waterfront in their own image but ultimately it is workers and company shareholders who pay the price for misguided management adventures on automation.


“I look forward to the next round of consultants’ reports recommending that employers actually sit down with workers and their union to see how real productivity can be achieved at container terminals without enormous capital expenditure and failed expectations – but I won’t hold my breath.


“Instead the report outlines a race to the bottom – cutting the jobs of hardworking men and women with no regard for the human cost, let alone poor business practice so unions and their members will have to keep up the fight for quality jobs, adequate safety and decent conditions."


The McKinsey report said an anonymous global port operator informed them that the average number of gross moves per hour for quay cranes is in the low 20s, while at many conventional terminals it is in the high 30s.


Poor data quality, siloed operations and the failure of ports to simplify processes before automating them were also factors at ports where automation has not yielded the expected benefits.

“With numbers like these, automation can’t overcome the burden of the up-front capital expenditures,” the report said.

However, this is not slowing the pace of automation in the ports sector, with 80 per cent of survey respondents telling McKinsey they expect that in the next five years, at least half of all greenfield port projects would be semi or fully automated.

Just over one third of respondents expect the proportion of automated ports will rise above seven in ten.


“Brownfield projects—the total or partial conversion of existing conventional ports—will probably gain momentum soon: more than half of the participants expect at least 50 per cent of the top 50 ports to initiate retrofitting plans or to add automated equipment during the next five years,” the report said.

“But the survey also clearly showed that the return on investment from port automation demands attention from port operators and investors alike. Up-front capital outlays are high.

“We estimate that to justify these investments, the operating expenses of an automated greenfield terminal would have to be 25 per cent lower than those of a conventional one or productivity would have to rise by 30 per cent while operating expenses fell by 10 per cent.”



Authorised by P Crumlin, Maritime Union of Australia, Sydney