WASHINGTON, Jan. 28, 2015 – A dispute between U.S. West Coast port operators and dockworkers will continue to cost American agricultural exporters millions of dollars a day because their containers, many with perishable products, are waylaid on jam-packed docks where ship loadings are weeks in arrears. Though negotiators finally cleared a critical hurdle toward settling this week, reaching a final agreement, holding a union vote on it, and then recovering from the shipping backlogs will take months.
Meanwhile, Dermot Carey, a vice president of Darigold, says his Seattle-based dairy cooperative has 700 refrigerated containers on the docks at Tacoma and Seattle that aren't being shipped, plus millions of pounds of cheese and milk powder exports held up in coolers and warehouses.
Problems are mounting quickly as well in Southern California for California Dairies Inc., the state’s top dairy exporter, which sends its foreign shipments out of the big Long Beach and Los Angeles ports. “We were in pretty good shape until about two to three weeks ago,” says CDI’s Marie Tevelde, “but it continues to get worse daily.” Beyond backed up shipments, exporters are also dealing with shortages of storage space and equipment at the ports, and, in the longer term, the loss of foreign market share because of missed deliveries, she said.
The conflict has pitted the Pacific Maritime Association, operators of 29 West Coast ports plus shipping lines that use the facilities, against dockworkers of the International Longshore and Warehouse Union. Their contract expired last July, and progress toward a deal has frayed steadily since. A work slowdown, started nearly three months ago by crane operators and other workers, is swelling the backlogs.
Lawmakers and ag industry leaders have been calling on President Obama to press for a settlement. William Westman, an international trade leader for the North American Meat Institute, says White House officials have assured him they’re talking to both sides. But, he notes, “This is not a strike; it’s a work slowdown. So Taft-Hartley couldn’t be used to end it,” he said, referring to the 1947 law that lets a president seek a court injunction to end a strike in severe situations.
Still, the outlook for a settlement is improving. A federal mediator started meeting with PMA and ILWU earlier this month. A big sticking point resolved this week ensures that union mechanics will retain their jobs maintaining the trucks used to move containers at the ports. Big international carriers and their terminal operators that serve the ports have wanted to farm out truck maintenance to low-cost subcontractors. ILWU spokesman says that would not only eliminate union jobs, but lead to less efficient truck service.
Also heavily squeezed by the ports slowdown: meatpackers, who send a fifth of U.S. pork and poultry and 11 percent of beef abroad. The meat exports average over 220,000 short tons and $700 million a month to Asian markets, so even small stoppages in west-bound sales are expensive.
The port logjams are worst for chilled meats, which must be delivered swiftly in big refrigerated containers called reefers. With so much meat and other perishables now sitting on docks, the available supply of reefers has plunged as well, USDA’s weekly container count indicates.
At great expense, packers have been retrieving some stalled shipments and air-freighting them to Asia. But, NAMI’s Westman says delayed shipments of chilled meat has meant “we’ve had to freeze all of that product. That means we’ve lost those sales.” NAMI estimated lost sales, extra port charges and such are costing its members at least $40 million a week.
Meanwhile, the port holdups started hitting ag exporters of perishable items just as fall harvests were wrapping up and the prime ag exporting season was just starting. Case in point: apples. Washington state usually produces about half of the U.S. commercial crop and sends 30 percent of it abroad – which amounts to 90 percent of U.S. apple exports. With a bumper crop there this year, growers hoped to export up to half of their crop this fall and winter, says Diane Kurrle of the U.S. Apple Association. In fact, China had just announced days before the slowdown started that it was reopening to Washington state apples. Instead, many apple shipments are sitting idle, or have been cancelled or rerouted.
One Washington grower said he’s losing $2 million a week, Kurrle said, adding “We are desperate to move our apples.”
Matt Harris of the Washington State Potato Commission says in the month of November alone, his state’s growers lost $23 million in sales of frozen spud products to Asia and the Pacific Rim. “And the losses aren’t getting any better. Potatoes, apples, hay -- they’re all being backed up” at the ports, he says.
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