Farm exporters try to pick up pieces after port deal


Issue Date: February 25, 2015
By Ching Lee

Operations at West Coast ports are returning to their normal pace after a contract deal was struck between dockworkers and shippers, but California agricultural exporters say their business won't be back to normal for quite some time, as they deal with the enormous backlog of shipments that must be cleared at the ports.

The International Longshore and Warehouse Union and the Pacific Maritime Association, which represents shipping lines and terminal operators, announced a tentative agreement late last Friday after nearly 10 months of negotiations. The new five-year contract covers some 20,000 workers at 29 West Coast ports, which had experienced major slowdowns during the prolonged labor dispute.

Agricultural exporters say while they are encouraged by the news of the settlement, they also say they expect it will take several weeks to months for the ports to sort out the current stockpile of cargo before goods can begin to move on a more timely basis.

"Certainly all of our issues and problems with this are far from over," said Kevin Severns, general manager of Orange Cove-Sanger Citrus Association, a grower cooperative citrus packinghouse in Fresno County. "Our growers are going to feel the reverberation of this for months to come."

In the meantime, Severns said Sunkist Growers, which sells the association's fruit, has arranged for charter vessels to take some of the shipments to Korea and Japan. This will help to mitigate some of the current problems, but it will not make up for financial losses incurred so far or work slowdowns in the field and at the packinghouse, he said.

He estimates the port slowdown has cost the association's growers about $1.2 million in potential export business so far, not counting employee wages that have been lost due to reduced hours at the plant. Normally this time of year, the packinghouse runs 60 to 70 hours a week, whereas it's now down to 30 to 35 hours, he noted.

The state historically exports 25 percent of its fresh citrus crop, with the movement of navel oranges and lemons to Asia and other countries starting in late December and running into April, according to California Citrus Mutual. Earlier this month, the organization reported the state had lost 25 percent of its export opportunity.

"We're hoping things can get cleared out in time for us to salvage part of the late navel crop and possibly the beginning of the valencia crop," Severns said.

Operations at Border Valley Trading, which exports hay, also remain unchanged, said company President Greg Braun. He noted his company, which has operations in the Imperial and Central valleys, currently has a backlog of 400 containers that are still waiting to be shipped.

"I don't think people realize how big the logjam is—how many containers that are sitting loaded that need to move and/or how many containers that are sitting offshore with ships that need to come in," Braun said. "That all needs to happen first before industry can move on to what we call new business."

Because of delays in shipping his products, Braun said he has lost some of his customers, who ended up buying hay from other countries. His concern now, he added, is what his business profile will look like once the logjam clears at the ports and whether demand for his products will return.

Carissa Sauer, spokeswoman for the Almond Board of California, said economic damage from the port slowdown has varied among the state's handlers, with some experiencing delays while others have reported sales losses in the millions of dollars and even some temporary layoffs.

About 70 percent of the state's almonds are exported, with 80 percent of those exports departing from the Port of Oakland, the board said.

It is expected to take a few weeks before the respective sides of the labor dispute ratify the tentative agreement that was reached, said Jock O'Connell, an international trade economist based in Sacramento. In the interim, the agreement calls on both sides to continue to operate the ports as efficiently as they can, he added, "and right now that means digging themselves out of a pile of containers."

What could further complicate the backlog is when cargo volumes begin to pick up during the spring, which is traditionally an accelerated time for trade and a peak period for container movements through the ports, O'Connell added.

About two-thirds of U.S. beef and pork exports, which are shipped either frozen or chilled, rely on ocean freight, out of which nearly 80 percent exit the country through West Coast ports, said Joe Schuele, spokesman for the U.S. Meat Export Federation.

While shelf life for frozen meat is not a great concern, he said, exporters of chilled meat, which has greater value, have had to freeze their product in order to extend its shelf life, and that meat will have to be sold at a deep discount.

He noted some exporters have had to use air freight to deliver critical orders and help retain key customers, "but this is very expensive and is not a viable, long-term option for shipping large volumes to Asia."

Jim Geller, president of Geller International, a San Mateo County importer and exporter who works with manufacturers, processors and suppliers of beef, poultry, dairy products, produce and other foods, said while he has not had to divert too much product to other ports, with one poultry company he represents, he is now moving a container to New Jersey in order to avoid the delays on the West Coast. His suppliers in the Midwest also are saying they're starting to route traffic to other states, he added.

Meanwhile, Solano County-based Superior Farms, which markets lamb, has encouraged retailers who currently buy imported lamb and have product stuck at West Coast ports to start buying its products. The company announced it is extending special "Easter pricing" to new customers in hopes that they will switch to carrying American lamb, said Lesa Eidman, director of producer resources and sustainability for Superior Farms.

"Obviously, there's a lot of product sitting at the ports that hasn't been able to come in that many retailers typically have imported," she said. "When that product isn't available, then retailers that want to keep lamb in the stores will hopefully switch over to an American product, which is a benefit to all of the local producers here in the U.S."

(Ching Lee is an assistant editor of Ag Alert. She may be contacted at clee@cfbf.com.)

Permission for use is granted, however, credit must be made to the California Farm Bureau Federation when reprinting this item.