For 14 weeks, 29 West Coast port terminals from San Diego to Seattle have been operating at a diminished capacity as the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA) negotiate new contracts for all employees. The organizations have told the public that they have been close to an agreement for weeks, but the dispute continues and every minute costs American retailers. Some estimates even put the number at $7 billion in 2015.
Meanwhile, U.S. food producers are bearing the brunt of the collateral damage: The North American Meat Institute estimates that the meat and poultry industry are losing $40 million per week due to the slowdown. California Citrus Mutual estimates that California citrus growers have already lost 25% of their export opportunities for the year. The Washington State Potato Commission reports that $23.5 million in frozen french fry exports have been lost every month since November.
The point is, U.S. food producers and growers can't afford to keep losing product and profits due to two organizations battling each other in a wage negotiation. At some point, both the ILWU and PMA need to worry about diminishing returns. As service slows (and in some cases, completely stops), customers will search for new avenues to move product. An improved pension system and higher salaries may be a great short-term win, but will ultimately mean nothing if shipping companies leave and force layoffs at the ports.
The local economy in Portland is already feeling the heat, as Hanjin Shipping Co. will be terminating operations at Terminal 6 in the Port of Portland after concerns about the slowdown have forced them to search for greener harbors. This has left farmers as far away as Idaho scrambling to find new export opportunities. In some cases, farmers are turning back to the domestic market. Agricultural groups are asking Congressmen to do something about the ports, who are in turn imploring President Obama to use the Taft-Hartley Act to help end the slowdown.
It would be wise for both parties to find some common ground before there's nothing left to ship at their ports.
Chris is a business writer and market analyst that focuses on the Markets, Legal and Washington sections of the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He invites you to contact him via email at email@example.com to talk about anything food-related.
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