Port Crisis, Failing Infrastructure Threaten Future US Trade

Excerpt from International Trade Today  | February 11, 2015

The West Coast port slowdown is slashing profits for agricultural producers and traders, and a number of critical global customers are choosing to purchase beef and pork from U.S. competitors, said industry representatives at a Senate Commerce subcommittee hearing on Feb. 10. Lawmakers and other witnesses called for a quick resolution to the crisis over labor contract negotiations. The International Labor and Warehouse Union resumed work this week at West Coast ports, after the Pacific Maritime Association shut
down work from Feb. 7-8, 2015.

LA port pics Alysons auntBeef and pork exports typically arrive at West Coast ports with a 25-day shelf life, but the West Coast backlog is now holding up products for two to three weeks, said Cargill Vice President for International Sales Norman Bessac. “With this delay our Asian customers cannot depend on a reliable supply of beef and pork, so they’re canceling orders and looking to suppliers in Chile, Australia and the European Union to meet their needs,” said Bessac. “Anytime you disappoint a customer it takes time to build trust back.” Agricultural exporters are now forced to choose between risking spoilage, airfreighting products at increased costs or cutting exports, said Bessac.

The weekend port shutdown illustrates the risk of a full-blown shutdown, said Sen. Deb Fischer, R-Neb., chairwoman of the Commerce Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security. “For many businesses, changing shipping routes or modes is cost prohibitive,” said Fischer. “Unfortunately, whether they export agricultural goods or import retail, businesses are being forced to opt for air freight or are re-routing products to avoid losing market share due to missed shipments. Port congestion also impacts truckers and freight rail, as well as the competitiveness of the ports themselves.”

A shutdown would cause 2.5 billion losses daily to the U.S. economy, said Fischer and Bessac.

The risks to the U.S. economy and trade are more acute during this ongoing port crisis, but U.S. infrastructure as a whole is failing, said a number of lawmakers and witnesses. Subcommittee ranking member Sen. Richard Blumenthal, D-Conn., Sen. Maria Cantwell, D-Wash., and others called for a severe increase in federal investment in U.S. inter-modal infrastructure. President Barack Obama’s fiscal year 2016 budget urged Congress to pass a six-year, $500 billion funding plan for infrastructure development. Meanwhile, the National Retail Federation said imports continued to spike at the end of 2014, despite the uncertainty surrounding the West Coast port crisis, but commercial flow is now shifting to East Coast ports (here).