So which is the lesser of two evils? Being prepared or being paranoid? For those who lost millions in spoiled produce, a little paranoia may be a good thing, to prevent the frustration and waste of perfectly saleable perishables.
Brace for a Long Recovery
The impact of a port slowdown or strike does not end once a contract is agreed upon. “The full impact still hasn’t been realized,” Janke says. “It takes a while to bring the supply chain back to reality.”
US. PORT OPERATIONS
WEST COAST
Management: Pacific Maritime Association
Union: International Longshore and Warehouse Union
Total Ports: 29
Key Ports: Los Angeles, Long Beach, Oakland, San Francisco, Seattle, Tacoma
Contract Expires: June 30, 2019EAST & GULF COAST
Management: U.S. Maritime Alliance
Union: International Longshoreman’s Association
Total Ports: 7 marine terminal operators (direct employers) and 11 port associations
Key Ports: Houston, Jacksonville, Miami, New York-New Jersey, Virginia
Contract Expires: September 30, 2018 (extension negotiations ongoing)
In the short term, port operations take time to straighten out. Six months after port managers and the union agreed in principle to a West Coast contract, Autenrieth estimated about 30 percent of shipments were still not going out of Oakland, due to continued troubles with port processes, while San Francisco remained congested as well. “This drastically reduces our ability to ship out,” he says.
Seasonality, too, intensifies the challenge. Countries such as South Africa or Chile can ship year-round, but “California has its time,” explains Autenrieth. “If you miss it, you miss it. You can’t just double up when the ports are back.”
Another critical factor is retail. Since supermarkets have already planned ads and promotions for various commodities during peak season, they must turn to other markets to ensure supply if their usual sources experience delays. Once the supermarket has a good experience with a new supplier, it can be hard for the previous supplier to get the customer back.
The same is true for international sales. Although the Pacific Northwest is a major source for apple and pear shipments to Asia, “Europe got a real leg up last year,” explains Reinholt. Europe’s apple supply was larger than usual, due to the Russian embargo, and more reliable than West Coast shippers. So the slowdown certainly benefited European suppliers, who he believes will be able to keep this new business, to the detriment of U.S. suppliers.
Port problems tend to be a rarity in Europe compared to the United States. In addition, the level of service is good and European rates for ocean freight are often less than in the United States. So when buyers are looking for more stable, lasting relationships, these factors bolster the competitive advantage of European suppliers, especially when U.S. producers are mired in difficulties like a port strike.
