Bill Bloxom of F. C. Bloxom Company in Seattle, WA says Chilean apples can displace Washington State apples as well, especially when transportation costs are more reasonable. Some customers even sourced potatoes and onions from Australia and New Zealand during the slowdown, while others in the Caribbean turned to Prince Edward Island, Canada.
“If we can’t be consistent and priced right, we’ll lose to these other markets,” Bloxom states. “Our customers have had a lot of exposure to alternatives; there will be a lot of competition out there.”
PORT SLOWDOWNS AND STRIKES: PRODUCE INDUSTRY IMPACT
For perishables shippers, port disruptions can have a profound impact:
• Increased costs due to overland shipping, extended cold storage, last-minute changes in sourcing and logistics
• Lower prices due to lower quality and/or late shipments (e.g., missed holidays) and the resulting discounts or refunds
• Selling locally instead of shipping stranded commodities, flooding the domestic market
• Squeezed margins due to a combination of lower prices and higher costs
• Lost market share to foreign suppliers (for exporters) and domestic suppliers (for importers), potentially with long-term ramifications
• Inventory concerns, including low inventories for domestic importers and retail customers, and high inventories for exporters
• Lost sales for exporters, importers, growers, and retailers, potentially extending into the future due to poor customer experience
• Spillover effects, including congestion and delays at other ports not directly affected by the slowdown (the East Coast, Gulf of Mexico, Canada), as well as railroads and trucking
• Layoffs and lost hours for workers due to uncertainty and stalled shipments
• Destroyed or rotting commodities, when no alternatives can be found (or if the domestic market becomes too flooded and prices drop too far).
That said, fortunately, Schulman believes “people have short memories.” International trade is still governed by price: “If European apples are $2 more, they’ll come back.”
What Else Can Be Done?
Short-term fixes such as shipping from other ports or finding alternative suppliers can help produce companies get through the worst of a slowdown, albeit with sales losses and reduced margins. In the long term, however, the threat of recurring strikes and slowdowns are a constant concern.
“I’m thinking about alternatives, but what alternatives are there?” asks Autenrieth. He cites one example: exporters could band together and charter vessels to key markets. Such a step would only be possible, however, for firms that plan ahead and are able to assemble the minimum volume required.
On a more macro level, observers note that newer ports in places such as Vietnam, Cambodia, and Singapore are highly automated and vessel operations are streamlined with much smaller crews than in the past. This puts U.S. ports at a disadvantage in terms of speed, service, and efficiency, a situation magnified by threats of slowdowns and stoppages.
