Dockworkers lockout yields domino effect
Clock ticks awayon perishables suchas grapes and onions
With the West Coast's 29 major ports shut down since last weekend because of a contract dispute, Patti Iverson-Summer is watching customers grapple with problems they can't control.
'There are no expletives that convey how strongly I feel,' says Iverson-Summer, who works for Global Trading Resources, a Portland company that is both a customs broker and freight forwarder.
The port shutdown had been a looming threat since May, when the International Warehouse and Longshore Union and the Pacific Maritime Association, which represents terminal operators and shippers, started negotiating a new three-year contract.
But the reality is turning out to be far worse than the threat.
Companies that rely on the export-oriented port to ship out wheat and other grains, as well as perishables including apples, pears, potatoes and onions, say the timing is especially cruel.
'In an economy where over the last few years we've been faced with such competition from outside markets, like China Ñ this really, really puts a damper on our comeback,' says Heather Stewart, director of Allports Forwarding Inc., another Portland customs broker and freight forwarder.
Negotiators for the two groups resolved health benefit issues several weeks ago. The remaining dispute is over introduction of new technology into cargo handling. The union says computerization is great if it doesn't cost union jobs; management contends advanced technology is necessary to deal with soaring cargo volumes.
The union's last strike was in 1971, but this work stoppage is not a strike; rather, longshore workers are locked off their job sites by the maritime association.
While negotiations were going on this spring and summer, Iverson-Summer says: 'We had high hopes that both sides, negotiating in good faith, would take into consideration the times Ñ homeland security, the recession Ñ and realize this would not be a good time for all shipping to come to a screeching halt.'
The port closure Ñ which began Sept. 27 Ñ immediately affects 10,500 longshore workers. But they're not the only ones.
Studies estimate that shutting down the ports initially has cost $1 billion a day. But that cost is expected to soar if the shutdown continues: An economic study done for the maritime association predicts the cost of a 10-day shutdown would climb to $19.4 billion. Almost $300 billion in goods moves through West Coast ports in a year.
Oregon's state economist thinks many retailers bulked up their inventories as insurance against a possible lockout. As a result, Tom Potiowsky says, they're buffered against what's happening.
'The group that may be more immediately hit is probably the manufacturers more attuned to doing just-in-time inventory methods,' he says. That's a reference to the shift many firms have made in recent years: They save money by keeping only a week or two of inventory on hand.
Also in peril, he noted, are 'the agricultural products that are perishable Ñ that does hurt.'
In Oregon, Potiowsky says: 'It seems like if they can work this out within two weeks, there probably won't be much of an impact at all, of any huge consequence. The longer that discussions and the lockout continues, of course, the worse things will get.'
Grain trains parked
Ships at anchor Ñ either unable to unload or waiting for cargo Ñ dot the Columbia and Willamette rivers. Railyards and sidings are filling up with loaded grain cars; both the Burlington Northern Santa Fe Railway and the Union Pacific Railroad have embargoed further moves of international cargo to and from the West Coast.
Union Pacific spokesman Mike Furtney says grain trains still are running, although they might be held in railyards, preferably those as close to the docks as possible.
UP's Albina Yard just north of the Fremont Bridge 'is normally a busy yard anyway,' Furtney says, adding, 'At this point the railroad continues to be fluid; we're not experiencing any serious congestion problems anywhere.'
About 8,000 containers Ñ some empty, some loaded Ñ are sitting at Terminal 6. The imported goods that some contain, from computer and electronic components to building materials, apparel and toys, are parked tantalizingly out of reach for the companies that ordered them.
Stewart can be more specific about what's in some of those containers: fresh commodities, headed for export, that won't last forever. And customers calling, she says, to ask: 'What are you going to do? You've got to do something now!'
'As of (last) Friday we had some ideas of contingency plans,' Stewart says. 'As the days go by with no (contract) resolution, those plans become less viable when we have products that are perishable stuck on vessels or stuck at the ports or stuck on barges, in trucks, or container yards.'
She lists the contents: fresh onions, grapes, celery and lettuce out of California, and frozen french fries, headed for fast-food franchises overseas.
'They're stuck,' Stewart says. 'We can't really do anything about it right now, but the inventory is not getting to the franchises over there, which is going to cause a problem for them.'
Onions are 'sort of touchy,' according to Stewart. They aren't shipped in refrigerated containers, and they've got a limited transit time: 14 days, now dwindling fast.
'Once this thing is cleared up, we have to make a decision whether the quality is good enough to send then overseas,' she says. 'Or, we have to take them back to their origin point and have them dumped as garbage.'
Bad for wheat growers
Jonathan Schlueter of the Pacific Northwest Grain and Feed Association says the port shutdown also is bad news for wheat growers, who have been enjoying the highest prices in years for their crops. Portland is the country's leading wheat exporter, rivaled only by the lower Mississippi in the amount of various grains exported.
At least for now, the lockout isn't affecting any food aid shipments; last year, a quarter of the wheat shipped from Portland went to a number of famine-stricken countries around the globe. But customers in foreign lands aren't getting the wheat they ordered.
Washington apple growers, who produce one of the state's most valuable agricultural crops Ñ and export a third of it Ñ fear a prolonged shutdown will crunch into their hard-won foreign markets. Taiwan, for example, is the second-largest export market for the state's apples.
'Asia is huge for us,' says Tracy King of the Washington State Apple Commission. 'Every day that goes by, we're missing a lot of business. Just as bad for us, it creates an opportunity for our competitors to get in Ñ it gives an opportunity for apple growers from France, China and other apple-producing companies to take advantage of the situation.'
He adds, 'We're a year-round business; we have to export every single day of the calendar year. É Because we're so big, there's no time that would be good for this to happen.'
Millwork firm awaits wood
On the import side, there's potential for everything from inconvenience to empty shelves if the lockout drags on. Some companies were able to plan ahead; for others, it wasn't an option.
Emily Kaplan, a spokeswoman for Columbia Sportswear, says the Portland apparel giant started positioning itself last spring for the possibility of a port shutdown.
'We upped our production schedule,' she says.
As a result, she says, the firm already has received more than 90 percent of its fall-winter line from Asia and is 'doing all right right now.'
The amount of stock will carry Columbia Sportswear through Christmas.
'Everything is in the hands of customers or in the distribution center waiting to be trucked,' Kaplan says.
But Woodgrain Millwork Inc., which though based in Fruitland, Idaho, has plants in White City and Lakeview, may have to shut down factories when it runs out of raw materials, which could be within a week. A ship loaded with radiata pine from New Zealand, scheduled to dock in Portland this week, is stranded in the Oakland, Calif., harbor; another ship is en route from South America.
The mills have some wood on hand, says Mark Bickmore, Woodgrain's export manager: 'We usually keep only about seven days' material at our facility to reduce the amount of money tied up in inventory.'
If the dispute isn't settled by the end of next week, Bickmore says, the company will run out of wood and have to close plants. Woodgrain's plants in Oregon and Idaho employ about 800 workers, who would be laid off.
Woodgrain, which makes window frames and moldings, is one of the largest millwork companies in the United States. It imports the majority of its raw materials from the Port of Portland, receiving a shipment weekly.
The shutdown means no work for the truckers who haul the wood out of Portland to Woodgrain factories.
'We're having a lot of truckers call to see if we do have anything, because they're looking for loads to pick up,' Bickmore says.