Last week USMEF was represented on a panel discussing port congestion and other issues impacting ocean freight at the Agricultural Transportation Summit Conference in Rosemont, Illinois. The conference was hosted by the Soy Transportation Coalition and the National Grain and Feed Association.
Joe Schuele, USMEF vice president of communications, participated on the panel along with Jon Gold, vice president of supply chain and customs policy with the National Retail Federation, and Jim Walker, director of navigation policy and legislation for the American Association of Port Authorities.
Schuele was asked to recap the West Coast port congestion that occurred in late 2014 and in the first quarter of this year and explain its impact on U.S. beef and pork exports. He noted that while the port crisis was not the only reason meat exports have slowed in 2015, it was a significant factor – especially for chilled meat exports, which declined 18 percent year-over-year in the first quarter.
“Other factors, such as the strength of the U.S. dollar and unusually large supplies of Australian beef and European pork entering Asian markets, have also had a major impact on exports in 2015,” Schuele said. “But the West Coast port crisis was a significant obstacle at a time when our industry was already facing strong headwinds.”
Gold explained that U.S. retailers shifted a significant amount of import volume to East and Gulf Coast ports to avoid the congestion, and some of that traffic still has not returned to the West Coast. This was confirmed by PIERS data, which showed double-digit growth in containerized imports at several East Coast ports in the first half of 2015, with the East Coast’s share of U.S. imports increasing from 40 percent to 43 percent. Gulf Coast share increased from 5 percent to 6 percent, while West Coast share dropped from 55 percent to 50 percent.
Schuele noted that the shift in import traffic away from the West Coast is not a positive development for meat exporters serving Asian markets.
“We need the West Coast ports to be competitive on the import side, because we rely on those vessels,” he said. “If the import traffic shifts permanently, there will come a time when we don’t have the shipping capacity needed to serve customers in Asia.”
Both Schuele and Gold said they are encouraged by the possibility of an early labor contract extension for the East and Gulf Coast ports. The current contract between the U.S. Maritime Alliance and the International Longshoreman’s Association doesn’t expire until 2018, but the parties recently opened exploratory discussions on an extension that could run through September 2025.