Market Matters Blog

Logistic, PNW Labor Issues Hurting Business

Mary Kennedy
By  Mary Kennedy , DTN Basis Analyst
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Flatbed truck loading containers of soybeans. (Photo courtesy of SB&B Foods Inc., Casselton, N.D.)

OMAHA (DTN) -- "Frustrated" was the one word Bob Sinner, president of SB&B Inc. located in Casselton, N.D., kept repeating during a recent conversation with DTN.

Sinner's business manages the marketing and sale of an extensive line of identity-preserved (IP), non-GMO and organic products to customers worldwide and has been supplying food-grade crops both domestically and internationally for over 20 years. Lately, however, it has been a challenge to do so because of the most recent snafu in logistics: a stall in negotiations between the International Longshore and Warehouse Union (ILWU) and the Pacific Maritime Association (PMA). The ILWU in this case consists of a group of 20,000 workers and the PMA represents shippers, stevedores and terminal operators at 29 West Coast ports.

Both organizations have been in contract discussions since May in hopes of avoiding problems when the contract expired on July 1 and eventually agreed to continue working under the current contract and continue talks. Sinner told DTN, "Here it is, five months later and things are only getting worse."

According to the PMA, tensions began to escalate in October, causing slowdowns and disruptions to container shipping. The union denied responsibility and told the press the problems were due to operational and logistic issues.

Sinner said both exports and imports of all containerized commodities are suffering. According to an article in the Minneapolis Star Tribune, "The dispute affects any cargo that needs to be shipped in containers, including fruit, vegetables, wine, beef and pork, high-protein distillers dried feed grain from ethanol plants, and specialty soybeans. It does not affect bulk vessels that ship Midwest corn and soybeans for animal feed abroad."

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In late November, the BNSF railroad ceased shipments from St. Paul of empty railcars heading for Seattle or Tacoma to pick up containers from ships. Sinner said his only "saving grace" was his ability to move containers out of Minneapolis on the Canadian Pacific Railway through Vancouver, BC. While this helped move some of the 240 containers of high-quality soybeans that he normally ships each month to the PNW, he said there are still many containers waiting to move.

Sinner said others were not so fortunate. He mentioned vegetable and fruit producers on the West Coast had to dump product in fields because the products weren't getting shipped and therefore spoiled.

Sinner is concerned his customers will get tired of waiting and look elsewhere for product, like Canada and South America. Sinner's customers reside in 15 countries, including Japan, Korea and Taiwan, and each customer has specific instructions for every bag of non-GMO soybeans that are shipped. He said his customers will not tolerate late arrivals of soybeans and will charge late fees or even cancel the delayed shipment altogether; a very costly situation for Sinner's business.

A small container shipper told DTN he has been unwilling to make sales because he is unsure if they will ship or not. "You can imagine what is happening to other guys and the losses in fresh fruit, veggies, hay off California, Oregon, Washington; losses are in the nine-digit range and jobs are being lost."

Sinner told DTN the only glimmer of hope right now is the scheduled caucus in San Francisco beginning on Dec. 15 between the ILWU and PMA.

"Every port on the West Coast is suffering right now," said Sinner. "While there are strong hopes for a resolution during the caucus, it would still take weeks before the members vote. It is so frustrating not knowing what is going on."

On Nov., 17, a group representing United States agriculture and forest products producers -- including farmers, food processors, exporters, and transportation and logistics providers -- wrote a letter to President Barack Obama urging him to send a labor mediator to help reach a contract deal. In the letter, the group warned, "There is nothing that we produce in this country in agriculture and forest products, that cannot be sourced somewhere else in the world. We can grow the best in the world, but if we can't deliver our products affordably and dependably, the customer will go somewhere else and may never come back."

According to the Minneapolis Star Tribune, "A White House spokesman said the president is monitoring the situation, but isn't planning to force a resolution."

Here is a link to the letter written to the president: http://goo.gl/…

Mary Kennedy can be reached at mary.kennedy@dtn.com

Follow Mary on Twitter @MaryCKenn

(AG/CZ)

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