Ripples from port protest spread across the Pacific

By PHILIPPA STEVENSON, CHRIS DANIELS and AGENCIES

Ripples from the US west coast port dispute are spreading rapidly to all corners of the Pacific, throwing logistics into chaos.

Port workers have been locked out of their jobs by the port and shipping companies for the past week.

Among many New Zealand exporters threatened by the dispute are avocado growers, who fear their trade in the key US market will be disrupted for the second year in a row. They export to America from September to the end of November, and last year the trade was severely affected by the September 11 terrorist attacks when many Americans stopped eating out and tourism slumped.

Avocado exporter Alistair Young of Team Avocado said the port lockout was "disconcerting, to say the least".

A ship carrying up to 400 pallets of avocados worth about US$750,000 was due to arrive in Los Angeles tomorrow. A second was due to depart yesterday on the two-week trip.

President George Bush has authorised a board to present him with data tomorrow to justify ordering ports open for 80 days under the 1947 Taft-Hartley federal act. The provision, last used by President Jimmy Carter, provides a "cooling off" period in a national emergency, which can include a risk to the US economy.



Affco chief executive Tony Egan said some shipments of frozen beef had just landed in the US.

He said the company had been paid "so it's the customers' problem".

Of greater concern was a shipment due to arrive next Tuesday, and Affco hoped President Bush would secure the 80-day cooling off period for the strike so the port's backlog could be cleared.

As a backstop, the shipment might be offloaded in Mexico.

Mexico is also the destination of one of the last shipments of kiwifruit to the US, expected to arrive in a few days. Thirty pallets of fruit on board the ship are destined for Los Angeles, but if the dispute is unresolved they, too, would be taken off in Mexico, a Zespri spokeswoman said.

Trans-Pacific shipping schedules have now also been disrupted by the lockout.

Some analysts are likening the system to a conveyor belt, with goods piling up at one end.

Brian Sadgrove, of the multinational freight-forwarding company UTI, and president of the New Zealand Customs Broker and Freight Forwarders Federation, said his company was rushing to charter aircraft to fly from Asia to the United States.

He said exporters now had a difficult decision to make - whether to spend at least 10 times more to airfreight their goods, or risk losing an important market to competitors.

Importers could soon find themselves waiting for vital goods.

"What will happen of course is that there will be a backlog of US exports coming down to New Zealand. This backlog of sea-freight will all hit here at the same time," he said. "It's not far to Christmas. Seasonal stock may not make it on time."

The longer the dispute dragged on, the more it would determine which exporters would turn to airfreight.

Space for sending freight by air was tight anyway, Sadgrove said, as airlines had cut back capacity after September 11. They would not increase their flights in response to demand for freight space, because they could not fill the seats on the planes.

The Korea International Trade Association yesterday said South Korean exporters were suffering daily losses of US$50.5 million ($107 million) due to the week-long shutdown, which has left about 200 cargo ships stranded outside West Coast docks.

"Goods are piling up in warehouses and ports. In 10 days, if ships don't come back there will be no more room and factories will be shut down," said Andy Xie, chief economist for Morgan Stanley Asia in Hong Kong.