Port of Tacoma

Collateral damage mounting from slowed activity at West Coast ports

Gary Gieser has a one-word summation of the effects of a three-week slowdown of shipping activity on West Coast docks.

“Catastrophic,” said Gieser, who is the vice president of the Puget Sound’s largest container freight consolidator, MacMillan-Piper Inc. “We are pretty much at a standstill,” he said.

Containerized exports and imports alike have been reduced to a trickle. Port terminals are stuffed to the limit with containers as are local warehouses and container yards. Trains bearing export containers destined for Puget Sound ports are stalled in yards and sidings in Eastern Washington, and the region’s major railroad, Burlington Northern Sante Fe Railway, is restricting shipments between Chicago, Minneapolis, Denver and West Coast ports.

At MacMillan-Piper and elsewhere, some workers are being laid off because of the port situation.

The gridlock is the result of a simmering dispute between the International Longshore Workers Union and the Pacific Maritime Association, which represents shipping companies and terminals at 29 West Coast ports. A contract between the two expired July 1, and negotiations, which began in May, haven’t produced a new agreement.

The slowdown in loading and unloading huge container vessels began in the ports of Tacoma and Seattle on Halloween and has spread to other West Coast ports. The PMA blames Longshore workers for cutting the pace, claiming that in some instances productivity on the docks is down 60 percent. The union says shortages of container chassis, larger ships and mismanagement are at the root of the issue.

Agreement on a new long-term contract likely won’t happen soon. The PMA announced Thursday that “main table” negotiations between the union and its employers has halted until at least Dec. 2 at the request of the union. Union spokesman Craig Merrilees said the talks continue but in smaller forums dedicated to reaching agreement piece-by-piece.

“Those smaller negotiating groups have proven to work in the past, and we’re continuing to negotiate,” he said.

That news has some trade-dependent businesses anxious as they watch their customers flee to other providers and see their perishable commodities molder inside containers. The same goes for importers who are scrambling to supply their domestic customers with goods to keep production lines running and their shelves filled with goods at the holiday season.

“This couldn’t have happened at a worse time,” said Chris Voight, executive director of the Washington Potato Commission. Washington’s $5 billion potato-growing and processing industry (Washington is the nation’s second-largest potato producer in the country after Idaho) depends on export markets for about half of its business.

“With the ports jammed, potato farmers and processors alike can’t get their products to their foreign customers,” he said. Those customers are turning to other producers in Europe and Australia for their supplies.

Dozens of containers packed with fresh potatoes specifically bred and grown to be made into chips, are sitting in port terminals, warehouses and at the farms where they were grown with little hope they will arrive at the foreign chip producers before they spoil.

Voight said because those potatoes are contract-grown for chip-making they can’t be made into french fries or mashed potatoes even if the shippers could retrieve them from the clogged storage yards. Many ultimately will likely be thrown away.

Big french fry producers Simplot and ConAgra have cut shifts at their Eastern Washington plants because the domestic market is already flooded with frozen potatoes.

U.S. potato buyers are unlikely to benefit from the glut because potatoes “are already over-produced and prices are in the toilet,” he said.

The only beneficiaries are likely to be food banks, which may receive many of the excess tubers that can’t reach foreign customers.

The situation is much the same for hay and apple producers, which both count on foreign markets to absorb their production. Washington, the nation’s largest apple producer, has grown more than 155 million boxes of apples this year, a new record.

In Tacoma, CEO Pierson Clair, of candy maker Brown & Haley, said the confectioner is being adversely affected on both the import and export side of the business.

Some of the packaging materials Brown & Haley receives from overseas aren’t arriving on time and its exports aren’t heading to Asia on their original schedule.

The maker of Almond Roca sells about 45 percent of its output overseas.

“There are a whole lot of containers of our stuff some place out there,” he said. Export sales peak during the Lunar New Year celebrations in Asia, so it’s critical for the company to bolster its supply on Asian shelves.

In Renton, Pac-Rim Building Supply Inc. President John Cahill said shipments of building supplies to Asia are jammed at the ports.

And importers and exporters are struggling to find chassis to carry their containers to and from the ports. Terminal operators are restricting inbound truck traffic to goods destined for specific ships already at the wharf. Because of the congestion, many aren’t accepting empty chassis or allowing truckers to retrieve chassis from their terminals.

Leased chassis incur daily charges outside of the terminals. Charges increase if the chassis user can’t return empties or chassis carrying containers destined for shipments on ships calling in the near future.

Truckers servicing the terminals are in a particularly difficult spot. Since the slowdown began, many of them spend hours awaiting entry to port terminals, drastically cutting their income.

Many of those truckers are independent contractors who get paid by the load delivered. In more normal times, a trucker might handle six loads a day. Now they’re lucky to handle a single load a day.

Jim Tutton, vice president of the Washington Trucking Associations, said those independent operators, unable to generate a steady income from moving containers, are abandoning the business and seeking other work.

“Many of those won’t be getting back into trucking,” he said. There defection from the industry will aggravate the shortage of truck drivers already plaguing the industry.

Some local manufacturers who supply major companies say they’ve been forced to hire jet freighters to bring their goods from China at huge costs.

Chartering a Boeing 767 for a flight from China to Sea-Tac can cost $400,000.

The slowdown is now affecting businesses as distant as Florida.

Wendy Krepak, owner of Orlando-based Card Cubby LLC, said her holiday shipment of card wallets from China is tied up in a container yard at the Port of Tacoma. Holiday sales represent about 25 percent of her business.

“I’m looking at a pile of orders that I may not be able to fill,” she said Friday. “I wish there was something I could do to affect the situation.”

Most businesses say they’ve called or written President Barack Obama, Gov. Jay Inslee or their congressional representatives. So far that’s yielded only polite replies and little progress toward resolution.