The slowdown in shipments through the U.S. west coasts largest container port in Los Angeles, California due to a labor dispute has caught national attention for imports for the after-Christmas season. The shortage of U.S. French fried potatoes at McDonalds fast-food restaurants in Japan shows how the slowdown is impacting U.S. agriculture and its consumers throughout Asia.

Members of the International Longshore and Warehouse Union (ILWU) have been working without a contract since July 1. Bargaining on a new contract began in May. Earlier this month, the Federal Mediation and Conciliation Service was asked by both sides to join the collective bargaining talks between the ILWU and the Pacific Maritime Association (PMA) representing the employers. Union representatives said late last year that some issues had been tentatively resolved, but critical issues about job protection and jurisdiction issues remained. Labor disputes are not new to the port; negotiations in 2002 i 2008 missed deadlines for reaching a contract and a 134-day strike occurred in 1971. Each side blames the other for not keeping up with the rapidly changing industry with larger ships.

In a modern container port, crane operators are an important labor activity in moving containers from ship to shore, and vice versa, and shore to truck chassis for delivery to their destinations. The current slowdown involves the movement of containers in the yard, not the movement from ship to shore and onto ships. The industry estimates that efficiency has been reduced by 40-60 per cent.

Almost everyone in agriculture knows that the New Orleans region is the number one port in the U.S. for agricultural trade estimated by the Agricultural Marketing Service (AMS) of USDA in 2011 a 61.6 milions de tones mètriques (MMT), amb 1.9 MMT of imports and 59.7 MMT of exports, 33 percent of all U.S. agricultural trade. More than 99 percent of agricultural exports from New Orleans moved in bulk vessels. Only 6 percent of those were refrigerated.

Los Angeles was the second largest U.S. port for agricultural trade in 2011 a 10.4 MMT, with imports of 2.7 MMT of imports and 7.7 MMT of exports, i una 6 percent share of U.S. agriculture trade. It is the largest container port in the U.S. i 99.8 percent of agricultural exports are in containers as are 95.4 percent of imports.

Animal feed tops the export list at 2.4 MMT, 31 percent of agricultural export from Los Angeles and 23 per cent de U.S. exports of animal feed. Soybeans have the second largest tonnage at 1.1 MMT, 14 percent of agricultural exports from the port, però només 3 per cent de la U.S. total.

Cotton is third on the list at 775,000 Montana, 10 percent of total agricultural exports and 52 percent of cotton exports for the U.S. Other products of interest include meat at 470,000 Montana, 21 per cent de la U.S. total, hides and skins at 385,000 Montana, 45 per cent de la U.S. total, grocery items at 280,000 Montana, 8 per cent de la U.S. total, oranges at 190,000 Montana, 33 per cent de la U.S. total and other fruit at 175,000 Montana, 16 per cent de la U.S. total.

The Long Beach port is a sister to the Los Angeles port. It is the second largest container port and the ninth largest agricultural port in the U.S. with over 99 percent of agricultural exports moving in containers. In 2011, according to AMS, it had 6.4 MMT in agricultural trade, with imports of 1.9 MMT and 4.5 MMT of exports, Sobre 3 per cent de U.S. agricultural trade.

Like Los Angeles, Long Beachs number one and two products were animal feeds at 1.2 MMT, 12 per cent de U.S. exportacions, and soybeans at 744,000 Montana, 2 per cent de U.S. exports. Cotton was the fourth largest agricultural commodity shipped out of Long Beach 248,000 MT and 17 per cent de U.S. shipments. Long Beach and Los Angeles together account for 69 percent of cotton exports. Oranges have a similar situation with Long Beach exporting 166,000 Montana, 28 percent of the national total, and a two-port total of 61 percent. Hide and skins exports from Long Beach were 14 per cent de la U.S. total, with a two-port total of 59 percent. Dairy products made the top-ten in Long Beach at 138,000 Montana, 16 percent of the national total. Meat was in the top-ten in both ports with 30 percent of the national total and grocery items at 13 per cent.

Although AMS lists seven of the top 20 U.S. agricultural ports as being on the west coast, shifting ports will not solve the problem. The PMA lists 29 ports as being represented by them on the west coast and all 29 have the ILWU representing workers. Some of those ports have also reported slowdowns. The enlarged Panama Canal and decreased travel times could make gulf ports a reasonable alternative, particularly for cotton and meat. For all kinds of containers that go through Los Angeles and Long Beach, about one-third is considered discretionary that could enter almost any port in North America large enough to handle the ship.

What is known is that shipments of further processed and finished agricultural products will increase. With trade agreements that eliminate tariff differentials between raw and processed products, more finished products will flow through trade, particularly to countries with high wage costs and alternatives uses for labor. Major international cities with good harbors will attract consumer-ready foods from around the world with low transportation costs rather use in-country high-cost ground transportation.

One alternative is simply to live with the realities of shipping slowdowns and stoppages. McDonalds could inventory more French fries in Japan when labor negotiations go into overtime. That would involve additional costs and acquiring the added skill of forecasting labor relations. McDonalds and other large companies usually do not willingly absorb additional costs from suppliers.

Those companies will more likely look for a new business model that more closely align incentives to deliver services rather than withhold services. Maybe that is already being done someplace in the world and will spread now that its value is recognized. Some have suggested putting U.S. ports under the Railway Labor Act used for airlines and railroads to avoid service disruptions. Or, maybe not having enough French fries in Japan will stimulate entirely new thinking.

Ross Korves is a Trade and Economic Policy Analyst with Veritat sobre el Comerç & tecnologia (http://www.truthabouttrade.org).

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