New Zealand exporters caught up in LA port strike

By NZPA

Wednesday 2nd October 2002

New Zealand exporters will start feeling the pinch soon as their goods are caught up in a strike by wharfies in the United States, estimated to cost $US1 billion ($NZ2.2 billion) a day.

Millions of dollars in cargo sat idle on Monday as workers were ordered off their jobs at the 29 major Pacific ports for a second day in a labour dispute between shipping lines and longshoremen.

Senior New Zealand trade commissioner to North America, Los Angeles-based Arama Kukutai, said at least one ship carrying New Zealand beef and lamb was understood to have been delayed by the strike.

"We've not had any definite reports from New Zealand exporters -- we're currently calling around our key clients as to the status of shipments coming into the market," he told National Radio today.

North America is the number two export market for New Zealand goods, and Los Angeles is the number one port for landed goods, "so it's a significant issue for us", Mr Kukutai said.

New Zealand exported about $5 billion of goods a year to the US, from manufactured goods to food and beverages.

"We continue to be on an up cycle to this market, 40 percent of US imports to New Zealand come through Los Angeles port," Mr Kukutai said.

"It's a huge issue for the US government and US business as well, and the US government has legislative powers to if necessary bring the army in to clear the ports.

"With Thanksgiving on the horizon in November, and getting into the Christmas season, the timing couldn't be worse," Mr Kukutai said.

Alternatives for exporters included shipping goods through other ports such as Vancouver, although that would be more expensive; living off stock already built up; and the more expensive possibility of air freight.

"But exporters who are selling up to this market will be advised to consult with their custom broker and freight forwarders," he said.

US economists said the shutdown of West Coast docks, unless ended quickly, could empty shelves in stores and malls and quickly shutter factory production lines across the United States and in Mexico.

A shutdown that lasts longer than a handful of days would be disastrous for the US economy, which is teetering between recovery and recession.

A five-day shutdown would cost the US economy about $US4.7 billion in lost wages and revenue, according to a Martin Associates study conducted for the Pacific Maritime Association, which represents shipping lines and sea terminal operators.

The problems would snowball quickly, his study said, with a 10-day shutdown costing the country $US19.4 billion.

American manufacturers increasingly rely on imported components and materials, and the dependence of giant retailers, such as Wal-Mart and Target, on imported merchandise has soared.

US foreign trade has quadrupled in the last 20 years and now accounts for 20 percent of the nation's economic activity. Trade through West Coast Customs districts reached $US567 billion in 2000, accounting for almost a third of the nation's international trade, according to Cohen's study.

Factories and retailers are more vulnerable than ever to supply disruptions. Cargo no longer sits in warehouses as it once did.

Analysts also worry that a prolonged lockout could trigger a crisis in international financial markets, especially in Asia, which is heavily dependent on massive volumes of exports to the United States, and Mexico, which relies on imported components for re-export.

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