West Coast Port Slowdown Impacts Almond Shipments
May 6, 2015 Although the labor dispute that backed up ports on the West Coast is closer to a resolution, the impact of the gridlock can still be felt. We caught up with Philip Finiello of the Almond Board of California to find out how the recent ports slowdown has impacted the almond industry.
Q: What’s going on with the port gridlock and how is it affecting the almond industry?
A: The California Almond industry is an export-oriented industry, sending abroad almost 70% of its production. A large majority of those exports are shipped from the Port of Oakland.
The Almond Board of California (ABC) continues to monitor the situation through partner associations and stakeholders as well as through direct communication with industry. The full impacts are difficult to quantify and isolate and are yet to be fully realized. While the tentative agreement is by some accounts moving closer to ratification, a certain level of anxiety remains. The latest industry feedback indicated that the overall situation has improved and that the backlog is clearing, but it will still take some time for a full return to normal operations, and some challenges remain. There are reports of continued delays, over-booked vessels and difficulty in acquiring accurate vessel arrival/departure information, to name a few.
The costs are potentially two-fold: lost sales, contract cancellations, and fees as well as the possibility of damage to reputation and future sales. As to the direct impacts, previous industry feedback pointed to hundreds of thousands of dollars in demurrage and other charges as well as lost sales totaling in the millions. We continue to solicit feedback on what this industry is still incurring in demurrage, detention, congestion, and other charges, due to circumstances beyond their control.
As to almond exports overall, the data on shipments are illustrative of the situation: In the first two months of 2015, bulk almond exports (by value) totaled $624 million, down 3% from $646 million in the first two months of 2014. By volume, the first two months of 2015 totaled 166 million pounds in bulk almond exports, down nearly 16% from the 197 million pounds in the same period last year.
Q: How is this impacting almond prices and sales?
A: It’s hard to isolate the final effects of the port experience from the full trade picture. Strong demand was already putting upward pressure on prices before the ports came to a near deadlock, but the situation certainly has not helped.
Q: Is the situation impacting California almond demand?
A: Demand remained strong during the peak of the ports slowdown. There were some reports that international customers were willing to pay more and wait longer to get product out of, for example, the Port of Houston. However, this is not a viable long-term solution. As to loss in market share, this is a concern no matter the circumstances. This industry has worked hard to achieve its global market standing and will continue to do so.
Q: How long do you think this is going to last?
A: This is difficult to say since there is the aspect of the actual contract ratification as well as the varying timeframes given as to how long it will take to clear the backlog at the ports, depending on the port itself, the commodity and even the terminal. We hope everything will be back on track by late spring.
Q: Is there anything you’d like to add?
A: We are glad there is an agreement and hope port operations return to normal as quickly as possible. The California Almond industry depends on free and predictable international trade. Any disruption, especially to the extent experienced in the last few months, can create untold economic damage that could be felt for years to come.
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