By Tom Polancik and P.J. Hofstadter
CHICAGO (Reuters) – A strike by dockworkers at U.S. East Coast and Gulf Coast ports is blocking imports of beef that restaurants and retailers increasingly rely on to make hamburgers because of limited domestic supplies, traders and industry members said.
The labor strike is preventing everything from car shipments to containers filled with Guatemalan bananas and Italian wine from being loaded or unloaded at dozens of ports from Maine to Texas. In addition to beef, US seafood imports and chicken exports were disrupted.
Even a short-term disruption to shipments could disrupt the broader U.S. food supply chain, according to experts and food importers. They added that if the strike extends, the result will be either a shortage of some food products, price inflation, or both.
More than 50 container ships were already anchored or idling off dozens of East and Gulf Coast ports as of early Wednesday, compared to just three on Sunday before the strike, according to shipping data from Reuters and Everstream Analytics.
“From a supply chain standpoint, this is a nightmare,” said Jason Miller, interim chair of Michigan State University’s Department of Supply Chain Management.
Industry members said the beef sector could see ripple effects if the strike disrupts imports for more than a week.
U.S. beef supplies have shrunk after severe drought and high grain prices prompted ranchers to sell their cattle, shrinking the nation’s cattle herd to its lowest level in decades.
The decline in livestock numbers has led to higher US beef prices and a wave of cheap imports. Beef imports from Australia jumped 72% through July of this year, according to USDA data. Imports from New Zealand and Brazil also increased.
In anticipation of the strike, suppliers to U.S. grocery stores and fast-food restaurants have ramped up imports of frozen lean beef that is mixed with domestic supplies to make hamburger meat, three industry members said.
Dan Sorbello, who imports beef to the ports of Philadelphia and Houston, said he unloaded containers from ships more quickly than usual before the strike to make sure he could grab the meat and distribute it.
“We got a lifeline for about a week,” said Sorbello, director of Sorbello Refrigeration Services.
Waves and grass
PanaPesca USA LLC, which imports and exports seafood, also has stockpiled additional supplies of squid and shellfish to meet its customers’ needs ahead of the strike, said Eric Buckner, chief trade officer.
Much of PanaPesca’s produce arrived in frozen shipping containers, but some remains stuck on ships now anchored offshore, he said.
Bob Chudy, a consultant for companies that import beef, said the strike could increase costs for fast food restaurants if it continues for more than a week.
“Suddenly, fast food chains that were relying on affordable lean meat from abroad will be forced to turn to local alternatives,” Tschudi said.
McDonald’s (MCD) and Burger King, which is owned by Restaurant Brands International (QSR), did not respond to requests for comment.
Analysts said beef importers could face late fees if the strike continues, costs that could be passed on to consumers. They said shipments of refrigerated fresh meat, which can be used in restaurant dishes such as fajitas, are at risk of spoilage.
U.S. retail prices for ground beef in August reached a record high of $5.58 per pound, according to the latest federal data available.
For the U.S. chicken industry, which relies on exports, the strike also comes at an inopportune time, said Matt Bussardo, team leader for U.S. Poultry Commodity Information Corporation.
He added that domestic demand is diminishing as consumers turn to cold-weather meals such as grilled meat and chili instead of grilling chicken. The sector relies on ports such as Savannah to export drumsticks and chicken thighs to countries such as Angola and Cuba.
(Reporting by Tom Polancik and PJ Hofstadter; Editing by Andrea Ricci)
Comments are closed, but trackbacks and pingbacks are open.