Meat exporters look at flying chilled lamb over US port logjams

2.30pm

Billions of dollars worth of New Zealand exports are potentially under threat as a 10-day port shutdown in the United States backs up more than 200 ships.

New Zealand meat exporters who have meat on five ships caught up in the strike by dockworkers say if the log-jam on the US west coast does not break in the next 48 hours they will have to start trying to switch shipments to east coast ports, which have not been directly affected.

And with the approach of the American Thanksgiving holiday - traditionally a key period for food and drink sales - some New Zealand meat companies are looking at flying chilled lamb to the west coast to fill lucrative contracts.

West coast port managers have pledged to keep 10,500 dock workers shut out of 29 ports, from San Diego to Seattle, until they settle their wage negotiations.

The International Longshore and Warehouse Union has urged port managers to let them unload some cargo containing food and perishable items - including New Zealand chilled lamb which has only a two-week shelf life - before they rot at sea but the Pacific Maritime Association has made a limited exemption only for food and basic items being exported to Alaska and Hawaii.

Military cargo has been allowed through during the work stoppage.

The blocked ports daily handle more than $1 billion ($NZ2.1 billion) worth of cargo - over a year about 7 per cent of the US gross domestic product.

New Zealand relies on the US to take most of New Zealand's beef - with shipments worth over $1 billion a year split evenly between west coast and east coast ports, while lamb exports were this year expected to be worth over $200 million.

Most of New Zealand's beef is mixed with local supplies and ground into hamburger patties.

Most of the New Zealand beef is shipped frozen, and so has greater capacity to be diverted through the Panama Canal to the east coast.

But New Zealand cannot afford any significant stoppages in its beef exports to the United States, as its booming dairy industry has been creating a mountain of cull cows to be turned into mince meat.

Meat Industry Association executive director Bryan Lynch said five vessels carrying New Zealand meat were now held up.

"There are several thousand tonnes of frozen beef affected, and several hundred tonnes of chilled and frozen lamb".

The immediate concern was over the chilled lamb because of its limited shelf life.

"It's not easy to re-deploy product from one coast to the other, and companies have been loathe to consider switching, but they are now beginning to look hard at the options," Mr Lynch said.

"In the next 48 hours, if there's no realistic sign of a breakthrough they are going to have to seriously consider some switching.

"Plus, if it drags further out, there is the prospect of having to send chilled lamb by air.

"It's a $220 million market, in the lead-up to Thanksgiving in late November," he said.

"We consolidated our presence in the lamb market while the Americans imposed tariffs, and now that the tariffs have finished we were looking to send another 2000 to 3000 tonnes of chilled lamb to lift the sendings to between 18,000 and 20,000 tonnes for the year."

"Companies, while they may be loathe to resort to air freight, they may be pushed into that," he said.

Alliance Group's marketing general manager Alan Henry said the long-term concern was the relationships which had been carefully built up with customers.

"It's quite serious in terms of the disruption it could give to our customer base... that's our major concern, whether it does anything to damage our image long-term."

"If it appears to us that this is going continue, we will divert product, either through the air or to different ports," he said.

"The options are to go to the east coast and incur the cost of bringing it to the west, or taking it directly to the west coast on planes, but that's quite expensive."

Meat companies would have to absorb much of the extra cost.

Another exporter, Richmond, said that there was still potential for land transport to get caught up in the dockers' strike, so it would not necessarily an easy fix to just deliver product via East Coast ports.

A delegation of New Zealand unionists left for the US yesterday to join the pickets by American wharfies.

- NZPA