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The U.S. and most countries around the world rely on trade with each other to support their economies and keep their citizens fed, clothed and otherwise provisioned. This trade depends on two factors: mutual trade agreements and an efficient and dependable means by which to move goods from country to country.
Much of the trade, as it has for many hundreds of years, relies on ships to perform that vital task. So, it is extremely disturbing that the U.S faces the first strike of East Coast and Gulf Coast dockworkers in 47 years. The strike, if prolonged, could wreak havoc on the export and import of beef, pork and chicken, plus a wide variety of animal food exports and imports.
Dockworkers from Maine to Texas went on strike on Oct. 1 after their current labor contract expired. The International Longshoremen’s Association (ILA), the union that represents about 45,000 people on the two coasts, started setting up picketing stations after work stoppage talks failed at the end of September. The strike involves 14 major ports on the two coasts. The last time the ILA struck in 1977, the port closure lasted six weeks, creating trade chaos.
The strike is preventing imports of beef that restaurants and retailers increasingly rely on to make hamburgers due to limited domestic supplies, traders and meat industry members told Reuters. Along with beef, imports of seafood and U.S. exports of chicken are being disrupted. Even short-term disruptions to shipments could snarl the broader U.S. food supply chain, experts and food importers said. If the strike stretches out, the result will be either shortages of some food products, price inflation or both, they told Reuters.
The beef sector could see ripple effects if the strike disrupts imports for more than a week, beef industry members told Reuters. In anticipation of the strike, suppliers to U.S. grocers and fast-food restaurants ramped up imports of frozen lean beef that is mixed with domestic supplies to make hamburger meat, three industry members told Reuters.
The strike could impose a significant economic impact on the U.S. meat industry, says Erin Borror of the U.S. Meat Export Federation (USMEF). In the first seven months of 2024, the East Coast and Gulf Coast ports directly accounted for nearly $3 billion worth of U.S. red meat exports, the equivalent of approximately $100 million worth of product weekly. As the industry learned from the COVID shipping issues, when there is one disruption in the shipping or in the supply chain, there are ripple or domino effects, says Borror.
The shutdown occurs at a time of year when exports typically increase, Borror said. U.S. production and exports typically accelerate in the fourth quarter. With the seasonal increase in pork production, the industry really needs to be able to handle and accommodate more pork, including ahead of year-end holidays. The U.S. is exporting a record large share of its pork production. More than 30% of all pork production goes to export when one includes variety meats. For beef, about 14% of all production, including variety meats, is exported. Both beef and pork exports are necessary for the profitability of the U.S. red meat industry, she said.
The American Feed Industry Association (AFIA) warned of long-term economic repercussions, potential animal food supply issues and escalating costs for farmers and pet owners. AFIA President and CEO Constance Cullman said the failure of the two sides to reach a labor agreement or of the Biden administration to intervene before the contract deadline means that U.S. animal food manufacturers face a dire trading situation that mirrors or could be worse than the days of the COVID-19 pandemic.
With reduced access to imports of essential ingredients, packaging materials, equipment or other goods, production of animal food may be limited at best, said Cullman. In 2023, the overall export value for feed, feed ingredients and pet food stood at $13.4 billion, while imports stood at an estimated $5.4 billion. According to the American Farm Bureau Federation, in 2023, grains, animal feed and hay accounted for 2.18 million metric tons (mt) or more than 70% of waterborne exports that ship from East Coast and Gulf Coast ports.
Beef exporters in Australia (and no doubt in New Zealand, Brazil and other countries) fear that a prolonged strike could cause severe disruptions to their efforts to export beef and other meat to the U.S. The U.S. is easily Australia’s largest beef and lamb export market this year, accounting for 235,000 mt of chilled and frozen beef by the end of August, plus 57,000 mt of lamb and mutton. The biggest proportion of Australian chilled, higher quality beef exports arrive via West Coast ports, which are likely to be unaffected by the current dispute, says Beef Central. But the majority of frozen trimmings used for hamburgers arrive via the big East Coast ports like Philadelphia, New York and New Jersey. — Steve Kay, WLJ columnist
(Steve Kay is editor/publisher of Cattle Buyers Weekly, an industry newsletter published at P.O. Box 2533, Petaluma, CA, 94953; 707-765-1725. Kay’s Korner appears exclusively in WLJ.)
