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President's Column

Tuesday, March 10

Port slowdown will leave lasting mark on economy

It’s the quietest disaster he’s ever seen.

That’s how Jim Kleist, senior vice president for West Coast operations at Railex, described the slowdown in operations at West Coast ports.

His company ships produce and wine via rail from Burbank, Wash. to the East Coast, so you might think it would be in position to benefit from the situation. Farmers and manufacturers looking for alternate ways to get their products to market might look to rail instead of cargo ships, right?

Not exactly. Because of the interconnection between the various transportation networks — cargo ships, trucking and rail — a disruption in one piece hurts them all, Kleist said.

Truck drivers who aren’t delivering and picking up goods at the ports are bidding on anything — and dropping their prices — in order to avoid sitting idle. Similarly, Kleist is facing pressure to drop his prices.

“If the market isn’t healthy, the whole system goes out of whack,” he said.

It could stay out of whack for some time, unfortunately.

At the time of this writing, the dispute between the Pacific Maritime Association and the International Longshore and Warehouse Union was continuing. But it’s clear that regardless of when it’s resolved, the months-long slowdown in the movement of goods in and out of our ports will have long-lasting and far-reaching effects on the Northwest economy.

A recent survey of Association of Washington Business members illustrated just how interconnected our economy is, and how closely Washington employers are tied to international trade.

More than half of the nearly 500 survey respondents said the slowdown has impacted their business or business operations, and more than 30 percent said they experienced work stoppages, a reduction of workforce, loss of customers or all above as a result. Nearly 15 percent said their business lost customers due to the port slowdowns.

Businesses hurt by the slowdown include well-known names such as Weyerhaeuser, which has cut pulp and paper production and jobs in Southwest Washington, and ConAgra Foods Lamb Weston in Kennewick, which has reduced its shipping volume of frozen potato products by half. In order to keep an international customer, the company had to fly French fries overseas.

Apple and hay growers are being hurt, and smaller employers are feeling the effects, too. Seattle-based Cascade Designs manufactures specialty outdoor goods for retailers such as REI. As of mid-January, the company reported lost sales of $1.2 million due to import and export difficulties.

And Pacific Bag, the Woodinville-based manufacturer of packaging for coffee, tea, pet food and other specialty products, has delayed shipments and damaged a reputation built over 30 successful years.
“We’ve lost a handful of clients, but the flood gates haven’t begun to pour,” owner Mark Howley said in late February. “It’s not fair. The people who are being hurt by this are not the people in the fight.”
None of this should come as a surprise. We knew before the slowdown began that 40 percent of

Washington’s jobs are tied to trade.

It should, however, encourage our government officials to look for ways to repair the damage and strengthen our export economy wherever possible.

It’s time to end this quiet disaster.

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