US port strike disrupts supplies of hamburgers, frozen seafood

By Tom Polansek and PJ Huffstutter

CHICAGO (Reuters) – Striking dock workers at ports on the U.S. East Coast and Gulf are hampering 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 blocking everything from car shipments to containers full of Guatemalan bananas and Italian wine from loading or unloading at dozens of ports from Maine to Texas. Along with beef, US seafood imports and chicken exports are disrupted.

According to experts and food importers, even short-term disruptions in shipments could derail the broader U.S. food supply chain. If the strike drags on, the result will be either food shortages, price inflation or both, they said.

More than 50 container ships were already anchored or docked at dozens of East Coast and Gulf ports as of Wednesday morning, compared with just three on Sunday before the strike, according to Reuters shipping data and Everstream Analytics.

“From a supply chain perspective, this is a nightmare,” said Jason Miller, interim chair of Michigan State University’s supply chain management department.

The beef sector could have ripple effects if the strike disrupts imports for more than a week, industry insiders said.

U.S. beef supplies have tightened after a severe drought and high grain prices prompted farmers to sell their cattle, shrinking the national herd to its lowest level in decades.

Declining cattle numbers have led to higher U.S. beef prices and a flurry of cheaper imports. Australian beef imports rose 72% in the year to July this year, according to data from the US Department of Agriculture. Imports from New Zealand and Brazil also increased.

In anticipation of the strike, suppliers to U.S. grocers and fast-food restaurants have stepped up imports of frozen lean beef that is mixed with domestic supplies to make hamburger meat, three industry insiders said.

Dan Sorbello, who imports beef into the ports of Philadelphia and Houston, said he unloaded containers from ships faster than normal before the strike to ensure he could get hold of the meat and distribute it.

“We have maybe a week to save,” said Sorbello, director of Sorbello Refrigeration Services.

SURF AND LAWN

PanaPesca USA LLC, which imports and exports seafood, has stocked up on extra supplies of squid and shellfish to meet the needs of its customers ahead of the strike, said Chief Commercial Officer Eric Buckner.

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Much of PanaPesca’s products in refrigerated cargo containers have arrived, but some are still stuck on ships now anchored offshore, he said.

The strike could raise costs for fast-food restaurants if it lasts more than a week, said Bob Chudy, a consultant for beef importing companies.

“Suddenly, fast-food chains that have relied on lean meat from overseas at much more reasonable prices would be forced to turn to domestic alternatives,” Chudy said.

McDonald’s Corp (MCD) and Burger King, owned by Restaurant Brands International (QSR), did not respond to requests for comment.

Beef importers could face staging fees if the strike persists, costs that can be passed on to consumers, analysts said. Shipments of fresh, refrigerated meat that can be used in restaurant dishes such as fajitas are at risk of spoilage, they said.

U.S. retail prices for ground beef in August hit a record high of $5.58 a pound, according to the latest federal data available.

For the U.S. chicken industry, which relies on exports, the strike is also inconvenient, said Matt Busardo, head of the U.S. poultry team at Expana, a commodity information company.

Domestic demand is falling as consumers switch to cold-weather foods like pot roast and chili instead of grilled chicken, he said. The sector relies on ports like Savannah to export quarter feet and drums to countries like Angola and Cuba.

(Reporting by Tom Polansek and PJ Huffstutter; Editing by Andrea Ricci)