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Port strike creating botanical 'fulfillment panic,' supplier says

By Hank Schultz , 29-Nov-2012
Last updated on 30-Nov-2012 at 16:09 GMT2012-11-30T16:09:58Z

A strike at the ports of Los Angeles and Long Beach is interrupting shipments of raw materials and is creating a “fulfillment panic” in the herbal industry, according to a leading botanical supplier.

“We are encouraging our customers is take possession of raw now.  Get it on your dock now so you can protect your ability to fulfill going into the back end of the year and into Q1,” George Pontiakos, CEO of BI Nutraceuticals, told NutraIngredients-USA.

Clerical workers of the ILWU (International Longshore and Warehouse Union) at the Ports of Los Angeles and Long Beach are on a strike that entered its third day Thursday with no new talks scheduled. Currently, all Los Angeles port terminals are shut down, Pontiakos said, resulting in a halt of all operations. Three of six terminals at the Long Beach facility were reportedly affected.

“You can’t unload, you can’t load, you can’t get stuff inspected. Nothing is going in or out,” he said.

Biggest US ports

The two ports combined make up about 40% of US container port capacity.  A measure  by Supply Chain Management Review of the first quarter of 2011 showed that Los Angeles and Long Beach moved a combined total of 1.6 million TEU (twenty-foot equivalent units, or the smaller standard size for shipping containers) out of a nationwide total of 4 million TEU. The twin harbors handled $273 billion worth of cargo last year.

The approximately 70 clerical workers who are on strike are claiming that management has been moving well paid jobs out of state and overseas. The Harbor Employers Association that represents the group of companies operating at the ports maintains the outsourcing charges are not true.  The clerical workers have been working without a contract since 2010.

The two ports, besides being the biggest, are the best placed for the shipment of many botanicals, Pontiakos said.

“They’re good for product coming in from Asia and India and as well as some product from Mexico,” he said.

And it’s a particularly difficult time of year for a shipping interruption, Pontiakos said.  While the ports were not operating at peak capacity because the shipment of holiday goods is mostly over, it’s high season for botanicals.

“There is a harvest coming in for chia and seasonal harvests of almost everything we bring in,” he said.

One day of strike = seven days of jogjam

Every day that goes by, Pontiakos said, adds to  the headache. A day lost on the docks gets magnified as containers make their way onto shore.

“Even if it broke tomorrow, one day’s strike is equivalent to one week’s worth of logjam.  It’s not like (FDA is) going to add 40% more inspectors. They only have so much throughput of containers,” he said.

Like many other manufacturing businesses, food and dietary supplement companies using botanical ingredients have in recent years been trying to limit how long they store raw materials on site in order to keep costs down and operate more efficiently.  Pontiakos recommends companies consider trading a little of that efficiency for security.

“They may have to have a little more inventory exposure.  Inventory costs are cheap compared to not being able to fulfill,” Pontiakos said.

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