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Posted at 12:10 p.m., Thursday, October 3, 2002

Port exemption request awaits shipping lines' OK

Gov. Ben Cayetano appeared on CNN today to discuss the dock dispute. He said Hawai'i residents were not panicking, but that if the lockout dragged on, the situation could change.

CNN/The Honolulu Advertiser
By Mike Gordon and Dan Nakaso
Advertiser Staff Writers
An exemption request by Gov. Ben Cayetano to allow cargo ships to leave West Coast ports for Hawai'i has not been rejected, but a decision will probably not be made today because shipping lines' representatives and the dockworkers union were meeting with a federal mediator.

The ports remain closed under a lockout of dockworkers that began Sunday. The Pacific Maritime Association, which represents more than 80 shipping lines and terminal operators, imposed the lockout on the International Longshore and Warehouse Union.

"I know the status as of yesterday was that PMA was not providing exemptions," said Steve Sugerman, a spokesman for the maritime association.

"But I know they were talking about it because of the governor's correspondence," he said today. "At this point, there are no exemptions."

Meanwhile, Cayetano told CNN today that Hawai'i consumers are not panicking about potential shortages.

"I think people have been pretty level-headed," Cayetano told CNN anchor Wolf Blitzer, amid images of Hawai'i shoppers loading up on toilet paper. "There has been a little bit of stocking up, but not the kind of urgency and panic that I saw in the past, when I was kid."

The Matson container ship RJ Pfeiffer pulls into Honolulu Harbor.

Bruce Asato • The Honolulu Advertiser

Cayetano told CNN that people here are optimistic the dispute will be settled, largely because the issues dividing the two sides have to do with technology.

"I think we're going to be OK, but if there is a strike and it goes on too long, that will be different," he said.

Today's meeting with the Federal Mediation and Conciliation Service was viewed as a hopeful sign by those participating.

The two sides agreed to discuss the single issue of new technology for the ports.

"We've agreed to give mediation a try," said James Spinosa, international president of the ILWU. "This is a good move to get the waterfront open again."

The ILWU, which represents 10,500 West Coast dockworkers, met at a neutral site in San Francisco with the shipping lines' association and Peter Hurtgen, director of the mediation service.

"I think we all feel the pressure," Hurtgen said before negotiations began at a San Francisco hotel. "Every hour is another hour of economic harm."

The last shipment of goods from the Mainland arrived in Hawai'i today.

With no immediate end to the lockout in sight, island distributors, retailers and consumers are wondering how long they can hold out.

Matson Navigation Co.'s R.J. Pfeiffer sailed into Honolulu Harbor just before noon today with the last load of supplies to come by sea since the lockout began.

The Pfeiffer quickly left Los Angeles with less than a full load Sunday before the latest shutdown.

"That's the last ship," said Mark Teruya, president of Armstrong Produce Ltd., Hawai'i's largest produce distributor. "We're very concerned. We're making alternative plans to fly in a lot of merchandise."

Many businesses and consumers in the Islands had been stocking up on goods as contract talks on the Mainland had grown increasingly antagonistic.

With the Islands dependent on shipping for 90 percent of all goods, however, many companies are starting to feel the economic effects of the delays and are starting to make shipment contingency plans.

ILWU officials yesterday reiterated their offer to load or unload ships to and from Hawai'i, or any other ships in their ports.

"Our members are ready and willing to work, and we hope that the PMA comes to its senses soon and lets us do our jobs at all the ports," said Spinosa.

The two sides remain at odds over pensions and other benefits, as well as the union's demand to control any new jobs that would come with the introduction of modern cargo-handling technology.

Teruya of Armstrong Produce said he was not optimistic that the ILWU's offer for mediation on the technology issue would ease his problems.

Teruya said Armstrong's load of 80,000 pounds of produce did not get aboard the Pfeiffer before it set sail Sunday. So Teruya had it flown to Hawai'i for $20,000.

It usually costs Armstrong $8,000 to ship an equivalent load by sea.

"We're looking into chartering a plane or finding space available," Teruya said yesterday. "But by air, it's 2› times the cost to send freight on a ship. What I'm worried about is the added cost that the people of Hawai'i will have to absorb, whether it's for milk or chickens or other perishable goods."

For Hawai'i, as the lockout heads toward its first full week, it's still too soon to measure the overall economic impact, said Pearl Imada Iboshi, chief economist for the state Department of Business, Economic Development and Tourism.

Most companies had anticipated problems on the West Coast and have stockpiled supplies, which should buffer the situation for a few weeks, Iboshi said.

"In the near future, it shouldn't be a concern," she said. "If it lasts just within a couple of weeks, there should be no change in prices."

Military officials were among those who began stockpiling weeks ago, and the commissaries have not been affected, said Nancy O'Nell, a spokeswoman for the Western/Pacific Region of the Defense Commissary Agency.

She said the lockout has not yet affected supplies at military installations in Hawai'i.

"In Hawai'i, commercial distributors support our military commissaries," O'Nell said. "These distributors support both commercial and military customers. We have worked with them since June to increase inventories on key products, and we are communicating daily to assess the impact."

O'Nell said military officials are working on a contingency plan should the lockout continue, but she would not discuss details.

The shutdown is causing economic ripple effects across the Mainland, as truckers, retailers, manufacturing companies and other businesses stall while awaiting cargo that is stacking up in ships lining the West Coast.

The economic impact of the work stoppage was accelerating and could be costing the U.S. economy $2 billion a day, said Robert Parry, president of the Federal Reserve Bank of San Francisco.

The standoff's growing economic impact has led to mounting calls for President Bush to intervene under the Taft-Hartley Act.

Sen. Dianne Feinstein, D-Calif., was among the lawmakers saying Bush should order the ports reopened for an 80-day "cooling-off" period.

White House spokesman Ari Fleischer said today that the U.S. economy is at risk.

"The administration continues to urge labor and management to come together to get an agreement because the longer this goes, the more harm it will do to the economy," he said. "The president is routinely informed of the status."

The lockout hit the transportation and manufacturing sectors first, and is now causing increasing concern in the U.S. grain industry, as evidenced today by a sharp drop in wheat futures on the Chicago Board of Trade.

With railroads already having stopped grain shipments to the coast, talk was increasing of an adverse impact on U.S. exports.

Elsewhere across the country, the economic ripple effects spread.

California almond growers said the port shutdown threatens their Asian markets.

The Associated Press contributed to this report.