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The Honolulu Advertiser
Posted on: Friday, October 4, 2002

Military will ship cargo to Hawai'i commissaries

 •  Movers continue business as usual

By Mike Gordon
and Frank Cho
Advertiser Staff Writers

The military said yesterday that it will begin shipping cargo to its Hawai'i commissaries early next week as the West Coast dock shutdown continues to stall the commercial flow of goods to the Islands.

Yesterday's developments

• More than 150 container ships laden with consumer products, auto parts and agricultural supplies vital to the U.S. economy are now backed up at many of the West Coast's 29 ports. An idled container vessel can cost $25,000 a day or more in fuel, crew wages, provisions, maintenance, insurance and loan payments. If the ship is docked at a major port such as Los Angeles, berthing fees can exceed $10,000 a day.

• White House spokesman Ari Fleischer said the White House is monitoring the situation. "The longer the strike goes on, the more harm is done to labor," he said. "The longer the strike goes on, the more harm is done to management. And the longer the strike goes on, the more harm is done to the economy."

• Some carriers have been diverting vessels to other destinations to unload cargo and free the ships for other work. The Marine Exchange for the ports of Los Angeles and Long Beach said yesterday that carriers had diverted 18 to 20 vessels to Mexican ports, the Panama Canal or back to the harbors where they were loaded.

• In Washington, a group of California House Republicans, joined by a Democrat, signed a letter urging President Bush to invoke the Taft-Hartley Act, which would allow him to order the reopening of the ports for an 80-day cooling-off period.

• Asiana Airlines Inc., China Airlines and Asia-based airfreight companies say demand for air cargo space is rising as exporters try to bypass West Coast ports. Cargo rates for charter freighters have increased about 15 percent as a result.

• Walgreen Co., the largest U.S. drugstore chain, said it isn't getting the Christmas supplies it needs.

• Union Pacific Corp. and Burlington Northern Santa Fe Corp. halted grain-export shipments to the U.S. Northwest.

• New United Motor Manufacturing, a California auto plant run by Toyota and General Motors, halted production of pickup trucks and cars because of a lack of parts.

• Honda Motor Co. started airlifting critical parts from Japan to supply its four North American auto factories.

• Boeing Co. has passenger entry doors, escape hatches and cargo doors from suppliers in Japan stuck on ships anchored outside Seattle and Tacoma. The parts are due to be installed on jetliners such as the 767 and 777 next week.

• The Consumer Electronics Association and the West Coast Waterfront Coalition, which represents companies that rely on imports, sent President Bush a letter calling for him to step in and reopen the ports.

• Oregon's straw exporters, who ship primarily to Asian dairy farmers, say layoffs could begin today if the shipping dispute isn't settled.

The cargo, which will be loaded on a commercial ship, includes groceries and will be available only for the 122,000 active and retired military members and their families in Hawai'i, said Nancy O'Nell, a spokeswoman for the Western/Pacific Region of the Defense Commissary Agency.

The military's move to continue stocking its shelves comes as the longshore union and the Pacific Maritime Association, which represents more than 80 shipping lines and sea terminal operators, tried to hammer out their differences with a federal mediator yesterday as losses from a West Coast port shutdown continued to cascade through the economy.

After five months of negotiations and escalating tensions, the talks in San Francisco were described by both sides as cordial, and one officer with the International Longshore and Warehouse Union said there was a good chance that progress would allow the ports to reopen this weekend.

"We're working hard. We plan to be here for as long as it takes," said Jim Spinosa, president of the International Longshore & Warehouse Union, which represents 10,500 workers. "We're here to get a contract, whatever it takes."

The renewed talks appeared to have overshadowed Gov. Ben Cayetano's request for a Hawai'i exemption to receive commercial shipments. Cayetano's office said it had not heard anything yesterday on its request.

"I think the focus right now is trying to push through some type of mediated negotiation," said Brian Taylor, vice president and general manager for CSX Lines, one of Hawai'i's two major shippers. "I think that's everybody's focus at the moment."

Despite the signs of movement in the negotiations, the economic impact of the shutdown 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 ripple effect also is beginning to escalate in the Islands, dependent on shipping for 90 percent of all goods. Yesterday, the last container ship to leave the West Coast before the lockout began arrived at Honolulu Harbor. Matson Navigation Co.'s R.J. Pfeiffer quickly set sail from Los Angeles on Sunday with less than a full load in a small window between lockdowns.

Now, even if West Coast docks were to open today, it would be at least a week before another cargo ship could be loaded and make the approximately five-day voyage to Hawai'i — that's four days later than what would have been the next regularly scheduled arrival of a ship Sunday.

Right now, it's unclear how much the shutdown of the docks by the carriers' association is costing businesses and the state, but some estimates put it at more than $3 million a day if the lockout lasts longer than a week.

"Hawai'i is certainly going to be impacted a lot by this being an island state," said John Martin, president of Martin Associates, a Lancaster, Pa., consulting firm that calculated the lockout is costing the U.S. economy about $1 billion a day.

Martin said that when such factors as lost wages, reduced business revenues and unemployment costs are figured in, the loss to the state economy could skyrocket if there is a prolonged lockout or strike.

More than $11 billion worth of products move through Hawai'i's ports every year, according to the state Department of Business, Economic Development and Tourism. About $309 billion in products is shipped through 29 West Coast ports.

"There are just so many things we don't know, it's difficult to put a figure on how much the state is losing ... " said Pearl Imada Iboshi, the state's chief economist. "Everyone wants to know how much this is costing and we are starting to look at it, but no one wants to make up a number they don't feel they can defend."

Iboshi said interstate cargo is largely unregulated so it is difficult for the state to track what is being exported and imported by private businesses.

Bank of Hawaii economist Paul Brewbaker said the real effect of the shutdown may not be felt by businesses and consumers for several weeks — in the form of higher shipping costs and higher prices at the cash register.

"That, I think, is when you will begin to see the opportunity costs," Brewbaker said.

In the meantime, as consumers begin to stock up with no end in sight for the shutdown, the military said that it also plans to send two other ships with goods to commissaries in Alaska and Japan, Okinawa and South Korea. There is no firm date set for the shipment to Hawai'i.

Military officials want to send ships from an Army transportation terminal at Naval Weapons Station Concord, near San Francisco, said O'Nell, the spokeswoman for the Western/Pacific Region of the Defense Commissary Agency.

Matson and CSX officials, who are part of the Pacific Maritime Association, said their ships are not involved in the military shipment. O'Nell did not know who owned the ships.

"The ships are dedicated charter ships to move strictly military cargo," O'Nell said. "Hopefully it is a temporary, short-term response. We will do whatever it takes to keep our product flowing to the commissaries."

She characterized the load as, "our normal groceries we use to stock the shelves. Produce, meat, paper goods, Christmas items."

The ships would also carry supplies necessary to run military installations, she said, but she did not know the exact contents.

O'Nell was not certain who would be loading the ships, which would be berthed on federal property and not under the jurisdiction of the Pacific Maritime Association.

The ILWU earlier this week offered to load and unload military cargo. But union officials were in negotiations late yesterday and could not say for certain whether they would load the military shipments headed for Hawai'i/Guam, Alaska and Asia, said ILWU spokesman Jeremy Prillwitz.

"In the past we have said that we are perfectly happy and willing to work military cargo," Prillwitz said. "It is fair to say that is our position that we are willing to work military cargo."

Advertiser staff writer Dan Nakaso contributed to this report. Reports from the Los Angeles Times and The Associated Press were included in this story.