Protesters last week shut down operations at the Port of Oakland over a new trucking regulation that would limit independent operators. The protesters not only blocked cargo, but port workers also refused to cross truckers' picket lines.

A prolonged shutdown could have a dramatic impact on U.S. red meat exports and ag exports as a whole, U.S. Meat Export Federation President and CEO Dan Halstrom says Oakland is the third-busiest port on the West Coast and the largest outlet for U.S. red meat exports.

"The operations of the Port of Oakland are virtually at a standstill and the issue is that independent truckers continue to protest the state of California's labor rules that tighten the definition of nonemployee drivers, and what's happened is that even the longshore workers are now unwilling to cross the truckers' picket line," Halstrom says. "So the bottom line is that a situation that we were dealing with before with congestion at the ports of which we're starting to see some progress there, but this only heightens the issue and really is going to make the issue much, much worse. 

"Some of our biggest markets are Japan, Korea, China and Taiwan. But specifically for Japan, you're looking at roughly 66% of the beef exports and maybe 70% of the pork exports originate out of the Port of Oakland."

Continued congestion and unreliability at the West Coast ports has already prompted a shift from chilled to more frozen product, which has a longer shelf life but doesn't carry the premium value of chilled meat. If the Oakland shutdown continues, it could accelerate this trend.

"Some of the highest margin business is the chilled product, never frozen, it's chilled, so you're very time sensitive on the shelf life. So what's gonna happen is if this cargo cannot ship on time, a lot of this cargo is going to have to be frozen down which means prices will plummet. This product has to ship chilled," Halstrom says.

"That's the value-added opportunity and you're talking about a market like Japan, last year it was a little over $4 billion worth of exports, $2.4 billion on beef and $1.7 billion on pork. A lot of the reason that's our No. 1 value destination is the fact that we're able to ship high value, chilled product. So it's essential that the state of California officials get together to intervene and come to some sort of resolution not only for meat, for beef and pork, but for a lot of different agricultural commodities throughout the nation."

Source: U.S. Meat Export Federation, which is solely responsible for the information provided, and wholly owns the information. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.