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Shipping industry feels mad-cow fallout

By Alwyn Scott
Seattle Times business reporter

	JOHN FROSCHAUER / AP A truck hauling a container arrives at the Port of Tacoma yesterday. SCS Refrigerated Services is storing at least 140 shipping containers of beef at its Tacoma and Seattle cold-storage facilities that had been headed overseas before many countries imposed bans on U.S. beef.
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Some 200 of those metal containers that populate the ports are sitting at Terminal 18 on Harbor Island, waiting for shipping lines and their customers to figure out what to do with them.

They can't be placed on ships, so they likely will be reloaded onto trucks and driven back out the gates, said Laurel Hart, communications manager for SSA Marine, which runs Terminal 18. From there, they'll go to warehouses, store shelves or back to the factory.

"Because they aren't going to be accepted overseas, they're going to have to be moved off the dock," Hart said.

While the backup posed some logistical problems, the number of containers stalled in transit in Seattle, Tacoma and Portland isn't great enough to clog the docks or impede the movement of other cargo. They represent a relatively small slice of overall port traffic: about 8 percent of the dollar value of exports in Seattle and even less in Tacoma and Portland.

"It's a mess," said a senior official at NYK Line, a shipper at Terminal 18, who asked not to be identified. "We're just working through it, shuffling containers to make space."

However, the delayed containers carry precious profits for meat and vegetable packers, and the cargo runs the risk of spoiling if export restrictions aren't lifted soon, industry officials said.

Refrigerated fresh beef is worthless after about 60 days in storage, and the quality of frozen meat deteriorates significantly.

More than 30 countries have banned U.S. beef since a Washington state dairy cow was found last week to have mad-cow disease. Humans can develop a deadly variant of the disease by eating certain parts from infected animals.

About $300 million worth of beef is either backed up in ports, on roads, on ships at sea or in the Customs offices of foreign countries, according to the U.S. Meat Export Federation, an industry group in Denver. That's enough to feed 1.6 million Americans for a year, and virtually all of it travels through West Coast ports, federation spokesman Lynn Heinze said.

"It's a big barbecue."

An additional $53 million worth of frozen French fries is stuck in limbo, too. Japan, China and Korea, big markets for frozen fries, have raised concerns about those prefried in beef tallow, fearing the beef byproduct could carry a risk of mad-cow-disease exposure. Experts said tallow doesn't contain the proteins that are linked to the disease.

Tallow fries represent about 15 percent of the $350 million worth of frozen fries shipped through Northwest ports each year. The rest are prefried in vegetable oil.

But overseas inspectors are closely checking shipments of fries, slowing delivery, said Pat Boss, executive director of the Washington State Potato Commission.

"What we are hearing is vegetable-oil fries are allowed to move into these countries, but the governments are checking very closely," Boss said.

Customers from Asia have called suppliers in Washington and asked that shipments be held up because they wouldn't be able to clear ports in Asia, he said. "Fries were at the Port of Seattle, but they had to be turned around and sent back to processors."

In the meantime, French-fry makers are scrambling to improve labels to clarify the distinction between vegetable-oil and tallow fries, Boss said.

	HARLEY SOLTES / THE SEATTLE TIMES Refrigerated containers stack up at Terminal 18 at the Port of Seattle. Mad-cow fears are causing a backup of containers carrying beef or frozen fries.

The backup of beef and fries has snowballed since the Dec. 23 disclosure that a Holstein dairy cow in Mabton, Yakima County, tested positive for bovine spongiform encephalopathy (BSE), or mad-cow disease. The amount of beef stuck in the export pipeline now represents nearly 10 percent of the $3.5 billion worth of beef the U.S. shipped in 2003, said Heinze, of the meat-export federation.

Industry officials said meat and fries are safe from transmitting the disease. The human form of mad cow-disease, variant Creutzfeldt-Jacob disease, is only thought to be transmitted by consuming infected brain, spinal and other tissues, not muscle meat or tallow. During the mad-cow outbreak in Britain, fewer than 140 people died from the condition.

But the disease's brain-wasting progress — it eats holes in neural tissues, leading to dementia and coma — and the fact that it is irreversible have stoked public fears.

U.S. officials early this week took further steps to keep the disease out of the human food chain, including banning meat from so-called downer animals — those too weak or sick to walk to the slaughterhouse — from the food supply. They also have tentatively identified a herd in Canada as the source of the cow that tested positive, and said the cow was born before nerve tissue was banned from cattle feed in 1997.

Yet in the global marketplace, the fears of foreign consumers are playing out in the local economy.

Washington Beef, a slaughterhouse and packing company in Toppenish, Yakima County, has $1.7 million worth of strip-loin steaks, rib eyes and other meat tied up in transit, either in Customs houses or on ships headed for Asia. That's roughly 5 percent of the company's annual exports.

Two-thirds of the meat is frozen and probably can be shipped back and resold at about half its usual price, company President Gayland Pedhirney said. But the rest is fresh and probably will spoil before it gets back to the United States.

On the bright side, he said, Americans appear to be eating beef, which means the plant still has most of its customers, since only about 15 percent of its output ends up overseas. "Our domestic business still remains pretty strong," Pedhirney said. "We don't have plans to reduce production, reduce hours or lay off employees."

Alwyn Scott: 206-464-3329 or ascott@seattletimes.com. Times staff reporter Jonathan Martin contributed to this report.

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