Latin American Trade Hampered by Hurricane

Hurricane Katrina’s battering of the Port of New Orleans is being felt throughout Latin America as companies scramble to reroute northbound vessels loaded with steel and apparel while importers in the region await delayed shipments of American grain and fertilizer.

The Louisiana port is one of the United States’ principal gateways for commerce with Latin America and the Caribbean. Officials estimate that one-fifth of the imports that pass through the port each year hail from the region -- including Brazilian coffee, Honduran auto parts, Mexican beer and Salvadoran underwear. About 15% of the port’s exports are sent to buyers in Latin America.

It’s a lucrative piece of business that port officials have eagerly courted and are anxious to keep as they struggle to restore commercial traffic. The port recently opened an office in Brazil to woo more trade from South America’s largest economy. And it’s looking to pacts such as the Central American Free Trade Agreement to boost its volume, according to Port of New Orleans President Gary LaGrange.

“We’re hanging our hat on that for the future,” LaGrange said.

On Tuesday, some of the port’s cargo facilities remained unrepaired, its workforce was scattered and none of its seven cranes were operational.

LaGrange said it could be a couple of weeks before normal operations resume. However, some shipping veterans said it could be months.

The disruption is already reverberating through some industries that get their supplies on a “just in time” basis.

Michigan-based Lear Corp. produces automotive wiring harnesses from facilities in Honduras, most of which are shipped to U.S. clients through the New Orleans port. With the port not yet able to accept inbound cargo, Lear is diverting shipments to Miami and some East Coast ports, according to company spokeswoman Andrea Puchalsky.

She said in an e-mail message that other companies were rushing to do the same, “putting a strain on those ports” and raising concerns about keeping products flowing smoothly to clients.

So far “we are meeting customers’ needs but with every passing day, it is becoming increasingly difficult,” Puchalsky said.

Latin American coffee producers are watching anxiously. New Orleans is one of only four U.S. ports certified to handle coffee traded on the New York Coffee Exchange. About 1.6 million bags -- 27% of the current U.S. coffee supply -- are warehoused at facilities near the port, according to Joe DeRupo, spokesman for the National Coffee Assn.

He said it was not clear whether those supplies were damaged by Katrina’s floodwaters.

At the Port of Coatzacoalcos in southern Mexico, officials are concerned about how to keep another popular beverage -- beer -- flowing to U.S. customers.

Coatzacoalcos is linked to the Port of New Orleans via a rail-ferry service established last year. Operated by CG Railway Inc., the system allows companies such as Mexican brewer Grupo Modelo to ship boxcars loaded with their product over water to New Orleans, where they are unloaded and whisked to their destinations by rail.

The rail-water service requires special infrastructure that can’t be quickly replicated in other ports, said Gilberto Rios, director general of the Mexican port. He said clients such as Grupo Modelo, as well as exporters of petrochemicals and metal products, had been forced to ship their products over land by rail to the U.S., adding time and cost to the process.

It’s a problem that’s bedeviling a number of companies, some of which may have a tough time passing on the extra costs to their customers.

Rick Dougherty, vice president of Cargill Ferrous International, a Minnesota-based steel trading concern, said his company was pondering what to do with a ship loaded with 70,000 tons of Brazilian pig iron sitting in the Gulf of Mexico just outside the Port of New Orleans.

The port is a popular destination for imported steel and other metals, which can be moved easily and cheaply by barge up the Mississippi River to factories in the Midwest.

Dougherty said it had been difficult to get information on how long it would take for New Orleans to start handling inbound commercial cargo.

“We could sell it elsewhere or we could wait for New Orleans to open up,” he said. “It’s hard to make a decision until we have a clearer picture of what’s going on.”

The only ships being unloaded at the Port of New Orleans are federal vessels dispatched to provide relief and speed the rebuilding of the port itself.

The port’s administrative offices have electricity but the docks do not, spokesman Ted Knight said. Generators are coming online, and two of the port’s seven cranes should be working soon, he said.

A U.S. Maritime Administration ship due Friday in New Orleans is carrying a third crane for loading and unloading cargo, agency spokeswoman Susan Clark said.

The other relief vessels include a helicopter-support ship and training ships that will be used as dormitories for as many as 1,000 port and oil industry workers, some of whom lost their homes to Hurricane Katrina.

The Port of South Louisiana, another major cargo facility upriver from the Port of New Orleans, is in better shape. The port is about 85% operational, spokesman Mitch Smith said, adding that the biggest challenge there was ensuring a reliable supply of electricity. About half of the nation’s grain exports move through the Port of South Louisiana, and those vessels are once again moving out to sea, Smith said.

That’s good news for Antonio Guzman, manager of a small animal feed distributorship in central Mexico. Shipments of U.S. grain to Mexico have been delayed since Katrina ravaged the Gulf Coast.

Guzman’s supplier has a few weeks of inventory in storage. And he said it appeared that new stocks would arrive from the U.S. in time to prevent any bottlenecks or shortages.

“Can you imagine if I had to tell a chicken farmer in Morelos that has come to rely on us that suddenly I don’t have any grain?” Guzman said.

Other businesses have not been so fortunate.

Katrina dealt a devastating blow to Linea Peninsular, a small shipping line that specializes in moving goods between Mexico’s Yucatan Peninsula and the small Mississippi port of Port Bienville. The Gulf Coast port was all but wiped out, said Linea Peninsular spokesman Manuel Fernandez, leaving the company without a U.S. base to operate.

“We don’t know how we’re going to solve this and our clients are really worried,” Fernandez said. “Everything is uncertain right now.”

*

(BEGIN TEXT OF INFOBOX)

Trade slowdown

Katrina has hurt operations at the second- and fourth-largest ports in the United States.

Top ports, based on millions of metric tons of cargo in 2004

Houston: 129.7

South Louisiana*: 80.5

New York: 68.7

New Orleans: 66.4

Corpus Christi, Texas: 58.2

Los Angeles: 50.8

Long Beach: 48.9

Port Arthur, Texas: 45.2

Texas City, Texas: 40.5

Beaumont, Texas: 34.1

*Upriver from New Orleans

Source: U.S. Maritime Administration/PIERS

*

Times staff writer Joseph Menn in San Francisco and researchers Cecilia Sanchez in Mexico City and Alex Renderos in San Salvador contributed to this report.