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Ash cloud grounds U.S. produce, fish and parts

cargo_volcano.gi.top.jpgCargo containers at the Munich Airport in Germany are piling up because the cloud of volcanic ash from Iceland has kept flights grounded.By Steve Hargreaves, Senior writer

NEW YORK (CNNMoney.com) -- From California produce to New England seafood, the ash cloud from the Iceland volcano is taking its toll on U.S. businesses. Air traffic to and from Europe has been disrupted for days, and that is keeping goods grounded.

On Saturday, Boston-based Black Pearl Seafood was supposed to import 25 tons of fresh fish from a London warehouse, fish with a wholesale value of $320,000.

"None of it left the ground," said Black Pearl owner Dick Martin. "They're just backed up like cords of wood with no end in sight."

The company was fortunate; it was able to freeze the fish and divert it to another market. However, freezing the fish could result in a shortage of fresh fish at U.S. supermarkets, he said.

In Southern California, Paramount Export Co. wasn't as fortunate. It is looking to sell $400,000 worth of fresh fruit and vegetables on the local market, at a steep loss. The produce was packed for the Middle East, but can no longer get there due to the bottleneck in Europe and a lack of available flights crossing the Pacific.

Some of the items were partly insured, but not all.

"We'll have to eat the loss," said Tara Westwater, Paramount's air department manager. "And not only are we losing money on that shipment, we're losing money on the stuff that would have gone out as well."

The dumped produce, combined with the lost opportunity costs, could ultimately run the company nearly a million dollars, said Westwater.

But while there are many similar anecdotes, it is not yet possible to put a dollar figure on losses caused by the disruption. And it is important to remember that only a small amount of the country's imports and exports move by air.

Still, high-value, highly perishable products such as berries, fresh fish and pharmaceuticals are often shipped by plane, as are certain manufactures goods that factories depend on to keep running.

"Warehouses right now are chock full, the pipeline has stopped," said Brandon Fried, executive director of the Airforwarders Association. "'And this product has a shelf life of days."

Even with limited flights resuming on Tuesday, Westwater said it will be at least until the weekend before the backlog of flights is cleared and Paramount can resume normal operations. In the meantime, the company has stopped buying goods for its European and Middle East markets.

Manufactures also rely on air transport for parts to keep their factories running.

Not many companies plan on using air transport to run a normal supply chain, said Glen Joerger, a director at the shipper National Air Cargo. The items they tend to ship are just too heavy.

But when there's a glitch in their operations, they turn to air transport to get key products delivered on time, avoiding shortages that could lead to an overall shutdown at their plants.

That's exactly what happened to BMW. Due to a problem in its normal supply chain, the company was flying transmissions from Germany to an assembly plant in South Carolina.

With those flights now on hold, the company said it has scaled back hours at the stateside plant by 20%.

Mercedes said it, too, is experiencing trouble, although didn't go into details.

"There has been disruption in our parts supply," a company spokeswoman said in an e-mail. "We expect that there may be shortages of some parts or delays in some instances."

Despite the current problems, many said the trade disruption could have been worse if the volcano blew at a different time of the year.

Strawberry growers in the Southeast said their growing season had just finished up, while a lobsterman in Maine said their season hadn't yet got into full swing.

"If this happened in September, there'd be people throwing themselves off bridges," said the lobsterman.  To top of page

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