Customs to shutter inspection center at Brooklyn port, potentially driving up costs of bananas, beer

on Tuesday, January 24, 2012

Customs to shutter inspection center at Brooklyn port, potentially driving up costs of bananas, beer U.S. officials are planning to close a major inspection station in Brooklyn, a move that could ultimately drive banana prices higher.

The New York Times reports that in an increasingly global trading environment, the transportation of goods is an exceedingly complicated endeavor. Delivering a piece of fruit from Latin America to New York is a calculated affair, as companies strive to drive profit margins through enhanced logistics tools.

Customs officials have thrown a proverbial wrench into that finely tuned machine, however, announcing their plans to shutter an inspection station in Brooklyn's Red Hook terminal. Companies that ship and transport food products and other items through the port are scrambling to respond to the news, as they team with supply chain management and procurement consultants in an effort to rework their global logistics operations.

By closing the Red Hook terminal, U.S. Customs and Border Protection will effectively require companies to unload myriad containers each year and subsequently transport them by truck to another terminal capable of inspecting their cargo. Moving thousands of container vessels each year is challenging in and of itself, but businesses are worried they could lose money and time as they truck goods to New Jersey or Staten Island, where the closest customs inspection stations are located.

Port operators contend that the additional transportation could ultimately drive up the cost of bananas for consumers. While companies will likely endeavor to implement business cost reduction programs as a means of offsetting the uptick in transportation costs, such initiatives – unless executed without error – are unlikely to depress fuel costs in the long-term.

Bananas are not the only items whose price would likely rise as a result of the closure: the Red Hook terminal processes approximately 15 percent of all beer delivered to the region, meaning prices on a 12-pack could jump 75 cents or more, according business officials. Executives from food and beverage companies are hoping to find an alternative solution, but their options are limited.

"Basically you're just taking beer on a ride to Staten Island, and right back from where it came from," Phoenix Beverages vice president Greg Brayman asserted. "It's a huge deal."

U.S. Representative Jerrold L. Nadler said that companies are going to struggle to contend with the additional costs associated with the closure of the inspection center. Nadler noted that Brooklyn's ports are an important economic driver in the region and that the move could ultimately kill jobs and increase traffic along the Verrazano-Narrows Bridge.

"It's a tremendous incentive for these shipping companies to say, 'Why bother with Red hook?' " Nadler told the Times. "It's imperative to the economy that we have a port on both sides of the river," he added, referring to the Hudson.

Moreover, other state lawmakers said they feared the closure of the inspections station would increase security risks in the state. Representative Michael G. Grimm asserted thousands of uninspected containers would be transported throughout New York City, which could potentially be targeted.

"Over my dead body are they going to be sending trucks through my district," he exclaimed.

For its part, customs said that it extensively studied whether or not to close the Red Hook inspection station. After a thorough review, officials determined that the total amount of goods that were inspected each year did not warrant the agency's expansive presence in the port. A spokesperson for the federal organization also noted that goods would first pass through a security screening before they are transported to either Staten Island or New Jersey.

 

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