PHILADELPHIA FACES STIFF CHALLENGE AS PREMIER WINTER FRUIT PORT IN US

PHILADELPHIA FACES STIFF CHALLENGE AS PREMIER WINTER FRUIT PORT IN US

Deal-making for the upcoming winter fruit season is under way in Chile and it is clear that Philadelphia is facing its severest challenge yet as the nation's premier winter fruit port.

In recent years, virtually all the fresh winter fruit consumed on the East Coast to as far west as Chicago passed through Philadelphia, creating thousands of local jobs and pumping at least $100 million into the local economy."We have been losing clients," said Patricio Graz, president of Chilean Line and its wholly owned subsidiary, Tioga Fruit Terminal, Philadelphia's largest Chilean fruit terminal.

Fruit growers are finding better deals at other ports, he said.

"Philadelphia always has been pretty expensive," Mr. Graz said last week. "But the gap has been widening between the city and Wilmington, Del., and Wilmington, N.C.," Philadelphia's two principal rivals for winter fruit shipments.

The problems began last season, when one major shipper transferred nearly 20 percent of the city's fruit business to Wilmington, Del. To keep their business, Philadelphia port costs must be slashed by $10 a ton, Mr. Graz warned port officials, local stevedoring companies and labor officials.

If not, he will be forced to bring Chilean fruit into cheaper ports. Last year, sources said, Mr. Graz had to pay about $41 to have each ton of fruit unloaded by longshoremen at the Tioga Fruit Terminal.

Earlier this month, at least two of the port's players cut their costs. Local stevedoring firms cut their crane rental costs, and the fruit terminal's owner, the Philadelphia Regional Port Authority, cut the rent it charges in half, to $100,000 a year. That reduced the per-ton cost of unloading the fruit by a full dollar, said John LaRue, the regional port authority's executive director

For the Philadelphia region, the stakes are high. More than 28.4 million cases of Chilean fruit, or 232,633 tons passed through the Philadelphia port in 1992, a 26 percent increase over the previous year. It is a labor-intensive and lucrative product, as well as an important link to Chile, the most economically sound South American nation.

"Chilean fruit is very important to Philadelphia," said Madeline Champion, senior vice president of First Fidelity Bank, which provides financing to fruit operations.

"Counting all the ancillary activity - the sales offices, Chilean visitors, trucks coming here and so forth - the fruit business contributes $100 million to $120 million annually to the region's economy," she said.

Ms. Champion, who is also president of the Chilean-American Chamber of Commerce in Philadelphia, was one of several experts who said that any further erosion in winter fruit shipments would lead to severe permanent damage.

"It has been an important niche," she said, "and once a niche starts to

break up, that is hard to stop."

The Philadelphia fruit business took a major hit last season when Seagate Corp. switched its nearly 5 million cases to Wilmington., Del.

That prompted First Fidelity Bank and the Philadelphia Regional Port Authority to sponsor a trade mission to Chile, led my Mayor Ed Rendell.

"Rendell was a super salesman," and that helped, a source said, but in the long run "the Chileans aren't sentimental."

"The cost per ton is what really matters to us," Mr. Graz said.

At the moment, Philadelphia has the edge in many respects. It has the skilled labor, a good location, ample refrigerated warehouses, as well as banking, legal services, land transportation, sales and security infrastructure that other ports cannot match.

But the loss of any more fruit shipments would weaken that infrastructure and embolden others to make substantial investments in building their own warehouses and other fruit facilities, several sources said.

If another chunk of fruit business disappears, sources in several segments of the port community said that within three years virtually all the winter fruit business could be gone.