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Retailers and food manufacturers call for inquiry into UK port disruption

Retailers and food manufacturers call for inquiry into UK port disruption
Imports are facing surcharges at Felixstowe and Southampton

The British Retail Consortium (BRC) and the Food and Drink Federation (FDF) have demanded an urgent inquiry into the ongoing disruption at UK ports and across the shipping market, with supply chain costs spiking by 25% week-on-week.

The COVID-19 pandemic’s impact on carrier schedules and the shipping sector’s workforce, along with an empty container shortage, has created significant congestion at the UK’s largest container ports in the crucial run up to Christmas.

The organisations have written to Lilian Greenwood MP, chair of the commons transport select committee, and Angus Brendan MacNeil MP, chair of the commons international trade committee.

Their letter requests the transport select committee holds a joint-inquiry with the commons international trade committee on port disruption and functioning of the shipping market.

Helen Dickinson, chief executive of the BRC, stated: “After a tremendously challenging 2020, many firms’ cashflows are under severe pressure, and so businesses are in no position to absorb these additional shipping costs.

“As a result, consumers will pay the final price. Christmas orders could be delayed, and retailers might be left with no option but to increase product prices. These issues must be addressed urgently; an inquiry would provide the scrutiny needed to help get our ports flowing freely again.”

According to the BRC and the FDF, such an inquiry would give affected businesses the opportunity to set out how the disruption has impacted their operations and could help support planning and troubleshooting of this crucial issue.

In particular, the letter noted: “Container spot rates have jumped considerably – in one instance, by 170% from this time last year. Others have noted week-on-week cost rises of 25%. In addition, congestion charges are being levied by carriers for imports into Felixstowe and Southampton.”

After previous calls for action in November, the British government temporarily relaxed the enforcement of EU drivers’ hours rules until the end of 2020 to help the delivery of essential items and reduce the backlog in some ports.

Tim Rycroft, chief operating officer of the FDF, said: “Food and drink manufacturers are extremely concerned about the delays we are witnessing at the ports.

“Our members are incurring costs totalling tens of thousands of pounds, and in some cases hundreds of thousands. In some cases, it is directly impacting on the ability of businesses to build up stockpiles of products and ingredients ahead of the end of the transition period.”

However, organisations representing British ports have claimed that the ongoing problems are due to multiple factors including “unprecedented volatility” this year, rather than specific failings in the ports sector.

Richard Ballantyne, British Ports Association chief executive, said: “Whilst we appreciate difficulties that some importers have experienced in recent weeks, this is certainly not a systemic issue nor is it unique to the UK. The underlying issues are well understood and there is no case for significant intervention or change to Government policy.

“We are aware that some in the freight sector have seen increases in shipping costs. This is not something the ports sector has any control over and is a challenge for the shipping community.”

Tim Morris, CEO of the UK Major Ports Group, noted that imbalances have built up over time, particularly on trades where goods are sourced from Asia with demand 15-25% above comparable periods last year.

Meanwhile, ports are facing additional pressures from stock build ahead of the end of the transition period with the EU, he added.

Morris stated: “[Ports] have hired more staff, committed more resources and are working closely with supply chain partners. Ports handling shorter distance container journeys, whilst busy, have additional capacity.

“We are in close contact with government and progressing practical measures to increase the flow of containers on and off ports. But we are certainly not complacent. Global demand remains very high – reflected in high shipping costs that are not driven by ports – and there are no immediate, magic wand solutions.”