UK Retailers Call for Inquiry into Port Delays and Shipping Costs
With daily reports of delays and disruptions at UK ports as the year-end and Brexit deadline looms, the associations for retailers and food manufacturers are once again weighing into the politically charged environment warning of the impact of the current port situation. Citing rising costs and the challenges to build inventory, they are calling for a parliamentary investigation into the ports and shipping market.
The British Retail Consortium (BRC) and the Food and Drink Federation (FDF) wrote to Lilian Greenwood, Chair of the British Parliament’s Commons Transport Select Committee, and Angus Brendan MacNeil Chair of the Commons International Trade Committee, to request an urgent inquiry. A month ago, the BRC also wrote to the Secretary of State for Transport with a similar call for action. The BRC cites the government’s actions relaxing rules on EU drivers’ hours as temporary relief after the first letter.
In their new letter, the BRC requests that the two parliamentary committees hold a joint hearing into port disruption and the functioning of the shipping market. The letter says that the inquiry would give affected businesses the opportunity to set out how the disruption has impacted their operations and could help support planning and troubleshooting for this crucial issue.
The British Ports Association responded to calls for inquiry saying, “Whilst we appreciate the 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.” The ports association went on to note that ports are always busy this time of year saying that it believes “the overwhelming majority are managing increased volumes.”
The retailers and food manufacturers cite the impact of Covid-19 on global shipping schedules and the shipping workforce along with a shortage of empty containers saying it created significant disruption at many of the UK’s key ports in the crucial selling season before Christmas. Retailers they say faced “major challenges in building up stock for the Christmas period and for the end of the transition period at the end of December.”
“The lead up to Christmas is the most important time of year for retailers; ordinarily accounting for up a fifth of the entire year’s sales and generating a large part of annual revenues. 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,” said Helen Dickinson OBE, Chief Executive of the British Retail Consortium. She went on to warn beyond a shortage of inventory that retailers might also be left with no option but to increase product prices as a result of the increased shipping costs.
The letter highlights that “container spot rates have jumped considerably – in one instance, by 170 percent from this time last year. Others have noted week-on-week cost rises of 25 percent. In addition, congestion charges are being levied by carriers for imports into Felixstowe and Southampton.”
BPA Chief Executive Richard Ballantyne responded to the issue of costs noting, “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.”
The associations had previously warned of the potential of food price increases without post-Brexit trade agreements. The food manufacturers said they are being affected badly by the current port delays. “Food manufacturers now face additional cost to source key inputs elsewhere, whilst also losing sales due to missed retail promotions in the run up to a key seasonal period – one company has lost over £1 million in sales due to the delays.”
Retailers and their supply chains the letter says worked to build stock ahead of the holiday retail season and the end of the transition period. While they acknowledge some delays were inevitable, they express concern that once the Brexit transition period ends, UK ports will be placed under even greater pressure.