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Retail trade calls for enquiry into port chaos

[ December 17, 2020   //   ]

The British Retail Consortium and the Food and Drink Federation are calling for an urgent parliamentary enquiry into the delays that have hit UK deepsea ports in the last few months.

In a letter to chair of the Commons Transport Select Committee, Lilian Greenwood MP, and chair of the Commons International Trade Committee, Angus Brendan MacNeil MP, they said that the impact of Covid-19 on global shipping schedules along with a shortage of empty containers has created significant disruption at many of the UK’s key ports in the run up to Christmas. Retailers face “major challenges in building up stock for the Christmas period and for the end of the transition period at the end of December.”

The 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. It would give affected businesses the opportunity to set out how the disruption has impacted their operations and could help support planning and troubleshooting.

The disruption is also having a serious impacton shipping-related costs, they say, with container spot rates jumping, 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.

Food manufacturers have lost sales of over £1 million due to the delays.”

The BRC previously wrote to the Secretary of State for Transport on 20 November to call for action, which led to nthe Government temporarily relaxing the enforcement of EU drivers’ hours rules until 31 December to reduce the backlog in some ports.

However, once the Brexit transition period ends, UK ports will be placed under even greater pressure.

Chief executive of the British Retail Consortium,  Helen Dickinson, said: “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.

“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.”

Chief operating officer of the Food and Drink Federation, Tim Rycroft, added: “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.”

In response, British Ports Association chief executive, Richard Ballantyne, said, however: “UK ports are working hard to keep trade flowing and most are managing some unusually high volumes as a result of unprecedented volatility this year. 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.

“The UK boasts a large number of highly competitive, highly productive ports, many specialising in particular trades or routes. The industry keeps the UK supplied and connected to global markets, and will continue to deliver for the UK as it has throughout the pandemic. Those ports handling containers and lorries are always busy at this time of year, and presently the overwhelming majority are managing increased volumes.

“As unitised traffic has grown continuously in recent years, UK ports have been investing in new infrastructure ensuring that there is enough capacity to meet increased volumes and will continue to do so whilst delivering £2bn in tax revenues each year to the UK exchequer.

“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.”

Chief executive of the UK Major Ports Group, Tim Morris, commented “Covid-19 has put unprecedented pressures on global supply chains. Imbalances have built up over time and there is strong demand globally for many goods sourced from Asia. It is undoubtedly a difficult situation, with ports and businesses around the world impacted. The UK also has some additional pressures from stock build before the end of the Transition period from the EU.

“Ports serving Asian trade routes are making real improvements against demand that remains 15-25% above comparable periods last year. They 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.”

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