Retailers Seek Inquiry Into Port Disruption as Brexit Pressure Mounts
(Bloomberg) -- Britain’s top retailers and food manufacturers are demanding lawmakers investigate disruption at U.K. ports that has caused shipping costs to soar and raised doubts over the stability of supply chains after the country completes its split from the European Union on Dec. 31.
The British Retail Consortium and the Food and Drink Federation have written to lawmaker committees focused on transportation and trade to request a joint inquiry to tackle blockages at U.K. ports, they said in a statement Thursday. The lobby groups represent two of the biggest employment industries in the country.
Brexit has heaped pressure on ports already under strain from stockpiling due to the pandemic and the festive season. While the delays could mean lost sales for retailers -- year-end holidays can account for a fifth of their annual sales -- things could get worse next year.
“Once the Brexit transition period ends, U.K. ports will be placed under even greater pressure,” the groups said in the statement. 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.”
There’s also uncertainty about hauliers’ ability to operate between the U.K. and EU next year as limits on the numbers of trucks that can cross the border may take effect if negotiators fail to reach a trade agreement.
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Just 1,668 of the annual European Conference of Ministers of Transport permits that U.K. truckers would need to cross into the EU during 2021 will be issued, according to government. The permit requirement could be put on hold for six months if contingency legislation pending in Brussels is finalized.
Some European hauliers have already stopped taking U.K. bound consignments from Jan. 1, as they await clarity on the future relationship, the trade group said this week.
Scores of British businesses have spoken out about supply chain disruption caused by the current congestion crisis in recent days. Now freighters including United Parcel Service Inc. and Deutsche Post AG-owned DHL are putting in place a Brexit surcharge on consignments. The fee will deal with “increased transportation, customs and brokerage, and network adjustment costs associated with goods movements in and out of the U.K.,” UPS said in an e-mailed statement.
Not all are fretting about the disruption. Alex Baldock, chief executive officer of Dixons Carphone Plc, the U.K.’s biggest electronics and mobile phone retailer, said Wednesday it is experiencing delays of as much as two days. This time period matches its “worst case” scenario planning for a no-deal Brexit.
“It is not ideal but we can handle the delays,” he said on an earnings call with reporters. “This is the advantage of being number one in the market as it means we are first in line for stock when it is scarce.”
The U.K. government is locked in eleventh-hour talks to hammer out a deal with its largest trading partner, with national parliaments on standby to ratify any agreement. British business groups are pleading with the government to ensure that businesses are granted grace periods to allow time to adjust, regardless of whether a deal is agreed or not.
The retail consortium previously wrote to the the U.K. Secretary of State for Transport about port congestion in November. The government subsequently temporarily relaxed the enforcement of limits on EU drivers’ hours until Dec. 31 to help delivery of essential items and reduce the backlog in some ports.
“After a tremendously challenging 2020, many firms’ cash flows are under severe pressure, and so businesses are in no position to absorb these additional shipping costs,” said Helen Dickinson, Chief Executive Officer of the BRC, in an emailed statement. “Consumers will pay the final price.”
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