An eight-day strike at the Port of Felixstowe, Britain’s biggest gateway to global trade, could disrupt supplies to the nation’s supermarkets and exports by the country’s biggest industrial groups through to Christmas, experts are warning.
There are fears that consumers could face fresh shortages of some goods and even higher prices, on top of the galloping inflation already hobbling the UK.
The walkout by 1,900 dockworkers at the Suffolk port could have the biggest single impact amid the wave of strikes in what has been billed Britain’s most widespread industrial action since the 1980s. More than 200,000 rail and London Underground workers, bus drivers, Royal Mail delivery personnel, Post Office and BT workers, as well as refuse collectors are all withdrawing their labour.
The unprecedented strike at the port is estimated as likely to disrupt trade to the tune of £700 million and will have a direct impact on the likes of Asda, John Lewis, Tesco and Marks & Spencer. Similarly affected will be industrial companies bringing in parts and exporting goods, such as Rolls-Royce, Jaguar Land Rover, JCB and RS, a parts distributor, as well Diageo, the spirits producer, and GSK, the drugs company.
Maersk, the world’s largest shipping line, has started cancelling calls into the port and is diverting traffic to European ports including Antwerp, Le Havre and London Gateway on the Thames.
“We expect the strike action to have a significant impact to the vessel line-up and are working along with vessel partners to mitigate risk and disruption as much as possible,” Maersk said.
An analysis of Felixstowe’s August traffic by Russell, a trade consultancy, has found that clothing and electronics components are likely to be among the goods hit most severely. Suki Basi, Russell’s managing director, said: “The large exposure of British companies from the disruption is a real-time example of ‘connected trading risk exposure’. The disruption creates ripple effects across the economy, from supply chain disruption for organisations to potential higher prices for consumers.
“Ports across the globe are facing congestion, due to a backlog caused by the pandemic. These strikes could increase the backlog.”
Felixstowe is Britain’s single biggest and busiest container port and one of the largest in Europe. It has some of the deepest waters, allowing for the largest vessels, of any European port.
It handles more than four million containers a year and processes the cargoes of approximately 2,000 ships operated by 17 shipping lines each year, including the very largest container vessels in the world. It takes goods from 700 ports worldwide and plays a pivotal role in the UK’s supply chain.
Dockworkers are demanding a pay rise because retail prices inflation is at 12 per cent and in recognition of the work they did to keep the economy going during the pandemic, when they accepted below-inflation pay settlements.
The Port of Felixstowe has offered a 7 per cent pay rise and a one-off £500 payment to its staff, who on average earn £43,000 a year. That, Unite, the dockworkers’ union, says, is not good enough. It walked out of talks at Acas, the arbitration service, and is taking its members out until next Bank Holiday Monday, saying the offer is not close enough to the cpresent rate of inflation.
Sharon Graham, Unite’s general secretary, said that Felixstowe and Hutchison Ports, its parent company, as part of the trade conglomerate of Li Ka-Shing, 94, the Hong Kong multibillionaire, were “massively profitable and incredibly wealthy and fully able to pay the workforce a fair day’s pay”.
Latest Companies House filings from the Felixstowe Dock and Railway Company showed that the port increased profits by 30 per cent to £78 million last year on revenues 12 per cent higher at £342 million. In the last two years it has paid dividends of £142 million.
One logistics executive played down the impact of the strikes. “Felixstowe doesn’t do fast-moving perishable foods or bulk commodities like grain, so we aren’t going to see gaps on supermarket shelves next week. We have seen worse during the pandemic supply chain issues. The supply chain has become more resilient and goods will divert to other UK ports, while high-value goods will transfer to air freight.”
Felixstowe said: “The port regrets that Unite has walked away from pay negotiations and announced strike action from August 21 to 29. We believe the offer of 7 per cent plus a £500 lump sum was very fair in the prevailing economic climate. The company is disappointed that Unite has not taken up our offer to call off the strike and come to the table to find a resolution. The port regrets the impact this action will have on UK supply chains.”
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Port strike threatens months of disruption