Felixstowe Strike: What affect will the strike at the UK’s biggest container port have on UK trade?
At the weekend more than 1,900 shipyard workers began an 8-day strike at Britain’s largest container port, Felixstowe. Leaving the reasons, politics and even ethics aside, how will this affect UK trade?
According to the ports website, Britain’s biggest and busiest container port, and one of Europe’s largest, Felixstowe, handles more than 4 million ‘Twenty-foot Equivalent Units’ (TEUs) of goods and has 2,000 ships arriving each year. Massive investment is ongoing, and its container handling capacity is forecast to double to 8 million containers in just 7 years.
The port can handle all types of cargo, including Ro-Ro and rail, but its main activity is deep sea vessels and containerisation. Felixstowe plays a very significant role in keeping UK’s trade moving and 48% of Britain’s container trade is through this port.
The main activity is for long distance shipments to and from Asia and, more or less, 17 different shipping companies operate between 700 overseas ports to and from Felixstowe. The strike will cause a damaging impact on both import and export supply chains, meaning that imported goods will not reach the shop shelves for consumers. Manufacturing companies will further feel the effects of an already damaged supply chain following the effect of the pandemic and Brexit. This means that the valuable raw materials that they require in order to manufacture their high quality, and sought after, ‘made in the UK’ goods will slow down and could possibly stop. And goods waiting to be shipped to UK PLC’s customers around the world will be held and subsequently delayed.
As much as £680 million in trade could be affected according to ALPS marine analysis by the Russell Group.
The immediate effect has a serious knock-on consequence. If our overseas customers cannot get the goods they have ordered, some may look elsewhere for their supply, creating business loss. As well as denting the reliability of Britain as a serious global supplier, and effects could be felt for many months after the strike has ended. The additional knock-on effect is that individual companies cash flow will be affected, as they cannot invoice for goods unshipped (depending on the INCOTERM agreement between them and their customer). They have paid for the raw materials and the costs of production, but recovering their investment is delayed!
Consumers are unlikely to see an immediate impact on shop shelves because Felixstowe typically handles larger, bulkier items shipped from Asia such as furniture, clothing and white goods. This is opposed to the Port of Dover which tends to handle EU mainland goods and products such as foods and other perishable goods that require a faster delivery time.
This disruption could add to logistics costs which, in turn, lead to higher prices in shops. According to John Glen, the chief economist at the Chartered Institute or Procurement and Supply, it will add to the inflationary pressures.
All this comes at a time when retailer and manufacturers alike are starting to think about the busy Christmas period.
Worse still, further strikes are on the cards if a settlement is not reached after this episode.
From my side, everyone will be affected, we are an island nation surrounded by sea, and our ports and airports are crucial to keeping this country ticking. Coming from a global manufacturing background, I really feel for the UK’s manufacturing sector who must grapple with yet another issue that has caused headaches, planning and re-planning, having faced many issues already over the past 3 years.