What is the Felixstowe strike, and how will it affect UK trade?
Workers at Britain’s busiest container port are on strike for eight days over pay.
Experts say that strikes at the Port of Felixstowe are exacerbating the effects of Brexit and the Covid pandemic on the British economy.
Workers at Britain’s largest container port, which handles approximately 2,000 ships per year, are on strike for eight days over pay.
The terminal owned by the Hong Kong-based company CK Hutchison serves as a linchpin for long-distance shipments to and from Asia, handling goods for approximately 17 different shipping lines operating to and from 700 ports.
More than 500 workers at the Port of Liverpool, another of the UK’s largest container terminals, plan to strike over pay.
Why are employees on strike?
The strike involves more than 1,900 Unite members, including crane drivers, machine operators, and stevedores. The union is urging the company to improve its 7% pay increase offer, which it claims is “significantly below” the rising cost of living.
According to the union, the docks and their owners are “incredibly wealthy,” with pre-tax profits of £61 million in 2020 and dividend payments of nearly £100 million. Felixstowe claims the union has not made an improved offer to its members of a 7% pay increase plus a £500 one-time bonus.
Union officials have cited the retail prices index (RPI) as a benchmark for inflation, which is currently 12.3%. A figure of 7% to 12.3%, according to Robert Morton, a Unite national officer, would be acceptable. The RPI is higher than the consumer price index (CPI), which registered 10.1% in July.
With another sharp increase in household energy bills expected this autumn, the Bank of England expects CPI to exceed 13%.
What are the implications for UK trade?
Business leaders are concerned that the strike will disrupt supply chains at a time when companies are dealing with disruption from Brexit and the Covid pandemic.
According to ALPS Marine analysis by Russell Group, a data and analytics company, up to $800 million (£680 million) in trade could be impacted. This includes more than $80 million in clothing trade and more than $30 million in electronics trade.
According to Josh Brazil, a global supply chain analyst at research firm project44, container capacity fell by more than a third on the first day of the strike compared to last week. Some vessels are being redirected to nearby London Gateway, where capacity volumes have increased by 45% in the last week.
“It has the potential to have massive implications for the nation’s supply chains,” he said.
According to industry sources, shipments were timed to arrive to avoid the strikes, with orders rushed to beat the start and others delayed to arrive later. Trade will also be diverted to smaller UK and EU ports, such as Rotterdam in the Netherlands and Wilhelmshaven in Germany.
What effect does this have on consumers?
Consumers are unlikely to notice an immediate impact, but experts predict that further strike action will result in delivery delays and shortages of certain goods.
This is due to the fact that Felixstowe typically handles bulkier items shipped from Asia, such as furniture, clothing, and white goods, as opposed to Dover, which handles food and perishable goods that require faster delivery.
UK ports have gradually been recovering from Covid, Brexit disruption and national lorry driver shortages, while warehouses have been restocked with goods. Consumer demand for big-ticket purchases such as sofas and fridges is also fading amid concerns over the rising cost of living, reducing the pressure on supply lines.
However, the disruption is likely to add to logistics costs, which could feed into consumer prices. “It will add an inflationary impulse,” said John Glen, the chief economist at the Chartered Institute of Procurement and Supply. “We still haven’t got back to just in time supply chains and stocks being held in warehouses. So you will see some impact in the shops. It won’t be a lack of availability of particular products, but you might see a lack of choice.”
Further strikes, according to experts, could have an impact on Christmas, when retailers typically ramp up supplies. “This is the latest unwanted twist in our weekly food shops,” said Sophie Lund-Yates, a lead equity analyst at Hargreaves Lansdown. “High prices are already making the experience more difficult for many shoppers.”
