High Shipping Costs Are Here to Stay, Says Bloomberg
By Henry Ren (Bloomberg) Stubbornly high shipping expenses for businesses are getting sealed into contracts for the next 12 months, forcing companies to pass the extra costs on to consumers....
By Joe Mayes (Bloomberg) — Britain faces disruption to goods flows from continental Europe as the coronavirus outbreak squeezes the finances of ferry companies that bring the bulk of trucks and freight into the country.
All four major operators are cutting back, with P&O Ferries Ltd., the No. 1 player on the key crossing from France to Dover, east of London, furloughing 1,100 staff and seeking a 150 million-pound ($185 million) U.K. bailout. Rival DFDS A/S has halted sailings from Amsterdam to Newcastle, northern England.
While the pandemic has buoyed retail demand from Britons stockpiling essential items, car bookings on ferries have slumped, erasing a vital revenue source for roll-on, roll-off operators. Firms are increasingly opting to idle vessels rather than run them at a loss, jeopardizing supply lines that are the “lifeblood” of Britain, said Bob Sanguinetti, who heads the U.K. Chamber of Shipping.
He said Britain’s maritime connections, on which 95% of imports and exports rely, should be viewed as a strategic asset and given government support in ongoing negotiations with the Department for Transport.
The biggest concern surrounds food supplies, with Britain reliant on trucks to import enough produce to feed itself, according to the U.K. Road Haulage Association. The sector is already in crisis, RHA spokesman Paul Mummery said, with 46% of vehicles parked as a result of staff shortages and financial issues.
The prospect of reduced connectivity with mainland Europe is an increasing worry, said Shane Brennan, chief executive officer of the Cold Chain Federation, which represents specialists in frozen and chilled-storage logistics.
“If we see ferry crossings reduce or fares increase, it will make it harder for cold-chain operators to get fresh food onto supermarket shelves,” he said.
So-called Ro-Ro ferries accounted for 56% of all cargo-vessel arrivals in the U.K. in 2018, the most recent year for which figures are available, carrying more than 1 1/2 times the tonnage of goods transported on container ships.
P&O is waiting to hear back on the aid application as it loses 250,000 pounds a day. The company, owned by Dubai-based ports and logistics giant DP World, has laid up some vessels while maintaining routes for now, a spokesman said.
In addition to suspending the Newcastle route, DFDS has cut passenger capacity to Dover and nearby Newhaven 50% to allow for social distancing. The Danish group has furloughed 2,000 staff across its shipping and logistics businesses.
Among the two other main ferry operators to the U.K., Stena Line, which provides links from the Netherlands and Ireland, said Monday that 150 jobs will be cut and 600 people laid off. Swedish parent Stena AB said passenger traffic may not recover until well into 2021.
BAI SA’s Brittany Ferries, which serves the English ports of Portsmouth, Poole and Plymouth from seven locations in France and Spain, said Tuesday it’s offering limited freight-only services after halting passenger operations.© 2019 Bloomberg L.P
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