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 Andrew MacAskill and Jonathan Saul LONDON, Jan 2 (Reuters) – Britain’s transport minister has defended awarding a 14 million-pound ($18 million) contract for shipping goods after Brexit to a new ferry company that owns no ships.
The government last week awarded three contracts to charter extra ferries to ease congestion if the United Kingdom fails to secure a trade deal before leaving the European Union in March.
The smallest contract was won by Seaborne Freight, a British business that has never previously operated a ferry route, raising concern about whether the new service would be ready.
“I make no apologies for supporting a new British business,” Transport Minister Chris Grayling told BBC radio on Wednesday. “We have looked very carefully at this business. We have put in place a tight contract to make sure they can deliver for us.”
He added that he believed channel ports would be able “to operate normally in all Brexit circumstances”.
But the United Kingdom is due to leave the EU on March 29, and the risk of a no-deal Brexit is growing — a nightmarish prospect for many businesses, which are now planning for an economic shock.
Finding extra ships – especially vessels that transport trucks – to work new routes across the Channel will be vital if the main terminals of Calais in France and Dover and Folkestone in Britain are clogged by customs checks.
Seaborne Freight did not immediately respond to requests for comment on Wednesday.
The company told Reuters in December it had been working over the past 18 months to offer a new service between Britain’s Ramsgate, which is near Dover, and Belgium’s Ostend – reopening a route that another operator had used until suspending the service in 2013.
Glenn Dudley, Seaborne Freight’s chief operating officer, told Reuters last month they were looking to start operations in the first quarter of 2019 with two ships, “with additional tonnage to join later on in the year”.
Each roll-on roll-off (RORO) ship would be able to carry up to 100 trucks. The company intends to offer up to 16 departures daily each way, Dudley said.
Finding RORO ships, which are usually booked in advance, is complex. About 85 percent of capacity on RORO ships was booked several months ahead, one industry source said.
Currently, Britain’s membership of the EU means that trucks drive smoothly through border checks within the bloc. But in a no-deal Brexit, even a few minutes’ delay at customs for each truck could mean vehicles backed up at ports and queued on feeder roads on both sides of the Channel.
To ease a potential backlog, the government awarded Seaborne Freight a contract to operate ferries from Ramsgate to Ostend.
Asked how the government knew the company could run an effective service, Grayling said officials had carried out due diligence on the company. The decision to use the port of Ramsgate, he said, was not “something that we have plucked from thin air.”
Thanet District Council, which owns the port of Ramsgate, told Reuters on Wednesday that dredging to extend access for ships would start this week, referring further queries to Seaborne Freight, which was carrying out the work.
Grayling, who campaigned for Brexit before Britain’s EU referendum, also said that Britain would be able to cope with a no-deal Brexit, saying he was confident that it would not cause problems at British ports.
“I am expecting the channel ports to operate normally in all Brexit circumstances” Grayling said. “I am confident that will happen.” ($1 = 0.7863 pounds) (Reporting By Andrew MacAskill and Jonathan Saul; editing by Paul Sandle, Larry King)
(c) Copyright Thomson Reuters 2019.
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