Port of Felixstowe at a Standstill, What Does This Mean for the Holidays?
The U.K.’s largest container port, The Port of Felixstowe, is essentially at a standstill after 1,900 members of the Unite union walked out for eight days over failed wage negotiations.
Based on trade data analysis by MDS Transmodal* the total value of containers impacted by the eight-day strike is estimated at roughly $4.7 billion.
Unite said members rejected the average 8% pay offer from the Felixstowe Dock and Railway Company because the wage offered was lower than the rate of inflation.
The owner of The Felixstow Port, CK Hutchison Holding Ltd, said in a statement on the port’s website it was “disappointed” the walkout had gone ahead and called its offer of salary increases of on average 8% “fair”. The company recorded a 75% increase in profits for 2021. In the first half of 2022, the company’s profits declined due to lower volumes of export/import cargoes handled in the Hong Kong port.
The General Secretary of Unite, recently said C.K. Hutchison Holding Ltd prioritised shareholder profits over worker welfare.
“They can give Felixstowe workers a decent pay raise. It’s clear both companies have prioritized delivering multimillion-pound profits and dividends rather than paying their workers a decent wage,” she said.
The CNBC Europe Supply Chain Heat map shows Felixstowe is now officially congested across the board.
Project44** shows the eight-day labor strike at the port of Felixstowe will have far-reaching consequences not only in maritime activity in the region but across Europe.
“The congestion is expected to worsen across Europe with an increase in blank (canceled) sailings and the container rollovers as a result of these cancellations will further impact the supply chain,” said Josh, VP of supply chain insights for Project44. “European ports have floundered in their attempts to reconcile with their striking labor force, causing ports like Rotterdam, Hamburg, and Bremerhaven to struggle with accommodating vessels, leading to vessel queuing off their coast. The average cargo lead time for the TransAtlantic route has climbed to 27 days in July, close to its all-time high of 29 days at the start of the year.”
It will take around two months for this congestion to be cleared out, a Freight Forwarding and Logistics company has said.
“First talks with shipping lines have started to deviate containers,” said Andreas, the product director at the Freight Forwarding and Logistics company. “However, there are few alternatives to move containers to other ports. Ocean carrier lines are already facing congestion and container mess in the other ports.”
This could impact the arrival of products destined to be on store shelves for the holidays.
“It takes on average a week for containers to clear out of the port, and then a week to schedule a pickup by truck,” said one logistics manager. “You are looking at the second half of November at the earliest to have products arrive at stores to be put on store shelves.” Andreas said.
The Port of Felixstowe process over 48% of the U.K.’s total container trade.
Maersk, has omitted three vessel calls during the strike. In a statement Maersk said: “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.”
* MDS Transmodal is a consultancy company which offers economic and commercial advice in the international transport sector, specialising particularly in freight transport including shipping, ports, road and rail, logistics and distribution.
** Project44 is a logistics technology company that provides a visibility solution to span the entire shipment workflow.