One of the world’s largest shipping lines has brought in a $150 per container surcharge on cargo passing through the Port of Felixstowe as it continues to struggle with delays and staff shortages amid the coronavirus pandemic.
French transporter CMA CGM, which has been dealing with a cyber-attack since the end of September, introduced the charge last Thursday after the costs of operating at the UK’s busiest container port had ‘significantly increased’ in recent weeks.
This has been on the back of reduced productivity from making the port coronavirus-secure, fewer available drivers and a rise in arriving containers.
The operations boss of one Essex-based freight company accused the world’s fourth-largest shipping line of making haulage firms foot the bill for the ‘disastrous performance’ of Felixstowe, calling it a ‘double whammy’ with companies already facing increased costs due to the ‘debacle’ at the port.
CMA CGM, the world’s fourth-largest shipping line, will hit containers coming through Felixstowe to and from Asia with a $150 surcharge, in another blow for businesses already facing problems with the port
And it could mean more costs for some businesses already dealing with delays of goods imported through the port.
The general manager of a flooring seller in Leeds enjoying a record year of sales telling This is Money they had paid out ‘several thousand pounds’ to customers whose orders were late.
This is Money reported on the problems at the Port of Felixstowe, which accounts for 48 per cent of the UK’s container trade, at the end of last month, with the industry body representing haulage firms saying its members faced ‘a perfect storm of issues’ which had reached a level that ‘could be disastrous’.
The Department for Transport had told This is Money it was ‘aware of the issue’ at Felixstowe and would continue to liaise with the port to monitor the situation.
We were told containers normally moved within 48 hours were left piling up on the dockside for up to 10 days, something the port denied, while the recent backlog had got so bad that the port for six days banned hauliers from bringing empty containers back to Felixstowe.
The pandemic has made the problems worse by making it harder to clear the backlog, with the port seeing container traffic 30 per cent above normal levels at a time when importers look to stock up ahead of Christmas, a time of the year known as ‘peak season’.
A statement on the Port of Felixstowe’s website published the day after This is Money’s original article said measures introduced to manage the flow of containers were ‘having a positive impact’ and that it had brought in the first batch of new staff, but the move from CMA CGA suggests it still faces problems.
The shipping line said: ‘Due to a combination of factors, including significant increase in import container arrivals, reduced terminal productivity due to coronavirus-safe working practices, and the deep cleaning required at each shift changeover, and reduced driver availability in the container sector, the operational costs have significantly increased in Felixstowe terminal over the past weeks.’
The $150 per container charge began applying to imports to and exports from Felixstowe being shipped via Asia from 1 October and will continue until further notice.
It will apply to ships currently on their way over from Asia which are not expected to arrive for another month.
We’ve paid out thousands of pounds
With people stuck inside for months on end staring at their walls and, more importantly, floors, 2020 has been a good year for Leeds-based online seller Luxury Flooring.
Its busiest month of the year for sales is usually November as people look to replace floors and do up their homes in time for Christmas, but July this year was a bigger month than last November and it set another record last month.
‘Coronavirus upped our seasonal trends’, general manager James Langton, 39, told This is Money.
Six months ago the business had 15 people working for it but that has now increased to 40, as coronavirus bolstered the business.
James Langton, general manager of Leeds-based seller Luxury Flooring
However, there is just one problem: getting the supplies in.
All of Luxury Flooring’s samples and stock come through Felixstowe, something it is in the midst of trying to change, and the company has faced problems as delays at the port have mounted.
Shipments have been ‘a week or two slower’ than usual, James said, while the company has had to take stock off its website until it physically arrives at its warehouse and can be sold.
A family business which sells imported goods to retailers and sees its busiest trade ahead of Christmas previously told This is Money they were in the dark over when shipments would arrive due to the delays at the Port.
James said there was a very big difference between when stock is supposed to arrive at its warehouse and when it has actually arrived.
He said the business had a ‘reasonable degree of sympathy due to the restrictions put in place’ but that the port hadn’t been ‘all that sympathetic’.
Luxury Flooring’s warehouse. Because of delays at the Port of Felixstowe the business is struggling to get stock in, leading to delays for the business and its customers
The problems the business has faced getting goods out of Felixstowe has meant delays for customers too, and more costs.
‘We have been forced to refund an awful lot in delivery charges’, he said. The company usually offers next day delivery for up to £45 while its usual 3-5 day shipping service costs up to £40, but it has paid out ‘several thousand pounds’ in refunds due to late orders, which has also translated into several recent negative TrustPilot reviews.
With delays continuing to affect imports into Felixstowe, James said the business was having to pre-purchase stock this month ahead of an expected surge of sales in November.
He said there was a concern about getting stock in in time but was confident the business was taking steps to manage any issues.
But while it is trying to change where it imports its stock, ‘Felixstowe is the big hub and changing from that is difficult’, James said. ‘You can’t just flip a switch’.
An email sent on 18 September by SeaLand, part of the world’s largest container shipping line Maersk, and seen by This is Money echoed CMA CGA.
It said normal service had been disrupted thanks to reduced productivity at the port due to staff shortages and new working conditions, a shortage of drivers, many of whom left the industry during the coronavirus lockdown, and a build-up of empty containers at Felixstowe.
‘Because of the completely disastrous performance by the port the knock-on to clients will be felt for many months afterwards’, the director of operations at the Essex-based freight firm told This is Money.
The company acts as a middleman between businesses and shipping lines.
He added: ‘In practice all of the freight industry will pass this onto their clients’, and ‘it is 100 per cent wrong that the shipping lines charge this as they are charging customers in real time now for charges caused by Felixstowe, and they are charging for something that in one months’ time may not exist, as on import the charge is applicable on arrival.’
Felixstowe, which handles close to half the UK’s container trade, has been beset by delays and problems. The port has blamed a shortage of staff and drivers and a surge in containers
Asked whether the issues with the port had eased since it attempted to get a grip on the crisis, he said: ‘The situation is slightly better but Felixstowe have seriously let the industry down and have not yet fully fixed the issue.’
Asked to comment on the CMA CGM surcharge and the continued complaints from haulage companies, a spokesperson for the port said it had not been consulted and was ‘disappointed’ by the new charge.
It said: ‘It is noted that the surcharge is levied from 1 October on cargos leaving Asia, which means it will not affect UK cargos until November. We are confident that the current challenges will have been resolved by then.
‘The large majority of import containers leave the port between five to seven days without incurring any rental charges during their time here and we are not aware of any other shipping line contemplating a similar charge.
‘The main cause of reported delays for importers is, in any event, the shortage of capacity in the container haulage market. Some hauliers are quoting no availability for 10-14 days at least due to high workloads.
‘Booking availability at the port is tight but there are over 4,000 slots available every day for hauliers, several hundred of which go unused.
‘The situation is not helped by some hauliers hoovering up all the bookings they can get then cancelling those they do not need at the last minute, by which time it is difficult for others to use them.
‘We are looking to make changes to the system to prevent this from happening and to allow hauliers who have a confirmed job more opportunities to get a booking.’