About 2,000 dockers at the Port of Felixstowe yesterday went on strike over pay for what their union said would be eight days, halting the flow of goods through the UK’s largest gateway for containerized imports and exports.
Handling about one-third of Britain’s container volume and an even bigger share of direct trade with Asia, the east coast settlement of about 25,000 people is the economic equivalent of the neighboring US ports of Los Angeles and Long Beach or the EU’s premier trade hub in Rotterdam, the Netherlands.
Shipping lines are planning to reroute cargo around the picket line, adding time and cost.
Photo: AP
A.P. Moller-Maersk A/S, the world’s second-largest container carrier, last week said that two ships would skip usual stops and unload Felixstowe-bound consignments at continental ports before sending them on when the strike ends.
Another would switch to DP World Ltd’s London Gateway, the UK’s third-busiest port, it said.
The strike could disrupt more than US$800 million in trade, data analytics firm Russell Group said.
Although it is too soon to evaluate any wider hit to growth, companies are anticipating longer delivery times and higher expenses that can only hurt Britain’s inflation-ravaged economy.
“It’s probably going to be an expense that we end up paying in the same way there were lots of knock-on costs of the ship that got stuck in the Suez Canal,” said Gary Grant, founder of The Entertainer, a toy retailer with goods currently bound for Felixstowe. “It’s just a risk of being in business. You just have to get on with it and try to sell more toys.”
Heading into the disruption, Felixstowe, owned by Hong Kong-based CK Hutchison Holdings Ltd (長和集團), had begun to ease congestion that built as the COVID-19 crisis roiled world trade, a trend reflected in reduced dwell times for containers, supply-chain visibility platform FourKites Inc said.
A strike might reverse that progress, it said, citing similar labor actions in ports in Melbourne and Montreal that boosted shipment durations 15 percent to 50 percent.
Flexport Inc, a digital freight platform, estimates that it could take 24 days to clear cargo backlogs from the strike.
The ripple effects could worsen congestion far from the UK, it said, citing Felixstowe’s 15 weekly services of container ships and truck-carrying ferries serving mainland Europe and Asia.
Among the biggest categories of imports through Felixstowe, about 100km from London, are furniture, computers and auto parts, data compiled by the Observatory of Economic Complexity (OEC) showed.
Another key import via the port is apparel, particularly from India, data compiled by San Francisco-based Flexport showed.
The Port of Felixstowe ran a trade deficit in May, with exports of ￡861 million (US$1.02 billion) and imports totaling ￡3.84 billion, indicating its status as a linchpin in supplying British retailers.
Dockworkers at the UK’s Port of Liverpool, an important hub for transatlantic trade, have also authorized a strike as inflation erodes incomes while shipping lines reel in record profits.
While the effect of the Felixstowe action alone might be negligible for GDP given that it is happening in the middle of this quarter, with time for the bottlenecks to ease, “it may be that the overall impact of labor disruptions acts as a drag to GDP,” Flexport economist Chris Rogers said.
With a recession looming, industry group Logistics UK urged all parties at the port to negotiate a settlement.
It also said the UK’s supply chain remains “resilient and can find alternative routes when issues occur, to alleviate potential disruption.”
However, that is not exactly what you hear from DP World, which operates the UK’s second-busiest container port in Southampton, in addition to London Gateway.
The United Arab Emirates-based company said it has little ability to handle additional cargo should shipping lines try to divert more vessels to its terminals.
“We shall of course do everything we can to support the UK supply chain, although it should be understood that we are currently delivering record volumes and there is minimal spare capacity,” it said by e-mail last week.
The Port of Felixstowe on Friday said that the Unite union had rejected a plea to call off the strike and resume negotiations after spurning a proposed 8 percent pay increase.
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