Why are there problems at UK ports and will it mean higher prices in shops?

Businesses say sky-high shipping costs will ultimately be passed on to consumers

Consumers are facing the prospect of rising prices of some imported goods because of worsening congestion at UK ports and a sharp increase in shipping costs.

A host of issues have combined at once to cause disruption for importers, and businesses are warning that this will begin to have an increasing impact on shoppers.

The trade body for freight companies, Logistics UK, wrote to the government this week calling for urgent action by ministers to ease the gridlock before the further chaos that is expected when the Brexit transition period ends on 31 December.

So what has happened and how might it affect you?

What is the problem?  

Long delays have been building at the UK’s busiest container port, Felixstowe, for several weeks. Initially this was put down partly to a faulty vehicle-booking system that stopped lorries entering the port.  

More recently, however, shipping companies and hauliers have reported similar issues at London Gateway in the Thames estuary and Southampton.

At Felixstowe, in Suffolk, the delays have worsened to the point that shipping companies are charging extra fees to customers and, in some cases, have chosen not to stop in the UK at all, dropping their cargo at EU ports such as Rotterdam and Antwerp instead.

The practice, known as “cut and run”, has resulted in delays of about 14 days, affecting a range of industries that import products from timber and tools to appliances and toys.

Shipping costs have also risen sharply, with companies reporting paying four or five times more than they were before the pandemic.  

What is causing the issues?

The shipping industry has moved rapidly from operating well under capacity earlier in the year to operating at full tilt as economies have begun to reopen after shutting down because of the pandemic. Supply chains for many products remain disrupted while demand has risen.

This has coincided with the busy Christmas period and companies’ efforts to build up their supplies ahead of the end of the Brexit transition period. Felixstowe has also had technical problems, and thousands of containers of personal protective equipment (PPE) imported on behalf of the government added to the backlog. About two-thirds of the PPE has now been moved on.

Will it affect the price or availability of goods?  

Businesses have warned that imported goods may become more expensive. Builders’ merchant Timco said prices of its products will rise as much as 17 per cent if problems are not resolved. 

Honda has temporarily shut down production because it has struggled to source all of the parts it needs. The Japanese car manufacturer said it was considering the much more expensive option of flying in parts by air. There is no indication that this would lead to an increase in the sale price of vehicles.

Worse could be in store if no Brexit trade deal is agreed. Tesco said food prices would rise by between 3 and 5 per cent on average in a no-deal scenario.

What is being done about it?

Trade bodies for the logistics industry have urged the government to fix the problems. In a letter to the transport secretary, Grant Shapps, organisations including UK Major Ports Group, Logistics UK and the UK Chamber of Shipping wrote:  

“Although we are hopeful that the current peak of port congestion has passed, high volumes remain and could persist for some months, running into the period of the end of the EU transition.

“Therefore challenges remain. The current situation has arisen in part from imbalances that accumulated over months. Reversing this accumulation is not an overnight task.” 

The Builders Merchants Federation warned ministers weeks ago about problems and said on Tuesday that while the government had been receptive, no progress had been made.