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Working for our membership: providing critical information while facing disruption in the Rea Sea
By Nichola Mallon, Head of Trade and Devolved Policy
With ongoing attacks in the Red Sea and the safety of sea-faring crews being paramount, shipping lines are being forced to detour and divert around the Cape of Good Hope, causing significant disruption to supply chains.
The diversion around the Cape of Good Hope is adding at least 10 days to journeys and increasing shipping costs. This situation is having a direct impact on members and, consequently, Logistics UK has been working closely with members and with government on the latest developments and need to protect UK importers, exporters and consumers.
The priority concern among our members, who are the UK’s importers and exporters, is the level of charges being levied by the shipping lines. Our members always try their best to absorb any additional costs, however, there is concern about the wider impact these charges will have on the economy and potentially inflation.
To help provide clarity and information around these charges, Logistics UK has been supporting members by hosting regular sessions with the Shippers Council, a group made up of members directly impacted by the situation.
On 18 January 2024, we met with our Shippers’ Council members to share the latest analysis of the situation in the Red Sea and listen to feedback from members on their experiences and concerns. Officials from the Department for Business and Trade and Department for Transport were in attendance and provided the latest updates.
A second follow-up meeting was held on 12 February, to facilitate a deep dive analysis of the surcharges shippers are facing.
For logistics businesses, having credible and accurate information on the additional costs is vital to check and challenge costs that appear disproportionate or unjustified. To help with this, we have collaborated with key stakeholders, the Global Shippers Forum and MDS Transmodal, who have created a new Surcharge Assessment Model to help members stress test charges and reinforce their own internal cost analysis.
In addition, David Wells our CEO, has attended a roundtable with Minister Nursat Ghani MP to discuss ongoing disruption and next week Logistics UK will be representing members at a second industry roundtable with the Minister and officials from the Department for Business and Trade.
At this meeting we will reiterate the importance of government continuing to engage directly with shippers on costs and acting to protect the interests of UK exporters, importers and consumers from over inflated prices. Key to this is ensuring facts on global trade trends and increased container and shipping capacity are communicated, particularly to smaller importers and exporters, to assist with their negotiations and decision making.
It is in the UK economy’s interests that robust scrutiny is applied to the increased charges being passed on to shippers and their customers and we have also requested a meeting with the UK Competition Markets Authority to discuss the concerns of members and how greater transparency can be brought to this situation.
Looking ahead and with attacks continuing, the working assumption among shippers is that avoidance of the Red Sea and diversion around the Cape of Good Hope will now be the rule rather than exception until there is a cessation of actions against merchant shipping in the Red Sea. Shippers are expecting service patterns to settle into the new longer routes and adjusted port calls returning some stability to predicted arrival times of ships and delivery of containers.
We will continue to monitor developments, have conversations with our members and represent their interests at the highest levels of government. In order for us to influence change, it is important that members engage and share their insights and experiences so we can take the shipping community asks directly to government. I would appeal to members to actively take part in discussions through our Councils.
The Shipping Council is next meeting on 28 February and if you are interested in attending, please contact me at nmallon@logistics.org.uk, for more information.
Published On: 15/02/2024 14:00:00
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