Strike at Port of Felixstowe to Upend Supply Chains

The coastal town Felixstowe was the site of the last attempt to invade England. Now it is ready for another shock from the ocean. This time, the problem will only be with foreign vessels that do not reach the shore.

Around 2,000 dockers at Port of Felixstowe will strike for eight days starting Sunday. This will stop the flow of goods through Britain’s largest gateway for containerized exports and imports.

The east coast settlement, which handles about a third of British container volume and a larger share of direct trade to Asia, is equivalent to the US ports of Long Beach and Los Angeles. It also houses the European Union’s largest trade hub in Rotterdam.

Shippers will reroute cargo along the picket line to save time and money. A.P. Moller-Maersk /S, the No. Moller-Maersk A/S, the world’s No. 2 container carrier, stated last week that two ships would skip normal stops to unload Felixstowe-bound consignments at continental ports and then send them on when the strike ends. Another vessel will switch to DP World Ltd.’s London Gateway, which is the third busiest port in the UK.

According to Russell Group, an analytics and data company, the strike could cause trade disruptions of more than $800 million. Although it is too early to assess any further impact on growth, companies anticipate longer delivery times and higher costs that could only harm Britain’s inflation-ravaged economy.

Gary Grant, the founder of The Entertainer, a retailer of toys with goods bound for Felixstowe, said, “It’s probably going be an expense that we end-up paying, in the same manner, there were lots of knock-on costs of the ship getting stuck in the Suez Canal.” It’s a risk that comes with being in business. It’s okay to just get on with the job and sell more toys.

Felixstowe, a Hong Kong-based CK Hutchison company, was heading into disruption. According to FourKites Inc, Felixstowe had started to reduce congestion as the Covid crisis roiled global trade. This trend was reflected in decreased dwell times for containers.

It stated that a strike would likely reverse this progress. Citing similar labour actions in ports like Melbourne and Montreal, which increased shipment durations by 15% to 50%, it added that strikes are possible.

Flexport Inc. is a digital freight platform that estimates it could take up to 24 days for cargo backlogs to be cleared after the strike. It warned that the ripple effects could cause congestion in other parts of the world, citing Felixstowe’s 15 weekly container ship and truck-carrying ferry services to mainland Europe and Asia.

According to OEC data, furniture, computers, and auto parts are the most important categories of imports through Felixstowe. It is located in Suffolk, about 70 miles from London. Based on data from San Francisco-based Flexport, apparel is another important import through the port.

In May, the port had a trade deficit with imports of £3.84 billion and exports of £861 million ($1.02 billion). This demonstrates its role as a key supplier to UK retailers. If the dispute continues into autumn, when shops start stocking up for the holiday season, shortages of certain goods could be an issue.

The strike was also approved by dockworkers at Liverpool’s Port, an important hub in trans-Atlantic commerce.

The disruption to the UK’s economy extends beyond the maritime sector. Last week, London subway workers staged pay protests. On Friday, Royal Mail Plc postal staff will begin a series of walkouts. Airport employees and airline workers are also involved in disputes. Nurses, barristers, and other professionals have organized walkouts or planned strike votes.

The effect of Felixstowe alone may not have any impact on the gross domestic product, given that it occurs mid-quarter with plenty of time for bottlenecks to clear, but Chris Rogers, the Flexport economist, believes that “it may be the overall effect of labour disruptions acts like a drag to GDP.”

According to OEC data, China is the largest source of goods coming into and out of Felixstowe.

Logistics UK, an industry group, is asking all parties to the port for a settlement. With the threat of a recession looming, The group also stated that the country’s supply chain is “resilient” and can find alternate routes to avoid disruption.

DP World operates the UK’s No. DP World, which operates the UK’s No. 2 container port, Southampton, is in addition to London Gateway. The dubai-based company claims it is unable to handle additional cargo if shipping lines attempt to divert vessels to its terminals.

It stated via email that it would do all it could to support the UK supply chains, but it was clear that it is currently delivering record volumes and has limited spare capacity.

The Port of Felixstowe said Friday, however, that the Unite union rejected a request to suspend the strike and resume negotiations following a rejection of a proposal for an 8% pay increase.

It stated that the port regretted the negative impact of the action on UK supply chains and added that there would be no winners from the confrontation.

In less than one day, Felixstowe was defeated in the Second Anglo-Dutch War (1667). This became the Battle Of Landguard Fort.

It is unlikely that the latest maritime conflict in the town will be resolved quickly.

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