Consumers to foot bill as freight costs surge : ukpolitics


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The cost of shipping goods from Europe to the UK has risen sharply this year, raising the prospect of higher prices for French cheese, German sausages and other imports together worth tens of billions of pounds.

The average cost of transporting a lorryload of goods to Britain from Germany was 26 per cent higher in the first week of 2021 compared with the average for the third quarter of last year, according to Transporeon, which tracks freight flows.

The value of goods imported from Germany is higher than from any other country. These imports were worth £24.3 billion in the first half of last year, equivalent to 12.6 per cent of the UK’s total imports, figures from the Office for National Statistics (ONS) show.

For a lorryload of goods from France, the average shipping cost to Britain rose by 39 per cent in the first week of 2021, according to Transporeon. France is the fifth largest goods exporter to the UK, accounting for 5.6 per cent of total imports in the first half of 2020.

Freight costs normally rise either side of Christmas and New Year’s Day because many lorry drivers are on holiday. However, prices have risen higher than usual at the start of this year.

Stephan Sieber, chief executive of Transporeon, said: “There is a strong possibility that some of these price increases will stay around. I can tell you with quite a lot of certainty that this is not just seasonality.”

Sarah Laouadi, of Logistics UK, a trade group, said that higher freight costs would “eventually have an impact on prices” for consumers.

She said compliance with the new border checks was slowly increasing, but “the question is whether the trend will hold when we go back to normal levels” of freight traffic.

Imports rose sharply in the weeks to mid-December as companies stockpiled before the Brexit transition ended. The subsequent fall in imports eased the pressure on the border around the new year, but lorry traffic to and from Britain is beginning to pick up again.

The higher shipping costs have arisen from additional paperwork required at the UK border since the Brexit transition ended at the start of the year. British companies exporting to the EU now must complete documents showing where their goods were made, among other things. Opportunism by freight companies is also thought to be behind some of the price increases.

Transporeon assesses spot rates for freighting full lorryloads of goods, but excludes volatile prices for cold transport. It estimates that it tracks as much as 10 per cent of lorry flows between continental Europe and the UK.

In the first week of the year, costs for Italian lorryloads were up by 9 per cent and Polish lorryloads were higher by 1 per cent, Transporeon figures showed.

Michael Gove, the Cabinet Office minister, said last week that businesses faced “significant disruption” at the border in the coming weeks, particularly at the Dover-Calais crossing, as exporters and importers grappled with the new requirements. About 2.5 million lorries pass through the Port of Dover every year.

The Road Haulage Association estimates that 220 million new forms will need to be filled in each year to facilitate trade with the EU, including customs forms that could run into thousands of pages for an individual lorry carrying small consignments.

Mike Hawes, of the Society of Motor Manufacturers and Traders, said that the UK-EU trade co-operation agreement had allowed the automotive sector “to avoid a catastrophic no-deal situation”, but “there remain non-tariff barriers to trade such as increased administration and customs costs . . . It remains to be seen how significant these barriers may be or to what extent they may affect pricing in future.”

The average cost of transporting a lorryload of goods to the UK from Germany was 26 per cent higher in the first week of 2021 compared with the average for the third quarter of last year, according to figures from Transporeon, which tracks freight flows.

The value of goods imported to the UK from Germany is higher than any other country. These imports were worth £24.3 billion in the first half of last year, equivalent to 12.6 per cent of the UK’s total imports, figures from the Office for National Statistics show.

For a lorryload of goods from France, the average shipping cost to the UK rose by 39 per cent in the first week of the year, according to Transporeon. France is the fifth largest goods exporter to the UK, accounting for 5.6 per cent of total imports in the first half of 2021.

Stephan Sieber, chief executive of Transporeon, said: “There is a strong possibility that some of these price increases will stay around. I can tell you with quite a lot of certainty that this is not just seasonality.”

Sarah Laouadi, of Logistics UK, a trade group, said higher freight costs “will eventually have an impact on prices” for consumers. She said that compliance with the new border checks was “slowly increasing” but “the question is whether the trend will hold when we go back to normal levels” of freight traffic.

Imports to the UK rose sharply in the weeks to mid-December before falling as companies stockpiled before the Brexit transition ended. This ultimately eased the pressure on the border around the new year but lorry traffic to and from the UK is beginning to pick up again.

The higher shipping costs have arisen from additional paperwork required at the UK border since the Brexit transition ended at the start of the year. British companies exporting to the EU must now complete documents showing where their goods were made, among other things. Opportunism by freight companies is also thought to be behind some of the price increases.

Transporeon assesses spot rates for freighting full lorryloads of goods but excludes volatile prices for cold transport. The company estimates that it tracks as much as 10 per cent of lorry flows between continental Europe and the UK.

In the first week of the year, costs for Italian lorryloads were up by 9 per cent and Polish lorryloads were higher by 1 per cent, Transporean figures showed.

Michael Gove, the cabinet office minister, said last week that businesses faced “significant disruption” at the border in the coming weeks, particularly at the Dover-Calais crossing, as exporters and importers grappled with the new requirements. About 2.5 million lorries pass through the Port of Dover every year.

The Road Haulage Association estimates that 220 million new forms will need to be filled in each year to facilitate trade with the EU, including customs forms that could run into the thousands of pages for an individual lorry carrying small consignments.

Estimates from a 2017 Institute of Government report suggested that import declarations alone could cost traders about £4 billion a year.

Separately yesterday, the UK’s largest supermarkets warned of significant disruption to food supplies to Northern Ireland because of “unworkable” border arrangements. In a letter to Mr Gove, the chief executives of J Sainsbury, Marks & Spencer and Tesco said food shortages would worsen when a Brexit grace period ends on March 31. The supermarkets urged the government to take action “to ensure the long-term sustainability of the Northern Irish grocery market,” the Financial Times reported.



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