News focus: Calais goes from chronic to critical

Paul Snell is managing editor at Supply Management
10 August 2015

The channel crossing between Dover in the UK and Calais in France is about to enter its busiest time of the year, but anyone anticipating a quick getaway to the Continent should think again.

The past month has seen ferry and rail services through the Channel Tunnel disrupted multiple times by industrial action and migrants attempting to enter the UK illegally. This combination has created a perfect storm for logistics providers, described by Road Haulage Association (RHA) chief executive Richard Burnett as “mayhem” that was “putting the livelihoods and lives of hundreds of hauliers at risk”.

The costs for the industry and the UK economy, are mounting up.

Port of Dover chief executive Tim Waggott said four days of disruption in June cost the UK economy more than £1 billion. “Unless supermarkets with empty shelves and assembly lines with vital parts missing are to become acceptable, then clearly under no circumstance should the recent situation be allowed to happen again,” he said.

A billion pounds was the figure the RHA placed on the potential cost of goods being spoilt as stowaways tamper with and soil shipments as they attempt to hide in trucks

Adding to the financial cost of the woes, in half-year results Eurotunnel said it had asked for €9.7 million from the French and UK authorities (having already secured €4.7 million) to cover the cost of extra security. And there doesn’t appear to be an end in sight. One unnamed union member was reported as saying the industrial action would continue as long as it was needed, and he did not care who was disrupted.

Increasing aggression
While Illegal immigration around Calais is not a new problem, the scale is. The number of migrants attempting to reach the UK by crossing the channel has risen from a few hundred a year to tens of thousands, with numbers massively increased by migrants crossing the Mediterranean from north Africa.

In May the British International Freight Association (BIFA) warned carriers might consider not operating on the route, because of safety and financial risks to hauliers. “The chronic, long-term problem is the migrants,” says Peter Cullum, head of international affairs at the RHA. “They have caused huge concerns to companies because businesses and employers have a duty of care to drivers. The fear factor is rising, the migrants have become more aggressive partly because they have become more desperate.”

The industrial action by French ferry workers has, in the words of one expert, “really put the screws on it”. Action taken to block roads and rail lines with burning tyres or wood, has left traffic at a standstill, providing migrants with the opportunity to attempt to board stationary trucks.

Cullum adds: “The difficulty in the past few weeks is [the strikes] have made a chronic problem critical. It has made a very bad situation much worse.” And aside from the immediate disruption and danger, there are other knock on consequences.

“We understand the hauliers are having great difficulty getting insurance now,” says Robert Keen, director general at BIFA. “It only takes one person to get inside a 40-footer with produce in it, foul it, and the whole load is just rejected. Fortunately, we haven’t had any gaps on the supermarket shelves yet, but these things could always happen.”

Prime Minister David Cameron said the situation is unsatisfactory but it was pointless “to point fingers of blame”. “It’s about working with the French, putting in place these additional security measures, adding in the investment where that is needed, and Britain will always come forward with that. We know how important this is,” he said.

Speaking to SM, UK transport minister Robert Goodwill said it was “unacceptable”. “I have been in regular touch with my opposite numbers on the other side of the channel but also speaking to ministers around Europe because this is not just affecting the UK and French economies. I’ve spoken with my Irish colleague because they have dairy products they want to get into the European market,” he said.

But a solution to both the strikes and the migrant problem seems a long way off. Burnett says the time for talking has passed, and has called for the army to be deployed. “Let’s get this desperate mess sorted out now and talk about a long-term solution afterwards,” he said.

UK home secretary Theresa May has announced the creation of a “secure zone” in Calais to provide space for 230 vehicles to wait, as well as additional funding for detection technology, dog searches and fencing around the tunnel entrance. May also chaired a meeting of the government’s Cobra crisis response committee to discuss the issue.

The industry has welcomed the moves, but there is cynicism about how effective the measures will be when it is a political and diplomatic solution that is ultimately needed.

Finding alternatives
So what are the options for hauliers and buyers? Taking a different route is a possibility – one logistics provider, for example, went via the port in Teesside and drove components back down to Derby – but there are two major issues; capacity and cost. There are other ports in France and northern Europe such as St Malo or Le Havre. But, as Donald Armour, manager, international affairs at the Freight Transport Association says there is not the capacity to divert and “there is nothing like the bus service [from Calais] in comparison.”

Between 70 to 80 per cent of freight passes through Calais, “so even if you stopped all that,” adds Cullum, “you would have to find 80 per cent of the demand going into 20 per cent of the capacity which is already being used. You could redeploy ships and get new ones, but it would take time.”

Alan Braithwaite, executive chairman at LCP Consulting, says he suspects the market will find some space elsewhere, but for the vast majority switching to air freight will be uneconomic.

And David Williams, managing director of freight forwarder Rhenus UK, says: “Clearly, this scenario has highlighted a wider challenge for the supply chain industry; dealing with the lack of capacity and alternative options to cross channel freight movements. While we’d like to see new export routes coming on stream – in reality, nothing is likely to happen soon.”

Unaccompanied freight – where goods are left at a port and picked up at the other end - could be another option. “It has been growing for the past five to 10 years, and there is a business opportunity to get stuff closer. But it is not popular with hauliers because they lose their margin opportunity. We could see this growing rapidly. There is plenty of available volume at the Thames ports, and there is also plenty of competition,” says Braithwaite.

And the industry is looking for buyers willing to renegotiate deals to help their suppliers cope with the crisis. “Some will, some won’t,” says BIFA’s Keen. “Some [clients] will say I want it now, I want it cheap. But somebody with a spoiled load may work with their service provider and pay a little extra, especially if insurance companies are getting quite wary about offering cover on loads that could be spoiled.”

Tom Woodham, a director in PwC’s consulting practice, says: “It depends on your relationships with your suppliers and how important it is to get the parts in. It’s much better to have discussions on likely supply chain risks in advance. If the supplier is paying you could help them, by having a mechanism in the contract to pay a proportion, for example – there are lots of different ways. What you don’t want is crude penalties in the contract, that simply punish the supplier rather than encouraging them to work with you to find a solution.”

 

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