Unite the Union has rejected various pay offers for being a "real terms" wage cut © Photo by Guy Smallman/Getty Images
Unite the Union has rejected various pay offers for being a "real terms" wage cut © Photo by Guy Smallman/Getty Images

Retailers 'right to worry' as further port strikes pile pressure on supply chains

29 September 2022

A fresh wave of port strike action will combine with the economic fallout from the UK mini budget and the peak retail season to spark supply chain inflation, experts have warned.

Two of UK's busiest ports – Felixstowe and Liverpool – are already being wracked by industrial action over pay, but a newly-announced strike at Liverpool port for 11-17 October and the “economic crisis” have created a “perfect storm”.

Stuart Douglas, director of industry solutions at supply chain platform provider O9 Solutions, told Supply Management: “Retailers are right to be worried by the strike action at Britain’s biggest ports, with Black Friday and peak season on the horizon, plus an economic crisis. 

“In the age of never normal, with ever increasing supply disruptions amid shifting buying patterns as spending tightens means it is no longer feasible to simply increase inventory buffers to absorb volatility, retailers need to be able to continuously sense, respond and adapt plans quickly and cost-effectively.”

The port of Felixstowe began an eight-day strike action from 27 September to 4 October, overlapping with Liverpool port’s two-week strike beginning on 19 September until 3 October. Felixstowe previously experienced industrial action between 21-26 August.

Josh Brazil, VP of supply chain insights at Project44, told SM the advent of concurrent cost of living and economic crises, following the government’s mini-budget, would exacerbate the problems. 

“You have a perfect storm, and it looks like it's going to be hard to resolve this labour dispute quickly,” he explained. “In terms of the effects on the economy, it's going to be big. And this one is closer to peak shipping season than it was last month, which means there’s going to be that much more disruption.

“The combination of the strike with these inflation issues the UK is facing is going to raise prices. It’s a downward spiral – port workers want more money, but closing the port is going to cause supply chain inflation.”

The August strike at Felixstowe saw delays surge by 88% and resulted in an estimated $800m loss of trade.

Data from Project44, which has just launched its Movement platform that offers end-to-end multimodal visibility on supply chains, found average export container wait times tripled during the strikes and import containers waited almost double the average time of seven days.

“It’s a real world thing,” Brazil noted. “You can’t control it, or things like hurricanes or pandemics. But what you can do is put in a strategy for having alternatives and being ready to pivot on your supply chain strategy and look for alternative routings. Look for warehousing in different spots. Having visibility and transparency across different players in your supply chain, that's the game changer.”

Felixstowe, owned by CK Hutchison, is the UK’s busiest port, handling almost half (48%) of the UK’s container volume. In 2020, Liverpool – owned by Peel Ports – was the UK’s fourth-largest port. Approximately $1bn in trade is moved weekly at the Port of Liverpool.

Bobby Morton, Unite national officer, said: “This latest round of strike action will inevitably cause huge disruption at Felixstowe and send shockwaves through the UK’s supply chain but this dispute is entirely of the company’s own making. It has been given every opportunity to negotiate an agreement but it has refused to do so.”

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