Critical threat to UK's Supply Chain: Felixstowe Port Strikes I Bar2

In recent weeks, one of Britain’s trade unions, Unite announced possible strike action across the UK’s largest container port, Felixstowe.

This comes as 92% of Unite members at Felixstowe port vote for industrial action in a dispute over pay, as the cost-of-living continues to rise (Financial Times).

The strikes – which are proposed to take place between 21 to 29 August 2022 - would follow a series of walkouts which have recently taken place in the transport and postal service industry, and pose a significant threat towards the UK’s critical supply chains.

So, what factors have contributed towards this action?

With inflation predicted to reach 11% over the coming months, Unite have argued that the forecasted pay rises from Felixstowe port - which sit as low as 5% - are simply not enough, and represent a “big real-terms cut” towards those workers in the industry (Financial Times) who are having to battle with the rising cost-of-living.

As the UK’s inflation rate reaches double figures and Felixstowe docks and its parent company, CK Hutchison Holdings Ltd remain hugely successful and profitable in the transportation industry (Financial Times); it’s no surprise to see that an overwhelming amount of Unite members have voted in favour of the strikes.

Following Felixstowe’s offer of a 5% pay increase and £500 cash bonus; Unite’s general secretary, Sharon Graham, has said that Felixstowe docks are “fully able to pay the workforce a fair day’s pay” however, over the years have “prioritised delivering multimillion-pound dividends rather than paying its workers a decent wage” (The Guardian).

Responding to the claims, a representative of Felixstowe port have said that they were “disappointed” with the result of the ballot and believe a “very fair offer” was made (Financial Times) and since then, have requested to meet with dispute resolution service, Acas, in the hope to come to an agreement over pay.

The effect on the UK’s supply chain

The strikes create the potential for Felixstowe port to shut down completely, resulting in a huge knock-on effect on the UK driving industry’s ability to function.

As incoming shipments may be diverted to other routes, HGV drivers could be delayed when it comes down to supplying the country with essential goods as we begin to approach the all-important festive season.

The number of daily deliveries achievable by drivers could significantly decrease, and with a lack of goods reaching depots and factories across the UK; petrol stations, supermarkets and other marketplaces could be yet again be placed at risk.

Well known UK toy shop, The Entertainer, have voiced their concerns about the strikes and their ability to create vast supply chain issues. Gary Grant, Founder and Executive Chairman has said that they “almost certainly” have containers on ships that will be affected by the disruption.

He went on to mention that “although companies may have the ability to place goods on ships to other UK ports, other retailers are likely to do the same” (Bloomberg), suggesting the insignificance of putting contingency measures in place.

If the port were to shut down completely, a huge backlog in imports and shipments could force ships to re-route to other European ports. With the rising cost-of-living and the UK economy already bracing itself for a deep, year-long recession, the impact of potential additional costs intertwined in the bureaucracy of transporting goods across to the UK (Bloomberg) will only cause the situation to worsen.

What does the future hold for the supply chain?

Several industries including the healthcare and transport industry have warned that we should expect industrial action to spread across into other sectors in the months ahead.

This comes as Transport for London, Network and National Rail and Ryan Air announce plans for both short and long-term strikes as UK inflation peaks.

Whilst both Felixstowe and Unite are in the process of having discussions over pay in the hope to avoid industrial action, UK businesses – particularly those which rely on the festive season for trade – should take the necessary measures in order to prepare for the effects of the strikes, should they go ahead.

To avoid further damage to the UK’s supply chain and those businesses already struggling with Brexit, soaring inflation rates and the prolonged effects of Covid-19; Felixstowe port would need to come to an agreement with Unite on pay, or else face the walkout of over 2,000 workers in the weeks to come.