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Retailers rattled by "brutal" freight increase proposals

Retailers rattled by

Monday 04 December 2023

Retailers rattled by "brutal" freight increase proposals

Monday 04 December 2023


Government, Condor and industry representatives have been locked in negotiations over the weekend after it emerged that the ferry service company have proposed a price increase of almost 19% on imported goods next year.

And local retailers have described the "brutal" impact the rise would have on the island's businesses, which may be forced to pass costs onto customers.

Condor's proposed freight increase was revealed in an email sent to Ferryspeed and Profreight customers at the end of last week.

"This level of price rise is unprecedented"

In the email, the sister companies outlined plans to increase their pricing from January by 8.76% based on September RPI indices of UK, Jersey and Guernsey.

However, they revealed that Condor is intending to increase prices by inflation plus 10%, resulting in a total increase of 18.76% from 1 January 2024

"As you will appreciate, this level of price rise is unprecedented and, if implemented, will have an impact on our operating costs that will not be covered by the 8.76% inflation linked increase referenced above," said Ferryspeed and Profreight.

The companies therefore explained that they "reserve the right to further raise prices beyond the 8.76% noted above depending upon the outcome of our discussions with Condor".

They added: "We have not, as yet, accepted Condor’s proposal and, instead, have raised the impact such an extraordinary increase would have on our customers and have asked them to explain the rationale behind their proposal."

"Terrible news for businesses"

Murray Norton, CEO of Chamber of Commerce, said: “The proposed rises in the cost of freight are terrible news for businesses in the island and will impact prices to customers."

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Pictured: Murray Norton, CEO of Chamber of Commerce, described the proposed increases as "terrible news for businesses in the island".

"Chamber has been in discussions with Condor and Government on Friday and throughout the weekend to gain a greater understanding of the causes. These Condor price rises are high and do unfortunately reflect cost increases in the jurisdictions they operate," he continued.

"These do include Ports fee increases above inflation, large minimum wage increases and the rises in the cost of stevedore services. The cumulative effect of these rises and others has all combined on one essential service.

He added: "Clearly, the restraint Chamber has consistently called for, on areas within the control of Government, does have an effect on the cost of running a business.

"The Governments of both islands should be mindful of this when they add to business costs. We are seeing many sectors under huge pressure right now and this will certainly not help.”

"These increases couldn’t come at a worse time"

Colin Gaskell, Head of Retail­ at Romerils, said that the impact of the price rise on local businesses and customers would be "brutal".

romerils.jpeg

Pictured: "...Businesses like Romerils cannot absorb these increases therefore it becomes inflationary to the Jersey consumer and businesses."

He said: "With already high inflation, this is further bad news for the Jersey consumer as businesses like Romerils cannot absorb these increases therefore it becomes inflationary to the Jersey consumer and businesses.

"At a time when the Jersey retail and construction industry are trying to balance budgets with high operating costs, these increases couldn’t come at a worse time."

"Condor need to justify why they are raising prices by so much more than the RPI. They're a single operator so there's no alternative for local businesses who need to import goods."

Concern over “de facto monopolistic position”

Condor were contacted for comment on Friday morning, but have not yet provided justification for the proposed increase. Express has also contacted Government for comment.

The proposed increases comes as Ports of Jersey also announced an 11.1% rise in fees at the Harbour and the Airport in the new year.

This is the maximum amount that Ports can increase its fees by – Jersey's recently published 10.1% inflation rate plus 1% – under rules set by local competition watchdog the Jersey Competition Regulations Authority.

Last week, the Economic and International Affairs Scrutiny Panel questioned Ports' CEO as part of a Supply Chain Resilience Review.

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Pictured: Ports of Jersey CEO Matt Thomas recently admitted that Jersey's current operating agreements with Condor give the company a “de facto monopolistic position”.

During the hearing, Deputy Moz Scott raised concerns about the “potential for abuse of market position” with a “dominant” single operator, such as Condor.

She asked Ports CEO Matt Thomas if “the level of regulation is sufficient in that respect in terms of the competition and the ability to intervene in the case of the single operator”.

In response, Mr Thomas admitted that the operating agreements with Condor give the company a “de facto monopolistic position”.

He added that the level of regulation on Condor is “certainly a lot less than the level of regulation on [Ports of Jersey]”.

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