CONDOR Ferries has said it has “no choice” but to increase freight prices after contending with “significantly above-inflation rises” in some port costs and other fees.
News that the ferry service had proposed a freight cost hike of 18.76% for next year was revealed in an email sent to Ferryspeed and Profreight customers at the end of last week.
The Chamber of Commerce, which has been locked in discussions with the government and the ferry firm, has branded the move “terrible news” for Island businesses.
But Condor’s chief executive, John Napton, has said the business has “no choice” but to pass on rising costs.
He said: “We have absorbed cost increases from suppliers over the past three years to minimise the impact on our own customers, but latterly have been subjected to significantly above-inflation rises in some port costs and other fees, which in some cases are between 18% to 35%, along with minimum and living wage increases.”
He continued: “As with many other businesses, our financial situation was impacted during the pandemic period and during that time we continued to maintain the supply of essential food and medicines to the Islands.
“We are notifying logistics clients of an increase in charges, which is obviously regrettable but having kept our charges low for the past three years, the rising costs mean we now have no choice but to pass these on.”
He added: “The adjustment in our freight tariff is one part of the overall costs of the distribution network from the UK and, in real terms, represents a much smaller uplift in end-consumer retail prices as a result of Condor’s shipping rates being passed through the supply chain.”
Ports of Jersey said Condor had “neither notified [us] nor discussed the reason for its proposed price increase”.
Deputy Kirsten Morel, who has frequently spoken of wanting to improve Jersey’s supply chain resilience, said: “The Channel Islands depend upon our sea links, and ensuring their continued resilience is essential. RPI price rises reflect the cost increases which everyone is facing, and would be expected, but I find it hard to see the justification for price rises which are so significantly above RPI. I am asking Condor to justify those price increases, and whether there are alternative approaches.”
In an email from Ferryspeed and Profreight seen by the JEP, 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 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.”
Chamber of Commerce chair Murray Norton described the proposed rises as “terrible news for businesses in the Island”.
He said: “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.
“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.”
Mr Norton added: “We are seeing many sectors under huge pressure right now and this will certainly not help.”
Ports of Jersey also recently 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.
Speaking during a recent Scrutiny hearing, Ports chief executive Matt Thomas admitted that the operating agreements with Condor gave 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]”.
A Ports spokesperson said yesterday: “Ports of Jersey has set its fees for 2023 within the regulated pricing framework set by the JCRA. All profits are invested into the Island’s critical infrastructure to safeguard the sustainability of the Island’s connectivity. Condor has neither notified nor discussed the reason for its proposed price increase with Ports of Jersey.”
