THE flat-rate charge of £56 per lane metre for shipped freight set by carrier DFDS has been defended by the government, which says it adds only 0.4% on to the price of goods on supermarket shelves.
Economic Development Minister Kirsten Morel said that this rate – which some traders have criticised for being higher than previously charged by Condor – not only was transparent but also was only 35% of the total cost of a typical trailer of freight.
The biggest component, he said, was the 60% attributable to logistics and carrier costs, which he said was outside of government control and set by a sector which is currently the subject of an investigation by the competition regulator.
In a letter to the Economic and International Affairs Scrutiny Panel, Deputy Morel said: “The now expired relationship with Condor did not contain freight pricing arrangements meaning that any objective analysis is difficult.
“The [Economic and International Affairs] Panel may have observed that legacy pricing arrangements in the transportation, logistics and storage sector are presently the subject of formal investigation by the Jersey Competition Regulatory Authority.”
He added: “When implementing the new core freight rate of £56 per lane metre, our Chief Economic Advisor assessed an impact of approximately 0.4% increase to grocery prices.
“Separately, during the period of this current States Assembly there was an assessed risk to the resilience of Jersey’s supply chain arising directly from financial difficulties faced by Condor.
“A key criterion of the tender process was long-term financial resilience of any future operator and confidence that a balance could be struck between competitiveness, resilience and much-needed fleet investment.”
Deputy Morel told the panel that the government’s agreement with DFDS, included a mechanism to vary the £56 per lane metre charge but he would not be publishing the contract, a decision he would keep under review.
“I would expect the operator to treat its customers fairly and provide reasonable notice of any changes to its pricing,” he said.
The minister added that the government held a quarterly ‘monitoring committee’ meeting with DFDS to review “reporting, forecasting and compliance with the concession agreement”.
He continued: “To the extent that anyone can predict the future, I am satisfied that Jersey now enjoys a level of freight service resilience and operator financial resilience that provides confidence into the future.
“This does not remove the need for companies depending upon those sea routes to have their own business continuity arrangements that are able to withstand supply disruptions and support continuity of provision to their customers, especially so in critical areas such as food, pharmaceutical and fuel.”
The letter also revealed that that the Danish carrier brought 4% more travellers to Jersey via Portsmouth and Poole this August compared to last, when Condor ran the route.
