Early responses received from the Competition & Markets Authority (CMA) to the British Home Enhancement Trade Association (BHETA)’s lobbying campaign to secure CMA intervention in the freight costs crisis suggest that it is now actively looking at the issue. Feedback received via the Ministers and MPs approached so far outline both actions to date and the CMA’s planned approach going forward. The campaign followed a BHETA member survey which confirmed the levels to which DIY, housewares, small domestic electricals, gift and garden suppliers are being impacted by increased freight costs when importing product, components or raw materials.
In correspondence from the end of September, Andrea Coscelli, chief executive of the CMA acknowledged the impact of the freight cost hikes on the UK economy and said that the organisation had been monitoring the situation for some time. The CMA is also in ongoing discussions with the Department for International Trade, the Department for Transport, the European Commission and the World Shipping Council as it considers the best approach going forward. Due to the international nature of the problem, the current view is that continued talks are likely to be more fruitful than a market investigation into the possible existence of cartel-like behaviour and other restrictive practices, although formal investigative work has not been ruled out.
Commenting on the feedback so far, chief operating officer of BHETA, Will Jones said: “To date, BHETA has contacted the Business Secretary, Kwasi Kwarteng, the Competition & Markets Authority, supported members in contacting their own local MPs and featured members’ views in an article in the Daily Telegraph. Clearly this co-ordinated approach is bearing fruit and we are urging all members and colleagues to maintain contact with their elected representatives on this subject, using the BHETA templates. Obviously, if we do come across any evidence of collusion between freight providers, we will be taking this directly to the CMA.”
Bryony Dyer, managing director of Dexam, a BHETA member said: “Dexam wrote to Gillian Keenan, our local MP, using the BHETA template and I was pleased with both the response from both our MP and the letter from the CMA. I’d encourage all leaders in our industry to develop relationships with their local MPs, to highlight both this freight issue, and other challenges such as plastic tax.”
Prices for container transport in the international shipping market have increased by unsustainable percentages in the last year. Freightos, a website which tracks the shipping market cites prices for a forty foot container from East Asia to Europe as now being ten times higher than before the pandemic. Meanwhile shipping consultancy Drewry is predicted profits for the current year in the freight industry as being as much as those made in the last twenty put together.
Will Jones continued, “As the CMA says, this situation is the result of a combination of challenging circumstances, some to do with the pandemic and some perhaps not so much, but in many cases, with freight costs now exceeding the value of goods being shipped, it is clearly an untenable position.
“Suppliers will only be able to absorb a certain percentage of the increased costs, which in turn will lead to higher costs for the end consumer. Smaller suppliers may not be as successful in passing increases onto the trade and this will result in the supplier base reducing or consolidating, which will impact on competition, employment and ultimately the whole economy. We are already seeing significant gaps on shelves, company closures and inflationary pressures. With reduced profits, there is reduced corporation tax, leading to a real shock to national economic wellbeing as well as to individual consumers, making this an issue of concern to everyone.
I urge all members to write to their local MP; and join with the BHETA campaign.”