Chaos at British ports sees Honda halt car production at UK plant

Honda halted manufacturing at its UK plant on Wednesday after the Japanese carmaker became the latest company to be affected by delays at British ports. With Covid chaos, Brexit stockpiling and soaring freight costs threatening supply chains across the country, Honda said it hopes to restart operations at its factory in Swindon, England, where it builds the Civic car, as soon as possible after delivery delays on spare parts caused production issues. “Honda has confirmed to employees that production will not run on Wednesday, December 9 due to transport-related parts delays. The situation is currently being monitored with a view to restart production as soon as possible," the company said on Wednesday. With the deadline for the end of the Brexit transition period just weeks away and talks between Britain and the European Union failing to reach a free trade deal, companies are warning of the risk of severe disruption to the flow of goods through UK ports if there is no agreement. Organisations representing ports, shipping and the logistics sector have written to the Department for Transport calling for it help clear port backlogs. “We recognise governments’ capacity to step in is limited but where they can, they should look at ways of increasing capacity for moving containers on and off ports,” said Tim Morris, chief executive of the UK Major Ports Group (UKMPG). That could mean running more and longer trains from the ports, he said, as well as allowing hauliers to collect containers out of normal hours and work longer hours where safe. Cabinet Office minister Michael Gove said on Wednesday that the government was aware of challenges for container ports. While Honda's southern English Swindon factory, which employs 3,000 people and built about 110,000 cars last year, is due to close permanently next year, other carmakers are also bracing for Brexit-related border turmoil. Luxury carmaker Bentley has cargo planes on standby to potentially transport vehicle bodies, engines or other parts, while Vauxhall maker PSA Group said last week that disruptions are inevitable – even if a last-minute trade deal is reached with the European Union. The absence of any deal would have severe consequences for car manufacturers because a 10 per cent duty could be applied to cars and 4 per cent levy to parts. Even a “bare-bones” agreement that does not address rules of origin for components would cost the industry £14.1 billion ($18.97bn), according to the Society of Motor Manufacturers and Traders. Retail stores are also concerned that the end of the Brexit transition period will disrupt the flow of goods through UK ports unless a new trade deal can be agreed, with fears shoppers will face gaps on shelves, factories will shut, food will rot on the dockside and Christmas presents could go undelivered. Tesco chairman John Allan said on Wednesday that the supermarket is stockpiling food ahead of the December 31 deadline, with a no-deal scenario set to cause shortages and a 3 to 5 per cent rise in prices. "We are trying to ensure we have stockpiled as much as we can of no-live product either in our own warehouses or with our suppliers," he told Bloomberg. The Food and Drink Federation warned that “ambient food” supplies stuck in thousands of lorries and containers are on the verge of passing their sell-by dates. Meanwhile, the Welsh food and drink industry sent a letter to Boris Johnson last month saying a trade deal is “critical to the survival of many food, drink and farming businesses and the supply chains and jobs they support". While Brexit stockpiling is one factor affecting UK ports, the disruption is a “global phenomenon” due to the effects of Covid-19 lockdowns and a rise in consumer demand for e-commerce, said Mr Morris. “There is disruption in global supply chains the world over. We are reaping the whirlwind of an imbalance which has grown over some time,” he said. The value of global merchandise trade is expected to fall by 5.6 per cent this year compared with 2019 , according to data from the United Nations trade and development body on Wednesday. This would be the biggest fall in merchandise trade since 2009, when it fell by 22 per cent in the wake of the worldwide financial crisis. Global shipping schedules were initially disrupted at the start of the pandemic when businesses postponed or cancelled large orders from overseas suppliers. However, a recent surge in demand for imports and a backlog of empty shipping containers is causing bottlenecks at some ports. "Ports all around the world, from Sydney to Los Angeles, are experiencing significant congestion in shipping container movements. Demand has surged and there are significant issues at Asian ports causing disruption at source which ripples across the world," said UKMPG. Britain's largest port of Felixstowe , which handles 40 per cent of all containers coming in and out of the country, was hit by congestion in autumn due to Covid-19 stockpiling and it struggled to store 11,000 containers of government-procured PPE equipment for the National Health Service. In November, container activities at some ports increased by 20 per cent compared to the same month a year ago, according to the UKMPG, as businesses bring in more stock both to meet Christmas demand but also to beat the end of the UK’s Brexit transition period. This has led to shipping rates skyrocketing and more carriers adding congestion charges because of severe delays. The industry now fears the chaos could spread to smaller container ports, such as DP World Southampton, which is dealing with higher than usual volumes, with backlogs also building up at the Channel Tunnel as around 2,000 extra trucks pass through it daily because hauliers are looking to avoid tariffs. Tailbacks have become commonplace in the past few weeks in the run-up to the port of Calais and the Eurotunnel entrance. Sebastien Rivera, secretary general of national hauliers federation FNTR, said the British “are stocking up like never before” due to fears of levies and other administrative disruption after December 31. Other sectors hit by the havoc include the construction industry, with builders already saying the delays are affecting vital supplies. John Newcomb, of the Builders Merchants Federation, told trade magazine Building that supplies of ironmongery, plumbing items, tools and natural stone are taking up to four weeks to unload, rather than a “maximum of one week”.

Chaos at British ports sees Honda halt car production at UK plant

Brexit stockpiling, Covid fallout and soaring freight costs are disrupting supply chains and flow of goods into UK