Tesco was accused today of "grossly irresponsible scaremongering" and promoting pre-Christmas panic buying after it was announced that it is stocking goods and warning customers that they will Bottlenecks and drastic price increases in the “worst-case scenario” of a no-deal Brexit.
Britain's largest retailer builds stores in durable food while Boris Johnson struggles to find a way through the blockade of trade negotiations.
But Foreign Secretary Dominic Raab suggested that Tesco was spreading panic among consumers over the UK's exit from the EU, saying, "Bare closet horror stories are nonsense." He also denied Chairman John Allan's claims that food prices could rise five percent after Jan 1, adding: “We only get 30 percent of our food from the EU. Stocking is a normal part of the business. "
Consumers have also blown up Tesco, accusing them of firing the gun at a new shopping spree, last seen when the UK left the EU in late 2019 and when the lockdown began in March.
However, supermarkets insist that families could suffer from food shortages for the next month or more if new post-Brexit customs controls cause delays in ports. Mr Raab told LBC today that the delays are caused by Covid rather than Brexit.
One reviewer said: “Does anyone else believe that Tesco is completely irresponsible in announcing that they are holding supplies? We will find empty supermarket shelves when there is absolutely no call for it. & # 39; Another said: “Well done, Tesco is promoting the fact that there may be bottlenecks. What do you think the public will do now? Very irresponsible of you to cause panic buying but you know what you are doing don't you? & # 39; One shopper said, "Tesco is stocking up for fear of bottlenecks? … Just what they told everyone not to do at the start of the lockdown."
Tesco's dire forecast adds to the chaos in the global shipping industry caused by the coronavirus pandemic and rising demand for Christmas imports threatening gift delivery, and fears that port may run out of food.
John Allan, Tesco Chairman, said, “Tesco is preparing for the worst case scenario, which is a no deal, and is trying as much as possible to ensure that we have long life products either in our warehouses or at store our suppliers. We try to minimize the risk of food being caught in what is probably the most difficult place, the Port of Dover.
“We may have a shortage of fresh food, especially fresh, short-lived food. I think this will only be for a limited time, a month or two before we get back to normal. There may be only a slightly limited selection for a given time period. "
According to Tesco boss John Allan, the supermarket stores groceries and fears bottlenecks if Boris Johnson fails to reach an agreement with the EU
Imports from Europe have also been disrupted, with large queues of trucks outside the port and channel tunnel today (pictured is the A20 on the coast).
Buyers were dissatisfied with Tesco, accusing it of adding to fears of shortages that would lead to panic buying again
Three main problems causing delays in UK ports
Today's problems in ports such as Felixstowe, Southampton, London Gateway and Dover are caused by a number of problems occurring concurrently and not unique to the UK.
A new truck booking system has been disrupting Felixstowe in the past few weeks, but trade organization Logistics UK today downplayed the problem, stating that the new regulations are "embedded".
Industry insiders say that there are three main problems behind the chaos:
COVID – Lack of shipping containers
The system for shipping goods around the world stopped working properly when the economies closed and reopened at different times when they dealt with Covid.
As a result, shipping companies fell behind when it came to fetching empty containers from European ports and bringing them back to factories in Asia.
The container shortage is exacerbated by the shortage of manpower across the global supply chain – including seafarers, shippers and warehouse workers – due to illness or quarantine.
The problems caused by Covid have been exacerbated by an increase in demand caused by:
BREXIT – Customs and storage
If the UK leaves the EU without an agreement, tariffs will be applied to imported goods according to World Trade Organization rules at the end of the transition period.
Companies therefore store goods for fear of having to pay customs duties or because they fear that new customs procedures after Brexit will delay imports.
Around Christmas, the demand for goods increases again and again, which exacerbates the problems.
Supermarkets have tried hard to ensure families can get their favorite foods, but Tesco, the UK's largest grocer, has warned that some items could be unavailable for months.
Fresh foods that cannot be made in the UK such as Parma ham, mozzarella and raspberries are most at risk as they cannot be stored in warehouses.
In a no-deal scenario, prices could also go up as import duties are passed on to buyers. For some articles, such as B. cheese, import duties of up to 40 pieces may apply.
Mr Allan added, "If we leave on a no-deal basis there will be tariffs and those tariffs will inevitably lead to higher prices."
Desperate retailers, supermarkets and department stores are still waiting for their Christmas stock as the chaos in UK ports could seriously disrupt festive deliveries.
Customs delays in processing ships at Felixstowe and a number of other ports can lead to shortages of consumer goods – including toys – so some may not arrive until January.
A specialist Christmas products supplier complained last night that vital festive supplies were buried in a mountain of hundreds of containers.
There are also fears that food imports could rot as a result of the disruption, while supermarket companies claim the delays could cost enormous and drive prices up.
And there are concerns that the lack of imported parts will force factories to follow the example of automaker Honda and stop production.
The problems appear to be the result of a perfect storm caused by a combination of the effects of Covid-19 and stockpiling ahead of the December 31st Brexit deadline.
Industry leaders fear that the introduction of new customs controls in the New Year will fuel the crisis without urgent action to remove the bottlenecks.
Some retailers say only one in five shipments arrived in September and October that reached the supply of scooters, Barbie dolls, and other toys before Christmas.
High street chains are reporting shortages of white goods like washing machines and fridges, while home builders are running out of supplies like power tools, screws, wood and roof tiles.
At the same time, shipping companies are charging UK importers massive "congestion fees", in some cases hundreds of thousands of pounds, due to the delays. This is to cover the dead time ships spend in ports rather than going back to sea.
A new truck booking system has caused disruptions at Felixstowe (pictured) in the past few weeks, but the trade organization Logistics UK downplayed this problem today and stated that the new regulations are "litter".
Dover mostly handles goods from Europe, while Southampton, Felixstowe and London Gateway mainly import from Asia. Pictured are queues on the A20 today (pictured)
Honda is the largest manufacturer to warn of serious disruption from the crisis. However, there are fears that others may soon follow suit.
How the chaos in the ports affects the import of goods from Brompton bikes to home heaters and LED lights
A number of companies are struggling to import goods due to the chaos in the UK ports.
Brompton Bikes is struggling to keep pace with the huge demand for its motorcycles due to delays in imported components due to a port "congested".
The company said 1.5 million components from Asia are "on the water" waiting to be dumped in Felixstowe, Suffolk.
The components were stored earlier this year but they are now depleted and the company said it is now "pretty much hand-to-mouth".
Lorne Vary, Chief Financial and Business Development Officer, said, “The demand for our motorcycles is not off-balance, but we cannot meet it just because our supply chain is under so much pressure.
"We canceled container deliveries – and all of that before Brexit."
Adam Russell, who imports home appliances for London-based One Retail Group, warned that it was now "nearly impossible" to get goods out of China, with fewer ships going to the UK than normal.
"I've always been able to find a way to keep the business moving, but if I can't find a way to get the goods into the country then the business stops," he told the BBC.
“We used to pay $ 2,000 (£ 1,500) to ship a 40-foot container to the UK. Now we're paying at least $ 8,000 to $ 10,000 (£ 7,500).
"Ultimately that means that we have to stop importing or that we have to pass that on to the consumer."
Ian Enwin of Ledlites Ltd in Welwyn Garden City is grappling with delays importing LED lights from China.
"It's an absolute nightmare and very frustrating," he told MailOnline. & # 39; Our shipping costs have increased from $ 1,000 (£ 750) per container to $ 5,000 (£ 3,700).
“Ships could not dock and we are diverting products to Europe, where the ports are not so affected. I've never seen anything like it – and Brexit hasn't even happened. & # 39;
Hanson Stone of Mansfield imports paving stones from India but has been hit hard by import delays.
"We're a start-up, we only ran for a year, we had to fight Covid, and now we have," said Ben Hanson, the company's managing director.
The Entertainer toy chain founder Gary Grant said last night: “The situation has gotten a lot worse in the past two weeks. It is not only the toy industry that is suffering from these delays, but clearly December 25th is a really critical day for the toy industry. "
Andrew Opie, Director of Food & Sustainability at the British Retail Consortium (BRC), said: “The UK is currently facing major challenges shipping many goods from countries around the world, particularly the Far East such as China. These issues were exacerbated by rising retailer demand ahead of Christmas and Brexit, compounded by the ongoing pandemic and the large shipments of PPE currently being brought into UK ports.
“Retailers now have higher costs than ever before. Some are seeing shipping costs up 25 percent from the previous week.
“As these rates continue to rise and disruption in ports and shipping continues, retailers face major challenges when some items are imported before Christmas.
"Retailers are working overtime to rearrange and reroute incoming freight to ensure customers can get the items they need. However, some delays seem inevitable." .
Mr Opie said: "The last thing the public needs is disruption in ports, which will last into the new year, at a time when Brexit will already put much more pressure on canal crossings." The Food & Drink Federation said huge amounts of food in the area – sold in packets, glasses and cans – are sitting in containers that have been stranded on docks.
Dominic Goudie, Head of International Trade at EVS (correct) said: “Manufacturers are extremely concerned about the delays we are seeing.
“Our members have costs in the tens of thousands and in some cases hundreds of thousands. In some cases, this has a direct impact on companies' ability to stock up on products and ingredients before the end of the transition (Brexit). "The chairman of Tesco, the UK's largest supermarket, warned of the problems that are going on in the 'worst of times'.
John Allan said: "We cannot rule out the possibility of a shortage of fresh food if the ports of entry are relocated to the UK."
"The country's food supply chain continues, but there may be some things that we may have to miss for a few weeks, possibly a few months." Piers Croke, head of marketing at Christmas products company Gisela Graham, complained: At the moment, hundreds of desperate retailers have not received their Christmas stocks.
& # 39; The reason? A mountain of containers waiting for customs clearance at the port and hundreds of other containers arrive every day. “Alan Joseph of The Cotswold Company said his company had no furniture inventory. “It's very confused. The UK congestion has reached a crescendo in the past few weeks, ”he said.
Adam Russell, who imports household appliances such as heating and air conditioning, said the situation was "next to impossible".
Felixstowe handles around 40 percent of UK container traffic. It is now feared that the chaos could spread to smaller container ports like Southampton, which was also disrupted last week due to bad weather, and London Gateway.
There are also residues in the Canal Tunnel. Around 2,000 additional trucks drive through the tunnel every day, mainly towards Great Britain. In Dover, queues stood for miles on the M20 earlier this week when traffic management systems were put in place to ease pressure on local car journeys.
When asked yesterday (Wed) about the chaos in the House of Commons, Michael Gove insisted that it was part of a global problem and not specific to the UK.
Two months ago, former Transport Secretary Chris Grayling was hired to advise Felixstowe's parent company Hutchison Ports Europe on an annual salary of £ 100,000 per year for "around seven hours" of work per week.
The problems arise from the fact that global shipping schedules were disrupted in the early stages of the pandemic, and different economies reopened at different times. Thousands of containers sit in British and European ports that should have been processed, emptied and sent back to Asia to import more goods.
At the same time, British manufacturers have tried to introduce additional parts and products to combat the delays at the borders expected from Brexit.
In a letter to the Minister of Transport, heads of organizations such as the UK's Major Ports Group and the UK Chamber of Shipping and Logistics wrote: “Large volumes remain and could take a few months until the end of the EU transition, so challenges remain. The current situation is partly due to imbalances that have accumulated over months. Reversing this accumulation is not an overnight task. “The letter urged the government not to be“ complacent ”and to provide“ reasonable flexibility and facilities ”for moving containers in ports and for road transport.
Tim Morris, Head of Major Ports Group, said: “What the UK is experiencing is a global phenomenon. There are disruptions in global supply chains around the world. We are reaping the whirlwind of imbalance that has grown over time. “The Department of Transportation said partners across government are working closely with the freight industry to solve the challenges in the global container system.
Boris Johnson sits in a car after arriving from Brussels at RAF Northolt near London in the early hours of the morning
The President of the European Commission, Ursula von der Leyen, speaks to British Prime Minister Boris Johnson before a meeting at the EU headquarters in Brussels
What are the sticking points in the Brexit talks?
The UK has insisted that it regain control of its coastal waters from the end of the transition period.
However, the EU called for its fleets to maintain their previous access levels – with Emmanuel Macron under particular pressure from the French fishing industry.
First, the UK said it would reclaim 80 percent of EU quotas from January 1.
However, Brussels suggested restoring just 18 percent.
The two sides are believed to be near a "landing zone" that has a transition period of perhaps five or seven years. However, there is still no agreement.
LEVEL PLAY FIELD
The EU has insisted that the UK commit to a level playing field rules to ensure that companies with lower environmental standards and regulations are not undercut.
State aid has emerged as a particular problem, especially as the coronavirus is making parts of the economy unprofitable.
However, the UK says it needs to regain sovereign powers to make rules, even though it has no plans to lower standards or distort competition by subsidizing the private sector.
It appeared that this area was close to being resolved last week before France reportedly put a number of additional conditions in place, including huge penalties for breaking the rules.
While the UK is happy with the "non-regression" – which means that current standards are accepted as a basis – it has rejected calls for future compliance with the bloc's rules.
Getting a deal done and who decides whether to break rules has been a focus from the start.
The exemption from the European Court of Justice was one of the Brexiter's greatest demands from the referendum.
However, the EU has tried to maintain control of governance and insist on harsh fines and punitive tariffs for violations.
The situation was inflamed by the dispute over the UK's Single Market Act, which gives ministers the power to override the previous Brexit divorce terms to prevent deadlocks between the UK and Northern Ireland.
Critics say this demonstrated why enforcement mechanisms need to be effective – which is why ministers felt it was important to resolve the problem.
Britain is on the verge of Brexit today after Boris Johnson and Ursula von der Leyen set a final breakthrough deadline on Sunday and warned that "very large" gaps remain.
The Prime Minister and the EU leader spent more than three hours taking stock of the dire situation when they ate steamed turbot and scallops at the Commission's headquarters in Brussels last night – the source of many skirmishes between British and French fishing boats.
But the pair could not find a way through the impasse that trade talks had left on the verge of collapse a year after Britain officially left the bloc.
Instead, they order Michel Barnier and Lord Frost to re-engage, provided that the plug is pulled if a solution is not found within four days. However, it is not clear whether they have received new policy instructions – which are seen as critical to postponing the deadlock.
Government sources confirmed that Lord Frost and Mr Barnier will resume trade talks in Brussels today after Brexit to resolve the outstanding issues.
In a grim assessment, a No. 10 source said Mr. Johnson "did not want to leave any path to a potential deal untested". "The Prime Minister and Ursula von der Leyen had an open discussion about the major obstacles that remain in the negotiations," the source said.
“There are very large gaps between the two sides and it is still unclear whether these can be bridged. The Prime Minister and Ms. von der Leyen agreed to hold further talks between their negotiating teams over the next few days.
& # 39; The Prime Minister does not want to leave any route to a potential deal untested. The Prime Minister and Ms. von der Leyen agreed that a firm decision on the future of the talks should be made by Sunday. & # 39;
Ms. von der Leyen said in a statement: “We had a lively and interesting discussion on the state of affairs on open issues. We understand each other's positions.
& # 39; They stay far apart. The teams should meet again immediately to try to resolve these issues. We will make a decision by the end of the weekend. & # 39;
Mr Barnier and Mr Frost argued unsuccessfully for months over access to UK waters, level playing field and enforcement, and finally admitted earlier this week that they could make no further progress.
Shortly after midnight, Mr Johnson landed at RAF Northolt near London from Brussels. He set the tone for the showdown yesterday by telling MPs that no prime minister could accept the EU's demands, including compliance with future and current rules.
In a bullish upbeat performance at PMQs, Mr Johnson said the UK would "thrive mightily" with or without an agreement – Even though the Office of Budgetary Responsibility (OBR) has suggested that the breakdown of talks would save 2 percent of GDP next year.
Bank of England Governor Andrew Bailey has warned that the long-term damage from resorting to World Trade Organization terms would be worse than the economic blow from the coronavirus.
Tory MPs urged Mr Johnson to hold onto his guns and insisted that his promise to regain control and put sovereignty first must not be sacrificed in order to get a deal. But Sir Keir Starmer accused the prime minister of botched negotiations and swiped: "Secure the deal, prime minister. You promised. & # 39;
Cabinet Secretary Robert Jenrick got into crisis last night telling ITV's Peston that although there had been "good discussions" between the Prime Minister and Mrs von der Leyen, there were still "very important areas of disagreement" and that this was "No clear movement" had been in the right direction & # 39 ;.
The Housing Secretary said, “From the conversations I had with the Prime Minister's team tonight, it appears that there are still very important areas of disagreement.
"So I don't want to give false hope, but he came to the conclusion with Ursula von der Leyen that we should bring the teams back together in the coming days and they will work hard to see if there is a way to go by Sunday in front there. "
When asked if the UK is getting any closer to a deal, he said: "I think there was a good discussion but there was no clear move in the right direction."
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