Honda is drawing up emergency plans to fly components into the UK to bypass a port logjam that caused the Japanese carmaker to shut its Swindon plant on Wednesday.
Production at the site was cancelled after the plant ran short of key parts that were due to arrive on long-haul ships.
Port operators have warned of chaos at waterfront terminals after the Brexit transition period ends on January 1 as customs paperwork holds up deliveries, leading to long delays.
The industry is also facing pressures from Christmas and Brexit stockpiling, and the disruption caused to supply chains by the Covid-19 pandemic, which has helped to create a backlog of empty containers awaiting return to the Far East, adding to quayside congestion.
The Road Haulage Association has said that data from its members has assessed delays at between three and seven hours depending on the port, with Felixstowe, Grangemouth, Southampton, Immingham and Portbury all affected.
There have been several reports of major shipping lines bypassing UK ports for major northern European ports, leaving UK-bound freight to be trans-shipped back to the UK, where it can face the same delays.
Honda is still investigating but believes that ships carrying parts for the carmaker that were due to arrive at UK ports were diverted to European alternatives, leaving components destined for the Swindon plant stranded on the mainland.
The company is now considering options that include flying in the goods to avoid travelling through the already-congested ports in order to try and restart the factory.
Honda said the company “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”.
Because of their “just in time” supply chains, modern car plants only hold enough components for several hours’ worth of production and are reliant on timely delivery of parts. About 2m parts arrive at Honda’s site each day.
George Griffiths of S&P Global Platts, independent market analysts, said that port congestion in the UK was so serious that shipping companies were charging an average $600 surcharge per container to ship to the UK — roughly a 12 per cent premium over average rates to the EU of $5,000 a container.
In the worst cases, surcharges were hitting $1,000 a container, he added, as shipping lines looked to incentivise companies to ship into Europe so they could avoid UK ports.
At the same time, all EU ports were facing rising costs and demands. “Over the last two weeks container rates have nearly doubled since the end of November because of an influx of pre-Brexit related demand and ongoing logistical issues in Asia,” he added.
Ed Miliband, the shadow business secretary, said “the government must take responsibility for having left the country in this position, not keep putting the burden of blame on businesses”.
“Businesses have been sounding the alarm for weeks about the problems at ports. While there are pressures caused by Covid-19 all over the world, no other country is facing the kind of uncertainty we are around the end of the [Brexit] transition period,” he said.
“There is a real worry that unless the government listens and urgently acts, the disruption today will just be the tip of the iceberg.”
The business department did not immediately respond to a request for comment.
Honda previously calculated that a warehouse able to hold parts for nine days’ of production at the Swindon site would be 300,000 square metres — one of the largest buildings in the world.
The site, which is due to close permanently next year, employs about 3,000 people and makes the Civic model, which is exported around the world.
Emergency air freight is something being considered by several carmakers to alleviate importing blockages in the event of disruption after Brexit.
Bentley has five Antonov planes on standby to fly in parts, chairman Adrian Hallmark told the FT Future of the Car summit last week, while Nissan has previously used the RAF to fly in parts to keep the lines at its Sunderland site running.
Source: Economy - ft.com
