Morrisons faces £400k shortfall over freight costs

Morrisons said the extra costs risked being passed on to customers

A supermarket boss has warned of price rises as it deals with a £400,000 shortfall due to extra freight charges.

Referring to a flat rate charging system introduced by DFDS in March, Morrisons operating director Andrew Holmes told Jersey's economic scrutiny panel on Monday it had "no time" to account for costs they "weren't told about".

"It's got to be passed on to the customer or we're going to have to look at other costs cutting exercises," he said.

DFDS said the flat rate charges - which sees importers pay the same rate regardless of how much freight they bring - was "a requirement" of the tender process. The Government of Jersey said the previous system "effectively shut out competition".

At the time it was introduced the Danish firm said the charge would "ensure fairness for companies of all sizes".

In February it said it was using a "flat rate price of £56 per lane metre and £45 for commodities".

DFDS became Jersey's new ferry service in March

Mr Holmes said the charge, coupled with new port tariffs, was essentially "penalising food retailers".

"At the end of the day, you're just not going to be able to defy gravity on some of this stuff. It's just impossible," he said.

"It's got to be passed on to the customer or we're going to have to look at other costs cutting exercises."

Mr Holmes said food retailers were "operating on very, very tight margins".

"None of these costs are in our budgets whatsoever," he said.

"We've not counted for them, and we've not had time to account for them.

"Now we need to look for potentially £400,000 that we're going to have to find within the budget somewhere to deliver the baseline profit of the business."

Minister for Sustainable Economic Development Kirsten Morel said the flat rate charge was designed to "make the market fairer and more competitive".

"Under the previous volume-based system, we believe that some freight forwarders benefitted from rates which were half those paid by others," he said.

"That structure effectively shut out competition, and the new system ensures operators can competes on equal terms."

At Monday's hearing the Channel Islands Co-op and other shops also expressed "disappointment" over "little engagement" from the government during the selection process for the new ferry company.

A spokesperson for DFDS said it "remains committed to ensuring reliable and efficient freight links for the island".

"The flat rate charges were a requirement of the government's tender process and would have applied regardless of which operator was appointed," they said.

"DFDS operates an open door policy and would welcome a meeting with supermarket representatives and their freight forwarders to discuss any specific concerns as a constructive way forward."