Retailer fears ferry costs will cause price rises

Sandpiper CI boss Tony O'Neill said rising costs could have a "knock-on effect" for shoppers

A retail group has raised fears food prices could shoot up due to increases in freight costs linked to ferry contracts.

Tony O'Neill, executive chairman of Sandpiper CI - which runs several shops in Jersey, Guernsey and the Isle of Man, echoed concerns raised by the Channel Islands Coop following the removal of discounts for companies in the DFDS contract.

Mr O'Neill said he could "categorically state" freight costs had risen by just over 5.8% since the new contract commenced in March.

DFDS said it firmly rejected claims its freight pricing structure was driving significant cost increases in Jersey, while Deputy Kirsten Morel said prices would be limited at RPI (retail price index).

Brittany Ferries, which has a contract for services in Guernsey, has kept a measure in place offering a discount for companies importing large volumes of goods.

DFDS said it introduced a flat rate for all customers which removed "the complexities of preferential discounts" while ensuring fairness for smaller firms and providing customers with clarity and certainty over costs.

'Exponential price increases'

A spokesperson for Jersey's government previously said it had assessed the different ferry contracts would lead to an additional 0.4% rise on supermarket prices.

But Mr O'Neill said that despite the government's assessment, he was in absolutely no doubt freight charging structures had increased and it would have "knock-on effects" for shoppers.

He added the decision to have separate ferry operators for the Channel Islands had caused "exponential price increases" as a consequence in Jersey.

DFDS took over Jersey's ferry contract in March

Mr O'Neill criticised Deputy Morel, Jersey's minister for sustainable economic development, over his handling of the ferry contract negotiations.

"Of course, the economic minister as usual did not consult with retailers before taking this course of action and continues to demonstrate a complete lack of business understanding or experience," Mr O'Neill said.

"To adopt a so-called 'flat rate' runs counter to most worldwide marine charging structures which unlike the DFDS contract, recognise volume-based efficiencies."

Mr O'Neill added it was not known if charges equating to port dues which DFDS said it had "missed" from its original calculations could also lead to more cost rises which will have to be recovered.

Deputy Morel said: "I think the really important bit is that going forward, we know what the price rises will be. They'll be limited at RPI. That's really important.

"That's something Jersey's never had before and yes there's a period of adjustment now but going forward we're going to have much less in the way of price rises.

"We saw just two years ago an 18% price rise come from Condor in the cost of freight out of the blue - no one knew it was coming, it happened.

"That sort of behaviour is not going to be possible in the future and that will give a great deal more certainty to the chairman of Sandpiper going forward than the situation he had in the past."

On the minimum wage, he added: "It's really difficult because we provided £20m of support for businesses so that's a significant amount.

"I believe the M&S franchise they [Sandpiper] have is highly profitable and performs very, very well and so it is very difficult to make an argument that people should not be paid appropriately."

DFDS said independent analysis for the government showed the effects of the ferry firm's new structure on grocery prices was "minimal" when compared with broader costs which make up the majority of retail expenses.

"To present DFDS as the source of wider inflationary pressures is therefore misleading," a spokesperson added.

"DFDS's commitment remains clear - to provide Jersey with a reliable, sustainable freight service that secures the Island's supply chain for the months and years ahead."