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The Government is calling on Condor to justify its proposed freight price increases of almost 19% – described by industry leaders as "terrible news" for businesses and customers alike.
Economic Development Kirsten Morel said tonight that he "find[s] it hard to see the justification for price rises which are so significantly above" inflation levels, which sat at just under 9% in September.
News that Condor had proposed a rise of 18.76% emerged last week, sending shockwaves through the local business community and sparking a round of urgent discussions between Government officials, the Chamber of Commerce and Condor's CEO, John Napton.
Condor were contacted by Express for comment on Friday morning, but are still yet to issue any formal response.
This evening, Deputy Morel said he was still seeking answers as to the rationale for the increase.
“The Channel Islands depend upon our sea links, and ensuring their continued resilience is essential," he commented.
"RPI price rises reflect the cost increases which everyone is facing, and would be expected, but I find it hard to see the justification for price rises which are so significantly above RPI.
"I am asking Condor to justify those price increases, and whether there are alternative approaches.”
Pictured: The Minister for Sustainable Economic Development, Deputy Kirsten Morel.
Earlier today, Express reported on a warning from Romerils of the potentially "brutal" impact on local businesses, which may be forced to pass costs onto customers.
Condor's proposed freight increase was revealed in an email sent to Ferryspeed and Profreight customers at the end of last week.
In the email, the sister companies outlined plans to increase their pricing from January by 8.76% based on September RPI indices of UK, Jersey and Guernsey.
However, they revealed that Condor is intending to increase prices by inflation plus 10%, resulting in a total increase of 18.76% from 1 January 2024.
"As you will appreciate, this level of price rise is unprecedented and, if implemented, will have an impact on our operating costs that will not be covered by the 8.76% inflation linked increase referenced above," said Ferryspeed and Profreight.
The companies therefore explained that they "reserve the right to further raise prices beyond the 8.76% noted above depending upon the outcome of our discussions with Condor".
They added: "We have not, as yet, accepted Condor’s proposal and, instead, have raised the impact such an extraordinary increase would have on our customers and have asked them to explain the rationale behind their proposal."
Murray Norton, CEO of Chamber of Commerce, said: “The proposed rises in the cost of freight are terrible news for businesses in the island and will impact prices to customers."
Pictured: Murray Norton, CEO of Chamber of Commerce, described the proposed increases as "terrible news for businesses in the island".
"Chamber has been in discussions with Condor and Government on Friday and throughout the weekend to gain a greater understanding of the causes. These Condor price rises are high and do unfortunately reflect cost increases in the jurisdictions they operate," he continued.
"These do include Ports fee increases above inflation, large minimum wage increases and the rises in the cost of stevedore services. The cumulative effect of these rises and others has all combined on one essential service.
He added: "Clearly, the restraint Chamber has consistently called for, on areas within the control of Government, does have an effect on the cost of running a business.
"The Governments of both islands should be mindful of this when they add to business costs. We are seeing many sectors under huge pressure right now and this will certainly not help.”
Condor signed an agreement with Jersey’s Harbourmaster in 2014 which, in essence, gave the company an exclusive ramp licence to run Roll-on, Roll-off services in return for a guaranteed level of service, including types of vessels, pricing and timetables.
The decade-long agreement does not prohibit other operators entering the market, but they would have to provide the same level of service as that set out in its 80 pages – setting a high barrier to overcome.
The current 10-year deal between the Government and Condor is in its ‘winding down’ phase, with a new agreement on such matters as capacity and frequency due to be signed before July 2025.
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