DFDS\u2019s flat-rate freight charge helps provide \u201ca safe and investable ferry service\u201d to the Island by encouraging competition elsewhere in the supply chain \u2013 enabling the operator to invest in new ferries \u2013 according to the Economic Development Minister.<\/p>\n
Deputy Kirsten Morel made the comments during yesterday\u2019s sitting of the States Assembly, where he faced several questions on the change \u2013 introduced as part of the government\u2019s 20-year contract with the Danish shipping firm.<\/p>\n
It marked a departure from the volume-based discounts Condor had offered and has drawn criticism from some retailers.<\/p>\n
Deputy Morel told States Members that the inclusion of a flat-rate card within DFDS\u2019s tender bid for the Island\u2019s ferry contract had been \u201cwelcomed by the Council of Ministers and approved as part of the selection of DFDS as the preferred bidder\u201d. <\/p>\n
He said that a flat-rate card \u201cprovides a safe and investable ferry service\u201d, arguing that cost reduction pressures \u201cpushed by the freight forwarders\u201d had deterred the Island\u2019s previous operator from investing in new ferries.<\/p>\n
\u201cThe flat-rate card puts competition into the correct part of the supply chain.\u201d<\/p>\n
\u201cInstead of the ferry service \u2013 the most important part of that supply chain \u2013 being beaten down on cost and price, competition will henceforth take place in the freight-forwarding part of the supply chain.\u201d<\/p>\n
He also stated that the freight-forwarding element accounted for 60% of the cost of delivering goods to Jersey.<\/p>\n
\u201cIt is appropriate that competition takes place in that majority part of the supply chain, rather than the minority part, the single point of failure that is the ferry service.\u201d<\/p>\n
Deputy Karen Wilson asked whether the Treasury Department or Jersey Competition Regulatory Authority were consulted on \u201cpotential market effects of the policy\u201d and how any \u201cmeasurable improvements\u201d in market competition would be monitored.<\/p>\n
\u201cI don\u2019t believe Treasury were asked,\u201d Deputy Morel answered, though he said the JCRA were asked about competition impacts \u201cand whether it would be an appropriate mechanism from the competition perspective\u201d.<\/p>\n
\u201cIt is quite clear to me that the reaction that we are seeing at the moment suggests that the flat-rate card is indeed having the appropriate effect,\u201d he continued.<\/p>\n
\u201cI know that there are importers to this island who have slashed the rate, their bills, for freight to this island.<\/p>\n
\u201cAnd by importers, I mean major importers who bring in vast quantities of goods to this island, because they now see that they can operate supply chain differently and in a competitive manner, so they are not beholden to the dominant supplier keeping them over a barrel.\u201d<\/p>\n
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