A Fresh Look at Freight Charges - Part 1

Condor has repeatedly stated that it did charge freight fees, but that for several years it absorbed significant cost increases rather than passing them on fully to customers. For example, in December 2023, Condor confirmed it would increase freight charges because it had been “subjected to significantly above‑inflation rises” in port costs and other fees, and could no longer absorb them. Condor’s CEO also said the company had absorbed cost increases for the past three years to minimise the impact on customers. Another report noted Condor had “no choice” but to increase freight costs by nearly 19% after absorbing rising prices for three years.

This last case came about partly because of Ports of Jersey having an above inflation rises in their charges. Specifically, Ports of Jersey announced an 11.1% rise in fees at the Harbour and Airport starting January 2024. It should be noted that they have also been giving above RPI increases for 2025 and 2026. The Deputy is silent on this and the effect this has on freight costs too!

Deputy Morel’s argument appears to be that under the previous tender arrangements, some freight‑related costs were not being fully covered by the structure of the contract, and he argues that Condor was absorbing more than it should have been, which he says put the company in a “financial predicament”. In other words, Morel is talking about under‑recovery of costs, not the absence of freight charges.

This differs from what Mark Cox , the chief executive of the Channel Islands Co-op is saying. They’re talking about different things. Mark Cox is saying the new structure increased costs because of port dues and flat‑rate charges. Morel is saying the old structure didn’t recover full freight costs, so Condor absorbed losses. Both can be true at the same time.

The bottom line is that Condor did charge freight fees and did raise them. Morel’s point is about structural under‑funding of freight operations under the old contract, not the absence of freight charges. He says that the new tender structure has made the real cost of freight more visible, but it has also made it more expensive!

But by imposing a single flat rate which the Deputy Morel (in drawing up the contract) made a non-negotiable part of the deal, the tender forced DFDS into a pricing structure that is unlike anything it uses elsewhere! That rigidity meant DFDS could not offer lower rates to supermarkets in exchange for guaranteed volume, nor could it reduce costs for small importers who use little deck space. The result was a system that lacked the natural stabilisers found in most freight markets.

So the solution chosen did not simply correct under‑recovery; it created a new structure that redistributed costs in a way that disproportionately affected consumers. Other options were possible, and I’ll look at those in the next blog.

So while it’s fair to say the decision was made with the intention of stabilising the freight operator’s finances, the practical effect was to raise the cost base for food and everyday goods in Jersey. That outcome should have been foreseeable by the Deputy, given how freight economics work and how other island systems structure their tariffs. Did he not do much homework on this, and model different options mathematically? We have not been told, and I suspect not! And when a politician has done the modelling, they usually say so and loudly because it strengthens their case. The silence here is telling.

In conclusion, the policy choice of a flat rate system had predictable economic consequences, and those consequences were inflationary for Jersey consumers. This should have been obvious. It was a good decision by the Deputy if there were not better alternatives – ones that DFDS uses elsewhere! So protest as he does, he is evading the core question: why doesn’t he mention those alternatives? And where is the mathematical modelling?

Next post I will look at alternatives to the tender structure, and why Kirsten Morel has saddled us with increased costs.