Absorbing costs can't last forever
A hike in freight charges of more than double the rate of inflation in Guernsey is going to have a knock-on effect across the islands, so it’s no wonder that the Economic Development leads in Guernsey and Jersey are looking to get involved.
What powers they might have to trim back that planned 18.9% increase we will see, but they will probably recognise the dilemma the ferry firm finds itself in.
Condor says that it is being hit by above-inflation rises in port costs and other fees, but also claims that it has absorbed cost increases from suppliers over the past three years – some of them quite chunky – to minimise the impact on its own customers.
The States has done the same over time in various areas, most notably at the ports, and Guernsey Ports will well know that when swingeing increases are then brought forward under the premise of catching up, it rarely ends well.
Nobody wants to pay more for anything.
But duped by years of next to no inflation in the economy, we’ve been used to absorbing 1% here and 2% there, but not being faced with 10% rises.
Absorbing costs for too long can prove to be a false economy – and one which will challenge Condor to explain away to the States in both islands.