The government has axed its no-deal Brexit contract with a ferry company which had no ships, after the Irish company backing the deal pulled out.
The government said it is in “advanced talks” to find another ferry firm.
But local MP Craig Mackinlay said this could be the “last throw of the dice” for commercial shipping from Ramsgate.
Meanwhile, Labour has called on Mr Grayling to resign or be sacked, describing him as “the worst secretary of state ever”.
Seaborne Freight was awarded the £13.8m contract in December to run a freight service between Ramsgate and Ostend, Belgium, in the event that Britain leaves the EU without a deal.
The government was criticised for choosing Seaborne Freight, a company with no ships or trading history, and for leaving too little time to establish the new ferry service before the Brexit deadline of 29 March.
And local politicians in both Ramsgate and Ostend warned that the ports at both ends of the route will not be ready the deadline.
At the time, the government said it awarded the contract “in the full knowledge” that Seaborne, which was formed in April 2017, was “a new shipping provider” but said the company had been “carefully vetted”.
On Saturday, the Daily Telegraph reported that Arklow Shipping, a major Irish shipping firm, withdrew its support from Seaborne “without warning”.
A spokesman said: “The government is already in advanced talks with a number of companies to secure additional freight capacity – including through the Port of Ramsgate – in the event of a no-deal Brexit.”
‘The last throw of the dice’
Following the news that Seaborne Freight had lost the contract, the Conservative MP for South Thanet, Mr Mackinlay, said ferry companies had “come and gone over the last few years” but “none of them have come to anything”.
“For me, this Seaborne operation was potentially the last throw of the dice for a chance for commercial shipping out of Ramsgate,” he said.
“It’s another example of a major disaster in the hands of Chris Grayling who must be classed as the worst secretary of state ever.”
The government said that no taxpayer money has been transferred to Seaborne.
It added that its confidence in the viability of the deal with Seaborne was based on Arklow Shipping’s backing of the company and the assurances it received from them.