Philippine exporters incur losses due to global shipping disruptions

by Louella Desiderio (The Philippine Star), 16 Jun 2021

MANILA, Philippines — Local exporters are incurring higher costs and losses due to disruptions in the global container shipping industry.

Philippine Exporters Confederation Inc. (Philexport) president Sergio Ortiz-Luis Jr. said in a telephone interview that exporters are incurring higher costs because of the disruptions in the global shipping industry.

“It is increasing both for imports and exports. Raw materials are also being affected,” he said.

He said shipping costs went up due to the shortage of ships and containers.

For garment exports, Foreign Buyers Association of the Philippines president Robert Young, who also serves as trustee for the textile sector at Philexport, said shipping costs have tripled to $15,000 per 40-foot container from just $5,000 previously.

According to a BBC report, shipping firms have been facing challenges with fluctuations in demand amid the pandemic, as well as the effects of the blockage of the Suez Canal earlier this year.

The recent outbreak of the coronavirus disease in China has worsened the situation with the limited operations at ports to control the spread of the virus, leading to congestion and delays in shipments.

Young said the move to prioritize the shipment of vaccines and other goods essential in addressing the pandemic has also contributed to the shortage in shipping containers.

Ortiz-Luis said there are exporters with products that have already been delayed for shipment for two months because of the lack of ships and containers.

“At the moment, like the vaccine, rich countries that are able to pay sometimes double the rates are the ones given priority. These would be the US, European countries and China,” he said.

He said if there are shipping lines that can offer charter services, it may help address the problem.

“That could be of help. But I don’t know who will do that…I don’t know how we can compel shipping lines to give us priority,” he said.

Young said there are some shipping lines that offer to bring containers in exchange for advance payments, but not all buyers are willing to pay ahead.

He said exporters, meanwhile, cannot cover these advance payments for they do not have the cash.

“The backlog is 150 containers for hard goods and 100 containers for soft goods. This is what we need. These are all waiting in factories to be moved out,” he said.

He said some orders have already been canceled and as a result, garment exporters estimate losses have piled up to about $200 million.

“These are fast fashion, seasonal products…Some buyers are saying how can I sell that? It is already out of fashion, out of season,” he said.

With no end in sight, he said he would be proposing to the government the creation of an emergency export fund to be used to advance payments for the shipping containers to help the sector.

“Perhaps they (government) can advance or guarantee, maybe the government can pay first the $15,000 [per container] so that all these goods will move,” he said.

He said the emergency fund could form part of the pandemic stimulus bill.

The Bayanihan 3 bill, which proposes a P401-billion relief package to help Filipinos deal with the impact of the pandemic, has been approved on third and final reading at the House of Representatives, while the counterpart measure has yet to be discussed in the Senate.

“We hope this (emergency export fund) could happen because this would be a solution,” Young said.

Without this support, he said many factories would be forced to close and more workers would be displaced.

Data from the Philippine Statistics Authority showed the country’s merchandise exports rose 19 percent to $23.37 billion in the January to April period from $19.63 billion in the same period last year.