PHL exporters may miss recovery boat on container woes

BY CAI ORDINARIO, 2 Jun 2021

PHILIPPINE exporters may not be able to take advantage of the recovery of the country’s export markets because of the container crisis, according to exporters and local economists.

According to Philippine Exporters Confederation Inc. (Philexport) President Sergio Ortiz-Luis, the trade bottleneck created by the ongoing container crisis does not bode well for the continued recovery of the export sector this year.

“[The] countries that are recovering [such as the] US, European [countries], [and] China, they are the ones in need of boats.

[Many of these are for the] vaccine. [They increase the payment for the boats] so these vessels will go to them. This makes it difficult for us to get these boats, that is the problem,” Ortiz-Luis said in a mix of Filipino and English. “If this persists, and there are indications that it will worsen, that will be a big problem,” he told BusinessMirror in a phone interview.

An exporter of marine products based in the Visayas was quoted in an earlier statement of the PhilExport as lamenting the shortage of available space aboard container vessels for Philippine cargo bound for the US market.

The exporter said Philippine cargo are at a big disadvantage and are “not getting priority” and being “shut out/bumped off from whatever available space,” while freight costs have soared because of the tight market.

What is sad, the exporter added, is there is now market demand, especially for food and furniture and other products since major markets have reopened, “but we are still constrained by supply chain and logistics issues.”

Ortiz-Luis said in order to mitigate the further damage of the crisis on exporters, there were proposals put forth at the Export Development Council’s Transportation and Shipping Committee.

Chartered shipment

These proposals included allowing local shipping lines to ply regional routes and for some shipping lines to operate on a chartered basis to deliver goods to and from Asian markets, including China.

The chartered shipment can be undertaken by ships that have not been used because of the lockdown and can be manned by Filipino seafarers who lost their jobs due to the pandemic.

However, Ortiz-Luis said these proposals are still being ironed out at the Export Development Council level. They still do not know how or if the government can help them with the licensing of these shipping lines to ply regional routes.

“Well, it is not clear what we can ask from the government. It’s not the problem here. All of us should think of a way around this problem. If there are those who are able to think of a remedy and the government is needed [that’s the time we can ask them for help]. In the meantime, there is a need to speed up the processing of the request of domestic shipping lines who have an application to ply regionally,” Ortiz-Luis said.

Economists

Local economists believe the problems encountered by exporters will not only affect the country’s export earnings performance but also increase trade costs.

Ateneo Eagle Watch Senior Fellow Leonardo A. Lanzona Jr. told BusinessMirror the container crisis will definitely be “a barrier to our effort to catch up” in the recovery from the pandemic.

University of Asia and the Pacific economist and former Tariff Commissioner George Manzano agreed and said supplying countries that are recovering from the pandemic may become difficult if there are shipment concerns.

“One factor of supplying them is logistics, our ability to ship out (products). If there are problems with the imbalance in container vans, even though there is demand, you cannot respond with your supply,” Manzano said.

Former Socioeconomic Planning Secretary Romulo L. Neri said while the trade bottlenecks being experienced by exporters will lead to higher transport and cargo handling costs, it may only be temporary.

Neri sees trade bottlenecks resolved in the next few months; they will not prevent Philippine exporters from tapping markets that are already recovering from the pandemic.

Recently, Philexport said exporters are seeking “very urgent” assistance to cope with worsening supply chain and logistics issues, including lack of vessel space, soaring freight rates and container shortage that are resulting in shipment delays and huge losses.