EVEN as Philippine trade volumes slowly recover from the impact of the pandemic, the recovery is hampered by worsening supply chain issues, chiefly lacking in space available for ships, according to a new investigation report from the Philippine Exporters Confederation Inc. (Philexport).
Philexport unveiled, Thursday, July 1, 2021, the results of the survey conducted among its exporting members on their main maritime issues. The survey is part of the trade association’s initiative to respond to shippers’ call for help with growing logistics and supply chain issues.
The initiative is being carried out in partnership with the Export Development Council (EDC) and Philippine-based logistics solutions provider Royal Cargo.
Almost 100 companies responded to the survey, with around 84 percent of these being micro, small and medium-sized enterprises (MSMEs), and mainly belonging to food (31.6 percent), household items ( 19.4 percent), furniture (13.3 percent), holiday decorations and gift items. (11.2%) sectors.
Survey results showed that the top three shipping challenges for shippers today are lack of space on international shipping lines (90 percent of respondents), higher freight rates (56.3 percent) and lack of containers (45 percent).
Notably, around 51.2% of products are shipped weekly, while 32.5% are shipped monthly and the rest are shipped quarterly. Most routes go west, with the United States and European countries being the main target destinations.
A previous survey of 65 respondents showed similar results, with pending shipments including processed foods, furniture, household items and activated charcoal already reaching around 30,000 twenty foot equivalent units (TEUs).
“As quarantine guidelines are relaxed globally and vaccination programs are successfully implemented, we expect this volume to double or even triple, large enough for shipping companies to notice,” said Sergio Ortiz-Luis Jr., President of Philexport.
No space for exports
Meanwhile, in the latest survey, 80 of those polled, or 81.6% of the total, said they currently have products ready to ship, but could not do so due to lack of space on ships.
Among them is an exporter of banana crisps, virgin coconut oil, coconut flour and similar products that regularly exports around 500 twenty foot equivalent units (TEUs) of containers every month to customers in Asia and the United States. Americas.
Another, a ceramics company, ships about 30 Forty Foot Equivalent Units (FEU) of decorative earthenware each month to the United States and Europe, while a freight forwarder of decorative items, furniture, crafts and dried food products is ready to export 100 TEU each. months in Europe, United States, United Kingdom, Australia, China and United Arab Emirates.
One company said it ships 40 cubic containers of holiday decor, table tops, dolls and gift items to the United States, Europe and Oceania every week. A major mattress manufacturer revealed that it exports about 120 FIRE of products each month to the United States.
Another company exports 85 full containers of canned tropical fruits, frozen fruits and vegetables, bagoong, dried and smoked fish, and consolidated fast food products every week to several destinations including North America, the Middle East. East, EU, UK, Asia, Australia and New Zealand.
“With our huge export market in these regions, it is reasonable to predict that the export industry will suffer huge losses if this problem is not addressed,” the report warned.
In a dialogue days before the findings, Dr. Enrico Basilio, chair of EDC’s Transportation and Logistics Networking Committee; Maman Flordeliza Leong, deputy vice-president of Philexport; and Michael Kurt Raeuber, Managing Director of Royal Cargo, stressed the importance of cooperation between the public and private sectors to address these issues.
They agreed that the survey confirms the large size of the Philippine export and import market, as they called on international carriers to pay enough attention to the country. They stressed that freight volumes are expected to continue to increase as peak season approaches and are expected to rebound once the pandemic is over.
The three organizations held meetings to discuss the problems of space available for ships and skyrocketing freight rates and make recommendations to the government.
As part of the intervention, Basilio asked the Maritime Industry Authority (Marina) to encourage national shipping companies to operate regionally. It is also suggested that Marina facilitate the issuance of a certificate of public utility so that national vessels can go ahead and provide the necessary regional service.
Leong, meanwhile, had earlier pledged that Philexport would conduct an investigation to identify maritime transport challenges and map priority routes on which national vessels can focus their operations.
For his part, Raeuber of Royal Cargo has agreed to help alleviate the space constraint by providing his ships to carry export cargoes to their destination ports in the region.
Recent media reports have highlighted the growing problems with supply chain disruptions, not only in the Philippines but around the world, due to factors such as increased global demand, rapid recovery manufacturing in China, port congestion and reduced capacity by carriers in response to lockdowns at the start of the pandemic.
Philexport urged the government to step in and implement measures to address these issues, which result in shipping delays and huge losses for exporters and importers.
Ortiz-Luis Jr. said earlier that while these are global issues that may be beyond anyone’s control, government and the private sector must always work closely together to resolve them effectively.
Difficulties in shipping exporters
Over the past two months, members of Philexport have deplored the increasing difficulties in getting shipments on international shipping lines to their customers abroad.
A food company said it could load its produce within a day or two of production, but now “stocks are getting old in the warehouse because it now takes one to two months or more before we can ship.”
In addition, he said freight rates are too high, almost triple or quadruple the usual rates, especially in the United States, and that it is difficult to secure space for ships to the United States, the Middle East and Canada.
Robert Young, director of Philexport for the textile sector and chairman of the Philippine Foreign Buyers Association, said the garment industry was facing millions of dollars in losses due to supply chain compression.
“The issue of vessel space availability is a major issue for us and our customers. The delay is between two weeks and almost two months, ”confirmed a clothing company. “We are loaded with seasonal holidays and (it is) very important that the goods are dispatched on time as they have a short selling period.”
A furniture exporter stressed that these issues need to be resolved quickly because the worst is yet to come. “The surge in exports in the third and fourth quarters could be a nightmare with this current setup.” (PHILEXPORT NEWS AND ARTICLES)