Supply chain issues hound PHL exporters

More than a year after the Covid-19 pandemic first broke out in China, business activities are coming back with a vengeance, thanks in large part to the early rollout of China’s vaccination campaign. In the United States, 60 percent of American adults have gotten at least one dose of a coronavirus vaccine, according to the US Centers for Disease Control and Prevention. Business centers in European countries, like Madrid in Spain, are mulling over the easing of Covid-19 restrictions due to falling infections and rising vaccination rates.

The World Trade Organization (WTO) said in March that demand for traded goods will be driven by North America, which it attributed to the large fiscal injections in the US. The report noted that this could stimulate other economies through the trade channel. Europe and South America, it added, will see import growth of around 8 percent this year.

According to the WTO, much of global import demand will be met by Asia. Exports from Asian countries including China are expected to expand by 8.4 percent this year. However, not all exporters in the region would benefit from this boom in trade this year due to constraints that would make it difficult for Asian nations like the Philippines to expand shipments to their major markets.

Philippine exporters, for instance, are grappling with a number of supply chain and logistics issues, including the lack of vessel space, soaring freight rates and container shortage that are resulting in shipment delays and losses. The Philippine Exporters Confederation Inc. (Philexport) said on May 28 that exporters lamented the increasing difficulties in getting their shipments on board international shipping lines to their international customers. One executive even warned that if the problem is not addressed, it could turn into a crisis worse than the recurring port congestion.

Philexport had warned in March that exporters had been experiencing delays in shipments ranging from two weeks to a month (See, “PHL exporters chafe as pandemic delays product shipments,” in the BusinessMirror, March 26, 2021). Two months after, the delays had stretched to more than two months because companies could not secure vessel space for their export goods. Some exporters could not accept reorders because they have yet to deliver the previous order made by foreign buyers.

Freight rates have tripled or quadrupled in recent weeks, according to Philexport. The rise in freight rates is also affecting food importers as their shipping costs went up by 65 percent in the second quarter (See, “Shipping charter rates up 65% in Q2, food importers hurting,” in the BusinessMirror, May 24, 2021). A businessman told this newspaper that the movement of charter rates and freight costs will depend largely on the pace of the vaccination campaign of countries.

Policy-makers must sit down with exporters and importers immediately to prevent the supply chain constraints from widening the losses being incurred by local traders. The surge in freight rates and shipping costs is also posing a threat to the country’s food security as the container crisis is compounding the sourcing problems of our traders (See, “Food shortage seen on global supply woes,” in the BusinessMirror, March 26, 2021). Philexport has proposed solutions to help ease the worsening supply chain challenges. The government needs to do its part and start tackling the supply chain constraints that can adversely affect the country’s food security.


Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Previous Article
Column box-Dennis Gorecho

Clemency for delisted seafarers

Next Article

Editorial Cartoon June 02, 2021

Related Posts

Read more

How to kill PHL’s coconut industry

For the longest time, Federation of Philippine Industries Chairman Dr. Jesus L. Arranza has been fighting smuggling and other illicit trade that threaten local industries. Recently, he sent a letter to President Marcos expressing grave concern over the alleged illegal use of imported palm olein, which threatens the country’s coconut industry.

Column box-Sonny Angara 2
Read more

Caring for children with disabilities

For couples blessed with children, there is nothing more gratifying than watching them grow up and become productive members of society with their own unique and individual personalities. But, in many instances, having a child could also be very challenging—especially when they are born with or end up acquiring a disability. Depending on the financial status of the parents, raising a child with disability could be extremely costly and oftentimes overwhelming for the couple.