PHILIPPINE exporters are seen dealing with potentially an even more severe container crisis in the second half as the local industry ushers in the peak shipping season amid the vessel capacity constraints.
Philippine Exporters Confederation Inc. (Philexport) said that more exporters and shippers have flagged the concerns over the shipment delays, heightened freight fees and container shortage; and have called for government intervention to address the logistics problems.
“We hope that we can resolve this [shipment constraint] soon as the worst is yet to come,” an exporter was cited by Philexport as saying in a recent statement, referring to the peak shipping season.
“The third quarter and fourth quarter surge of exports might be a nightmare with this current setup,” the unnamed exporter added.
The industry players have been reeling from the shipment delays amid a pandemic-induced container imbalance since the latter part of 2020—or for over half a year now. Such constraints in delivery of finished goods and raw materials are denting the production and revenues of manufacturers and exporters.
In the garment sector, for example, one company said that shipment delays range from two weeks to nearly two months, Philexport reported.
“The issue of vessel space availability is a huge one for us and our clients,” the garment manufacturer said. “We are seasonal holiday-heavy and [it is] very critical that goods move on time as they have a short selling period.”
“This situation is creating production space issues which are creating a domino effect, [such as] continuing delays in our shipment,” another garment exporter said.
The company pointed out that cash flows may be disrupted even if the vendors finish the production of orders as they cannot ship their goods immediately, delaying the receipt of payments.
Other issues raised by the garment industry are “slow” release of permits and import licenses, higher cost of natural materials and shortage of raw materials, Philexport said. The export group added that such concerns “lead to continuing loss of business in favor of Vietnam and Indonesia.”
In an April interview with the BusinessMirror, the Foreign Buyers Association of the Philippines said garment exporters may lose $450 million to $600 million worth of orders this year due to the shipment delays (Read related story: ‘PHL garment sector faces $600M in losses,’ https://businessmirror.com.ph/2021/04/26/phl-garment-sector-faces-600m-in-losses/).
Furniture, too
Meanwhile, Philexport said furniture exporters are also seeking assistance from the Chamber of Furniture Industries of the Philippines to secure slots on vessels.
This, in addition to addressing the surging freight rates amid the container shortage.
“Cost of freight has gone up from around $4,000 per 40-foot container to $12,000,” a shipper told Philexport. The industry player said this “makes their products uncompetitive.”
In addressing the increasing freight fees, the Department of Trade and Industry submitted last month to Congress and the Economic Development Cluster the draft bill of the Philippine Shippers’ Act. The proposed measure, which is currently in deliberation, seeks to grant the Maritime Industry Authority (Marina) power to oversee the freight charges being imposed by the logistics service providers.
Addressing limited capacity
Philexport, along with Marina and domestic ship owners, recently participated in an online discussion held by Export Development Council-Networking Committee on Transport and Logistics (EDC-NCTL) to tackle the unavailability of vessel space.
“Among the recommendations, which will be presented to the appropriate agencies, is to encourage domestic ship owners to operate within the region to expand vessel capacity,” the exporters’ group noted.
For its part, Philexport said it committed to conduct a survey among its members to pinpoint necessary routes for domestic vessels.
“These priority routes are those that have sufficient volumes to and from the Philippines so local ship owners will see the viability of taking the risk to launch new services,” the group explained.
According to Philexport, during the EDC-NCTL-led meeting, Marina was also urged to facilitate the issuance of a Certificate of Public Convenience allowing domestic ships to provide regional service.
In the first quarter, cargo handled by the local ports rose by 1.2 percent to 54.853 million metric tons (MT) from 54.218 million MT in the previous year for the same period as export volumes recovered.
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