AMID shipment delays that have sparked serious concern, export industry stakeholders urged shipping lines to open more routes going to the United States, as bulk of the pending cargo are West-bound.
Doing so will ease concerns over movement of goods to one of the country’s major export markets, the Philippine Exporters Confederation Inc. (Philexport) and the Supply Chain Management Association of the Philippines (SCMAP) said in an interview with the BusinessMirror.
Philexport, in a survey last month, found that 34.4 percent of the pending cargo are scheduled for shipment to the US, followed by Europe and Asia, at 20 percent and 14 percent, respectively.
“The US route will then very clearly help address this issue and if successful, may be a model for other domestic shipping lines to follow and international shipping lines to take notice,” said Ma. Flordeliza C. Leong, Philexport vice president for advocacy, communications and specialconcerns.
Leong said that a lot of cargo are still here because of vessel shortage amid the pandemic—the reason for shipment delays for at least half a year already.
“Another issue is the huge jump in freight rates, and so exporters and buyers may still be checking with shipping lines for the best rates,” she added.
“We were informed that many food orders had been cancelled already due to the huge freight rate increase.”
Amid the surging freight costs, the Philippine Competition Commission is currently checking if price-fixing among some shipping companies may be causing prices to rise.
The competition watchdog previously told the BusinessMirror that some shipping firms appear to be in collusion, but it has yet to obtain absolute proof (Read related story: https://businessmirror.com.ph/2021/08/16/pcc-eyes-price-fixing-in-shipping-sector/).
Meanwhile, SCMAP Executive Director Corazon Curay said opening more routes will help the local industry, but it may be challenging given the pandemic.
“We do hope that other logistics firms would consider expanding their routes to address issues in the global movement of goods, but we acknowledge that it may be difficult to achieve economies of scale in these times,” Curay said.
“We recognize that for these routes to be viable and sustainable, it has to be widely patronized by shippers, who have also been badly affected by the pandemic as consumer demand continues to fluctuate,” she added.
Trade Secretary Ramon Lopez backed the sentiments of the industry groups. Opening more routes, he said, is “a much faster solution compared to bareboat chartering which is the other option being worked out.”
New route
The statements were made after Iris Logistics Inc., a local shipping company 80-percent owned by Royal Cargo Inc., announced the opening of a direct Philippine-US route by next month. See related story, “All set for RCI direct PHL-US sea route,” on page A10, Second Front Page.
Curay said the additional route will provide exporters with more options to deliver their goods, for both raw materials and finished products.
“This could contribute to the lessening of costs, as it spurs competition among service providers which should lead to improved service levels and value-adding services,” Curay explained.
“This [new US route] will be a big help to exporters especially having the much-needed vessel space for US, and Iris group under Royal Cargo has a more integrated logistics structure even in the west coast US, so it can respond faster to the current needs,” Lopez added.
While the opening of the new route is a welcome development, Curay said shipping delays are brought about by various factors—port congestion, lack of empty containers and reduction of available ships amid personnel shortages because of the pandemic.
Increase in freight costs
Meanwhile, Philexport Chairman George T. Barcelon warned that the partial closure of a port in China due to Covid-19 may further jack up already surging freight rates.
“Exporters would again be challenged with their supply chain and export commitment to buyers [will be] disrupted,” he said, noting that the incident will also “aggravate cargo vessel availability.”
With this, Barcelon said export earnings will be affected because of higher shipping costs and delays in production.
In response, the Philippine Ports Authority told importers and exporters to make adjustments in order to mitigate the impact of the port closure while ensuring continued operations.