Amid shipping delays that raised serious concerns, export industry stakeholders urged shipping companies to open more routes to the United States as most of the cargo on hold heads west.
This will alleviate concerns about the movement of goods to one of the country’s main export markets, said the Philippine Exporters Confederation Inc. (Philexport) and the Supply Chain Management Association of the Philippines (SCMAP). in an interview with BusinessMirror.
Philexport, in a survey last month, found that 34.4% of the cargo on hold is slated to ship to the United States, followed by Europe and Asia, at 20% and 14%, respectively .
“The US route will then help very clearly to solve this problem and, if successful, could be a model for other national shipping companies and for international shipping companies to take into account,” said Ma. Flordeliza C Leong, Philexport Vice President for Advocacy, Communications and Special Concerns.
Leong said much of the cargo is still there due to the shortage of ships amid the pandemic – the reason for shipping delays for at least six months already.
“Another problem is the huge increase in freight rates, so exporters and buyers can always check with shipping companies for the best rates,” she added.
“We have been informed that many food orders have already been canceled due to the huge increase in freight rates.”
Amid skyrocketing freight costs, the Philippine Competition Commission is currently investigating whether pricing between certain shipping companies can lead to higher prices.
The competition watchdog previously told BusinessMirror that some transport companies appeared to be colluding, but has yet to obtain absolute proof (Read the 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 roads would help local industry, but it could be difficult given the pandemic.
“We hope other logistics companies will consider expanding their routes to address global freight movement issues, but we recognize that it can be difficult to achieve economies of scale in these times,” said Curay. .
“We recognize that for these routes to be viable and sustainable, they must be widely used by shippers, who have also been hit hard by the pandemic as consumer demand continues to fluctuate,” she added.
Commerce Secretary Ramon Lopez supported the sentiments of industrial groups. Opening more routes, he said, is “a much faster solution compared to bareboat charter which is the other option under development.”
The statements were made after Iris Logistics Inc., a local shipping company 80% owned by Royal Cargo Inc., announced the opening of a direct Philippines-United States route by next month. See related article, “Ready for RCI PHL-US Direct Sea Route,” on page A10, second home page.
Curay said the additional route would give exporters more options to deliver their goods, both for raw materials and finished products.
“This could help reduce costs, as it stimulates competition between service providers, which should lead to improved service levels and value-added services,” said Curay.
“This [new US route] will be of great help to exporters, especially having the much needed ship space the United States, and the Iris group under Royal Cargo has a more integrated logistics structure even on the west coast of the United States. , so that it can respond more quickly to current needs, ”added Lopez. .
While the opening of the new route is a welcome development, Curay said the shipping delays are due to a variety of factors: congestion at ports, lack of empty containers and reduction of available ships amid staff shortages in due to the pandemic.
Increased transport costs
Meanwhile, Philexport chairman George T. Barcelon has warned that the partial closure of a port in China due to Covid-19 could further increase already rising freight rates.
“Exporters would again be challenged with their supply chain and export commitment to buyers [will be] disturbed, “he said, noting that the incident” will also worsen the availability of cargo ships. “
With this, Barcelon said export earnings would be affected due to higher shipping costs and production delays.
In response, the Philippine Ports Authority asked importers and exporters to make adjustments to mitigate the impact of the port closure while ensuring continued operations.