Faced with a two-month backlog in trade due to lack of vessel space and soaring freight rates, exporters are struggling to meet Christmas orders.
Sergio Ortiz-Luis, president of the Philippine Exporters Confederation Inc. (Philexport), said some of the group’s members have stopped accepting raw materials from farmers and other local suppliers. Imported inputs are not also being delivered.
These have slowed production for orders made as far back as January, particularly for goods that require a long lead time.
Ortiz-Luis said exporters fear they may not be able to fulfill the orders from buyers in time for the holidays, a seasonally strong period for the country’s handicraft industry.
Other sectors affected are furniture, garments and electronics durables and computers which have to queue to have their goods shipped.
According to Ortiz-Luis, exporters report shipping rates are up as much as five times.
Some shipping lines demand advance payments, he said. Charters, if available, are expensive.
“There is a huge backlog due to lack of ships. Because of the pandemic, shipping companies have cut back on the number of ships and dispatch was limited. But now that global trade is slowly picking up, rich countries which have the capacity to pay dominate the spaces. It’s a seller’s market. To some extent, there are still restrictions and limitations in some destinations. We are not sure how long this will last,” he added.
Securing vessel space is particularly difficult going to the US, Middle East and Canada.
Ortiz-Luis welcomes a proposal to get domestic shipping lines to ply regional routes but noted this can only do so much.
“This could parly help but shippers will not be able to service markets outside the region like the US and Europe,” he said.
Ortiz-Luis said this logistics constraint oc exports sector which accounts for 30 percent of the country’s GDP.
Ortiz-Luis described as deceiving the surge in exports in March and April “because we are comparing numbers from last year when there was practically no exports.”
Exporters have noted non-availability of shipping space; exorbitant shipping costs, and long waiting time have been worsening even as market demand continues to Improve.
What used to take to a day or two to load after securing vessel space now takes up to two months Philippine cargoes are at a big disadvantage and are “not getting priority” and being “shut out/bumped off from whatever available space, they said. – Irma Isip
