More exporters and shippers have joined calls for the government to step in and address the current maritime transport issues, including vessel capacity constraints and surging freight prices, which are leading to cargo delays and revenue setbacks.
After the processed food and fresh food exporters, garment and furniture exporters have taken their turn to express frustration and ask for help with the deteriorating container shipping situation in the Philippines.
Robert Young, Philippine Exporters Confederation, Inc. (PHILEXPORT) trustee for the textile sector and president of the Foreign Buyers Association of the Philippines (FOBAP), said the garment industry is incurring millions of dollars in losses due to the supply chain squeeze.
"The issue of vessel space availability is a huge one for us and our clients. Delay is between two weeks to almost two months", said one garment company. "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. "My concern is that even if vendors finish production of their orders, if they are not able to move [the goods], they don't get paid, [creating a] cash flow issue", said another.
This, along with other issues such as the slow release of permits and import license, rising cost of natural materials, and shortage of raw materials, adds to manufacturing costs and leads to continuing loss of business in favor of Vietnam and Indonesia, one exporter added.
Meanwhile, furniture exporters have asked the Chamber of Furniture Industries of the Philippines to help them find slots on vessels and address soaring freight rates.
Cost of freight has gone up from around $4,000 per 40-foot container to $12,000, revealed one shipper, adding this makes their products uncompetitive.
"We hope that we can resolve this soon as the worst is yet to come", the exporter said, referring to the approaching peak shipping season. The third quarter and fourth quarter surge of exports might be a nightmare with this current setup.
PHILEXPORT president Sergio Ortiz-Luis, Jr. earlier said that while this is a global issue that may be beyond anyone's control, the government and private sector must still work closely together to effectively address the logistics constraints.
Last week, PHILEXPORT reported on the difficulties encountered by food exporters in getting their shipments on international shipping lines to their customers overseas.
The Export Development Council-Networking Committee on Transport and Logistics (EDC-NCTL) held an online discussion recently with the Maritime Industry Authority (MARINA), PHILEXPORT and domestic ship owners on 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.
PHILEXPORT committed to conduct a poll among its member exporters to identify the routes where domestic vessels can focus their operations. 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.
EDC-NCTL chair Dr. Enrico L. Basilio welcomed Philippine-based logistics service provider Royal Cargo's commitment to provide its ships to transport export cargoes to their ports of destination in the region.
Royal Cargo CEO Michael Raeuber disclosed that the company has already applied for a franchise with MARINA to be able to do so.
Also suggested is for MARINA to facilitate the issuance of a Certificate of Public Convenience so domestic ships can go ahead and provide the regional service.
Source: PHILEXPORT News and Feature
Thumbnail: "Shipping container ship" by BigStock Images
Photo: "Shipping container ship" by BigStock Images
June 08, 2021
