Tuesday, September 28, 2021
HomeBreaking NewsInsufficient vessel space PH exporters’ top shipping challenge

Insufficient vessel space PH exporters’ top shipping challenge

  • 3 key shipping challenges emerged from a recent survey of exporters: insufficient space on international vessels, higher freight rates and lack of containers
  • 90% of survey respondents identified lack of vessel space as their top shipping concern
  • 6% of respondents said they have products ready for shipping but are unable to due to lack of vessel space
  • Almost 100 participated in the survey conducted among members of the Philippine Exporters Confederation, Inc
  • Most shipments of respondents were headed to the US and Europe

The lack of vessel space has emerged as the biggest shipping challenge among exporters based on results of a recent survey among members of the Philippine Exporters Confederation, Inc. (PHILEXPORT).

Insufficient space on international vessels was the top concern among 90% of respondents, followed by higher freight rates (56.3%) then lack of containers (45%).

Almost 100 companies participated in the survey, about 84% of whom were micro, small and medium enterprises (MSMEs), mostly belonging to the food (31.6%), housewares (19.4%), furniture (13.3%), holiday décor and giftware (11.2%) sectors.

Some 51.2% of the respondents ship their products weekly, while 32.5% ship monthly, and the rest quarterly. Shipments are mostly headed to the US and Europe.

The survey was carried out in partnership with the Export Development Council (EDC) and logistics provider Royal Cargo.

An earlier survey with 65 respondents showed similar results, with pending cargoes including processed food, furniture, housewares and activated carbon already reaching about 30,000 twenty-equivalent units.

“As quarantine guidelines are eased globally and vaccination programs are successfully implemented, we project this volume will double or even triple, sizable enough for shipping lines to take notice,” said Sergio R. Ortiz-Luis Jr., PHILEXPORT president in a statement.

No space for exports

In the latest survey, 81.6% of respondents said they have products ready for shipping but are unable to due to lack of vessel space.

Among them is an exporter of banana chips, virgin coconut oil, coco flour and similar products who regularly exports about 500 twenty-footer containers each month to customers in Asia and the Americas.

Another, a ceramics company, ships out about 30 forty-footer of decorative earthenware each month to the US and Europe, while a forwarder of decorative items, furniture, handicrafts and dried foodstuff is ready to export a 100 TEUs each month to Europe, the US, UK, Australia, China and the UAE.

One company said it ships out 40 high-cube containers of holiday décor, tabletops, dolls, and giftware each week to the US, Europe and Oceania. A big manufacturer of mattresses disclosed it exports about 120 FEUs of products every month to the US.

Another firm exports 85 full container loads of tropical fruit preserves, frozen fruits and vegetables, bagoong, dried and smoked fish and consolidated FMCG products every week to several destinations including North America, Middle East, EU, UK, Asia, Australia and New Zealand.

“With our huge export market in these regions, it is reasonable to foresee that the export industry will incur huge losses if this issue goes unresolved,” warned the report.

In a dialogue a days ahead of the findings, Dr. Enrico L. Basilio, chair of the EDC Networking Committee on Transport and Logistics; PHILEXPORT’s assistant vice president Ma. Flordeliza Leong; and Michael Kurt Raeuber, CEO of Royal Cargo, stressed the importance of public-private sector cooperation to address these issues.

They said the poll confirms the significant size of the Philippine export and import market, as they called on international carriers to provide the country sufficient attention. They pointed out that cargo volumes are expected to further expand as the peak season approaches, and are forecast to rebound once the pandemic subsides.

The three organizations have been holding meetings to discuss issues of unavailable vessel space and soaring freight rates and come up with recommendations to the government.
As part of the intervention, Basilio called on the Maritime Industry Authority to encourage domestic shipping lines to operate regionally and plug space shortage.

Recent media reports highlighted growing issues with supply chain disruptions, not just in the Philippines but around the world, the result of factors such as a surge in global demand, early resumption of manufacturing in China, port congestion, and the reduction of capacity by carriers in response to lockdowns early in the pandemic.

PHILEXPORT has asked government to intervene and implement measures addressing these issues that have resulted in shipment delays and huge losses for exporters and importers.

Exporters’ shipping woes

Over the past couple of months, PHILEXPORT members have lamented the increasing difficulties in getting shipments onto international shipping lines to their customers overseas.

A food and beverage company said they used to be able to load their products one to two days after production, but now “stocks are ageing in warehouse as it now takes one to two or more months before we can ship out.”

Moreover, it said freight rates are too high, almost triple or quadruple the usual rates especially to the US, and securing vessel space is difficult going to the US, Middle East and Canada.

Robert Young, PHILEXPORT trustee for the textile sector and president of the Foreign Buyers Association of the Philippines, 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,” confirmed a garment company. “We are seasonal holiday heavy and [it is] very critical that goods move on time as they have a short selling period.”

A furniture exporter stressed these issues needed to be resolved soon as the worst is yet to come. “The third quarter and fourth quarter surge of exports might be a nightmare with this current setup.”

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