Supply Chain Council of European Union | Scceu.org
Transportation

Exporters reel as shipping crisis spurs freight cost rise

EXPORTERS are also bearing the brunt of the shipping crisis as they have to pay higher freight costs to ship their products

“Many shipping lines did not field many of their boats during the pandemic. Some are still not in full operation. Priority is being given to bigger economies [that] can guarantee bigger volumes. Developing countries have to wait in line and pay higher prices,” Philippine Exporters Confederation Inc. (PhilExport) President Sergio R. Ortiz-Luis Jr. told BusinessMirror in a text message.

The PhilExport chief noted that although there are many problems in shipping, they are not related to the war between Ukraine and Russia. He also said that they haven’t noticed any signs of the supply chain disruption meddling with the shipping from the Philippines.

However, Ortiz-Luis reiterated that they are having problems involving the Philippine Ports Authority (PPA) and high freight costs.

“Well first there’s the shortage of ships, the scheduling…And then there’s the cost, it’s too high;  and there’s a problem with [Philippine Ports Authority] PPA which is using their tracking device” which entails additional expense, he explained.

Two weeks ago, PhilExport along with the Philippine Chamber of Commerce and Industry (PCCI), and other business groups signed a joint manifesto seeking immediate revocation of a PPA order that they say threatens the transport and logistics industries and the economy.

The business groups urged the Office of the President and the National Economic and Development Authority (Neda) to look into PPA’s issuance of Administrative Order 04-2021, which could negatively impact business and the country’s recovery.

PCCI President George T. Barcelon said, “We are supposed to streamline our processes and not add burden by having redundant policies. How would we be able to attract investors and create ease of doing business if our policies are confusing.”

The new policy enables PPA to implement the Trusted Operator Program-Container Registry Monitoring System (TOP-CRMS) and Empty Container Storage Shared Service Facility (ECSSSF), projects to track real-time movement of containers from the time of entry, discharge, return and storage, and re-export.

The business groups said in their joint statement that a fee of P4,900, exclusive of 12-percent value-added tax per tagged container will be charged for TOP-CRMS—a huge burden especially for the micro, small, and medium enterprises.

PCCI noted that this measure is also being implemented by the Bureau of Customs through Administrative Order 08-2019, which institutionalized a container monitoring policy supplemented by the Electronic Tracking of Containerized Cargo (E-TRACC).

Barcelon said consumers and businesses will ultimately bear the brunt of additional logistics costs due to the adhoc charges from using the system, and inefficiency in cargo growth. The process of tagging and untagging the tracking device on the containers, it explained, spells additional time and truck trips.

From the importer’s perspective, Department of Trade and Industry (DTI) for Consumer Protection Group (CPG) Undersecretary Ruth B. Castelo pointed to the conflict between Ukraine and Russia, on why businesses and restaurants are experiencing shortage of raw materials.

Noted food brands have been impacted, meanwhile, by the supply chain woes. On May 25, Mary Grace cafe said they’re experiencing some global supply issues on a few raw materials which are beyond their control, by way of explaining their “ensaymada” shortage.

On the same day, Randy’s Donuts said on their Facebook page, “Sorry we ran out of flour before we ran out of queues.”

With this, Castelo said, partly in Filipino, “It’s still the Ukraine-Russia conflict. Most countries are really impacted; our supply is affected, especially those that we get internationally, from the global market; and of course, the rising prices of crude oil on production and distribution; these truly affect prices of goods.”

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