Part 1: Additional Shocks to Phl’s Food Supply Chain
IT will take about a foot for a spoonful of food to reach the mouth; to reach the dining table, it’s farther than that. Nearly 10,000 nautical miles: 9,629, to be exact. That is the distance between the Port of Rotterdam, Europe’s largest seaport, and the Manila International Container Terminal, the Philippines’ busiest port. That is also the exact length it takes for a container of pork products from the world’s top exporter of pork to arrive in the world’s ninth-biggest consumer of pork meat. Vice versa, it’s also the same mileage that shipments of virgin coconut oil from the Philippines, one of two of the world’s largest exporters, cover upon reaching Europe. Prior to the pandemic year, it took about a month to a month and a half on average to complete one delivery; either of pork from Europe to the Philippines, or coconut oil from the Philippines to Europe. Today, it takes an eternity…of sorts. The grounding of the Ever Given at the Suez Canal in March came at the worst time, compounding the persisting global shipping problems that stemmed from Covid-19-related lockdowns and problems that started late last year. After certain economies, such as China and the United States, reopened their economies in the latter part of 2020, global trade took one hellacious ride: lack of shipping vessels and container imbalance.
Woes, headaches
SINCE most of the vessels and containers were docked in the West after global trade was put on halt due to the health pandemic, importers and exporters had to scramble in seeking to source their logistical needs. The scrambling led from one problem to another; it has shaken industries and their captains on how to thrive amid today’s uncertainties: delayed shipping arrivals and near record-high freight costs.
For the Philippines, a country that is not considered a major trading port in the global trade, these problems mean a myriad of headaches. Royal Cargo Inc. Chief Operating Officer Jet B. Ambalada was straightforward about it: the country is facing a “perfect storm.”
“We are facing shipping and logistics problems. For example in Europe, there are a lot of delays due to Covid-19 problems and challenges such as lockdowns,” Ambalada told the BusinessMirror. “We are now encountering two weeks to a month’s delays in our arrivals.”
He explained that the problem in the global shipping industry emerged last year when the global economy ground to a halt as the virus risked those operating the gears of the trade. Due to lockdown measures, the number of drivers and ship captains allowed to work were pared down and vessels and containers were grounded in major ports like those in Europe and the US.
Overwhelmed with orders
HOWEVER, when global trade gained a bit of momentum last year, the shipping industry was overwhelmed with orders from developed countries like the US and China. This resulted in a container imbalance. Countries that are not major shipping points or routes, like the Philippines, were at the losing end, Ambalada told the BusinessMirror. He added that container-turnaround is also delayed due to lack of drivers in Europe, which is experiencing its third wave of Covid-19, with the spread of more transmissible variants. Ambalada said huge economies like China, Singapore and the US have been more
aggressive in terms of imports and exports, thus concerning the bulk of the available vessels and containers in the world.
“The major problem is that our transshipment points are already congested. For
example, Singapore and China ports are congested since these countries are sourcing
a lot of raw materials,” he said.
Rising Costs
DUE to this situation, shipping costs for exports have increased “10-fold” with outbound shipments being delayed by a month to three months at worst, Ambalada pointed out. He said the cost of shipping one dry container from Manila to the European Union has ballooned to $5,000 from the usual $800 (about P38,424.40 at current exchange rates). Shipping one 20-foot container from Manila to the US West Coast used to cost only about a maximum of $1,000 (P48,030.50); it’s now hitting $5,000 (P240,152.50). Inter-Asia shipping rates have also ballooned to unprecedented levels with the Philippines to China route costing now as much as $2,000 from the usual $200, since we are outside the “preferred routes” of shipping companies, Ambalada added. “We are being outbidded by our neighbors who can afford $5,000. The question is, who can bite the bullet among our exporters? Instead of catering to the Philippines, the vessels will just go to China en route to Europe since they can pay higher,” he explained. Increase in shipping costs of importing goods from Europe and the US to the Philippines “is not significant” since there are available containers and vessels from these areas, Ambalada told the BusinessMirror. He said they started to experience the problem in the last quarter of 2020 after countries like China started to buy more imports and were able to jump-start their economy again amid the pandemic; hence, exporting more goods than any other country.
Key Issues
FELIX Ishizuka, president and CEO of Reefer Filipinas Express Line Inc., said it is undeniable that the industry was overwhelmed when demand surged in the latter half of last year. “It is always supply and demand. Obviously, the demand went up and the container supply is scarce in every port due to congestion,” Ishizuka added. Also contributing to the delays, he said, are the rules of countries to quarantine cargo and shipments in a bid to prevent the spread of Covid-19. “China, for example, is getting heavy congestion for fresh produce. Normally they do not quarantine these; but now every container must undergo a minimum of three days,” Ishizuka said. “That is obviously going to pile up.”
He explained that the unavailability of space is felt across all segments of the shipping industry from dry cargo containers, break bulk to reefers. Ishizuka pointed out that the cost of renting a reefer ship has now skyrocketed to $25,000 per day from the $9,000 per day to $10,000 per day recorded in June of last year.
“Freight cost is crazy right now; it is now at a level never seen before; never seen these reefer ship prices in the last 15 years of the industry,” Ishizuka told the BusinessMirror. “The most affected businesses are the small players who ship 5 containers at maximum.” He added that the cost of moving used cars from Japan to the West Coast, say South America, is now at $5,000 per container from $1,000. Uncertain that unloaded imported cargo would have an export replacement, importers are now shouldering additional costs in the form of prepositioning fees, Ishizuka said.
Effect to consumers
CONSUMERS ultimately suffered, and still suffer, since rising freight costs and other additional costs are just passed on to them, American Chamber of Commerce of the Philippines Agribusiness Committee Co-Chairman Christopher A. Ilagan told the BusinessMirror. “Generally speaking, the global shipping and/or logistics issues we face today affect the cost effectiveness and efficiency of our supply chains,” Ilagan said. “The rising freight costs ultimately put pressure on general consumer prices as these are often just passed on to final consumers.”
He said some of their members “have been seeing delays in their imports and exports, ranging from a few weeks to a few months,” forcing them to “create new ways of coping with these realities.” “One such coping mechanism comes in the form of building up of buffer stocks—with clear implications on working capital and warehouse costs,” Ilagan told the BusinessMirror.
Restarting economies
ILAGAN added they observed that another way of coping has to do with shippers getting creative with inter-modal transport options. He cited as example: from the traditional full reliance on ocean shipping from origin to destination, a shipper has considered a mix of utilizing air freight to get to a transshipment site that can accommodate a shorter delivery time to the final destination port via sea. Ilagan said it is becoming “clear” that the fastest countries that would reach herd immunity against Covid-19 would “emerge faster” in the new normal of global trade; thus, reaping benefits of the global economic restart.
“Because of this uneven return to the ‘new normal,’ it wouldn’t be surprising that the laggard countries may find themselves having difficulties coping with shipment and logistics delays and elevated costs,” he told the BusinessMirror.
“The faster we can move to the ‘new normal’ in the Philippines, the faster the Philippines can take advantage of the global economic restart,” Ilagan added.
Slowed down
THE global container imbalance and lack of vessels have caused shipments of meat imports to arrive in about three to four months. This could derail the Duterte government’s plan to bring in cheaper imported protein sources with its pork tariff reduction and increase in the minimum access volume (MAV). “We now are looking at three months to four months of arrival,” Meat Importers and Traders Association (Mita) President Jesus C. Cham told the BusinessMirror. “There’s a lot of congestion caused by Covid-19 pandemic. It has created an imbalance in trade with containers going one way and the others returning without a back-load.” Cham added that North America is also reeling from the impact of severe winters that have slowed down the movement of people, trucks and cargoes in the West. “We will know only of the additional charges when the cargo arrives; and they are delayed. Upon arrival, we will see the destination charges,” he said. “The CIF cost of a headless pork carcass has gone up to $3 per kilogram from $1.5 per kilogram,” Cham added. Cham warned that given the delays in shipments, the government’s pork-tariff reduction to as low as 5 percent for in-quota volume and 15 percent for out-quota volume may not be maximized.
“Only the pre-ordered [batch] will benefit but the new orders may not, since it takes us now at least three months for new orders,” Cham explained.
Upended process
AMBALADA, who is also a director of the Philippine Association of Meat Processors Inc., warned that the current shipping and logistics problem is worsened by the challenge of sourcing raw materials for food manufacturers, like processors. Furthermore, delays in arrival of imported goods may pose food security problems for the country, he added. For example, meat processors are now struggling to import mechanically deboned meat of chicken since the country lost about 60 percent of its import source after the government slapped temporary blanket bans on European countries over bird flu concerns, Ambalada explained.
“This is really a perfect storm. If this won’t be eased or resolved, then we’re up for a looming major food shortage. Take, for example, processed meat products,” he said. “What will be our alternative protein source if we lose processed meat products or they hike their prices amid rising pork and chicken retail prices?”
Noted problems
IN an exclusive interview with the BusinessMirror, a staff of the Philippine Coconut Authority (PCA) said coconut oil (CNO) exporters are booking their shipments in advance—about two weeks to a month before target shipment date—as a “stop-gap” solution to the ongoing global container and vessel imbalance. The person familiar with PCA operations pointed out that the impact of these problems
were “greatly noted” in July last year when the country’s CNO exports “dropped to its lowest” at 7,863.15 metric tons (MT). “With this problem, to be able to deliver the goods as per agreed contract, what our
exporters do is to book their shipment with the shippers in advance, two weeks to a month before the target shipment date,” the person familiar with the PCA said. The person said the PCA, an attached agency of the Department of Agriculture, disclosed that the Department of Trade and Industry is already looking into the problem and is looking to come up with a solution to mitigate the impact of the problems on one of the country’s top agricultural exports. According to the person familiar with the PCA, the trade and industry department’s Committee on Logistics of the Export Development Council has been conducting consultation meetings with the exporters, shipping and logistics companies to minimize
the impact of this problem to our exports.
“Advance booking is still the stop-gap solution at the moment,” the source at the PCA
told the BusinessMirror.
Imports, exports
THE ongoing global logistical problem adds another problem to the country’s CNO exports that have been suffering from supply problems in recent years. In fact, Philippine Statistics Authority (PSA) data showed that the total value of the country’s CNO exports last year declined by 9.1 percent to $846 million despite a rebound in prices. A Global Agricultural Information Network (GAIN) report projected that the country’s CNO exports in market year 2021 to 2022 will continue to decline for the third straight
year due to “logistical problems from importing countries as a result of the Covid-19 pandemic.” The report noted that the country’s top markets for its CNO are Europe and the US, which have been reeling from the impact of the global shipping problems. The GAIN report, prepared by the US Department of Agriculture’s Foreign Agricultural Service in Manila, estimated that CNO exports from October-to-September of next year would decline to 875,000 MT from 925,000 MT recorded in the previous market year.
Tight margins
PHILIPPINE banana exporters are also reeling from rising shipping costs and shipment delays, which they estimate may slash the country’s profit from the prized yellow fruit by at least 15 percent. Pilipino Banana Growers and Exporters Association (PBGEA) said the rising shipping costs, brought about by the global shipping problem due to Covid-19-induced problems, are further “eroding” the “already tight margins” of exporters in all markets. PBGEA Chairman Alberto F. Bacani told the—their shipping costs have increased by 15 percent to 20 percent compared to last year’s average quotations. For example, Bacani said the cost of shipping a container of bananas to Saudi Arabia has risen to $3,000 from the usual quotation of $2,600 (about P124,879.30 at current exchange rates). Due to this, Bacani noted that profits by the industry this year would be slashed by double-digit rates.
“You can assume the same amount of the increase in shipping costs—about 15-percent reduction,” Bacani, who is also the President and CEO of Unifrutti Tropical Philippines Inc., told the BusinessMirror.
“With market prices generally staying the same year-on-year, the rise in shipping costs have eroded the already tight margins of banana exporters in all markets,” he added.
Equally affected
WORSE, the rise in costs is coupled with shipping delays from Davao to the Middle East, with shipments arriving within 30 days to 33 days—from the usual average of 25 days, Bacani told the BusinessMirror. He further explained that the transit delay was caused by the “continued spillover effect from the port congestions in China and Singapore that started at the end of 2020.” The congestion, Bacani pointed out, caused feeder vessels to miss scheduled connecting dates with the intended mother vessels in Singapore and Shekou. “This congestion has affected all shipping lines from Davao since all of them rely on the same feeder vessel service from Davao offered by CMA and RCL, meaning all banana exporters from Davao are equally affected by the delayed transit time,” he said. The increase in freight costs has put the Philippines in a tighter corner against its rising Vietnamese and Cambodian competitors in securing market share in the growing market that is China. “Vietnam and Cambodia, given their proximity to China, are the last affected by these increased freight costs, making their bananas even cheaper now versus Philippine bananas compared to last year,” Bacani said. Indeed, it appears it would take a long way for the Philippines to recover to a position of
strength in matters of logistics.
Part 2: Supply Stiffness to Stay as Shipment Issues Seen Spilling Past Yule Season
UPPLY constraints were already a given before the Ever Given blocked the Suez Canal: lockdowns are to blame and exporters are seen to put up with the setback for a long term. And merchants relying on revenues from sending goods out of the country’s borders—nay, the whole economy itself have no other choice but to adjust operations and hold on tight during this bumpy ride. The Supply Chain Management Association of the Philippines (SCMAP) told the BusinessMirror that the concern regarding shipment delays is not going away any time soon.
“We have been told that these issues may persist even after the Christmas rush,” the group said. Philippine Exporters Confederation Inc. (Philexport) Assistant Vice President Flordeliza C. Leong told the BusinessMirror that exporters started dealing with shipment delays in the last quarter of 2020 when production began picking up anew. While there is no conclusive report yet, Leong said that delays usually range from two weeks to a month.
The bottlenecks were caused by the schedule changes, occasional vessel omissions and increasing shipment rates, Leong’s group said. “However, in recent months these issues have gotten worse, with shipping lines not confirming space beyond contracted allocations and rates going up as high as three
times more, especially for long-haul shipments,” the group told the BusinessMirror.
Book Shipments
LEONG explained that the delays are also being caused by the piling up of goods in the shipping lines and the traffic going to the ports. In addition, she noted that ports have no regular operations at the moment and employees are working in shortened hours amid the pandemic, among others. The Philexport official said that she already talked to traders and logistics service providers to find solutions to the shipping delays. But it appears that the sector is on a deadlock.
“There is nothing to do but to wait [if there is a shipping container already],” she lamented. However, Leong said it may help if exporters consolidate their orders and book early shipments.
End-customers
ASIDE from export-oriented firms, importers have also experienced delays in shipments, which are seen to impact manufacturing and, ergo, consumption of the country, SCMAP Executive Director Corazon C. Curay told the BusinessMirror. The shipments that are taking a longer time to deliver include raw materials; and finished goods, which are usually purchased through e-commerce, Curay said. There
could also be potential shortage of stocks and price increases that the customers have to deal with as a result, she added.
“For our end customers, this will result in products missing from shelves and higher prices, which is not ideal considering our continued battle against Covid-19 and its long-term economic impact,” SCMAP added. But Leong said that it is fortunate that customers understand the shipping delays. “The good thing about this is it is a global thing,” Leong said. “Alam din ng mga buyers nila na this is happening.” [The buyers are aware of the situation.]
Imports arrangement
SOME importers manufacturing for exports are negotiating with their buyers to have a longer turnaround period, she explained. If the buyers agree with the arrangement, orders will not be cancelled anymore—and buyers are ready to deal with the delays as well. In general, Philexport said that exporters have accepted that they have to adjust their production timeline as no concrete and long-term solution is in place yet.
However, there are still concerns for perishable items, Leong noted, adding that air shipment is usually the solution to make sure the products arrive fresh. This may not be applicable to some nonperishable items as fees could be higher if ever, she said. Leong, on the positive side, said that she has not encountered an exporter who decided to cut production because of the shipment delays. A garment exporter, the Philexport official, is even seeing continuous flow of orders from the US. However, “they have to decline orders only because of order capacity, not because of the shipping problem,” she added.
Manufacturing Issues
REPORTS from the BusinessMirror stated that shipping costs for exports have increased “10-fold.”
Henry Basilio, chairman of the networking committee on transportation and logistics of the Export Development Council (EDC), flagged in a recent statement the increasing freight rates amid imbalances in the repositioning of empty containers. Basilio noted that the cargo handling cost has doubled with the cranage fee amounting to P1,587. This is on top of the arrastre fee of P1,575, Basilio said. Cranage fee is the price paid for the use of cranes when loading and unloading ships. Arrastre fee is charged for the handling, receiving and custody of shipments. Basilio also noted that the proposed increase for out-of-gauge (OOG) cargo is 300 percent. OOG cargo refers to shipments that cannot fit into 6-sided shipping containers because of their larger size.
Among Southeast Asian countries, standard OOG surcharge is only 50 percent based on Association of International Shipping Lines tariff comparison, Basilio noted. An exception is Tanjung Priok, the busiest Indonesian seaport. “The proposed rates are exorbitant and will increase the cost of doing business, drive away investors, and unduly burden existing manufacturing industries and export companies,” he said. “While these intended charges are billable to the shipping lines, this will directly impact the logistics cost and will ultimately be borne by the end consumers.”
Meanwhile, Basilio expects the container imbalance to normalize this month amid increased shipping logistics costs.
Affecting winners
DESPITE the exorbitant rates, University of the Philippines Professor Emeritus Epictetus E. Patalinghug believes the increase in these costs were mainly due to the low volumes and a select few ocean shipping carriers that dominated the market. This would not likely affect the country’s export winners. According to the Philippine Statistics Authority (PSA), exports in January dipped by 5.2 percent to $5.49 billion from $5.79 billion for the same month last year. Based on preliminary data from the PSA, the country’s top export remains to be electronic products. This brought in $3.24 billion in earnings for the country and
accounted for 59.1 percent of the country’s exports in January 2021. The commodity is also the country’s top import. PSA data showed imported electronic products were valued at $2.34 billion or a share of 29.6 percent to the total imports in January 2021. But “because of low volume and despite excess capacity, shipping costs have increased by 10 percent—due to the market power of the dominant few ocean shipping carriers. Electronics exports can be shipped via air, they are not affected,” Patalinghug told the BusinessMirror.
Going bananas
FORMER dean of the School of Labor and Industrial Relations (Solair) Rene E. Ofreneo shared Patalinghug’s view, saying that among electronic exports and imports, the top product are semiconductors, particularly microchips, which can easily be transported. “Pwede kasing isakay sa maleta [This can be transported through your luggage],” Ofreneo explained to the BusinessMirror.
Based on the January data, semiconductors accounted for 43.2 percent of total exports. This amounted to $2.37 billion in 2021, a 4.4-percent decline from the $2.48 billion posted in the January 2020. Ofreneo said it is reasonable to expect exports of goods shipped in bulk, such as bananas, to sag.
To note, the country’s banana exports in January plunged 51 percent to 186,419.019 metric tons (MT), from last year’s 384,151.173 MT. PSA data earlier analyzed by the BusinessMirror showed that the latest figure is the steepest decline in January banana shipments since 2006. Ofreneo added that bulky auto parts and electronics assemblies may also be affected by the logistics nightmare. Exports of other electronic products such as electronic data processing amounted to $557.66 million while automotive electronics amounted to $8.06 million in January 2021 based on the PSA’s report. While electronic data processing saw a 24.4-percent growth in January, automotive electronics suffered a 61.6-percent decline value.
Issued order
TO ease the cargo traffic, the SCMAP said government agencies should still implement the measures they placed in response last year. “We also call for the continued enforcement of the Joint Administrative Order (JAO) issued by various government agencies at the beginning of the pandemic to facilitate movement of cargo from Manila’s ports,” Curay told the BusinessMirror. The Department of Trade and Industry (DTI), along with several agencies, agreed to release an order in April last year to decongest the ports of Manila to allow inbound shipments of food, medicine and personal protective equipment. These government agencies include Philippine Ports Authority (PPA), the Bureau of Customs, the Department of Finance and the Department of Agriculture (DA).
Prior to this, the Inter-Agency Task Force (IATF) for the Management of Emerging Infectious Diseases had instructed the PPA to remove the overstaying containers in the ports to make way for incoming cargo containing essential goods. Under the JAO, all cargo remaining beyond 30 days from discharge should be withdrawn within five days from the effectivity date of the order. Containers scheduled to arrive after the issuance of order are required to be withdrawn 10 days from discharge. The JAO also expedites customs clearance and streamline the process of applying for import permits and clearances online.
“While these issues are out of our control due to its global nature, we believe our local authorities can help reduce its impact,” Curay added. “The PPA and the Marina [Maritime Industry Authority] must continue efforts to ensure sufficient capacity in ports across the country, as well as improved efficiency.”
Needs slowdown
THE shipment delays may potentially cut the country’s export revenues this year. “Definitely, the lockdown will affect our export target this year,” De La Salle University (DLSU) Economist Maria Ella C. Oplas told the BusinessMirror. According to the DTI, the goods and services exports were expected to drop by 14.7 percent to $80.5 billion in 2020 before growing by 12.4 percent to $90.5 billion this year. Figures are anticipated to further rise by 14.8 percent to $103.9 billion in 2022, lower than the earlier target of $130 billion as the pandemic severely impacted business activities.
Oplas said shipment delays have affected the whole value chain. In addition, she noted that manufacturing companies may need to slow down production because employees cannot come to work, which meant fewer goods to be shipped out as well. “It’s a domino effect on them,” she said. On the demand side, the DLSU economist pointed out that orders from abroad could have been fewer as well, as company-clients potentially scaled down their operations, or worse, were forced to shutter.
Philexport’s Leong noted that shipment delays could also explain the lower export revenues because the earnings will not be reflected immediately.
Added bottlenecks
FOR the semiconductor sector, a major contributor to the Philippines’s export industry, shipment delays usually take weeks. Semiconductor and Electronics Industries in the Philippines Foundation Inc. (Seipi)
President Danilo C. Lachica told the BusinessMirror the industry’s supply chain has been disrupted with the implementation of lockdowns. Lachica noted that the reduced flights and ships have been causing bottleneck to the shipments of semiconductor players. But Seipi is not worried about not meeting the 7-percent growth forecast for this year. Lachica said the Seipi has factored in this forecast. Data from Seipi shows that electronics accounted for 65 percent of the total Philippine exports in January. Exports for the segment inched up by 1.48 percent to $3.55 billion in the first month of 2021 from $3.50 billion year-on-year, supported by growth in four sectors.
Medical and/or industrial instrumentation led the sector with 84.31-percent growth to $22.99 million for the period. Consumer electronics, electronic data processing and control and instrumentation, grew by 28.2 percent, 24.38 percent and 8.89 percent, respectively. Meanwhile, automotive electronics declined by 61.64 percent; telecommunication, 27.24 percent; office equipment, 4.59 percent; components or devices, 4.37 percent; and, communication or radar, 3.47 percent.
Last year, total electronic exports dropped by 8.8 percent to $39.67 billion from $43.39 billion. The top destinations for Philippine electronics exports are China, Hong Kong, Japan, Singapore and the United States of America. Earlier, Trade Secretary Ramon M. Lopez said electronic exports were expected to
register further growth this year with the opening of more economies.
Temp checks
THE government recently extended the enhanced community quarantine (ECQ) measure in the National Capital Region (NCR), Cavite, Rizal, Laguna and Bulacan for another week or until April 11 amid surging Covid-19 cases. While Seipi understands the rationale behind the move, Lachica said allowing full
occupancy of shuttle buses that follow the health protocols for the electronics sector would be a big help. “For electronics, allowing 100-percent occupancy for shuttle buses with plastic partitions
would help relieve the mounting costs,” he explained. Lachica said the infections do not spread in such “clean shuttles,” even during an upsurge of cases, because Covid-19 protocols are strictly enforced.
He noted the passengers wear face masks and face shields and are not allowed to talk, eat or make phone calls. There are also disinfection and temperature checks, among others, as safety measures.
“The pandemic affects the volume of exports and imports. Since our exports are import-dependent, our net exports—exports less imports—will be down. On the other hand, an import declining more than export declining means we have net dollar inflow and is good for our balance of payments,” Patalinghug explained. “Less trade volume, less shipping activities mean less port congestion. Less port congestion means less logistics problems—there is excess capacity for logistics given less goods to move to and from destinations and/or origins,” he added.
Impacts OFWs
HOWEVER, despite the numbers, Patalinghug said the Philippines is still not an export-oriented economy. This means that the country’s recovery from the recession will not depend on trade but on consumption. Patalinghug said remittances from overseas Filipino workers (OFWs) and revenues
from business process outsourcing (BPO) matter more to the recovery. He noted that despite the mobility restrictions and economies going into recession, earnings of these sectors did not decline that much. As such, he said these can fuel domestic consumption, which represents 72 percent of gross domestic product in Luzon, determining the pace of the recovery. One caveat, Ofreneo said, is that global trade also affects OFWs. Many global shipping and logistics firms employ Filipino seafarers. The perfect storm in global trade, Ofreneo said, would add to the existing challenge of the shipping and logistics industries to automate and even use artificial intelligence (AI) in the hope of making their operations more efficient.
“The only thing I know re shipping and logistics is the adverse impact on our seafarers who are working in this sector. For example, Maersk, maraming [there are a lot of] Pinoy. Jobs falling due to global recession. Also there is the trend towards leaner and leaner ship cargo operations, facilitated by AI,” Ofreneo said.
Vegetables, rice
IN terms of food security, Patalinghug believes that rice and vegetables are still in adequate supply in the country. While the African Swine Fever (ASF) continues to ravage hog farms nationwide, there are pork substitutes such as poultry and fish that can be consumed by Filipinos. He added that the recent move by the agriculture department to recommend a higher minimum access volume (MAV) quota for pork imports will help address the shortage from domestic pork suppliers. This shortage has been blamed for the surge in pork prices.
The PSA said the price of pork in the National Capital Region (NCR) averaged P329 per kilo in March, a 59-percent increase from the P207 per kilo recorded in March last year. Compared to February, when the price of pork averaged P323 per kilo, the increase was slower at 1.8 percent. In Areas Outside NCR (AONCR), pork prices averaged P312 per kilo in March, a 50-percent increase from the P208 per kilo in the same period last year. However, compared to February, there was a 1.6-percent decline in pork prices. The average price of a kilo of pork in these areas was pegged at P317.
Easing situation
“IN short, there is no probability of a food shortage—unless there is a food riot due to fake information in the social media, but this possibility is remote,” Patalinghug, nonetheless, told the BusinessMirror in April.
He cited the “maximum” inflation target of the Bangko Sentral ng Pilipinas (BSP) at “only 4 percent.”
Last week, monetary authorities slashed the central bank’s average inflation forecast for this year from 4.2 percent to 3.9 percent. Prior to this, Patalinghug said: “Let’s see if they can hit this target [4 percent].
“Reaching 10 percent—double digit—from 4.7 percent for this year is less of a possibility, unless there is a food shortage—an unlikely scenario,” he added Ofreneo added that a food shortage may not be possible given the high availability of food imports in markets nationwide, particularly rice, pork and chicken. To find a more sustainable solution, he said there is a need to increase support for local producers. This support should help them and their products better compete with imported goods that are currently available in the market. Patalinghug believes the government has sufficient tools to address any shipping and logistics problem. However, he emphasized, “there are no shipping and logistics
problems at present.” Should a shipping or logistics problem arise, Patalinghug said the completion of Harbor Link Road and Skyway Stage 3 will ease the situation.
“[This] despite the inefficiency of the DOTr [Department of Transportation] top leadership, particularly its clueless Secretary,” Ofreneo said. “If the government gets the competence to learn how to manage well the pandemic problem, then the economy will be on the trajectory to growth, even without active government intervention in terms of fiscal and monetary policy,” he added. “Certainty, instead of fear due to the virus, and macroeconomic stability are the prerequisites for recovery.”