MANILA, Philippines — Philippine trade may face some headwinds due to a massive vessel stuck in the Suez Canal, which could result to delays in both imports and exports while driving shipping costs up further.
Philippine Ports Authority general manager Jay Santiago said the situation in the Suez Canal, where a 224,000-ton vessel got stuck last week, would not materially affect ship calls in the Philippines, but may somehow impact the shipment of goods because of the delays caused by the incident.
“Ultimately, the blockage in the Suez Canal will have an impact on global logistics, especially for goods originating from areas using that route,” Santiago told The STAR.
“However, as far as the Philippines is concerned, foreign vessels calling on our ports emanate mostly from within the region, namely China, Taiwan, Korea, Singapore and the other Southeast Asian countries,” he said.
Initial estimates indicated that the large container ship stuck at the Suez Canal could take weeks to be resolved.
“Thus, this could result to some delays in the movement of both exports and imports of the Philippines, especially with Europe and parts of Africa, that pass through the Suez Canal, as a result of the additional time to take a longer route around the African continent, with the risk of some disruptions in some parts of the global supply chain,” Michael Ricafort, chief economist at Rizal Commercial Banking Corp., told The STAR.
Consequently, transport and shipping costs would also increase for some Philippine exports and imports with Europe and parts of Africa that pass through the vital trade waterway given the additional time and longer voyage.
Shipping rates have previously been soaring due to container box shortages and port congestion as pandemic-related operational disruptions have extended container ships’ turnaround times.
“Nonetheless, any delay or disruptions in the supply/value chain of countries adversely affected by the temporary closure of the Suez Canal would also have adverse effects on parts of the global supply chains in terms of reduced production and movement of some products bound for global markets, including some indirect effects on the Philippines and other countries around the world as well,” he said.
Global ports giant International Container Terminal Services Inc. (ICTSI) is closely monitoring the incident.
ICTSI senior vice president and chief financial officer Rafael Consing said the incident would not have a material impact on the company’s terminal operations.
The company’s portfolio of terminals and projects are located in developed and emerging market economies in the Asia Pacific, the Americas, and Europe, the Middle East and Africa.
“The blockage of the Suez Canal will send ripple effects across an already strained global supply chain,” Consing told The STAR.
“Prior to this event, services to and from Asia were already delayed for days. Now, many of these ships will need to divert their vessels to sail around the southern tip of Africa, which could further add five to seven days to their journey,” he said.
Consing said a prolonged blockage would result in higher shipping charges, as well as raw material and product shortages at a time of unprecedented demand and congestion at some of the world’s major ports.