Market seen to stabilize amid container imbalance in shipping industry

The market is expected to normalize until next month following a container imbalance in the shipping industry that led to some exporters’ reduced shipments while some even stopped exporting.

Henry Basilio, chairman of the networking committee on transportation and logistics of the Export Development Council (EDC), said the opening up of many countries to trade in the third quarter last year has caused imbalances in the repositioning of empty containers, and freight rates to increase.

Basilio said there is an ongoing race to China which offers to pay shipping lines to be able to hold on to empty containers. The freight rates in China have also gone up by as much as 200 percent.

He said it was clarified that there are enough empty containers in the Philippines.

“However, the shipping lines cannot make them available to the exporters due to lack of guaranteed/allocated vessel space/slot. It is very difficult to pre-book the shipments. Even large shippers can no longer depend on long-term (locked) contracts,” he added.

Basilio said this situation is seen to stabilize around March or next month amid high shipping logistics costs.

“In shipping costs, even the regulations during this pandemic seem to be more of increasing the cost instead of reducing it so (the) ratio is, exports already went down by as much as 30 percent, but then again we have to contend with its high costs,” he said.

Basilio particularly cited the doubling of cargo handling cost with the cranage fee set at P1,587 in addition to the arrastre fee of P1,575.

He said the proposed rate increase for out-of-gauge cargoes (OOG) is 300 percent.

Basilio said the Association of International Shipping Lines (AISL) tariff comparison among Southeast Asian countries shows that the standard regional OOG surcharge is only 50 percent, except for Tanjung Priok in Indonesia.

“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,” he added.

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