Slowdown in shipping cargo adds pressure to food prices

MANILA, Philippines — Food prices – already affected by higher oil and fertilizer costs – may take another hit as supply tightens due to the reduction in cargo trips by local shippers.

Based on data furnished The STAR, while total cargo volume in Philippine ports went up by two percent to 66.96 million metric tons (MMT) in the first quarter, there was a noticeable three percent decline in domestic cargo to 27.47 MMT, with these shipments comprising mostly food products.

De La Salle University economics professor Maria Ella Oplas said the oil price shocks may have taken its toll on local shippers as they resorted to cutting trips to save fuel. She warned that in the long run, this could dry out food supply in non-agricultural regions, such as Metro Manila.

“I’m not surprised [about the decline in domestic cargo]. First, it is due to fuel price increases, as it is most costly to transport goods domestically in archipelagic states,” Oplas told The STAR.

“The point is, logistics has long been a problem of the Philippines, and now this is aggravated by fuel price increases,” she added.

Records showed that local shippers are cutting down trips to trim business costs, as shipcalls fell by one percent to 163,002 in the first quarter, from 164,978 a year ago.

Although foreign arrivals have risen by six percent to 2,717 as of March, this was negated by the one percent decline in domestic shipcalls to 160,285.

Philippine Ports Authority (PPA) general manager Jay Santiago said the impact of elevated fuel rates appears to be tougher on domestic shippers. Foreign cargo throughput is up by five percent to 39.49 MMT in the first quarter, showing no signs of slowdown.

“Based on PPA’s first quarter data, only domestic shipcalls posted a slight decline of one percent, while foreign shipcalls increased by six percent. The softening in the domestic shipcalls reflects reduced inter-island activities under current conditions,” Santiago told The STAR.

With the geopolitical conflict in the Middle East still unresolved, the PPA expects port activities to weaken in the second quarter, as shippers have to pay more for fuel orders.

“Based on trends, lower targets for these variables are anticipated in the second quarter, and they are currently being reassessed based on latest reports from field offices,” Santiago said.

In an archipelagic country like the Philippines, Oplas said a few hundred trips removed from the picture could spell disaster for food prices and supply.

On one hand, it will be challenging to locally ship products, especially quality-sensitive ones like fruits and vegetables, if voyages are limited. On the other hand, Oplas said producers may find it difficult also to cover price hikes on shipping services.

“Due to an expected shortage in oil, companies outside Metro Manila limited sending supplies, (and) in this case, the higher insecurity is Metro Manila. The region does not have agriculture, so if our sources outside decide not to ship products anymore, it could get worse,” Oplas said.

Shippers are currently permitted to hike freight and passenger rates by as much as 30 percent as approved by the Maritime Industry Authority in light of oil price shocks.

Based on data from the Philippine Statistics Authority, inflation in food products accelerated by three percent in March, contributing largely to the spike in headline rate to 4.1 percent.

Regulators, for their part, are trying to soften the blow on local shippers by reducing tariffs, with the PPA slashing Ro-Ro terminal fees to just P1 for the transport of farm goods.