Port congestion: Investors warn of higher consumer prices

MANILA, Philippines - Port congestion could cause prices of goods to skyrocket in the next eight weeks.

Speaking to reporters yesterday, European Chamber of Commerce of the Philippines (ECCP) president Michael Raeuber said the impact of port congestion on prices of goods is expected if immediate steps are not taken.

“We cannot quantify, but if it is not resolved moving forward, it could lead to bigger price increases. Right now, supply is short,” he said.

“There are containers that simply don’t make it to the Philippines. Some shipping lines have suspended operations to the Philippines,” he added.

Raeuber said it is important that congestion at the ports be resolved since an increase in cargo is expected in the next two to three weeks as the Christmas season is approaching.

“We are of the opinion that today’s serious problems in the supply chains of the Philippines will persist and may even further aggravate within the pre-Christmas season if the root causes of the port congestion and resulting significant cost increases and delays in moving supplies to the Philippines are not recognized and addressed in a coordinated way,” he said.

He cited a joint statement of the ECCP, Canadian Chamber of Commerce of the Philippines, American Chamber of Commerce of the Philippines, Japanese Chamber of Commerce and Industry of the Philippines, Semiconductor and Electronics Industries in the Philippines Inc. and truckers associations.

They are of the view that the present situation is due to the lack of proper coordination between the national and local government.

Absence of long-term strategic planning and infrastructure development is also seen to impede the free flow of cargo and create damaging effects to the supply chain and the economy.

They said regulatory restrictions to the free and unhampered flow of cargo to and from the ports have reduced the productivity per truck every month from 25 to about 13 to 15.

These also increased the demand for trucks serving Manila ports to above 20,000 units from 6,000 to 8,000 units, they added.

They said the lack of trucks has worsened the traffic and tripled the cost of deliveries to Manila ports.

They are proposing a number of remedies to get congestion down and bring back productivity.

These include doing away with the truck ban in other cities in Metro Manila.

Raeuber said they are of the opinion that the national government needs to reassert its power and jurisdiction over national roads across cities in Metro Manila and open express lanes 24/7 for delivery trucks to enable the continuous flow of cargo to and from port.

Raeuber said they also want the Land Transportation Franchising and Regulatory Board (LTFRB) to review the policy of requiring franchises for trucks-for-hire since these vehicles are not public utilities.

They also want to do away with expiration of gate passes or delivery orders for container vans in port to eliminate endless extensions and the inconvenience and delay of long queues for revalidation of gate passes, as well as streamline the delivery system at port.

They also see the need to review and  regulate, through the reactivation of a Shipper’s Council, the allowable demurrage and detention charges for containers.

Raeuber said the problem of congestion and the resulting inefficiency of the delivery system in ports of Manila have caused shipping lines to impose unbridled and unrestricted charging of demurrage and detention charges to the prejudice of shippers, importers, consignees and the public in general.

The speedy upgrade of equipment in the secondary ports of Batangas and Subic is also recommended for expanded operations.

They are of the view a direct link from the South Luzon and North Luzon Expressways to the port of Manila will also address the problem.

“We are confident that by considering the above remedial measures and attacking the experienced supply problems at the roots, the situation can be brought under control and the truck productivity be restored, resulting in supply meeting demand, increased competition and reduced cost,” Raeuber said.