No delays in PH shipments so far despite Red Sea tensions

MANILA  —Philippine shipments have yet to encounter bottlenecks despite the Red Sea crisis disrupting global trade in the Asia-Europe corridor.

“No delays claimed on account of the Red Sea issue so far,” Philippine Ports Authority (PPA) General Manager Jay Daniel Santiago told the Inquirer on Monday.

The Houthis have launched attacks in the Red Sea, one of the world’s busiest shipping lanes, to show its alliance with Palestinians amid the ongoing war between Israel and Hamas.

The conflict is expected to affect the movement of goods across the sea, posing risks to supply chains.

According to a report by BMI, a Fitch Solutions unit, the ongoing conflict can cause shipment delays of six days to 15 days due to rerouting of vessels.

READ: Global maritime trade sails into geopolitical storm

“The Asia-Europe corridor will face the most acute delays given the scarcity of viable alternatives to the essential Suez Canal and the intricate nature of sea-based logistics,” it explained.

As an alternative, vessels may do a detour via Cape of Good Hope in Africa but this will be more expensive for shippers. “This longer circuit requires more fuel, raises demand for competitive ports and bunkering facilities in the Africa region,” BMI explained.

As such, freight rates would remain elevated in the first quarter, it said.

Drewry’s World Container Index, which monitors ocean freights, already rose by 44 percent to $3,072 per 40-foot container on Jan 11. This is the highest since October 2022.

The Fitch Solutions unit added that some carriers would also implement surcharges amounting to $500 to $2,700 per 40-foot container amid the delays.

READ: Red Sea shipping workarounds add costs, delays for suppliers, retailers

It said that more expensive transportation costs, which are usually included in the cost of goods, would not be felt immediately by consumers.

“The transmission of higher transportation costs to the prices of final goods could unfold over several months, and it is also likely that businesses will absorb some of the cost pressures through reduced profit margins,” it explained.

Locally, the PPA said port fees would not be increasing.

“Any potential freight rate increase on account of issues in the Red Sea should not affect Philippine cargo handling charges being charged in PPA terminals,” Santiago added.

However, “Inasmuch as international freight charges are unregulated by Philippine authorities and are contractual between the foreign shipping lines and the Philippine importers, we expect that shipping lines will adjust their freight charges accordingly,” he said. INQ