Red Sea conflict seen doubling PH logistics costs

The Italian Chamber of Commerce in the Philippines (ICCP) has voiced concern over the impact of the situation in the Red Sea, fearing that the conflict in the commercial sea lane will double the already high logistics costs of their member-companies operating in the Philippines.

Last week, ICCP executive director Lorens Ziller said that the main issue that their members will face are higher logistics costs as shipping firms are expected to take alternate routes to avoid the Red Sea, where an estimated 12 percent of global trade passes through.

“We will see an increase in transport costs. I think a container would cost up to $5,000. And that will definitely make things more expensive,” Siller told reporters on the sidelines of the economic forum organized by the business group at the Dusit Thani Hotel in Makati.

That is nearly double the current cost of $3,000 that they are paying for each container.

The Iran-backed Houthis have vowed to attack ships passing through the Red Sea until Israel puts a stop to its offensive against Hamas in the Gaza Strip.

In the Philippines, at least 84 export enterprises said they see a significant impact of the conflict, according to a survey conducted by the Philippine Economic Zone Authority.

This includes delays in import shipments of goods ranging from seven to 20 days, as well as longer lead times and reductions in production capacity resulting from the rearrangement of vessels for materials coming from Europe.

Speaking to the Philippine News Agency last year, the Italian Embassy in Manila said that bilateral trade between the Philippines and Italy stood at 1.24 billion euros (P7.55 billion if 1 euro=P60.86) in 2022.

Pressed on what relief measures they would like to see from the government, Ziller said that they want further improvements on the ease of doing business in the country. INQ