By Arjay L. Balinbin

THE Philippine Ports Authority (PPA) said the yard utilization rate at the Port of Manila dropped from 65% to 50% in February due to the coronavirus outbreak.

PPA General Manager Jay Daniel R. Santiago told BusinessWorld in an interview on Feb. 24 that the yard utilization rate was “about 50%” during the month.

In a follow-up phone interview on Tuesday, he said the normal utilization level was about 65%, with shipments seeing a downturn in activity for cargoes originating in Hong Kong and China.

Cargo ships directly or indirectly from Hong Kong and China represent “about 70%” of all inbound cargo vessels, Mr. Santiago said.

“The Philippines is considered a feeder port, which means that majority of the inbound or outbound cargo vessels pass through either China or Hong Kong for consolidation with other cargo vessels before they proceed to their destinations,” he added.

He said the Port of Manila was just recovering from Chinese New Year, which dampened shipping activity, when the coronavirus began to affect cargo transactions in southern China, including Macau.

He said the coronavirus outbreak has had a knock-on impact on cargoes from elsewhere because of the paralysis of Chinese supply chains.

“For example, we have imports from Japan, South Korea, the United States, and Europe. A lot of them utilize components from China. Maybe, the coronavirus outbreak has affected their manufacturing industry… there is really a global slowdown because of the virus,” he said.

The coronavirus outbreak has forced the Philippine government to impose travel bans covering China, Hong Kong, Macau and parts of South Korea. It also briefly imposed a brief ban on Taiwan travel.

Mr. Santiago said the PPA will be issuing a notice to impose restrictions on ships from South Korea and their crews.

“If a ship is from South Korea and its crew members are Koreans who are not permanent residents of the Philippines, they will not be allowed to disembark from the vessel. As for the Filipino crew members, if their last stop is the Philippines, they will be required to undergo a 14-day quarantine. But if the Philippines is not their last stop, they will not be allowed to disembark from the ship. They will be treated like they are foreigners because there is no need for them to disembark,” he said.

“The volume of imports from South Korea is minimal as 70% of our cargoes emanate from China or Hong Kong either directly or by transshipment,” he added.

ANZ Research has said slower economic activity in China and other affected countries will have spillover effects on the Philippines, particularly tourism, remittances and import demand, which could consequently affect the current account.

“The Philippines’ exposure to goods exports… to China is estimated to be around 1.6% of GDP (gross domestic product)… Thus, a 20% drop in import demand from China for three months will translate to a 0.08 ppt hit to Philippines’ Q1 GDP through this channel,” the research arm of ANZ Bank said in a report.

With Chinese exports to the Philippines also likely to take a hit amid factory shutdowns, Philippine industrial production may also be affected negatively.

Still, ANZ Research said the Philippines may be “relatively less exposed” than its neighbors to trade disruptions due to the outbreak.

On Monday, IHS Markit reported that its Philippines Manufacturing purchasing managers’ index (PMI) rose slightly to 52.3 last month from 52.1 in January — the highest level in 13 months.