THE PHILIPPINES will feel the impact of the disruption of operations at the Suez Canal via the delayed flow of trade goods between Asia and Europe, as well as indirect consequences like higher shipping costs in the wake of the stranding of hundreds of merchant vessels during the weeklong blockage, analysts said.
“The recent disruptions at Suez Canal, though already being resolved lately, could result in some delays in the movement of both exports and imports of the Philippines… that pass through the Suez Canal, as a result of the additional time taken for the longer route around the African continent, with the risk of some disruptions in some parts of the global supply chain,” Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort told BusinessWorld in an e-mail Tuesday.
On March 23, the 224,000-ton Ever Given container ship blocked the Suez Canal, a key trading route connecting Europe and Asia. The incident set back the operations of hundreds of vessels. As of Monday, the vessel had been re-floated and towed away from its position blocking a narrow section of the canal.
Mr. Ricafort said that transport and shipping costs for some Philippine exports and imports will increase due to the delay to ships undertaking longer-than-expected voyages.
Mr. Ricafort added that air freight is a costly alternative to speed up the delivery of critically-needed goods.
“The key risk of this previously stuck giant vessel is the disruption of global supply chains already reeling from the impacts of the COVID-19 pandemic,” Ruben Carlo O. Asuncion, chief economist of the UnionBank of the Philippines, Inc., told BusinessWorld in an e-mail on Tuesday.
“Now that the Egyptian authorities have successfully unstuck the Ever Given, various ships and vessels are still there and waiting for their turn to go through the trade way,” he added.
According to Mr. Asuncion, normal transit time through the canal is 16 hours.
Yanting Zhou, a senior economist at energy consultancy firm Wood Mackenzie, said on Wednesday that it will take at least one more week to clear the backlog, which will result in the loss of two weeks’ disruption to delivery timetables.
“This poses a risk to supply chains given that this time period is close to the inventory days for some manufacturers and will have a ripple effect on many others,” Ms. Zhou was quoted as saying in Wood Mackenzie’s Asia Pacific Energy Buzz blog.
She added that the blockage will “greatly impact” industrial goods and consumer products moving between Europe and Asia.
RCBC’s Mr. Ricafort said the Philippines’ oil, petroleum and fuel imports are not affected since they do not pass through the Suez Canal.
“But the Philippines could still be indirectly affected by any disruption in some parts of the global supply chain as well as any pick up in global shipping costs,” he added. — Angelica Y. Yang
