Exporters want to cut costs as logistics crisis worsens

The Philippine Chamber of Commerce and Industry (PCCI) said exporters are looking for ways to cut costs as they grapple with a global container shortage and high logistics cost.

“Most of the exporters are trying to find ways on how to cut costs here. So that is how most of the export manufacturing services are coping now,” said EMPS Group of Companies Chairman and CEO Ferdinand A. Ferrer on the sidelines of the 48th Philippine Business Conference and Expo (PBC&E) held in Manila on Tuesday.

Ferrer, who is also chairman of the PCCI’S 48th PBC&E, said expensive power and the spike in fuel prices have significantly increased manufacturing cost in the Philippines.

“Everybody’s looking for innovative ways on how to save. Fuel, logistics are very expensive,” he said.

PCCI’S vice president said the government and the private sector must work together to reduce the cost of doing business in the country and make the Philippines more competitive.

As for the impact of the weakening peso on exports, Ferrer said certain sectors like semiconductor industry would see some gains.

He said, however, that the depreciation of the peso would make life difficult for manufacturers who are import-dependent.

Despite these challenges, the PCCI official expects the manufacturing sector to expand this year. He also said the sector could grow higher if it can get the support it needs to overcome supply chain issues and high input costs.

As they work on the factors within their control, Ferrer said there are initiatives in place “internally” in the Philippines for the manufacturers. On the semiconductor side, he said, companies are ramping up production and increasing capacity.

For his part, PCCI President George T. Barcelon said exporters are being weighed down by high freight costs and slow turnaround time.

“For North America, [freight cost] has gone up by about 200, 300 percent and not only that, the turnaround time is very slow so there’s not enough shipping space and the freight cost is very high,” said Barcelon.

He said food producers, particularly those who are into exporting perishable fruits, are the most affected by the slow turnaround time and prohibitive freight cost.

Last week Philippine Retailers Association (PRA) President Rosemarie B. Ong said during the group’s general membership meeting that the lead time of companies has been prolonged. She said this can be attributed to the reopening of economies.