84 locators ‘significantly’ affected by Red Sea crisis, PEZA poll shows
AT least 84 locators, or around 24 percent, of the Philippine Economic Zone Authority (PEZA), are “significantly” affected by the Red Sea crisis, according to the investment promotion agency. Based on PEZA’S records, there are 448 Registered Business Enterprises (RBE) engaged in exports to Europe and 523 RBES engaged in imports from Europe.
With this, the investment promotion agency told the Businessmirror, “We proactively conducted a rapid survey across all 4,378 of our locators that could potentially be affected by the Red Sea crisis, considering both import and export activities, involving Europe, or lack thereof.”
In addition, PEZA noted that it sought comments and feedback from shipping lines and freight forwarders.
“Out of all the PEZA RBES surveyed, only 347 responded,” PEZA said.
“Among them, 24 percent [84 RBES] confirmed significant effects on their operations due to the Red Sea crisis. Meanwhile, 73 percent [252 respondents] stated that they are not affected by the said crisis, and 3 percent [11 respondents] did not respond to the survey,” PEZA added.
Illustrating the impact of the Red Sea crisis on its registered business enterprises, PEZA stressed that the delays in import shipments lead to reduced production capacity.
“The effects on RBES include delays in import shipments [7 to 20 days] and the rearrangement of vessels for materials coming from Europe, leading to longer lead times and potential reductions in production capacity,” the investment promotion agency said.
Apart from this, it cited negative effects such as limited vessels, shortages of containers (especially during the Lunar New Year season), port congestion on the West Coast, and late confirmation of booking.
On outbound cargoes, PEZA said 25 percent of RBES exporting shipments reported delays of 7 days to 1 month due to vessels being rerouted via the Cape of Good Hope.
“Challenges include shortages of containers, late confirmation of booking, limited vessels, and port congestion in various locations,” PEZA said.
The investment promotion agency attached to the Department of Trade and Industry (DTI) explained that freight costs to Europe and the Middle East have surged by 100 to 400 percent, with RBES resorting to using airfreight, which it said is “significantly more expensive than sea shipment.”
The goods being sourced from and exported to by PEZA’S RBES consist of electronics, semiconductors, automotive parts, printers and flexible printed circuits, coil transformers, aircraft galley parts, enterprise solid-state drives, optical coupled isolators, raw materials of insulation anvil, quick crimp, wire anvil, and radiation survey meters, among others.
In a statement sent to reporters two weeks ago, PEZA Director General Tereso O. Panga said that while traders are “yet to feel the effects in the Philippines,” he emphasized that they are already “proactively working together with other concerned agencies to de-risk global supply chains that may affect our locators in particular and the whole economy in general.”
He recognized that the effect of the closure of the Red Sea route to trade would be higher inflation in different parts of the world, as delay in production and deliveries of products and resources would increase cost of goods. (Full story here: https://businessmirror. com.ph/2024/01/20/peza-readies-locators-for-possible-disruption-amid-red-sea-attacks/)
In a separate Viber message, Semiconductor and Electronics Industries in the Philippines Foundation, Inc. (SEIPI) President Danilo C. Lachica said that “for now,” he remains confident that the local semiconductor and electronics industry will not be affected by the attacks on ships sailing in Red Sea as it is “not evident” if there have been semiconductor and electronics shipments affected by the 42 percent decline in the trade volume in the Suez Canal, which the United Nations Conference on Trade and Development (UNCTAD) described as a “critical waterway” connecting the Mediterranean Sea to the Red Sea.