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Shipping industry struggles to reach pre-pandemic cargo volume

Shipping industry struggles to reach pre-pandemic cargo volume
Arjay L. Balinbin April 12, 2022

THE FUEL CRISIS is making it more difficult for the domestic shipping industry to reach pre-pandemic cargo volumes this year, the Philippine Liner Shipping Association (PLSA) said.

“It’s still up and down. It’s still below 2019. The 2021 numbers did not meet the 2019 numbers. It’s very tough,” PLSA President Mark Matthew F. Parco told BusinessWorld in a recent phone interview.

Data from Philippine Ports Authority (PPA) showed that domestic cargo throughput in 2021 reached 96.86 million metric tons (MT), down by 7.2% from 104.43 million MT in 2019 before the coronavirus pandemic crisis.

Last year’s domestic cargo volume, however, was 3.5% higher than the 93.59 million MT recorded in 2020.

“We were [initially] hopeful that 2022 would get us there (pre-pandemic level),” Mr. Parco said.

“But with the spike in fuel prices and the overhang of the Ukraine war, it’s going to be a problem because if the fuel prices spike up more, people will have less money to spend, and then we still have to pay our fuel bills. So that is the problem,” he added.

Since the start of the year, local prices of gasoline, diesel, and kerosene posted a net increase of P16, P26, and P24.10 per liter, respectively. Oil firms are set to implement a price rollback on Tuesday.

Some shipping companies in the country have started increasing their freight fees due to the continued rise in oil prices.

The average increase in freight fees is 25%, according to Mr. Parco. Domestic ship operators are authorized to set their own shipping rates under Republic Act No. 9295.

For his part, Chelsea Logistics and Infrastructure Holdings Corp. President and Chief Executive Officer Chryss Alfonsus V. Damuy said cargo “volume should be better this year.”

“The challenge now is the cost to operate, not limited to fuel. For the passenger [business], it may take a while still,” he said in a phone message to BusinessWorld.

In a statement last week, Chelsea Logistics said its freight business “continued to recover with a 30% year-on-year increase in revenues to P2.727 billion — already surpassing the P2.688 billion in revenues in 2019 prior to the COVID-19 pandemic and the first lockdown in March 2020.”

“We are hopeful of a further recovery this year while we need to carefully monitor world oil prices as they will certainly have a negative impact on our margins,” Mr. Damuy said.

In a phone interview, Philippine Exporters Confederation, Inc. President Sergio R. Ortiz-Luis, Jr. said the volumes will go up, “but definitely slower than what we hope for.”

According to data from the PPA, export cargo volume reached 70.54 million MT last year, up by 17.1% from 60.25 million MT in 2020 and 14.3% higher than the 61.69 million MT in 2019.

However, Mr. Ortiz-Luis said that delays, shipping costs, and shortage in vessel space are “worsening” due to pandemic-induced disruptions and the ongoing Russia-Ukraine war.