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WEDNESDAY, September 28, 2022
Filipinos feel pinch of inflation as logistics crisis bites

Filipinos feel pinch of inflation as logistics crisis bites

TUESDAY, June 14, 2022

Logistics constraints disrupting supply chains in the Philippines are expected to be a burden until next year, driving up the price of food and basic commodities even further.

Supply Chain Management Association of the Philippines (SCMAP) president Pierre Carlo Curay explained that Russia’s war on Ukraine coupled with pandemic restrictions have resulted in logistics bottlenecks that have raised costs for goods transport and for raw materials to be processed into finished goods.

Among restaurant brands complaining of supply-chain trouble are McDonald’s Philippines, Mang Inasal and Mary Grace Cafe.

“Outside of the immediate disruption in transport lanes on sea and air, the continuing rise in fuel prices caused by the war has added to the strain logistics providers are already experiencing due to lockdowns,” Curay said. Oil prices have breached $120 per barrel.

Rising energy costs would also drive up operations costs in warehouses and other logistics facilities, he said.

“The impact of these rising costs will be seen when major shippers begin renegotiating their rates with their logistics partners,” he added.

The SCMAP chief also flagged up supply-chain disruption from backlogs in shipments during the pandemic.

The Philippines began suffering shipping delays at the end of 2020 when production regained momentum as demand slowly recovered after Covid-19 lockdowns.

However, a container imbalance amid the uneven pace of reopening borders meant finished goods and raw materials could not be shipped in sufficient quantity.

“The disruptions will continue up until next year at the earliest,” Curay said.

“Apart from the disruptions caused by pandemic-related lockdowns, ongoing geopolitical disruption … continues to have an effect on our prices, which means higher prices in the foreseeable future,” he added.

The Philippine Statistics Authority reports that May inflation accelerated to 5.4 per cent from 4.1 per cent the previous month due to higher food and transport costs.

Curay lamented that logistics firms can only do “little” in the short term to address the supply chain constraints, such as talking to clients about the current dire situation.

“We have to set expectations, and continue collaboration to ensure we can continue to provide satisfactory service to our customers,” he said.

The SCMAP chief suggested further investments in technologies to mitigate disruptions and improve cost and operational efficiency in the long run.

According to Allianz Risk Barometer 2022, supply chain disruption is among the top global risks businesses are watching out for this year.

“Companies have had to close or scale-back production where they have been unable to secure critical components, or forgo sales as the result of capacity issues, such as constraints on container shipping or labour shortages,” it explained.

Philippine Daily Inquirer

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Filipinos feel pinch of inflation as logistics crisis bites