The Philippine Economic Zone Authority (PEZA) is looking for an alternate route to bring out shipments bound for Europe amid the Red Sea crisis.
PEZA director-general general Tereso Panga said the Philippines might collaborate with China to use a Xiamen-based railroad system that could ferry the shipments to Europe.
“This is very timely because we have an upcoming investments roadshow in Xiamen, and this will be a perfect opportunity for us to look into this,” Panga said.
The railroad system is the same network used by China to export to Russia, he said. The route could be cheaper for some European companies.
PEZA said the current alternative route exporters were using to ship goods to Europe were costing them a 10-day delay in terms of shipments and additional costs. The detour to Cape of Good Hope consumes at least seven more shipment days to about a month for some shipments, he said.
A survey showed that of more than 400 European companies registered with PEZA, 84 openly admitted about the impact of the crisis to their operations.
A 15-percent increase in shipping fees are likely to hound exporters, Peza said, as the Red Sea route remains impassable.
Panga said the situation might trigger elevated inflation globally or in areas where logistics is hampered due to the political friction in Yemen.
The European Chamber of Commerce of the Philippines (ECCP), however, downplayed the crisis as most of their members have operations elsewhere in the region.
“It’s not necessarily a big impact, because many European companies that have established operations in South Asia also have local production in the region,” said ECCP president Paolo Duarte.
He said while the Red Sea crisis would not be critical factor in the operation European companies in the Philippines, “that is something we need to observe as this develops.”