TRADE disruptions due to the closure of the Red Sea may cause a 10-day delay in the exchange of goods between Europe and the Philippines, along with a 15-percent hike in shipping costs, according to the Philippine Economic Zone Authority (PEZA).
PEZA director general Tereso Panga said the shutdown of the vital trade route will not only impact on Philippine-Europe commerce, but will also have lingering effects on global trade.
“The effect of which will be higher inflation in different parts of the world,” Panga said.
He added that PEZA is currently collaborating with affected registered business enterprises (RBEs) that are sourcing and exporting to and from the EU and the Mediterranean to minimize the possible effects of the Red Sea crisis.
“We have yet to feel the effects in the Philippines but are pro-actively 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,” Panga said.
This early, PEZA is identifying measures that will address the concerns of RBEs and set up contingencies in advance of any major conflict.
Panga has deployed a team to survey how many European and Philippine firms are affected by the crisis and to determine how PEZA can assist these companies.
Already, major companies have started rerouting delivery vessels as the world feels the ripple effects of Red Sea diversion that may also lead to a shortage of cargo containers.
The Red Sea is the traditional sea trade route used by European and Asian companies for import and export of goods.