WONDERING which sector suffered the most in 2019? It’s the export sector.
The global trade uncertainties marred by trade and geopolitical tensions, are affecting economies this year, including Cebu.
Exports in Cebu contracted in 2019 as demand from its traditional markets slowed down.
“To depend so much on our traditional trade partners which represent about 35 percent of our exports combined like the United States (US), China, Japan, European Union and Hong Kong is just too risky in the near term,” said Fred Escalona, executive director at the Philippine Exporters Confederation Inc. (Philexport) in Cebu. “These countries have either disputes in trade or have violations in human rights and geopolitics.”
Escalona estimated that seafreight exports moved by the Cebu International Port (CIP), the city’s biggest port, would likely see a 18 to 20 percent contraction this year.
Global tensions
In the first nine months of 2019, Cebu’s shipments to its key export buyers plunged 17.4 percent to US$157 million from $190 million in the same period last year.
The exports slump has significantly been influenced by the US-China trade dispute, the Hong Kong unrest, Brexit and the Japan-Korea trade war.
“Although most experts predict a flat global growth in 2020, I still remain optimistic that we could achieve a slight growth next year,” the export official told SunStar Cebu.
That could only be possible, Escalona said, if Cebu enters new markets that could boost growth such as India, Eastern Europe, South America and Africa.
Cebu exporters might continue to see a flat or dismal growth through next year.
“But as I said, we should see development in new markets to address our weaknesses through this opportunity,” the Philexport official said.
The country’s exporters stand to benefit from the Philippines’ membership in the Regional Comprehensive Economic Partnership (RCEP).
“Provided that India will not opt out of RCEP, the Philippines could benefit from being a member of this huge trade bloc. Aside from its traditional trade partners like the US, China, Japan and Hong Kong, the Philippines must penetrate or increase market share in other markets of the world,” Escalona explained.
RCEP is a proposed free trade agreement in the Asia-Pacific region between the 10 member states of the Association of Southeast Asian Nations (Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam) and their five free trade agreement partners (Australia, China, Japan, New Zealand and South Korea).
If the trade woes between the US and China, the world’s biggest economies, aren’t resolved, the gloomy outlook on trade activity may extend to 2020.
“I will stick by my prediction that 2020 will not be any different from 2019, although there are factors that may change global trade such as the coming US elections, resolution to the Hong Kong situation, and the final establishment of the RCEP, which is the world’s biggest trade bloc,” he said.
Export weighing down Central Visayas’ growth
Efren Carreon, regional director at the National Economic and Development Authority in Central Visayas, said the export sector’s continued sluggish growth was weighing down the region’s economic growth.
He said the industry needs more “attention” to get back on its growth track.
Data from the Cebu Port Authority (CPA) showed that ports in Cebu handled 44.120 million metric tons (MT) of cargoes in the first nine months of 2019, up 34.4 percent from the 32.819 million MT recorded in the same period last year.
Of the total, domestic cargoes accounted for 76 percent or 33.329 million MT, while foreign cargoes contributed 24 percent or 10.792 million MT.
Of the total foreign volume handled in the first three quarters of 2019, imports had an 86 percent share while exports accounted for only 14 percent.
The figures indicate that Cebu has been in a trade deficit this year as it was importing more than exporting.
In terms of containers, volume at Cebu ports also recorded an improvement, rising eight percent to 756,356 twenty-foot equivalent units (TEUs) in the first nine months of 2019 from 699,848 TEUs in the same period in 2018.
Domestic containers contributed 56 percent to the total with 421,583.75 TEUs, down 0.3 percent from the 422,710 TEUs posted last year.
On the other hand, foreign containers increased 20.8 percent to 334,772.25 TEUs from 277,138 TEUs.
Top buyers in 2019
For 2019, the US, Japan and China remained Cebu’s top export buyers.
As of September 2019, the US, the world’s biggest economy, remained the top destination for Cebu’s export goods, receiving $64.65 million worth of goods in the first nine.
Japan came in as Cebu’s second biggest export market, with shipments reaching $16.02 million. China, the world’s second biggest economy, was Cebu’s third top market, buying $6.25 million worth of exports as of September.
Cebu’s export goods were also shipped to other traditional markets such as Hong Kong (4th), Korea (5th), Canada (6th), Denmark (7th), Germany (8th), Indonesia (9th) and France (10th).
As of the first half of 2019, Cebu’s top export products in terms of value were furniture, dried mango, steel scrap, handicrafts, assorted noodles, frozen seafood and carrageenan, among others.
In terms of volume, top export goods from Cebu included steel scrap, furniture, dried raw seaweed and fresh bananas, among others.
In 2018, the Cebu exports sector also contracted by 13.81 percent to $246.62 million from $286.12 million in 2017.
CIP’s annual capacity has increased to 900,000 TEUs with the inauguration of its new P1 billion finger pier in October this year.
The new finger pier, a project of CIP cargo-handling operator Oriental Port and Allied Services Corp. in cooperation with CPA, allows the terminal to handle more cargo traffic and helps decongest the Cebu hub.
Aside from expanding the capacity of the main port, a new international port will also soon rise in Cebu’s northern municipality of Consolacion.