It has, understandably, been a very busy fortnight for us at SCMAP. As the medium-term effects of the conflict in the Middle East – and the resulting spike in oil prices globally – became clearer, we have been involved in several meetings with stakeholders in the public and private sectors exploring ways to relieve cost pressure, reduce logistics costs and continue to deliver products, particularly basic goods, to Filipinos.
We are keen to note that the Department of Trade and Industry has also taken the initiative on this front. Secretary Ma. Cristina Roque herself identified the impact of the conflict on logistics costs, and especially how it will lead to increase in the prices of final goods, at a congressional hearing. Last week we helped convene a meeting with manufacturers, retailers and logistics providers to explore one such approach to reduce costs: co-loading, where products from different manufacturers with a common destination are consolidated into one vehicle.
Apart from reducing costs, it also helps maximize transport assets and deliver higher service levels to retailers and consumers. But this takes coordination between all players in the supply chain, particularly in synchronizing delivery windows and networks.
The focus of the last few weeks has been, understandably, on the impact of oil price hikes on public transportation. As I write this, the government has gone as far to approve a provisional increase in fares, only for president Bongbong Marcos to halt it, choosing to focus instead on driver subsidies. That said, all the chatter has overshadowed what I feel is a potential crisis. Truckers are also bearing the brunt of the price increases, and while some have implemented higher fees to compensate, others may decide to stop driving altogether, for fear that the money they make will just go to fuel expenses.
This risks interrupting supply chains, especially those in the provinces where agricultural products come from. No matter how much the private sector works, if the chain is broken at some point, costs will inevitably rise – and these costs will be passed down to the consumer, especially for products that already have razor-thin margins, such as basic goods.
With that in mind, you can imagine the crisis – and yes, it’s a crisis, even if some government officials are keen to stress there isn’t one – extend beyond what is being covered on the evening news. Yes, we have a potential energy crisis in our hands, not just in prices, but potentially in supplies as well. It is possible that the country is not able to procure crude or finished petroleum products beyond April, which would literally see supply chains stop. No transportation. No deliveries. No products on shelves.
Yes, we have a potential food security crisis in our hands, too. When food is not delivered because of high costs or complete lack of fuel, this will send some Filipinos hungry and unable to feed their families. Considering our archipelagic nature and the complexity of our supply chains – and how, even at this point, some regions remain difficult to penetrate due to lack of infrastructure or vulnerability to natural disruptions – some areas may feel the impact more heavily than others.
Yes, we have a potential economic crisis in our hands, too. While we don’t rely as heavily on oil for our electricity supply, some areas are more exposed to this risk than others. If electricity supply reaches a point where rotating power outages become necessary to manage what is available – and remember, the dry season is near, which means supply will be razor-thin again – then industries may not be able to produce enough to satisfy demand.
And speaking of demand, higher costs would mean slower consumption, of course. Our economy has not been performing strongly in the last few quarters, and we expect similarly gloom numbers in the coming months.
I am reminded once again of a caveat presented by our colleague, Roni Balbieran, during his economic briefing at our Supply Chain Outlook event last month. The Philippines has a strong economy, but it needs strong leadership to harness it. The conflict in the Middle East is not of our making, but we are bearing vast consequences. What we need now is strong leadership at all corners of government. What we need now is a truly all-of-government approach, one that covers immediate needs of disenfranchised Filipinos while also keeping an eye on the broader economic picture. Fail at this, and I fear another crisis in our hands – a political one, especially now that tempers are flaring and disinformation is rampant. (Have you seen unfounded posts claiming the Philippines will have a “three-month long brownout”?)
Here’s a suggestion for a quick win: when the law providing emergency powers to suspend excise tax on petroleum is passed, exercise those powers quickly. The impact may not be big, but any help, any way to relieve the many pressures the economy faces now, will be much appreciated. And it would go a long way to erase any suggestions that we are sleepwalking towards a perfect storm.
2026 Supply Chain Immersion: Amidst the uncertainty unfolding across our supply chains, the show must go on. Registration for one of our flagship events, the annual Supply Chain Immersion, is now open. We are heading to Cagayan de Oro for an immersive look at how we can identify, manage and optimize costs across our supply chains, with the help of our supply chain leaders with real experience and expertise, as well as site tours of key locations in and around the city. Learn more and sign up at scmap.org/events/immersion.
Henrik Batallones is the marketing and communications director of SCMAP, and editor-in-chief of its official publication, Supply Chain Philippines. More information about SCMAP is available at scmap.org.
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