The Philippine Ports Authority (PPA) is planning to spend P3.5 billion on port upgrades this year to mitigate the impact of external disruptions on the local industry, as global shipping suffers from the Red Sea conflict.
PPA general manager Jay Santiago said that the government is allocating P3.5 billion for infrastructure projects this year to improve facilities and services as trade and travel activities pick up.
The PPA expects cargo and passenger traffic to grow by as much as 7.5 percent this year, with cargo volume reaching an all-time high of 291 million metric tons (MMT) and passenger footprint nearing the pre-pandemic high of 83.72 million.
However, experts warn that achieving such targets may be challenging due to the impact of the Red Sea conflict on the global shipping industry. Rizal Commercial Banking Corp. chief economist Michael Ricafort highlighted the risks of higher shipping costs, delays, and disruptions due to the conflict in the Red Sea.
BMI, a unit of Fitch Solutions, believes that freight rates will remain high in the first quarter of the year due to the conflict’s influence on shipping routes between Asia and Europe.
Furthermore, the Philippine Economic Zone Authority estimates that if the Red Sea is closed off, freight costs will increase by 15 percent, and deliveries between Asia and Europe will be delayed by 10 days.
Despite the challenges, the government still plans to undertake a total of 79 projects aimed at improving ports across the Philippines, with the help of the private sector. The PPA also aims to develop cruise terminals in tourist hotspots to attract high-end vessels, as part of efforts to heighten shipping activities in the face of external risks.
