Price Risk Turning Into Supply Risk

CEBU, Philippines — DTI-7 warned that prolonged volatility could transform what initially appears to be a pricing issue into a broader supply problem. Disruptions in shipping routes and higher freight costs could lengthen delivery times and reduce the availability of raw materials — particularly those sourced overseas.

“If raw material inputs decline, exports will eventually suffer,” Sederiosa said. “This could affect production and employment, ultimately impacting the entire economy.”

Survey results gathered between March 12 and March 19 showed logistics companies reporting severe operational strain.

About 45 percent said they were “severely affected,” citing reduced trips and rising fuel costs as primary concerns. Another 30 percent described the impact as moderate.

Companies called for targeted fuel subsidies, stabilization measures, and improved interagency coordination to manage supply chain risks. They also urged the government to streamline customs and port operations, expand road infrastructure and ensure transparent fuel pricing mechanisms.

MSMEs Flag Currency, Energy Pressures

MSMEs, meanwhile, reported mounting expenses linked to higher freight charges, rising raw material costs and peso depreciation. Most respondents said they were moderately affected but warned that conditions could worsen if geopolitical tensions persist.

Support measures sought by smaller firms include financial relief programs, price monitoring, market diversification initiatives and employment assistance.

Government Response and Constraints

Sederiosa acknowledged that policy responses such as excise tax adjustments or subsidies involve trade-offs. Reduced tax collections could limit funding for public programs, especially as national economic growth has fallen short of targets.

She emphasized the need for shared responsibility between the public and private sectors in managing the crisis.

“Government action alone will not be enough,” she said. “We need collaborative solutions.”

Structural Risks to Food Security

The DTI also highlighted longer-term vulnerabilities in Central Visayas’ economic structure. The region’s gross regional domestic product is dominated by services at about 70 percent, while agriculture accounts for only around 5 percent.

With Cebu Island’s population exceeding five million, the region relies heavily on food imports from other areas. In times of global disruption, this imbalance could expose the local economy to food security risks.

To address this, DTI is working with local governments to identify investment opportunities in agriculture, alternative raw material sourcing and supply diversification.

“We are trying to prepare before the situation worsens,” Sederiosa said. “Lessons from the pandemic show the importance of strengthening resilience in logistics, production and food supply.”