Consumers buy in bulk, depleting supermarket supplies

Metro Manila residents are buying goods in bulk, depleting inventories of supermarkets, hours before a typhoon is expected to make landfall.

Consumers have made a mad scramble for items such as sardines, biscuits, instant noodles, candles, batteries, and flashlights, the president of a Philippine supermarket association told GMANews.TV.

“People are alarmed and they are buying more than what they need,” Steven T. Cua, president of the Philippine Amalgamated Supermarkets Association Inc., (Pagasa), said. The industry group is composed of supermarkets that serve the low to upper-middle market.

“Selling areas are crowded and queues are very long,” he said on Friday evening as television news programs aired reports of empty grocery shelves.

Demand for instant food items have surged since these can be prepared and consumed easily, Cua said.

These food items can also be transported with minimal difficulty should consumers be forced to relocate and/or leave their homes in case of floods, he added.

For the past few days, appetite for instant food items was driven by bulk-buying for relief operations for victims of the storm Ondoy.

But on Friday night, consumers stocked up on their supplies, alarmed that a new storm may unleash effects similar to those wrought by ‘Ondoy’ just a week earlier.

In the meantime, demand for candles, batteries, and flashlights was spurred by rumors that the Manila Electric Co. (Meralco) will be cutting off power in its areas upon the arrival of typhoon “Pepeng.”

Meralco, Metro Manila’s lone electricity distributor, has denied the report.

To ensure that inventories are well-stocked, supermarkets have switched brands, especially if quality, price, and sometimes even the manufacturer are the same, Cua said.

He also acknowledged that inventories have been reduced as some deliveries were delayed by floods that were caused by record amounts of rainfall a week ago.

But buffer stocks of basic goods remain stable, Cua said.

This view is shared by Corazon C. Curay, logistics director at the Makati-based XVC Logistics Inc. Curay is also the president of the Supply Chain Management Association of the Philippines (SCMAP), an industry group that represents firms that store and deliver goods made by manufacturing giants such as San Miguel, Nestle, and Johnson & Johnson.

Damage to inventories has been minimal, Curay told GMANews.TV in an earlier phone interview held four days after Ondoy submerged the Philippine capital.

“Manufacturers just have to catch up on production,” she said, adding that some companies may be forced to sell their products in larger or smaller sizes, depending on their stocks.

Although Curay expects an increase in bulk prices of raw materials, companies will refrain from passing on the hike to its customers since it may translate to lower market share.

She also downplayed apprehensions that delayed deliveries and increased demand will boost basic goods’ prices.

Cua agreed.

Despite reports of increased bulk-buying – which raises the possibility of higher goods prices – neighborhood groceries have yet to buy double of what they usually purchase, Cua said. This indicates that they do not expect higher prices in the short term, Cua explained.

“If they wanted to take advantage of higher prices in the future, smaller stores would have bought more,” Cua said.

“People are just reacting too quickly to news of the storm,” he said. “Consumers should just buy supplies good enough for one and a half days, instead of three.”

A heavy toll on the Batangas Port

Editorial cartoon

LIKE all government infrastructure projects, the Port of Batangas was built and conceived with the best of intentions.

A facility located within an economic growth corridor outside Metro Manila, the Batangas Port is expected to boost local and global trade, unlocking huge possibilities to support the country’s continued economic expansion.

Once in full swing, the port would also help lift the Philippine shipping industry out of its rut.

Since nearly 90 percent of all goods around the world are transported by sea—including the ones entering and leaving domestic shores—the port is envisioned to form part of a seamless logistical system, allowing companies to ship their products to and from any point in the country and the world at the least possible cost.

But as with any well-planned, well-funded, and well-intentioned government project, the Batangas Port has its own share of hitches and obstacles.

Bankrolled by a low-interest, long-term Japanese loan, the facility has very little to show for except its excellent potential, which has been sadly left unrealized.

Owing to low shipment volumes, the private cargo-handler tasked to run the port’s domestic terminal has yet to turn in a healthy profit from its operations. This, ten years after the company secured a concession to manage the facility’s domestic shipments.

Fewer cargoes, in turn, were brought about by the lack of necessary road infrastructure within the area.

Not only has this discouraged companies from using the port, the absence of road networks linking the facility to main highways have increased transport costs, forcing shipping and trucking operators to endure inefficiencies in the country’s capital.

Thankfully, with the recent completion of various highway projects in Luzon—including a flyover connecting the Batangas Port diversion road to the port proper—logistics companies may yet give the facility another chance to prove its capabilities.

But that may come later rather than sooner.

As soon as the government announced that a flyover and an access road to the port was nearly complete, the Japanese Bank for International Cooperation requested the Philippine Ports Authority (PPA) to levy toll fees on all vehicles using the very same highway project. The request was made because the Japanese bank may already be eager to collect on a P336 million loan which was used for the road network’s construction.

However, once the proposed fee secures approval, it will only give companies another reason to avoid Batangas altogether.

Since it is already more expensive for shippers and truckers to use the port, collecting toll fees on the said highway would threaten Batangas Port’s ambitions to become an alternative to Manila’s harbors.

As it stands, commercial entities in both the transport and logistics sectors are already reeling from the effects of record oil prices, forcing many operators to seek a rate hike. A local association of trucking companies has even compared their operations to a “dead horse,” indicating that rates they currently charge for moving cargo may not even allow them to break even.

Imposing the toll fee—simply on the recommendation of a Japanese agency, however altruistic—would surely make the port fall off the logistical radar screens of these trucking operators.

Although the PPA has announced it will review the Japanese bank’s request, the undertaking, however important, is not enough.

While it is always prudent to scrutinize any proposal—especially if it involves any fees—port officials should nevertheless draft a counter-proposal calling for the fee’s deferral without compromising the government’s obligation to settle loans for the road project.

After all, at stake is a terminal which, if saddled with toll charges, may further suffer from inactivity, diminishing whatever remains of its advantages, both real and imagined.

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Published in BusinessMirror’s January 17, 2007 issue. Editorial cartoon by Jimbo Albano.