39% of businesses face extreme supply chain bottlenecks during lockdown: ADB

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Source: Pixabay

Key insights:

  • A recent survey from ADB found 39.1% of Philippine enterprises faced severe bottlenecks in the product supply chain, negatively affecting more than half their production capacity.
  • Supply chain bottlenecks were mainly caused by slow customs clearance on imported goods, limited operations with local suppliers, and shortage of trucks/drivers.
  • More than half of enterprises reported no change in the cost of supplies after the ECQ began, regardless of firm size.
  • Traditional trade, accommodation and food services, and manufacturing accounted for more than half of enterprises reporting an increase in the cost of supplies.

The lockdown measures immediately affected the logistics of supplying goods and services. Accordingly, 39.1% or 971 of 2,481 of those surveyed businesses faced severe bottlenecks in the product supply chain, negatively affecting more than half their production capacity.

However, 26.7% reported only minor bottlenecks, affecting less than half their production capacity, while 34.2% did not experience any bottlenecks.

In the multiple answer section of the questionnaire where respondents can select up to three reasons, 1,109 firms (44.7% of total respondents) reported that slow customs clearance on goods and/or raw material imports caused the supply chain bottleneck, followed by contract termination or reduced operations with local suppliers or distributors (773 responses or 31.2% of total respondents) and the limited availability of trucks/drivers that delayed logistics (558 responses or 22.5%).

Cost of raw materials remain steady

There was no change in the cost of supplies and raw materials after the ECQ began for 52.6% of enterprises; 26.1% reported an increase in cost; while 21.3% reported a decrease.

By firm size, 53.0% of microenterprises reported no change in cost of supplies and raw materials, 24.6% reported an increase, while 22.4% reported a supply cost decrease. For small enterprises, 52.9% reported no change in the cost of supplies and raw materials, 26.8% reported a cost increase, while 20.3% reported a cost decrease.

For medium-sized enterprises, 51.5% reported no change in the cost of supplies and raw materials, 31.8% reported a cost increase, while 16.7% reported a cost decrease. For large enterprises, 51.1% reported no change in the cost of supplies and raw materials, 23.1% reported a cost increase, while 25.8% reported a cost decrease.

By sector, firms in wholesale and retail trade accounted for 26.2% of enterprises reporting an increase in the cost of supplies and raw materials after the ECQ began, followed by those in accommodation and food services (15.5%) and manufacturing (13.6%).

Meanwhile, firms in wholesale and retail trade also accounted for 20.8% of total enterprises reporting a cost decrease, followed by those in accommodation and food services (16.1%) and other services (12.9%). These mixed results of cost increases and decreases depended on the extent of bottlenecks within the supply chain.

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