Domestic shipping to pick up slack as tariffs dampen international trade

DOMESTIC TRADE is expected to drive the growth of the shipping industry in the face of the US tariffs that are disrupting international trade, according to Royal Cargo.

“I think domestic shipping will increase and improve. The Philippines is one of the growth areas here in Southeast Asia, so I think it will improve,” Michael Kurt Raeuber, chairman and group chief executive officer of Royal Cargo, told reporters on Tuesday.

However, he said that the Philippines still imports more than it exports.

“We can only hope that exports will improve. And that is why it is very important to have the EU-Philippines Free Trade Agreement and the EU Generalized Scheme of Preferences Plus (GSP+),” he added.

The EU and the Philippines are currently negotiating an FTA. The Philippines currently benefits from the EU GSP+, which removes duties on 6,274 Philippine products.

Mr. Raeuber said that e-commerce could also be a driver of growth for the shipping industry.

“Anything that is increasing the volume of transactions is welcome and, of course, will drive growth,” he added.

In 2024, the Philippine digital economy’s gross merchandise value grew 20% to $31 billion, according to a report by Google, Temasek, and Bain & Co.

Of the total, e-commerce accounted for $21 billion, up 23%.

However, he said that the tariffs announced by US President Donald J. Trump has caused shipping volumes to slump “about 50-60%.”

“On the other hand, I personally believe that trade with China, for one reason or another, will be going up,” he added.

The US imposed reciprocal tariffs on its trading partners to address trade imbalances. The Philippines was assigned a 17% tariff, the second-lowest rate in Southeast Asia.

These have been suspended for 90 days, during which the US will charge most countries a 10% baseline rate, with China’s tariff being bumped up to 145% before a recent breakthrough in negotiations, with both sides agreeing to a 90-day freeze on the  tariffs, with Chinese goods to be charged 30% in the interim, while US goods paid 10%. — Justine Irish D. Tabile