At Friedrich-Ebert-Stiftung briefing, experts chart supply chain resilience amid South China Sea disputes
30 Sep 20255 min read
Summary
- The South China Sea remains a critical artery for global commerce, carrying nearly a quarter of maritime trade valued at $5.3 trillion annually. With rising tensions driving up shipping and freight costs across key routes, policymakers and industry experts at the recent Makati dialogue underscored the urgency of reinforcing humanitarian, environmental, and supply chain safeguards.
- The Track 1.5 Workshop on ASEAN Economic Security highlighted persistent gaps in enforcement and coordination, calling for stronger private-sector leadership and regional mechanisms. Three priorities emerged: advancing human capital in the maritime sector, establishing a regional protocol for energy and supply chain resilience, and building collective maritime security frameworks.
- Participants urged ASEAN to expand its geoeconomic agenda to include labor protections, small business resilience, and environmental safeguards while addressing vulnerabilities in energy supply routes. As the Philippines prepares to chair ASEAN in 2026, the push for a binding Code of Conduct in the South China Sea is viewed as vital to securing trade stability and strengthening economic resilience across the region.
Philippines – September 29, 2025 | At a recent policy briefing in Makati organized by the Friedrich-Ebert-Stiftung Philippines in partnership with the Foundation for the National Interest, Value Chain Asia joined scholars and policymakers in discussing the urgent need for stronger humanitarian and environmental safeguards in the South China Sea.
This dialogue also builds on earlier sessions where experts noted the equally critical challenge of securing supply chains, protecting submarine cables, and balancing resource extraction with long-term sustainability.
This dialogue also builds on earlier sessions where experts noted the equally critical challenge of securing supply chains, protecting submarine cables, and balancing resource extraction with long-term sustainability.
Supply Chain Lens on the South China Sea
When 24% of global maritime trade passes through the region, the question of safeguarding supply chains becomes imperative as tensions heighten. According to U.S. Energy Information Administration, in 2024 alone, 45% of crude oil, 42% of propane, 31% of electronics, and 26% of automotive goods passed through the South China Sea. This is an estimated $5.3 trillion worth of commercial goods that transit in the region annually.
Tensions in the South China Sea have already affected supply chains since 2022. For example, data from the Baltic Exchange noted an increase of shipping costs by 28.5% during the Scarborough Shoal tensions in 2022 and 25.6% during the Ayungin Shoal confrontation in 2024.
Moreover, according to the Atlas Institute of International Affairs, from January to July 2024, freight rates on Asian routes doubled. For instance, the Shanghai-South America route was noted to reach $9,026 per twenty-foot equivalent unit, the highest since 2022.
Tensions in the South China Sea have already affected supply chains since 2022. For example, data from the Baltic Exchange noted an increase of shipping costs by 28.5% during the Scarborough Shoal tensions in 2022 and 25.6% during the Ayungin Shoal confrontation in 2024.
Moreover, according to the Atlas Institute of International Affairs, from January to July 2024, freight rates on Asian routes doubled. For instance, the Shanghai-South America route was noted to reach $9,026 per twenty-foot equivalent unit, the highest since 2022.
What’s next?
According to the results of the Track 1.5 Workshop on ASEAN (Association of Southeast Asian Nations) Economic Security in the South China Sea,”weak enforcement, skeletal frameworks, and uneven implementation continue to undermine resilience” in the region.
While existing frameworks such as the ASEAN Economic Community and Regional Comprehensive Economic Partnership are set forth, the same weaknesses were pointed out. Thus, the need for better private-sector leadership, marine domain awareness, and cooperative models was paramount.
Three priorities were set out in the dialogue: strengthening human capital and standards in the maritime sector, developing a regional protocol for energy and supply chain resilience, and collective mechanisms for maritime supply chain security.
While existing frameworks such as the ASEAN Economic Community and Regional Comprehensive Economic Partnership are set forth, the same weaknesses were pointed out. Thus, the need for better private-sector leadership, marine domain awareness, and cooperative models was paramount.
Three priorities were set out in the dialogue: strengthening human capital and standards in the maritime sector, developing a regional protocol for energy and supply chain resilience, and collective mechanisms for maritime supply chain security.
Expanding human capital
Participants from the security, academic, and environmental field emphasized more people-centered approaches towards the South China Sea, not just in the security aspect but also in supply chains. There was a specific focus as well on marginalized fishing communities who are directly affected by the disputes.
A recommendation to the Track 1.5 Workshop cited “expanding the ASEAN Geoeconomic Task Force (AGTF) to include more people-centered dimensions such as labor protections, small business resilience, equitable access to digital infrastructure, environmental and climate safe guards, and participatory governments.”
It was noted that this would help expand geoeconomic resilience’s scope from simple state capacity or trade flows, to direct and relevant stakeholders such as fishing communities and their livelihoods and rights. “This includes harmonized training, mutual recognition arrangements, and protections for seafarers to ensure a skilled, resilient workforce.”
A recommendation to the Track 1.5 Workshop cited “expanding the ASEAN Geoeconomic Task Force (AGTF) to include more people-centered dimensions such as labor protections, small business resilience, equitable access to digital infrastructure, environmental and climate safe guards, and participatory governments.”
It was noted that this would help expand geoeconomic resilience’s scope from simple state capacity or trade flows, to direct and relevant stakeholders such as fishing communities and their livelihoods and rights. “This includes harmonized training, mutual recognition arrangements, and protections for seafarers to ensure a skilled, resilient workforce.”
Energy and supply chain resilience
One of the key concerns raised during the workshop was the vulnerability of regional supply chains to chokepoints and the concentration of power in single actors. Participants warned that a blockade or disruption in the South China Sea could trigger severe oil shortages and energy crises across ASEAN, underscoring the urgency of preventive measures.
To address these risks, experts recommended two major pathways: first, the diversification of supply chain routes to reduce dependence on contested maritime corridors; and second, greater investments in alternative and renewable energy sources to ease reliance on fossil fuels vulnerable to geopolitical shocks.
The discussion also highlighted the need to prepare for incidents involving liquefied natural gas and oil. The workshop emphasized that security and emergency response capabilities remain uneven across the region, leaving gaps in ASEAN’s collective preparedness. They called for a coordinated mechanism to strengthen maritime supply chain security.
This proposed framework would combine intelligence sharing, joint surveillance initiatives, coordinated disaster response, and contingency planning for oil-related incidents. Such measures, participants argued, are essential not only to safeguard the flow of energy but also to maintain economic stability in the face of rising geopolitical tensions.
To address these risks, experts recommended two major pathways: first, the diversification of supply chain routes to reduce dependence on contested maritime corridors; and second, greater investments in alternative and renewable energy sources to ease reliance on fossil fuels vulnerable to geopolitical shocks.
The discussion also highlighted the need to prepare for incidents involving liquefied natural gas and oil. The workshop emphasized that security and emergency response capabilities remain uneven across the region, leaving gaps in ASEAN’s collective preparedness. They called for a coordinated mechanism to strengthen maritime supply chain security.
This proposed framework would combine intelligence sharing, joint surveillance initiatives, coordinated disaster response, and contingency planning for oil-related incidents. Such measures, participants argued, are essential not only to safeguard the flow of energy but also to maintain economic stability in the face of rising geopolitical tensions.
Towards 2026
As the Philippines is set to become the ASEAN chair in 2026, the issue of the South China Sea dispute is expected to be at the forefront of the country’s chairmanship agenda, specifically the contested legally binding Code of Conduct (COC) in the South China Sea.
The COC is expected to reach consensus by 2026, as agreed upon in 2023 by the foreign ministers of ASEAN and China in the Guidelines on Accelerating the Early Conclusion of the Code of Conduct.
While 4 ASEAN members have competing claims: Brunei, Vietnam, Malaysia, and the Philippines (including China), Philippine president Marcos confirmed that Manila would try for the binding COC, stressing the urgency of a legally binding agreement to maintain stability in the region.
The South China Sea is not just a geopolitical flashpoint, it’s a stress test for global supply chains. Every flare-up threatens energy flows, trade routes, and livelihoods across Asia. By talking about this vulnerability, it shows how resilience planning is needed for businesses navigating today’s volatile landscape.
The COC is expected to reach consensus by 2026, as agreed upon in 2023 by the foreign ministers of ASEAN and China in the Guidelines on Accelerating the Early Conclusion of the Code of Conduct.
While 4 ASEAN members have competing claims: Brunei, Vietnam, Malaysia, and the Philippines (including China), Philippine president Marcos confirmed that Manila would try for the binding COC, stressing the urgency of a legally binding agreement to maintain stability in the region.
The South China Sea is not just a geopolitical flashpoint, it’s a stress test for global supply chains. Every flare-up threatens energy flows, trade routes, and livelihoods across Asia. By talking about this vulnerability, it shows how resilience planning is needed for businesses navigating today’s volatile landscape.