Domestic shipping industry feels pinch

With the fast approaching holiday season, domestic shipping companies are starting to feel the pinch as the industry missed its November peak.

Domestic shipowners revealed yesterday that for the first time in decades, the passenger and cargo traffic did not peak during the traditional All Saints’ Day exodus, making shipping companies edgy over prospects in the coming months.

Traditionally, a high traffic period, the Domestic Shipowners Association (DSA), said that passenger and cargo volume have not moved since the semestral break in October and well past the Nov. 1 holiday.

DSA president Josephine Marie Uranza told The STAR that historically, passenger and cargo volumes increase dramatically during the semestral break, slowing down a little for a couple of weeks and then picking up again towards Nov. 1 when Filipinos traditionally go to their provinces to celebrate All Saints’ Day.

By October also, Uranza said, cargo volumes usually start picking up as the Christmas approaches and businesses stock up on commodities for the coming holidays.

"For the first time, domestic shipping companies did not see any movement in either passenger and cargo volume in October and November," Uranza said. "This is highly unusual."

According to Uranza, domestic shipping companies normally record between 40 and 50 percent capacity utilization during the lean months. Volumes then go up to as high as 80 to 90 percent of total capacity during the peak months.

"If the volumes didn’t move as they normally do in October and November, this means that ships are being utilized at their lean-month rate of 40 to 50 percent of total capacity," she said. "If this holds up, we have a big problem."

Travel has been severely restricted since the Sept. 11 terrorist attacks on the US, but Uranza said this had little to do with the dramatic reduction in domestic passenger and cargo volumes.

"I think people are not traveling simply because they have no money," she said. "People who would otherwise spend to travel might be saving against the possibility that times could get worse."

Airline companies have dropped their domestic fare rates, but Uranza said this could not have a significant enough impact on domestic passenger traffic since the segment that would travel by sea would still not be able to afford traveling by air, despite the reduction in airfares.

"These two market segments do not overlap," she said. "We could only hope that those who didn’t travel by sea opted to travel by air. This means they could afford to. But this is highly unlikely."

Domestic shipping companies move about 22 million passenger a year and roughly 1.5 million tons of containerized cargo. Since the economic slowdown, however, the industry has been struggling against the steady contraction of the market, aggravated by policy issues that make domestic companies uncompetitive.