Something needs to be done fast!

It’s about time that the national government takes notice of the serious condition of two of our ports in Manila.  The Manila International Container Port (MICP) and the Port of Manila have been congested far too long that the country is fast disappearing from the radar of international shipping lines as a destination.  The lack of berthing space has also cost many sectors to lose money due to missed deadlines for the country’s exporters or added berthing or harbor fees.

Senators Francis Escudero and Bam Aquino have jointly filed a bill for a probe into this worsening situation, and the timely intervention could save the country from a costly economic backlash. While many concede, this writer included, that the daytime truck ban has indeed eased the traffic jams in Manila and the city officials recognize the potential income lost due to persistent daily traffic gridlocks, it is time for both the city government and the national government to thresh out the issue to consider the bigger picture.

The Association of International Shipping Lines (AISL) are at their wits’ end in trying to cope with the daily situation at the ports.  This organization counts 41 international carriers that do business in the Philippines.  It has been around for 50 years and it is only now that they have come to a crisis such as this. According to AISL president Patrick G. Ronan, prior to the truck ban, they had a maximum utilization of the ports of up to 70 percent.  With the ensuing daytime truck ban, movement of cargo outside of the terminals has been so restricted and this has resulted in choke points inside and outside of the terminals because of the limited number of trucks that are pulling the containers out. The delay has moved back schedules by several weeks because of the difficulty, not only in moving cargo into Manila but also of positioning the empty containers out of the terminal as well.  The Philippines is largely an importing country such that for every four containers coming into the Philippines, only one container is loaded for export.

And speaking of exports, the Foreign Buyers Association of the Philippines (FOBAP), an association that has been around for 37 years with 50 active members, is likewise facing the current crisis at the ports because they have to import most of their raw materials and move out finished products from the Philippines as well. The delays coming in and going out have caused them untold penalties and surcharges and is hurting our credibility as a reliable global partner as well. FOBAP president Robert Young has placed their losses thus far at between $2 to $3-million in delays or cancellation. They are actually missing as much as 50 percent of their commitments, that’s why the Cebu exporters have reported losing as much as $15,000 for every delay in shipments. With the neck-to-neck competition here, can their margins afford this?  To cope with the deadlines, many of them have resorted to shipping their finished products by air, thus compounding their costs, and with close consultations with their members, Mr. Young learned that about 50 percent of their members have resorted to this. Better to shoulder the added costs for now than lose their foreign buyers with whom they have developed a partnership for years now and hope that this situation is just temporary. So the first quarter of 2014 (as against the first Q of 2013) has been dismal for this sector, their profits eaten up by untenable airfreight costs.  Even the Philippine Economic Zone (PEZA), we heard, has been affected negatively such that production has had to slow down in the economic processing zone.       

The Manila ports regularly expect about 18 arrivals. I understand that the South Harbor has five berths available, while ICTSI has six. Congestion at the ports result in idle ships waiting to berth, so this translates to added costs to the shipping lines which need a fast turn around and have no time to spare to wait around at the periphery waiting to dock. The added costs include more fuel, manpower, berthing and harbor fees. Consider that for a 20-foot container, the equivalent units equal $10,000/day.  If this takes an additional four to seven days before actual berthing, which is now the standard at the Manila ports, this means an additional $40,000 - $70,000/week of waiting outside the terminals, according to Mr. Ronan.

They say that every crisis in a given sector gives rise to an opportunity for another. Well, from all indications the truckers seem to be benefitting from the current crisis, but on closer look that is not really the case.  Trucking cost has risen 400 percent to 500 percent these days, but then these trucks used to ply the roads about twice a day.  Given the current situation, they are only able to make one trip every three days because of the longer turn around, so one can see why they have had to raise their fees to unreasonable levels. The trucking costs have increased because the ports of Manila are just so full, and the depots for empty containers are full as well, and the soaring trucking rates have added to the woes of all businesses using the Manila ports. Of course, the Batangas and Subic ports can still accommodate all these liners docking in, but the Batangas port is 145 km away and the Subic Port is about 100 km away, so trucking costs are also enormous.

Well, both the international shipping lines and the foreign buyers have tried reaching out to the concerned government agencies.  FOBAP has been holding talks with Philexport and the Department of Trade & Industry in the hope of coming up with more constructive solutions to the problem. The AISL has also initiated talks with government, but Mr. Ronan says that terminal operators say that it will take anywhere between three to eight months before they can see any clear improvements in the ports. 

This is just too long.  Senators Escudero and Aquino have to get the ball rolling asap to get to the bottom of the crisis before we end up undoing whatever gains we have chalked up in recent years. The timing could not have been any worse with the economic integration upon us.  Let us not be the sick man of Asia anymore.

Mabuhay!!! Be proud to be a Filipino.

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