Aboitiz Transport System starts re-fleeting program

The Aboitiz Transport System (ATS) has started its re-fleeting program for its cargo ships to take advantage of the robust growth in the logistics sector in the Philippines.

ATS vice president Bob Gothong said that the company is going to acquire two 300 TEU container ships, and is currently looking for good cargo ships in Japan and Europe to fulfill this plan.

Gothong said ATS has already disposed its three cargo ships the Lady Rosary, Lady Charity and Brinkness. Its re-fleeting for container ships would mean improved efficiency and accommodation of cargo products in the domestic routes.

This move for re-fleeting of its cargo ships is implemented amid the projected challenges in its shipping business, due to high fuel costs.

Aboitiz's transport group experienced difficulties last year, and expects a rough road ahead, with the volatile fuel price movement in the world market.

Gothong said the company would have to acquire at least less than 15-year old cargo ships, and will look for good deal maybe in Japan, or in Europe.

In an earlier interview with Abotiz Equity Venture (AEV) president Jon Ramon Aboitiz, he said the company is going to take positive measures to mitigate the increases in fuel and other costs by becoming more efficient thereby reducing cost.

It's fast craft operations SuperCat had also disposed some of its vessels, while continuing its operations in highly profitable routes.

Last year, ATS contributed P94 million to the AEV, a 63 percent drop compared to the previous year.

"As you can imagine we have been hit by large increases in fuel price. Coupled with this, higher security related expenditures and dry docking costs, led by higher steel prices have affected our profitability," said Aboitiz.

He said since there is a lag in passing on these costs, the company was forced to absorb these higher costs.

ATS has recently integrated its other transport related businesses, which will not only give ATS a larger and more diversified revenue base, but will also allow the company to offer higher value added transport solutions to its customers, further differentiating itself from its competitors.

ATS, which is also the largest operator in domestic passenger shipping business also plans to pass on the cost of additional VAT (value added tax) to 12 percent from 10 percent recently implemented by the Arroyo administration.

While ATS is struggling amid the volatile fuel cost, and forced itself to improve its efficiency by acquiring new vessels for cargo operations, it can no longer absorb further cost adjustments, thus passing on the additional VAT requirement to consumers is its last resort.

"Eventually people or consumers will adjust [to probable fare rate increase]," Aboitiz said.

ATS vice president Bob Gothong said that the company is going to acquire two 300 TEU container ships, and is currently looking for good cargo ships in Japan and Europe to fulfill this plan. ISTE SESANTE