Port investments will be needed for the growing ASEAN trade volume
ASEAN members are located at the heart of the world’s most important global trading routes and it is vital for the Region’s communities and export industries that countries in the area have sufficient port infrastructure and well-managed maritime services. This is additionally important as more regions around the world, including Europe and the US, are taking ASEAN and the opportunities the ASEAN Economic Community offers seriously. As earlier reported, the European Union has developed strategies to support European SMEs on their expansion into ASEAN.
Safety, of course, is equally important; the ongoing territorial conflicts among ASEAN members and China is creating concerns in the US, Japan and Europe.
Many ports in ASEAN member states need to expand their handling and logistics capacities in order to accommodate the potential growth in trade. In addition to physical infrastructure, issues such as customs protocols and the introduction of computerized standardized systems also need addressing. As manufacturing systems become more global, delays in procedures will impact on the capability of countries to become a single integrated production base. The Port of Manila is just going through the process of decongesting the port, creating better accessibility and adjusting procedures to an effective movement of import and export shipments. The Philippines is also looking at creating larger operating capacities in Batangas and Subic.
The Region’s major ports also have to address global shipping trends that emphasize much larger vessels, able to carry 18,000 containers or more. These ships can only be accommodated at ports that have deep draughts, longer quay lengths, the latest crane technology and sufficient logistics capacity. Such facilities also need to be highly productive and well managed to ensure efficient turn-around times. However, many in ASEAN are unable to accommodate the large container ships. In the Philippines, Subic can accommodate large ships but, as mentioned above, the on-shore infrastructure needs to be adjusted.
ASEAN countries, with the exception of Singapore and Malaysia, still rank low down the latest Liner Shipping Connectivity Index in terms of international maritime trade volumes. Singapore and Malaysia have the highest world rankings at 113.2 and 99.7, respectively. Vietnam scores 48.7, Thailand 37.7, Indonesia 26.3, Philippines 17.2, Myanmar 4.2 and Cambodia 3.5.
The Philippines has pressing reasons to develop not only its ports but also to improve inter-island maritime connectivity. As in other parts of the Region PPP projects are promoted. In 2010, the Philippine Port Authority, the industry regulator (and unfortunately also the ports operator), said that at least five state controlled ports would be de-nationalized and handed over to PPPs. That has not happened yet.
One of the most innovative developments in recent years has been the introduction of the Philippine Nautical highway in which trucks and passenger vehicles can drive straight on and off Roll-on, Roll-off (Ro-Ro) vessels. Introduced in 2003, the Ro-Ro services allow ports that do not have facilities to accommodate ocean-going container ships to transport smaller cargoes and passengers.
It is this kind of integrated system that other ASEAN countries can emulate and its impact has been likened to the introduction of low-cost airlines on transport systems, given the fact that transport costs have been reduced by 40 percent where Ro-Ro services have been introduced.
While Ro-Ro networks are seen as an effective means of targeting underserved areas, rather than a replacement of existing shipping networks, they could also play a significant role in developing the Region’s 51,000 kilometers of navigable inland waterways. The Ro-Ro cooperation / interlink between northern Indonesia and southern Philippines is a good start in creating the required Region-wide interconnectivity.
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