Want cheaper cost of goods? Unburden domestic shippers

Food, clothing, shelter materials and other goods are so costly. Blame special groups who make archipelagic shipping expensive.

A vessel recently docked in Batangas to unload wheat from Cagayan de Oro. Being small, less than 1,000 gross tons, it was supposed to be exempted from harbor pilot fees. Yet it was charged P24,794. The shipowner naturally passed on that cost to the shipper, who in turn passed it on to customers.

Another ship berthed in Batangas to haul steel rods to Tagbilaran. Also small and exempted, the owner protested the P24,794 pilotage. It was barred from departing for five days until paying up, plus ten percent penalty. Again, that amount was passed on to the shipper; end-users bore the costlier merchandise.

A private group of pilots controls most harbors. The Philippine Ports Authority accredits them to steer and park vessels to and from piers. That’s to avoid ship collisions and port damage.

In some cases, harbor pilots do not even board the entering or exiting vessel, but just charge pilotage. When they do board, they don’t touch the helm but merely direct the shipmaster. They’re not liable for wrong instructions that lead to accidents. It’s the shipowner or insurer that pays.

Pilots are expected to know every square inch of the harbor. Yet recently in the Visayas, the harbor pilot caused the ship to scrape a sunken vessel. The owner spent hundreds of thousands to drydock and repair the hull.

Harbor pilot fees vary port to port, P2,500-P5,000 per vessel. But Tacloban, Subic, General Santos, Batangas and Manila are extraordinary, with P10,000-P25,000 rates.

In September 2021, Batangas Harbor Pilot Co. imposed P24,794 flat rate for all vessel sizes in the province’s nine government and private ports. It was a three percent yearly increase from the 2014 rate of P20,160. Supposedly the old rate was “inconsistent with the passage of time and changes in economic condition.”

PPA general manager Jay Santiago is striving to bring down logistics costs. In international shipping, he enforced a Container Registry and Monitoring System to swiftly ship out empty 20- and 40-footers and decongest ports.

Informed of the high pilot fees, Santiago sent the authorized rates:

Note: Highest pilotage charge for domestic vessels is P300, a fraction of the P2,500 to P24,794 that ships actually pay. Lowest charge for huge international vessels is $110, or P5,940 at $1:P54.

The Maritime Industry Authority (Marina) listed 3,623 cargo vessels in 2021. There are no figures on how much pilotage companies earn and pay in taxes per year. One hundred ten million Filipino consumers suffer costly commodities.

Though private, pilotage firms can be officious. Cargo handler Avega Bros. Integrated Shipping Corp. recently complained to PPA’s Santiago about the situation at Manila North Harbor (MNH).

The Manila Bay Harbor Pilot’s Partnership (MBHPP) suddenly banned Avega’s two tugboats from berthing and undocking its vessels there. Allegedly, Avega’s tug captains were unknowledgeable. This, despite their 15 years’ experience traversing MNH, for which Marina duly licensed them.

A six-hour impasse ensued between Avega and MBHPP. Avega hired two other tugboats from Tugmaster. But MBHPP rejected the replacements, claiming that those too, despite their Marina licenses, “lacked experience and knowledge.”

Avega was forced to hire MBHPP’s two tugs - for P28,000.

Domestic ships previously were allowed to go in and out unassisted by tugs and harbor pilots. Then, MNH required tug and pilot assists. And this year MBHPP mandated the use only of its tugboats.

Goods are priciest in the national capital.

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