Investments in cargo handling facilities necessary for efficiency — shipping lines

Debunking claims by certain sectors that shipping lines earn more if they invest in cargo handling equipment instead of shipping, the Philippine Interisland Shipping Association (PISA) maintains its stand that such investment is necessary due to the under-capitalized and ill-equipped situation of the cargo handlers at the North Harbor and other domestic ports.

In a press briefing yesterday, PISA vice president for liners Josephine Uranza stressed that a shipping line wanting to make more profit on cargo handling operations would need only to invest in cargo handling for dock service in a separate company.

This would allow a shipping company to earn 18 percent return on investments (ROI) as allowed by the Philippine Ports Authority (PPA) instead of the 12 percent ROI as provided for in the Maritime Industry Authority (Marina) rules, Uranza pointed out.

She added a shipping line could also invest in land, facilities and equipment needed for off-dock operations as well as for hustling cargo in another company so that it could collect charges at commercial rates instead of being subjected to 12-percent ROI. Under this arrangement, the other company would be considered a commercial company and not a public utility, thus exempted from any limit on ROI under either Marina or PPA rules.

"The shipping company only intends to provide efficiency to service and not to earn more money," Uranza commented.

Certain sectors have accused the shipping lines of making more profit by investing in cargo handling equipment. They alleged that shipping lines prefer to buy brand new cargo handling equipment while acquiring second hand vessels.

The additional work and investments shouldered by the shipping lines only showed the inefficiency and inadequacy of the country’s ports to handle domestic cargo, PISA pointed out.

Uranza also lamented the government’s continued neglect of the North Harbor since its modernization plan has been on the drawing board for more than a decade. She said North Harbor, which is far from international standards, should be developed and modernized to meet the challenges of the domestic commerce.