Shippers dispute PCCI claim on cabotage rule

Lifting or relaxing the cabotage rule may not guarantee lower shipping costs in the country, according to a statement released yesterday by the Philippine Interisland Shipping Association (PISA), the umbrella organization of domestic shipping operators.

PISA was reacting to claims made by the Northern Mindanao Shippers Association (Norminsa) and the Davao City Chamber of Commerce and Industries Inc. that domestic shipping rates are higher than international freight rates and that by allowing foreign shipping lines to operate in the country lower shipping costs will be realized. It will be recalled that this same claim originated from a study made by the Philippine Chamber of Commerce and Industry (PCCI) which has since then been adopted by several chambers of commerce around the country.

Norminsa and the Davao City chamber made this claim during the 3rd Mindanao Shippers Conference held in Cagayan de Oro City last Nov. 14. They said freight rates from Manila to Singapore are lower compared to the Manila-Davao route.

PISA executive director Leonardo Odoño said the figures presented by Norminsa and the Davao City chamber were not comparable since the Manila-Davao freight are cited included terminal handling and documentation costs while the Manila-Singapore rate presented was purely ocean freight rate. Odoño explained that terminal handling charges are paid by shippers and receivers to terminal operators on top of the ocean freight paid to foreign shipping lines.

Odoño further explained that the computed rate for Manila-Singapore presented by Norminsa and the Davao City chamber of $300 over 547 nautical miles did not include terminal handling charges of $148 for destination and origin, documentation fee of $20 and bunker adjustment factor of $30 which are charged by foreign shipping lines. This then would add up to a total of $498 or approximately $0.91 per nautical mile. In comparison, the cost of freight from Manila-Davao is $600 over 892 nautical miles or only $.072 per nautical mile, Odoño pointed out.