Unresolved port congestion

The Philippines could waste trillions of pesos earmarked for the government’s Build Build Build infrastructure projects, if the issue of port congestion, high cost of inter-island transport, and other logistic bottlenecks persist.

Taxpayers’ money is already being spent to expand the network of roads, bridges, and port facilities that will facilitate movement of goods and services not just to and from other countries, but within the archipelago.

Yet, simple systems to solve something as elementary as a port congestion issue, which truckers and importers recently brought up again, remain elusive. Even a promised joint administrative order to solve the problem remains unsigned for more than five months now.

The accusation that the port congestion problem is being left to fester because some groups want to make a quick buck could contain some truth. The fines involved when container vans are not returned on time have run into six-digit figures for some, and this ultimately is at the expense of the consumer.

Trucking companies and importers have been saying for the longest time that the solution to freeing up space at the ports to accommodate incoming containers is to make shipping companies responsible for the containers that they bring in.

This would mean shipping firms having their own container yards outside the port area where empties can be stored and retrieved for shipping out. The same goes for managing yard space so that used containers do not stay for unnecessarily long periods.

Increased incoming cargo

The Philippines imports more than it is able to ship out, and because shippers want to optimize their trips by carrying cargo out to other destinations, they are more inclined to leave empty containers at the ports.

The problem with this practice had been magnified with the increase in incoming cargo last year because of a three-fold rise in value of imported raw materials, as well as intermediate and capital goods. This year promises to be worse as importations for Build Build Build increase.

The Rice Tariffication Law, alongside the import liberalization of other food products, has also contributed to increasing the amount of cargo that is being shipped into the country. At the moment, for every five containers that bring in goods, only one is laden with merchandize for shipping out.

It is understandable why shippers would rather leave empty containers, preferably at the port yard rather than in their own depots, because of the logistical challenges of getting them back on the ship. Getting them back to the port from the depots takes time and money, likewise with queuing them for loading onto their vessels.

The management of empties costs shippers serious money, which could explain why shipping companies try to get paid all kinds of fees from truckers, brokers and importers when it comes to and getting back empty containers.

Getting away with murder

Still, shipping companies are getting away with murder. Their containers are allowed to overstay in the ports, they are not obliged to properly maintain their container yards and keep them with enough space for incoming empties, and arbitrarily charge truckers, brokers, and importers with all kinds of fees.

The government should revisit a Bureau of Customs (BoC) order that allows shippers to keep their empties in the port for 90 days without having to pay a single centavo. Let’s cut this time to less days given the space constraints at the port site.

A temporary peace over overcrowding at Metro Manila’s three ports – the South Harbor, North Harbor, and the Manila International Container Terminal – is slowing evolving as major shippers have agreed to maximize the number of containers that they should load in every outgoing vessel.

Trucker woes

But this has not stopped shippers from charging what truckers and importers consider to be unfair fees and penalties for a host of reasons such as demurrage, detention, container imbalance surcharge, control fees, peak season, and many others.

Truckers, in particular, are worst hit. They reckon with their tight margins given the slow turnaround time for their vehicles to pick up containers, bring them to importers, and return empties because of traffic and truck bans.

They also worry about an order issued by the Land Transportation Franchising and Regulatory Board banning trucks covered by a certificate of public convenience that are 15 years or older by 2020, and replacing these with Euro 4-compliant vehicles.

While the order, likewise, covers public utility jeepneys, truck owners say that because a new Euro 4 truck costs from between P3 million to P5 million, the replacement period should be extended in consideration of the huge investment needed.

Mobility roadmap

Clearly, a more realistic and workable mobility roadmap must be put in place to address what is turning out to be a logistical nightmare for an unprepared government faced with a growing population and a surging economy.

Being an archipelago, policies at all ports must be cohesive to keep movement of goods flowing smoothly – and more importantly, at a justifiable cost. Other ports near Metro Manila can also be utilized.

The port congestion issue has been around for decades. So has the problem of high shipping rates, inefficient inter-island ferries, and even a beleaguered roll-on, roll-off nautical map.

We look forward to new roads and bridges under the current administration’s infrastructure push, for a chance to ease the traffic problems in cities, and more importantly, to make these work to bring sustainable economic growth for future Filipinos.

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Should you wish to share any insights, write me at Link Edge, 25th Floor, 139 Corporate Center, Valero Street, Salcedo Village, 1227 Makati City. Or e-mail me at [email protected]. For a compilation of previous articles, visit www.BizlinksPhilippines.net.