27 April 2014

Economies of scale to settle Subic or Batangas port option

WITH freight contracts mostly decided abroad, whether to call or not on the Batangas Port or the Subic Port is decided based on economies of scale and not as a result of state policies, according to the Association of International Shipping Lines (AISL).

AISL President Patrick Ronas said since freight deals are decided abroad, it is only natural that economies of scale factor heavily in the decision-making of foreign principals.

He added that premiums or the extra costs on operating in the ports of Batangas and Subic would disappear once the flow of trade takes progress in those areas.

The ports in Cebu, Davao and Cagayan de Oro, he cited, were historically having a premium of $350 to $400 per cargo at the time that international feeders were non-existent in those ports, but eventually the cost was eliminated after these ports experienced growth in trade.

Foreign shippers have also done their part to ease the current problem of truckers who are being charged with penalties for illegal parking when they could not comply with the truck ban during the hours to traverse Manila to their container yards.

Ronas said a lot of depots, contrary to the knowledge of many in the industry, were not owned by shippers but by private contractors. He added that shipping lines have to convince private contractors to operate their depots for 24 hours to accommodate truckers returning their containers.

He said there was a move by contractors to look for space in the North or South harbors as an alternative for locating the depots, but the only problem would be the distance.

Ronas suggested that the Philippine Ports Authority identify areas near the ports to put up new depots to allow cost efficiency in transporting cargoes.

At the recent transport and logistics summit, included in the private sector’s recommendations is the setting up of alternative depots to address congestion of cargoes.

Exporting and importing companies, as well as service providers of transport and logistics and allied services, contributed to the drafting of the resolution which aims to attain a sustainable solution on removing barriers in cargo transport and customs procedures.

Among the proposed measures include the creation of alternative depots, maximization of Batangas and Subic ports, 24/7 operations by the Customs bureau, removal of the truck ban, connection of the North and Luzon expressways, and facilitation of road-network constructions.

Ronas said shipping lines were caught with surprise when the truck ban was imposed, which resulted in additional costs. “For every four containers that come in, only one goes out. We were not spared of the additional costs,” he added. (Business Mirror)