About 10 members of the Semiconductors and Electronics Industries in the Philippines, Inc. (SEIPI) are said to be “seriously considering” shifting to Batangas port as a solution to the cargo congestion at Manila’s ports because of the city’s daytime truck ban.
The SEIPI members’ tack follows the Export Development Council’s support of a proposal to shift to an alternative port for goods, specifically the Batangas port, in a bid to decongest the Port of Manila.
Association of SEIPI Logistics Managers (ASLM) chair Malou Ronquillo told PortCalls in a text message that the 10 firms – out of SEIPI’s total membership of about 250 – are looking at the Batangas option as delays in parts deliveries is forcing their customers to shift orders to other countries in Asia.
“We have members who were hit hard. The delay in deliveries of parts caused assembly line shutdown, consequently affecting commitments to customers, some of which already placed new orders with Vietnam and China,” Ronquillo said.
The electronics industry faces factory shutdowns and losses if the truck ban continues and truckers go on strike, Ronquillo said.
In a Feb 27 statement, SEIPI cited the risks its members are facing in view of the modified truck ban that triggered a truckers strike a week ago:
- Line shutdown if materials don’t arrive on time. This means sending the operators home as there is nothing to work on anyway.
- Higher storage costs because the longer the materials stay in the ports, more charges are incurred.
- Loss of sales because committed delivery dates to clients are not met. One company’s production per day is valued at $90,000. If it has no raw materials to run, this will translate to a huge loss.
The industry, which makes up around 40% of the country’s total exports annually, depends on the two Manila ports to ship raw materials in and finished products out. The industry accounts for more than 40% of total exports.
Besides the truck ban, SEIPI said the simultaneous road projects in Metro Manila that will begin next month will also pose a threat to the daily operations of its member-companies.
The long turnaround times and huge backlog of cargoes at the Manila ports resulting from the truck ban have also caused “delivery and pick-up backlogs” for members of the Supply Chain Management Association of the Philippines (SCMAP), the group’s director Ike Castillo said.
“Coming off the truck holidays, we’ve built delivery and pick-up backlogs that we have yet to service completely. Additionally, we’ve seen the requirement for trucks double the past days – driven by the long turnaround times and the backlog [at the ports],” Castillo told PortCalls.
“This will definitely result in higher cost as truck owners realize fewer trips. We foresee quite tough discussions with customers on how the value chain can absorb this additional cost.”
Castillo said the “current trucking rate structure has been sensitive to attainment of truck turnaround assumptions , even prior to the truck holiday and new truck ban period.”
The long turnaround times and, therefore, less utilization of trucks (assets), as well as the planned road congestion surcharge to make up for the fewer trips “simply means increasing rates to cover the additional time spent to turn around trucks,” Castillo said.
“At the end of the day, this had to be absorbed by the cargo owners, as this would become an add-on to the costs assumed in the current rate structure – in the same way that changes in either labor rates or fuel costs are captured to adjust rates,” he said.
The truck ban has driven Export Development Council (EDC) to back the proposed shift to an alternative port for goods, specifically Batangas.
“We are promoting the use of ports outside Metro Manila, particularly the International Port of Batangas, for goods moving in and out of South Luzon,” Philippine Exporters Confederation Inc. (Philexport) president and EDC vice-chairman Sergio R. Ortiz-Luis Jr. said.
The EDC specifically recommended the issuance of policy or an executive order that would mandate shifting cargoes from the Manila ports to Batangas and other newly developed international ports.
Ortiz said the port of Manila is “operating beyond its capacity” and is crowding not just the port but major roads leading to the port.
“We urge the Philippine Ports Authority to work on a feasible plan and timetable to start transferring the shipment of cargoes into the Port of Batangas and other international ports in the country. This plan can start by putting the proper equipment and people in these ports,” Ortiz-Luis said.
Ortiz-Luis also said major infrastructure networks, such as the expansion of the South Luzon Expressway, are in place to facilitate the shift of foreign cargoes. – Roumina Pablo