Home » 3PL/4PL » AISL airs views on transport cost

(The following was issued by the Association of International Shipping Lines following the release of a World Bank study on transport costs in Asia.)

THE Association of International Shipping Lines (AISL), consisting of major foreign lines plying the Philippine trade route, expresses deep concern over the manner the World Bank study on RP cross border trading cost was presented to the public by media. Citing World Bank figures, the news reports give the impression that the reason behind the high trading costs in the Philippines compared to Thailand, China and Singapore are the charges and fees imposed by foreign shipping lines. This is grossly unfair and misleading. Our stand is based on the following:

“The World Bank study needs to be reexamined. There are some costs that actually do not go to the lines. The domestic transshipment cost of $500, for example, being the most expensive component of the port and terminal handling costs which total $ 994 cannot be considered as a charge by the foreign lines. The public should be made aware that foreign carriers, under the present law on cabotage, are not allowed to transport goods between two domestic ports in the Philippines. Given this constraint, foreign lines have to contract the services of local carriers for the domestic leg of the voyage. The former pays for the freight and other incidental charges. The $500 paid by shippers to the foreign lines is simply a cost recovery and the latter do not gain any benefit from it;

“The study made on Thailand, Singapore and China dealt only with expenses incurred for direct export and did not consider the domestic transshipment cost which was applied in the Philippine case. Thus, deducting the domestic transshipment cost of $500 from the WB figure of $1,336 , total trading cost in the Philippines will be $836 compared to Thailand’s $ 848;

Additionally, the following should be considered:

“Philippine shippers are competing for vessel space on foreign lines with other Asian countries and therefore have to pay market rates;

“The shipping lines’ level of charges is dictated by market forces. To cite as an example, the Manila-Hongkong freight rate could go as low at US$50 per container. International shipping today has become a highly competitive vehicle of global trade that should always remain deregulated;

“Based on the 17th Survey of Investment-Related Cost Comparison in Major Cities and Regions in Asia conducted in March 2007 by the Overseas Research Department of the Japan External Trade Organization, rate for a 40-footer export container from Manila and Cebu to Japan is lower compared to other Southeast Asian countries like Bangkok, Singapore and Jakarta;

“Shipping line rates are influenced by new impositions of the government authority like increases in port tariffs. Foreign lines cannot simply absorb these increases but have to pass it on to importers/exporters.

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