Home » Maritime » Capacity oversupply hounds Philippine cargo industry

OVERSUPPLY of bottoms remains a threat to the Philippine cargo industry, creating stiff competition in a very thin market, according to Magsaysay Transport and Logistics president Roberto Umali.

Magsaysay Transport operates cargo carriers NMC Container Lines and Lorenzo Shipping Corp.

“Opportunities right now are very limited due to oversupply of bottoms,” Umali said.

“Players, instead of competing on service and other value-adds, are competing on rates just to increase volume. This is unhealthy and it continues to be a threat to the local shipping industry.”

Umali noted cargo imbalance in the Southern Philippines to Luzon trade has further aggravated an already precarious situation.

While cargo volume from Luzon to South Philippines is vibrant, the same cannot be said for volume on the return journey, he said. Vessel utilization on the Southern Philippines to Luzon trade is only 20-30%, creating fierce competition among carriers, Umali added.

From January to March this year, Philippine cargo volume declined 4.34% to 36.47 million metric tons year on year.

Domestic cargo dwindled from 18.06 mmt in 2010 to 16.68 mmt and foreign cargo from 20.06 mmt in 2010 to 19.79 mmt.

Last year, additional bottoms were introduced by Oceanic Shipping Lines, Negros Navigation and ATS Consolidated, Inc, formerly the Aboitiz Transport System Corp.

The new vessels have capacities of 500-1,000 twenty-foot equivalent units compared with the usual 150-250 TEUs of other carriers.

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