TUGBOAT operator Harbor Star Shipping Services Inc. has its sights on business expansion, aiming to become the leading marine service provider in the Philippines and eventually establishing a major presence in Southeast Asia by 2020.
On Oct 30, the company will list 30% of its total issued and outstanding capital stock at the Philippine Stock Exchange at P1.88 per share, potentially raising P341.408 million. The proceeds will, among others, fund acquisition of tugboats for domestic and international expansion and re-fleeting as well as landing craft transporter tug-and-barge tandems for lighterage operations.
The company’s biggest operation is at the Manila International Container Terminal (MICT), where it has been the sole harbor assistance provider since 2007. Its exclusive contract at the facility was recently renewed for another five years.
For the first half of the year, Harbor Star serviced 2,506 vessels, 95.13% of which were foreign. Of the total, 938 ships were staged at MICT, and 611 ships in Davao. Its other major base ports are Bataan, Batangas, and Cagayan de Oro.
For 2012, foreign vessels accounted for the bulk or 92.12% of the total shipcalls serviced.
The tugboat operator services mainly vessels of the Association of International Shipping Lines members, especially Maersk and APL, and occasionally gets calls to provide services for ships using the Harbour Centre in the North Harbor. (Harbor Star does not operate in North Harbor.)
Harbor Star owns and operates a fleet of 27 tugboats deployed in 12 base ports across the country in addition to one anchor handling tug supply vessel, three barges, a cargo vessel, and an oil spill response vessel.
Expansion
Harbor Star chairman and president Geronimo Bella Jr. told PortCalls in an interview the company is eyeing expansion in Malaysia and Indonesia, as well as in Vietnam, Myanmar and Papua New Guinea.
But international expansion had in fact begun as early as 2012, when the company acquired a 45% stake in Malaysian marine services company Peak Flag Sdn Bhd. Bella said the company is looking to offer harbor assist services in certain Malaysian ports.
Diving is another business the company has plunged into, although this segment accounted for just 1% of revenue last year. The company sees potential in this enterprise, which involves underwater ship and port inspections, surveys, and works. Rodriguez said Harbor Star is in the process of securing international accreditations for this business.
In addition, Harbor Star is considering extending its services to the offshore oil exploration industry, proof of which is its recent purchase of the M/V Rho Cas, a 9,186 BHP anchor handling tug supply vessel. Apart from the offshore market, Rho Cas has the capability to provide ocean towing and engage in major salvage operations.
Ready for ASEAN integration
Atty Ignatius Rodriguez, corporate information officer, said the company is ready for the Association of Southeast Asian Nations’ economic integration in 2015. “We see our industry benefiting more from this integration because this will open up new markets for our company.
He noted the company’s peers in Singapore may have all the modern equipment but Harbor Star believes it can still compete price-wise. It also helps that Filipinos are more skilled, being more hands-on with any task at hand.
For Vietnam and Indonesia, their harbor tug operators are mostly family-owned localized operators. The experience of Harbor Star in running a professionalized operation will be an advantage Rodriguez explained.
Asked whether there’s a price war in the industry, he said: “There has always been a price war” but qualified that undercutting is mostly carried out by small operators, particularly those deploying old tugboats. Harbor Star, he added, maintains its prices despite the challenge and competes on the basis of offering services anchored on safety and reliability.
“The shipping industry is getting tough. (It’s) price (that makes it) challenging for us. We have to be competitive,” Bella told PortCalls. Bella is also president of the Harbor Tug Association of the Philippines.
He said regulations are likewise getting tougher and “there’s a lot of new regulations being passed and these all tend to increase costs so we’re trying to be as competitive as possible.”
Part of being competitive is securing accreditation from international bodies. So far, the company has three international accreditations and an IMS Certification tucked under its belt.
Eye on Cebu
Locally, Cebu is the company’s number one target for expansion. Asked why Harbor Star was not yet present at the Visayan port, Bella replied, “The price was too low; it wasn’t profitable for us. Now, there is an increase in vessel calls and the prices have more or less stabilized so it’s the right time to (go).”
Rodriguez added tugboats servicing Cebu are getting old and need replacements plus Harbor Star’s customers had been asking the company to provide service at the said port.
The company also plans to expand operations in Surigao and Negros.
Cabotage Law
Harbor Star said the company is ready if the cabotage law is repealed, but hopes the harbor assistance business will be spared from any amendments in the law.
Rodriguez said the firm fears a repeal of the law could turn the Philippines into a dumping ground of old tugs from South Korea and China noting that there are no government regulations limiting the age and quality of tugboats that can be imported to the Philippines.
Harbor Star has been in the marine services business for 15 years, but its corporate history goes back to July 5, 1988, when it started as a company named Seatows, Inc. It was not until 1998 when, under the management of Captain Daniel Pablo, it was renamed Harbor Star Shipping Services Inc. A year later, the company launched its commercial operations. –– Roumina M. Pablo
