PortCalls

Cargo Economics Conference tackles key trends, provides hard-to-source statistics

THE PortCalls-organized Cargo Economics Conference last week was attended by about 150 top managers from the transportation sector.
Conference speakers detailed key transport industry trends and provided hard-to-source statistics during the whole-day event.
The track on the global economy (speaker: Asian Development Bank lead economist Dr. Ernesto Pernia) and the local economy (National Economic and Development Authority assistant director for National Planning and Policy Staff Scholastica Cororaton) generated the most number of questions.
Other conference speakers were Dr. Hussein Lidasan, transport expert from the University of the Philippines (topic: The Philippine transportation sector); Edgar Milla, regional sales director for global shipping line APL (key trends in international container shipping); Atty. Agaton Teodoro O. Uvero, partner in The Law Firm of David Leabres Uvero Gaticales Sto. Tomas and PortCalls columnist (World Trade: The Changing Landscape); Charles Brewer, DHL Express country manager (prospects for international air cargo); Angelito Colona, ASEAN Federation of Freight Forwarder Associations president (the future of logistics in the Philippines); Sean Perez, Asian Terminals, Inc. (ATI) vice president for marketing and commercial (terminal operations); Atty. Romeo Sto. Tomas, Philippine International Seafreight Forwarders Association director or PISFA (seafreight forwarding); Eduardo de Guzman II, Aircargo Forwarders of the Phils. Inc. president or AFPI (airfreight forwarding); Civil Aeronautics Board (CAB) deputy executive director Atty. Carmelo Arcilla (CAB directions for 2004); and Philippine Ports Authority Port District Manager-Port District Office Manila Leopoldo Bungubung (investment opportunities in ports.)
A panel of private and public sector cargo industry experts fielded questions to the speakers after their presentation.
The panelists were PortCalls columnist Leo Morada, an expert on information technology and its application to transport and the ports; Francis Lopez, managing director of InterCommerce Network Services; Erich Lingad, president of the Philippine International Seafreight Forwarders Association and president of International Consolidated Phils. Inc.; Modesto Ramos, senior vice president of Hanjin Shipping; Virgilio Angeles, general manager of COSCO Phils.,; Cecille Reyes, Transport and Communications assistant secretary; Mario Pangan, president of the Global Cargo Carriers, Inc.,; Herman Tuguigui, acting manager of the Port Marketing Division, Philippine Ports Authority; Atty. Oscar Brillo, former Customs deputy commissioner; Atty. Francis Egenias, president of the Maritime Law Association; and Col. Leonardo Odo–o, executive director of the Philippine Liner Shipping Association.
The conference was sponsored by ATI, International Container Terminal Services, Inc., Pilipinas Shell, WG&A Philippines, Air 21, DHL Express Phils., Negros Navigation, and Smart Communications, and endorsed by the AFPI, Association of International Shipping Lines, Global Cargo Carriers, Inc., and PISFA.

CAB pushes for liberalized cargo trade

THE Civil Aeronautics Board (CAB) is pushing for a more accelerated cargo transportation regime, noting that as the global trend.
CAB deputy executive director Carmelo L. Arcilla, during last week's PortCalls-organized Cargo Economics Conference, said the country is losing out on opportunities offered by the cargo business.
"The phase of air cargo is very quick, fast outpacing the passenger side of the business," he said.
He cited several factors which makes the cargo industry viable for liberalization. The business relies heavily on multimodal transport, allowing for more flexible operations.
Also, it has a limited synergy with the passenger market, which is susceptible to policy restrictions and requirements. "Cargo operations have different constraints with passenger operations," he said.
According to Arcilla, cargo industry players in Asia are already seeking liberalized cargo market access. Thailand has just signed an cargo open skies agreement with the US. India is also eyeing the same, he noted.
Last year, the Association of South East Asian Nations member countries, save for Myanmar and Laos, signed a memo-randum of agreement committing another 100 tons of car-goes per week.

PPA seeks expansion of roro ports

THE Philippine Ports Authority (PPA) has recommended the inclusion of 16 new links to the government's flagship project, the Strong Republic Nautical Highway (SRNH) or the roll on/roll off project.
PPA general manager Alfonso Cusi said the links would also include the development of 21 additional ports that would connect the SRNH.
"It is beyond doubt that the SRNH has resulted in the lowering of inter-island transport costs and other benefits to small businessmen and farmers as well as local tourists around the country. We want to multiply these benefits by opening the nautical highway to other points," he said.
The proposed links call for the development of ports that lie along the Western Seaboard, Eastern Seaboard, MIMAROPA (Mindoro-Marinduque-Romblon-Palawan), the Southwestern Seaboard and the Northeastern Seaboard.
In the Western Seaboard, the ports to be included are Abra de ilog, Tabaco and Virac. In the Eastern Seaboard, the ports are Matnog in Sorsogon, San Isidro and Allen in Northern Samar, Liloan in Southern Leyte and Lipata in Surigao.
For the MIMAROPA link, the proposed additions are San Jose in Mindoro Occidental; Odiongan in Romblon; and Dalahican in Lucena, Quezon. In the Visayas, the ports are San Jose in Antique; Tampi and Amlan in Negros Oriental; and Palompon, Ormoc in Maasin, Leyte.
Further linking the Southwestern Seaboard are ports in Zamboanga City, Pagadian in Zamboanga del Sur, Isabela in Basilan, Jolo and Bongao. In the Northeastern Seaboard, to be added are Curimao in Ilocos Norte and Basco in Batanes.

Container freight rates expected to continue rising

THERE is more good news for container shipping lines as more industry research points to a sustained recovery of freight rates through at least 2004, aided in a large part by the 'China effect'.
In its latest supply and demand report, Containerisation International said freight rates on the dominant legs of the world's top trade lanes are expected to continue rising at least through the end of 2004.
In a prelude to the peak summer months, second quarter freight rates on the Asia to Europe trade jumped 42% over the same period last year on the back of westbound utilization rates averaging 81% over the first half this year. This is expected to rise to 96% over the second half.
While this brought average rates on the trade up to US$1,570 per TEU, the report noted that this level is only now reaching the levels last seen before the slump of the first quarter of 2002. Utilization rates are expected to remain similarly buoyant through 2004.
"As freight rate levels drive ocean carrier profitability, the industry looks set for further recovery," it said.
Much of the industry's recovering health has been a product of China's extraordinary growth, which saw its exports climb more than 32% over the first nine months this year, compared to a year earlier to US$307.7 billion while imports were up a full 40.5% to US$298.6 billion.
Calling this the 'China effect' the report's author Matthew Beddow said: "Whilst the extraordinary growth in exports from China at the beginning of last year caught everyone by surprise, we believe that this year's predictions are much more reliable."
Last year's surprise was due to the expectation among industry watchers that cargo growth would continue to be dominated primarily by consumer demand.
"The effects of offshoring, involving the transfer of production overseas, in this case to China, were not clearly quantifiable. The picture today is very different, enabling analysts to predict the future much more accurately," he said.
Executive managing director of international consulting at Global Insights and a contributor to the report, Ben Hackett commented: "Historically, it was always a safe bet to use the rule of thumb that, for the G7 countries, GDP growth x 2.5 equated growth in trade.
"For the Asian tigers, we tended towards a factor of 4. During a recession, the measure became less clear. But all of that has had to be adjusted now, to help explain what has been happening in China."
The report also noted that the China effect has not only affected services to and from Asia but the other major trades as well. Citing the 10 new transpacific services which deployed over 50 additional vessels on the Pacific to cater for this year's peak season, the report said this move helped to soak up surplus tonnage that could otherwise have been dumped in other trades, such as the transatlantic.
"Without this, maintaining a sensible balance between supply and demand in these other trades would have been impossible, and freight rates would have fallen," it concluded.
And despite the additional tonnage put on the transpacific, the report noted that the average eastbound vessel utilisation during the first half this year remained respectable at around 84%. This level is expected to be maintained through 2004. Westbound utilization, however, currently languishes at around 36%.

Post-entry audit guidelines now in effect

THE guidelines for the Post-Entry Audit (PEA), which allows government to conduct an extensive audit and assessment of duties up to three years after the release of goods, took effect last week.
Customs Commissioner Antonio M. Bernardo said the bureau will focus on big time importers, taxpayers and traders delinquent in the payment of duties.
Customs Administrative Order 8-2003 set the guidelines for the PEA, provided under Republic Act 9135 or the Customs Compliance Audit Law.
Before RA 9135 was enacted, the BoC was required to audit all imported goods within port premises before these are released. After release, the government could generally no longer assess importers or brokers for unpaid duties.

DHL developing markets of RP trading partners

DHL Express is building markets in countries where Philippine enterprises are most active.
DHL Express chief executive officer Uwe Rolf Doerken, in a press briefing last week, said part of enhancing Philippine operations is developing markets the country has dealings with.
Doerken said DHL recently concluded a major investment in the US, the country's top export market, by acquiring Airborne Express Inc.
"With the US being one of the Philippines' key trading partners, this strategic move is especially relevant to DHL's business here and will bring more value to Philippine customers with transpacific shipment needs," he said.
Another major market, he noted, is China. DHL has invested in excess of $50 million in putting more infrastructure and service offerings in the fastest-growing market in Asia.
In the Asia Pacific, Doerken reported DHL invested around $910 million in the last two years. He said $300 million was allotted for infrastructure development projects since 2000 while $100 million is being invested into an Express Cargo Terminal at the Hong Kong International Airport.
In the Philippines, the company infused $32 million for the enhancement and expansion of DHL's local network over the last two years. These include enhanced service centers and an upgraded domestic hub as well as other infrastructure development projects.

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