ECCP: DOJ opinion
upholding nationality rule on airfreight firms
dampens investment
A RECENT Department of Justice
(DOJ) opinion declaring airfreight forwarding
firms as public utilities, therefore subject to
the nationality rule, will likely alienate foreign
investors, according to the European Chamber of
Commerce (ECCP).
The group said DOJ opinion no.
29 is clearly an issue of shifting position, considering
the department in 1975 and in 1999 opined that
"an airfreight forwarder is an indirect air
carrier and in the same manner as foreign airlines,
which are engaged in direct air transportation
between the Philippines and other points outside
the Philippines is not subject to the nationality
requirement."
ECCP said there is no question
that airfreight forwarders, acting as indirect
air carriers are neither serving the general public
nor are they a franchised utility. "The consequences
of a different interpretation of law would have
far-reaching consequences," pointed out Henry
Schumacher, ECCP executive vice president.
If the DOJ opinion stays, international
airfreight forwarders with more than 40% foreign
shareholdings now face either cancellation of
their license to operate as such with the Civil
Aeronautics Board (CAB), if they have an existing
one, or denied the opportunity to obtain renewal
for those with pending applications such as Exel
Philippines, Inc.
"Actions like these not only
discourage investments in the country, they also
rob existing investors of their fruits of labor
and investment," Schumacher noted.
He added some investors have allocated
huge amounts over a period of time on assumption
of a stable investment climate and based on conventional
wisdom and interpretation of laws unchanged for
the past 29 years.
The DOJ opinion also runs counter
to the policy of President Arroyo to develop the
country into a hub for global logistics.
Schumacher said integrators FedEx,
DHL or UPS are amenable to selling part of their
shareholdings and hand over management of their
companies to Filipinos. "The biggest problem
for investors in the Philippines is not the law
or the constitution," he noted, adding it
is the "liberal, shifting and often self-serving
interpretation of law" which continues to
create havoc on the investment climate.
ECCP said the DOJ opinion needs
to be revisited, if not reversed, if the country
intends to secure its place in logistics and international
trade.
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CCBI sees RA 9280 implementation
by Jan
THE Chamber of Customs Brokers, Inc. (CCBI)
expects the implementation of Republic Act 9820
or the Customs Brokers Act of 2004 by January
2005.
The law's implementing rules and regulations
(IRR) are also expected to be rolled out in today's
CCBI general membership meeting (GMM), a GMM committee
member told PortCalls.
Guests of honor Senator Aquilino Pimentel and
Rep. Magtanggol Gunigundo are speaking before
more than 500 licensed customs brokers at the
event.
The committee member said the association is
firm on its position that no part of the act should
be amended and that the IRR should keep to the
essence of the law.
He said opposition from various sectors, particularly
freight forwarders and shippers, must be discussed
once the law is already in place. "A law,
once enacted cannot be amended. We should implement
it first, see if it is constructive or detrimental
to the general public, then that is the time we
seek for amendment," he explained.
The freight forwarding sector has identified
five provisions in the law which it deems questionable.
These are the Scope of Practice of Customs Brokers;
Acts Constituting the Practice of Customs Broker
Profession; Prohibition on Unauthorized Practice
of Customs Broker Profession; Prohibition on Corporate
Practice; and Prohibition on Financing Activities.
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New equipment to boost productivity
at ATI
ASIAN TERMINALS, INC. (ATI) is anticipating
increased productivity with the continuous deployment
of newer and modern equipment at the South Harbor.
Current productivity - recorded at 24-26 moves
per hour - keeps on improving, while productivity
rates of up to 33 moves per hour have been achieved
in optimal working conditions, said ATI president
and chief executive officer Jeremy J.L. Rickcord.
He said with the company's acquisition of new
rubber-tyred gantry cranes (RTG), ATI is likewise
expecting significant improvement in truck turnaround
time at the container yard. "These will mean
an addition of 60 moves per hour," he said.
The new RTGs, which were manufactured in September
this year by Mitsui in Oita, Japan, weigh 120
tons, with a safe working load of 40.8 tons under
spreader. Each RTG has the capacity to lift one
container over five-high stack of up to six-wide
stacking.
"The machines are fitted with the latest
technology including radio data terminals, wheel
lock parking system, safety limit switches and
closed circuit television system," Rickcord
noted.
According to him, the modernization of the container
handling equipment fleet at the South Harbor will
keep the company afloat amid tough economic conditions
and shifts in world trade.
"ATI continues to ensure sustained growth
and value enhancement for the port users. This
is why we are relentless in setting higher benchmarks
for health, safety, security and environment and
why we continue to invest in technology to streamline
port procedures and increase the security of our
customers' cargoes," he stressed.
In 2000, the company initialized the modernization
of South Harbor with the deployment of a brand
new ship-to-shore crane, forklifts, sideloaders
and toploaders and trailers to speed up vessel
and truck turnaround time.
Port facilities have also been upgraded. These
include the building of a fully-equipped security
warehouse for the Bureau of Customs, establishment
of a Designated Examination Area, and the expansion
of the main container yard to boost the annual
throughput capacity from 600,000 twenty-foot equivalent
units (TEU) to 860,000 TEU.
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Fuel surcharge,
declining yields add to airfreight woes
THE continuous increase in the
price of aviation fuel and capacity restructuring
that has brought about declining yields have added
to the woes of the airfreight business, said Darryl
Modelo, president of AERO, the general sales agent
of Lufthansa Cargo in the Philippines.
This, he noted, has created an
even tougher business environment for the airfreight
industry. The increase in fuel prices is a primary
concern for airlines considering fuel cost is
a major cost driver.
To keep afloat, Modelo said Lufthansa
Cargo has instituted cost-saving measures, including
cutting 10% of the workforce in Germany. It is
also adopting the GRIPS (Growth and Revenue through
Improved Processes and Systems) program, and the
Continuous Process Management throughout the organization
starting from the board to rank-and-file employees.
"For Lufthansa Cargo, our
focus is towards a more and better customer-orientation
through better processes and services. We will
do business towards customer-focused solutions
where value can still be created," he said.
He admitted the company is presently
experiencing little growth in import and export
airfreight volume in the Philippines.
"If you look at the industry
segmentation, there are few with good airfreight
potentials, excluding the major driver which is
the semicon and electronics industry," he
said.
The downturn in investments has
not helped any. This, Modelo said, will "affect
us in the long term especially if it continues.
Airfreight capacity reacts very much where the
market goes so planning takes place on short-time
windows. Foreign investments in the form of capital
expenditures (new factories, expansion of existing
plants) is a good barometer of future airfreight
growth as increase in these kinds of investments
point to higher exports and therefore, demand
for airfreight."
He expressed fears that the current
situation would make the Philippines "irrelevant
as far as operations of European carriers because
of the high cost of operations in Europe"
- revenues are pegged in US dollars while costs
are in euro. "Considering the currency conversion,
this represents an approximate 20% difference
year-on-year," he noted.
Meanwhile, to ensure the development
of the airfreight industry in the Philippines,
Modelo said, the development of infrastructure
such as cargo terminals and efficient road systems
that would allow for the fast flow of goods from
economic zones located outside the city to the
airport is necessary.
He noted "the lack of infrastructure
has slowed down progress, thus hindering growth
and competitiveness."
For increased competitiveness,
there is also a need to diversify, specifically
"for government to develop and support other
industries" such as perishables (mangoes,
fresh-cut tuna loin) so they can better survive
in the European market, he added.
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Filipino shipowners
elect new officers
THE Filipino Shipowners Association
(FSA) recently held its annual elections at the
Manila Yacht Club. The group elected the 15-man
board of trustees, which will serve for the next
three years.
These include Carlos C. Salinas,
Philippine Transmarine Carriers, Inc.; Capt. Amado
V. Romillo, Jupiter Maritime Corporation; Jose
Mari Moraza, United Salvage & Towage Corp.;
Michael G. Bernardino, Loadstar International
Shipping; and Michael G. Estaniel, Trans-Global
Maritime Agency, Inc.
Also elected were the new set of
officers for the year 2004-2005, including the
association's incumbent chairman and president
Salinas; Dario R. Alampay, vice president; Bibiano
Reynoso IV, secretary; and Edgar J. Ramirez, treasurer.
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PPA expects all
ports to get full-term compliance certificate
from OTS
THE Philippine Ports Authority
(PPA) is expecting the issuance of full-term compliance
certificates from the Office of Transportation
Security (OTS) for all ports, which will be re-evaluated
and declared International Ship and Port Facility
Security (ISPS) code-compliant.
PPA police chief and coordinator
with the OTS, superintendent Loving Fetalvero,
has assured that the port agency has already addressed
all deficiencies noted by the OTS earlier, including
the installation of scanners, metal detectors
and the proper training of personnel.
Last July, 17 ports under PPA jurisdiction
have been issued short-term compliance certificates
valid for only up to six months because the OTS
found some minor errors in their Port Facility
Security Plans (PFSP).
The PPA ports up for re-assessment
and re-evaluation are the country's seven major
gateways: Manila, Cagayan de Oro, Batangas, General
Santos, Iloilo, Davao and Zamboanga.
The other ten are Tacloban in Leyte,
Iligan, Tagbilaran, Cotabato, Dumaguete, Ozamis,
Calapan, San Fernando in La Union, Pulupandan
in Negros Occidental, and Surigao.
Fetalvero said now that all PPA
ports have been readied for the re-evaluation,
the port regulator is expecting the OTS to grant
them permits covering five years.
"All these shortcomings have
been properly addressed and we are optimistic
that we will be able to comply again despite the
tightening of the procedures," he noted.
Following a series of criticism
from various agencies for the alleged haphazard
issuance of certificates, the OTS has tightened
its procedures in the issuance of compliance permits.
The agency has started re-evaluation
and re-assessment of international ports in the
country in anticipation of the lapse of interim
compliance certificates by end-December. This
time, failure to comply would mean non-renewal
or revocation of compliance permits to the code.
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DOTC backs FSA
move to shift trading term for coal imports
THE Department of Transportation
and Communications (DOTC) is in full support of
the Filipino Shipowners Association's (FSA) move
to promote a shift in trading terms to make the
overseas shipping sector more competitive.
In a letter, FSA president Carlos
C. Salinas proposed that importing/exporting government
agencies should bid on a Free On Board (FOB) basis
rather than Cost and Freight (C&F).
Specifically, the FSA suggested
that coal imports of the National Power Corporation
(NAPOCOR) be bidded out on an FOB basis. Mendoza
noted this has already been favorably endorsed
to Energy Secretary Vincent S. Perez.
An FSA source explained shipping
an FOB basis would provide for separate bids for
the cost of the commodity and freight. This will
allow overseas shipowners to participate in the
carriage of NAPOCOR's coal requirements.
Mendoza said the desire of shipowners
to participate in the carriage of government cargo
will help boost DOTC's efforts to help modernize
the Philippine overseas merchant fleet and stimulate
private sector investment in the overseas shipping
industry.
FSA stressed the opportunity to
carry government cargo will result in foreign
exchange savings as freight payments will now
be made to Philippine overseas shipping companies.
In turn, income generated by overseas
shipping companies will not only mean additional
government revenue but will serve as a catalyst
for the expansion and modernization of the country's
merchant marine fleet, it explained.
Moreover, it will result in greater
job opportunities and better salaries for Filipino
seafarers which, in turn, will mean additional
foreign exchange earnings for government in the
form of foreign exchange remittances.
The association added the country's
shipyards will also be revitalized and other ancillary
services created, including manning, ship management,
chandling, ship agency and banking.
An increase in the number of ships
would mean higher government revenues in terms
of company registration and license fees; vessel
registration fees and related charges such as
inspection fee, and measurement fee; income taxes
from incremental business generated by companies/sectors
doing business with Philippine shipping companies;
port charges and berthing fees; processing fees
for all seamen's documents and travel papers;
and various fees paid by a shipping company for
various applications such as vessel importation,
bareboat chartering and company accreditation.
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MARINA to pursue
phase out of wooden-hulled vessels
THE Maritime Industry Authority
(MARINA) is determined to push through with a
previously deferred plan to gradually phase out
wooden-hulled vessels operating in Philippine
waters.
This was after President Gloria
Macapagal-Arroyo directed the maritime agency
to continue the plan in line with the government's
environmental policies, said MARINA administrator
Vicente T. Suazo, Jr.
The scheduled phaseout of the accident-prone
wooden-hulled vessels was shelved prior to the
May elections, following successive opposition
from various shipping operators.
Suazo said MARINA will come up
with an initial program which would halt the construction
of new wooden-hulled ships. "We must focus
first on abating the continuous growth of this
type of ships. Then, we move on to slowly scrapping
the existing ones," he said.
At the time of former MARINA chief
and now Philippine Ports Authority general manager
Oscar M. Sevilla, the maritime agency tapped the
Japan Bank for International Cooperation for the
conduct of a study on the viability of the project.
Suazo said his administration will
pursue a technical study since the phaseout is
set to adversely affect small and medium ship
operators servicing short-haul routes. "We
have to know who are these operators and what
can the MARINA do to help lessen the project's
impact," he said.
The shipping operators argued it is not viable
to remove the antiquated wooden-hulled ships since
they comprise 60% of the country's domestic fleet.
The maritime agency earlier suspended
the implementation of the phaseout order after
realizing the inability of shipping operators
in the country to acquire steel-hulled vessels.
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ATSC net income
down 19.3% in first 9 months
ABOITIZ TRANSPORT SYSTEM CORP.
(ATSC) posted a net income of P213.7 million for
the first nine months of the year, down 19.3%
from P254.9 million in the same period last year.
Earnings per share decreased 16% to P0.14.
Total revenues reached P6,172.2
million, up 9.4% from P5,643.5 million the previous
year.
Freight operations posted P3,265.5
million in revenues, contributing approximately
53% to ATSC's total revenues. Passage revenues,
on the other hand, registered P2,853.1 million,
accounting for 46% of the total revenues.
Income from operations went up
2% to P489.4 million from P479.4 million during
the same period last year. The company managed
to reduce terminal expenses by 11% to P720.1 million
and overhead expenses by 4% to P739.9 million.
Income before income tax decreased
P55.5 million, partly due to the P65.6 million
rise in other charges.
Since December 2003, ATSC's total
assets increased 6% to P10,110.9 million from
P9,541 million. Similarly, total liabilities grew
6% to P6,018.6 million from P5,662.5 million.
Total non-current liabilities as of the third
quarter reached P2,554.3 million.
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APL to launch new
direct service to Nhava Sheva
APL is set to further enhance its
coverage of the fast-growing Indian Subcontinent
market with the launch of a new direct service
to Nhava Sheva, an important gateway to India's
western and northern hinterlands. From November
17, 2004, the Singapore Subcontinent Express 2
(SS2) service will provide weekly services between
Singapore and Nhava Sheva.
Domestic demand in India for high-end
goods, especially consumer electronics, has been
growing steadily, and the outlook continues to
be buoyant. APL's Vice President for the Intra-Asia
Trade, Eng Aik Meng, said, "The two vessels
in the current Singapore Subcontinent Express
(SSX) service have been fully utilized since we
launched it in March and customers have been asking
for more space on this route. The SS2 answers
the needs of our customers looking to capitalize
on this fast-growing trade, offering them greater
choice and access to the Indian market."
The SS2 offers one of the industry's fastest transit
times between Singapore and Nhava Sheva as well
as highly competitive transit times between North
and Southeast Asia to Nhava Sheva. Together with
the SSX, the SS2 provides shippers who have cargo
originating in China, Korea, Japan, Taiwan and
Southeast Asia with a seamless connection to India's
extensive inland network. Customers are also connected
to APL's global network via the key hub of Singapore.
The SS2 will deploy two vessels, each with a nominal
capacity of 1,000 TEU on a port rotation of Singapore,
Nhava Sheva, Singapore.
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