Airfreight industry
signs positive but some dampeners remain
FOR Cynthia Reyes-Tsui, president
of the Aircargo Forwarders of the Philippines, Inc.
(AFPI), the road to recovery for the airfreight industry
is still a long stretch ahead.
While the business performed fairly
well in 2004 with total airfreight tonnage growing 13%
to 242,068 tons from 214,144 tons, some issues could
continue to weigh down the sector.
Indicators are positive enough, according
to the chief of AFPI, the only accredited organization
representing airfreight forwarders and which celebrates
its 25th year this month.eyes-Tsui notes for example
the 10% increase in export shipments of semiconductors
and electronics, and stable freight rates on top of
a booming Asian market.
"Cargo to and from the Philippines
and China is increasing as well as shipments to Bangkok,
Singapore, Kuala Lumpur, Indonesia, Taipei and other
Asian countries. Shipments going to the US and Europe
have been so far very stable," she said. But constant
fuel surcharge increases imposed by various airlines
- resulting from a steady rise in fuel prices since
early February - cannot be overlooked. "If the
fuel price index exceeds the 290 level for two consecutive
weeks an increase in fuel surcharge will be imposed
by all carriers," Reyes-Tsui explained. Another
issue that may hinder business growth is the supposedly
improper implementation of Republic Act 9280 or the
Customs Brokers Act of 2004.
"It seems many sectors are out
to change the actual implementation of the law by adopting
their ownÉ illegal interpretationsÉ in
order to make the business of customs brokerage exclusive
to them," she explained. One key provision of RA
9280 opposed by airfreight forwarders is that which
prohibits corporate practice of customs brokerage.
The sector is also opposing the recent
Land Transport Franchising and Regulatory Board order
requiring trucking companies, including trucks owned
by forwarding firms, to secure yellow plates. "Aside
from the fact that this will cost a lot of money, it's
improper - as yellow plates are indicative of 'for hire'
vehicles, which are not so for most freight forwarders'
vehicles," said Reyes-Tsui.
A development that has already meant
additional cost to the industry is the global focus
on security and terrorism. This, she explained, has
made necessary the need to adopt newer technologies,
combine capabilities, and cooperate with other players
in the transport chain to bring forth seamless compliance
with international requirements. Ultimately, Reyes-Tsui
said the airfreight industry's recovery depends largely
on the economic situation.
There has to be investors willing to
open up manufacturing outfits in the country despite
the ever-present political chaos and threats to security,
she added. "If the market is too small and profit
margin of freight forwarders is very minimal due to
stiff competition then recovery will be very slow,"
she explained.As it marks another year, Reyes-Tsui said
the association is embarking on the following projects:
Active participation in the Ateneo-FEDFAP
Institute for Logistics and Transportation Management.
Established in December 2003, the institute offers three
courses:Trade Facilitation, Freight Forwarding Management,
and Logistics Management.
The Trade Facilitation course will
start on May 21, 2005 and the other two courses in the
last quarter of 2005 or early 2006. ¥ Involvement
with different government agencies and other associations
in support of the improvement of peace and order situation
by way of monitoring and reporting all illegal importation
and transportation of prohibited and regulated items
to the Philippine National Police (PNP).
The memorandum of agreement is being
finalized by the PNP national headquarters and will
soon be signed by AFPI and the Bureau of Customs.
Implementation in June this year of
the Default Insurance Protection (DIP), a consolidated
bonding system for association members.The DIP resulted
from earlier appeals by airfreight forwarders from the
International Air Transport Association to adopt a uniform
set of requirements when transacting with airlines.
INTERISLAND freight carrier Lorenzo
Shipping Corp. (LSC) reported robust operations in 2004
as reflected in its net income after tax of P70 million,
up 85% from the previous year's P38 million.
In a recent disclosure to the Philippine
Stock Exchange, the all-cargo shipping firm said growth
in profit is mainly attributed to the 12% increase in
net freight revenue which, in turn, resulted from the
10% growth in container traffic and 2% growth in net
freight per container.
It said freight per twenty equivalent
unit (TEU) registered an improvement with the implementation
of a general rate increase in October 2004, a freight
rate increase for foreign shipments, as well as improved
cargo mix. Direct operating expenses rose 13.69% (P81.13
million) to P673.95 million last year from P592.82 million
in 2003.
The most notable increase came from
fuel and lubricants in view of the series of oil price
hikes which accumulated to P52.52 million or 20% over
last year. In December 2004, LSC accrued P12 million
under claims and damages account filed by an insurance
company. Drydocking expenses also grew 14.78% due to
accelerated amortization of the remaining balance of
drydocking costs of Lorcon Cagayan De Oro and Lorcon
Luzon.
The robust performance was also attributed
to the full implementation of the LSC integrated online
system (bill of lading, booking, container tracking,
accounts receivable), which provides accurate, timely
and efficient reports. The online connectivity of container
yard offices was completed by full utilization of network
equipment without additional cost, the company added.
LSC said a key development last year
was the signing of Neptune Orient Lines (NOL) of a memorandum
of understanding with the National Marine Corporation
(NMC) in November on the preliminary terms of NOL's
proposed sale of its entire equity in the company.
Last March, NOL and NMC signed the
sale and purchase agreement for the entire shareholdings
of NOL in Lorenzo. Closing of the transaction is within
60 days from the execution of the agreement.
This year, the company has lined up projects to enhance
its competitive edge, including the purchase of two
new cargo handling equipment (28-tonner hyster forklift)
to improve cargo handling capabilities and terminal
operations productivity. The company is also planning
to acquire 50 units of special container vans to answer
to the demands of the livestock market.
THE Philippine Ports Authority (PPA)
and concerned local government units (LGUs) are still
battling over the settlement of real estate tax payments
of various properties under the port regulator's control.
In a recent interview, PPA assistant
general manager for Special Projects and Corporate Affairs
Raul T. Santos said PPA will stand by its earlier position
that it does not owe LGUs any taxes.
He said an earlier Supreme Court (SC)
ruling asking PPA to pay taxes on its assets and properties
in Iloilo is not applicable to all ports under its jurisdiction.
Santos said the ruling was based on the assets being
used commercially by a third party. Various LGUs are
pointing to the SC ruling as justification for PPA's
payment of taxes.
The port regulator said the idea is
"impractical" and would have a big impact
on its budget management. The funds, supposedly for
the development and construction of dilapidated ports
nationwide, would have to be diverted to LGUs, he noted.
"We are waiting for the final indefinite ruling
from the court. Whatever comes out of it, we will follow,"
Santos said. - Maritess R. Mesias
