IT'S crunch time and Philippine logistics
companies are doing what their international counterparts
do when the economy isn't conducive to business: they
restructure and downsize.In an informal survey by
PortCalls, enterprises said company restructuring
and downsizing are better than folding and starting
over again elsewhere. What it all boils down to, they
said, is trying to keep one's head above water and riding
out the crisis - by keeping an eye on what the company
does best and spending only the essentials.
Companies are also selling assets that are less profitable
and concentrating on their core business. Outgoing Philippine
International Seafreight Forwarders Association president
Erich Lingad said there is an even more conscious effort
to minimize cost, a sentiment echoed by Wingspeed Shipping
Corp. general manager Chris Coching.
Coching said minimizing cost is the best strategy especially
at a time when you just simply have to make do with
what you have. "Until business picks up, we will
have to spend extra wisely and project company growth
according to budget," he added.Big companies such
as vessel operators Aboitiz Transport Corp. (ATS) and
logistics service provider Asian Terminals, Inc. (ATI),
meanwhile, are focusing their attention on their more
profitable businesses.
Chief finance officer Lilian Cariaso said ATS has lined
up several initiatives to further bring down operating
cost which soared almost 10% in the first half of the
year compared to the previous year. The initiatives
to lessen cost will preserve the company's edge over
its competitors and further strengthen its hold on the
market, she said.
As early as 2003, ATI has started to restructure and
downsize. It said its actions to consolidate and reallocate
resources to more profitable sectors are now bearing
fruit.Some companies, such as those involved in the
manufacturing and distribution businesses, have closed
their marketing and manufacturing divisions in the country
and maintaining only certain sectors, for example logistics
and sales."Other companies are shifting to other
countries where it is cheaper to do business,"
Distribution and Management Association of the Philippines
spokesperson John Guillermo said.
RP
needs gov't agency to regulate international carrier
charges
THE absence of a government regulatory
body to police charges levied by international shipping
lines is helping keep operational costs - and eventually
logistics costs - high, according to Erich Lingad, outgoing
president of the Philippine International Seafreight
Forwarders Association (PISFA)."Unlike elsewhere,
no government agency in the Philippines regulates shipping
line charges (eg, container deposit, cleaning charges,
etc.), thus shipping lines can charge whatever they
want and shippers have no choice but to follow,"
Lingad added.
He said the charges should be removed to make shipping
rates more competitive. As it is, he noted, there are
already added costs borne by shippers such as those
related to security, making logistics costs even higher.The
Port Users Confederation with the assistance of the
Philippine Shippers' Bureau and Association of International
Shipping Lines are lobbying to remove these charges.
The high charges include those for transhipment, said
Lingad.
He said exporters are forced to transship products to
foreign ports such as Singapore and Hong Kong as Philippine
ports are incapable of handling mother ships with tonnages
of 30,000 to 60,000 tons and which can carry 5,000 to
6,000 TEUs on a single trip.Lingad said local ports
- hobbled by depth problems - can only accommodate small
ships, those with up to 1,000-TEU capacity.
"Our ports are not designed for transshipment purposes
so our exporters are forced to send their products abroad
for pickup," he added.The average transshipment
rates from Manila to Singapore or Hong Kong are $300
per FEU and $225 per TEU.He added that the high shipping
cost is forcing many local exporters to increase prices,
making their products less competitive than those from
China.
THE Bureau of Customs (BOC) is feeling
the brunt of the current political uproar."The
political situation has negatively impacted (our) import
(collections)," Customs commissioner Alexander
Arevalo said in a recent press conference, adding that
the present condition has affected collection of the
agency which now has a shortfall of approximately P1.5
billion.
Arevalo, however, declined to give exact figures on
the drop in imports.He said importers are taking a wait-and-see
attitude, waiting for the outcome of the political crisis,
and particularly what happens to the exchange rate.Since
the crisis began almost two months ago, the Philippine
peso has plunged by almost P2 from P54+ in June to P56.13
as of August 1.
"People are afraid to import. The political situation
has affected business decisions, particularly on the
issue of exchange rate," Arevalo stressed.Aside
from the political situation, he attributed the low
level of collection to less-than-expected collection
of duties and taxes on so-called sin products. "Our
estimates (did not pan out)," he stressed. The
BOC, together with the Department of Finance, is now
devising measures to plug the collection deficit and
lure importers to resume their operations.
Despite the setbacks, Arevalo said the BOC remains optimistic
about meeting its collection target before year-end,
particularly with the impending implementation of the
new value-added tax law.
The BOC was given a collection target of P151 billion
for 2005, P20 billion higher than its 2004 target.For
the first six months of the year, the agency fell short
of its target by 6%, collecting only P68 billion. Its
first-half target is P72.5 billion.Based on this data,
the BOC must generate approximately P83.1 billion in
revenues for the remainder of the year to meet its 2005
collection target.
THE European Union (EU) has extended
duty-free privileges to the Philippines for another
six months under its generalized system of preference
(GSP).With the extension, the Philippines has until
May 31, 2006 to utilize its unused slots accumulated
for the current 10-year cycle of the GSP, which ends
December this year.
The Department of Trade and Industry (DTI) said the
extension would allow Philippine exports to enter the
EU duty-free under the EU GSP program, a scheme that
grants duty-free status or a reduced duty on imports
from developing countries like the Philippines in order
to promote in-dustrialization, regional integration
and sustain-able develop-ment.The EU GSP gives duty-free
access to all non-sensitive products and a flat rate
reduc-tion of 3.5 percentage points on the duty rates
of mostly other products.
