2003 Q4 | In Their View | Portcalls - the Philippines only Shipping and Transport Guide

Launch of Ateneo-FEDFAP Institute for Logistics and Transportation Management (December 8, 2003)

By ANGELITO E. COLONA, ASEAN Federation of Forwarder Associations (AFFA) Chairman (This speech was delived on Decem-ber 4 at the launch of the Ateneo-FEDFAP Institute for Logistics and Transportation Management at the Vivere Suites in Muntinlupa.)

It is with a great sense of satisfaction and history that I stand before you today.

Satisfaction because we have gone a long way in realizing one of our industry's cherished dreams: professionalizing our industry. I remember how fearful we were in taking those initial hesitant steps when we formally established a Training Center in 1998, borrowing training rooms of members to conduct our courses.

I remember us all putting up brave faces when we decided to institutionalize our dream by renting some 120 square meters of office at PAIR Pags to put up our Association's Training Center even as we were all terrified on how we will be able to sustain the initiative financially. Where will we get the money for the rental?… the instructors?… and a lot of myriad things. Yet we are here today with a Training Center that is IATA-endorsed, a pool of professional trainors for both air and seafreight courses. We have consolidated our industry resources and have merged our individual associations into a Federation. All because for these past years, difficult though they may have been, the members kept faith and believed in the value of what we have been doing.

Many helping hands were offered, generously, graciously, by everybody; some leading, others engaging in constructive criticism, everybody encouraging, lending quiet support in any manner they can. As in the past, when we were just starting, again we find ourselves at a crossroad. We find ourselves at a defining moment. In the past we all shared and believed and pursued a dream…a vision. We have relentlessly pursued it with a single mindedness through many Board changes in our organizations and the innumerable meetings and discussions among ourselves in the industry and with those organizations and institutions we engaged to accomplish the vision.

Then we wanted to address our immediate industry requirement of developing technically proficient human resources. This we did by developing short courses and putting up a Training Center. We worked hard to bring up the quality of our training to world standards resulting in our successfully having the Training Center IATA-endorsed. Having succeeded in addressing our short-term goal, we are now poised to address the other half of our dream and really define our industry as well as ourselves for the years to come. From now on, the outlook will be long term; the journey thus longer, more perilous and perhaps harder. Our ambition is greater, more complex.

We want to transform our industry into a profession by putting up a degreed course in a similar manner that accounting or medicine are professions. We want practitioners in this business to be recognized professionals as well as experts. We can accomplish this two ways: we either put up our own school and offer a degreed course in logistics and transportation or engage and partner with an educational institution to do so. Putting up a school though, given the various requirements and the logistics, would be almost impossible for us to manage. We are after all forwarders and logistics/transportation practitioners, not educators. The most practical option then would be to engage an existing educational institution and partner with it. In the past we approached UP's Institute of Transportation to broach the idea of creating an MBA course in Logistics and Transportation in a CEO convocation. They initially agreed to the partnership only to later develop cold feet because they were afraid the initiative would eat into their budget. The discussion therefore went nowhere.

After an invitation to give a talk on the role of transportation and creating efficient channels of distribution for exports ar De La Salle University, discussions were again opened for a FEDFAP-De La Salle arrangement to jointly develop an MBA course. But like the UP initiative, the discussions went nowhere and died for lack of commitment by De La Salle. The experience had made us wary. We backed off from further pursuing the initiative as we seemingly couldn't find a committed partner. That was until an initial discussion with Ateneo's Center for Continuing Education and industry associations FEDFAP and CCBI was initiated by PortCalls. In the discussion we signified our interest in putting up an MBA program and, later should it be possible and practicable, an undergraduate course. Even then Ateneo signified its interest in pursuing and realizing the concept. Given, however, our previous frustrating experiences, we wanted to make sure of the commitment of Ateneo. We purposely put off pursuing the initiative for almost a year, wanting to see how enthusiastically Ateneo would pursue the idea of an industry partnership. It literally became a reversal of roles, with FEDFAP playing hard to get and Ateneo pursuing the idea of partnership, never showing any sign of flagging or giving up. It became obvious: we have finally found our committed partner! And so we stand here today in a historic and defining moment… for our industry, for our association, for ourselves! We stand at the edge of realizing the last part of our vision… of our dream. We will be forming men and women who are not only professionals in the discipline of logistics and transportation but experts… men and women who can rightfully claim to such a title because they have acquired the proficiency and skills that such a title implies and requires. Hopefully with this initiative, we will form legions of such experts. For ours is an industry that is vital and critical to the life of our country.

We are the guardian of its economic lifeblood for we make sure that the channels of distribution for commerce and services are operative and always healthy and efficient. It is obvious that without these channels, there is economic death. It may not be a glamorous industry. Most often what we do is invisible. But it is vital and strategic and necessary, something the country cannot do without. The country therefore requires and deserves only the best… people who are compleat professionals. It is therefore with great pleasure to welcome all of you today. This is our celebration, a congratulations to all of us for dreaming for the country.

And not just silently dreaming and standing there and doing nothing about the dream but making sure that the dream is fulfilled and realized. God bless us all in this our collective endeavor.

Mode of maritime transportation and required facilities (November 3, 2003)

By COL. LEONARDO ODO„O, (Ret.),
Executive Director, Philippine Interisland Shipping Association
(The following was a speech delivered at a recent JICA port development workshop.)

I congratulate the DOTC, together with JICA, for initiating this important project leading to the crafting of a master plan for our national ports system. As a shipping man, I am encouraged to see our government finally getting its act together and putting rhyme and reason to how we develop ports around our islands. With a formal and official plan in place, I suppose we will not again go astray building ports where there is hardly any cargo - just because some politicians want them - and leaving North Harbor, the busiest port in this country, as primitive as it was 50 years ago.

When the JICA study team came to see me a few months back for some inputs for their study, I remember saying that while the JICA project was extremely important and must proceed quickly, I thought that a framework for the development of our national merchant fleet was the "chicken that should come before the egg" - which is the ports system master plan. For how can we intelligently design ports if we are not sure what type and size of vessels will use those ports and what cargoes will be carried by those vessels. And so, when the JICA team asked me to speak today on "Mode of Maritime Transportation and the Required Facilities", I agreed. I find this to be a perfect opportunity to share my views on the modes of maritime transportation to be considered in the master plan for our ports system, as well as in the framework for a national fleet development plan which I suggest our government formulate soon.

The Need for Regional RORO Ferry Linkages
A major thrust of our government's economic development policy is to accelerate countryside development and to develop self-sustained island and regional economies. This would require connecting undeveloped and underdeveloped islands and regions in the country to centers of social and economic activities. Our best option, I believe, is to set up regional networks of RORO ferry links with a fleet of optimum-size RORO ferries carrying interisland trade and people between RORO ports in strategic locations. I am in effect reiterating the recommendation of the JICA team which did the study in 1992 on the Nationwide RORO Transport System Development.

Proposed RORO Ferry Links and Facilities
To my mind, some of the more important links that need to be developed or further developed as part of a whole RORO ferry network are the following:

¥ The 300-GRT, 300-passenger, 30-vehicle RORO ferries may be ideal for ferry-distance RORO links, or those between two ports accessible to each other within a sailing time of three hours or less. I remember taking this type and size of ferry on a number of trips I made in the past from Imabari City to Shimonoseki in Japan. Bigger-capacity RORO ferries can be considered for longer RORO links.

¥ RORO ferry ports should be built in selected localities that could best enhance development and urbanization of adjacent hinterland areas. Instead of building a port in each town as every local politician would demand, we should build road networks to link hinterland towns to RORO ports. That could be cheaper than building a port in every municipality and should stimulate development in areas to be traversed by the new roads.

¥ As each regional RORO ferry system infrastructure is developed, the wooden-hulled vessels that now serve many of the links should be phased out progressively. Not only will the phase-out make for a safer Philippine fleet. It could render steel-hulled vessel service financially viable with none of those primitive wooden-hulled vessels providing cutthroat competition that, in the end, compromises safety.

Moving People and Cargo around the Archipelago
The following depicts how people and cargo can move all around our archipelago once the regional RORO ferry networks are linked with existing trunk routes:

¥ the Philippine-Japan Friendship Highway (PJFH) which is the Eastern seaboard trunk route from Manila all the way to Davao;

¥ the East-West trunk route connecting the PJFH from Samar thru Leyte, Cebu and Negros to the Northwestern tip of Panay Island;

¥ the new Strong Republic Nautical Highway, which is the Western seaboard trunk route from Manila to Dapitan on the northwestern tip of Mindanao, and which connects to the East-West trunk route at Kalibo Aklan on the Northwestern tip of Panay Island; and

¥ the major sea links from Manila to Cebu, Iloilo, Bacolod, Cagayan de Oro, Davao and General Santos.

Alternatives to ROPAX Vessel Operation
When the domestic shipping industry was deregulated in 1996, our liner sector responded with the introduction of modern RORO-passenger or ROPAX vessels in the major routes: specially from Manila to Cebu, to Iloilo and to Bacolod. The modernization of our national fleet finally began, thanks to the major players who tried, and are still trying, to outdo one another with bigger, younger, and more luxurious vessels.

As alternative modes of transportation in routes with high-density passenger and cargo traffic, I propose pure passenger service with day ferries, or vessels without cabins, and pure container service with gearless vessels.

I actually have reservations about continuing the deployment in the domestic market of expensive ROPAX vessels with cabins and other passenger facilities found in luxury liners. This is because the great majority of our passengers traveling by sea from the outports to Manila and back are not tourists or vacationists. The typical passenger just wants to get to his destination quickly, unmindful of the kind of amenities he finds when he goes aboard. Many of our passengers, in any case, are unable to pay for cabin accommodations. Those who can generally travel by air.

From what I know, the cabins and facilities of our typical ROPAX vessels could cost up to 50% of total project outlay to refurbish and to refit, and could eat up up to 50% of usable ship space - but are underutilized outside of peak passenger seasons, except in the case of a few of our ROPAX vessels which I know to be performing very well. I have sailed on one of them.

Day ferries fitted with airline-type seats and offering nothing more fancy than the kind of cabin service and facilities which airlines provide economy-class passengers should theoretically be less expensive to build and less expensive to maintain and to operate than the high-end ROPAX vessels we have. And they certainly can accommodate more paying passengers per square meter of usable ship space.

Day ferries cruising at 25 knots can do Manila-Cebu in 16 hours; Manila-Iloilo and Manila-Bacolod in much less time, but still more than four hours. We need to amend our present regulation making lying accommodations in passenger ships compulsory for sea travel in excess of four hours. That regulation is outdated since we all know now that on transpacific flights which take up to 16 hours, Filipino passengers do not complain of not being able to lie on a bed or on a bunk while in flight. Neither do our local passengers traveling by land to Leyte from Manila for 20 hours or more on very cramped buses.

For our cargo trade in the high-density routes, I propose deployment of gearless container ships in lieu of conventional LOLO vessels once North Harbor and the rest of the domestic ports in major routes are equipped with quay cranes. It should not be difficult to see that gearless container ships are less expensive to build and less expensive to maintain and to operate than geared vessels. And, with quay cranes able to handle up to 25 boxes an hour compared to the 10 or so boxes that geared container ships and conventional LOLO vessels can do at the most, those gearless ships can be turned around much faster for higher productivity.

Tonnage for Trade with Asian Countries
As part of our maritime industry's announced vision to carry 50% of cargoes in the Philippines' trade with countries in the East Asian region by the year 2010, additional tonnage should be brought into the national fleet inventory, including the following:

¥ 5,000-10,000 DWT general cargo ships for our tramp trade
¥ A few panamax vessels for our coal trade

Intermodal Service on the
Manila-Davao Link
Cagayan de Oro and Davao are now linked by a 300-kilometer newly completed highway which could be negotiated by cargo trucks in 10 to 12 hours and by passenger buses in about six hours. It is time we try the intermodal transport of cargo and passengers between Manila and Davao: by sea between Manila and Cagayan de Oro and by land between Cagayan de Oro and Davao.

A preliminary cost comparison shows negligible difference in freight and passage costs but the saving in transit time is significant: up to 24 hours for passengers and up to 20 hours for cargo. In any case, there are potential cost savings: one, from lower trucking rates, once the Davao-Manila backhaul traffic is developed and, two, in port handling costs if direct-to-truck unloading and direct-to-ship loading is done.

Many of our ROPAX as well as LOLO vessels which ply the 800-mile Manila-Davao route sail underloaded, except in peak seasons. It is so much waste of fuel and ship time. Let us try the intermodal option, have a much shorter sea leg and allow trucks and buses to perform the rest of the service over land at conceivably lower cost. Then, combining Davao cargo and passengers with Cagayan de Oro cargo and passengers will increase traffic volume on the Manila-Cagayan de Oro leg, improve vessel utilization and reduce overall shipping cost drastically.

For this intermodal service, the port in Cagayan de Oro should provide additional truck holding areas as well as bus terminals within the port zone for layover and transfer of passengers.

Summary of recommendations
In closing, allow me to summarize my proposed inputs for your master plan study:

¥ Undeveloped islands and regions to be linked by RORO ferries to centers of commerce

Disclaimer
Finally, for the sake of good order, I would like to declare that the views I have presented today are entirely my own and do not necessarily reflect the official position of the Philippine Interisland Shipping Association.