Philippine-based specialized logistics solutions provider Royal Cargo, Inc. is spending US$40 million or almost P2 billion this year to fund the expansion of its business portfolio and initial venture into domestic shipping.
The 2017 budget is allotted mainly for new warehousing facilities, equipment, and a vessel to be utilized for domestic shipping operations.
“We are joining the fray. We are going into domestic shipping,” Royal Cargo group chief executive officer Michael Raeuber announced during the ground-breaking ceremony May 24 of the company’s Cargo City North Hub.
More than $20 million of the budget is allotted for the completion in mid-2018 of this hub, which is set to become the company’s biggest multipurpose facility.
The Cargo City North Hub sits on a six-hectare property in Plaridel, Bulacan, and will have three activity areas—cold store, dry store, and container yard.
The cold store will have a capacity of more than 14,000 pallet positions and account for 2.4 hectares of the total land area. The dry store, on the other hand, will have a capacity of 6,000 pallet positions. The container yard is for empty containers.
The entire facility will adhere to international green building standards and feature eco-friendly construction materials, including solar panels.
The north hub complements the company’s Cargo City South Hub in Laguna and will serve the demand for efficient distribution channels in Mega Manila, Northern Luzon, Clark, Subic, and the Central Plains.
“The Philippines has definitely seen significant growth in export and import activities over the years, translating to rising warehousing and distribution needs. By helping Philippine firms keep up with the increase and further increasing number of orders, our new warehouse facility will help drive operational sustainability across supply chains,” Raeuber said.
Group president Elmer Soriano said the facility not just offers warehousing services, but also end-to-end solutions such as freight clearance and delivery.
Aside from the Luzon hubs, Royal Cargo has recently acquired a 3.4-hectare property in Cordova, Mactan, as the future site of another warehouse facility. Raeuber said the property is strategically located near the newly inaugurated bridge that connects Mactan to Cebu City.
The company currently has 14 warehouses in the country with around 60,000 square meters of footprint.
Shipping plans
In an interview on the sidelines of the ceremony, Raeuber, who was previously president of the European Chamber of Commerce in the Philippines, noted how the previous and the current governments would like to see lower domestic shipping costs and increased competition. “So we’ll provide more competition,” he said.
He explained that the company is already into shipping, with its Royal Cargo Lines, Inc. (RCLI) providing shipping services to locators at the Subic Bay Freeport. RCLI will be renamed Iris Logistics to reflect the change in the nature of its business.
Raeuber said the company is in the process of securing a certificate of public convenience from the Maritime Industry Authority to operate domestic shipping.
But the company has already acquired a preliminary conditional permit to import its first vessel, scheduled to arrive on June 13 in Batangas from Rotterdam, Netherlands. The self-sustaining, 1,100-container-capacity vessel will be carrying 186 meat-laden forty-foot reefers for one of Royal Cargo’s customers. Raeuber said they have gone on the market to acquire a second vessel.
Equipment acquisition
Royal Cargo is also currently investing heavily in equipment. Last April, it received a Liebherr LTM 1500-8.1 mobile crane and a Liebherr LR 1600/2 crawler crane at Bauan International Port, Inc. (BIPI), Batangas.
Sarmiento said they are working on a separate unit for its project cargo business that will focus on erection and installation of renewable energy power plants, among others, as Royal Cargo is heavily supporting the renewable energy industry in the country.
The company also purchased new reefer vans for domestic operations and heavy trucks for industrial projects.
In the last three years, Sarmiento said, Royal Cargo’s turnover growth has averaged over 24%.
Raeuber said the company has been replacing contracted or subcontracted facilities with its own facilities. While this requires bigger investment and merits higher risk, the margin is also bigger, he added.
Offshore expansion
On overseas plans, Raeuber said they aim to make their presence felt in all countries in Asia, except Japan, where it already has a strategic alliance with a Japanese warehousing company.
The company has offices in Cambodia, China, Germany, Guam, Hong Kong, Palau, Singapore, Taiwan, Thailand, United States, and Vietnam, and soon Indonesia and Malaysia.
Royal Cargo provides services and solutions in international and domestic freight forwarding, warehousing and distribution, projects and heavylift, erection and installation, business process outsourcing, customs brokerage, liquid transportation, shipping agencies, trucking services, and logistics solutions for clinical research and development. – Roumina Pablo
