One of the questions raised during the recently concluded 10th Philippine Ports and Shipping 2019 seemed easier to answer than it actually is: why did the Davao-Bitung RORO route not take off?
It’s easy to point at how the route proved to be unsustainable, at least for now, with a low number of TEUs being shipped from both sides. This, despite the stronger trade between the Philippines and Indonesia, as evidenced by the entry of brands such as Sosro and Indomie to our markets – and the traditional trade links between Mindanao and their neighbors to the south. But in practice, it’s become clear that despite a smaller vessel being deployed from Bitung to make the journey north, the number of goods being shipped is low compared to the costs of actually maintaining the route.
That’s not to say Davao-Bitung is doomed to fail. It’s not clear whether the low volume is due to shortcomings in regulations or demand. But it should be clear that a regular sea route alone does not jumpstart trade. A thriving ecosystem – from port facilities and equipment to logistics support infrastructure – must be developed, allowing shippers to better tap into these routes, take advantage of economies of scale, and ultimately make these routes not just viable, but thriving.
Take what I’d like to call the “slow motion congestion” of Manila’s ports. Existing facilities were unable to keep up with rising demand, leading to a slew of problems we are now facing today: congested roads, slow return of empty containers, delays in deliveries. Stakeholders, for various reasons, have been slow to respond with increased capacity, although we’re encouraged to see that some efforts have begun to materialize, from big ticket projects like the Cavite Gateway Terminal or the (partially) recently opened NLEX Harbor Link, to increased investment in state-of-the-art logistics and port facilities.
Policies promoting the use of Subic and Batangas have also stumbled because of the need to develop this ecosystem. Port capacity is available, but slow uptake from shipping lines meant these ports have been underutilized until recently. The links connecting both ports to Manila – where almost three-quarters of all of the country’s trade takes place – has only materialized in recent years, making these ports even more appealing to shippers in the capital – but perhaps not yet for those in the northern and southern parts of Luzon. Now that trade is picking up, these ports are experiencing some of the problems that Manila has dealt with for a long time: take the recent issue of empty container returns in Subic, an issue recently discussed by our North Luzon chapter during their recent Kapihan Session last January.
Of course, a strong ecosystem surrounding our sea ports isn’t just about infrastructure: the right policies and the right talent must also be in place. In Manila, we’re seeing some much-needed progress in the former as the government comes closer to issuing a Joint Administrative Order on shipping rates and port congestion. We still have issues with people, however, as truckers shift to other better-paying jobs (because congested roads don’t make them money) and as new logistics firms struggle to fill vacancies as they expand capacity to meet demand.
You can imagine this is also the case elsewhere in the country. We have ports across the country whose potentials aren’t fully realized because the ecosystems supporting them aren’t able to keep up. It’s encouraging to hear of plans to expand Iloilo’s port, to support not just the booming city but also the rest of Panay island (and Boracay, by extension). It’s also encouraging to hear of robust plans to hike infrastructure spending in Mindanao – and even more ambitious plans like transforming Tawi-Tawi into a regional transshipment hub – although we’ll have to wait and see if these truly materialize. I mentioned in a previous column how enhancing links between Cagayan de Oro and Davao ports can be a boon to Mindanao’s agricultural sector. Recent steps towards a lasting peace in the region would bring the stability this requires.
That brings us back to the question of Davao-Bitung: why did it not take off? I believe it’s because the ecosystem to support it isn’t fully in place. Put all that together – facilities beyond the ports, but also, the right policies at the national and local levels, as well as investment in world-class talent – and the route can be both sustainable and beneficial to all stakeholders. We know the market is there. It’s not too late to act.
SCMAP Visayas swears in new Board of Directors: Congratulations to the new board of SCMAP Visayas, who were sworn in (by yours truly) during their General Membership Meeting last Friday in Cebu City. They are comprised of Marivic Esmero (Peer Cargo Movers), president; Dr. Rodien Paca (Naga Port Shipping Marine Services), vice president; Mae Masnayon (Northpoint), secretary; Arnold Jumalon (Boeing Material Handling), treasurer; Roberto Cabaero (Transfluent), auditor; Gilbert Cabataña (LF Logistics), PRO; and Alan Jesus Salmero (Gan Networks), Pablito Evangelista Jr. (Fast Logistics), Nilda Getalada (Onesource Logistics) and Glenn Manguilimotan (Treasure Island), directors.
Supply Chain Immersion heads to Bacolod: Join us as we better understand supply chain from end to end, with the help of industry experts. This year we return to Bacolod, a city we last visited over twenty years ago. Expect workshops and talks on supply chain fundamentals, as well as a first-hand look at supply chain for the country’s sugar industry. It’s happening on May 17-19; we’ll release registration details in the coming weeks, but you can become a sponsor now. Visit scmap.org for more details.
Henrik Batallones is the marketing and communications executive of SCMAP. A former board director, he is also editor-in-chief of the organization’s official publication, Supply Chain Philippines. More information about SCMAP is available at scmap.org.