Domestic shipping lines: charters, yes; overseas services, not really

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  • Domestic shipping lines are receptive to chartering but not to operating overseas services to help plug vessel space shortage for exports
  • An export body earlier asked government to encourage domestic shipping lines to operate regionally and for shipowners to get into bareboat charter arrangements
  • Philippine Liner Shipping Association president Mark Matthew Parco said he has “not seen any line interested in starting a service overseas” but there may be interest in chartering vessels for overseas deployment as feeders
  • Vessel chartering seen as more expensive for exporters though, requiring them to consolidate shipments

Domestic shipping lines may be interested in vessel chartering but not in operating overseas services to help address the vessel space shortage currently encountered by Philippine exporters, according to an executive of the Philippine Liner Shipping Association (PLSA).

PLSA president Mark Matthew Parco in an email to PortCalls said he has “not seen any line interested in starting a service overseas,” but there may be an interest in chartering vessels for overseas deployment as feeders.

The Export Development Council-Networking Committee on Transport and Logistics earlier called on the Maritime Industry Authority (MARINA) to encourage domestic shipping lines to operate regionally to plug the gap in vessel space. Bareboat chartering by the Filipino Shipowners Association (FSA) was also pushed. FSA members operate and charter Philippine-flag ships for overseas trade.

MARINA deputy administrator for operations Nanette Dinopol was earlier quoted in a report that the authority has already “granted consent” for bareboat chartering to Iris Logistics, Inc. and PNX-Chelsea Shipping Corp., allowing them to engage in regional operations.

Parco said that with chartering, the domestic shipping line will not need to source for cargo, buy or lease new containers, and set up an enterprise resource planning system to manage the international shipments and data interchange required with overseas ports.

He added that to his knowledge, the largest ships in the domestic market have a nominal capacity of about 1,000 TEUs (twenty-foot equivalent units), which “would be too small for a regular service.”

Exporters also require 40-footers, he said, but most domestic lines have 20-footers for the local market.

Other requirements for a regular service include arranging port berthing windows at the port of destination; appointing agencies, container yards, truckers, and container freight stations at destination ports depending on the product offering; and putting up bonds especially for customs claims at destination port, among others.

The Philippine Exporters Confederation, Inc. (PHILEXPORT) earlier said its members are suffering from worsening supply chain and logistics issues, particularly lack of vessel space, soaring freight rates, and container shortage that are resulting in shipment delays and huge losses.

READ: Insufficient vessel space PH exporters’ top shipping challenge

The group said cargo volumes are expected to further expand—and the vessel space shortage along with it—as the peak season approaches and with rebound seen once the pandemic subsides.

On the issue of container shortage, Association of International Shipping Lines president Patrick Ronas earlier told PortCalls the problem lies with unavailability of space on mother vessels, and not on insufficient containers in the country.

Parco said allowing domestic shipping lines to operate regionally or as feeders would not “solve the issue” of lack of space on the long haul/mother vessel service. Due to the Philippines’ comparatively low volumes, only feeder vessels call the country to transport their cargoes to mother vessels in transshipment ports. These mother vessels then carry shipments to their final ports of destination.

RELATED READ: AISL open to dialogue with exporters to fix vessel space shortage

“Perhaps what the exporters can do is to consider and study the feasibility of chartering a Philippine vessel themselves; they can seek assistance from government to perhaps facilitate the process and negotiate for a more ‘reasonable’ charter rate from Filipino shipowners,” Parco said.

PHILEXPORT assistant vice president for advocacy Ma. Flordeliza Leong told PortCalls vessel chartering is an option but an expensive one and will require exporters to consolidate their shipments.

She added that PHILEXPORT president Sergio Ortiz-Luis, Jr. had actually raised a request at an EDC executive committee meeting last month for government to put up a quick response fund for this purpose.Roumina Pablo