OPTIMISM seems the prevailing sentiment among most logistics players these days.
International container shipping lines and truckers are enjoying higher volumes, thanks to strong import and export figures. Cold chain and tanker operators are also seeing better days although these two sectors say it may be too early to bring out the bubbly.
The Association of International Shipping Lines (AISL) projects a strong finish for the year for its members as fears of a double dip recession seem to have abated.
AISL president Patrick Ronas told PortCalls containerized import and export shipments to and from the Philippines are strong but a bit volatile. Member lines have also reported volume increases especially for inbound cargo in the last three months.
Ronas, who is the executive vice president and general manager of Soriamont Steamship Agencies, Inc, said the intra-Asia market is performing better than expected and slowly accounting for a greater share of the country’s total throughput.
“As for exports to the US, it is pleasing to note that the double dip everybody has been talking about did not happen,” Ronas said, adding though that the strong Philippine peso “is placing substantial pressure on buyers who in turn pass on the stress to exporters.”
This year “will surely be better than 2009 but will not be the same as 2008,” he said. “We therefore expect that volume will remain steady until the end of the year or taper off to 14% by end of the year.”
The average laden throughput reported by AISL members for the third quarter is 15-16% higher than in the same period last year.
Truckers
Meanwhile, more stable petroleum prices and the business community’s confidence in the current administration are expected to translate to more business for trucking operators.
“The trucking industry is (doing) better than expected. If the business sector continues its support for the present administration, we anticipate a better trucking business,” Confederation of Truckers Association of the Philippines (CTAP) president Rupert Bayocot told PortCalls.
“Also if graft and corruption is lessened by 60-70% and there are no more incidents that will bring shame to the Aquino administration like the Quirino Grandstand hostage crisis, more businessmen, especially foreigners, will invest in the Philippines. More investors mean more trucking,” Bayocot explained.
In the first half of the year, CTAP members saw volumes jump at least 20% year on year on account of strong imports and exports.
Cold chain operators
Cold chain operators are just as upbeat. Cold Chain Association of the Philippines (CCAP) president Anthony Dizon said his members are currently operating at full capacity but are “still puzzled where to attribute our strong volume. We still want to see if our performance will drag through to the early part of next year when all markets start their full recovery from the global crisis before making another assessment.”
The better-than-expected demand for cold chain facilities has earlier been attributed to customers who bought extra supplies — which therefore required refrigeration — during times when prices were favorable.
Dizon feared that once business conditions stabilize and projections become less subject to volatility, demand may drop.
“But overall, we are happy as we have not been that affected by the crisis,” he told PortCalls.
Cold chain installations continue to rise with strong demand from the processing sector.
In the last few months, an estimated 30,000 tons of additional capacity had been put in place. Several more projects are expected to go online before end of the year and early next year.
In the next two years, about five more facilities worth close to P2 billion will be opened.
Last month, CCAP said it was testing a new refrigeration system being developed by the Philippine Center for Postharvest Development and Mechanization that uses biomass as source of energy.
The system is expected to cut power cost by almost half at the same time require only a minimal investment.
Power costs account for 25-30% of overhead expense for cold chain operators.
Tanker operators
For its part, the Philippine Petroleum Sea Transport Association (Philpesta) said its members prefer to keep their heads low, eschewing expansion or modernization programs at least for now.
“The tankering business is (doing) relatively better this year but still not enough to project a brighter future,” Philpesta executive director Ernesto Pagayo told PortCalls.
There is much optimism with the assumption of the new government, he noted, but it remains to be seen whether this would translate to better volume for operators.
“As a result, majority of Philpesta members are just maintaining the current (pace of) business and waiting until the murky condition clears up.”
In the meantime, the group is asking the Maritime Industry Authority (Marina) to temporarily defer a few new policies that would increase business costs for small-time tanker operators, including compliance to the International Safety Management (ISM) Code.
While Philpesta acknowledges the need to comply with the ISM alongside the National Safety Management Code, the association said their adoption at this time will translate to greater expense for operators already operating on a very thin market to begin with.
As it is, more investments are in order next year. Starting January 2011, Marina will require all marine vessels delivering white petroleum products to coastal locations to have double-hull configuration.
At the same time, all vessels plying the local trade will have to comply with the mandatory Protection and Indemnity insurance program.
Tanker operators are also getting ready for the adoption of Republic Act 9483 or the Oil Pollution Compensation Act which requires setting aside P0.10 per liter/per delivery of oil for the oil pollution fund.
