Listed Philippine carrier Lorenzo Shipping Corp. is allotting P600 million as capital expenditure for this year, for use in acquiring land-based equipment and facility as well as in the dry-docking of vessels.
The 2015 capex is 96.1% higher than last year’s P306 million which was used partly to acquire a new vessel and containers.
Company operations planning manager Celeste Villareal said this year’s funds are earmarked for dry-docking of four vessels; purchase of the Bacolod container yard currently leased by the firm for the last 14 years; lease of containers; and investment in land-based equipment such as forklifts.
In a presentation during the company’s annual shareholders’ meeting on June 25, Lorenzo president Roberto Umali said drydocking for MV Lorcon Bacolod and Lorcon Visayas was completed in March, while Lorcon Dumaguete is still in the shipyard. MV Lorcon General Santos is scheduled to be dry-docked in August.
To compensate for reduced vessel sailings as a result of drydocking, Umali said Lorenzo has entered into co-loading arrangements with other carriers.
In Iloilo, there is a plan to acquire a bigger container yard in view of expected growth of volume at Iloilo ports. In Davao, Lorenzo transferred to a bigger container yard last year while in Malabon the leased area for the yard was increased to accommodate inbound cargoes for stripping, and reduce storage costs for empty containers, Umali said.
As part of its re-fleeting plan, Lorenzo is selling the 31-year-old MV Lorcon Cebu, to be replaced by MV Lorcon Iloilo bought last March. Lorcon Iloilo, an 11-year-old vessel with a capacity of 270 twenty-foot equivalent units (TEUs), had its maiden voyage June 18 on the Manila-Cebu-Dumaguete-Zamboanga-Manila route.
Umali said the new acquisition increased Lorenzo’s total vessel capacity from 1,883 TEUs to 1,943 TEUs, and brought down the average age of its fleet to 19 years from 22.
Seeking fixed berthing space
Moreover, Umali said Lorenzo is working closely with the Manila North Harbour Port, Inc. (MNHPI), which operates Manila’s domestic port, “on the berthing allocation for our vessels in anticipation of a tighter berth availability for this year due to the full blast construction of North Harbour.”
Similarly, the shipping executive said Lorenzo is coordinating with Fast Cranes, Inc. in Cebu on a fixed berthing window.
“Though these will entail added costs, using the gantry cranes will result in faster loading and discharging of containers, faster delivery of cargoes to consignees, and over the long term, minimize the maintenance cost of our vessel cranes,” Umali pointed out.
He said Lorenzo started using the gantry cranes at Manila North Harbour last year to improve productivity and vessel turnaround.
However, their vessels had to queue before docking due to the limited availability of berths as a result of ongoing development of the domestic port.
“In addition, our cargo handling cost increased without fully reaping the desired benefits to improve productivity and efficiency,” Umali noted.
He added they experience the same berth congestion in the port of Cebu due to the numerous vessel calls. There’s also queuing in the ports of Iloilo and Zamboanga because, he claimed, “foreign vessels are prioritized for docking over domestic shipping lines.”
“With the increasing number of vessels, without port development and modernization, we will continue to experience berthing congestion,” Umali said.
He added that this remains one of the foremost issues that the Philippine Liner Shipping Association, where Lorenzo is a member, “continuously brings forth to the attention of the Philippine Ports Authority.”
Meanwhile, Umali said Lorenzo will still be implementing the three success drivers it identified last year, which are to increase productivity, reduce costs, and quickly respond to changes in customers’ requirement.
He added that the carrier will continue to synergize with other transport and logistics providers to provide a total logistics experience to clients. Umali said competition remains tough in the domestic shipping industry, and it is “a challenge for us to protect our existing 10% market share.”
Lorenzo has secured an ISO 9000:2008 certification for its quality management system at its Manila office, and is working on getting the same certification for its regional branches. – Roumina Pablo