DAVAO CITY — The Mindanao business community needs to take a more united stand in pushing for lower shipping rates and more direct cargo services to boost international trade in the southern islands, an official of the European Chamber of Commerce of the Philippines (ECCP) said.
ECCP-Southern Mindanao Chairperson Antonio S. Peralta said the amendment of the Cabotage Law in 2015, which eased restrictions on the entry of foreign ships to any port in the country, has not translated to lower logistics costs for Mindanao’s producers and traders.
“There has got to be greater consensus of the Mindanao business community to really push for the lowering of shipping costs,” he said during last week’s Habi at Kape forum.
“Why, after all these years, there was no decline on our shipping cost… It’s very hard for us to accept na mataas ’yung shipping cost natin, biruin mo (that our shipping cost is higher, imagine) it’s like almost over 31% of your product cost, (while in) Luzon it’s 17%,” he added.
According to the Mindanao Development Authority, freight rates from Manila to Kaohsiung are $300 or $0.55 per nautical mile (nm) and $250 to Hong Kong or $0.39/nm, both lower compared with $1,047 or $0.97/nm from Manila to Davao.
In a separate interview with BusinessWorld, Mr. Peralta said that the situation is “really a combination of factors,” which involves not just limited foreign ships serving Mindanao and high rates, but also constraints among domestic shipping firms in terms of capital and port infrastructure in Mindanao.
“The shipping business is capital-intensive given the larger costs associated with acquiring vessels. One of the alternatives of raising capital would be to consider joint ventures with foreign shipping lines. This would mean an infusion of fresh capital for local shipping companies to acquire modern vessels,” he said.
Government must also look into new areas for port development, citing as an example Malalag in Davao Occidental or Panabo in Davao del Norte given the limited berthing space at Sasa Port in Davao City.
“Davao City has hardly any room for expansion,” he said.
Mr. Peralta said the chamber hopes to have a consolidated position paper and plan of action that can be presented to the government later this year after the staging of the ECCP’s Business Conference on Logistics in the Visayas and Mindanao.
A half-day conference was held on Jan. 31 in Davao City for the initial discussions.
Other points that were raised include maritime accidents, ageing vessels, low incentives given to shipping companies, and lack of coordination between producers and shipping companies.
“That was only a half-day conference and normally it was meant to just open up the issue to lay the basis for a larger conference,” Mr. Peralta said.
The next gathering, originally scheduled for March, has been postponed to June or July due to the coronavirus disease 2019 (COVID-19) outbreak.
“This cannot just be done overnight… I think there should be changes that are forthcoming for the improvement of the shipping rates as well as the condition of vessels,” he said. — Maya M. Padillo
