To ease shipping costs, gov’t agency turns to IFC

The Department of Transportation and Communications (DOTC) has tapped the services of International Finance Corp. to bring down the cost of domestic shipping.

In a statement it issued Wednesday, the DOTC said that transportation costs make up nearly half of the wholesale prices of basic food commodities, and it needs to lower expenses for the benefit of farmers and consumers.

The three-year program is meant to boost agribusiness trade by improving farmers’ market access, the DOTC said, explaining that IFC needs to come up with policy solutions to bring down costs.

IFC is expected to promote competition in various parts of the shipping supply chain which, in turn, may result in lower prices of commodities like food products.

“This partnership with IFC is a very welcome development. It will have a major impact on our economy, especially for farmers and fisherfolk who stand to realize the most gains from our policy reforms,” the DOTC said in the statement.

The DOTC said that transportation and logistics costs accounted for as much as 43.8 percent of wholesale food prices, based on a study by the United Nations Development Program.

The initiative will be implemented nationwide, beginning in ports with high volumes of agricultural cargo shipments in Luzon and Mindanao.

Streamlining shipping costs, the IFC said, will result in additional investments in the logistics industry of as much as $17 million a year.

“By making it cheaper to move agricultural goods from farms to markets, the prices of these commodities will also be reduced, making them more affordable to consumers,” the DOTC said.

This effort is partly funded by the Canadian International Cooperation Agency (CIDA), and will require no cost on the part of the Philippine government.

It is also part of IFC’s Philippine Agribusiness Trade Logistics program, the statement said.

The DOTC will likewise collaborate with other agencies like the Maritime Industry Authority and the Philippine Ports Authority in reviewing the results of the study and implementing IFC’s recommendations from 2013 to 2016.

The government is eyeing reforms in the shipping industry to help bolster economic growth.

The government expects the country’s gross domestic product to grow between 6 and 7 percent this year.

The Philippines recently received an investment grade rating from two major credit agencies.

The DOTC is eyeing other reforms related to shipping, including diverting cargo traffic away from Manila, which is suffering from congestion problems, to underutilized facilities in Subic and Batangas.

Former Transportation Secretary Mar Roxas earlier said that products shipped from Luzon to Mindanao turned out to be more expensive than the same product shipped to Manila from the United States.