Can Subic and Batangas ports help decongest Metro Manila?
The standoff between the truckers’ associations and Manila Mayor Joseph Estrada has been resolved temporarily. Trucks with cargoes would now be allowed to pass through Manila from 10 a.m. to 5 p.m., an extension of two hours from the previous window of 10 a.m. to 3 p.m. The truck ban was imposed when 15 projects, including a 14.8 kilometer Skyway Connector between South Luzon Expressway (SLEx) and North Luzon Expressway (NLEx), and the 6 kilometer NAIA Expressway connecting the airport to the Entertainment City at the seafront, have simultaneously been started. They will be completed, hopefully, before the President’s term ends in 2016. The construction had exacerbated the traffic gridlock which, according to the Japan International Cooperation Agency (JICA), is causing loss to the economy of P2.4 billion daily. While SLEx and NLEx Connector would help ease the traffic until it also becomes as congested as C-5 and Edsa, some immediate solutions have to be found.
Among the solutions is to divert incoming cargoes to Subic Container Port the northbound cargoes, and to Batangas Container Port, the cargoes bound for Calabarzon and the rest of Southern Luzon. As both Subic and Batangas Ports are underutilized, it is timely to discuss why they remain underutilized. The case of Subic Port is instructive.
The Subic Container Port is a significant component of the Subic-Clark Alliance for Development (SCAD) strategy which includes the construction of the Subic-Clark-Tarlac Expressway (SCTex) and the Clark International Airport to form a global logistics hub and international gateway for Central Luzon. Because of the long, parallel runway and vast land area in Clark and the deep water and natural harbor of Subic, it made sense to build an international civil aviation complex as center of a future Aerotropolis in Clark, and a maritime center in Subic connected by an efficient highway. This logistics hub would give locators in the Subic-Clark corridor an edge in this age of just-in-time production and delivery to the global market. Subic, first and foremost, is a maritime center.
The Subic Port modernization project was premised on JICA’s study that Subic, given its strategic assets, can acquire its market share of the growing container cargo, half of which bypasses the Philippines on or from its way to Singapore. The trend in shipping was toward containerization and a capacity shortage of 14 million TEUs was projected for the Pacific region. Singapore has reached its capacity limit and Hong Kong was severely silted. Laem Chabang in Thailand and other Malaysian ports were racing to fill the gap. Guan Yang port in Korea and Qing Dao in China were being expanded despite their proximity to Pusan and Shanghai ports. And Vietnam was then building a new container port.
Thus, an ODA loan with a term of 40 years at 0.95 percent interest rate was obtained from Japan Bank for International Cooperation (JBIC) for the construction of the 600,000 TEU capacity Subic Container Port. A 10-year grace period was included for SBMA to promote, market, and build up the volume. By 2012, the volume was less than 40,000 TEUs. The question is: Was there any previous honest-to-goodness effort to promote the use of the container port during the 10-year grace period? In addressing this neglect, the current SBMA administration had convened shippers and shipping lines in a Subic maritime summit.
A recent JICA study showed that:
1. Potential cargo in Subic hinterland is 531,000 TEUs with total actual volume generation at 288,800 TEUs of which only 25,560 TEUs come to Subic. The others flow out to Manila Ports. “In other words, there exists in the hinterland of Subic Port a sufficient volume worth marketing to vessel lines for use of Subic Port.”
Chicken or egg
2. There have been cargo flows strongly wishing to use Subic Port but are currently using Manila Ports because there are not enough vessel calls in Subic to meet their shipping needs. And few vessels come to Subic because there are not enough cargoes to load.
To break this “chicken or egg” situation, two types of services are considered for linkages to Singapore, Japan, Hong Kong, and Taiwan via Subic Port: the Subic shuttle (round voyage between Subic and another port), and Subic plus (added call in Subic of vessels calling at Manila Ports on shuttle or pendulum services with other linked ports.)
3. The break-even volume for Subic-plus service is only 150 TEUs, a volume that is collectible if consolidated together with some locators. But this will not happen without spade work from SBMA in identifying these locators, not only in SBMA, Clark and AFAB but in Pampanga, Tarlac, Bulacan and Zambales. Pampanga exports significant volume of furniture. Should the DA succeed in producing agricultural products for exports, Subic is the logical port for products from Central/Northern Luzon and the food bowl of Cagayan Valley.
4. Subic advantage—There is cost advantage, ranging from $100/TEU for Pampanga shippers and $200 for Zambales shippers, to ship thru Subic rather than the distant and traffic congested Manila Ports. This advantage can offset the freight premium of $150 that shipping lines charge to call in Subic.
Thus, if costs can still be reduced by $50, and calls increased for consolidated cargoes or customized to suit shippers, more Pampanga locators, including Yokohama Tires which produces 21,000 tires a day in Clark but now ships out through Manila, are expected to use Subic Port.
5. Other measures for decreasing vessel costs and reinforcing Subic advantage include consolidation, granting Subic Port tariff incentives, enticement of low cost carriers (common feeder), and construction of needed infrastructure (e.g. empty container depot).
In short, some real hard work has to be done.
By way of comparison, the Laem Chabang port in Thailand was built to decongest the Bangkok river port. It was the same reason we built Subic Port— to decongest Manila. Both Bangkok and Manila ports were doing 2 million TEUs then. And Laem Chabang is 110 km from Bangkok, about the same distance between Subic and Manila.
Now, Laem Chabang with 6 berths is doing four million TEUs while Bangkok had been limited to 1 million TEUs. Subic with two berths is now probably doing less than 50,000 TEUs.
The question is—if Laem Chabang can do it, why not Subic? If Bangkok had been limited to only 1 million TEUs, why not similarly limit the volume for Manila Port and promote the use of the underutilized Subic and Batangas ports which the government had constructed? The irony is that there are even plans to expand the capacity of the Manila Container Port when there is so much unutilized capacity in Subic and Batangas ports.
It is time for the national government to decide. Do we want to decongest the Manila Port and thereby help solve Metro Manila’s monstrous traffic problem?
(This article reflects the personal opinion of the author and does not reflect the official stand of the Management Association of the Philippines. The author was a three-term congressman of the First District of Bataan. He was also Chair and Administrator of the SBMA and subsequently, Chair of the Bases Conversion Development Authority until he ran as congressman in the last election. He is currently Chair of the Board of Trustees of the University of Nueva Caceres. Feedback at <[email protected]> and <[email protected]>. For previous articles, please visit www.map.org.ph)
