Economies of scale key to port choice

With freight contracts mostly decided abroad, whether to call or not on the Batangas Port or Subic Port are decided based on economies of scale and not as a result of state policies, according to the Association of International Shipping Lines (AISL).

AISL president Patrick Ronas said since freight deals are decided abroad, it is only natural that economies of scale factor heavily in the decision-making of foreign principals, he said.

He added premiums or the extra costs on operating in the ports of Batangas and Subic would disappear once the flow of trade takes progress in those areas.

The ports in Cebu, Davao and Cagayan De Oro, he cited, were historically having a premium of $350 to $400 per cargo at the time that international feeders were nonexistnent in those ports, but eventually the cost was eliminated after these ports experienced growth in trade.

Foreign shippers have also done their part to ease the current problem of truckers who are being charged with penalties for illegal parking when they could not comply with the truck ban during the hours to traverse Manila to their container yards.

Ronas said a lot of depots, contrary to the knowledge of many in the industry, were not owned by shippers but by contractors.

He added that shipping lines have to convince private contractors to operate their depots for 24 hours to accommodate truckers returning their containers.

He said there was a move by contractors to look for space in the North or South harbors as an alternative for locating the depots but the problem was distance.

Ronas suggested that the Philippines Ports Authority (PPA) identify areas near the ports to put up new depots to allow cost efficiency in transporting cargoes.

At the recent transport and logistics summit, included in the private sector’s recommendations is the setting up of alternative depots to address congestion of cargoes.

Exporting and importing firms as well as service providers of transport and logistics and allied services contributed to the drafting of the resolution which aims to attain a sustainable solution on removing barriers in cargo transport and customs procedures.

Among the proposed measures include the creation of alternative depots, maximization of Batangas and Subic ports, 24/7 operations by the customs agency, removal of the truck ban, connection of the North and Luzon expressways, and facilitation of road network constructions.

The resolution of the private sector would be eventually submitted to President Aquino.

Ronas said shipping lines were caught by surprise when the truck ban was imposed, resulting in additional costs.