Aboitiz to buy more ferries

THE Aboitiz Transport System Corp. (ATSCC) plans to purchase additional ferries to meet demands of the domestic transport market.

Though no particular date of purchase was given, Stephen Paradies, senior vice-president and chief financial officer of Aboitiz Equity Ventures (AEV), said they plan to
replace the company’s existing ferries. AEV is the publicly-listed holding and investment management company of the Aboitiz group.

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The company is looking to bring in two or three Superferry-sized ferries this year “because our existing ferries are getting old,” Paradies said.

ATSC, operator of the Superferry, SuperCat and Cebu Ferries businesses, will try to sell the old ferries that will be replaced.

ATSC owns 34 percent of the domestic freight market and 49 percent of the sea passenger market.

Paradies told Sun.Star Cebu that although airlines dominate the domestic passenger market, this doesn’t stop the company from working to penetrate the transport business. Airlines corner about 72 percent of the passenger market.

Cargo focus

“The lowering of airfare rates of domestic airline companies prompted the company to focus more on cargo business. We have reconfigured our vessels, giving more load capacity on freight,” he said in an interview last Monday.

Paradies said 70 percent of vessels’ load capacity is reserved for freight, with the 30 percent set aside for passengers. He said domestic passenger sea travel began declining in 2004 when airlines started offering budget fares, prompting travelers to shift to air travel.

With the nautical highway, people can now just take the bus, Paradies said, “from Aparri to Davao or Zamboanga.”

Introduced in 2003 as part of the 10-point agenda of President Arroyo to reduce poverty and bring progress to the nation, the Strong Republic Nautical Highway combines highway segments and vehicular ferry routes to create a nationwide vehicle-accessible transport system to transport both people and produce from Luzon to Mindanao.

Paradies said he did not expect sea travel to fall further.

The Aboitiz official said the cargo business has not been affected by the cheap fares offered by airlines because shipping firms’ cargo rates are still lower than air cargo rates.

“People still choose to have their cargos shipped by sea,” he said.

When asked about sales performance last year, Paradies said ATSCC had flat sales due to the sea mishap of the Superferry 9 in September last year.

Lost revenue

“The company had a revenue loss of about P200 million because of the accident and the fleet was temporarily suspended. But after a month, we were glad that passengers came back and the operations resumed,” he said.

The volume of the cargoes went up by six percent last year over 2008, he added.

“Fuel remains to be the big cost in the transport business, we still can’t tell our outlook but we are hoping a positive growth,” Paradies said.

ATSCC currently owns eight passenger and freight vessels, three container ships and six fast crafts.

The refleeting of ATSC also comes after the company sold four passenger ferries in 2007 and 2008, and lost Superferry 9 last year. The Superferry 9 was fully insured, so the company was “paid in full” for the cost of the ship and the insurance claims paid out to passengers. But the grounding of the company’s vessels by the Maritime Industry Authority following the accident, hit the company’s revenues, Paradies said.

The delivery of the new vessels will increase capacity and enable ATSC to improve its revenues, he said.

Last year, ATSCC brought in two container ships at 1,000 TEU capacity each. TEU refers to Twenty Equivalent Units, a unit of measurement which refers to a 20-footer container.