Wednesday, July 09, 2008 Aboitiz ships raise rates
WHILE businesses are complaining about high transport costs, rising fuel prices have prompted one of the country’s major shipping companies to adjust its rates.
Erramon I. Aboitiz, Aboitiz Equity Ventures (AEV) executive vice president and chief operating officer, said Aboitiz Transport System Corp. (ATSC) will adjust its cargo and passage rates this month to cope with the increasing prices of fuel.
He did not say, however, how high the increase would be.
Some directors of Computer Manufacturers, Distributors and Dealers Association of the Philippines (Comddap) complained about the high cost of shipping goods to different ports in the country.
“It is cheaper to transport by ship from Hong Kong and Singapore,” said Wesley Ngo of Astech Pengson, distributor of computer systems and office equipment.
Ngo was one of the exhibitors at the Comddap 2008 expo at SM City Cebu last week. He lost a 20-foot container van, which carried various office equipment, that was supposed to be showcased at the Comddap expo, with the sinking of mv Princess of the Stars of Sulpicio Lines.
Transport cost
Although Ngo does not know yet when he will be able to claim the insurance coverage of the cargo, he said the loss is one of the risks in business.
He said, though, that what matters most to businesses is the high cost of transporting goods to different areas in the country.
He said government should encourage more competition in the shipping industry to bring down the cost of shipping cargo.
William Chua of IC Systems, also a Comddap director, said high transport costs also hamper trade and commerce in the archipelago.
“We want to have the same prices everywhere,” said Ngo whose company has a branch in Mandaue City. “But our (profit) margin gets slimmer due to transport costs. Sometimes, there are certain products that we only sell in Manila because we don’t ship (to other provinces) products which we know are not very popular.”
Losing money
Chua said for local businesses, shipping is the only way to transport goods because the cost of air freight is even higher.
But Stephen Paradies, AEV senior vice president and chief financial officer, said all shipping companies are “losing money.”
He told Sun.Star Cebu in an interview Monday that 40 percent of a shipping company’s revenues go to fuel expenses.
ATSC, Paradies said, has converted some of its passenger capacity into cargo to maximize revenues.
ATSC had also sold some vessels (Superferry) to offset losses.
Aboitiz, in a meeting with the media last Monday, said although some of ATSC’s vessels use bunker and diesel, the prices of both types of fuel are also increasing.
“The prices of everything are going up like crazy,” he said.
Paradies said the Philippine shipping industry cannot be compared with those overseas.
“For one, the fuel rates are different. It’s higher here because fuel is taxed,” he said. “The infrastructure (and facilities) at ports are also different.”
He said international shipping companies also have bigger vessels so their unit cost is lower.
Meanwhile, Aboitiz observed “tightness” in the market as a result of the suspension of roll-on, roll-off (RORO) vessels of Sulpicio Lines, pending the investigation on the mv Princess of the Stars sinking.
Although Sulpicio’s cargo vessels have been allowed to sail, he said the suspension of the RORO vessels—which also carry cargo aside from passengers—also affected the shipment of goods to different ports in the country.
“It’s good for (our) business but (in the long run) there is a need for new capacity (more vessels),” he said.
But he said ATSC does not have immediate plans to increase its cargo or passage capacity. (LAP)
