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Friday, September 02, 2005
Santos Sr.: Sailing on rough seas
By Antonio R. Santos Sr.
MBC Updates
THE recently concluded Mindanao Shippers Conference held in Zamboanga City revealed that there is still much to work on with the shipping and ports development advocacy.
Mindanao shippers still continue to protest the increasing rates of shipping cargoes and the negotiation for awarding of long-term contracts. It likewise raised the immediate need to address the inefficiencies of the shipping services in major ports in Mindanao.
Cargo handling operators in Mindanao had already petitioned for a tariff rate increase that would consequently raise the shipping rates of transporting goods from Mindanao to Manila by 20 percent.
The average tariff rate increase in all of the major ports in Mindanao (General Santos, Cagayan de Oro, Davao, Zamboanga, Iligan, Dapitan and Ozamiz) would be 31.5 percent with the highest increase in the ports of Dapitan and Ozamiz with a 37.5 increase. The seven ports serve about 90 percent of the total cargo output
in Mindanao.
The Mindanao Federation of Shippers Association (Minfesa) highlighted this concern as a major resolution during the Minfesa conference and requested President Gloria Macapagal-Arroyo to dismiss the petition of the cargo handlers.
The shippers have long been clamoring for the reduction of the domestic freight rates considering its devastating effects to the Mindanao business community. High costs of shipping would likely cut down the competitiveness of the market.
Moreover, these cargo-handling operators are probationary in nature making the likelihood of an increase more hurting in the part of the Mindanao shippers. The status of almost all cargo-handling operators will expire within the year. These include the ports of General Santos, Davao (two ports), Zamboanga, Ozamiz, and Dapitan.
The OroPort in Cagayan de Oro was awarded a ten-year long-term contract last December 2004 and the Iligan port was awarded an eight-year long-term contract to will expire on 2012.
Given this situation, there should be immediate action in the part of the Philippine Ports Authority (PPA) to amend AO No. 01-2001 (Guidelines for the Issuance of Probationary contracts and Long-term contracts for Expired/Expiring Cargo Handling Contracts) because it clearly contradicts Republic Act 9184 (An Act Providing for the Modernization, Standardization and Regulation of the Procurement Activities of the Government and Other Purposes).
AO No. 01-2001 should be consistent with RA 9184 to allow the awarding of a long-term contract through competitive bidding. The absence of transparency, competition and greater private sector participation was obvious in the said order.
Most importantly, the lack of dynamic private sector participation is perhaps the underlying factor why perennial shipping problems still continue to haunt Mindanao shippers.
Issues on rising costs of domestic freight rates can be attributed to the lack of forum, dialogue or consultation between the shippers association and the local chambers of commerce.
Moreover, there is a need to re-activate and strengthen the Ports Management Advisory Council (PMAC), which will serve as a venue for the shippers and port authorities, and that able representation of the shippers association in PMAC activities should be ensured.
On the regional level, there must be initiative on the Department of Trade and Industry (DTI) with cooperation from the local chamber of commerce to activate and strengthen the local shippers association. It came out during the Davao leg of the Minfesa policy consultation that the shippers association in Davao is not officially organized.
With the absence of such formation, the shippers could not effectively lobby their concerns to port authorities. The low turnout of participation of Davao shippers in consultative meetings like the one held at Medco can also be attributed to the absence of a shippers association in the city.
While the increased dynamic private sector participation in the shipping industry is being called for, port authorities should also direct their attention to the growing need for ports development in all Mindanao ports. Mindanao ports lack facilities that would enable them to respond to the rapidly increasing demand for infrastructure development and improved services.
There is an immediate need to hasten port expansion in major ports specifically in Davao, GenSan and Zamboanga. In Davao alone, berthing capacity rate has exceeded by 71% and the total volume cargo of the three ports has increased to 100.6% by 2005.
Currently, the port of Zamboanga is undergoing an expansion project to address the increasing congestion. The scope of the project includes the construction of additional berth length, reclamation, and mooring and fendering system.
Corollary to the amendment of the AO 01-2001, the tariff rates must also be commensurate to the efficiency level of the cargo handlers. There must be improved and adequate facilities to cater the increasing demand in the Mindanao shipping industry.
Other port development programs must also be pushed such as the development of the bulk-handling facilities in Mindanao ports and the intensification of private sector investments in Roro development and operations and cargo consolidation, which could also be a feasible option in lowering the shipping rates.
Indeed, increased private sector collaboration is needed to surpass the many hurdles that the Mindanao shipping sector is facing. Unless these issues and concerns are addressed, the Mindanao shippers will likely adopt a 'wait-and-see' attitude that would only hurt the shipping industry and defer economic sustainability in Mindanao.
For Bisaya stories from Davao. Click here. (September 2, 2005 issue)
Write letter to the editor.Click here.
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