Saturday, May 05, 2007 Cargo pooling to reduce Mindanao shipping cost
IN A bid to reduce lofty shipping costs of products from Mindanao to other parts of the country, industry leaders are promoting cargo pooling even among competing agricultural producers across the island.
Vicente S. Lagdamen Jr., president of Mindanao Federation of Shippers' Association, urged business sectors and trade associations to adopt cargo pooling as a scheme to cut down transportation costs of Mindanao out-bound products.
Cargo pooling has been successfully done by local tuna exporters here for the US market and Cagayan de Oro City-based Northern Mindanao Shippers' Association, Inc. in the shipment of products like vegetables to Metro Manila markets.
The scheme simply involves shipping at the same time similar products though produced by different groups or individuals.
"We have successfully implemented cargo pooling in Cagayan de Oro since 2006, bringing down the cost of domestic freight by 40 to 50 percent," Lagdamen said in a paper presented in a recent regional business conference in Isulan, Sultan Kudarat.
"Volume cargo shipments always get lower rates," he added.
To do the job, Lagdamen advised sectors or trade associations to do a similar thing for rice and corn, banana, fruits and vegetables, and other major commodities produced per region.
Mindanao's riches lie not only in its fertile soil but span the seas and inland body of waters as shown by the island's seaweeds production, different varieties of ocean-based fishes and inland aquaculture products like tilapia and bangus.
The cargo pooling scheme has benefited a lot of small farmers and small shippers in Northern Mindanao with Lagdamen expressing hopes other Mindanao regions would adopt the system for bigger profits to producers.
Government support, however, is vital for the cargo pooling system to succeed.
It would require the assistance of government agencies like the Departments of Trade and Industry, Agriculture, and Environment and Natural Resources to make the cargo pooling machine work effectively, Lagdamen said.
Specifically for the trade department, the agency is expected to spearhead the organization of the sectors or trade associations, as well as the identification of the products that would be shipped to domestic markets.
High cost of domestic shipping has been besetting Mindanao producers over the last 14 years and it is a perennial issue discussed in various business conferences in the island.
Shipping industry players in the island have lamented that domestic cargo sea freight fee is twice higher than international rate of the same distance.
For example, a 20-footer dry van from Manila to Kaosiung or Hong Kong would only cost $400, but the same cargo volume from either the cities of Davao and General Santos to Manila would cost the shipper $800, industry figures said.
In case of exports, port and terminal charges are also not competitive for the country’s shippers, a November 2006 report by the World Bank on cross border trading showed.
The World Bank said that the Philippines ranked the highest in terms of port and terminal handling charges when exporting a containerized 20-footer van.
Port and terminal handling charges in the Philippines is more than triple compared to charges slapped by Singapore.
Philippines slapped $494 for port and terminal handling fees for a 20-footer van; $146 in Singapore; $107 in Malaysia; $75 in China; and $67 in Thailand.
The breakdown of Philippine charges: $274 for port fees; $175 for cargo handling; and $45 for terminal handling, the World Bank study showed.
