THE shipping industry sees a positive outlook on the back of the buoyant domestic economic activity despite challenges such as the increasing fuel prices.
Fuel remains one of the sector’s challenges, said Lucio Lim Jr., chairman of the newly formed Cebu-based Philippine Coastwise Shipping Association Inc. (PCSA).
The biggest component of operating costs for domestic shipping lines is fuel, which accounts for about 40 percent of its total operational costs, Lim said in a press conference Friday, Aug. 16, 2019.
Under the government’s Tax Reform for Acceleration and Inclusion Law, excise tax on fuel further increased to P4.50 per liter this year.
It was in 2018 when the government implemented the first package of its tax reform program, which had increased fuel excise tax, a concern that became a continuing challenge for the shipping business.
Despite this, the industry is looking to benefit from the sustained consumption growth, the government’s infrastructure program and the booming e-commerce sector which should drive logistics demand.
According to Lim, the association is seeking to push for a viable public policy framework to accelerate the modernization and development of the shipping industry.
The newly organized PCSA is composed of members formerly from the Philippine Roll-On-Roll-Off (Roro) Operators Association, Visayan Association of Ferry Boat and Coastwise Shipowners Operators and United Trampers Association of the Philippines.
With the merger, PCSA will become the largest shipping association in the Philippines and the biggest in terms of total gross tonnage of ships combined. This cements Maritime Industry Authority (Marina) Cebu’s stance of having the biggest gross tonnage of ships registered among all regions
Speaking at the group’s induction of new officials, former President Gloria Macapagal-Arroyo said the merger of the shipping associations is a response to the government’s Maritime Integrated Development Plan drawn up in December 2018.
She said this roadmap by the Maritime Industry Authority was approved in principle by the National Economic and Development Authority on Aug. 5.
“I am confident that with the establishment of the PCSA, the industry will have a stronger voice,” the former House Speaker said.
In particular, Arroyo mentioned the need to further improve the inter-island connectivity in the country through roro projects, which she said, are set to be revived under the Duterte administration.
She said the development of the roro ships, which are designed to carry wheeled cargoes, helped strengthen the country’s competitiveness.
Cut transport costs
Arroyo said it helped cut transport costs for multinational companies delivering goods to different provinces.
She cited Nestle, for instance, which was able to slash transport expenses and offset higher milk prices abroad because of roro.
“Transport costs became so reasonable for bakeries like Gardenia that a loaf of its bread in Iloilo was priced the same as in Laguna and Manila, thanks to roro,” she said.
It was during Arroyo’s administration that Executive Order 170 was signed in 2003, which paved the way for the creation of the roro system.
The goal was to reduce transport costs from Mindanao to Luzon but more to cut costs of inter-island transportation, boost tourism, hasten movement of people and goods and drive commerce.
“This helped us establish more ports to connect the different islands and make delivery of cargo easier. I like to think that these projects laid the foundation for the blossoming of our domestic shipping industry, something which we all should continue to promote,” Arroyo said.