LOGISTIC companies will be reviewing policies behind the prevailing high shipping cost that has been affecting the trade in the region.
In a press conference, Antonio Peralta, European Chamber of Commerce in the Philippines-Southern Mindanao Business Council (ECCP-SMBC) executive director, said the country’s Cabotage Law or Republic Act 10668 has done “little” on making shipping rates competitive.
This, despite the amendment of the law in 2015.
“I think a lot has to be looked at the review of the Cabotage Law. We looked at this as a key issue that is affecting the development of Mindanao as early as 1993 or 1994 when Paul Dominguez was still then the Presidential Assistant for Mindanao,” he said.
“If we talk about efficiency, a lot of that is translated to the cost because how is it that up to this time it is a very expensive thing to consider for small businessmen that want to move their products,” he added.
Peralta noted the law has done “little” in trying to make shipping rates competitive.
“There was little activity that gives hope to the competitive shipping rates of commodities. Hindi lang shipping by sea, air, also by land,” he said.
He said among the factors that determine the prices of the shipping were the prices of oil, costs of labor, and costs of maintaining operations, and amortization of bank loans, and farm-to-market infrastructures.
“It has become a detriment to us maybe because of the lack of infrastructure that we have in this country. That is also determinant. The other thing is the capital investments required to have good transport systems to really get your goods from the farm gate to the market,” he said.
Peralta said on average, the total shipping cost takes up about 20 to 30 percent of the production cost and it varies in the type of commodity.
“Normally for any business the shipping cost depends on where you are located. The farther you are, the higher your shipping cost is because you have to consider your trucking cost from the distant communities to the urban areas where it is consolidated in for ship out. But take note even if it is shipped out, it goes to another port for the main consolidation depending on the kind of carrier that you have,” he said.
On January 31, 2020, the ECCP will gather stakeholders in the logistics and export industries from Visayas and Mindanao as well as government agencies such as the Department of Transportation (DoTr) and the Mindanao Development Authority (MinDa) to review and resolve issues in the Cabotage Law, tackle other challenges that hounds the industry, and propose changes particularly on the shipping rates which will affect the competitiveness of the country in the global trade.
“[If our] shipping cost is lower then therefore we will be able to ship out more. And because we are able to ship out more, we are able to create greater economic activities in our farms, in business both in the urban and the rural areas,” he said.