Local shipping industry needs competition; logistics cost in Mindanao is 30.32% of production cost, Luzon 17.48%, Visayas 25.08%

Local shipping industry needs competition, say
Nicole Burlas February 12, 2020 https://mindanaotimes.com.ph/2020/02/13/local-shipping-industry-needs-co...

A business leader has pushed for the opening of the domestic shipping industry to foreign companies to ensure competitive rates.

At the Wednesdays @ Habi at Kape – Abreeza, Antonio Peralta, European Chamber of Commerce of the Philippines (ECCP) – Southern Mindanao Business Council chair, said that opening up the shipping industry to foreign companies and clustering the companies will ultimately reduce prohibitive shipping rates.

Peralta pointed out that the conclusion was based on the result of the logistics conference that the business group initiated last month.

Among the factors that affect higher shipping routes for Mindanao, he said, is its location.

“If you look at it, the vessel has to make a turn around Zamboanga to come here or maybe we have to reconfigure everything. Use Cagayan as the main shipping point. But that can only be done if there is efficient land transportation system in place,” Peralta said.

He said that aside from high shipping cost, other problems that affect the industry is the lack of incentives from the government to shipping companies resulting in the aging vessels and unsafe handling of cargoes.

Based on the Mindanao Development Authority (MinDA) data, the logistics cost in Mindanao is 30.32% of the production cost, compared with Luzon at 17.48% and the Visayas at 25.08%.

He conceded that is it hard for the government to provide incentives, making it very difficult for shipping companies to improve the quality of their vessels. In order to make it happen, there must be a competition by inviting foreign companies to encourage local shipping companies to improve their services and lower the shipping cost.

Other issues raised during the problems included the seeming lack of coordination among industry stakeholders as well as the failure for shipping companies to get cargoes back to Mindanao.

To resolve the problems, Peralta said local producers must have to “rationalize these production numbers and make sure that the shipping companies are aware of this so that there is a better coordination, and it can only be done through a convergence mechanism in the private sector and the government which the Department of Agriculture and DTI, and the shipping companies.”

The chamber would be having another logistics conference this year, although it has yet to finalize the date due to the outbreak of coronavirus.

“For one, the next conference would seriously look into these (problems), why are we in a situation like this, we need to hear the side of the shippers why it continues to be like that, how can we work together to make it lower the cost, and perhaps for them to also consider that when the time comes, we have to open the shipping industry to allow foreign competition to come in to really improve the shipping rates,” he said.