The Effect of the Containerization Paradigm Shift on the Philippine Shipping Fleet

Image by Edison Sy

Container shipping, which began to be widely accepted in the international routes in the late 1960’s came a little later in the Philippines just before the end of the 1970’s. It had a profound and lasting impact, more than a simple paradigm shift in our shipping fleet. Many do not realize it, but it also helped sink our ocean-going fleet along with other reasons.

Before the advent of container shipping, in the inter-island routes, our major shipping companies invested in a lot of passenger-cargo ships. This kind of ship then carried the bulk of local trade especially since our road system was not yet developed then. The type of ships varied from wooden motor boats to small, local-built coasters to ex-FS ships to various ex-cargo ships used by the USA in World War II and to passenger-cargo ships and former refrigerated ships from Europe.

M.S. Edward, an ex-FS (Freight and Supply) ship. © Gorio Belen

Passenger capacities then were small because the country’s population was still small. Money for travel is also hard to come by then with our economy being too dependent on agriculture in the past. Ships with passenger capacity in the thousand was unheard of. Large cargo holds were prized and it carried the staple cargoes of the past like copra, rice, corn, abaca, dried fish and construction materials. Since most cargo then was break-bulk, the role of the ship’s purser was important because haggling of cargo rates goes through him.

Bulk carriers then were few and even trampers are not that many, relatively. The bigger shipping companies then not operating ferries were the tanker companies.

Cargo handling during the old days. © Lindsay Bridge via Mike Baylon

Break-bulk shipping has a myriad of problems. The biggest was the rampant thieving especially at the ports. The second was the damage to cargo by poor cargo handling and by the weather. Not all ports then had cargo sheds (and the walls of the sheds are good camouflage for thievery). Remnants of this practice are still visible today. Some porters or port guards or even some ship crew will tear a carton open like that of sardines and cook it as meal. Rice then was even harder to protect because everybody needs rice and money then was hard. Well, even bulk shipping then was also very vulnerable to theft. That is why our ports in the past have an unsavory reputation and feared by some.

Our ocean-going fleet then were mainly bulk carriers and some are OBO (Ore-Bulk-Oil) carriers. Those were generally much bigger than our ships in the inter-island trade. They basically carried our natural resources to foreign countries. Outgoing, their cargo basically consisted of sugar, copra, coconut oil, abaca, mineral ores, logs, lumber, plywood, rubber and tobacco. Incoming, their cargo were machinery, spare parts, tools, industrial supplies, chemicals and even vehicles (some of which are for assembly here). It also included some foodstuffs we do not grow. A few of these cargo liners have a small passenger compartment. They sailed to as far as Japan, the USA (both the West Coast and East Coast) and Western Europe.

S/S President Macapagal, a cargo ship of Philippine President Lines. © Gorio Belen

When containerization came, our liner companies plying local routes halved their purchase of passenger ships. Actually, in the 1980’s, they bought more container ships than passenger ships. The charge then that “we lacked bottoms” was only partially true because actually Aboitiz Shipping Company, Sulpicio Lines, William Lines, Negros Navigation, Sweet Lines, Lorenzo Shipping, Escano Lines, Solid Lines, Sea Transport, etc. were buying cargo ships and container vans. Even then, cargoes already generated more revenues. Besides, it does not complain and no service crew or clean accommodations are needed.

In the 1980’s wave of containerization many small local ferry companies were not able to buy RORO liners. Few of them survived beyond this decade and that was part of the reason for the drop of the number of our liners and the ports and routes served.

But more importantly, the quizzical thing that happened in this decade (which is also a crisis decade) was that our shipping companies that have foreign routes did not convert to container shipping. I am referring to Philippine President Lines/United President Lines, Galleon Shipping, Maritime Company of the Philippines (it quit at the peak of the financial crisis in the middle of that decade) and a few other smaller companies. Aboitiz Shipping Company (which inherited the Everett Steamship operations in the country) seemed to have only a halfhearted effort in containerizing their foreign routes.

M.S. Maria Rosello, a ship of the United Philippine Lines © Gorio Belen

I remember that in the 1970’s, though it started an outsider, the Evergreen Line of Taiwan made their big push in rolling out container ships (and now they are one of the world’s majors). That was also true for the Neptune Orient Lines of Singapore and they are also one of the world’s shipping majors now (and they were even able to buy out the venerable American President Lines). Incidentally, both were only founded in 1968 (guess who was the Philippine President then). To think Taiwan and Singapore were not yet prosperous countries then.  The same story can also be told about the South Korean shipping companies. We already had long-distance foreign shipping companies and routes then when they barely had any.

In the 1980’s, the problem of our shipping companies in the foreign routes was not only the financial crisis. The outbound cargo also suffered a big drop. There were almost no more products from our forests that can be exported. And with the advent of plastic, the metal ore exports nosedived. Even the world demand for our primary export commodity crop copra (and coconut oil) slid a lot. Our big obsolete ships that can no longer compete were soon on the way to the breakers. Now, we almost have no regular ships on the foreign routes (at least not on a significant scale).

Meanwhile, our local container fleet is not growing. The ships remain small and load factors are reportedly abysmally low resulting in very high local container rates. We now import a lot of commodities we used to trade internally in the past. Presently,  rice, corn, soya beans, green and yellow peas that are imported go direct to the provincial ports. And more important in impact, the intermodal trucks are now rolling and in growing in number every year. They are more ubiquitous, their rates are lower compared to container vans and they can go direct to their destination. And if only rolling rates are lower in the short-distance routes (it is obscenely high before the coming of the RORO Cargo LCTs), their rates will even be lower.

Container shipping is challenged by the continuing rise of the intermodal © Mike Baylon

Sadly, the stark truth is we missed badly in this paradigm shift which is containerization and all academic and bureaucratic talks now that off and on circulate miss badly the history, causes, current situation and solutions.

Is it any wonder why Aboitiz basically quit shipping?


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