Now They Are Selling The Shipping Company With The Ships They Say Are The Most Modern

What is happening?

Shipping news recently said that the Cusi family is selling Starlite Ferries to Chelsea Shipping which has recently gained control of 2GO, the only national liner shipping company left and Trans-Asia Shipping Lines Inc. (TASLI), once the biggest regional shipping company in the Visayas before the advent of Cebu Ferries Corporation (CFC). When to think Alfonso Cusi is politically powerful and influential in his own right being in and out of government at usually Cabinet level.

Until just recently Starlite Ferries was very proud of their brand-new series of ships from Japan which is supposedly the best in the short-distance routes. These ships are a series of ten ships financed through a leasing window of the government-owned Development Bank of the Philippines (DBP), the DBP Leasing Corporation. This window is the arm of the government in modernizing our shipping industry and for Starlite Ferries to corner ten ships speaks of their clout.

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Starlite Archer, the latest ship of Starlite Ferries (Photo by Jon Erodias)

Just a while ago Starlite Ferries announced they are extending the run of these modern ships from ten to twenty because they said they were expanding operations to the ASEAN Region which if it materialized will be our first foray ever in international passenger shipping operations. The news was believable because in the ASEAN Free Trade Zone any company should in theory would be allowed free entry in any country within the FTZ.

Now this news of the sell-out looks like a hot potato being dropped and of course questions will be raised.

Starlite Ferries already had nine ROPAXes (RORO-Passenger ships) and two fastcrafts when they started to acquire a series of ten brand-new ferries from Japan which to me, with its size looks better if it had been used in overnight routes rather than the short-distance routes. I was puzzled when they first announced it because they have only four routes – Batangas-Abra de Ilog, Batangas-Puerto Galera, Batangas-Calapan and Roxas-Caticlan which are all Mindoro routes. Mindoro is the origin of Alfonso Cusi, the founder and owner of Starlite Ferries.

I thought if they will acquire ten new ships then all old ships have to be disposed unless they create new routes. But then Alfonso Cusi was jeering our old ferries and so I thought he will really dispose his old ships. That is if he is true to his word.

But then I never saw a shipping company dominate a route simply because their ferries were all-new. One simply has to look at the experience of Maharlika I and Maharlika II then in the eastern seaboard routes of Matnog-San Isidro and Liloan-Lipata. They did not dominate. Schedules, discounts and rates are decision points too for shippers and passengers and it is not only the newness of the ship that matters. If it is 12 noon and the new ship will still be available at 3 or 4pm the shippers and the passengers will not wait for that. That is particularly true in the short-distance routes which are the routes of Starlite Ferries.

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A view of the stern of one of the new ships of Starlite Ferries (Photo by Carl Jakosalem)

There was news then that Starlite Ferries will enter the overcrowded Cebu-Western Leyte routes through the Cebu-Ormoc route. But though Starlite Ferries already had its new ferries nothing came out of that rumor. They were still on their home base and they still have no new routes while their fleet expanded by about 50% already and they were already shelling out amortization and carrying costs for the new ferries. And with probably no additional income to boot. Somehow something have give as additional ferries are being built for them in Japan. Was the ASEAN routes just a trial balloon?

If Starlite Ferries was doing well as what can be concluded from their press releases and as indicated by their new ships then why the sell-out?

I do not know if theirs is a case of biting what they cannot chew. A PhP 2.4 billion loan without new successful routes and with no sign competition is backing down is not easy to digest. Their new ships have no technical edge over competition unlike the new FastCats of Archipelago Philippine Ferries. It is simply new, nothing more. Maybe that was the reason there was rumor they will be given exclusive routes. But to where? Franchises or Certificates of Public Conveyance (CPC) of the competition can’t simply be cancelled. And maybe that was the reason for the underhanded push to get rid of 35-year old ferries through a questionable administrative fiat which has actually no empirical basis.

Is Alfonso Cusi bailing out before he chokes? The shipping company that acquired Starlite Ferries which is Chelsea Shipping has owners and patrons with very deep pockets. And they have cheap fuel and lubricants to boot which could be decisive in making sense for the new ferries of Starlite.

I am just reminded of a critical juncture in our shipping history in the 1960’s when we already needed to enlarge our inter-island passenger-cargo fleet. Some national liner companies like Escano Lines, General Shipping Corporation, Compania Maritima and Southern Lines Inc. took the route of acquiring loans to order brand-new ships from the National Shipyards and Steel Corporation (NASSCO) and West Germany shipyards. They regretted their decisions eventually.

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Port view of one of the new ships. Starlite Pioneer is the lead ship of the series (Photo by Carl Jakosalem)

Meanwhile at the same time Carlos A. Gothong & Company, William Lines Inc. and Sweet Lines Inc. decided to purchase second-hand vessels from Europe to be converted into passenger-cargo liners here and they came out ahead. For the same amount as a brand-new liner they were able to acquire two to three surplus ships of the same size, reliability and speed. Guess who was able to offer more routes and frequencies and which had more passengers and cargo. That decision vaulted Carlos A. Gothong & Company , William Lines and Sweet Lines to the Top 5 when they were not in that position the decade before.

Is history repeating itself here and Alfonso Cusi has seen the handwriting in the wall and wants to bail out early?

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