Was It Choking Or Indigestion For Starlite Ferries?

Almost since its establishment I tried to monitor the Starlite Ferries which was founded by Alfonso Cusi who has Mindoro origins. Starlite Ferries was easier to track since unlike her pair Montenegro Shipping Lines Inc. which is related in a way to them in patronship, Starlite Ferries did not expand beyond Mindoro unlike the other one which can be found practically all over the Philippines (and so it has the distinction of being a national shipping line without being a liner company). Starlite Ferries, meanwhile, remained a short-distance ferry company and in this segment they basically carry rolling cargo or in layman’s term we call that as vehicles and passengers, of course.

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Starlite Pioneer by Raymond A. Lapus

Over the years of its existence, Starlite consistently added ferries to its fleet (although they had sales and disposals too) until they reached some 11 passenger ships in 2013, to wit, the Starlite Jupiter, Starlite Phoenix (a fastcraft), Starlite Juno (a fastcraft), Starlite Neptune, Starlite Polaris, Starlite Annapolis, Starlite Atlantic, Starlite Navigator, Starlite Ferry, Starlite Pacific and the Starlite Nautica. In their track record, aside from surplus ships acquired from Japan they were not anathema to buying the discards of other local shipping company like when the Shipshape/Safeship ferry dual ferry companies quit operations and they took over its fleet (but not the routes to Romblon). And from Cebu they got a ferry from the defunct FJP Lines which is better known as Palacio Lines. Actually, the first three ships of Starlite Ferries which are no longer existing now were from other local shipping companies.

However, over the years, what I noticed with Starlite Ferries is although their fleet is already relatively big by local standards they did not get out of the confines of Mindoro where they were just serving four routes. These are the Batangas-Calapan, Batangas-Puerto Galera, Batangas-Abra de Ilog and Roxas-Caticlan routes. The longest of this route is the last named that takes four hours of sailing time while the other routes take two to two-and-a-half hours depending on the ship. With such length of sailing time it can be gleaned that actually their 11 ferries is  a little bit over already than their need for the four routes.

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Starlite Reliance by Carl Jakosalem

So it came as a bombshell for me and many others that they will be getting 10 new ferries from Japan through a loan with a government loan window (and the first one, the Starlite Pioneer arrived in 2015). They were too proud of the coup and acquisition, of course, and they crowed about it in the media with all the jeers about the old ferries but I was skeptical. My first question is where will they put it. It is easy to apply for new routes but the approval is another matter. They do not own MARINA (Maritime Industry Authority), the maritime regulatory agency, it is no longer the reign of the nina bonita Maria Elena Bautista who did a lot for her patron and its pet Montenegro Lines. And I was sure the players that will be affected by their planned entry will fight tooth and nail (who wouldn’t?) and the approval process for franchises goes through public hearings anyway and if there is real opposition then it will be difficult to rig it (what are lawyers for anyway?). Getting route franchises is not as easy as getting it from a grocery shelf unless it is a missionary route which no shipping company has plied before except for motor bancas. And there is no more possibility now that a program like the “Strong Republic Nautical Highway” of Gloria which created new routes (and made it appear that old routes are “new routes”). It was the time of Noynoy when their new ferries came and Al Cusi who is identified with Gloria was out of power.

It is obvious that they can only absorb the new ferries well if they can dispose all their old ferries. But regarding the price it will be, “Are they buying or are they selling?”. That means forced selling will not gain them a good price and with the ferry structure in the country and their fleet size I am not even sure if there will be enough buyers especially when banks are averse to extending loans to shipping companies. Pinoys are averse to the breaking of still-good ships unless one’s name is starts with “A” and ends with “z” or maybe connected to 2GO (well, Negros Navigation’s case then was different as there was force majeure in it).

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Starlite Eagle by Carl Jakosalem

And they might be forced to sell their old ships if they have honor because after all the owner Al Cusi is one of the hecklers of our old ferries and pushing for their forced retirement (and the sauce for the goose should also be the sauce for the gander but then Al Cusi was not selling old ferries until his end in shipping). I thought those in government should lead by example? By 2016, with the ascension of Digong, Al Cusi was back in power and my fears of an administrative fiat to phase out old ships intensified.

Then a news item came out that they will enter the prime Ormoc route. My immediate thought was of a dogfight not only in sailing but also in the approval process of a franchise. The Ormoc route from Cebu has a lot of parallel routes competing with it (like Palompon, Baybay, Hilongos, Bato and Albuera routes) and all of them will raise a howl against the entry of an outsider especially one with good ships, naturally. I was even titillated how that will play out (it could have been a good boxing match or worse an MMA fight). But then nothing came out of that news. Well, certainly Al Cusi knows how to pick a good route, I thought, but he might have underestimated the opposition (of course, the better the route, the fiercer will be the opposition).

And then another news item was published that Starlite Ferries will go into Southeast Asia routes. Well, really? That was my thought as I had doubts again. It is Indonesia that is the most archipelagic in our region but I knew the rates there are too cheap and sometimes as ROROs there is practically no fare charged in the old ships if patrons don’t want to pay (and so I remember the problem of some of our operators in our ARMM Region where collection of fares can be a problem and rates are really so low). They wanna go there with brand-new ships, I thought? Won’t there be demand for reciprocity? Oh, well, I would welcome Indonesian ferries in our waters especially if they are liners, why not? Now, what a way of upsetting the cart, I mused. But then nothing came out of that too.

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Starlite Saturn by Raymond A. Lapus

The logical is actually to phase out his old ferries immediately as there is no way to create a bonanza of new routes given how difficult it is to secure new routes in the country and actually the situation is the feasibility of routes are limited as it is dictated by people and goods movements and not by wish, simple geography as in nearness or MARINA inducement. They can try the Pilar-Aroroy route that was validated by three titled international experts on shipping with all the feasibility study calculations but then as known by the locals it wouldn’t last and they were proven right as the route lasted only a few months (Archipelago Philippine Ferries tried it). Plus they might have to dredge Pilar port as that is shallow for their ships (the government will pass on to them their dredging responsibilities and they will be lucky to earn a thank you). MARINA has actually a lot of routes that they were promoting like the Pasacao to Burias route, the Cataingan to Maripipi route, et cetera but shipping operators not biting as they are not fools unlike some sitting in some MARINA chairs. With Starlite Ferries obliged to pay the bank amortization they cannot simply let their ships gather barnacles in Batangas Bay.

But where will he sell his old ferries? Many of the ships of Starlite Ferries are not fit to be small short-distance ferry-ROROs, the type most needed and most flexible to field (that will survive better in low-density routes) and now the problem is that is being supplanted now in many cases by the passenger-cargo LCTs and RORO Cargo LCTs which may be slow but are cheap to operate (and so many of these are arriving from China brand-new and not surplus with good terms). The reinforcements that entered San Bernardino Strait and Surigao Strait were actually LCTs (the former are operated by SulitFerry, a 2GO enterprise) and there are LCTs that are new arrivals in Tablas Strait that belong to Orange Navigation, a sister company of Besta Shipping.

Cebu won’t buy it as what is mainly needed there are overnight ships and generally bigger than what Starlite Ferries have. The actual direction of ferry sales is from Cebu to Batangas and not the other way around. It is also hard to sell the Starlite ferries to Zamboanga as only one shipping line has the capability there to buy (Aleson Shipping Line) and they have enough ships already and they can afford to buy direct from Japan. It won’t be Manila as there are no more overnight ships there remaining to Mindoro and Romblon (Starlite Ferries helped sank Moreta Shipping Lines, MBRS Lines and its successor Romblon Shipping Lines). The operators to Coron and Cuyo are not that big and the Starlite ships are too big for those routes. It is really hard to dispose of 11 ferries unless Starlite gives it on a lay-away plan but then they have to pay the bank for their new acquisitions.

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Starlite Archer by John Edmund

I feared Al Cusi with his Malacanang clout and political clout (he is vice-president of the ruling party now) will resort to administrative fiat through the Department of Transportation. But that will be bloody and when the old operators feared something was afoot with the Tugade trial balloons they were ready with deep questions like if there is a study that shows old ferries are unsafe (good question) and MARINA was put on the defensive. These old operators are not patsies, they can hire good lawyers and they have congressmen as padrinos that Tugade and Cusi cannot just push around.

And so came the announcement that there will be no phase-out of old ferries (which is nonsense anyway as phase-out should be based on technical evaluations and not on age). It seems that was a big blow to Starlite Ferries which by that time was already shouldering the burden and amortizing five new ferries with five more on the pipeline and their old ferries still around and unsold (their other new ferries are Starlite Reliance, Starlite Eagle, Starlite Saturn and Starlite Archer). Trying to force their old ferries in some near routes might just mean competing with their sister Montenegro Lines and their shared patron saint will look askance to that.

I guess the financial burden of the new ships were getting heavier by the day for Starlite Ferries. With a surplus of ferries they were even able to send Starlite Annapolis to Mandaue just to get some new engines if what I heard was true. There is really no way to cram 15 ferries (as Starlite Atlantic was lost maneuvering in a typhoon) in just four short-distance routes. I just don’t know, should have they converted some of their new ships into overnight ferries and competed in the longer Batangas to Caticlan route? But the accommodations of the former Cebu Ferries ship of 2GO are superior to them. How about the Batangas to Roxas City route that is irregularly served by Asian Marine Transport Corporation?

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The most senior now in the fleet of Starlite Ferries

But instead of fighting to resolve their problem, Al Cusi took the easy way and sold out. Well, it is never easy to finance five new ferries with five more still on the way with no new routes coming. They might drown in debt and default. Or end up just helping the bank make their living (in Tagalog, “ipinaghahanapbuhay na lang ang bangko”).

I wonder why Al Cusi did not just get two or three units for testing and evaluation and proceed slowly. With that they might have known with less pain and pressure that although their ferries are new it does not have a technological edge nor an advance over the old ferries unlike the new FastCats. They knew already that intermodal vehicles are mainly locked like the Dimple Star buses are locked to them and so newness of the ship will not easily sell and not even to private car owners whose main concern is what RORO is leaving first (and that is also the main concern of the passengers who do not even have a free choice if they are bus passengers).

It looks to me the 10 new ROROS ordered by Starlite Ferries was a simple case of indigestion or worse a choking. It looks like more of the latter and so Al Cusi spit it out and settled for a half billion pesos as consolation for the sale of Starlite Ferries to the Udenna group, the new hotshot in shipping which also owns Trans-Asia Shipping Lines of Cebu now. That might be a good decision for Udenna as their Trans-Asia Shipping Lines lacks ferries now whereas Starlite Ferries has a surplus and so it might be a good match. Converting the ships into overnight ferries is not difficult nor would it cost much although the ships of Starlite Ferries is a little small than what Trans-Asia Shipping Lines was accustomed to (but then it is also possible to lengthen the upcoming ferries).

Now I don’t really know exactly where Starlite Ferries is headed and it will not be as easy to guess that but in all likelihood a Starlite and Trans-Asia marriage might work out especially since the Udenna group has the money to smoothen out the kinks.

Nice experiment but it seems the 10 new ships was too much for Starlite Ferries to chew.

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