The China-built LCTs

It seems that just like in buses, in due time China-made LCTs might rule our waves just like China-made buses are now beginning to rule the Luzon highways. The process will not be that sudden though because ships last longer than buses and it is much more costlier to acquire ships. We too have that attachment to our old ships and we don’t suddenly just let them go. But then who knows if some crazy people try to cull our old ferries? I am sure many of the replacements of them will be Cargo RORO LCTs and ROPAX LCTs from China. They are simply that cheap and the terms are good. One thing sure though is the replacements will not be local-built ships. Local-builds generally cost much more than China-builds and the price of the ship is a key decision point.

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A Meiling LCT a.k.a. deck loading ship

A decade ago, China-built LCTs were practically unknown in the country as we were building our own LCTs in many shipyards around the country. Then the first palpable show of LCTs happened early this decade was when a lot of brand-new LCTs suddenly appeared and anchored for long in North Mactan Channel waiting for business. Some of these were rumored to be destined for the mines of Surigao which was then booming. That area already had China-owned and -built LCTs to carry ores to China just like some other provinces which allowed black sand mining had China-owned LCTs docking. But then here, I am talking of China-built LCTs that are locally-operated or owned. However, the Surigao mining boom when world metal prices spiked a decade ago because of China demand was one of our key introduction to China-built LCTs.

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Row of LCTs in North Mactan Channel

Then the demand for ore of China suddenly weakened and so those brand-new China-built LCTs that showed in Mactan Channel owned by Cebu Sea Charterers (of the renowned Premship group), Broadway One Shipping and Concrete Solutions Incorporated went into regular cargo moving. Later, the two companies plus others like Primary Trident Solutions (owner of the Poseidon series of LCTs), and Adnama Mining Resources which also acquired China-made LCTs went into Cargo RORO LCT operations like the Cebu Sea Charterers which meant conveying rolling cargo or vehicles between islands. The Cebu to Leyte routes was the first staple of the Cargo RORO LCTs. Cargo RORO LCTs were also fielded in the key Matnog-Allen and Liloan-Lipata routes to ease backlogs of trucks waiting to be loaded. They became the augmentations to short-distance ferry-ROROs in heavily crowded routes during peak season or when there are disruptions after typhoons.

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Cargo RORO LCTs in Carmen port

The old overnight passenger-shipping companies of Cebu more than noticed the emergence of the Cargo RORO LCTs and felt its threat to their trade and so they also joined the bandwagon in acquiring China-built LCTs. Roble Shipping first chartered LCTs from Asian Shipping Corporation before buying their own and those were China-made LCTs. However, it was Lite Ferries that made a bet in acquiring new China LCTs to be converted into passenger-cargo LCTs after some modifications. Outside of Cebu the shipping company 2GO, under the name NN+ATS and brand “Sulit Ferries” chartered China-built LCTs from Concrete Solutions Incorporated, which are the Poseidon LCTs for use in their Matnog-Allen route.

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A ROPAX LCT operated by Sulit Ferries (LCT Poseidon 26)

Meanwhile, LCTs were also tried by Ocean Transport & Key West Shipping as container ships. When they started they also chartered LCTs from Asian Shipping Corporation like Roble Shipping. They were successful in using LCTs as container ships and they were always full (and maybe to the chagrin of the CHA-RO messiah Enrico Basilio). This mode might be a no-frills way of moving goods through container vans but it is actually the cheaper way as LCTs are cheap to operate. Later, Ocean Transport & Key West Shipping also acquired their own LCTs with the blessings of Asian Shipping Corporation. Ocean Transport & Key West Shipping might have been successful in showing a new mode of transport but the self-proclaimed “shipping experts” never took notice of them nor studied their craft and mode.

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Brizu, a container carrier LCT by Ocean Transport

Asian Shipping Corporation (ASC) which really has a lot of LCTs for charter and probably with the most number in the country started by building their own LCTs right in their yards in Navotas just like some other smaller shipping had their LCTs built in Metro Manila wharves. Asian Shipping Corporation have not completely turned their back of own-built LCTs but more and more they are acquiring China-built LCTs which come out cheaper than local-builds. Shipbuilding on the lower technology level like LCT-building is at times can also be viewed too as selling of steel and China is the cheapest seller of steel in the whole world. Their engines and marine equipment are also on cheap end.

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ASC Ashley of Asian Shipping Corporation

Another big operator of China-built LCTs that must be noted is the Royal Dragon Ocean Transport which owns the Meiling series of LCTs. Many of their LCTs can be found in Surigao serving the mines there. Right now, China-built LCTs are already mushrooming in Central and Eastern Visayas but in other parts of the country they are still practically unknown except in Manila or when passing by or calling. Ironically, it might actually be a typhoon, the super-typhoon “Yolanda” which devastated Leyte that might have given the China LCTs a big break because they were used in Leyte and in the eastern seaboard routes (in San Bernardino Strait and Surigao Strait) when there a big need for sea transport after the typhoon and their potential was exposed. The super-typhoon also showed the need for Cargo RORO LCTs separate from short-distance ferry-ROROs.

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Owned LCTs by Roble Shipping

Ocean Transport of Cebu, as stated earlier, now also have their own China LCTs to haul container vans from Manila after initially chartering from Asian Shipping Corporation. The same is true for Roble Shipping which initially chartered Cargo RORO LCTs from Asian Shipping Corporation for Cebu-Leyte use. Now other Cebu passenger shipping companies are also beginning to acquire their China LCTs. And that even includes Medallion Transport. Actually there are so many LCTs now from China that don’t have a name but just sports a number (i.e. LCT 308, etc.). But among Cebu overnight ferry companies, it is actually Lite Ferries who is betting the biggest on China LCTs that carries passengers too after some modifications.

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PMI-3, a Cargo RORO LCT of Premium Megastructures Inc.

In the following years I still see a lot of China-built LCTs coming and that will include LCTs that have provisions for passenger accommodations. If the government cull the old (but still good) ferries, I bet that type will suddenly mushroom especially in the short-distance routes. But of course it will not have the speed nor the comfort of the basic, short-distance ferry-ROROS. But who knows if that is actually the wish of some decision-making foggy old bureaucrats who don’t ride ships anyway? They will just be giving China yards and engine makers a big break. And a final note – LCTs from China are also called as “deck loading ships”. So don’t get confused.

Now let us just see how these China imports grow in size and importance.

Time Will Come The LCTs Will Take Away The Business Of The Container Ships

It was a friend of mine who worked as trusted man of someone high up in shipping who told me that MARINA has set it just to 30 or 35% load for a container ship to be profitable. I was aghast by that because that will mean terrible inefficiency and high rates for the shippers. That was twenty years ago and in that same time span our local shipping industry has been under attack for very high rates and it has been pointed out that from Davao it is much cheaper to send a container van to Hongkong or Singapore which are much farther than Manila. But even after two decades there has been no change in the situation of the industry. If there was, it is the rates went up geometrically higher. And of course that was unacceptable but our bureaucrazy only acts to change things if there is already an imminent revolt.

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Intermodal trucks for loading in BALWHARTECO Port in Allen, Samar

As they say water seeks its own path and one cannot hold or bottle it forever. One big response by shippers that I saw was in the widespread deployment of intermodal trucks that use our highways and then boards short-distance ROROs at the end of the road and then continue on to the next island. The intermodal truck might then still board another short-distance RORO to another island. I found out there are even trucks whose origin is Mactan island which are bound to Manila and will traverse Cebu island, Negros island, Panay island and Mindoro island before landing in Batangas port. And of course intermodal trucks from Manila or CALABARZON find its way to Davao regularly and there are some that reach as far as Zamboanga.

Consolidation” of the local cargo shipping industry especially the container sector has long been proposed by experts both local and foreign. But it has fallen into deaf ears and the national government will not wield the proverbial stick to make this come true and so it lays until now where it started, that is as proposals. “Consolidation” would have led to greater efficiency and thus lower rates. But locally, businesses and not only shipping wants to see efficiency not to lower rates (of course, they will pay lip service to that) but to higher profits. And so greed rules and trumps everything and the higher national interest and greater good do not matter in the end.

Our different shipping companies are republics of their own and historically they have never been into cooperation, consolidation or merger (except the “Great Merger” which produced WG&A and which had been a disaster to local shipping) even though some are related by blood. If there has been a CISO (Conference of Inter-island Ship Owners) in the past, it is only because they want to present a common front vis-a-vis the government and also to make sure that the agreed rates are being observed by all (however, in other countries that will ruled as “cartelization” and subject to penalties or even jail terms; but not here as that term is practically unknown and even Economics teachers here do not know that). Oh, well, actually the cartel master locally is MARINA which sets the rates. Historically, they set the maximum rates but like what happened to LTFRB they treat the maximum rate as also the minimum and MARINA in the end serves just the needs of the shipping companies and not the general public. But before it be misconstrued that they are servile to shipping companies, the truth is shipping companies fear MARINA as their livelihood and fortune is dependent on the decisions of MARINA. If the rates are drastically brought down then they might all go down.

That is the reason why the shipping companies will fight toe and nail for the retention of the Anti-Cabotage Law which bars foreign shipping companies from sailing local or inter-island routes. If the Congress (which has the power to repeal the Anti-Cabotage Law) allows the entry of the much more efficient and capable foreign ships then local cargo rates will drastically go down but our local shipping companies will drown. Regarding the Philippine Competition Commission (PCC), that entity will not amount to anything in shipping because that only checks mergers and mergers are a near-impossibility in shipping.

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LCT Raenell of Asian Shipping Corporation in Mandaue

And so shippers and other related interests will find new ways to bring down rates some other way. One of these is the employment of the cheap and cheap-to-operate LCTs which has only 1,000 horsepower on the average which is just about a third of the power of the container ships. True, they will probably only run at about 7 to 8 knots compared to the 11 to 12 knots of the container ships. So they will take three days to Cebu where a container van will only take two days. But, hey, the bulk of cargo is not express anyway and a difference of one day will not really matter, in the main. Nowadays if one really wants it fast one takes to the plane and use air cargo which is P20/kilo at the lowest now.

It is through the use of chartered LCTs from Asian Shipping Corporation that Ocean Transport had their start. Using big LCTs (by local standards), 94 TEUs can be fitted with the container vans stacked like Lego and handled by big forklifts. The LCTs cost P70,000 a day, fuel and crew included and so the transport cost one way is just over P200,000 not including cargo handling in Manila and possible cargo handling in Cebu. Plus of course other labor, office, yard and anciliary costs and maybe insurance. Under the table money, I have only the vaguest of ideas. But in this calculation one can see the movement of a TEU to Cebu via chartered LCTs is just P4,000, starting. That will not be the actual rate but one can see how low it is via LCT when the normal commercial rate for a TEU to Cebu is probably 5 times of that. The LCT might have just a capacity of 94 TEUs and the container van has 300 TEU but if they are only a third full on the average then the actual load of the two is just about equal and the LCT has probably only has a third of the horsepower of the container ship. The LCT usually has about 100% load. So it is very easy to see which is more efficient and why an LCT can give much, much cheaper rates.

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Roble Shipping was the next to follow the shipping model of Ocean Transport and like the first they were also very quiet about it. Maybe the two fear that if it becomes known widespread that the LCT mode is successful some shipping companies will lobby MARINA and MARINA will institute a crackdown and maybe cite “safety” again which is the usual bogey of MARINA. It has been a long time that the LCTs, being flat-bottomed and not that resilient against capsizing has been tagged with safety issues. It does not help either that being open-decked and having a low freeboard some issues were also attached by some to those. [Note: Ocean Transport and Roble Shipping now operates their own LCTs regularly carrying container vans from Manila to Cebu.]

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LCT Akira of Ocean Transport by John Carlos Cabanillas

The longest route I have seen LCTs bring container vans regularly is from Manila to Cagayan de Oro. And so locally it is proven now that LCTs can be container carriers for 500 nautical miles. I do not know if they are capable of Southern Mindanao routes which is up to 800 nautical miles but I think they can do it if needed. Of course, LCTs are normally earlier to seek shelter than container ships when there are storms. But if MARINA and the Coast Guard suspends voyages at 45kph wind speed then the container ships might not have an advantage anymore.

The LCTs are looked down upon by many but they should know that China which is already the biggest shipbuilding country in the world and is already a shipping power widely uses LCTs to move their cargo internally and on shorter distances. Actually most of our new LCTs now are from China and many came here brand-new. In terms of age, our LCTs might be younger than our container ships now. And LCTs are the backbone of our Cargo RORO LCT fleet which not only move trucks but also trucks and trailers bearing container vans especially to islands that are not served well by container ships like Bohol, Leyte and Samar.

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LCT PMI-3 from Leyte

If MARINA won’t crack down, I see intermodal trucks and LCTs further taking away the business of the container ships which is still growing in number but I know their cargo volume is not increasing. Consolidation would have been easy for them if they will just open their eyes and be open-minded and it does not mean that they would have to merge, an anathema to many executives as that might mean losing their positions and careers that they have built over the years. Actually the simplest consolidation is the swapping of container vans. There is no container company that has daily departures even from Manila and the simplest is they should load their containers to their partner shipping companies which has the nearest departure. That will mean ships being fuller and at the end of the month they can reconcile their figures and charges would have to be paid for the difference but of course it should be on friendship or partner rates.

With that, less ships might have to be employed, there would be less sailings and that would have to mean savings that should be passed on to consumers if they have any integrity. With consolidation too there might be enough containers vans to ports and islands that they have already abandoned or bypassed and so the container ships can come back there and sailing level might be maintained (now isn’t that neat?). Internationally, this system I mentioned is already being used and not only in shipping. I don’t see any valid reason why the local shipping companies can’t do it. It will only be impossible if their distrust of each other is too much and their owners and executives are too obtuse. The national government should also wield the stick after incentives are laid out. They can even set the rules and the system. It is high time already as for the past two decades after constant criticisms I have not seen our local container companies try to bring down container rates to acceptable world standards. They are just being kept afloat by the blood of the shippers. And that is why forwarder companies are making great strides and container shipping is just where they were two decades before. That is also the true reason they won’t venture out to foreign waters because they simply cannot compete. Regarding their charge that our ports are too shallow that is baloney because much bigger foreign ships use the same major ports that they do.

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LCT Poseidon 15 in Verde Island Passage

I wish the LCTs well for maybe it is them that will be able to bring down container rates even though they might not look modern or beautiful. If they drown the container ships then it is the fault of the container shipping companies themselves.

Container Ships Also Sink Our Liners

In the past, before 1980, there was no conflict between the our liners and the container ships. First, container ships did not exist before the late 1970’s. Second, before that time, general cargo ships were not many as it is our liners that were mainly carrying the inter-island cargo that should be transported fast and were not in bulk. That was the reason why even though our production and the number of people were not yet as high like today, there were so many liners existing with as high as 90 liners at its very peak.

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Gorio Belen research in the National Library

In the early 1970’s, the Sea Transport Company came into existence. What was notable for this new company is they offered regular express cargo service to Mindanao which means a direct service and aside from loose cargo, their ships were able to carry small container vans which were non-standard as in they were offering 8-foot containers which they themselves designed (it was rectangular in shape). In due time, they also shifted to standard container vans and they fielded pure container carriers.

In 1976, Aboitiz Shipping Corporation converted one of their general cargo ships, the P. Aboitiz into a container carrier. Conversion like this was not difficult because only some internal structures need to be modified so a container van can be slot in and that also means modifying the holds and the hatches. The grabs of the booms also have to be modified by a bit so it can handle a container van.

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Gorio Belen research in the National Library

In 1978, containerization was already in full swing when Aboitiz Shipping Corporation added more container ships and William Lines Incorporated followed suit. The next year, in 1979, Sulpicio Lines Incorporated also joined the bandwagon to be followed in the next year by Lorenzo Shipping Corporation which had already split from its merger with Carlos A. Gothong Lines Inc (CAGLI). Negros Navigation Company also joined this new paradigm in 1980. In 1981, Sweet Lines Incorporated also followed suit but they used their old company name Central Shipping Corporation. Among the major liner companies then, it was only Compania Maritima which did not join this new paradigm.

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Gorio Belen research in the National Library

These new container services offered direct sailings as in there were no intermediate ports. With direct service, the container ships might be a little slower than the liners (except for the fast cruisers) but their transit times were not worse than the liners (except to Cebu) because they don’t lose time in an intermediate port or ports. With the speed, convenience, security (no pilferage), lack of damage and contamination, soon the shippers were already shifting en masse to the new container services.

In the liner crisis of 1980 when many liners were deactivated and laid up, it seems the main cause of that was the emergence and immediate success of the container ships and container shipping. Maybe the liners suddenly found they don’t have enough cargo and hence they can’t maintain the old sailing schedule and from the outside it looked like that suddenly there was a “surplus” of bottoms (actually the liners complained of that).

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Gorio Belen research in the National Library

In December 1979, the first RORO liner, the Dona Virginia of William Lines came. This RORO and those that came after her were capable of carrying container vans especially the XEU or 10-foot container vans that can be loaded aboard by the big forklifts. Soon even the fast cruiser liners were also carrying container vans atop their cargo holds especially at the bow of the ship. Some can also carry container vans on a platform in the stern.

Locally, I did not see a new paradigm take hold as fast as container shipping. The ROROs even took longer to be the new paradigm. In containerization, there was even a rush to convert general cargo ships into container ships. All the “new” container ship of Lorenzo Shipping Corporation were converts at the start. The other container shipping companies bought general cargo ships from Japan and converted them into container carriers. Our first container ships looked like general cargo ship unlike the modern container ship which does not look like general cargo ships (and nor can they handle loose cargo).

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In just a little over a year William Lines had 5 container ships (Gorio Belen research in the National Library)

The emergence of the RORO liners even pushed containerization faster as that new kind of ferry is ready-made not only for vehicles or rolling cargo but also for container vans, wheeled in atop chassis (which means atop trailers) or not (if not wheeled then big forklifts “wheeled” them in). There were not yet reach stackers in the early years of our containerization to handle the container vans.

In the 1980’s and the 1990’s, the liners can still hold off the container ships. The reason was there were no budget airlines yet (Philippine Airlines fares then were really stiff) and there were no intermodal buses yet in the bulk of the islands (it was only strong in Eastern Visayas, their pioneer area). And liners can still pack in the passengers (even up to “overloading” or overbooking point) because people has already learned how to travel and there was a great push for migration to Metro Manila (which later led to the overcrowding of this metropolis).

However, when budget airlines and the intermodal buses came in droves, the passengers of the liners dropped. The 2,000 to 3,000 passenger capacity slowly became “too big” and hence the national shipping companies no longer fielded liners with capacities such as this in the new millennium. Aboitiz Transport System (ATS) also tried to reduce passenger capacity and increase cargo capacity by converting some of their liners to have two decks for rolling cargo like what they did in SuperFerry 12, SuperFerry 9 and SuperFerry 2.

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Photo by Edison Sy

Can the liners compete with container ships when the passenger demand dipped? The answer is a plain “No way”. Liners usually have more than three times the horsepower of a local container ship (and it is single-engined which means less spare parts are needed) and yet the local container ship usually have three times the container capacity of a RORO liner. This even became more pronounced when the regime of high oil prices came in the first decade of this millennium. Per fuel prices alone, the container ships can carry each container van much cheaper than what a liner can.

Container vans also do not need the amenities needed by the passengers. Moreover, it does not need the service expected of the passengers which need to be fed and be given more than decent accommodations plus some entertainment. Because of that, the crewing needs of a liner is far higher than that of a container ship. All of those means more expense of the part of the liner company. Besides, a RORO liner is more expensive than a container ship for the same size and its insurance is higher.

Ever since the 1980’s, even when the passenger demand was still great, the national shipping companies were earning more from cargo than their passengers. That is true even today when 2GO admits that almost 70% of their revenues are from cargo (and to think under their roof is SuperCat which widens the passenger revenues). Definitely their investment for liners is greater than their cargo ships. Maybe it was only loyalty to their passengers and passenger shipping why they were not quitting this segment. Maybe it is also because of inertia which means just keeping doing the old things.

Lorcon Dumaguete assisted by tugs

If we look at the recent years we can see that for every liner acquired at least 7 container ships were acquired and this is even a conservative estimate. If we look at the last 10 years starting from 2006, only 11 liners came to our shores and that includes the 3 Cebu Ferries, two of which are still used as overnight ships although already converted into small liners. Meanwhile, MARINA registered 80 or more newly-arrived container ships in the same period. These are the container ships of Oceanic Container Lines, Sulpicio Lines/Philippine Span Asia Carrier Corporation, Lorenzo Shipping Corporation, NMC Container Lines, Solid Shipping Lines, Negros Navigation/Caprotec Corporation/2GO, MCC Transport Philippines (MCCTP), Moreta Shipping Lines, Meridian Cargo Forwarders, Seaview Cargo Shipping Corporation, Escano Lines/Loadstar Shipping Company and West Ocean Lines and Transport acquired in the last ten years. Now how many container lines is that compared to a sole passenger liner company?

There are few liners sailing now and all are under just one company which is 2GO (since Romblon Shipping Lines has already quit). Meanwhile, container ships are still mushrooming and more container shipping companies are joining the field. Even 20 years ago there were already more container ships than liners. Now the container ships are already outstripping the liners in number. And the trend holds true year after year.

The question is why? Well, the simple answer is the shipping companies won’t invest in liners as it does not make sense. More revenues can be earned from container shipping at less investment with less hassles from regulations and supply needs (like the food needed by the passengers). So why would they enter passenger liner shipping? Better “pets” like containers vans rather than people like the passengers who can raise a ruckus and if the ship sinks then goodbye to all the advertising and service spent for the goodwill. If a cargo ship sinks, the uneducated public and the media almost won’t mind at all.

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A Cargo RORO LCT by Asian Shipping Corporation

If cargo is the bread and butter of shipping it will now go to the container lines because they can actually offer the lower shipping rates. If not it will go to the intermodal trucks which has even lower rates. And arriving now recently are the Cargo RORO LCTs which carry container vans (even from Manila) like those of Roble Shipping Incorporated, Ocean Transport and Asian Shipping Corporation. This new paradigm can offer even lower rates than the container ships.

Sometimes it looks like liners are already passe. But I don’t want them to go because I prefer them over planes and the intermodal buses are sometimes too tiring especially those who are no longer young.

Will the liners survive? Now, that is one question I would not like to answer.

It Seems They Are Beginning To Fear The Cargo RORO LCTs Now

Once upon a time, in the early days of connecting islands, LCTs had a place as exemplified by Millennium Shipping in the 1970’s and the LCTs connecting Mactan island and the islands of Samar and Leyte. But as it moved into the 1980’s and the 1990’s, it was the short-distance ferry-ROROs that began connecting the islands like in San Bernardino Strait, in Surigao Strait, in Verde Island Passage, in Guimaras Strait, in Tanon Strait, in Bohol Strait, across Camotes Sea, in Basilan Strait and in Panguil Bay. LCTs began losing favor then and some of the reason might be psychological. There was a belief then that LCTs were “less safe”.

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It was actually only Maayo Shipping and Tri-Star Megalink which bucked the trend in those decades before the change of the millennium by still using LCTs as passenger-cargo carriers. To some extent, Asian Marine Transport Corporation (AMTC) can also be counted here before the start of the new millennium. Among the the most notable operator of passenger-cargo LCTS in this millennium are Lite Ferries and Starhorse Shipping Lines. Of course, LCTs also connected Samal island, Guimaras and Olutanga islands but I would rather exclude it here as they were very short connections like the connection across Sula Channel of Albay to Cagraray island.

LCTs as means of transport are slow and slower than short-distance ferry-ROROs. Their passenger accommodations are also very basic and small and can be uncomfortable. They were never really meant to be people carrier unless one is talking of the hybrid Korean LCTs (like the Ma. Angelica Grace, Reina Banderada, Reina Justisya and Star San Carlos among others) which have more comfortable passenger accommodations and even airconditioning plus bigger engines which afford speeds higher than the basic, short-distance ferry-ROROs.

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I do not know which started the trend of using LCTs for vehicles mainly with not much intent to carry passengers. The most significant I noticed that had an operation like this was Golden Bridge Shipping of the Lua family (owner of a tramper company and Oceanjet) which has its base in Cansaga Bay and had a route to Hindang, Leyte. Early on they were known as Socor Shipping. Of course, Mandaue Transport also had a route from Mandaue to Tagbilaran and Simpoi Shipping had a route from Carmen to Ormoc.

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There were also LCTs that were used not for rolling cargo but as container van carriers. Ocean Transport chartered LCTs from Asian Shipping Corporation for this purpose which was copied by others until they were able to acquire their own LCTs. But of course, transit time from Manila to Cebu can take up to 4 days but container vans won’t protest unlike passengers. Some Asian Shipping Corporation LCTs were also chartered to load container vans from Manila to Cagayan de Oro.

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These operations are of course Cargo RORO operations. The only difference is instead of using Cargo RORO or RORO Cargo ships, LCTs are used. That is why I termed these LCTs as “Cargo RORO LCTs”.

Starting in 2012, LCTs from China began appearing in great number in Mactan Channel and the biggest owners were Cebu Sea Charterers, Broadway One Shipping, Concrete Solutions/Primary Trident Marine Solutions and Royal Dragon Ocean Transport. The first two simply had numbers as names of the LCTs. The third one was the owner of the Poseidon LCTs and the last one was the owner of the Meiling LCTs. Asian Shipping Corporation also bulked up their LCT fleet. Supposedly, these LCTs which were called “deck loading ships” in China will be used to transport ores from Surigao to China.

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However, two major happenings intervened. One, the need of China for ores declined and in November of 2013, Typhoon “Yolanda” wreaked havoc in Eastern Visayas. In the aftermath, in the need for relief and rehabilitation of the region, trucks and trailers have to cross. This happened during a time that the long-distance trucks were already running via Eastern Visayas as substitute for the ship-borne container vans and many of these are still destined for Mindanao.

Immediately, mile-long queues of trucks formed in the ports of Matnog, Allen, Liloan, Benit and Lipata leading to loud protests. MARINA then allowed the temporary use of LCTs which became de facto permanent until today. Meanwhile, there was also a great demand for bottoms to be used by trucks across Camotes Bay. Suddenly, the moored “deck loading ships” in Cansaga Bay was crossing Camotes Bay, San Bernardino Strait and Surigao Strait. Cebu Sea Charterers and the Poseidon LCTs slowly begans Cargo RORO LCT operations together with the Adnama LCTs (many more were used in Surigao and elsewhere). Roble Shipping meanwhile chartered LCTs from Asian Shipping Corporation which they replaced when they were able to acquire their own LCTs.

There was also an upsurge in LCT demand to Bohol and some old LCT began plying routes. Feeling their grip threatened, Lite Ferries bought them all lock, stock and barrel aside from buying additional LCTs. Meanwhile, Cebu Sea Charterers invaded other routes like the Carmen-Ormoc, the Dumangas-Banago and the Tuburan-Escalante routes. Suddenly, the lowly LCTs which became Cargo RORO LCTs looked menacing. Even the pioneer Golden Bridge Shipping which had queues even before “Yolanda” feels threatened now.

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How did this come to be? One reason is at the start, the overnight ferry companies crossing Camotes Sea did not give due regard to the rolling cargo or vehicles. They were too content in their successful palletized and loose cargo operations and they underestimated the need of the rolling cargo. At the start only Golden Bridge Shipping, Simpoi Shipping and Asian Marine Transport Corporation were servicing them. It seems Lite Ferries saw the need earlier than their fellow overnight ferry companies. Well, they are strong in rolling cargo operation in Bohol and is even dominating it.

Secondly, in terms of rates none can beat the Cargo RORO LCTs. They might be slow but in terms of rates they are far cheaper than the overnight ferry companies as in they can give rates that are cheaper by 40%. Well, they don’t need to invest in passenger services and accommodations and they have small engines compared to overnight ROROs. Now they even carry container vans not in trailers to Leyte from Cebu superseding the container ships that used to call in Leyte ports from Manila.

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That is always the danger brought by Cargo RORO LCTs, the low rates. Now feeling they can’t beat it, the overnight ferry companies are beginning to acquire their own LCTs. Lite Ferries is so well ahead in this game but Roble Shipping is already following suit. Medallion Transport seems not to be that worried yet because compared to other they saw immediately the need for rolling cargo operations and were not too dependent on palletized and loose cargo operations. After all they started in short-distance ferry-RORO operations and so they might have had a better understanding of rolling cargo from the start.

The old ROROs better adjust now. From what I heard even the big Asian Shipping Corporation which has the most number of ships in the Philippines is joining the fray. It seems they might have already tired of just chartering LCTs.

In the eastern seaboard, I heard the Cargo RORO LCTs are already the favorites of the truckers. As they say money talks. Price point as decision point is simply too easy not to miss. Everybody wants savings.

To me, it is no longer a question if the Cargo RORO LCT sector will take a slice of the pie. The question is how much. From container ships to liners to overnight ships to short-distance ferries, all are threatened. They will not be overwhelmed but they must be prepared to share the pie with the Cargo RORO LCTs. By how much, now that is the guessing game. All I know is the Cargo RORO LCT rates are simply unbeatable. And that might be sending shivers now down the spine of the competition.

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And I dare say this development is good. Rolling rates are simply too high in the Philippines because the regulatory agency MARINA never learned how to compute rates. It is as if fuel and distance are never really factored in.

Rolling cargo rates of the LCTs across Camotes Sea is now lower than RORO rate across Surigao Strait. How did that happen?