The Ship Design Conflict Within WG & A

On the first day of the year 1996, the “Great Merger” officially happened. This brought the fleets and all assets of William Lines Inc. (WLI), Carlos A. Gothong Lines Inc. (CAGLI) and Aboitiz Shipping Corporation (ASC) under one single company and management except for some very old ferries of Aboitiz Shipping Corporation (the likes of Legazpi) and a some ferries and container ships of Aboitiz Jebsens (that was a separate company) which were the container ships acquired from the Ukraine. This was supposedly a preemptive move so local shipping can compete against the purported entry of foreign competition in the inter-island routes which proved to be a bogey or a false story later. How some old shipping families believed that foreigners can enter with a Anti-Cabotage Law in effect that forbids foreign shipping firms from sailing in local routes is beyond me because repeal of any law passes through Congress and our Congress is usually not keen on passing laws that grants free passage to foreigners and if those three liner and container shipping companies are willing, the regional shipping companies and other companies might not be willing and they can also raise a ruckus. But anyway the unlikely merger happened and a very big shipping company was formed from previously competitors.

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Dona Virginia (Credits to Palawan Wildlife Rescue and Conservation Center and Manu Sarmiento)

Any merger usually results in excess assets and in shipping that includes ships aside from management personnel and employees and logistical assets like containers, container yards and buildings. This was easily obvious with the WG&A merger. Since there were excess liners some of it were sent to its regional subsidiary Cebu Ferries Corporation (CFC) like when the Mabuhay 6 (the Our Lady of Good Voyage) and the Our Lady of Lipa were sent there. Meanwhile, all the cruisers liners were offered for sale. They also tried to dispose old and unreliable ROROs like the Dona Cristina, Don Calvino and the Dona Lili that were formerly regional ferries. Actually even some recent liners were also offered for sale. The total was about 10 and that was already about a third of the combined fleet. That also included a handful of container ships.

I knew it early there was a conflict with the disposal of ships when I had as a cabin mate in SuperFerry 7 the cargo manager of William Lines in North Harbor and he was furious because to him it seems that the liners of William Lines were being targeted. Well, that might have been the unintended result of getting Aboitiz Jebsens as fleet and maintenance manager because they will use their old standard in choosing ships (that company was subsequently renamed to WG&A Jebsens to reflect the changed circumstances).

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Don Calvino (Credits to George Tappan and Gorio Belen)

One has to look into recent history to understand this. Aboitiz Shipping Corporation as a liner company did not acquire any liners from 1974 to 1988 and the one they acquired in 1988 was inconsequential as it was just the small and old cruiser liner Katipunan of Escano Lines which became the Legaspi 1. By that time Aboitiz Shipping Corporation had just a few old liners sailing, a combination of former “FS” ships which were on its last legs and a few old cruisers including the pair acquired from Everett Steamship, the Legazpi and the Elcano which were also clearly obsolete already and getting unreliable. It looked to me that without their partner Jebsens Maritime that was influential in their container shipping (which was actually good), they might not have had their blockbuster SuperFerry series.

If one looks at the SuperFerry series of Aboitiz Shipping Corporation, one will easily see its distinguishing characteristics. They are all ROROs (or more exactly ROPAXes) with car ramps at the bow and at the stern, the container vans are all mounted in trailers, trailer caddies hauled them in a fast manner and if possible the two car ramps are both employed so one is dedicated for loading and the other for unloading. Radios are also employed for communication to orchestrate the movement of the container vans so a trailer caddy hauling a container aboard will have a container being unloaded on the way down and markers are used so loading of container vans will not be helter-skelter which can mean difficulty in unloading a container van in an intermediate port.

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Maynilad by Britz Salih

To remedy their serious lack of liners due to non-purchase in the recent years past, Aboitiz Shipping Corporation and Aboitiz Jebsens designed their liners to have short interport hours as in 2 to 3 hours only, the former the preferred time. In Manila and in the endport, the port hours were also very short. With this kind of operation the SuperFerries had a high number of hours at sea on a weekly basis which meant maximum utilization. While a Sulpicio Lines liner will only have a round-trip voyage if the route is Southern Mindanao, an Aboitiz ship will still have a short trip to the likes of Panay within the same week or else do a twice a week Northern Mindanao voyage. With this style, their 4 SuperFerry ships were in practicality the equal of 5 or 6 ships of the competition. Of course with this kind of use of ships a heavy load of preventive maintenance is needed and that happened to be the forte of Aboitiz Jebsens.

When the Chiongbian and Gothong families agreed to the Aboitiz proposal to have Aboitiz Jebsens as fleet and maintenance manager they should have already known was in store and that is the liners should perform the Aboitiz Jebsens way and that meant those which can’t will fall into disfavor and might be the target for culling because with the Aboitiz Jebsens system a lesser number of liners will be needed to maintain their route system and frequencies. Of course at the start WG & A will try to employ all the liners that were not relegated to their subsidiary Cebu Ferries Corporation. But then new liners were still coming onstream, the liners William Lines, Gothong Lines and Aboitiz Shipping ordered when they were still separate companies. WG & A created new routes and frequencies but in a short time they realized what cannot be maintained because there are not enough passengers or cargo like the routes to Tacloban and Dipolog (Dapitan actually) and the Manila-Dumaguete-Cotabato and Manila-Cebu-Surigao-Davao routes.

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Tacloban City (Credits to Times Journal and Gorio Belen)

With that “weak” and “inefficient” ships will be targets for culling aside from the old liners and there was no question that cruiser liners will be first in the firing line. That type cannot carry much cargo and their cargo handling in the interport is longer as cargo booms are not as fast in loading and unloading unlike trailer caddies. So it was no surprise that the cruiser liners Misamis OccidentalTacloban City and Iligan City, formerly of William Lines were almost immediately up for sale. The small ROPAX Zamboanga City was also offered for sale because her engines were big relative to her size and capacity (16,800-horsepower engines) and she had no ramps at the bow. That also went true for the slow Maynilad (14-15 knots only on 16,800 horsepower). The problem with these is they were all former William Lines ship, the reason why some former William Lines people were upset. But they accepted Aboitiz Jebsens as the fleet manager and so that will almost inevitably be the result.

Some lesser liners survived. The “Our Lady” ships of Gothong Lines survived because for their size and capacity their engines were small and that speaks of efficiency and though while a little slower they were fit for the short routes like the northern Panay routes (Dumaguit and Roxas City) or in the periphery like Masbate and Eastern Visayas. The northern Panay route also became the refuge of the Our Lady of Naju, a former Gothong ship which was also a cruiser. The passengers and cargo of the route were not big and so a big cruiser liner like the Dona Virginia will not fit. But of course all that favored the former Gothong ships. It might just have been a quirk of fate and not necessarily because the Gothong representative to the WG & A Board of Directors who is Bob Gothong is close to the Aboitizes. But then I wonder how the Our Lady of Lipa survived. For her size she has big engines and speed was not really needed in the Dumaguit/Roxas City route. Was it because they wanted to show up their competitor the old but beautiful cruiser liner Don Julio of Negros Navigation? I thought when the old cruiser liner Misamis Occidental was refurbished to become the cruiser ship Our Lady of Montserrat, a former William Lines vessel she might have fitted the route (she was even re-engined and became all-airconditioned like the Our Lady of Naju). Was her speed not really enough for the route? Or WG & A wants a ship that is really superior to the competition?

Our Lady of Banneux

Credits to Keppel Cebu and Ken Ledesma

It was not surprising then that in the early merger years that former William Lines officers and employees would think it was only their vessels which was on the firing line or chopping block.

The beautiful SuperFerry 11 which was fielded after the merger was also not that favored. Her engines are just about okay for her size, she has the speed but then like the Zamboanga City she has no car ramps at the bow because she also came from A” Lines of Japan. She was also destined for William Lines if the merger did not happen. The beautiful Maynilad would have easily been a SuperFerry in terms of size and accommodations if not for her grave lack of speed. Being excess later the SuperFerry 11 and Maynilad were passed to Cebu Ferries Corporation and they were the biggest ships that company ever had. That was after WG & A created an entirely new route for them, the Manila-Ormoc-Nasipit route which in first report was good. But then along the years WG & A and successor company Aboitiz Transport System (ATS) developed a reputation for being very soft in holding and maintaining routes. In Cebu Ferries the SuperFerry 11 was renamed to Our Lady of Banneux and the Maynilad was renamed to Our Lady of Akita 2 after her top passenger deck was removed. The two happened to be ex-William Lines ships also! Although not clearly disfavored (as she made the SuperFerry grade), the Our Lady of Banneux which can run at up to 19 knots had a grounding incident in Canigao Channel from which she never recovered again.

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The ship Zamboanga by Wilben Santos

So actually the William liners were the great casualties of the merger due to redundancy and incompatibility and that was because they were unlike the original SuperFerry liners and they simply cannot make the SuperFerry grade (well, just like the former “Our Lady” ships of Gothong Lines only one of those made the SuperFerry grade, the former Our Lady of Akita which became the SuperFerry 6). Of course their former Mabuhay 1 and Mabuhay 3 which made the SuperFerry grade lived longer. The former Mabuhay 2 was not lucky as she was hit by fire early which led to complete total loss. In the longer run only the Mabuhay 1 and Mabuhay 3 survived and the Mabuhay 3 as SuperFerry 8 was even leased to Papua New Guinea because of the surplus of liners in WG & A.

The liners of Carlos A. Gothong Lines Inc. (CAGLI) were more lucky as they found niche routes and small engines played into their favor. Moreover many of the former Gothong Lines ships were in regional routes and they lived long there including their former small liners the Our Lady of Fatima and the Our Lady of Lourdes which were sister ships. That even included the venerable Our Lady of the Rule and their old Our Lady of Guadalupe which has unreliable engines and I even wonder how she lasted so long. In the regional routes some former ships of William Lines survived like the Our Lady of Good Voyage and the Our Lady of Manaoag.

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Dona Lili (Credits to PNA, Phil. Daily Express and Gorio Belen)

When the Chiongbian family of William Lines divested in 2003 only 2 of their former liners remained in WG & A aside from a few container ships. They were paid off in cash from the passenger and container ships that were scrapped. There were still many Gothong ships in the fleet of WG & A when they divested as most survived the culling but they preferred newly-acquired ships when they restarted independent operations.

And that was the story of the ship design conflict in WG & A which have been one of the reasons why the “Great Merger” unraveled so soon.

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The First “Great” Merger: The Failed Saga of WG&A and CFC

When WG&A was formed it was ostensibly to combat the entry of foreign shipping companies on local inter-island routes. That was the time of many so-called “deregulation” initiatives of Fidel V. Ramos. But even then I had doubts about this as an cabotage law was in effect in the Philippines. Cabotage effectively prevents foreign shipping companies from plying local routes. And to repeal it an act of Congress is needed and I heavily doubted then that the Philippine Congress will go along with that.

It is generally accepted that it was Aboitiz Shipping that proposed this big merger. Rumors had it that the biggest shipping company, Sulpicio Lines, which was also Cebu-based was also invited but it refused and preferred to go it all alone.

The merger brought together the second, third and fourth-biggest shipping companies in the Philippines reckoned by passenger and cargo operations out of a total of five long-distance liner companies (but may I note which is in fourth place might be disputed by Negros Navigation). It had the effect of lowering the number of long-distance passenger shipping companies from five to three.

The merged company and its subsidiaries were the biggest shipping combine that ever existed in the Philippines in terms of fleet and in terms of route network. It significantly brought to that Visayas-Mindanao and intra-Visayas routes and High Speed Craft(HSC) operations. For the former, the Cebu Ferries Corp. (CFC) was formed and for the latter SuperCat was retained.

Brought into the merger were the following ferries (including their former routes):

WILLIAM LINES INC.
Mabuhay 1 (Manila-Cebu and Manila-Iloilo)
Mabuhay 2 ((Mnl-Surigao-Butuan-Tagbilaran-Mnl and Mnl-Tagbilaran-CDO)
Mabuhay 3 (Manila-Davao-Dadiangas-Manila and Manila-CDO-Iloilo-Manila)
Mabuhay 5 [after a few voyages permanent fielding overtaken by merger]
Dona Virginia (Manila-Dumaguete-Ozamis-Iligan v.v.)
Maynilad (Manila-Zamboanga-Davao)
Masbate I (Manila-Masbate-Catbalogan-Tacloban)
Zamboanga City (Manila-Puerto Princesa v.v.)
Tacloban City (Manila-Batan-Dumaguit-Dipolog v.v.)
Iligan City (Cebu-Iligan v.v.)
Misamis Occidental (Cebu-Ozamis v.v.)
Mabuhay 6 [unfinished]

CARLOS A. GOTHONG LINES INC.
Our Lady of Akita (Manila-CDO-Butuan v.v. and Manila-Cebu v.v.)
Our Lady of Medjugorje (Manila-Dumaguete-Ozamis-Iligan-Cebu v.v.)
Our Lady of Sacred Heart (Manila-Roxas-Palompon-Isabel-Cebu v.v.)
Our Lady of Lourdes (Manila-Dumaguit-Palompon-Cebu v.v.)
Our Lady of the Rule (CDO-Cebu v.v. and CDO-Jagna v.v.)
Our Lady of Naju (Cebu-Ozamis v.v.)
Our Lady of Fatima (Nasipit-Cebu v.v. and Nasipit-Jagna v.v.)
Our Lady of Mt. Carmel (Iligan-Cebu v.v. and Iligan-Dumaguete v.v.)
Our Lady of Guadalupe [reserve/unreliable; formerly Cebu-Surigao v.v.]
Our Lady of Lipa (Cebu-CDO v.v.)
Dona Cristina (Cebu-Tacloban v.v. and Cebu-Palompon v.v.)
Dona Lili (Cebu-Surigao v.v. and Cebu-Maasin v.v.)
Don Calvino [reserve/unreliable; formerly Cebu-Iligan v.v.]
Our Lady of Akita 2 [unfinished]

ABOITIZ SHIPPING CORP.
SuperFerry 1 (Manila-Iloilo-GSC-Davao v.v. and Manila-Iloilo v.v.)
SuperFerry 2 (Manila-Cebu-CDO v.v.)
SuperFerry 3 (Mnl-Zamboanga-Cotabato v.v. w/ Boracay (summer) and Mnl-Dumaguit-Roxas v.v.)
SuperFerry 5 (Mnl-Cebu-Iligan-Dumaguete-Mnl) and Mnl-Dumaguete-CDO-Cebu-Mnl)
Elcano (was not used; obsolete/unreliable; supposedly not brought by ASC to the merger)
Allowing for database inaccuracies, the following cargo ships were brought to the merger:

CARLOS A. GOTHONG LINES INC.
Our Lady of Peace (112.9m x 18.0m, 17kts, b. 1974)
Our Lady of Hope (99.0m x17.3m, 17kts, b.1979)

ABOITIZ SHIPPING CORP.
Aboitiz Concarrier V (69.0m x 10.9m, b. 1968)
Aboitiz Concarrier XIV (71.0m x 10.9m, 13kts, b. 1965)
Aboitiz Superconcarrier I (115.1m x17.3m, 14kts, b. 1970)
Aboitiz Superconcarrier II (102.0m x 16.3m, 12.5kts, b. 1970)
Aboitiz Superconcarrier III (105.5m x16.3m, 12.5kts, b. 1976)
Aboitiz Megacarrier 1 (139.7m x 19.3m, 14kts, b. 1975)
Aboitiz SuperRORO 100 (108.2m x20.0m, 16kts, b. 1983)

WILLIAM LINES INC.
Wilcon II
Wilcon 4
Wilcon 5
Wilcon VI
Wilcon VII
Wilcon 8
Wilcon 11
ROCON I

Excluding HSCs which were just beginning to arrive in the Philippines, the combined fleet of WG&A was nearly 50 vessels, slightly more than double the fleet of Sulpicio Lines, previously the biggest shipping company in the country.

SHIP TRANSFORMATIONS AFTER THE MERGER
Mabuhay 1 became SuperFerry10
Mabuhay 2 became SuperFerry 7
Mabuhay 3 became SuperFerry 8
Mabuhay 5 became SuperFerry 9
Mabuhay 6 became Our Lady of Good Voyage
Our Lady Akita became SuperFerry 6
Our Lady of Akita 2 became SuperFerry 11 (and later the Our Lady of Banneux)
Masbate I became Our Lady of Manaoag (in 1998)
Misamis Occidental became Our Lady of Montserrat (in 1997)

VESSELS TRANSFERRED TO CEBU FERRIES CORP.
Our Lady of Lipa (later transferred to WG&A)
Our Lady of the Rule
Our Lady of Lourdes
Our Lady of Fatima
Our Lady of Mt. Carmel
Our Lady of Guadalupe
Dona Cristina
Dona Lili
Don Calvino
Misamis Occidental
Our Lady of Good Voyage (later)
Maynilad (later and also renamed Our Lady of Akita 2)
Our Lady of Banneux (later)
Our Lady of Manaoag (later)

Like all mergers and acquisitions (M&A), the terms “synergy”, “rationalization” and “streamlining” was bandied about as if these terms are positive terms in business. But soon these words brought chills to the rank and file because the sum of the 3 words is actually only one — “chopping block”. This is the field of bean counters where shipping passion is simply thrown out of the window.

Immediately, the Aboitiz Jebsens system was adopted. That means relying on bigger, faster ROROs and short in-port hours which equates to high utilization of ships. That called for good ship engines, a field of expertise of the now-renamed WG&A Jebsens. That system, however, also meant the death knell for the cruiser liners as their cargo booms meant long in-port hours and their having no car decks means low capacity for container vans.

The new style was to put all cargo in container vans and all container vans are mounted in trailers. For fast handling, tractor heads from trucks were no longer good enough. Only dedicated, automatic prime movers with the capability to raise the trailers were used. Calls on in-between ports generally were only 2-3 hours and ships don’t stay overnight at the farthest port of call of a voyage.

With so many ROROs sailing high hours per week (with some ships sailing 145.5 hours out of a 168-hour week), WG&A was confident it could sell less-efficient and slower ropax and container ships without affecting capacity and frequency. Soon some of the vessels were already for sale.

VESSELS SOLD SOON AFTER THE MERGER
Tacloban City (cruiser)
Iligan City (cruiser)
Dona Cristina (slow, small RORO)
Don Calvino (slow, small, unreliable RORO)
Dona Lili (slow, small RORO)
Wilcon 6 (old cargo ship)
Aboitiz Concarrier V (old cargo ship)
Aboitiz Megacarrier 1 (big, modern container ship)
Aboitiz SuperRORO 100 (big, modern container ship)
RoCon I (big, modern container ship, the biggest in the country)

VESSELS OFFERED FOR SALE BUT NOT SOLD THEN
Dona Virginia (cruiser liner)
Maynilad (big but slow RORO liner)
Zamboanga City (ROLO liner)
Our Lady of Naju (cruiser)
Masbate I (slow, small RORO)
Our Lady of Montserrat (cruiser)
SuperRORO 300 (former Our Lady of Hope, container ship)

With WG&A Jebsens managing the fleet, the merger upgraded the amenities, cleanliness and passenger service of the ferries. But initially all meals were for sale; vehement protests from patrons thereafter forced WG&A to backtrack. It was also claimed that safety standards improved as the whole fleet is now internationally-certificated. However this was not reflected in lower hull-loss rates. Ironically, it was the lesser Our Ladies (and not the SuperFerries) which proved to be unsinkable.

WG&A and CFC practiced branding. Branding is good in the sense that it promises consistent quality and service. On the other hand branding also utilizes ads and promotions. If that results in better market share then it should be good. Otherwise it only means higher level of costs. And higher costs are a threat to marginal routes and to less-efficient ships.

Initially, even with a fifth of their fleet sold (and with only one additional ship coming, the SF12 and while losing the SF7 to fire), WG&A was able to offer more frequencies because of the higher utilization of ships. But almost no new ports of call were added except for Bacolod. And probably the only significant new routes were the Manila-Cebu-Surigao-Davao (which passes through the eastern seaboard of Mindanao), Manila-Ormoc-Nasipit, Manila-Dumaguete-Cotabato and Manila-Cebu-Zamboanga-General Santos/Davao routes.

It was Cebu Ferries that added more new ports of call and routes (like Cebu to Dumaguit, Roxas City, Bacolod, Dumaguete, Larena, Jagna and Camiguin and Cagayan de Oro to Dumaguete) which in turn put a lot of pressure on the other Cebu shipping companies. CFC ships were faster than the competition and as former liners they simply outclassed the rest in terms of amenities and service.

Sulpicio Lines and Negros Navigation responded by adding ships. Sulpicio Lines basically kept to their old routes (except for the new Manila-Cebu-Davao-Dadiangas route) but Negros Navigation which previously concentrated only in Western Visayas has to venture in a lot of new routes and ports of call because their fleet more than doubled in a span of a few years. But then by sailing to Cebu, Nenaco also opened their former exclusive port of Bacolod to competition and they lost more than they gained.

This period right after the merger, the late 90s, was probably one of the best in Philippine passenger shipping. Competition was fierce, choices were many and there were a lot of newly-fielded ships. There were more shipping companies in the past but the ships of the 90s were far better than the ships of the earlier periods. In major ports there were nearly daily departures from all the liner companies combined.

But they say good times never really last. But I didn’t expect that the decline will be that soon, that fast, that continuous and what will be left is just the rump of the biggest-ever shipping company in the Philippines.

The first hint of trouble that I detected was when I noticed that WG&A was not properly assessing the threat, challenge and development of the intermodal system in Eastern Visayas which was then growing by leaps and bounds.

If Fidel V. Ramos had a deregulation program in shipping he also had a deregulation program in the bus and truck sectors. As deregulated area, bus companies can now ply Eastern Visayas routes with just a temporary operator’s permit. Soon a lot of buses were plying the Samar-Leyte-Biliran routes. Then the dominant short-distance RORO company in the Matnog-Allen route lost the case to protect their missionary status and new players entered that route ensuring that the ROROs needed will always be there. Long-distance trucking also developed with the loosening of the restrictions in the importation of surplus trucks. And with the advent of radial truck tires long-distance trucking became easy.

WG&A’s response was to withdraw from the Samar-Leyte routes except for the adjacent ports of Ormoc, Palompon and Isabel which actually comprises just one route. But soon under pressure from the buses these were lost too including the port of Masbate City which was also part of this route. Soon the islands of Masbate, Samar, Leyte and Biliran were lost to the intermodal trucks and buses.

Eastern Visayas was a signal victory for the intermodal system which was based on long-distance truck/bus plus the short-distance RORO ship. Wins by the challengers tend to have a multiplier effect. They become stronger, bolder and more confident. If the ship can be beaten in one area then nobody can pooh-pooh anymore that they will not be beaten in the next area of confrontation. And the next challenge probably happened before the WG&A has fully internalized their loss and it happened when they were in relative disarray.

A related development at this time was that WG&A’s new routes failed to stick and only the Bacolod route was able to survive. The new CFC routes also failed to pan out and were being abandoned one by one. One contributory factor for CFC’s retreat is fuel cost. The amenities and service of their ships might have been higher as those were former liners but as former liners it is also the reason why their engines are bigger and consume more fuel. Soon WG&A/CFC were selling ships. This was the second set of disposals and it happened at about the turn of the millennium. Also disposed in this period were at least six catamarans including vessels that came from mergers in the High Speed Craft (HSC) sector (the mergers with the Sea Angels of Negros Navigation and Waterjet).

At the same proximate time, it was already the strategy of WG&A to sell old and inefficient cargo ships and just let the ROROs liners carry the container vans. They then went for bigger ROROs later with twin cargo decks, the reason for the purchases of the SuperFerry 15, SuperFerry 16, SuperFerry 17 and SuperFerry 18.

The next challenge did not come from the intermodal. Rather it was the withdrawal of the Gothong family from the merger except for one scion. Soon the Gothong family re-entered the shipping business and re-established Carlos A. Gothong Lines Inc. (but they were not particular successful). Not long after this development the Chiongbian family (of William Lines) also withdrew from the merged company. But they did not re-enter the shipping business. Let it be noted, because it is important, that all the merged shipping companies independently retained their cargo forwarding businesess. For the Chiongbian family it was the Fast Cargo Transport Corp.(FCTC) and Gothong Cargo Forwarding Corp.(GCFC) for the Gothong family.

One can speculate that the sale of 10 vessels in 2000-02 (including those withdrawn from routes and old container ships) might somehow be connected to these withdrawals. When the company also took out a big loan in this period ($18.6 million) it might also have a relation to this state of affairs. Before the end of 2002, Aboitiz had already bought out its former partners. But it will still be later that the company will be renamed Aboitiz Transport System (ATS).

The next challenge came from the intermodal again. In 2003, the Western Nautical Highway opened and buses, trucks and jeeps were able to roll down to Panay island via Mindoro and Batangas. Soon the shipping routes and shipping companies serving Panay were under great pressure. Again, WG&A chose to withdraw (from Dumaguit and Roxas) and just tried to hold on to Iloilo port.

The opening of the Western Nautical Highway and the consequent withdrawal from routes, the withdrawal of the Chiongbian family and the need for new ROROs provoked a massacre of ships in this period as about 15 ships were disposed in the years 2003-06, both from WG&A and CFC, both ROPAX and container ships. It must also be noted that six catamarans were also sold in this period. WG&A was lucky that at this time world metal prices were peaking. If it hastened the disposal of ships I can say it is probable. Let me state that in the late 1990’s when all three families were still in WG&A, the company did not sell to the breakers, in general. In the first half of the first decade of the new millennium WG&A sold heavily to the breakers especially when world metal prices were peaking.

Attracted by the doubling of world metal price in 2007, WG&A then sold their prized ferries Superferry 15, SuperFerry 16, SuperFerry 17 and SuperFerry 18 to foreign liner companies.In the process they earned a windfall. But this is not without cost as they suddenly lacked the ships needed to carry the container vans. As a stopgap measure WG&A chartered 3 container ships, the “Myriad”, “Markella” and “Eponyma”. They then also converted SuperFerry 2, SuperFerry 9 and SuperFerry 12 into twin-cargo-deck ROPAX ships. Later the subsidiary cargo company 2GO was formed and the chartered ships were returned one by one.

At about the same time, in 2007, a very ominous development took place. Aboitiz partnered with MCC Transport of Singapore, the Asia subsidiary of the A.P. Moller – Maersk Group, the biggest container shipping company in the world and formed the MCC Transport Philippines (MCCTP). Since it met nationality rules, it was able to ply local routes and the ships invested by Maersk were given special permits by MARINA.

If the chartered ships of ATS and the ships of 2GO were a step up over local competition, the ships that came from MCC Transport were still another further step ahead in terms of size, speed and efficiency. MCCTP acted as feeder to MCC Transport which now dominates the Asia container routes. Together with the coming of more regional container ships (after APL) with direct foreign routes (like MELL, PIL, RCL and others), this completely undermined one important bread and butter of local container shipping which is the transshipment of foreign container vans. ATS and subsidiary 2GO cargo operations might have been affected by this but as a group Aboitiz is safe because they are also on the side of the winners through MCCTP.

After the sales of the four of the biggest and most modern SuperFerry ships in 2007, the fleet of ATS/CFC no longer grew. New ships have come like SuperFerry 20, SuperFerry 21, Cebu Ferry 1, Cebu Ferry 2 and Cebu Ferry 3. But ships have also been sold, lost or laid-up like SuperFerry 9, Our Lady of Medjugorje, Our Lady of Good Voyage, Our Lady of the Rule, Our Lady of Mount Carmel and SuperFerry 19.

With only six ships sailing, ATS ports of call were already down to half compared to its peak and in half of these ports the frequencies were down to once a week. CFC ports of call were also down to half and its fleet is less than a third of what it had before. CFC changed its website and no longer claimed it was the biggest Visayan shipping company (which is just a reflection of the truth). The Sulpicio Lines fleet was already bigger than the combined ATS and CFC fleets. If cargo ships are counted, Sulpicio’s fleet was almost double the combined ATS, CFC and 2GO fleets.

In 2008, KGLI-NM, the holding company owning Negros Navigation made an offer for Aboitiz Transport System. When the bank financing the take-over bid asked for more collateral the bid collapsed. This take-over bid was news for a long time because of the significance and it dragged. It was here that ATS propagated the canard that shipping is losing to the budget airlines and it obscured the fact that cargo is the lifeblood of shipping. Ironically it is this same year that regional container ships in Philippine ports multiplied. And not once did I notice Aboitiz discussing its shares in MCC Transport Philippines. But at least the Aboitiz group was frank enough to admit that the business of power generation attracts them more and that they are already heavily investing in it and if ATS is sold it will be one of their primary investment areas.

In 2010, with the assistance of the ASEAN-China Fund, Negros Navigation Company was finally able to secure the deal to buy Aboitiz Transport System and its subsidiaries especially Cebu Ferries Corporation, SuperCat and 2GO, the forwarding company. At its end as an Aboitiz company, ATS, CFC and 2GO had only 9 ROPAX ships and 2 cargo ships sailing which is not any bigger in gross tons than the company it merged in WG&A even if the SuperCats are counted. So in effect that means the bigger William Lines and Gothong sank without any replacement.

Aboitiz always says around that it has already gotten out of shipping and the maritime industry. But they completely obscure the fact that they are still in MCC Transport Philippines (MCCTP) and they completely own now the former Aboitiz Jebsens (renamed back when the Gothong and Chiongbian families withdrew from WG&A). The former Abojeb is in crewing and manning and that is one of the five recognized sectors of the Philippine maritime industry as defined by the government. MCCTP is already in expansion after Aboitiz sold Aboitiz Transport System. [Recently, Aboitiz clarified that some of their family members are engaged in MCCTP.]

Now, Negros Navigation Company owns Aboitiz Transport System and NENACO even retained the name and the brands. It will be a matter of time before it will be evident how big a bag they are holding.

The “great” merger of 1996 started out with a bang, lofty words and promises. It exited with just a whimper. But along the way it sank two great liner companies (William Lines and Gothong) and took down with it the liner industry.