Is There Enough Cargo To Move Around?

In the last few years there has been an upsurge in the ships that move cargo. First, that became noticeable with the LCTs that became ore carriers of the black sand mining in a few provinces and particularly in Surigao where opening of mines close to the sea boomed. That happened because of the sudden great demand then of metals in China.

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An aggregates carrier LCT off Taganito, Surigao

Just after the peak of that demand, a fleet of brand-new LCTs built in China appeared in north Mactan Channel. That happened when the demand for metallic ores in China was beginning to wane. And so initially those LCTs especially those owned by Broadway One Shipping and Cebu Sea Charterers were just anchored in the channel. Those LCTs were only known by their numbers but in size those were bigger than the average Philippine LCT. Generally, their powers and speeds were also higher and better.

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Row of newly-arrived LCTs in north Mactan Channel

With nowhere to go these LCTs including those owned by others but also built in China (like the Poseidon LCTs, the Meiling LCTs, those owned by Premium Megastructures Inc., Adnama Resources, etc.) became aggregates carriers and Cargo RORO LCTs and in the latter it challenged in the business then dominated by Goldenbridge Shipping which had a route from Labogon, Mandaue to Hindang, Leyte. Sand is gold in Cebu because of its construction needs and it is not readily available in the island in quantity because of its upraised sea floor origins which meant just a lot of limestone. And so sand is transported from Leyte whose land is volcanic in origin and thus there is plenty of sand and hard rock. Aggregates carrier LCTs go as far as Samar and some also go to Bohol.

The value of Cargo RORO LCTs was highlighted when the super-typhoon “Yolanda” struck and lots of trucks have to move to Leyte and long queues of truck formed in Matnog and Lipata ports and there was also a lot of needed bottoms for trucks crossing from Cebu to Leyte. The LCTs filled this need and suddenly the Cargo RORO LCT segment was here to stay. It challenged not only old LCT operators like Mandaue Transport and Simpoi Shipping but also the overnight ferry companies operating ROROs that Roble Shipping even felt the need to charter LCTs from Asian Shipping Corporation (ASC), owner of many LCTs for charter. Now Cargo RORO LCTs connects many islands and it is also a viable transporter now of container vans from Manila to the Visayas and Mindanao, a mode pioneered by Ocean Transport that also started by chartering LCTs from Asian Shipping Corporation before acquiring their own China-built LCTs.

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On the left is an LCT of Asian Shipping Corporation chartered by Roble Shipping

I can understand the need and value of LCTs which have proven their uses and versatility recently and that is why it is still continuing to increase in number. But in the same period I also noticed the rise in the numbers of our container ships and general-purpose cargo ships which are mainly freighters on tramper duty. In general that is a surprise for me as I know our local inter-island trade is flat and intermodal trucks have already stolen a significant portion of their cargo and that can be shown in the queue of trucks in many short-distance crossings like in the routes to Panay, the routes to Eastern Visayas and Surigao and Cargo RORO LCTs are used by these intermodal trucks along with short-distance ferry-ROROs. Cargo RORO LCTs are also used by tractor-trailers hauling container vans to serve islands where local container ships are now gone or where the service is weak or the rate expensive. Examples of these are Samar, Leyte and Bohol islands.

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A Cargo-RORO LCT

I have been contacted by a writer doing the history of Delgado Brothers or Delbros which once dominated the Manila ports and which was also involved in shipping then (it was also the first employer of my late father). Delbros happened to by one of the two dominant leasers of container vans locally together with Waterfront and they cannot resolve the problem of flat leasing for several years already and they cannot fathom the reason why. I told her the reason is simple – the intermodal trucks are stealing their business.

But in recent years I have seen our container shipping companies add and add container ships. Most remarkable is Oceanic Container Lines (OCLI) which has the most number of container ships now. Notable too is Philippine Span Asia Container Corporation (PSACC), the new name of the controversial Sulpicio Lines. Lorenzo Shipping and Solid Shipping have also added a few. There are new players which are Moreta Shipping Lines which was formerly in overnight ferries, Meridian Shipping and Seaborne Shipping and these new players are also expanding their route networks. To this might be added Trans-Asia Shipping Lines Incorporated (TASLI) which now has a container ship to Manila.

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A deck loading ship

Another notable addition is Fiesta Cargo and Logistics (this is not the exact name of the company) which operates true deck loading ships. These ships have flat decks like those in LCTs and booms for cargo handling. Aside from this and container ships, the Asian Marine Transport Corporation (AMTC) also added a few RORO Cargo ships, their forte and choice of transport.

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A RORO Cargo ship

For NMC Container Lines and 2GO there was no noticeable addition although the latter have chartered container ships from Caprotec and they also charter ships from Ocean Transport (or is it Key West?). Hard to say because of the rumored split between the two. Escano/Loadstar meanwhile seems to be exhibiting a decline in their fleet.

In general-cargo ships a few companies showed newly-acquired ones and probably topping the list is Avega Brothers which from chartering ships from Asian Shipping Corporation went on a spree of acquiring trampers that though Manila in origin they regularly anchor ships now in north Mactan Channel. Medallion Transport and Roble Shipping also both acquired a significant number of freighters. Aside from the three mentioned many other shipping companies also added freighters to their fleet.

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Asian Shipping Corporation LCTs in their Mandaue port

Asian Shipping Corporation which specializes in chartering ships and operating barges aside from LCTs needs special mention because of the rate they are adding ships annually. As of last year their fleet total is nearly 200 ships already including the lowly tugs but MARINA (Maritime Industry Authority) has noted that they already have the biggest fleet in the country in terms of Gross Tonnage (GT), the traditional method of comparing ship and fleet size and that they have already displaced 2GO from its old Number 1 perch. 2GO temporarily regained the top ranking with their acquisition of the liner St. Therese of Child Jesus but I wonder if they did not slide to Number 2 again with the sale of the liner St. Joan of Arc. For an operator of supposedly “lowly” ships the achievement of Asian Shipping Corporation certainly has to be lauded.

But all of these leads me to the question, “Is there enough cargo to move around?” I know many of the trampers are just carriers of cement and other construction/hardware/electrical materials that they are practically “cement carriers”. Some are “copra carriers”. And these trampers are also carrier of bagged flour of various kinds and also other bagged products like fertilizers and feeds. But our freighters seldom carry rice and corn now unlike in the past. Ditto for cassava – the volume now is small.

Is there really a significant rise in the volume of these products? Maybe in cement and related materials because of the construction boom. But I wonder about the others. Are there other products being carried now? What I know is a lot of grocery items is now carried by the intermodal trucks.

Coal might be big now because of the rise in number of our coal plants. But freighters do not carry that. Other types of fuel are carried by the tankers.

There are incentives now from the government on the acquisition of new ships and it even opened a loan window with the government-owned Development Bank of the Philippines (DBP). Are shipping companies taking advantage of that just to hoard ships?

What I know is shipping rates in the country are high if compared to other countries. That can cover low cargo volume. The most visible show of that are our container ships. Seldom will one see them full or even near that. Well, operating ships is expensive especially since MARINA exactions adds to the cost.

Whatever, newer ships are always good. I just want to see where this would lead. Lower rates? Probably not. Better service? That is hard to measure on cargo ships. More availability of ships? Maybe one can count on that.

Anyway, this article is just meant as an update on one aspect of our cargo shipping.

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What Has MARINA Done For The Country’s International Container Shipping?

It was in 1974 that MARINA, the Maritime Industry Authority was created by a Presidential Decree by then President Ferdinand Marcos. Its primary mandate was the development of our maritime industry. For such function it has the shipping companies, the seamen and the shipyards under it. MARINA was our maritime regulatory agency and it even has quasi-judicial powers. As such this agency is responsible for issuing franchises to ships and in approving route permits. For a long time too they decided rates and fares in the shipping industry. MARINA was in charge of the inter-island trade as well as the ocean-going trade.

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From the research of Gorio Belen in the National Library

When MARINA was created in 1974, we still had many international lines ranging from Philippine President Lines (sometimes known as United President Lines), Maritime Company of the Philippines, the Eastern Shipping Lines, Madrigal Shipping as well as an assortment of smaller international lines some of which were associated with our national passenger liner companies. In those days we were ahead of most of our neighbors in international shipping and that might have included even South Korea and China. Can anybody imagine that was possible and believable? It can even be an entry now in “Ripley’s Believe It Or Not”.

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From an newspaper found by Grek Peromingan

When Martial Law came another ocean-going company emerged in the scene, the Galleon Shipping Corporation of Herminio Disini, a documented Marcos crony (“Some Are Smarter Than Others” by Ricardo Manapat) and of the Bataan Nuclear Power Plant “fame”. He and the surging Philippine President Lines (PPL), now helmed by Emilio Yap, of the Manila Hotel and Manila Bulletin fame, had a race in the ocean-going scene, acquiring tons of big ships from the National Development Company (NDC) of the Philippine Government. Government functionaries during Martial Law simply cannot ignore what were called as “marginal notes”.

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From an newspaper found by Grek Peromingan

The two giant companies were able to accumulate a total of some 200,000 gross tons of ships totaling some 20 ships each. How big was that? The only other time that figure was approached was when the WG&A was created with the merger of William Lines, Carlos A. Gothong Lines Incorporated and Aboitiz Shipping Corporation in 1996 and that included the container ships for a total of some 60 ships.

In using government funds for development the National Economic Development Authority (NEDA) is mandated act as the validator if the project really makes sense. And I assume the input of MARINA was sought in the maritime field because supposedly it regulates this field and it is tasked for its development.

I wonder about the divergence. In the 1970’s, our neighbors were already stressing and supporting the creation of their international container lines after seeing this new paradigm develop in the late 1960’s in the more advanced countries. In our country, what the National Development Company acquired for Philippine President Lines and Galleon Shipping Corporation were the castoff bulk carriers and OBO ships of the other countries some of which were even built in the 1940’s and the 1950’s (and it was already in the 1970’s; during that period we buy ferries that were 10 years old). What was the sense in that? Well, if there is “slush”, then that is the “sense” maybe.

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Built in 1958. From the research of Gorio Belen in the National Library

Where was MARINA in all of that? They should have been the “experts” telling the government the “development” was headed in the wrong direction. Shall we lay the primary blame to NEDA? They might have MBA graduates there from good schools but that degree does not confer any maritime knowledge (well, they might not even know the difference of port to starboard or bow to stern). Was it because MARINA is full of lawyers in the upper echelons and not by true maritime experts? The government can hire consultants if they lack knowledge. Did they ever try to enroll true maritime experts in this case?

Fast forward to the great political and financial crisis of 1983 when Ninoy Aquino was assassinated and the economy was tottering, let alone the Marcos regime. Not long after this the Philippine President Lines and Galleon Shipping Corporation toppled along with the Martial Law regime that supported them. Their ships stopped sailing and most were given the fiery torch treatment of the ship breakers. Some others, the newer ones were sold abroad. Practically none survived locally except for the Galleon Tourmaline which became the Madrigal Integrity of Madrigal Shipping.

And that was really a great lost chance for Philippine shipping. It invested a lot of money in ships and all came to naught. And it is very hard to find a second chance after a venture that lost great money and simply went down the drain. The government was left practically holding nothing but just an empty bag. Or shall we say a bag with a lot of scrap metal.

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From the research of Gorio Belen in the National Library

In the 1980’s and early 1990’s, some local shipping companies still tried to engage in the international container trade at least in the short routes in the Far East. It was not really a full container service as understood in the full sense of the world. One of these was the Aboitiz Overseas Shipping Corporation (AOSC). Another was the Eastern Shipping Lines (but it was mainly operating general cargo ships). None ever engaged big container ships by international standards.

I thought Aboitiz was serious in this business when they acquired three brand-new container ships from Ukraine starting in 1994, the Ramon Aboitiz, Vidal Aboitiz and the Luis Aboitiz. The three were under Aboitiz Jebsens and were not part of the merger that produced WG&A. However, after a few years the three were sold. Maybe they found out competing with established international container lines is difficult. We don’t have much to offer the world anyway. Abaca and copra have lost importance in the world market and we have no more logs left and metal ores were in the doldrums then. Our tropical fruits and fresh produce still had limited production and markets then.

A new millennium is always greeted with great fanfare, hopes and expectations. But not in our international shipping. By this time we almost have no container ships going abroad. We practically have no bulkers or OBO ships going abroad. Of course, some small general-purpose cargo ships will go abroad if there is cargo but that is nothing to be proud of and that is not significant enough to be counted. All we had was a lot of mariners wanting to board ships somehow.

Where was MARINA in this plunge of our international shipping, I would like to ask? Where were they as developers of our shipping? Where they simply just too busy pushing papers and affixing their signatures to the regulations they impose on our seamen? Their number is nearly a million so imagine all the papers that need to be cleared. Maybe because of the weight of all of these they have already forgotten that their primary duty is to develop our maritime industry. Actually our mariners are over-certificated. Our doctors, engineers and other professionals don’t have to waste time pursuing such many certificates. In the mariner world, it is not only certificates that they have to cope with. They also have to undergo a lot of training repeatedly at their own expense. Maybe the lawyers in MARINA should be the first one to undergo and pass these trainings and be able to handle ships in the real world.

Today, we still have no international container shipping lines. Well, not even reefers which are important to our fresh fruit and fresh produce exports except for two ships I heard is chartered by Lapanday Foods Corporation of the Lorenzo family. If an innocent lad will look at the ships that call on our ports he might think our national line is Maersk as they dominate our foreign trade.

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A ship of the de facto “national” container line of the Philippines

Today our neighbors have their international container lines. We have none. So clearly in this segment MARINA was clearly a great failure after all these years. It simply dropped the ball.

What are their plans for this segment? Or is it better to just dissolve them and replace them with a body of true maritime experts (like those who know that most maritime accidents are caused by human error) who truly have the interest of our shipping in their hearts and have the vision (and who know their main job is not the export of mariners)?