Carlos A. Gothong Lines Incorporated Is Still Fighting Back

When the original shipping company Carlos A. Gothong & Company broke up in 1972, one of the successor companies was Carlos A. Gothong Lines Incorporated (CAGLI or Gothong Lines) owned by the scions of the founder Don Carlos A. Gothong. It was eclipsed early by Sulpicio Lines Incorporated which was owned by the once operations manager of the mother company. And then its operation and fleet even got smaller in 1980 when Lorenzo Shipping Corporation of Lorenzo Go and two other siblings went their separate way (this company was later sold to the Magsaysay Shipping Group but later the scions of Lorenzo Go founded the Oceanic Container Lines Incorporated which now has the biggest number of container ships in the country which has the “Ocean” series).

Carlos A. Gothong Lines Inc. again became a significant national liner company in the 1990’s when again they built a fleet of liners starting in 1986 and more significantly in 1987 when they acquired the sister ships Our Lady of Fatima and the Our Lady of Lourdes. The sister ships Sto. Nino de Cebu (the later Our Lady of Medjugorje) and the beautiful Our Lady of Sacred Heart, both acquired in 1990 cemented their national liner position and the big liner Our Lady of Akita, acquired in 1993 declared their intention to play in the big leagues.

The rising company got absorbed when they acquiesced to the creation of big merged shipping company WG & A (which stood for William, Gothong and Aboitiz) in late 1995 and that included their small fleet of RORO Cargo ships and also their Visayas-Mindanao overnight ferries. In this merged company their main representative to the Board of Directors was Bob Gothong who was close to the Aboitizes and not the eldest Bowen Gothong.

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Butuan Bay 1 by Vinz Sanchez

While Bob Gothong never veered from the Aboitiz orbit (take note it was Aboitiz Jebsens which was in charge of the operations fleet maintenance of WG & A), the other siblings of Bob Gothong were not satisfied with the state of things in the merged company and in 2001 they asked out and the process of divestment began. Even before the divestment was completed the revived Carlos A. Gothong Lines Incorporated already had the Butuan Bay 1 ready to sail the Manila-Cebu-Nasipit route which was considered lucky for them and where they were very strong in cargo historically. Instead of being paid in ships, the Gothong siblings were paid in cash (while Bob Gothong remained with WG&A) and for this to happen a lot of WG&A ships, both ROPAX and container ships had to be sold to China ship breakers for cash.

With the proceeds in the divestment that did not include Bob Gothong, the Gothong siblings led by Bowen Gothong acquired the big Manila Bay 1 and Subic Bay 1 in 2003 and 2004, respectively which were as big as their old Our Lady of Akita which burned in 2000 as the SuperFerry 6. The two was followed by the Ozamis Bay 1, also in 2004 and by the Cagayan Bay 1, the sister ship of SuperFerry 2 and SuperFerry 5, in 2007. At its peak the revived Carlos A. Gothong Lines Incorporated had a total of 5 ROPAXes (RORO-Passenger ships) plus a valuable wharf in the new reclaimed land in Mandaue adjacent the Cebu International Port or Cebu Pier 6. But though they had five ferries, the revived CAGLI was only able to regain a limited presence in the Visayas-Mindanao routes which were once dominated by them together with the Trans-Asia Shipping Lines Incorporated.

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The revived Gothong Lines did not prove to be very successful. When they re-entered liner shipping, many passengers were already leaving the liners and they were going to the budget airlines and the intermodal buses using short-distance ferry-ROROs. Cargo was also shifting too to the intermodal system because of the high container rates and the hassles of hauling container vans to the Port of Manila from road congestion to criminality and to the rampant mulcting of the so-called “authorities”. In those years it seemed there was a surplus of bottoms which meant excess ships, a possible result of liberalization and incentives programs of President Fidel V. Ramos.

Gothong Lines then became notorious for late departures and arrivals because they gave preference to cargo which earns more than carrying passengers and they were actually never strong in the passenger department. Repeated complaints led the maritime authority MARINA (Maritime Industry Authority) to suspend their permit to carry passengers. With that happening Gothong Lines simply converted their ROPAXes into RORO Cargo ships just carrying container vans and vehicles.

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With weakness in this business too, soon Cagayan Bay 1 and Ozamis Bay 1 soon found themselves laid up in the Gothong wharf in Mandaue and Butuan Bay 1 was sold after an engine explosion and it became the Trans-Asia 5 of Trans-Asia Shipping Lines Incorporated (TASLI). So in the recent years it was only Manila Bay 1 and Subic Bay 1 which were sailing for Gothong Lines and it seemed the two was enough for their limited cargo and routes. However, as RORO Cargo ships they were inefficient because of their big engines. But even then Gothong Lines were offering discounts and cheap rates in general which only showed how overpriced are container rates in the country. Recently, Cagayan Bay 1 and Ozamis Bay 1 were sold to the breakers but their hulls are still in the Gothong wharf in Mandaue as of the writing of this article.

Many speculated what will happen next to Gothong Lines with two inefficient and obsolescent ships and some were even asking if they will soon cease operations as their two ships were already clearly old and might even be too big for their routes. For me, I always look at their wharf which they retained and I know it is very valuable in terms of market value. Actually, the container shipping company established by their brother Bob Gothong, the Gothong Southern Shipping Lines Incorporated (GSSLI) does not even have an equivalent although it is the more progressive and booming company.

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Panglao Bay 1

Recently, two RORO Cargo ships arrived in the Gothong wharf one after another and they were still relatively new by Philippine standards. These are the Panglao Bay 1 and the Dapitan Bay 1 and from the look of things they are the replacements of Subic Bay 1 and Manila Bay 1. Actually, some three months ago as of the writing of this article, the Subic Bay 1 was already pulled by tugs and it seems here destination is a ship breaker somewhere in South Asia. That happened when the Panglao Bay 1 was already sailing for them. It is speculated that the Manila Bay 1 will be disposed of when Dapitan Bay 1 will already be sailing. In reality, it is possible she already has a buyer now.

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The Panglao Bay 1 was built in 1995 and her external dimensions are 128 meters by 22 meters with a Gross Tonnage (GT) of 5,930 in cubic volume and a cargo capacity of 4,946 tons in Deadweight Tonnage (DWT). Meanwhile, the Dapitan Bay 1 is officially a Vehicle Carrier and was built in 1992 and has the external dimensions 145 meters by 21 meters and has a cubic volume of 7,073 tons in GT and a DWT of 4,485 tons. This ship has different specifications depending on the maritime database. Whatever, these two ships are already the ships of Gothong Lines for the future and they look like worthy replacements for the Subic Bay 1 and Manila Bay 1 though they are a little smaller (but the engines are smaller too which is a plus). But then Gothong Lines might have already studied their cargo capacity needs and concluded that the sizes of the two fits them just right.

And so Carlos A. Gothong Lines Inc. is still fighting back. That is good news as they are the bearer of one of the most storied names in Philippine shipping history.

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The Leyte-Surigao Crossing Is Heating Up

Just after Super-typhoon “Yolanda” in 2013, long lines of trucks formed in the Surigao Strait crossings connecting Leyte and Mindanao when the relief and reconstruction efforts were in full swing. I thought it was just a temporary phenomenon brought about by the typhoon destruction but the truck queues persisted after that (but the buses were not affected by that in the main because bearing passengers they always have the highest priority in boarding short-distance ROROs). Cargo RORO LCTs requested by the government helped in transporting trucks months after the super-typhoon passed until the situation more or less returned to normal.

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LCT sent by Asian Shipping Corporation to the Typhoon Yolanda relief effort (Photo by ASC)

But further developments showed there was really increased vehicle traffic already in the Liloan-Lipata and Benit-Lipata parallel routes that connect Leyte and Mindanao. So in the recent years the Surigao Strait saw more short-distance ferry-ROROs sailing the north-south direction. These included new players plus a dedicated Cargo RORO LCT plying the route and carrying trucks. With such there is a palpable increase in the sailing frequencies between Leyte and Surigao.

The once-oldest ferries in the route, the Maharlika ferries are now gone after the sinking in 2013 of its Maharlika Dos off the southwest tip of Panaon island when its engines conked out and she was swamped by waves when no help came after she drifted for hours. Archipelago Philippine Ferries, the owners of the Maharlika series then stopped operations until they were able to bring their new catamaran-ROROs which are part of the FastCat series.

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Now these new type of ROPAXes (RORO-Passenger ships) hold different time slots. Even with just a single ferry which is currently the FastCat M7, it can do three round trips in a day with its superior speed (17 knots) and favorable passenger and shipper response. The FastCat is gaining popularity in the route by offering the same rates but employing a brand-new craft with the best passenger service in the short-distance routes together with the legendary 2GO liners. They are practically the horse to beat there now from being derided in the past because of the lousiness of their Maharlika series.

FastCat still uses the Liloan-Lipata route even though Lipata port was damaged by an earthquake in 2016 which forced other ships to use the other port of Surigao City which is Verano port. This is the port that caters before to the passenger ships from Cebu (there are no more liners from Manila) and freighters plus different crafts to Dinagat, Siargao and various small islands off the Surigao mainland.

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Benit port and MSLI ferry

Giving them stiff competition because it enjoys a short route are the ferries of Montenegro Shipping Lines Inc. (MSLI) which uses the Benit port exclusively to sail the Benit-Surigao route. Normally, this shipping company deploys two big short-distance ferry-ROROs in the route and these are usually the sister ships Maria Felisa and Maria Vanessa. The Benit-Surigao route is only a little over a third of the Liloan-Lipata route but the MSLI rates are only a little less than Liloan-Lipata rates and so MSLI enjoys greater profitability than competition and I wonder why MARINA allows the shipping company to prey on the passengers and vehicle owners when I thought they are the maritime regulatory agency (and they are regulating what and are they for the shipping owners or for the passengers and shippers?).

A newcomer on the route is the Southwest Premier Ferries which is using a brand-new ferry, the SWM Stella del Mar which is a sister ship of the new vessels of Starlite Ferries of Batangas. This company promised several trips in a day but I wonder how they can live up to that if they don’t have enough rolling cargo as many of the vehicles there are already locked to their competitors (well, they can offer discounting to attract the clientele of competition). Southwest Premier Ferries is just a few months on the route.

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Photo from Scoopnest.com

A Bicol shipping company has also invaded the route, the Sta. Clara Shipping Corp. which rotates some of their bigger ships in the route and sometimes it uses a ferry of its legal-fiction company Penafrancia Shipping Corp. As of the time of this writing they are using the ship King Frederick but with two ferries from Japan being refitted right now in Nagasaka Shipyard in Tayud, Cebu, it is probable that one of the two might be assigned to their Liloan-Surigao route to better handle the challenge of the new ferries in the route.

Another old shipping company still plying the route through Liloan and Surigao is the Millennium Shipping Inc. which uses its old and slow Millennium Uno, a ferry with over half a century of sailing experience. At several times in the past this ferry was thought by observers to be already gone only to rise again like a phoenix and one of the recent episode was when they voluntarily stopped sailing after the hot eyes that came with the sinking of the Maharlika Dos (she has her own deficiencies after all). When the ruckus died down the ship quietly went back to sailing with some cosmetic changes and engine improvements so that from 4 hours plus she can now sail the 38-nautical mile distance in a little over 3.5 hours.

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Added to that mix of ships is a Cargo RORO LCT, the GT Express I of GT Express Shipping which was once connecting Negros and Panay islands through the Banago-Dumangas route. This LCT actually uses the Liloan municipal port which once had overnight ships to Cebu and not the Liloan Ferry Terminal. The two ports are just a kilometer apart in a very small bay. As a Cargo RORO LCT, the GT Express 1 can only take in trucks.

One shipping company that is gone now in the route is Asian Marine Transport Corporation (AMTC) which stopped their sailing when they found themselves lacking ferries because of mechanical failures on their other ferries. It is a loss and a perplexity because they fielded in the route the first decent ferry when all that was available 15 years ago were the lousy Maharlika and Millennium ferries. I don’t think they will come back in the route because they still lack short-distance ferry-ROROs.

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Verano Port of Surigao City

So right now 6 different ROROs ply the routes across Surigao Strait from 5 different shipping companies and total of about a dozen voyages in a day with a capacity for over 200 assorted vehicles each way excluding motorcycles plus a passenger capacity of more than 4,000. Such is the available capacity now on the route which is a far cry from that of a decade ago when shut-outs happen.

One reason from the increased demand in the route is Surigao Strait became a favorite crossing point of vehicles to or from Cebu of vehicles not only from CARAGA Region but also from Southern Mindanao as Northern Mindanao is not a viable entry for the rates there are very high. This is aside from the fact that that strait is the old crossing point of buses and trucks coming from Luzon and going to Mindanao.

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“The Saddle” dominates the view of the Surigao Strait crossings

The competition in the route might be heating up for now with some threatened over-capacity but in a few years, with the growth in traffic being shown by the route then maybe more ships and frequencies will again be needed. Actually there is a report that a new port will be built in San Ricardo east of Benit and it will be connected to the eastern coastal road being built in Panaon island that will bypass the mountain pass called “The Saddle” which gives some trucks problems because of the inexperience now of drivers in mountain passes.

Maybe by then there will also be more routes across Surigao Strait in the future. More is merrier and normally that redounds to the benefit of the passengers and shippers if only MARINA will do its job. Let us see it then.

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

What is happening?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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