Final Report Shipping Costs and Competitiveness in Northern Mindanao
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Transcript of Final Report Shipping Costs and Competitiveness in Northern Mindanao
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Shipping Costs and Competitiveness In Northern Mindanao 2
TABLE OF CONTENTS
1. Introduction
1.1 Background 01
1.2 Objectives 01
1.3 Study Area 02
1.4 Review of Relevant Studies 03
1.4.1 Master Plan Study of Cagayan de Oro 03
1.4.2 RORO for Mobility Enhancement 03
1.4.3 Master Plan for Strategic Ports in the Phils. 04
1.4.4 Metro Cagayan de Oro Road Network Development 04
1.4.5 Domestic Shipping Dev’t Project of the Phils. 05
1.4.6 The Cost of Exporting a Container from the Phils. 05
1.4.7 Phil. Logistics Study 05
1.4.8 Mindanao Logistics Infrastructure Improvement Project 06
1.5 Study Methodology and Approach
1.5.1 A Review on Government Infrastructure Initiatives 06
1.5.2 Collection and Review of Information from Past Studies 07
1.5.3 Conduct of Surveys & Interviews of Industry 07
1.5.4 Validation session and Survey Trials 08
1.5.5 Data Processing and Analysis 08
1.5.6 Completion of Actual Logistics Cost Structures 08
1.5.7 Report Writing 08
2. Logistics Conditions in Northern Mindanao
2.1 Infrastructures Logistics Conditions
2.1.1 Spatial Character of Northern Mindanao 09
Shipping Costs and Competitiveness In Northern Mindanao 3
A. Corridor 1. Eastern Misamis Oriental 10
B. Corridor 2. Western Misamis Oriental 11
C. Corridor 3. Eastern Bukidnon 11
D. Corridor 4. Western Bukidnon 13
2.1.2 Freight Corridor and Port Access
A. Corridor 2 and 4.CDO Port & MCT Road Access 14
B. Licoan Intersection (J. Pacana St.) 15
C. Osmeña Street Extension 15
D. Agora Road 17
2.1.3 Ports and Port Facilities 18
A. Port of Cagayan de Oro 18
B. Mindanao Container Terminal 20
2.2 Exports and Imports of Key Commodities 21
2.2.1 Movement of Commodities 21
A. Corridor 1. Eastern Misamis Oriental 21
B. Corridor 2. Western Misamis Oriental 22
C. Eastern Bukidnon 23
D. Western Bukidnon 23
2.2.2 Export and Import Volumes 24
2.3 Logistics Players in Northern Mindanao 29
A. Exporters (Shippers) 29
B. Truckers 29
C. Imports and Importers 29
D. Shipping Lines 30
E. Cargo handling Operators 31
2.4 Logistics Costs/Charges for Exports and Imports 31
Shipping Costs and Competitiveness In Northern Mindanao 4
2.4.1 Trucking and Hauling Rates 31
2.4.2 Brokerage and Facilitation Charges 33
2.4.3 Port Charges 34
2.4.4 Sample Logistics Cost of Exporters 35
3. Logistics Survey for Northern Mindanao 38
3.1 Survey Implementation 38
3.2 Profile of Survey Respondents 39
3.3 Results from the Survey 40
3.3.1 Shippers Survey 40
3.3.2 Importers Survey 44
3.3.3 Truckers Survey 46
3.3.4 Shipping Lines Survey 48
4 Issues and Measures 51
4.1 On the World Bank Report 51
4.1.1 Breakdown of Port Related Transport Costs 51
4.2 Costs and Charges for Shipping 51
4.2.1 Terminal Handling Charge and Other Surcharges 52
A. Findings 54
B. Legislation is Necessary 55
C. Other Shipping Surcharges 55
4.3 Transshipment 55
4.4 Port Operational Issues 56
4.4.1 Mindanao Container Terminal 56
4.4.2 Cagayan de Oro Port 56
4.4.3 Vessel Dues 57
4.5 Domestic Sea Freight 58
Shipping Costs and Competitiveness In Northern Mindanao 5
4.5.1 RORO 59
4.5.2 Freight Quotations and Rates 64
4.6 Trucking 64
4.6.1 Empty Backhaul 64
4.6.2 DOTC-LTO Fines/Penalties 65
4.6.3 DPWH Weigh Bridges 66
4.7 Harmony of Policies and Programs 66
4.7.1 DPWH-PPA Cargo Weight Policies 66
4.8 Securities, Clearance and Inspection Costs 68
4.9 Value Added Tax 68
4.10 Freight Equalization Scheme 69
4.11 Timely Policy Dissemination 69
5 Best Practices of Logistics Players 70
5.1 Exports and Exporters 70
5.1.1 One Stop Processing Centers 70
5.2 Trucking Industry 70
5.2.1 Water Brakes 70
5.2.2 24 Hour Delivery Service Provision 70
5.3 Customs Clearing 70
5.3.1 Value Added Service Provider (VASP) 70
5.3.2 Inspection Areas for Imported Items 71
5.4 Port Management 71
5.4.1 International Shipping and Port Security Code 71
5.4.2 Vessel Operations Commitments 71
5.4.3 Labor Unions 71
5.4.4 Vessel Tracking System 72
Shipping Costs and Competitiveness In Northern Mindanao 6
5.4.5 Port Revenues 72
5.4.6 Port Management Advisory Council (PMAC) 72
6 Way Forward 73
6.1 Institutional Coordination 73
6.2 Replicable Best Practices 73
6.2.1 One Stop Centers 73
6.2.2 BOC’s VASP 74
6.2.3 Maintaining Free Inspection Areas 74
6.2.4 Wharfage Discounts 74
6.3 Information Drive 74
6.4 Logistics Training 74
6.5 Business Support Organizations 75
6.5.1 NORMINSA 75
6.5.2 PhilExport 10A 75
List of Tables
Table 2.1 Some Difficult Road Sections by Corridor 13
Table 2.2 Corridor 1 Commodity Flow 21
Table 2.3 Corridor 2 Commodity Flow 22
Table 2.4 Corridor 3 Commodity Flow 23
Table 2.5 Corridor 4 Commodity Flow 24
Table 2.6 Comparative Shipping and Cargo Traffic, PPA 25
Table 2.7 Volume of Exports by Commodity 25
Table 2.8 Comparative container traffic for both ports in TEU 26
Table 2.9 Value of Exports 27
Table 2.10 Top Import Commodities for Northern Mindanao, 2009 28
Shipping Costs and Competitiveness In Northern Mindanao 7
Table 2.11 Northern Mindanao’s Exporters 29
Table 2.12 Importers for 2009 30
Table 2.13 Foreign Shipping Lines operating in Northern Mindanao 30
Table 2.14 Transshipment Cargo from Northern Mindanao 30
Table 2.15 Spot Market Trucking Rates for Containerized Cargo 31
Table 2.16 Shipping Lines Trucking Rates for Containerized Cargo 32
Table 2.17 Brokerage and Facilitation of Containerized Cargo 33
Table 2.18 Export and Import Processing Charges by Agency 33
Table 2.19 Comparative Arrastre Rates of Selected Phil. Ports 34
Table 2.20 Arrastre and Stevedoring Charges at MCT and CDO Ports 34
Table 2.21 Exporting Lumber through 40’ Dry Van 35
Table 2.22 Exporting a 40’ Refrigerated Van 36
Table 2.23 Transshipment Cost Components 37
Table 3.1 Survey Sampling 38
Table 3.2 Profile of Exporters and Importers Respondents 39
Table 3.3 Profile of Trucker Respondents 40
Table 3.4 Profile of Shipping Lines Respondents 40
Table 3.5 Outsourcing of Trucking Logistics by Shippers 41
Table 3.6 Trucking Share to Total Logistics Cost of Shippers 41
Table 3.7 Shipping Share to Total Logistics Cost of Shippers 41
Table 3.8 Evaluation of Quality of Infrastructure by Shippers 42
Table 3.9 Ranked Logistics Cost by Shippers 42
Table 3.10 Logistics Issues from Shippers 42
Table 3.11 Evaluation and Experiences of Selected Export Processes 43
Table 3.12 Perceived Evolution of Logistical Components by Shippers 43
Table 3.13 Freight Costs by Commodity of Exporters 43
Shipping Costs and Competitiveness In Northern Mindanao 8
Table 3.14 Assessed Port Charges by Importers 44
Table 3.15 Identified Difficult Import Procedures by Importers 45
Table 3.16 Good Practices to Improve Importation Process 45
Table 3.17 Ranked Importation Costs 46
Table 3.18 Actual Logistics Costs Incurred by Importers 46
Table 3.19 Assessed Road Conditions by Truckers 47
Table 3.20 Recommended Solutions for Road Improvements 47
Table 3.21 Identified Problems at Port by Truckers 48
Table 3.22 Ranked Operational Expenses of Trucking Firms 48
Table 3.23 Cargo Tariffs 49
Table 3.24 Rate Port and Freight Conditions by Shipping Lines 49
Table 3.25 Shipping Lines’ Port Operation Conditions 50
Table 3.26 Ranked Port Charges by Shipping Lines 50
Table 4.1 Comparative Breakdown of transport costs per TEU 51
Table 4.2 Cargo Handling activity & applicability of THC 52
Table 4.3 THC Rates 53
List of Figures
Figure 1.1 Study Area 02
Figure 2.1 Carmen Hill Section 11
Figure 2.2: Section of the Highway along Mangima Canyon 12
Figure 2.3: Hazardous Road Section: Mangima Canyon 12
Figure 2.4 Puerto-Bukidnon junction going to Carmen Hill 14
Figure 1.5: Difficult road sections leading to ports from Corridor 2 14 Figure 2.6 Osmeña Extension to the CDO Port 15
Figure 2.7 Motorela 16
Shipping Costs and Competitiveness In Northern Mindanao 9
Figure 2.8 Pedicab, locally known as Trisikad 16
Figure 2.9 The Cagayan de Oro Base Port 18
Figure 2.10 Vehicular Traffic at CDO Port Southern Gate 19
Figure 2.11 The Mindanao Container Terminal (MCT) 20
Figure 2.12 Export Volumes by Commodity, 2009 27
Figure 4.1 PPA reported CDO Port's Annual BOR was beyond 65% in 2009 57
Figure 4.2 Balingoan-Benoni RORO Vessel; Wing Vans ideal for RORO 59
Figure 4.3 Container Vans unloaded from a RORO/Pax Vessel 60
Figure 4.4 Workflow for CHA-RO (RORO/PAX) 61
Figure 4.5 Trailer Horse 63
Figure 4.6 Motorcab 66
Figure 4.7 MCT Weighbridges 67
List of Annexes
Annex 1.1 Presentation of Study Results to Relevant Stakeholders
Annex 1.2 Highlights of the Validation Meetings
Annex 3.1 Shippers Survey Form
Annex 3.2 Importers and Cargo Forwarders Survey Form
Annex 3.3 Truckers Survey Form
Annex 3.4 Shipping Lines Survey Form
Annex 4.1: Maersk Line THC Table
Annex 4.2 LTO Fines and Penalties
Glossary of Terms and Abbreviations
Acknowledgements
The Study Team
1. INTRODUCTION
1.1 Background
Despite the concentration of rich natural resources and vastly developing agriculture,
Mindanao falls far short of national averages in virtually many socio-economic
indicators. As far as the private sector (in Northern Mindanao) is concerned, the brunt
of the problem still lay on a disproportionate government spending in infrastructure
particularly in ports, farm to market roads and highways favoring other areas in the
Philippines. Access to agricultural production areas is constrained by poor road
infrastructure leading to large postharvest losses.
Mindanao’s distance to the traditional markets (mainly Manila) and exports is also a
major competitiveness issue since the logistics cost in bringing products to the
wholesale markets are high in terms of freight and associated costs. Mindanao
shippers for decades have complained of high domestic and foreign freight rates and
surcharges.
This has been a bane for Mindanao shippers as fewer international carriers call
Mindanao ports and domestic transshipment is too expensive as an option. Raw
materials, fertilizer and rice are Mindanao’s main imports.
There had been numerous studies undertaken and designed to alleviate Mindanao’s
logistics woes funded by both national entities and international donor agencies. So
as not to duplicate past transport and logistics studies, PhilExport 10A through the
assistance of USAID’s LINC EG Program opted to limit the study to Northern
Mindanao and take a closer look at issues in the logistics chain through the Cagayan
de Oro (CDO) base port and the Mindanao Container Terminal (MCT), being
Northern Mindanao’s most strategically located gateways.
1.2 Objectives
From the private sector’s point of view, the primary objective of this undertaking is to
establish an updated document on the state of competitiveness of transporting
selected key commodities from Northern Mindanao. The study objectives are, thus,
as follows:
a. Identify present and pressing transport-related issues detrimental to Northern
Mindanao’s competitiveness of selected export and import commodities;
b. Showcase the best practices on the different segments on the logistics chain,
aimed at reducing costs and maximizing efficiency;
c. Provide recommendations leading to policy changes in ports, shipping, road use
and infrastructure at all levels of government.
Shipping Costs and Competitiveness In Northern Mindanao 2
1.3 Study Area
Northern Mindanao consists of the provinces of Misamis Oriental, Camiguin,
Bukidnon, Lanao del Norte and Misamis Occidental as well as the cities of Cagayan
de Oro (CDO), Gingoog, Malaybalay, Valencia, Iligan Ozamis and Oroquieta.
However, focus will be on areas which contribute significant freight volume to the
ports of Cagayan de Oro (Macabalan) and Mindanao Container Terminal (MCT).
Figure 1.1 shows the spatial coverage of the study, which is divided into four
corridors for a more localized view of the logistics conditions and issues.
Legend:
Corridor 1: Eastern Misamis Oriental (green)
Areas along the Butuan-Cagayan de Oro-Iligan Road (BCIR)1 East of
Cagayan de Oro (Tagoloan to Magsaysay, Misamis Oriental) going to Butuan City
Corridor 2: Western Misamis Oriental (blue)
Areas along the Butuan-Cagayan de Oro-Iligan Road (BCIR), West of Cagayan de Oro (Opol to Lugait, Misamis Oriental) to include Iligan, Lanao del Norte & Misamis Occidental
Corridor 3: Eastern Bukidnon (orange)
Areas along the Sayre Highway from Cagayan de Oro to Quezon, Bukidnon
Corridor 4: Western Bukidnon (violet)
Areas along the Cagayan de Oro-Talakag Road including the town of Baungon, Bukidnon
1 Formerly known as the Iligan-Cagayan de Oro – Butuan Road (ICBR) per DPWH update
Figure 2.1 Study Area, Northern Mindanao
Shipping Costs and Competitiveness In Northern Mindanao 3
1.4 Review of Relevant Studies
The Government of the Philippines, as the principal entity, has conducted several
transport studies in the past funded by various donor agencies. Likewise, Business
Support Organizations (BSOs) in Northern Mindanao have conducted value chain
studies on different commodities but no study has been made recently looking
closely at the overall transport logistics of commodities especially exports.
The study not only refreshes the information on local logistics conditions but also
gives focus on the various transport modes such trucking, ports and shipping.
Relevant regulatory costs that impacts on the competitiveness of export commodities
from Northern Mindanao is also tackled.
There have been a number of studies for the improvement of the infrastructure,
transportation and logistics in Mindanao. Relevant studies are as follows:
1.4.1 Master Plan Study for Cagayan de Oro - Iligan Corridor Special
Development Project, 1992
The Laguindingan Airport Development Project (LADP), upgrading of existing
seaports and the establishment of the Mindanao Container Terminal (MCT) are
among the key infrastructures identified for development. Likewise, major road
development projects were also proposed.
Most of the major infrastructure projects identified in this study are currently either in
place or in the pipeline. Implementation status of some of the projects require updating.
It is also noted that some of the road and component projects saw delayed completion
such as the new RCDG Tagoloan Bridge; the Cagayan de Oro 3rd Bridge and By-pass
road crossing the Cagayan and Iponan Rivers to Opol, Misamis Oriental.
1.4.2 RORO for Mobility Enhancement, November 2007
This study highlights the need for a more efficient Roll-on roll-off (RORO) system for
the country, linking the existing RORO systems already in place in Northern
Mindanao (e.g. CDO-Cebu; Balingoan-Camiguin-Bohol).
The study recommends institutional strengthening and development of the Roll On-
Roll Off Transport System (RRTS) by authorizing eight Strong Republic Nautical
Highways (SRNH) as a National Project. The study encourages institutionalizing
SRNH by establishing an SNRH project management office.
This mechanism will not just oversee existing developments but also future
developments on RRTS, through periodic surveys to update the program’s
development. The study also encourages the need for a sustainable procurement of
RORO capable ships.
Shipping Costs and Competitiveness In Northern Mindanao 4
This study includes a plan to establish a RORO terminal for international cargo in the
port of Cebu. In Northern Mindanao, transshipment of some export container
cargoes is expected via Manila or Cebu through the RORO system.
1.4.3 Master Plan for Strategic Ports in the Philippines, January 2004
This study aims to develop a master plan for major seaports in the country as well as
develop a 5-year and 25-year development strategies for priority ports including the
Cagayan de Oro base port. Northern Mindanao was identified as high priority for
immediate and long term development.
The study recommends installing additional equipment at the CDO Port, mainly a
Quay crane, establishment of additional 500-meter berth and support facilities for
bulk cargo and improvement of RORO facilities.
Further, the study recommends that PPA to amend its port tariff from GRT/day to
meter/hour basis, introduce lease contract with terminal operator with fixed and
variable tariff, simplify port procedures, introduce the Port EDI System/Single
Window System and improve port security measures.
Most, if not all, of what was recommended in this study has already been implemented
by the PPA or by its cargo handling operator for the Port of Cagayan de Oro.
The Quay crane was installed and commissioned in early 2005, 250-meters of the
proposed 500-meter additional berth is already established in 2009 with back-up
facilities including depot for liquid bulk (molasses), improved port procedures had
obvious positive results and in 2009 and PPA invested on emergency response
equipment (e.g. first aid, fire fighting), as well as close circuit television (CCTV)
system for security.
1.4.4 Metro Cagayan de Oro Road Network Development Master Plan, 2004
This is a detailed study of Cagayan de Oro’s road network including those of the city’s
neighboring towns. Several road and bridge projects were initially identified for
development or improvement by the respective Local Government Units (LGUs) and
DPWH. However, only four (4) projects were found to be feasible by the study namely:
1. CDO Western Coastal Road (from Kauswagan, Cagayan de Oro City to
Igpit, Opol, Misamis Oriental) linking the CDO 3rd Bridge from Kauswagan
to Julio Pacana Street as major alternate for west bound traffic from the
CDO base Port.
2. The JR Borja Extension Road connecting the Central business district
mainly Cogon Market to BCIR in Gusa, Cagayan de Oro City.
Shipping Costs and Competitiveness In Northern Mindanao 5
3. Proposed CDO 7th Bridge and approaches between the Gov. Ysalina
Bridge (at Carmen) and the Emmanuel Pelaez Bridge (CDO 3rd Bridge) in
Barangay Taguanao.
4. CDO West Diversion Road connecting Masterson Avenue (near SM City
CDO) and the ICBR in Barangay Bulua, Cagayan de Oro through
Barangay Canitoan.
All the recommendations of this study have already been implemented. the CDO
Western Coastal Road which is currently being implemented is experiencing
delays caused by right-of-way acquisition.
1.4.5 Domestic Shipping Development Project of the Philippines, 2004
This study highlights the feasibility of an efficient RORO system in the country.
Further the study highlights the contestability of cargo handling services, resolution of
port labor issues leading to port privatization. The study also reviewed the
deregulation policies in the shipping sub sector.
1.4.6 The Cost of Exporting a Container from the Philippines Study 2007
This study was a joint effort between the Export Development Council (EDC) and
Phil. Chamber of Commerce and Industry (PCCI) and the Phil. Exporters
Confederation (PHILEXPORT).
The study aimed to validate the cost of exporting a container from the Philippines and
Identify areas for possible cost reduction, in light of the 2006 World Bank-IFC “Cost
of Doing Business” Report, particularly on Cross-Border Trade where the Philippines
was ranked highest in terms of cost in exporting compared to other ASEAN countries
like Thailand, Vietnam and Indonesia. The study also proposed for the passage of
the Omnibus Maritime Code.
1.4.7 Philippine Logistics Study, November 2002
The study provided a detailed supply chain analyses for key agricultural commodities
from Northern Mindanao. It recommended policy reforms such as rationalizing PPA’s
role as regulator and manager of public ports, deregulation of domestic shipping and
shipping rates, lifting of the cabotage law, revocation of Executive Order 59 (creation
of a single entity from various stakeholders to manage cargo handling operations in
public ports), and campaign against corrupt practices on the road.
Shipping Costs and Competitiveness In Northern Mindanao 6
1.4.8 Mindanao Logistics Infrastructure Improvement Project August, 2009
The study aimed at looking for ways in maximizing the utilization of the Mindanao
Container Terminal as the country’s “Southgate” for both domestic and international
cargo. The study provided a detailed description of Northern Mindanao’s shipping
system, as well as the various supply chains of major agricultural commodities of
Mindanao, especially export winners such as fresh fruits pineapple & banana, coconut
as food and vegetable oil, including promising commodities such as vegetables.
The study also reinforced government’s plans and programs for agriculture and farm-
to-market road development which will integrate, improve, and increase productivity
and flow cargo.
Apart from other recommendations, the study highly recommends for additional
official development assistance on the following:
1. Establishment of a “Container highway” leading to MCT and CDO Port;
2. Establishment of RORO traffic for CDO/MCT and Batangas Port;
3. Additional market researches with focus on the cold chain to encourage
more production of other crops such as vegetables;
4. Establishment of an agribusiness center (patterned after the Makubetsu
Agricultural Coop in Hokkaido, Japan); and
5. Expansion of MCT.
On the whole, these enumerated studies highlighted Northern Mindanao’s logistical
problems and possible solutions. The study however barely touched on the transport
cost structure of Northern Mindanao’s exports and imports.
1.5 Study Methodology and Approach
The study was conducted from December 2009 till April 2010. The following activities
took place:
1.5.1 A review on government’s infrastructure initiatives:
a. The region’s infrastructure development and improvement programs
The data secured for this study were the materials presented by government
agencies during the Mindanao Logistics Conference held last November 25-
26, 2009. While the Medium Term Philippine Development Plan (MTPDP) is
the best basis for government programs and initiatives.
Shipping Costs and Competitiveness In Northern Mindanao 7
b. Transport policies and enforcement
Transport and shipping policies were gathered from various government
offices and companies mainly through online information (to ensure said
policies are already for public consumption). The team also secured other
related policies during mutli-sectoral activities like the CIQS (Customs-
Immigration-Quarantine and Security) Northern Mindanao Consultative
Committee, the Regional Development Council (RDC) and during other
consultations by these respective agencies. PhilExport-10A has also
compiled policies issued over the years. These policies are in the form of
memo circulars, enacted laws and implementing rules and regulations,
department orders and the like.
1.5.2 Collection and review of information from past studies and official data
from government agencies and local governments, which include:
a. Export data from the Bureau of Customs (BOC) and the Department of
Trade and Industry (DTI)
b. Import Data from the Bureau of Customs and the Philippine Ports
Authority (PPA)
c. Port Statistics from PPA offices and from the Philippine Veterans
Investment Development Corporation (PHIVIDEC) Industrial Authority
d. Socio-economic information from the Department of Trade and Industry
and the National Economic and Development Authority
1.5.3 Conduct of surveys and interviews of industry key players and some
government officials in the region.
The surveys were undertaken from February till end of March 2010. The target key
players and participants were:
a. Shippers - exporting PhilExport10A members and other exporters.
b. Truckers - PhilExport member service providers and members of the
Cagayan de Oro Port Truckers’ Association as well as other independent
truckers.
c. Shipping Lines - foreign shipping lines calling the ports of Cagayan de Oro
(CDO) and Mindanao Container Terminal (MCT), domestic shipping lines
and Non-Vessel Operating Common Carriers (NVOCCs).
d. Cargo forwarders and importers - especially companies importing raw
materials for export.
Shipping Costs and Competitiveness In Northern Mindanao 8
e. OROPORT Cargohandling Services, Inc.; the cargo handling operator of
CDO Port and the Mindanao International Container Terminal Services,
Inc. (MICTSI), the terminal operator of MCT.
Most of the survey sheets were hand delivered with priority given to PhilExport 10A
members while the others were either sent through courier, fax or email (as
requested by the target respondents).
1.5.4 Validation session and survey trials
The survey questionnaires were drafted early January. A trial survey was conducted
on January 14, 2010 which provided feedback in improving the survey mode and
survey instrument.
1.5.5 Data processing and analysis
Data collection and processing were done as soon as each data was secured
especially for survey sheets. Follow-ups of respondents were done on a daily basis.
Most survey target respondents had problems completing the survey sheets due to
the daily power interruptions and their need to maximize power availability. Others
were apprehensive to respond, fearful of compromising business positions.
1.5.6 Completion of actual logistics cost structures based on transport cost
standards
While the survey sheets provided questions on the cost components, separate
interviews with key respondent companies (either their managers or their
import/export staff) were done to ensure that these data were secured.
1.5.7 Report writing
This final activity documents all interpretation and findings of the study. Study results
and recommendations are presented and validated during the stakeholders’ meeting
on April 6, 2010. The attendance list of said meeting is attached as Annex 1.1 and
the presentation material is shown in Annex 1.2.
Shipping Costs and Competitiveness In Northern Mindanao 9
2 LOGISTICS CONDITIONS IN NORTHERN MINDANAO
2.1 Infrastructure Logistics Conditions
2.1.1 Spatial Character of Northern Mindanao2
Northern Mindanao is bounded on the North by Bohol Sea; on the South by Lanao
del Sur and North Cotabato; on the West by Zamboanga provinces; and on the East
by Agusan Provinces and Davao.
The region consists of five provinces composed of the landlocked province of
Bukidnon in the south; Misamis Oriental in the north; the island of Camiguin in the
northeast; Lanao del Norte and Misamis Occidental in the west; the cities of Cagayan
de Oro, Gingoog, Iligan, Malaybalay, Valencia, Ozamis, Oroquieta, and Tangub; a
total of 85 municipalities, 11 Congressional districts, and 2,020 barangays.
The total area of the region is 2,018,617 hectares with a population of about
4,846,579 with an average annual growth rate of 2.4%. Population density in the
rural areas is 1,193.05 per square kilometer, while in urban areas; it is 4,685.37 per
square kilometer.
Bukidnon has vast agricultural resources which are highly suitable for most types of
crops like corn, rice, vegetables crops, fruits and other commercial crops such as
abaca, coffee, rubber and sugarcane. Moreover, livestock, poultry and dairy are also
produced in large quantities in the province supplying the needs of neighboring
provinces and cities. It is the region's food basket and primary supplier of raw
materials for processing in the various agri-industrial centers of the region.
Misamis Oriental is also an industrial hub of the region. It is home to the regional
capital, Cagayan de Oro hosting a regional airport, international seaports, first class
hotels and variety of agri-based and other manufacturing industries.
The island of Camiguin is a place of unspoiled beauty, white sandy beaches, clear
mountain springs and waterfalls and rustic old world charm. Camiguin is the perfect
place for tourism adventures.
Misamis Occidental, a place of natural beauty, wetlands, unspoiled forests and rich
fertile soils. It is one of three major prawn, shrimp and squid spawning grounds in
the Philippines. It is the base for most of the region’s aquaculture industries.
Lanao del Norte is the newest province added to the Northern Mindanao region. The
province used to belong to the Central Mindanao region. The province is traversed by
several rivers, the most important of which is the Agus River which feeds the Maria
Cristina Falls and is a major source of hydroelectric power for the Mindanao Grid.
2 Northern Mindanao Socio Economic Profiles from NEDA-10, DTI-10, DA-RFU 10
Shipping Costs and Competitiveness In Northern Mindanao 10
Physically, the region enjoys distinct advantages over other areas in the country. It is
geologically a combination of plains, mountains, rolling hills, and coastal areas. It has
fertile soil, abundant minerals and forest and aquaculture resources.
The region serves as the gateway to and from the rest of Mindanao, linking this
resource-rich island to the rest of the country and the world via its relatively modern
seaport, airports, and an extensive arterial road network. It is located outside the
typhoon belt and enjoys a climate that is favorable to agriculture and industrial
activities.
The study area is grouped into four corridors based on the locations of the cities,
municipalities, road network, and industries for a better grasp of its spatial and
transport attributes. The corridors are as follows:
Corridor 1: Eastern Misamis Oriental
Areas along the Butuan -Cagayan de Oro – Iligan Road (BICR)3
East of Cagayan de Oro (Tagoloan to Magsaysay, Misamis Oriental) going to Butuan City
Corridor 2: Western Misamis Oriental
Areas along the Iligan-Cagayan de Oro – Butuan Road (ICBR) West of Cagayan de Oro (Opol to Lugait, Misamis Oriental) to include Iligan, Lanao del Norte & Misamis Occidental
Corridor 3:Eastern Bukidnon
Areas along the Sayre Highway from Cagayan de Oro to : Quezon, Bukidnon
Corridor 4: Western Bukidnon
Areas along the Cagayan de Oro-Talakag Road including the towns of Baungon, Bukidnon
A. Corridor 1: Eastern Misamis Oriental
It is one of the region’s largest coconut-producing areas with the presence of small to
large coconut-based industries. Corridor 1 is also the home of the PHIVIDEC
Industrial Estate along Tagoloan and Villanueva in Misamis Oriental, hosting 29
manufacturing companies and 62 service firms. The two-lane coastal highway is
also the major artery that connects Cagayan de Oro City to the agricultural provinces
of Surigao del Norte, Agusan del Norte, Agusan del Sur, Surigao del Sur, through
Davao del Norte to Davao City.
The highway stretches 170 kilometers to Butuan City and is in fairly good condition
with periodic maintenance by DPWH. Laden cargo trucks take approximately five
hours to bring cargoes from Butuan to Cagayan de Oro Port or to MCT.
3 Formerly known as Iligan – Cagayan de Oro – Butuan Road (ICBR)
Shipping Costs and Competitiveness In Northern Mindanao 11
Figure 2.1 Carmen Hill Section, between Puerto, Cagayan de Oro & Ala-e, Manolo Fortich, Bukidnon
B. Corridor 2: Western Misamis Oriental
This coastal highway connects Cagayan de Oro City to the cities of Iligan, Ozamis,
Dipolog, Pagadian and Zamboanga. The Cagayan-Iligan link was developed in the
1970’s and is fairly in good condition with concrete re-blocking undertaken last year.
Owing to its relatively flat terrain, this road probably carries the heaviest cargo loads
comprising of steel, cement and wood products.
Along this very important stretch of national road is the soon to be operational
Laguindingan International Airport. Though current airfreight export volume
contribution is negligible, improving and protecting this road section is of vital
importance as the airport’s international status is expected to attract cargo traffic.
C. Corridor 3: Eastern Bukidnon
Sayre Highway is the portion of the Philippine national highway that starts from
Puerto, Cagayan de Oro City to Kabacan, North Cotabato passing through the
province of Bukidnon. This also connects Cagayan de Oro to Davao via Buda road
which was completed in early 2000 and shortens the north-southeast transit time for
both cargo and commuters.
The Sayre Highway though paved predominantly by asphalt traverses sections with
deep ravines and cliffs such as the Manolo Fortich Section, Mangima section and
Damay pass. Accidents involving hauling trucks carrying various Bukidnon products
are common occurrences along this stretch of national road. The hazardous road
sections are shown in Figures 2.1 and 2.2.
Carmen Hill is one of
the most difficult
sections along Sayre
Highway and serves as
the main trunk to and
from the province of
Bukidnon. Carmen Hill
section is a narrow two
lane road, winding and
steep. A short section
has been recently
rehabilitated but was
not widened. The peak
hour traffic volume at
this section was
around 500 vehicles
per hour. As vehicles
cannot gain
momentum due to congestion, vehicles are reduced to a crawl of approximately five
kilometers per hour. This is a “no passing” section but faster vehicles will always try
to overtake laden trucks which poses danger to motorists.
Shipping Costs and Competitiveness In Northern Mindanao 12
Figure 2.3: Hazardous Road Section: Mangima Canyon
Mangima Canyon is dubbed as the
Kennon Road of the South and the
Purple Heart Canyon by American
Veterans. the zigzag road of Mangima
Canyon at Manolo Fortich awes visitors
who visit the place with its naturally
scenic spot. The road along the Sayre
highway however is a narrow two lane
winding and steep affair and is also the
site of hundreds of accidents. This has
been considered as the most
dangerous of the entire Sayre highway
stretch.
This section is unlit at night and
chevron directional highway signs have been stolen. A signage with the warning
“Watch out for falling rocks ahead” warns motorists of numerous dangers ahead.
There is Department of Public Works and Highways (DPWH) “Rest Area” where
motorists can cool their brakes and enjoy the fabulous view.
Figure 2.2: Section of the Highway along Mangima Canyon
Shipping Costs and Competitiveness In Northern Mindanao 13
D. Corridor 4: Western Bukidnon
The Cagayan-Talakag road is two lane concrete built and completed in early part of
2000. Except for a few steep and winding sections, this road is in good condition and
traffic is sparse.
Cargoes truck using this corridor encounter traffic congestion and road friction upon
descending from Carmen Hill (west side from SM Mall), with merging traffic at the
CDO 2nd bridge. Traffic is heavy along Vamenta Boulevard up to Liceo de Cagayan
University before taking a left to Marcos bridge. This vital corridor is also used
currently for the Lumbia airport commuter and cargo traffic. At present the airport is
utilized for domestic passenger and cargo only. The list of difficult road sections is
given by corridor in Table 2.1 as enumerated by the truck operators and drivers.
Table 2.1 Some Difficult Road Sections by Corridor
Location Est. length (Kms.) Corridor 1: Eastern Misamis Oriental 26
Puerto-Bukidnon Junction 1 Binuangan to Sugbongcogon 4 Medina Brgy. Maanas 2 Medina, New Mananom to Fiesta Brand 3 Gingoog, Crossing Bal-ason to Anakan 3 Lambuyog Bridge to Artadi 6 Kibunsod to Carmen 6
Corridor 2: Western Misamis Oriental 3.5 Marcos Bridge and approaches 2 Bulua Section 1.5 Iligan City Diversion NA
Corridor 3: Eastern Bukidnon 32 Carmen Hill 5 Diclum 3 Lingion to Mangima 4 Dalirig to Maluko Zigzag 5 Maluko to Kulaman Bridge 1.5 Damay Pass to San Vicente 4 Impasug-ong to Kapitan Bayong 4 Impalutao to Stock Farm 0.5 Patpat to Malaybalay 4 Malaybalay Diversion Road NA
Corridor 4: Western Bukidnon 11 kms. (Roads) 120meters (bridges) To Baungon Airport to Maasin 1 Maasin Baily Bridge 0.08 Maasin to Imbatug NA (unpaved) Kamatayan section 1 Lipatunan Wooden Bridge 0.03 To Talakag Makahambus Cave to Mambuaya 4 Dansolihon to Langawan 2 Langawon to Menzi 3 Lapok-Talakag to Dominorog NA (unpaved)
Source: Truckers’ Survey and Truck Drivers’ Interview. The terrain road geometry along these sections forces trucks
to reduce to low speed of 20 km/hour or lower.
Shipping Costs and Competitiveness In Northern Mindanao 14
2.1.2 Freight Corridor and Port Access
A. Corridor 2 and 4: CDO Port and MCT Road Access
The most vital section of the
Butuan-Cagayan-Iligan road for
road freight stretches from the
municipalities of Laguindingan in
the west (the site of the new
international airport) to Jasaan in
the east of Cagayan de Oro City.
Corridor 2 export bound cargoes will
have to pass through Cagayan de
Oro (CDO) going to Mindanao
Container Terminal (MCT) and
would encounter urban vehicular
traffic. The most critical sections of heavy traffic concentration and roadside friction
are the following: - Bulua section
- Marcos bridge
- Licoan intersection
- Gaisano-Nazareno Church section
- Corrales intersection
- Osmeña intersection
- Limketkai intersection (un-signaled)
- Agora intersection
- Puerto intersection (un-signaled)
For cargoes from corridors 1 and 3 with the port of Cagayan de Oro as destination
point, the critical sections are: - Puerto intersection
- Agora intersection
- Agora road leading to CDO port South
entrance gate
- Limketkai intersection and Mindanao
University for Science & Technology gate
- Corrales intersection and Corrales
extension
- Corrales extension -Gaabucayan
intersection
- Gaabucayan-Corrales Street
extension intersection
Figure 3.5: Difficult road sections leading to ports from Corridor 2
Figure 2.4 Unsignalled Puerto-Bukidnon junction
Shipping Costs and Competitiveness In Northern Mindanao 15
The roads are shared by several road users, mainly private cars, trucks, motorela,
jeepneys, taxis and buses. There are no comprehensive statistics reported by
Northern Mindanao road agencies regarding traffic levels on the roads and the
composition of total traffic by vehicle class. As trucks and buses occupy more road
space than cars, the contribution of trucks to congestion can be greater than their
share of traffic.
B. Licoan Intersection (J. Pacana Street)
Cagayan de Oro Port is currently accessed by J. Pacana Street from the west turning
left after crossing the Marcos bridge. The road is a 16 meter concrete with asphalt
overlay and has been recently rehabilitated up to the corner of Gaabucayan street.
Road widening from the crossing of Mendoza street to the corner of the port access
road has not helped ease traffic as these are used by cargo trucks as parking
spaces.
Traffic flow from the highway is smooth unless a gridlock occurs at the un-signaled J.
Pacana-Gaabucayan intersection. Intermittent effort by local traffic management
officials has not eradicated trisikads from using this road and illegal parking by cargo
trucks and trailers. Near the port access, are warehouses that use the road to load
and unload cargo and queuing trucks waiting to be allowed entry into the Aboitiz
Transport system container yard or trucks loaded with corn grains waiting for buyers
and weighing at a nearby weighbridge.
When the access road leading to the 4th bridge connecting Puntod and Kauswagan is
completed, port related traffic to/from the west can utilize this route and relieve
Marcos bridge from some of its excess traffic volume. Even after the opening of 4th
bridge, Marcos Bridge will be remaining as a bottleneck of the City, and adjacent
section of road networks at both side of river bank will be still suffering serious traffic
problem.
C. Osmeña Street Extension
Osmeña Street Extension is the second
most important access road to the port
from the east turning right from Iligan-
CDO-Butuan Road. This section is four
lane concrete road with narrow
shoulders. The approach from the
highway is by a sharp right turn. Trucks
turning right into Osmeña extension
from the east occupy the middle lane of
the three lane highway to be able to
negotiate the sharp turn. The left lane
vehicles are always in danger of being
crushed.
Shipping Costs and Competitiveness In Northern Mindanao 16
Figure 2.8 Pedicab, locally known
as Trisikad
The left lane is oftentimes occupied by passenger jeeps loading and unloading
passengers leading to the intersection.
After turning from the highway, only one of the two lanes of Osmeña extension can
be used as private cars and unserviceable vehicles occupy the right lane as
parking/garage. The opposing two lanes is also tight as unserviceable vehicles,
illegal parked trucks, motorelas and debris occupy part of the road and most of the
sidewalk.
A few meters further is Fiesta Grocers where its delivery trucks are either queuing
along the road or trying to maneuver entry into the store’s narrow truck bays, thus
impeding traffic flow.
Traffic along this important stretch of road is
further aggravated by delivery trucks of Coca
Cola Bottlers which use this road as
queuing/parking area. At times, as much as 20
trucks can be seen parking on both sides of
the road carrying Coca Cola bottles for
delivery to the plant located along the
highway. Coca Cola have not provided parking
for these delivery trucks.
Some other obstructions include a barangay
outpost, appropriation by some businesses of
the sidewalks, and illegal structures.
Delivery trucks that use roadsides as parking and queuing areas are not owned in this
case by either Coca Cola Bottlers or Fiesta Grocers as these are operated by third
party logistics providers. However, companies with high cargo volume and daily truck
traffic should provide these delivery trucks with proper parking and waiting areas and
not burden the public by using public roads as private convenience parking.
Cargo trucks will then turn right from Osmeña street extension to Gaabucayan street
before turning right to Corrales street extension leading to the port. This intersection
is un-signaled and can often result in gridlocks. This is also used by motorelas and
trisikads (pedicabs).
Along Gaabucayan Street are structures that impede
traffic flow such as a vulcanizing shop, a car repair
shop that occupied the sidewalks and a store
constructed on the sidewalk.
Before reaching the port gate, Cagayan de Oro
Construction Supply is also using the road along
Corrales Street Extension to load and unload its
cargoes and the road shoulders as open warehouse.
These impede traffic flow with forklifts using the road
to load and unload cement, plywood and steel bars.
Motorelas and trisikads are also allowed on this road.
Figure 2.7: Motorela
Shipping Costs and Competitiveness In Northern Mindanao 17
D. Agora Road
The most strategic and most preferred route from the east is the Agora road turning
right from the Butuan-CDO road. This has not been made feasible as Agora road has
turned into a free for all section. Illegal parking, sidewalk vendors, illegal structures,
vulcanizing shops, vegetable stalls, used clothing stalls, etc. has congested the road
that truckers have shunned using it. This is aside from trucks unloading agricultural
produce, trisikads sharing road space with passenger bus that calls Agora as its
primary eastbound terminal.
Non containerized trucks such as those carrying rice, corn, sugar are also facing
risks of pilferage when using this road. The four lane section with a median divider
has been turned to a one lane affair due to illegal parking and illegal structures. Lack
of traffic enforcement has made this road unfriendly to trucks delivering or
withdrawing cargoes to and from the port.
This is most ironic as this road leads directly to the southern gate of the port of
Cagayan de Oro where the port’s weighbridge is located. The port’s southern gate is
its most important entry point (see Figure 2.9).
For its credit, PPA has opened the port’s main gate for the entry of cargo trucks.
However, trucks that needs to be weighed needs to go through Agora gate for
weighing.
Shipping Costs and Competitiveness In Northern Mindanao 18
2.1.3 Ports and Port Facilities
Northern Mindanao boasts of two modern international port facilities with a combined
potential capacity of 500,000 TEUs of containerized cargoes. A brief description of
both these commercial ports is given below.
A. Port of Cagayan De Oro
The port of Cagayan de Oro is the biggest port in Mindanao with a total berth length
of 1,200 linear meters and over 23 hectares of back up area and container yards (a
50 meter wharf extension and 4,500 square meters of reclaimed back-up area is
being planned for implementation this year). Mindanao’s traditional gateway is a
multi-purpose port catering to domestic as well as import/export cargoes. It is also
capable of handling containerized, bulk, liquid bulk, general and break bulk cargoes,
passenger and RORO vessels. In 2008, CDO Port cargo handling operator
established a cold storage facility with a capacity of 100,000 boxes of fresh banana
and pineapple for export markets exclusively used by Del Monte Fresh International.
The Cagayan de Oro port has an annual potential capacity of at least 300,000 TEUs
of containerized cargo and at least four million tons of general, bulk, liquid bulk and
break bulk cargoes. The port is also equipped, as part of its cargo handling fleet, the
following: (i) 1 unit of ship to shore gantry crane; (ii) 2 units of 45-ton reach
stackers; (iii) 2 units 45-ton toplifts; (iv) 7 units 25-ton forklifts; (v) 43 units of 3-
ton forklifts; and (vi) 14 units 1.5-ton electric forklifts, etc.
Figure 2.9: The Cagayan de Oro Base Port
Shipping Costs and Competitiveness In Northern Mindanao 19
island
Island
Okay-Okay Area
I s l a n d
Metro Bank
ORORAMA
Island
Island
AgoraMarket
Bus Terminal
BusTerminal
ProposedOkay-okay
Area(Underutilized Road)
PPA Agora Gate
To Gaabucayan Road
Fish Landing (Busy only in early morning)
Vehicular Flow
ACTUAL VEHICULARFLOW
Okay-okayArea
Figure 2.10 Vehicular Traffic at CDO Port Southern Gate
Shipping Costs and Competitiveness In Northern Mindanao 20
Figure 2.11: The Mindanao Container Terminal (MCT)
B. Mindanao Container Terminal
The Mindanao Container Terminal
(MCT) at the PHIVIDEC Industrial
Estate, Tagoloan, Misamis Oriental
was originally conceptualized to
maximize Northern Mindanao's
potential as the Philippines' southern
gateway, catalyzing Northern
Mindanao's role as domestic food
basket and agri-industrial exporter.
The MCT has been identified as a
Mindanao flagship project, one of the
key infrastructure envisioned to jump
start the island's economic potential.
The MCT was conceived to fill the
supply gap for an efficient cargo
handling facility with its state of the
art facilities and cargo handling
equipment, It has been designed to
be exclusively operated for fully-
containerized and semi-containerized
domestic and foreign vessels with an annual capacity of 270,000 twenty equivalent
units (TEUs) with a 9.4-hectare container yard.
The port was privatized in 2008 and is now operated as a subsidiary of the
International Container Terminal Services, Inc., (ICTSI).
The berth length of the port measures 300 meters and 13 meter draft. It can
accommodate container vessels up to 30,000 DWT. Port facilities include 2 quay-
side gantry cranes and four rubber-tired gantry cranes and 262 reefer outlets.
Shipping Costs and Competitiveness In Northern Mindanao 21
2.2 Exports and Imports of Key Commodities
2.2.1 Movement of Commodities
The flow of commodities by type is segregated by corridor as described below.
A. Corridor 1: Eastern Misamis Oriental
These are coastal areas along the Butuan-Cagayan de Oro-Iligan Road (BCIR) East
of Cagayan de Oro, covering the towns of Tagoloan, Villanueva, Jasaan, Balingasag,
Lagonglong, Salay, Binuangan, Sugbongcogon, Kinoguitan, Balingoan, Talisayan,
Medina, Magsaysay and Gingoog City in Misamis Oriental, going to Butuan City in
the CARAGA Region.
It is one of the region’s largest coconut producing areas with the presence of small to
large coconut-based industries. It is also the major link to other raw material sources
from Camiguin Island and CARAGA such as wood and mineral ore. Table 2.2 gives
the origin and destination of export and import commodities.
Table 2.2 Corridor 1 Commodity Flow In-bound Raw Material Source
Fertilizers Imported from other countries Grains Imported & other areas in Mindanao via Corridor 3 Fresh Coconut Local and some from other areas of Mindanao Copra Local and some from other areas of Mindanao Crude coconut oil Corridor 2 and other areas of Mindanao Fresh fruit Corridor 2 and other areas of Mindanao Milk powder Imported from other countries
Agricultura
l P
roduct
s
Aquamarine products Corridor 2 Resins Imported from other countries Steel products Imported from other countries and from Corridor 2 Petrochemicals Imported from other countries
Indust
rial
pro
duct
s
Packaging materials Imported from other countries
Iron ore Imported from other countries Silica Imported from other countries
Min
era
ls
Lime Corridor 3
Forest Products – Logs Other areas in Mindanao
Out-bound Commodity Main Markets Coconut: Desiccated, coconut cream, frozen chunks, coco sugar World-wide Aquamarine: Prawns Japan Fresh fruit: pineapple & banana World-wide F
ood
Processed: canned/dried/cooked fruit, raw sugar World-wide Coconut: Oleo chemicals, charcoal, fiber & coconut oil World-wide Industrial: Sintered ore, Fiber-reinforced plastics, finished rubber,
silicon metals, activated carbon Japan and Europe
Indust
rial
Iron & Steel: Tin cans, metal scraps Asia
GTH: Handmade paper USA & Europe Minerals China Wood: Lumber & furniture components China & USA
Resourc
e-
Base
d
Others: Pineapple & Sugarcane by-products, raw rubber Europe & Asia
Source: Compiled from DTI, PhilExport and BOC data, 2009.
Shipping Costs and Competitiveness In Northern Mindanao 22
B. Corridor 2: Western Misamis Oriental
These are areas along the Butuan-Cagayan de Oro-Iligan Road (BCIR) West of
Cagayan de Oro. It covers the towns of Opol, El Salvador, Alubijid, Laguindingan,
Gitagum, Libertad, Initao, Naawan, Manticao and Lugait in Misamis Oriental, Iligan
City and the coastal areas of Lanao del Norte namely: Linamon, Kauswagan,
Bacolod, Maigo, Kolambugan, Tubod, Lala and Kapatagan. This road stretch
connects the region with other major agricultural producing areas of Misamis
Occidental (via RORO between Ozamis City and Kolambugan) and the Zamboanga
Peninsula.
Iligan is considered the industrial city of the south as it is home to 17 large
manufacturing companies.
Similar to Corridor 1, the area also has its share of perennial heavy rainfall during the
wet season, destroying some bridges along the BICR, especially along the Lanao del
Norte Stretch and flooding between the El Salvador and Alubijid in Misamis Oriental.
Table 2.3 Corridor 2 Commodity Flow In-bound Raw Material Source
Fertilizers Imported from other countries
Grains (and wheat) Imported from other countries & other areas in Mindanao
Fresh Coconut Local and from other areas in Mindanao
Copra Local and from other areas in Mindanao
Agricultura
l
Pro
duct
s
Tapioca Starch Corridor 3 & 4 and other countries
Steel products Imported from other countries
Petrochemicals Imported from other countries
Clinker Imported from other countries
Indust
rial
Pro
duct
s
Packaging materials Imported from other countries
Forest Products - Logs Other areas in Mindanao
Out-bound Commodity Main Markets
Coconut: Coconut vinegar USA
Aquamarine: Prawns Japan
Food
Processed: Banana chips World-wide
Coconut: Charcoal, fiber & coconut oil World-wide
Industrial: Cement Japan and Europe
Indust
rial
Iron & Steel: hot rolled coils, cold rolled coils, metal scraps Asia
GTH: Handmade paper; wooden toys USA, Europe & Japan
Minerals: copper and chromite ore China
Wood: Lumber China & USA
Resourc
e-
Based
Others: Abaca pulp, rubber cup lumps Europe & Asia
Source: Compiled from DTI, PhilExport and BOC data, 2009.
Shipping Costs and Competitiveness In Northern Mindanao 23
C. Corridor 3: Eastern Bukidnon
Areas along the Sayre Highway from Cagayan de Oro to the towns of Manolo
Fortich, Impasug-ong, Maramag and Quezon, Bukidnon, including the cities of
Malaybalay and Valencia. Bukidnon is known as the food basket of Northern
Mindanao.
Large plantations and contract farms of fruit, vegetables and livestock are located
along these areas. Irrigation facilities are in place with enough water supply for year-
round agricultural production.
Similar to Corridors 1 and 2, the area is also perennially visited by heavy rainfall
during the wet season, affecting agricultural production despite technologies and
techniques applied on ground.
Table 2.4 Corridor 3 Commodity Flow In-bound Raw Material Source
Fertilizers Imported from other countries
Grains Imported from other countries & other areas in Mindanao
Agricultura
l
Pro
duct
s
Feeds Imported from other countries & other areas in Mindanao
Industrial -Packaging materials Imported from other countries
Resource-based - Raw Rubber Local and from other areas in Mindanao
Out-bound Commodity Main Markets
Fresh fruit: Pineapples & Bananas World-wide
Raw sugar Asia
Food
Processed: Frozen fruit Japan
Industrial: rubber boots Japan and Europe
GTH: handbags and home décor USA, Europe & Japan
Cut flowers (via air) Asia
Mineral: Copper ore China
Wood: Lumber China & USA
Resourc
e-
based
Others: rubber cup lumps, pineapple & sugarcane by-products Europe & Asia
Source: Compiled from DTI, PhilExport and BOC data, 2009.
D. Corridor 4: Western Bukidnon
These are areas along the Cagayan de Oro-Talakag Road, particularly the
hinterlands of Cagayan de Oro, and the towns of Baungon and Talakag, Bukidnon.
This area has its share of irrigation, however, because of the terrain, irrigated areas
are limited. Major roads are all-weather concrete paved but most of the farm to
market roads are either, yet to be developed or needs improvement.
Shipping Costs and Competitiveness In Northern Mindanao 24
Table 2.5 Corridor 4 Commodity Flow In-bound Raw Material Source
Fertilizers Imported from other countries
Grains Imported from other countries & other areas in Mindanao
Agricultura
l
Pro
duct
s
Feeds Imported from other countries & other areas in Mindanao
Industrial Products -Packaging materials Imported from other countries
Resource-based – Raw rubber Local and from other areas in Mindanao
Out-bound Commodity Main Markets
Fresh fruit: Bananas World-wide
Food
Processed: Frozen diced/chunk fruit USA
Resource-based - Mineral: Copper ore China Source: Compiled from DTI, PhilExport and BOC data, 2009.
2.2.2 Export and Import Volumes
Ports and airports are the regular gateways for exports and imports. For Northern
Mindanao, the exports/imports through airports are negligible as only export samples
are the usual commodities sent out.
The data on export and import volumes passing through the ports are reported by the
Philippine Ports Authority based on ships’ manifests. However, PPA statistics are
aggregated to broader categories as to import and export cargo by packing type
rather than details on commodities. As such, the PPA data are supplemented with
the study team’s compiled information by commodity from the local and regional
offices of the Bureau of Customs, the Department of Trade and Industry and
PhilExport’s One-stop Export Processing Center.
The PPA 2008 and 2009 statistics show a slightly lower volume than the study
team’s data. But the general trend is the same in that there is a decrease in the total
volumes from the previous year 2008 (see Tables 2.6 and 2.8).
Shipping Costs and Competitiveness In Northern Mindanao 25
Table 2.6 Comparative Shipping and Cargo Traffic, PPA Inc (Dec)
Particulars 2009 2008 variance %
A. Shipping Traffic Number of Shipcalls 12,539 14,027 (1,488) -11% Domestic 12,172 13,625 (1,453) -11% Foreign 367 402 (35) -9% Total G.R.T. 13,403,453 14,110,503 (707,050) -5% Domestic 10,226,455 10,764,075 (537,620) -5% Foreign 3,176,998 3,346,428 (169,430) -5% Total Waiting Time 9,499 10,629 (1,130) -11% Domestic 9,142 10,019 (877) -9% Foreign 357 610 (253) -41% Total Service Time 227,557 249,812 (22,255) -9% Domestic 208,780 227,434 (18,654) -8% Foreign 18,777 22,378 (3,601) -16% B. Total Cargo (m tons) 5,698,477 6,090,936 (392,459) -6% Domestic Trade 4,186,618 4,232,543 (45,925) -1% Inbound 1,826,712 1,847,482 (20,770) -1% Outbound 2,359,905 2,385,061 (25,156) -1% Foreign Trade 1,511,860 1,858,393 (346,533) -19% Import 675,334 769,741 (94,407) -12% Export 836,526 1,088,652 (252,126) -23% C. Container Traffic (baseports) 140,860 150,208 (9,348) -6% Domestic 116,467 123,751 (7,284) -6% Inbound 57,086 60,921 (3,835) -6% Outbound 59,381 62,830 (3,449) -5% Foreign 24,393 26,457 (2,064) -8% Import 14,306 12,821 1,485 12% Export 10,087 13,636 (3,549) -26%
Source: Philippine Ports Authority Statistics, 2008 and 2009
Table 2.7: Volume of Exports by Commodity (in Metric Tons)1
Sector 2006 2007 2008 2009 2008-2009 Variance
(%)
Ave. Growth (%)
Food 236,435.78 272,557.82 557,403.83 386,140.55 -31 15.8
Coconut (Food) 17,758.45 17,525.58 12,830.74 16,050.40 25 -2.4
Aquamarine 5,088.49 2,679.31 2,905.50 2,427.43 -16 -13.1
Fresh 909.64 92,666.78 189,003.51 134,057.24 -29 3659.4
Processed (including Sugar) 212,679.19 159,686.15 352,664.08 233,605.49 -34 2.5
Industrial 254,504.81 382,502.30 456,635.99 412,610.97 -10 15.5
Coconut (Industrial w Coco oil) 101,672.80 322,281.01 295,499.00 333,983.82 13 57.1
Industrial 119,136.59 5,047.19 23,964.11 26,371.22 10 -19.5
Iron & Steel 33,695.42 55,174.09 137,172.87 52,255.93 -62 13.8
GTH 187.95 322.24 2,020.02 216.06 -89 3.7
Resource-based 63,837.53 69,200.62 278,888.32 231,460.07 -17 65.6
Minerals 35,924.16 6,039.98 109,342.52 53,974.01 -51 12.6
Wood 27,905.25 34,144.78 148,707.68 163,192.96 10 121.2
Others 8.13 29,015.87 20,838.11 14,293.09 -31 43942.9
Shipping Costs and Competitiveness In Northern Mindanao 26
Sector 2006 2007 2008 2009 2008-2009 Variance
(%)
Ave. Growth (%)
Special Transactions 317.95 554.45 548.88 1,990.51 263 131.5
Sub-total (Commercial Ports) 555,284.02 725,137.43 1,295,497.03 1,032,418.16 -20 21.5
Phil. Sinter Corp. 5,319,613.76 17,481.36 4,316,104.21 3,115,361.00 -28 -10.4
HOLCIM Phils. 909,431.00 742,085.01 448,793.90 293,053.00 -35 -16.9
Total NM Exports 5,874,897.78 742,618.79 6,060,395.14 4,440,832.16 -27 -6.1 1 Note: Volume of Phil. Sinter Corp. and HOLCIM Phils., Inc were segregated since they have their own port facilities
and 100% of their export pass through their respective ports in bulk. Source: Compiled by the Study Team based on records from BOC, DTI and Philexport10A One-stop Export Documentation Center.
While the overall cargo traffic has gone down compared to the previous year, it is noted
that that total FCL (full container load) traffic accounting to about 72,771 TEUs has
increased in 2009.
Table 2.8: Comparative container traffic for both ports in TEU
2008 2009 Container Traffic (FCL only) CDO MCT Total CDO MCT Total
Import 10,632 14,172 24,804 12,134 33,808 45,942
Export 11,803 17,165 28,968 8,796 18,033 26,829
Total 22,435 31,337 53,772 20,930 51,841 72,771
For 2009, PPA reports a total of 837,000 metric tons of export cargo while the study
team’s data shows a total of 1,032,000 metric tons, which excludes the export volumes
of large industries using their own ports. On a four-year growth analysis, an average of
21.5% yearly increase in volumes was realized between 2006 and 2009. The top
commodity, coconut-based products, posted a strong growth of 57% in the industry
sector but a slight dip of -2.4% for the food sector. Other top commodities such as
processed food, iron and steel, and wood posted positive growths of 2.5%, 13.8% and
121.2%, respectively. It should be noted that the wood products are of the commercially
grown, non dipterocarp types.
The markets for these commodities are indicated in Table 2.2 to 2.5. Coconut, fresh and
processed food products are exported worldwide. Most of the resource-based products,
on the other hand, are exported to China and the USA.
Figure 2.7 shows the shares of commodities to total export volumes for 2009. On the
whole, industrial commodities accounts for 56% of total export volumes. This is followed
by food products (fresh and processed) with 26% and by resource-based products with
18% of total exports. Coconut-based products posted 47% of total volume in the
industrial sector and 5% of the food sector.
Shipping Costs and Competitiveness In Northern Mindanao 27
Table 2.9 Value of Exports (in Million US Dollars)1
Sector 2006 2007 2008 2009 Ave.
Growth (%)
Food 135.57 149.50 252.00 161.30 4.7
Coconut (Food) 18.75 21.94 24.02 22.91 5.5
Aquamarine 1.73 3.20 3.19 4.78 44.1
Fresh 5.31 33.77 67.49 39.41 160.5
Processed (including Sugar) 109.77 90.59 157.30 94.19 -3.5
Industrial 389.62 357.67 463.57 245.45 -9.3
Coconut (Industrial w Coco oil) 245.38 257.00 323.53 204.21 -4.2
Industrial 10.92 36.86 23.43 21.41 24.0
Iron & Steel 133.32 63.81 116.61 19.83 -21.3
GTH 1.38 1.76 1.57 1.53 2.7
Resource-based 10.69 31.62 125.59 70.13 139.0
Minerals 0.92 1.73 53.15 3.00 56.5
Wood 9.77 19.45 26.95 11.71 5.0
Others 0.0018 10.44 45.49 55.42
Special Transactions 0.34 1.92 1.97 0.42 5.9
Sub-total (via Commercial Ports) 537.60 542.47 844.71 478.83 -2.7
Phil. Sinter Corp. 62.97 288.46 56.43 35.87 -10.8
HOLCIM Phils. 27.63 23.50 20.13 12.02 -14.1
Total NM Exports 600.57 830.92 921.27 526.72 -3.1 1 Note: Values of Phil. Sinter Corp. and HOLCIM Phils., Inc were segregated since they have their own port facilities
and 100% of their exports pass through their respective ports in bulk. Source: Compiled by the Study Team based on records from BOC, DTI and Philexport10A One-stop Export Documentation Center.
Figure 2.7 Export Volumes by Commodity, 2009
Source: Compiled by the Study Team based on records from BOC, DTI & Philexport10A One-stop Export Documentation Center.
Shipping Costs and Competitiveness In Northern Mindanao 28
For the import volumes, commodity data compiled by the Study Team is incomplete as it
only reflects about 56% of total volume of 675 thousand metric tons reported in the PPA
statistics. The data of BOC at the MCT port have not yet been provided and it is
expected that the information would complete the overall view of imports in the study
area.
Based on available breakdown of imported commodities, the top three products are
minerals, foodstuffs and fertilizer. Minerals imports are exporters’ raw material inputs for
their products. Most of the listed commodities are for local use.
Based on PPA’s statistics, import volumes are also decreasing from 769,000 metric tons
in 2008 to 675,000 metric tons in 2009; a 12% reduction in one year.
.
Table 2.10 Top Import Commodities for Northern Mindanao, 2009
Commodity Vol. (Kgs.) Value (Php)
Minerals 147,164,493 540,967,161.00
Foodstuffs 97,735,684 2,604,132,298.58
Fertilizer 40,488,025 337,429,813.00
Corn 27,717,124 259,563,594.00
Chemicals 21,422,033 522,356,023.15
Paper & paperboard thereof 9,900,250 224,637,552.00
Spare Parts 6,645,759 90,526,836.67
Footwear 5,172,683 7,602,797.00
Petrochemical Products 3,400,000 81,953,687.00
Forest Product 3,042,084 26,881,112.00
Plastic/rubber & articles thereof 2,173,291 159,709,649.99
Iron & Steel Products 2,035,912 149,461,617.40
Live Animal 1,924,510 79,548,560.00
Hardware 1,894,254 30,044,606.00
Textiles & textiles articles 1,827,945 62,020,343.00
Electrical Machinery 1,738,983 69,390,043.00
Miscellaneous Items 1,112,478 49,595,870.87
Maize 1,000,000 1,892,008.00
Non-electrical machinery 831,119 98,203,160.00
Motor Vehicle 380,721 17,001,433.00
Articles of Iron 57,208 13,015,167.00
Old stocks 16,250 187,148.00
Others, raw hides, shin & leather 6,100 37,371.00
Machine Parts Acc. 3 3,802.00
Total 377,686,909 5,476,161,653.66
Source: BOC CDO District
Shipping Costs and Competitiveness In Northern Mindanao 29
2.3 Logistics Players in Northern Mindanao
A. Exporters (Shippers)
Unlike other areas where export commodities are homogenous, Northern Mindanao’s
export is relatively diverse in terms of commodities. As such, there are numerous
players in the export sector. Listed in Table 2.9 are the exporters from 2006 to 2009
showing a modest growth from 127 to 174. The number of firms recorded under the
special transactions is not considered as regular exporters. Thus, the total number of
regular exporters in 2009 is 161, which is the target sample for the survey as
described in Chapter 3.
Table 2.11 Northern Mindanao’s Exporters
Sector 2006 2007 2008 2009
Food 25 31 35 41
Coconut (Food) - desiccated, coco cream, frozen chunks, coco sugar 2 2 2 3
Fresh - banana, pineapple 8 7 6 6
Aquamarine – prawns 5 12 17 22
Processed Sugar - tropical fruit, sugar 10 10 10 10
Industrial 34 33 41 44
Coconut - Oleo-chemicals, Coconut oil, Coco charcoal, Coco husks 13 13 18 22
Industrial - construction materials, processed silica, activated carbon, finished rubber
10 11 11 13
Iron & Steel - hot rolled coils, cold rolled coils, scrap metal 11 9 12 9
GTH - gifts toys and house-ware 6 6 7 6
Resource-based 52 79 88 70
Minerals - copper ore, chromite ore 10 30 43 22
Wood - lumber, furniture components 34 35 37 32
Others - pineapple & sugarcane by-products, raw rubber, abaca pulp 8 14 8 16
Special Transactions 10 11 15 13
Total 127 160 186 174
Source: DTI, BOC and PhilExport, 2009
B. Truckers
The region has about forty (40) major trucking companies serving both exporters and
importers. Most of these players are based in Cagayan de Oro. There are other
players based outside the region (e.g. Davao, Cotabato, and Manila) who also
operate within the region on a per contract basis.
C. Imports and Importers
Northern Mindanao’s major imports are raw materials for agricultural production,
petrochemicals and minerals for finished and semi-goods of industrial exports.
Below is the distribution of importers and import commodities for the region.
Shipping Costs and Competitiveness In Northern Mindanao 30
Table 2.12 Importers for 2009
Corridor
1 Corridor
2 Corridor
3 Corridor
4 Total
Exporters importing raw materials
27 9 6 5 47
Importers for Domestic Consumption
140 33 1 1 175
Total 167 42 7 6 222
Source: BOC CDO District
D. Shipping Lines
Compared to other areas in Mindanao, Northern Mindanao has a relatively good
international connectivity with several domestic liners providing transshipment cargo.
Five (5) foreign shipping lines call Northern Mindanao
Table 2.12 Foreign Shipping Lines operating in Northern Mindanao Company Call Frequency Port(s) of Call
American President Lines (APL) Weekly CDO-Bugo-MCT
Maersk Lines Weekly MCT
Marianas Shipping Weekly MCT
Pacific Eagle Lines (PEL) Weekly MCT
Region Container Lines (RCL) Weekly MCT
China Shipping Weekly Via Cebu
Orient Overseas Container Line Weekly Via MICT/Cebu
Nippon Yusen Kaisha (NYK) Weekly Via MICT
Domestic liners and most Non Vessel Operating Common Carriers (NVOCC) provide
transshipment services for export. However, because of the increasing number of
foreign ship calls, transshipment volume has been steadily on the decline.
Table 2.13 Transshipment Cargo from Northern Mindanao Period Vol. (MT) Val. (USD Million)
2006 80,695.14 54.72
2007 98,406.33 37.39
2008 134,868.35 27.08
2009 123,101.51 20.95
Source: BOC, 2009
Shipping Costs and Competitiveness In Northern Mindanao 31
E. Cargo Handling Operators
Cagayan de Oro Port is managed by the Philippine Port Authority’s Port
Management Office and contracted OROPORT Cargohandling Services, Inc. as its
cargo handling service provider. OROPORT, since its merger (between Continental
Arrastre and Stevedoring Co., Inc. – CASCO (1986) and Gold City Integrated Port
Services, Inc. – INPORT(1977)) has been providing cargo handling services at the
port since 1999.
Mindanao Container Terminal is operated by the Mindanao International Container
Terminal Services, Inc. (MICTSI), a subsidiary of the International Container Terminal
Services, Inc., which took over terminal operations in 2008.
2.4 Logistics Costs/Charges for Exports and Imports
2.4.1 Trucking and Hauling Rates
The trucking fleet in Northern Mindanao is primarily composed of Japanese and
American surplus trucks of various age, model and type. Trucking for container
cargoes are usually by six or ten wheeler semi-trucks with 20 or 40-footer skeletal or
flatbed trailers and/or by 10-wheeler stake trucks equipped with adequate container
twist locks.
The 10-wheeler semi truck with 40-foot trailers can load two units of 20-foot
containers (tandem load). With this system, trucking rates per container unit
becomes cheaper; however, overloading becomes a major issue.
Prevailing spot market trucking rates are usually paid on cash, short term credit
and/or short term credit with diesel cost paid in advance.
Table 2.14 Northern Mindanao Spot Market Trucking Rates for Containerized
Cargo -including empty positioning/empty return (in PhP)
FCL MCT to CDO w/n 20Km.
radius
El Salvador, Mis. Or (Sanwa)
Iligan City (Global Steel)
Bukidnon (BUSCO)
Medina, Mis. Or.
(Celebes Oil)
20 Footer 2,500 4,000 8,500 11,000 8,000 40 Footer 3,500 6,000 14,000 16,000 12,000 Tandem (2x20) 4,000 6,000 14,000 18,000 13,000 Dist. (Kms): 1-way 20 38 112 127 94 Back and forth 20 76 223 254 188 20 Footer P62/km P52/km P37/km P43/km P42/km 40 Footer P87/km P78/km P62/km P62/km P63/km Tandem (2x20) 50/km/unit 40/km/unit 31/km/unit 35/km/unit 35/km/unit
Source: Trucker interviews and rate canvass
Shipping Costs and Competitiveness In Northern Mindanao 32
The shipping lines also have their own published trucking rates referred to as the
Shippers’ Matrix Guides for an “all in” door-to-door service, which usually includes
empty positioning/return. This is shown in Table 2.15.
Table 2.15 Shipping Lines Trucking Published Rates Containerized Cargo -
Door to Door Service (in PhP) 20 Footer Dry 40 Footer Dry
Destination Distance
(Kms) Non-VAT VAT-in Non-VAT VAT-in MCT, Bugo to CDO proper 1.6 to 18 2,398.22 2,686.00 4,796.44 5,372.00 CDO Proper 18 2,398.22 2,686.00 4,796.44 5,372.00 Carmen/Kauswagan/Bulua 20 to 25 2,877.85 3,223.20 5,755.70 6,446.40 MCT to Eastern Misamis Oriental Villanueva 3.7 2,686.00 5,372.00 Jasaan 15 2,829.75 5,659.50 Balingasag 30 3,996.30 7,992.60 Lagonglong 37 4,578.00 9,156.00 Salay 45 5,076.75 10,153.50 Binuangan 53 5,744.55 11,489.10 Sugbongcogon 64 6,076.35 12,152.70 Kinoguitan 72 6,325.20 12,650.40 Balingoan 76 6,991.95 13,983.90 Talisayan 80 7,325.85 14,651.70 Medina 94 8,990.10 17,980.20 Gingoog 102 10,155.60 20,311.20 Magsaysay 112 10,393.95 20,787.90 MCT to Western Misamis Oriental Opol 28 3,531.50 7,063.00 El Salvador 38 4,322.00 8,644.00 Alubijid 45 4,875.00 9,750.00 Laguindingan 50 5,271.00 10,542.00 Gitagum 56 5,744.50 11,489.00 Libertad 62 6,218.50 12,438.00 Initao 72 7,009.00 14,018.00 Naawan 80 7,642.00 15,284.00 Manticao 84 7,957.00 15,914.00 Lugait 93 8,669.00 17,338.00 Iligan City 108 9,855.00 19,710.00 Source: Philippine Liner Shipping Association (PLSA)
Shipping Costs and Competitiveness In Northern Mindanao 33
2.4.2 Brokerage and Facilitation Charges
Services provided by import-export brokers have a standard charge by the quantity of
goods exported as shown in Table 2.16. The standard charge for all other activities
of processing the exportation and importation of containerized cargoes are
established by the brokers’ association and these are identified per agency as shown
in Table 2.17.
Table 2.16 Brokerage and Facilitation of Containerized Cargo
No. of units/BL Brokerage Unit
Fee (PhP)
Facilitation Unit
Fee (PhP)
Total Unit Cost
(PhP)
1 box 2,500 30,000 32,500
2 boxes 2,500 15,000 17,500
3 boxes 2,500 10,000 12,500
4 boxes 2,500 7,500 10,000
5 boxes 2,500 6,000 8,500
6 boxes 2,500 5,000 7,500
7 boxes 2,500 4,286 7,786
8 boxes 2,500 3,750 6,250
9 boxes 2,500 3,334 5,834
10 boxes & Over 2,500 3,000 5,500
Source: Compiled from Bill of Ladings
Table 2.17 Export and Import Processing Charges by Agency Cost Item Amount (PhP)
Containerized Cargo
Due to Customs :Processing Fee Php1,000
Container Security Fee - 40’* US$10
Container Security Fee - 40’* US$5
ATRIG: Facilitation Php3,000/application
Certification Fee Php100
Doc Stamps Php30
“Facilitation” (Informal) Php5,000/application
Miscellaneous Php1,000/BL
Break bulk Cargo (PEZA Registered)
Customs Legal Charges: Processing Fee Php1,000/BL
ATRIG: Facilitation Php3,000/application
Certification Fee Php100
Doc Stamps Php30
Broker’s Facilitation Php5,000/application
Miscellaneous Php1,000/BL
Brokers: Brokerage Php50,000/BL
Facilitation Fee Php100,000/BL
*: subject to applicable forex
Source: CDO Import/Export Brokers
Shipping Costs and Competitiveness In Northern Mindanao 34
2.4.3 Port Charges
Costs incurred at the port are the arrastre and stevedoring charges. The rates are
shown in Table 2.18 for the Northern Mindanao ports in comparison to other
international ports in the country. It is evident that a uniform Mindanao-wide arrastre
rate is used while those of Cebu and MICT (Manila) are different and much higher.
It is interesting to note that the arrastre charges for domestic-bound containers are
almost the same as export-bound or import containers at the MCT and CDO ports
(see Table 2.19). The 40 footers for the import/export are even slightly lower than
the domestic-bound containers. However, stevedoring rates at these ports favor the
domestic-bound containers as they are considerably lower than their import/export
counterparts.
Table 2.18 Comparative Arrastre Rates of Selected Philippine International Ports1
20 Footer FCL 40 Footer FCL Port
Import Export Import Export
CDO – CDO Port 974.50 974.50 1,797 1,797
PHIVIDEC – MCT 974.50 974.50 1,797 1,797
Davao – Sasa 974.50 974.50 1,797 1,797
Cebu – Cebu Int’l. 1,465 1,465 2,448 2,448
Manila – MICT 2,646 6,077 3,241 7,436
1Arrastre rates (Terminal Handling) for major ports in Mindanao under the jurisdiction of the Philippine Ports
Authority (PPA), namely Cagayan de Oro, Davao and General Santos had been leveled as of August 2009.
Source: PPA CDO, Davao Port Tariff, MCT Tariff, CIP, ICTSI Tariff
Table 2.19 Arrastre and Stevedoring Charges at MCT and CDO Ports
FCL Containers Domestic Import/Export
Arrastre
20’ 903.50 974.50
40’ 1,806.00 1,797.00
Stevedoring
20’ 273.50 603.00
40’ 273.50 1,207.00
Source: PPA CDO and MCT Tariff
Shipping Costs and Competitiveness In Northern Mindanao 35
2.4.4 Sample Logistics Cost of Exporters
Based on several receipts and financial records of exporters and importers, all costs
actually incurred are documented. A representative sample of how costs run for a
dry and reefer 40-footer are presented in Tables 2.20 and 2.21 for a better
understanding of the recent export cost structure to a destination within Asia. Freight
cost is shown to account for almost 40% of total cost for a dry 40-footer. The
informal cost incurred is quite high at 20% of total cost. Freight cost for a 40-footer
reefer, on the other hand, accounts for 78% of export cost.
Table 2.20 Exporter’s Cost - Exporting Lumber through 40 Footer Dry
Van from CDO to Shanghai via MCT
November 2009 Cost Items Published
(PhP) Actual (PhP)
Share to Total
(%) Remarks
Ocean Freight - 28,740.00 49.1 paid to shipping line Docs Fee (Bill of Lading) - 1,437.00 2.5 paid to shipping line THC (Terminal Handling Charge)
5,990.00 5,987.50 10.2 paid to shipping line
Seal Fee 150.00 150.00 0.3 paid shipping line Wharfage (VAT-in) 438.03 219.02 0.4 paid to port authority Weighing (VAT-in) 179.20 179.20 0.3 paid to terminal operator Arrastre (VAT-in) 2,012.64 2,068.64 3.5 paid to terminal operator Storage (VAT-in) 134.74 134.74 0.2 paid to terminal operator Trucking (VAT-in) 3,500.00 6.0 paid to trucker Documentary Stamps (shipper)
575.00 1.0 paid to BOC
Commodity Clearance (DENR)
20.00/CBM 900.00 1.5 paid to regulatory agency @ 45CBM/40’ van
Customs Broker's fee 1,200.00 1,200.00 2.1 paid to Customs Broker Stuffing 1,500.00 1,500.00 2.6 paid to trucker
DENR "Facilitation" - 7,000.00 informal cost (per "rush" transaction)
BOC Customs on Board Cargo Clearance “Facilitation”
- 900.00 informal cost (per bill of lading)
BOC Export "Facilitation" - 4,000.00
20.3
informal cost (per export declaration)
Total 58,491.09 100.0 Source: Compiled by the Study Team from actual cost disbursements of exporters.
Shipping Costs and Competitiveness In Northern Mindanao 36
Table2.21 Exporter's Cost - Exporting a commodity through 40 Footer
Refrigerated Van from CDO to Tokyo via MCT
March 2010 Cost Items Published
(PhP) Actual (PhP)
Share to
Total (%)
Remarks
Ocean Freight - 119,600.00 77.9 paid to shipping line FAF (Fuel Adjustment Factor) 10,120.00 6.6 paid to shipping line YAS (Yen Appreciation Surcharge) 4,830.00 3.1 paid to shipping line Docs Fee (Bill of Lading) 1,380.00 0.9 paid to shipping line THC (Terminal Handling Charge) 5,990.00 7,795.00 5.1 paid to shipping line Documentary Stamps (shipping line) 10.00 0.0 paid to shipping line Seal Fee 150.00 150.00 0.1 paid to shipping line
ED Processing (OSEDC) 150.00 0.1 paid to PhilExport (processing fee)
Arrastre (VAT-in) 2,012.64 2,012.64 1.3 paid to terminal
operator
Weighing (VAT-in) 179.20 179.20 0.1 paid to terminal
operator Wharfage (VAT-in) 437.98 0.3 paid to port authority C-5 Form (PIA) 56.00 0.0 paid to port authority Trucking 3,200.00 2.1 paid to trucker Documentary Stamps (shipper) 575.00 0.4 paid to BOC Customs Broker's fee 1,200.00 1,200.00 0.8 paid to Customs Broker
Commodity Clearance (BFAR) - per EO 554 BOC Customs on Board Cargo Clearance "Facilitation”
900.00 Informal cost (per bill of lading)
BOC Export "Facilitation" 1,000.00 1.2
informal cost (per export declaration)
Total 153,595.82 100.00 Source: Compiled by the Study Team from actual cost disbursements of exporters.
Presently, domestic transshipment of FCL containers is not a viable option for
Mindanao shippers/exporters since the cost is too high. Many ports of Northern
Mindanao particularly Iligan, Ozamis and Butuan do not have direct foreign
containerized shipping calls due to low cargo volume. Presently, due to very high
domestic freight rates, handling, and wharfage charges, exporters from these areas
truck their products to Cagayan de Oro or MCT to have access to foreign shipping.
Table 2.22 gives the build up of costs to be incurred for transshipped goods using the
conventional and the RORO.
The latter transport system is the development thrust of the government to improve
inter-island movement of goods and passengers. Among others, it is meant to bring
down transport costs but with the current system of handling employed, the cost
benefit of using the RORO as against the conventional is negligible. That is, only a
savings of Php1,102.50 for a 20-footer and Php2,053 for a 40-footer is noted with the
use of the RORO.
Shipping Costs and Competitiveness In Northern Mindanao 37
Table 2.22 Transshipment Cost Components (Php) Conventional CHA-RO
Item 20 Footer 40 Footer 20 Footer 40 Footer
Arrastre (CDO) 974.50 1,797.00 431.00 862.00
Wharfage (CDO) 202.00 437.98 202.00 437.98
Domestic Freight 20,913.00 43,760.00 20,913.00 43,760.00
Arrastre (North Harbor) 990.00 1,980.00 431.00 862.00
Wharfage (North Harbor) 202.00 437.00 202.00 437.00
Trucking to MICT 2,640.00 3,960.00 2,640.00 3,960.00
Wharfage (MICT) 202.00 437.00 202.00 437.00
Arrastre (MICT) 2,646.00 6,077.00 2,646.00 6,077.00
VAT 3,418.00 7,032.00 3,418.00 7,032.00
Total 32,187.50 65,917.98 31,085.00 63,864.98
20 Footer 40 Footer Difference between
Conventional and
CHA-RO (1,102.50) (2,053.00)
Source: Compiled from tariffs of PPA CDO, MICT, Shipping lines, and Truckers.
Shipping Costs and Competitiveness In Northern Mindanao 38
3 LOGISTICS SURVEY FOR NORTHERN MINDANAO
3.1 Survey Implementation
Surveys to capture the actual logistics conditions for exports and imports within the study
area in Northern Mindanao were conducted from the month of February to March 2010.
The shippers/exporters, importers, shipping lines and truckers were the main export
logistics groups targeted for the survey.
The sampling was based on the recorded/registered firms in the study area. The
locations and number of players, in terms of shippers, importers, truckers and shipping
lines, are discussed in chapter 2. Based on this information, the target sampling was
drawn up only for those firms that use the public ports of Cagayan de Oro (CDO) and
Mindanao Container Terminal (MCT). As such, the bigger firms with their own private
ports (i.e., Philippine Sinter Corporation) are no longer included in survey. On the whole,
26% of total registered firms were targeted and a good sampling rate of 10% was
achieved. Table 3.1 presents the sampling rate by logistics group.
Table 3.1 Survey Sampling
Particulars Shippers/
Exporters Importers
Shipping
Lines Truckers Total
Total Firms1 in Study Area 161 222 6 40 429
Number of Samples 46 36 6 25 113
Tar
get
Sam
ples
Share to Total 29% 16% 100% 63% 26%
Number of Samples 14 14 6 8 42
Sur
vey
Ret
urns
Sampling Rate 9% 6% 100% 20% 10%
1 Data on Shippers – DTI, One Stop Export Documentation Center and BOC-CDO/MCT 2009; Data on
Importers – BOC Accredited Firms and MCT List 2009; Data on Foreign Shipping Lines – Philexport10A;
Data on Truckers – CDO Port Truckers’ Assn & Others identified by Philexport10A 2009.
The activities for the survey included the following:
a) Questionnaire forms were distributed by the surveyors to target respondents
located within the four corridors of the study area. The questionnaires are
shown in Annexes 3-1 to 3-4.
b) Follow ups and collection were extensively done for a month.
c) Accomplished forms were reviewed and call-backs to respondents were
made for those needing clarification and completion.
d) Encoding of the collected forms was done using MS Excel.
Moreover, interviews were also conducted for the truck drivers to supplement the trucking
questionnaire forms, which were accomplished by the truck operators. The truck drivers
gave specifics as to difficult road sections to traverse and the nature of problems.
Findings and results of the surveys are given in succeeding sections of this report. Further,
the disclosed information on actual charges and costs incurred by the respondents are used
Shipping Costs and Competitiveness In Northern Mindanao 39
in the comparative cost analysis against the published rates gathered from relevant agencies
and entities, which is discussed in section 2.4 of this report.
3.2 Profile of Survey Respondents
The profiles of the survey respondents by target group are presented in Tables 3.2 to
3.4. For the shippers/exporters, respondents from all industry sectors are covered with
many in the manufacturing type of business. A fair distribution of the respondents by size
of business is noted.
The importers, on the other hand, are more of the service business types (such as
forwarders) servicing the exporters. Some of the importers (i.e., 6 firms) are actually the
exporters themselves importing their raw material requirements. Two of the
respondents, however, are importers for the domestic market only.
The trucker respondents are more on the micro business size owning about 1 to 3
trucks. There is one large sized trucking firm owning a fleet of hundreds of trucks. Most
of these firms acquired second-hand or surplus vehicles for their operation and many are
operating on a “for hire” basis.
For the shipping companies, five respondents are foreign liners and one is a non-vessel
operating carrier company (NVOCC). All firms have vessels calling at MICT port but
only one firm has vessels calling at CDO port. The total number of vessels calling at
Northern Mindanao is 11 but the frequency of calls is 6 vessels weekly.
Table 3.2 Profile of Exporters and Importers Respondents
Exporters Importers
Item No. of Exporters
Distribution (%)
No. of Importers
Distribution (%)
No. of Respondents 14 100.0 14 100.0
Industry Sector1
Agriculture/Aquaculture 2 14.3 0 0.0
Processed Food 2 14.3 0 0.0
Wood/Furniture 2 14.3 0 0.0
Industrial 5 35.7 6 42.9
Others 3 21.4 7 50.0
Business Type1
Production 2 14.3 1 7.1
Trading 0 0.0 0 0.0
Manufacturing 12 85.7 5 35.7
Services 0 0.0 8 57.1
Others 0 0.0 0 0.0
Business Size1
Micro (below Php3M) 2 14.3 6 42.9
Small (Php3M-15M) 4 28.6 3 21.4
Medium (Php15M-100M) 4 28.6 1 7.1
Large (above Php100M) 4 28.6 4 28.6
1 Using NEDA classifications
Source: Logistics Survey, 2010
Shipping Costs and Competitiveness In Northern Mindanao 40
Table 3.3 Profile of Trucker Respondents
Item No. of
Truckers Distribution
Total Samples 8 100.0
Business Size
Micro (below Php3M) 3 37.5
Small (Php3M-15M) 2 25.0
Medium (Php15M-100M) 2 25.0
Large (above Php100M) 1 12.5
Operation Type
For Hire 5 62.5
Not For Hire 1 12.5
Mixed 2 25.0
Vehicle Acquisition Type
Brand New 1 12.5
Surplus 7 87.5
Source: Northern Mindanao Logistics Survey, 2010
Table 3.4 Profile of Shipping Lines Respondents
Respondent No. Vessel Information
1 2 3 4 5 6
No. of Ships Calling MCT Port 1 2 1 6 1 1
No. of Ships Calling CDO Port 2 - - - - -
Vessel Types Conventional Containerized
Origin/Destination
Asia,
Europe,
US
Hong
Kong Singapore China Japan Singapore
Call Frequency Weekly
Ship Capacity (in TEUs) 712 &
1,049 1108
1,114 &
1,338 1,200 1,300
Ship Capacity (reefer plugs) 220 & 180 220 & 449 220 100
Source: Northern Mindanao Logistics Survey, 2010
3.3 Results from the Survey
3.3.1 Shippers Survey
Most of the shippers or exporters surveyed apparently outsource their trucking logistics
instead of maintaining their own fleet. This is true for exporters in all industry sectors
especially since trucking cost make up less than 10% of their total logistics cost. This
may be explained by the proximity of most shippers of less than 20 Kilometers from the
ports. Even with costs reaching 26% to 50% of total cost, trucking still remains an
outsourced service (see Tables 3.5 and 3.6).
Shipping cost, on the other hand, is substantial for most of the surveyed companies
accounting for more than 75% of total logistics cost (see Table 3.7).
Shipping Costs and Competitiveness In Northern Mindanao 41
Table 3.5 Outsourcing of Trucking Logistics by Shippers
Industry Sector of Samples Shippers Yes No
Total Samples 14 13 1
Agriculture/Aquaculture 2 2 0
Processed Food 2 2 0
Wood/Furniture 2 2 0
Industrial 5 5 0
Others 3 2 1
Percentage of Total Samples 93% 7% Distance from Port (kms) Shippers Share (%)
<20 10 71.4 20-50 1 7.1
51-100 2 14.3 101-150 1 7.1
Source: Northern Mindanao Logistics Survey, 2010
Table 3.6 Trucking Share to Total Logistics Cost of Shippers Trucking Share to Total Logistics Cost
1
Industry Sector of Samples a b c d e
Agriculture/Aquaculture 1 1 0 0 0
Processed Food 1 1 0 0 0
Wood/Furniture 1 1 0 0 0
Industrial 1 1 1 0 2
Others 2 0 1 0 0
Percentage of Total Samples 43% 29% 14% 0 14% 1 Note: a: Less than 10%; b: 10% - 25%; c: 26% - 50%; d: 51% - 75%; e: More than 75%
Source: Northern Mindanao Logistics Survey, 2010
Table 3.7 Shipping Share to Total Logistics Cost of Shippers Shipping Cost to Total Logistics Cost
1
Industry Sectors of Samples a b c d e
Agriculture/Aquaculture 0 1 0 0 1
Processed Food 0 0 0 1 1
Wood/Furniture 1 1 0 0 0
Industrial 1 1 1 0 2
Others 0 0 0 1 2
Percentage of Total Samples 14% 21% 7% 14% 43% 1Note: a: Less than 10%; b: 10% - 25%; c: 26% - 50%; d: 51% - 75%; e: More than 75%
Source: Northern Mindanao Logistics Survey, 2010
Based on the evaluation of the present logistics infrastructure shown in Table 3.8, the
quality of ports, roads and highways, and telecommunication services are found
adequate (either average or highly adequate). Warehouses are just average in quality.
Shipping Costs and Competitiveness In Northern Mindanao 42
Table 3.8 Evaluation of Quality of Infrastructure by Shippers Evaluation of Quality (% of answers)
Logistics Infrastructure Very
High High Ave. Low
Very
Low
Ports 14 36 36 14 0
Roads and Highway 7 29 36 21 1
Warehouse 0 9 82 9 0
Telecom Infrastructure &
Services 8 38 31 23 0
Total 8 29 44 17 2
Source: Northern Mindanao Logistics Survey, 2010
Among the components of the logistics costs, freight is revealed as highest cost followed
by the trucking cost. It should be noted that informal costs are heavily borne by the
shippers in the form of customs’ facilitation and other informal charges (see Table 3.9).
The issues of high freight cost and presence of high informal cost repeatedly appears in
other survey responses as seen in Tables 3.10 and 3.11. Another nagging issue on the
software aspects of logistics is the difficult and time consuming export documentation/
clearance procedures.
Table 3.9 Ranked Logistics Cost by Shippers
Rank of Costs (% of responses)
Cost Items Very
Low Low Average High
Very
High
Port Charges: THC - 7 43 21 7
Trucking 7 - 43 43 7
Arrastre 7 7 57 14 7
Stuffing/Stripping - - 36 7 7
Customs Brokerage 7 7 36 - 14
Warehouse - - 29 - 7
Port -Wharfage - - 43 14 7
Freight - - 14 43 29
Customs Facilitation - - 43 29 7
Other Informal - - 21 7 14
Source: Northern Mindanao Logistics Survey, 2010
Table 3.10 Logistics Issues from Shippers
Identified Issues
Number of
Samples
% of
Responses
Freight charges - high 8 34.8
Doc Processing - complicated 4 17.4
Fuel/Transport Cost - high 4 17.4
Shipping Schedules - poor 3 13.0
Informal Charges - high 3 13.0
Infrastructure - poor 1 4.3
Total 23 100.0
Source: Northern Mindanao Logistics Survey, 2010
Shipping Costs and Competitiveness In Northern Mindanao 43
Table 3.11 Evaluation and Experiences of Selected Export Processes Frequency of Occurrence (% of responses)
Evaluation of Selected Export Processes Always Often
Some-
times Rarely
Hardly
Ever
Timely Clearing & Shipping of Export Goods 85.7 14.3 - - -
Timely Clearing & Delivery of Import Goods 42.9 21.4 14.3 - -
Transparency of Customs' Clearance Process 50.0 14.3 - 28.6 -
Timely & Adequate Receipt of Regulatory Changes 35.7 14.3 21.4 14.3 7.1
Electronic Processing of Customs' Declaration 28.6 14.3 7.1 - 28.6
Experiences of Shippers
Delays due to Pre-shipment Inspection - 8.3 41.7 25.0 25.0
Criminal Activities (e.g. Stolen cargo) - - 8.3 33.3 58.3
Solicitation of Informal Payments 41.7 - 25.0 16.7 25.0
Source: Northern Mindanao Logistics Survey, 2010
Despite the poor rating of logistical conditions, the shippers perceived some of the
components to have improved in the past 3 years. Improvements were noted for the quality
of infrastructure, telecommunications, and private sector services. However, customs, port
clearance and business environment are perceived to be same (see Table 3.12).
Table 3.12 Perceived Evolution of Logistical Components by Shippers Development of Logistics Conditions
(in % of responses) Logistics Components’ Evolution in the Past 3
Years – Shippers’ Views Much
Worse Worse
About
the
Same
Better Much
Better
Customs clearance procedures - 8.3 75.0 8.3 8.3
Port clearance procedures - 8.3 75.0 - 16.7
Quality of transport infrastructure - 8.3 33.3 58.3 8.3
Quality of telecommunications infrastructure - - 33.3 66.7 8.3
Availability of private sector services - - 25.0 66.7 8.3
Regulatory regime - 25.0 - 25.0 -
Good governance and eradication of corruption 8.3 41.7 - 16.7 -
Overall business environment - 16.7 58.3 16.7 16.7
Source: Northern Mindanao Logistics Survey, 2010
Table 3.13 summarizes the freight costs provided by the shippers by type of commodity
and by destination. Likewise, those exporters with import activities especially for their
raw material inputs provided freight costs of their imports.
Table 3.13 Freight Costs by Commodity of Exporters
Export Domestic Shipment
Commodity Package
Freight Cost (PhP)
Destinations Shipment Mode
Freight Cost (PhP)
Package
Wood 40' 24,000 China C&F
Silicon 20' 87,400 Europe FOB
Silicon 20' 103,000 USA FOB
Paper Products 3.12 cbm 39,000 Europe FOB 3,000 3.12cbm
Shipping Costs and Competitiveness In Northern Mindanao 44
Export Domestic Shipment
Commodity Package
Freight Cost (PhP)
Destinations Shipment Mode
Freight Cost (PhP)
Package
Paper Products 20' 38,000-45,000 Europe FOB & CIF 175,000 20'
Raw Sugar Bulker not given USA FOB 16,000 20'
Cocohusk Chips not given not given Japan FOB
Fiberglass 40' 69,325 Japan C&F 22,000 10' raw material
Fiberglass 20' 45,825 Japan C&F 32,000 20'
Abaca Bags box LCL 20,000 Europe, USA FOB
Frozen Fruits (coconut) 20' Consignee paid USA Consignee Designated
90,000 20' reefer
Wood/Native Crafts 40' 10,000/cbm Japan FOB
Wood/Native Crafts 20' 6,000/cbm Japan FOB
Fresh Seafood 40'reefer 154,000 Japan C&F 350,000 bulk shipment
Ceramics 20' 120,000 Europe, USA FOB
Rubber Boots 20' Consignee paid Japan FOB
Fatty Alcohol, Tertiary Amines, RG PG (Coco Industrial)
20' 36,000 - 150,000
Worldwide
FOB&CIF
Source: Northern Mindanao Logistics Survey, 2010
3.3.2 Importers Survey
There were 7 respondents from a total of 14 that gave their assessment on charges by
port they use. On the whole, the ports of MICT and CDO are found to be very expensive
as compared to the ports in Baloy (private port), Davao and Cebu (see Table 3.14).
Import procedures were evaluated by all the importer respondents and the top most
difficult processes identified per implementing agency are given in Table 3.15.
Table 3.14 Assessed Port Charges by Importers
Comparative Port Charges
(in % of responses) Ports
Cheap Reasonable Expensive Very
Expensive
CDO Port 0 0 8 17
MCT 0 8 0 17
Cagayan Corn Port-Baloy 0 8 0 0
Davao 0 17 0 0
Cebu 0 17 8 0
Source: Northern Mindanao Logistics Survey, 2010
Shipping Costs and Competitiveness In Northern Mindanao 45
Table 3.15 Identified Difficult Import Procedures by Importers
Agencies Identified Most Difficult Procedures
a) Documentations
b) Facilitations
c) Manila-based Tax Refund
d) Manila-based Accreditation
Bureau of Customs (BOC)
e) Renewal of Permits
a) Processing of Documents and Payments
b) Withdrawal of Cargoes Philippine Ports Authority
(PPA) c) Permit to Load Dangerous Cargoes
a) Withdrawal of Loose Cargoes
b) Heavy Equipment Operation
c) Cargo Stripping of LCL
Arrastre Service Provider
d) Payments
Bureau of Plant Industry
(BPI) a) Manila-based Filing of Import Permits
a) Securing Dangerous Goods Certificate
b) Export Permit Dept. of Environment and
Natural Resources (DENR) c) Ore Certification Process
a) Processing of Authority to Release Imported Goods Bureau of Internal Revenue
(BIR) b) Tax Clearance
Dept. of Finance (DOF) a) Release of Tax and Duties Exemption
Source: Northern Mindanao Logistics Survey, 2010
To compensate for difficulties encountered in import procedures, the respondents have
resorted to the use of some measures listed in the questionnaire. The common practice
of an early cargo withdrawal from port is done by almost all the firms. Moreover, many of
the firms encourage formal training for their staff on import procedures. However, the
benefits of using the VASP is not well explored as this is the electronic submission of
required import forms, which eliminates a number of steps of the importation process
(see Table 3.16).
Table 3.16 Good Practices to Improve Importation Process Practices of Importing Firms Yes No
1) VASP submission to Bureau of Customs 35.7 50.0
2) Early cargo withdrawal from port 92.9 7.1
3) Participate in consultations on regulatory matters 42.9 28.6
4) Encourage staff formal training on import procedures 64.3 7.1
Source: Northern Mindanao Logistics Survey, 2010
Similar to the claim of exporters, importers also ranked freight costs as the highest in
their incurred logistics costs. This is followed by customs duties and informal costs
(Table 3.17). The actual logistics costs and charges incurred by the importers are
broken down by component as shown in Table 3.18. Freight is shown as the largest cost
component together with the customs duties.
Shipping Costs and Competitiveness In Northern Mindanao 46
Table 3.17 Ranked Importation Costs
Importation Cost Items Ranked
Highest
Share
(%)
Freight 4 28.6
Arrastre 0 0.0
Wharfage Dues 0 0.0
Port Storage Charges 0 0.0
Trucking 1 7.1
Customs Duties 3 21.4
Value Added Tax 1 7.1
Brokerage 2 14.3
Facilitation/Informal Cost 3 21.4
Total Respondents 14 100.0 Source: Northern Mindanao Logistics Survey, 2010
Table 3.18 Actual Logistics Costs Incurred by Importers
Import Costs (in PhP)
Commodity
Packing Type
Freight
Arrastre
Wharfage
Port Storage
Trucking
Customs Duties
VAT
Brokerage
Facilitation/
Inform
al Cost
Not disclosed 1,797 779 2,600-4,000
zero rated
2,500 14,000
Not disclosed 40' 150,000 CDO:1,610; MCT:2,013
CDO:1,545; MCT:873
539 5,500 80,000 Inclusive 5,300 11,000
Coffee 3 in 1 (origin - Asia)
40' 210,000 CDO:1,610; MCT:2,014
CDO:1,545; MCT:874
539 5,500-9,,000
345,000 Inclusive 11,000 15,000
Not disclosed 50,000 1,200 1,800 550 3,500 70,000 60,000 5,000 20,000
Not disclosed 63,491 894 773 8,000 24,915 23,716 5,300 3,230
DMA/MMA 20' 80,000 MCT:974 MCT:520 MCT:
269 3,650 exempt exempt 6,500 2,000
LUNAC 20' 30,000 MCT:974 MCT:520 MCT:
269 3,650 exempt exempt 6,500 2,000
Source: Northern Mindanao Logistics Survey, 2010
3.3.3 Truckers Survey
There were eight respondents for the trucker’s survey. Similar to the other surveys, the
truckers were made to assess the conditions of their operation in terms of the roads they
traverse, the conditions at the ports, and the costs of their operations. For the worst
roads traversed, Table 3.19 lists the road with a ranking of the type of difficulties.
Shipping Costs and Competitiveness In Northern Mindanao 47
Table 3.19 Assessed Road Conditions by Truckers
Ranked Conditions (% of responses)
Highway Congestion
Congestion due to Accidents
Poor Road Design
(Geometry)
Worst Roads
3 4-5 3 4-5 3 4-5
Bukidnon (via Sayre Highway) 37.5 12.5 - 62.5 - 12.5
Talakag, Bukidnon 25.0 25.0 12.5 25.0 12.5 12.5
Lanao, Iligan, West Misamis Oriental 12.5 - 25.0 12.5 12.5 -
Eastern Misamis Oriental 12.5 - 25.0 12.5 - -
Note: Shown here are ranked 3 (quite problematic) and 4-5 (very problematic) responses only.
Source: Northern Mindanao Logistics Survey, 2010
The Sayre Highway in Bukidnon is ranked as the worst road due to congestion and
accidents. Likewise, other roads in Bukidnon that are enumerated by the truckers as the
accident-prone areas are as follows:
1) Baloy 2) El Salvador 3) Mangima Road 4) Maluko
5) Manolo Fortich 6) Carmen Hill Road 7) Talakag Road
When requested to provide solutions for the road improvements, the obvious high cost
solutions given are new roads and paving of roads (see Table 3.20). The low cost end of
the solutions that are notable are the repainting and improvement of road signages as
well as the dissemination of strict implementation of allowable weight of trucks. This is
recommendation surfaced since there is an inconsistency in the allowable weight of
trucks in the port as against that which is allowed by DPWH on the highways.
Table 3.20 Recommended Solutions for Road Improvements
Improvements for
Roads Recommended Solutions
High Cost Solutions a) Pave/cement roads;
b) Repair of cemented and asphalted roads; and
c) Build new roads/ highways.
Low Cost Solutions a) Repaint and improve road signages;
b) Set up proper road signs;
c) Improve pave roads;
d) Dissemination and strict implementation of allowable
weight of trucks; and
e) Deployment of more traffic enforcers. Source: Northern Mindanao Logistics Survey, 2010
The respondents identified the problems they encounter at the commercial ports of the
study area (i.e., CDO port and MICT). Table 3.21 shows that the common problem of
both ports is the lack of equipment.
Shipping Costs and Competitiveness In Northern Mindanao 48
Table 3.22 gives the operational expense items of the firms and the corresponding ranking in
terms of their share in the overall operational cost. Fuel has been ranked by almost all firms as
the highest cost incurred accounting for 40% to 55% of total expenses.
Table 3.21 Identified Problems at Port by Truckers Commercial Port Identified Problems at Port
Cagayan de Oro a) Breakdown of Equipment
b) Lack of Equipment
c) Tips to Equipment Operator
d) Misplaced cargoes
e) Stickers
f) Traffic
g) Kotong or Informal Collections
Mindanao Container
Terminal
a) Dont allow trailer jack-up
b) Lack of lifting equipment
c) Computer malfunctions
d) Long coffee and lunck breaks of regulatory agencies
e) Long truck queue for loading/unloading of containers
f) Red tape in entering
g) Too many requirements
h) Delays due to heavy traffic upon vessel arrival
Source: Northern Mindanao Logistics Survey, 2010
Table 3.22 Ranked Operational Expenses of Trucking Firms
Rank Operation Cost Item
Share of
Operation
Cost
1 Fuel 40 to 55%
2 Financing Cost 1%
3 Repair and Maintenance 7 to 9%
4 Drivers and Helpers’ Salaries 1 to 15%
5 Tires 10 to 25%
6 Insurance and Inland Marine 1 to 8%
7 Business Permits and Vehicle Registration 1 to 7%
8 Oil and Lubricants 1 to 5%
9 Franchise Fee and Regulatory Permits 1 to 5%
10 Garage 1 to 1.4%
11 Port Bribes 0.3 to 2%
12 Road Bribes 0.7 to 2%
13 Weighbridge 0.5 to 1%
Source: Northern Mindanao Logistics Survey, 2010
3.3.4 Shipping Lines Survey
All the shipping lines in the study area responded the survey. However, not all provide
their cargo tariff although the shippers provide information on this (see Table 3.23). In
terms of port and freight conditions, shipping lines rated timeliness of cargo delivery by
shippers and power outages as serious problems (see Table 3.24).
Shipping Costs and Competitiveness In Northern Mindanao 49
Table 3.23 Cargo Tariffs (in USD)
Respondent Number Container Size
1 2 3 4 5 6
Origin/Destination Asia,
Europe, US Hong Kong Singapore China Japan Singapore
10 Footer Dry
20 Footer Dry 2200 603
40 Footer Dry 1207
20 Footer Reefer 603
40 Footer Reefer 3500 1207
Source: Northern Mindanao Logistics Survey, 2010
Table 3.24 Rate Port and Freight Conditions by Shipping Lines Number of Respondents
by Rated Problem Areas Port/Freight Conditions
1-2 3 4-5
Port Berth Congestion 3 3
Cargo handling productivity 5 1
Timeliness of vessel departure 5 1
Port equipment availability 5 1
Port and berthing facilities 6
Reefer plug availability 6
Truck and trailer availability 6
Container retention by shippers 4 2
Timeliness of cargo delivery by shippers 3 2 1
Timeliness of cargo withdrawal 3 3
Overweight containers 3 3
Truck ban restrictions on movement of large 3 3
Poor truck access to shipping terminals 5 1
Cargo truck queuing area 5 1
Other (specify): Power Outages 1
Note: 1: not a problem; 2: slight problem; 3: manageable problem; 4: really a problem; 5: very serious problem
Source: Northern Mindanao Logistics Survey, 2010
Table 3.25 gives the port operation conditions of the shipping lines. All ships are
charged berthing dues based on their gross registered tonnage (GRT), which all claim to
be appropriate. However, 50% of the respondents are open to charges based on actual
space occupied. The operating own container yard is not deemed necessary by half of
the shipping firms for reasons ranging from small volumes of cargo to high maintenance
cost of equipment.
Shipping Costs and Competitiveness In Northern Mindanao 50
Table 3.25 Shipping Lines’ Port Operation Conditions Respondent Number
Questionnaire Item 1 2 3 4 5 6
Average Time at Ports (hrs.) 8 12 12 10
10. Your vessels are currently charged berthing dues based on GRT per day; do you find the system appropriate?
Yes Yes Yes Yes Yes Yes
11. Would you find it appropriate for the port authority to charge berthing dues based on actual space occupied rather that GRT basis?
No No Yes Yes No Yes
12. If your vessel arrived at 10 p.m. and departs at 6am the ff. day, are you charged an equivalent of two days port dues?
Yes Yes Yes Yes Yes Yes
13. Does your company deem it necessary to operate your own container yard?
Yes No No No Yes Yes
Justification.
Equipment Monitoring
volume is very small
High maintenance
cost
High maintenance
cost
For better monitoring
For low cost of
operations
Source: Northern Mindanao Logistics Survey, 2010
Table 3.26 reveals that shipping lines find the port storage charge to be quite high. This
is followed by informal charge. All other charges are basically assessed by the shipping
lines as average or low.
Table 3.26 Ranked Port Charges by Shipping Lines Number of Respondents by
Ranking of Costs/Charges
1 Cost items
1-2 3 4-5
Port charges 5 1
Arrastre charges 5 1
Stevedoring charges 5 1
Quay crane charges 5 1
Wharfage rates 5 1
Port Storage 1 5
Port dues (dockage) rates 5 1
Pilotage rates 4 2
Tug service rates 1 4 1
Trucking rates 1 4 1
Stuffing/Stripping rates 2 1
Reefer Plug rates 4 2
Weighbridge rates 1 3 1
Informal Cost (bribes) 1 3 1 Rank 1-2 = very low and low; 3=average; and 4-5=high and very high. Source: Northern Mindanao Logistics Survey, 2010
Shipping Costs and Competitiveness In Northern Mindanao 51
4. ISSUES AND MEASURES
4.1 On the World Bank Report
The 2006 World Bank Report-IFC on cross border trade claimed that the cost to
export a 20-footer container is US$1,336 in the Philippines as compared to US$ 848
in Thailand, US$335 in China and US$ 382 in Singapore.
The breakdown of the US$1,336 transport cost in the Philippines, as cited by the
World Bank covers four areas, namely (a) Documentation, (b) Inland Transportation,
(c) Customs Clearance and Technical Control, and (d) Ports and Terminal Handling.
Ports and Terminal Handling, which entails the biggest chunk at US$994 of the
US$1,336, includes domestic transshipment (US$500), cargo handling/arrastre
(US$175), terminal handling charge (US$45) and port charges (US$274).
4.1.1 Breakdown of Port Related Transport Costs /TEU, WB Report
Port-related costs are those paid to PPA or PHIVIDEC (wharfage) and those
paid to the terminal operator (container handling).
Table 4.1: Comparative Breakdown of transport costs per TEU Particulars WB-reported
Rates (US$)
Rates at
CDO/MCT
Remarks
Domestic Transshipment 500 NA
Cargo handling/ Arrastre 175 Php974.50
(US$22)
Terminal Handling
Charge
45 NA Charged by shipping
lines @US$104/TEU
Port charges 274 PhP259.70
(US$5.86)
Total Port & Terminal
Handling
994 PhP1,233.70
(US$27.87)
For export cargoes a 20-footer container from Northern Mindanao will
entail wharfage and container handling charges amounting to USUS$5.86
(PhP259.70) and USUS$22 (PhP974.50) only at exit port.
Combined port-related export costs (wharfage and container handling)
represent a measly 2.0 percent of the total USUS$1,336 WB figure or merely
2.8 percent of the USUS$994 Ports & Terminal Handling component-charges.
The World Bank erred in its 2006 World Bank-IFC “Cost of Doing Business”
Report, particularly on Cross-Border Trade where the Philippines was claimed
to have the highest cost of exporting compared to other ASEAN countries like
Thailand, Vietnam and Indonesia.
Ports and terminal handling rates for export/import cargoes in Northern
Mindanao are the lowest in Asia.
Shipping Costs and Competitiveness In Northern Mindanao 52
4.2.1 Terminal Handling Charge (THC) and other Surcharges
Terminal Handling Charge (THC) has been a source of contention since its
introduction in 1991. Asian shippers have fought for their removal as the THC
has become an extra charge over and above the freight rate. The World
Bank-IFC included THC in the computation of port related charges in arriving
at its conclusions as the term is indeed misleading.
For containers shipped on an FOB (Free-On-Board) terms, which specifies
which party (buyer or seller) pays for which shipment and loading costs,
and/or where responsibility for the goods is transferred. The shippers at the
origin port of shipment are responsible for paying the THC at the port of
loading. This is defined as the Origin THC. The consignees or buyers of the
cargo are responsible for paying the freight rate and the THC (or equivalent)
on the discharge port of destination, known as the destination charge. This is
consistent with the Incoterms (International Chamber of Shipping) definition.
Since 1991, most shipping lines have introduced separate charges for the
freight rate and THC.
In Indonesia, the THC has been successfully reduced while in China, the
Chinese Government has announced the conclusion of its investigation into
the THC issue, stating that THC is in nature an integral part of the freight.
The Federation of ASEAN Shippers’ Councils (FASC) and Asian Shippers’
Council (ASC) emphasized that THC is an integral part of the freight, that all
costs shall be inclusive in the freight as an “all in” freight rate. Hence,
it should be shouldered by the party who secures the shipping service and
thus pays the freight.
Table 4.2 Cargo Handling activity & applicability of THC Activity Covered by
1. Delivery Empty Shipper/consignee
2. +all associated clerical work and reporting THC
3. Receiving full (+all associated clerical work & reporting) Arrastre Charge
4. Inspection and reporting condition of
container/completion interchange
Shipping THC
5. Inspection and reporting of seals and wiring,
removal invalid labels, re-sealing
Shipping THC
6. Movement of container on/from chassis Arrastre Charge
7. Internal transport of container to or from stack Arrastre Charge
8. Handling container into or out of stack Arrastre Charge
9. Storage of full container within time limits defined
by port authority
Arrastre Charge
10. Storage charges after free storage period Shipper/consignee
11. Take laden box out of stack Arrastre Charge
12. Internal transport from stack to ship’s side under hook Arrastre Charge
13. Move of container from ship’s side to ship’s rail Stevedoring/Freight rate
14. Move of container from ships rail into ship’s cell Stevedoring/Freight rate
15. Cranage Stevedoring/Freight rate
16. Opening and closing of hatch covers Stevedoring/Freight rate
17. Lashing of container Stevedoring/Freight rate
Shipping Costs and Competitiveness In Northern Mindanao 53
Activity Covered by
18. Physical & clerical planning of vessel operation
+reporting
Stevedoring/Freight rate
19. Overtime Stevedoring/Freight rate
20. Wharfage Shipper/consignee
Source: Study Team 2010
Note that actual terminal handling activities with costs borne by the shipping
lines are only items 3, 4, and a portion of item 1, which does not warrant the
USUS$100 charge.
The primary issue against THC in the Philippines however, is that the actual
terminal handling (arrastre) charge is paid by the shipper/consignee directly to
the terminal operator and not by the shipping line. In effect, THC in the
Philippines is an arbitrary charge and has nothing to do with land-based
terminal cost recovery. Through the THC, shipping lines are earning more
than the cargo handling operator who are actually performing the service.
Hong Kong, India, Singapore and China shippers/consignees do not pay the
terminal operator handling charges similar to arrastre. Terminal operators
collect terminal services from the shipping line and, thus, THC charges by the
shipping lines is justified. Whether the rates/charges per country are justified
is another matter.
Table 4.2 THC Rates
Country Currency
Charges
20’ In USD 40’ In USD
Philippines USD 100 100 130 130
Hong Kong HKD 1,600 206 2,400 309
Japan Yen 25,000 264 37,000 391
Malaysia MYR 300 93 450 139
Pakistan USD 90 90 110 110
Sri Lanka USD 120 120 170 170
Source: Shipping lines THC advisory 2009-2010
Shipping lines collect a uniform THC for the entire country irregardless of the
port of call. However, arrastre rates usually differ from one Philippine port to
another making the terminal cost per port of call variable. A comparative
arrastre rates for selected international ports in the country is shown in
Chapter 2 (Table 2.16).
In a research initiated by Center for Research and Communication (CRC) and
Philippine Chamber of Commerce and Industry (PCCI) “Cost to Export: Is the
Philippines (Really) Uncompetitive?” claims that the Association of
International Shipping Lines (AISL) admitted that a major portion of the THC
is paid by the shipping lines to the cargo handler for stevedoring services.
THC is a mechanism by which shipping lines recover the expenses of land-
based cost. Stevedoring services (service performed on board vessel) has
been traditionally for the account of the shipping lines and stevedoring
Shipping Costs and Competitiveness In Northern Mindanao 54
charges are bundled with freight. The payment of stevedoring services
through THC is not only highly irregular, it is also unfair for Philippine FOB
shippers/exporters who are practically subsidizing their buyers freight cost by
paying the THC.
The admission by the AISL is unfair to the shippers and should be addressed.
A. Findings
THC as an Integral Part of the Freight Charge
a. When containers are moved across the globe using transshipment points, land
based cost in these transshipment points are included in the freight rate.
b. When other methods of land transport is used such as rail/road to deliver
to inland destinations, all land based cost are included in the freight rate -
E.g.: Inland, delivery points of USA, Europe & Russia
c. Up to 1994 THC was part of Freight.
THC is Anti- Competitive and Non Transparent
a. It is forced on shippers’ and thus it is non-negotiable
b. There is a profit element as well as a over recovery
c. Charges other than the so called Land Based charges are included in the THC
d. It violates the principle of free market forces (supply and demand)
e. If THC is an actual recovery of land based cost, why are Philippine
shippers paying arrastre (cargo handling) charges directly to the cargo
handling or terminal operator? (see Maersk Line THC Table)
f. It violates the simple principle of “no work, no pay”.
Effects on Mindanao Exports (on current levels)
a. It contributes to making Mindanao exports uncompetitive.
b. Increases cost for FOB shippers
c. Only a small section of the business community (multinationals and large
scale exporters) has the bargaining power of reducing costs.
d. THC has continued to increase since 1997. There is no guarantee that
THC will not increased further.
e. It is a bad reflection on Mindanao port and handling charges which are
actually the lowest in Asia.
Shipping Costs and Competitiveness In Northern Mindanao 55
B. Legislation is Necessary
a. To prove that THC pricing mechanism is an anti-competitive practice in a
free market economy.
b. Legislation is particularly necessary to protect the interest of the small and
medium scale shippers
c. There are mechanisms in place in the USA and EU to prevent price fixing
(anti trust)
d. There are also mechanisms in place in the USA and EU which compels
shipping lines to file details of pricing with the authorities. These
authorities have wide powers to monitor unfair pricing.
e. Helps to keep export products competitive
The government, the Philippine Shippers Bureau, PHILEXPORT and various
shippers’ associations should unite and engage the Association of
International Shipping Lines (AISL) in a dialogue against the arbitrary
imposition of the THC in the Philippines.
The large portion of land based cost namely “arrastre” is already paid by the
shipper. Some cost such as reporting, documentation and empty container
handling, empty wharfage are some of the terminal costs that are borne by
the shipping lines, but which costs are already part freight as these are not in
any way related to product shipment.
The need for shipping lines to charge some form of THC to recover land
based costs is recognized but the cost should be properly itemized and
explained to the shippers. THC should be imposed on a port to port basis
given the disparities in handling rates among the different ports in the country.
C. Other Shipping Surcharge
Surcharges should be temporary in nature and should be removed when
normality resumes. By having a simplified freight tariff after due
consultations, there would be less confusion and disputes, thus paving the
way for improved shipper-carrier relationships.
4.3 Transshipment
Domestic transshipment of FCL containers have not been an option for exporters. In
transshipments, shippers will have to pay on top of domestic freight domestic arrastre
and wharfage dues at origin port, at Manila or Cebu discharging port, trucking to
international port and again wharfage and export arrastre at the final loading port. All
charges are subject to 12% Value Added Tax.
Domestic freight rates are higher than foreign freight rates per nautical mile.
Shipping Costs and Competitiveness In Northern Mindanao 56
In an interview, an exporter of marine products from Northern Mindanao was offered
freight rate that is USUS$1,000 lower than the usual rates his company is paying.
The hitch however is that cargo should be shipped from Cebu. Upon checking with
local freight rate and charges, he found out that it will cost his company
approximately PhP80,000 (USUS$1,770) in freight, handling and associated costs to
bring his company’s 40footer refrigerated container to Cebu.
4.4. Port Operational Issues
4.4.1 Mindanao Container Terminal
With increasing domestic and foreign traffic, MCT cannot just rely on its four
units of RTGs and one unit reach stacker for its yard operations.
Operationally, prioritizing vessel over yard (withdrawal) operations is
strategically appropriate. However, with domestic containers enjoying only
two days of free storage privilege, this becomes a problem and complaints of
delayed withdrawal will abound. Long waiting time of hauling trucks will
prompt trucking service providers to seek for higher rates to compensate for
the delays and on their inability to complete multiple trips.
Shippers will also need to pay overtime to employees, stripping and
warehouse receiving crew or pay overnight charges to truckers.
Employing other types of handling equipment such as empty handlers is not
feasible at MCT due to the unique design of its yards which employs
container slippers. Pavement block construction on the yards has also limited
the use of MCTs container reach stacker. This could mean that the container
yards were designed exclusively for RTG type of operation and front end
loaders (reach stackers, forklifts) were not considered in the ports design
criteria.
As traffic volume increases, MCT will need to improve its yard handling
capacity and additional RTGs may be the only option to keep up with higher
demand.
Demand versus capacity projection will guide PHIVIDEC and MCT in deciding
when port expansion should commence.
4.4.2 Cagayan de Oro Port
CDO port has the advantage of having long berths, wide storage areas and
covered transit sheds. Efficient container yard operation is however hampered
by the exclusive use of container front end loaders, mostly acquired surplus or
second hand. Though the cargo handler is well equipped based on inventory,
equipment reliability becomes a major issue for the CDO port.
Shipping Costs and Competitiveness In Northern Mindanao 57
Until 2009, CDO cargo handling tariff is thirty percent lower than that of the
ports of Davao and General
Santos. The cargo handling
operator’s ability to acquire
modern cargo handling
equipment may have been
curtailed by issues of
affordability. With the
approval in 2009 of its tariff
leveling petition, it should be
in a position to replace
ageing front end loaders
and improve equipment
reliability.
The continued and
increasing use of domestic liners of ten footer containers is also a problem in
yard and equipment planning.
Unlike MCT, CDO port does not have an Electronic Data Interchange (EDI)
system and due to apprehensions by domestic shipping lines of higher
handling costs, utilization of the CDO port quay crane has not been made
compulsory.
4.4.3 Vessel Dues
PPA currently charge berthing fees on a GRT-day basis. The Tariff and
Customs Code, which originally embodied the berthing fees, did specify that
the berthing charges shall be assessed based on the GRT of the vessel for
the first 24 hours or fraction thereof. However, in the course of restructuring
the port tariff in the early 80’s and in order not to deal with the nitty-gritty and
assessment conflicts with the shipping lines, the PPA decided to change the
charge base to GRT per Calendar Day due to the following reasons:
a. There were some problems when to reckon a vessel as having arrived
and when to reckon it as having departed;
b. The shipping lines were contesting that they should not be made to
pay for the x number of hours due to the delay in the arrival of harbor
pilot, delay in the arrival of quarantine launch, etc.
c. Harbor master clearances and assessments are delayed as shipping
agents frequently request for re-computation when the departure of
vessel are delayed due to problems such as winch or generator
trouble, etc. This resulted in the need for supplemental billings which
led to account build up over a period of time because the agents either
intentionally or unintentionally forgets to pay charges. This is most
prevalent among tramping vessels.
Figure 4.1: PPA reported that CDO Port's Annual Berth
Occupancy Rate was beyond 65% in 2009
Shipping Costs and Competitiveness In Northern Mindanao 58
d. The implementation of the present charging base of Per GRT per
Calendar Day has been going on for the last 20 years. However, with
the improvement in cargo handling productivity and the employment of
quay cranes by port operators, there is a need to revisit the berthing
dues currently charged by port authorities.
On top of these, vessels arriving before midnight and departs early the next
day are charged equivalent of two days at berth. Vessels intentionally slows
down when their estimated time of arrival (ETA) will be before midnight to
save a day’s equivalent of berthing fees.
Assessing the shipping lines based on Linear Meter Hour instead of GRT
days is most appropriate to encourage vessels to arrive on time. This will also
give the shipping lines incentive to avoid waiting for cargo or in using the port
as parking space. Besides, GRT based charges instead of actual space
occupied is not the most appropriate as some vessels have higher GRT but
shorter LOA or vice versa. Cebu run vessels (Roro) also berth stern first
requiring less berth space.
Additionally, shipping lines can demand higher productivity from cargo
handling operators and/or strictly observe Vessel Operations Commitments
(VOC). Bookings will also be better managed and cargo delivery cut-off
strictly enforced.
4.5 Domestic Sea Freight
Only Philippine registered vessels may engage in inter-island shipping.
Foreign ocean freight shipping lines may not engage in inter-island freight
shipping because of restrictions in cabotage. Cabotage refers to the practice
of maritime countries of reserving the privilege of navigating and trading along
the coast between two (2) ports within the national territory, only to vessels
which are registered in that country.
The improvement of the inter-island freight shipping will translate into
competitiveness or better competitiveness of Philippine exports.
The higher cost of domestic shipping service vis-à-vis foreign shipping can be
traced to several factors including: high fuel cost, high interest rates, high
insurance premium, low port efficiency and productivity (North Harbor), higher
taxes for domestic shipping operations, lack of comparable government
support program for domestic shipping, and higher cost in domestic liner
operations.
Based on industry statistics, majority of the vessels of the major players in the
industry Aboitiz Transport System., Negros Navigation Co., Sulpicio Lines,
Inc., Lorenzo Shipping Corp., NMC Container lines, Solid shipping, Inc. and
Cebu Ferries, Corp. are obsolete by Japanese standards and require higher
operating, maintenance and drydock costs.
Shipping Costs and Competitiveness In Northern Mindanao 59
4.5.1 RORO (Strong Republic Nautical Highway)
Strong Republic Nautical Highway otherwise known as Roll-On Roll-off
Transport System (RRTS) is a major project of the government designed to
help alleviate transport cost. The original concept is as floating bridges to
connect the islands for easier transport of cargo and do away with cargo
handling, its role was expanded to cover long haul routes. It is most efficient
for short-sea crossing of passenger and cargoes and a big boost to tourism. It
saw very limited success in long-haul sea freight.
Short Haul RORO
The RRTS-SNRH program has been very effective for short sea crossing
such as Mukas-Ozamis, Balingoan-Camiguin, Dipolog-Dumaguete, Surigao-
Leyte among others. This has not only lowered the transport cost of goods,
but more particularly improved mobility and enhanced tourism. Cargoes are
efficiently transported via wing vans or open stake trucks and freight rates
have been reasonable.
RORO/PAX Container Carriers
RORO/Pax or Roro-Passenger Container vessels are carriers that carry both
passenger and containerized cargoes. Containers are mounted on a chassis
and is towed to the vessel hold via a terminal tractor and where it is jacked
up. Unlike short sea Roro, the chassis mounted containers are lashed to the
vessel deck in preparation for voyage.
Long Haul domestic shipping have started to change some of their strategies
from employing RORO-Passenger (RORO/PAX) Carriers to purely container
freighters. Aboitiz Transport System, Negros Navigation, Ocean Transport
and Sulpicio Lines operate cellular container carriers and/or pure container
carriers in addition to their RORO operations.
Shipping companies which ply longer inter-island distances, such as Manila-
Cebu and Cebu-Zamboanga, among others, are traditionally not dependent
on revenues from passengers alone. They earn their profits from cargo.
Figure 4.2: Left: Balingoan-Benoni RORO Vessel; Right: Wing Vans ideal for RORO
Shipping Costs and Competitiveness In Northern Mindanao 60
Though contributing only roughly thirty percent of revenues, passengers
however pay cash while cargo is oftentimes on credit terms.
The introduction of the RORO/PAX concept in the Philippines was mainly due
to the inability of cargo handling operators to efficiently handle containerized
cargo due to lack of suitable equipment. Even today, many cargo handling
operators still rely on liner owned equipment to handle containerized cargo
prompting the PPA to reverse the 65%-35% rule in favor of the shipping lines.
RORO/PAX has provided shipping companies with flexibility and
independence from the inefficiencies on the cargo handling service providers
during the last decade.
Historically, ships
carry passengers
onboard because it
translates to
scheduled departures
and specific routes,
elements that assure a
cargo clients that they
could plan and
manage the
movement of their
goods.
With the increase in
fuel prices, and stiff
competition from
budget airlines, RORO/PAX carriers are burdened by lower ridership and
higher fuel costs as they have to maintain speeds which does not contribute
to fuel efficiency measures else passengers will complain of delays.
Conventional container carriers however can reduce speed and save fuel.
Foreign shipping lines have reduced speed of their vessels from 25 knots to
20 knots and save 15 to 20 percent fuel.
Survey results indicate that seventy two (72) hours sailing from Cagayan de
Oro to Manila is still acceptable to majority of Northern Mindanao shippers.
Shippers of perishable cargoes such as tomatoes prefer faster sailing time in
the absence of ventilated containers.
Northern Mindanao cargo handling operators have also improved vastly on
their container handling capabilities. Ship to shore gantry cranes in Northern
Mindanao can achieve 20 to 28 moves an hour, a far cry from the seven (7) to
ten (10) moves per hour using ship’s gear thereby reducing port time. This
improvement in productivity have nullified RORO/PAX carriers advantage of
faster loading and unloading of containerized cargo.
Container carrying RORO vessels are further disadvantaged by having to
maintain ancillary equipment such as yard tractors and hundreds of chassis.
Vessel capacity is not maximized due to dead spaces above and below
Figure 4.3: Container Vans unloaded from a RORO/Pax Vessel
Shipping Costs and Competitiveness In Northern Mindanao 61
chassis mounted containers stowed on its cargo decks. A 180 meter
dedicated container carrier can load as much as 600 TEUs or over while a
RORO/PAX carrier can only carry 200 TEUs mounted on at least 100
chassis.
The difference in handling rates is a substantial saving for RORO operators
especially when RORO vessels were exempted from paying stevedoring
charges starting in 1997. This despite their continued reliance on cargo
handlers to provide stevedores for work on board vessels for trailer landing
leg deployment/redeployment, chuck positioning, lashing/unlashing, etc.
There is limited cargo handling interplay for pre-mounted outbound RORO
containers as the shipping lines own and operate the tractors required to tow
containers from marshalling yard to the vessel. There had been debates over
this issue as towing of chassis has been claimed by cargo handling operators
and part of their function and being the authorized cargo handling operator,
should provide the services to the shipping lines.
The shipping lines in return argued that the RORO tractors and trailers should
be treated as ship’s gear. The cargo handling operators in return argued that
in conventional container carriers, the ship’s gear (ships crane) is operated by
the personnel of the cargo handling operator.
This issue has not yet been resolved and the tractors are still owned and
operated by the shipping lines and employs their own drivers operating inside
port premises.
Figure 4.4: Workflow for CHA-RO (RORO/PAX)
Shipping Costs and Competitiveness In Northern Mindanao 62
Aside from arrastre charges, one of the cost drivers related to cargo handling
for RORO containers are Lift-up and Lift-off services. Not all chassis mounted
containers are withdrawn from the ships hold directly for delivery thereby
limiting cargo handling interplay. From the RORO vessel, most RORO
containers are lifted off the chassis and stored at the port’s marshalling yard
and lifted on to another chassis when ready for withdrawal. The same
interplay, but this time in reverse order is performed by the cargo handling
operator for containers for loading to vessel.
In addition to arrastre and lift-up/lift-off charges, RORO operators are saddled
with added cost such as fuel, drivers, repair and maintenance and depreciation in
operating terminal tractors and chassis. Some shipping lines load the tractors to
the vessel to serve the same function at its next port of call.
Cargo interplay is necessary due to the following:
a. Chassis are not registered with LTO and cannot operate outside port zone;
b. Chassis not designed for highway use (no brakes, no signal & brake lights);
c. Not enough tractors to directly withdraw cargo to outside port container yard;
d. Time element;
e. Not enough RORO marshalling yards to store chassis mounted containers
(without spacing, a forty foot chassis will occupy 30 square meters) for
inbound/ outbound marshalling of RORO containers, a vessel with 200
TEU capacity would need about one hectare of marshalling yards. If two
or three vessels call at the same time, ports will be congested.
Conventional container handling can stack containers at multiple tiers and
thus save valuable port space.
MCC Transport, a domestic shipping line which is a joint venture partnership
between MCC Transport Philippines and Aboitiz Transport Systems has been
offering freight rates much lower than those offered by RORO vessel operators.
RORO/PAX and Cargo Handling
The introduction and continued development of the RORO/PAX system in the
Philippines have stunted the development of the cargo handling industry. The
low level of domestic cargo handling rates relative to freight, the limited
interplay model in the RORO/PAX system and the continued use of the ten
footer container has contributed to the underdevelopment of the cargo
handling system. The inability of many cargo handling operators to procure
necessary and suitable equipment can be attributed to low cargo volume, low
revenue, and high equipment cost.
Similar to the trucking industry, most of the country’s cargo handling operators
have deployed second hand container handling equipment. This is the practice
even for high volume ports like Cagayan de Oro, Cebu, Davao and North
Harbor. Equipment reliability issues are common among these ports.
Shipping Costs and Competitiveness In Northern Mindanao 63
Due to higher foreign container volume, the port of Cebu have ten units of old
second hand rubber-tired gantry for its yards operation, which is more than
what is needed to handle its container traffic had the units been new.
Similarly, Sasa port in Davao deployed seven brand new and one second
hand unit of container reach stackers. However, the cargo handling operators
at these ports were able to afford the equipments from foreign stevedoring
generated revenue (see table 2.16 and 2.17).
The port of Cagayan de Oro despite having higher domestic traffic but majority
of which is carried by RORO have only two ageing reach stacker and a second
hand top lifter and a variety of second hand 24-ton forklifts. Presently, a brand
new reach stacker cost Euro430,000 C&F and would normally have a
guaranteed service life of 10 years under Philippine conditions where the labor
component in repair and maintenance cost is cheap.
Some advocacy group like to Coalition for Shipping and Port Modernization
and the transport policy group of the Center for Research and
Communication-University of Asia Pacific have even proposed to exempt
RORO containers from payment of arrastre charges. Its argument is centered
on the limited interplay model. Had their proposal saw fruition, it would have
been the demise of domestic port modernization dreams of the PPA and
further stunt the growth of the cargo handling industry.
The ironically the port of Cagayan de Oro is quay crane equipped as required
by PPA but is also designated as Mindanao’s primary nautical highway and
RORO gateway.
Trailer Horse and RORO/Pax Safety
The trailer horse is a device which provides added support for loaded chassis
lashed on vessel decks. Chassis landing leg failures are common occurrence
even on land. In the Philippines, Roro carriers do not employ this device
which would assure that chassis and containers would not topple down in
rough seas.
4.5.2 Freight Quotations and Freight Rates
Figure 4.6: Trailer Horse
Shipping Costs and Competitiveness In Northern Mindanao 64
Freight rate setting has never been transparent. Shippers pay whatever fees
shipping lines charge for freight, terminal handling and various surcharges.
Most shippers particularly those without the negotiating posture have
accepted this as a fact of life.
Though complaints are common, shippers have not bonded together
effectively to demand transparency by shipping lines. In addition, shipping
lines takes approximately one to two weeks to submit freight quotations. This
practice by foreign shipping lines has not provided shippers with enough
flexibility as to timing and scheduling of exports. This also limits the shipper’s
ability to canvass for competitive rates and/or negotiate the same.
This problem is not too prevalent with large shippers which the shipping lines
tend to favor not only with lower rates but with better services. Some foreign
shipping line offices and/or agents are not empowered by their principals to
provide freight quotations which explains the delay as quotations are solely
issued by their foreign offices.
This could also be a strategy by the shipping lines to prevent over-booking.
The fault could also be attributed to some shippers who over-book but does
not deliver the cargo for a particular voyage, preventing the shipping lines to
accept other cargoes when their vessels are already laden in accordance with
advanced bookings. Over-booking is however, a custom by large shippers
rather than small ones according to some foreign shipping line
representatives interviewed.
4.6 Trucking
4.6.1 Empty Backhaul
The number of empty trips is a way to measure the efficiency of road freight transport
activities as empty backhaul are a waste of resources for truckers. Some possible
explanations for this phenomenon are the technical restrictions for some typical
freight transport activities that cannot take return loads (e.g. empty container return
or empty repositioning), unavailability of cargo for backloads and time constraints.
Empty backhaul and/or empty container repositioning does not allow the trucker the
optimum use of transport assets. However, such practices become necessary in the
face of cargo security issues. Transport losses due to pilferage, cargo hijacking, theft
or cargo loss weight are the primary reasons for empty repositioning. Primarily for
added security, sealed containers cannot be opened without owner’s presence and
thus, deter pilferage and theft.
Any loss therefore, containers with broken seals without owner’s presence are
chargeable against truckers, port operators and/or carriers; whoever has custody of
the container where the breaking of the seal occurred.
Shipping Costs and Competitiveness In Northern Mindanao 65
Empty backhaul is however not an efficient way in trucking operations. Together,
shippers and trucking providers must find ways to increase truck efficiency through
backloads to further reduce trucking costs.
Trucks link the inland factories and agricultural production areas with the ports and
airports and also play an important role for domestic distribution. Speeding up
trucking will decrease transit time and increase supply chain quality. Road safety is
an issue with trucking; additionally road quality influences break downs which create
congestion on roads.
Recommendation of improving road quality and separating trucking from motorbike,
motorela, trisikad and other slow moving vehicles on the most frequented streets
roads and highway to increase traffic flow resulting in shorter trucking times to and
from ports. Clearing roads of illegally parked vehicles, junk vehicles, illegal structures
and other road frictions should be immediately implemented. Installation of standard
road signs, road markings, pedestrian lanes, and left turn pockets is recommended.
Further recommending widening and/or geometry improvement on difficult road
sections and intersections to enhance safety.
Improvement in road transport infrastructure will enable Northern Mindanao land
transport operators to make significant improvements in vehicle utilization and
productivity. These improvements will be reflected in significant increases in vehicle
payloads and reduced transit times between production areas to vital transit points.
4.6.2 DOTC-LTO Fines/Penalties for Traffic & Administrative Violations
The approved rates and listing of LTO fines and penalties for traffic and
administrative violations needs to be carefully reviewed. The list is not only
confusing, some of the violations listed are vague and/or subjective and could be
subject to abuse by apprehending authorities. (See Annex 3.5)
The lists lumps up violations for private, commercial as well as Public Utility
Jeepneys (PUJs) and taxi service and its confusing as to what applies where. It is
filled with grammatical and construction errors. The list is posted on the LTO website.
Highway Patrol
Local highway patrol units do not really patrol the highway. Probably to save
on fuel, highway patrol officers are stationed at strategic points along the
highway and act as checkpoints and where trucks are routinely flagged for
inspection. They are less concerned of moving violations but rather on the
correctness of vehicle registration and franchises. Due to the agency’s “no
approach” policy, trucks and other vehicles with probable documentary
violations and who may not be willing to pay informal fees will simply park on
the side of the road and wait for the Highway patrol or LTO personnel to leave
before continuing on their journey.
Inconsistencies
Shipping Costs and Competitiveness In Northern Mindanao 66
Ironically, along the national highway and sometimes passing the checkpoints
are motorcabs (a local tricycle designed using 2 stroke engines with no
transmission, alternators, lights, chassis numbers etc.) which cannot be
registered with the LTO nor franchised as a public conveyance by the LTFRB
plies the highway for passengers and not getting apprehended by traffic and
transportation authorities.
Such vehicles are not road worthy
much less appropriate for highway use.
They are given authority by the
barangay captains and enjoy political
protection. These vehicles however
poses traffic hazards and danger to the
riding and commuting public. They also
slow down traffic flow along the Puerto,
Tablon, Agusan and Bugo sections of
the highway to the consternation of
truck drivers and other legitimate
motorists.
Similar to trisikads, they cannot be issued citation tickets as they do not carry
plates or tags and the only way to apprehend them is only through impounding.
4.6.3 DPWH Weigh bridges-DPWH
Weigh bridges are located on the right side of the highway prior to entering Cagayan
de Oro City from both east and west section of the BCIR. Trucks are weighed before
entering the city. This however defeats the purpose of monitoring truck weights to
protect the highway from overloading as trucks are weighed after they have already
passed the highway.
Trucks from Cagayan de Oro going outwards are not weighed.
4.7 Harmony of Policies and Programs
4.7.1 DPWH-PPA Cargo Weight Policies
DPWH mandates that vehicles shall have load limits of 13.5 tons per axle. This policy
has been a bane to truckers who have no idea what their axial loads are once loaded
with containerized cargoes.
Shippers also encountered similar problems as they have no idea of the exact weight
of their cargoes and will rely on commercial weigh bridges located near or at the port.
Cagayan de Oro port and MCT imposes compulsory weighing of outbound cargoes.
Inbound cargoes are presumed to be weighed at the port of origin.
Figure 5.7: Motorcab
Shipping Costs and Competitiveness In Northern Mindanao 67
Inconsistencies
PPA on the other hand is
observing ISO 1995 and allows
20 foot containers up to a
maximum gross weight of 24
tons. PPA weighs the whole
truck, deduct truck tare weights
to determine container gross
weight. Information on the
weight of containers is critical
for proper stowage planning by carriers.
PPA also allows tandem loads of 2 units 20 footer container on a 40 footer
chassis which by DPWH standards may weight more than 13.5 tons per axle.
DPWH and PPA should harmonize their load limit policies.
Development Strategies
To fast tract the development of the land transportation industry in Northern
Mindanao, the following recommendations are given:
a. Increase the region’s share of the total national road budget;
b. Introduce immediate development on difficult and dangerous and high
traffic density road sections;
c. Encourage the participation of the private sector in road infrastructure
development;
d. Consult transport service providers and players in identifying priority road
and bridges for development.
A reduction in transactions costs in land transportation can be done through
the following:
a. Pursue consolidated efforts on the part of the DENR, DILG, DPWH and
DOTC to review existing laws/regulations dealing with legitimate transport
permits and corresponding fees;
b. Institute public information and dissemination mechanisms on the
procedures, charges and clearances required by implementing agencies,
c. Organize truck operators/owners into a vigilant and unified association;
d. Pursue an education campaign among members of truckers’ associations
on awareness and compliance of required transportation permits;
e. Minimize the collection of illicit fees by using the media to expose cases of
erring/corrupt government personnel;
Figure 4.9: MCT Weighbridges
Shipping Costs and Competitiveness In Northern Mindanao 68
f. Strict imposition of charges against government personnel if the quality of
delivered cargoes deteriorate while being impounded by them despite the
presence of required documents.
4.8. Security, Clearance and Inspection Costs
Despite the issuance of Executive Order 554 issued in 1996 instructing all
government agencies to improve the competitiveness of the country’s export sector
by eliminating fees and charges imposed on export clearances, inspections, permits,
certificates and other documentary requirements, several regulatory agencies have
not yet implemented this policy particularly BIR, Bureau of Customs, BFAD and
DENR.
4.9 Value Added Tax
Mindanao shippers are not only burdened by high freight rates, they are also heavily
taxed. Mindanao goods shipped to Manila markets are assessed Value added tax on
cargo handling, and wharfage at Mindanao ports, vat on freight and again vat on
wharfage and cargo handling at destination port. With this level of multiple taxation,
the only way for Mindanao products to be competitive is to lower down production
costs e.g. labor, inputs and profit margins. Better else, to produce goods that are not
produced anywhere else.
Moreover, Mindanao producers, shippers and transport operators pay higher fuel
pump prices (PhP2.00 to PhP3.00 per liter) as fuel is also shipped to Mindanao and
whose freight and handling is also subjected to VAT charges. Shippers also have to
pay VAT on freight, wharfage and cargo handling of raw materials shipped to
Mindanao such as animal feed ingredients, locally produced or transshipped fertilizer
and packaging materials keeping production costs high.
The value added tax, particularly on freight (a function of distance) has inclined the
playing field against Mindanao shippers. Competing under this unfair environment
does not bore well for Mindanao, the food basket of the Philippines.
Not only are some Luzon transport infrastructure and fare structure highly subsidized
by government such as the Philippine National Railway, MRT and LRT, commercial
users of North Luzon Expressway, South Luzon Expressway, Southern Tagalog
Arterial Road among others are not assessed value added tax on their toll fees.
It is therefore recommended to zero rate the value added tax for Mindanao freight,
cargo handling and wharfage. This will translate into at least twelve percent savings,
which affects prices for products and higher margins and better competitiveness of
Mindanao products.
Legislation is Necessary
Shipping Costs and Competitiveness In Northern Mindanao 69
The removal of VAT on Mindanao cargo handling, wharfage and freight may
be termed The Mindanao Freight Equalization Program.
4.10 Freight Equalization Scheme
Freight equalization through removal of Vat from sea freight of all commodities
flowing to and from Mindanao.
Freight Equalization can assist in alleviating the comparative domestic freight cost
disadvantage incurred by Mindanao products to markets. Its objective is to provide
Mindanao industries with equal opportunities to compete in Luzon markets,
recognizing that, unlike their Luzon counterparts, Mindanao shippers are burdened
by high freight, wharfage, handling and VAT cost.
Freight equalization Scheme is a tool for Mindanao economic development in
response to the underlying distance cost penalty.
The rationale is for equitable treatment of industry with respect to domestic trade and
specifically, access to production inputs, and the markets for goods produced. To
achieve this, neutrality in terms of access to transport infrastructure is essential.
The Philippine Government has actively engaged in pursuing this equity between the
three main islands only through its Strong Republic Nautical Highway which has little
impact on sea freight cost reduction for containerized freight.
4.11. Timely Policy Dissemination
Despite the technology, regulatory agencies including the Bureau of Customs has not
provide timely dissemination issuances or policy updates especially for provincial
areas. Their information systems including their websites are not regularly updated,
that even regional offices, especially at field level, receive delayed updates by as
much as a month after the issuance of new policies.
5 BEST PRACTICES OF LOGISTICS PLAYERS
Shipping Costs and Competitiveness In Northern Mindanao 70
5.1 Exports and Exporters
5.1.1 One Stop Processing Centers
Although the concept of the “one stop” is literally a single venue with collective
agencies to process documents, the realities are not as what is intended. The system
of regulation for commodity clearances are yet to be institutionalized (i.e. regional
heads of regulatory agencies delegating approving authorities posted at the venue). At
present, there are three (3) one stop processing venues in Northern Mindanao at least
for exports namely: the PPA One Stop Processing Center located at the CDO Base
Port, the MCT Terminal Building where most of the shipping lines, the terminal
operator and PHIVIDEC Industrial Authority are housed, and the One Stop Export
Documentation Center located at the DTI Regional office operated by PhilExport-10A.
The purpose is to facilitate export processing for the convenience of shippers.
Though far from the ideal set-up, the various one stop centers has alleviated some of
the problems of shippers and has effectively shorten document processing time.
5.2 Trucking Industry
5.2.1 Water Brakes
Northern Mindanao Truckers practically invented the “Water Brakes” for added
operational safety. Water brakes comprises of a water tank and a series of hoses
with water sprinkles at its end directed at the brake drums of trucks. In traversing
steep inclines, truck drivers will engage the water brakes and spray water on the
brake drums to reduce frictional heat and keep the brakes from overheating. This will
ensure that the brakes will hold once applied.
5.2.2 Twenty-four (24) hour delivery service provision
Truckers cover all major routes along the four corridors and trucking rates are almost
uniform per kilometer except for short distance door to door trucking. There is no
discrimination of cargoes and truckers are willing to provide 24 hour trucking service
with no additional overtime charges.
5.3 Customs Clearing
5.3.1 VASP (Value Added Service Provider)
The Customs Modernization Act allows for electronic filing of customs documents.
EDI services are provided through a proprietary Value-added Network, Direct Trade
input through privately-operated network stations and a privately operated port based
entry and encoding system. BOC uses ASYCUDA ++ and provides for automatic
payment and on-line release of goods to speed up cargo clearance.
The introduction of ASYCUDA World will allow greater use of the Internet for
submission of BOC documents. For most cargoes, the time for cargo clearance will
be reduced to only a few hours.
Shipping Costs and Competitiveness In Northern Mindanao 71
Additional improvements should be realized as BOC develops its enforcement
database and improves its risk management techniques. At present the BOC applies
selective enforcement through three physical inspection procedures:
- Green lane - no inspection of cargo is done other than random sampling
- Yellow lane - inspection of documents only
- Red section - 100% physical inspection of cargo is conducted
Both CDO Port is now implementing the e2m (electronic to mobile) system for import
clearance while MCT will also be adopting such scheme within the year.
5.3.2 Inspection Areas for Imported Items
The Bureau of Customs in partnership with PPA and PHIVIDEC Industrial Authority
have provided inspection areas within the port for free. Unlike in other areas where
inspection sites are located outside of port zones, costs of customs import inspection
are mainly for inspection fees and facilitation services with no additional cost on
handling and trucking to bring containers out of the port zones for inspection.
5.4 Port Management
5.4.1 International Shipping and Port Security (ISPS) Code
Cagayan de Oro Port in response to security codes enforced by the government of
the United States of America for US-bound shipments endeavored to update and
cause the compliance of ISPS code standards. OROPORT the cargo handling
operator spent a substantial amount of funds to effect the segregation of foreign and
domestic cargo and took measures to prevent contamination of all foreign-bound
cargoes. PPA and OROPORT security personnel also attended trainings and
technical sessions on the ISPS Code security procedures and certification.
5.4.2 VOC (Vessel Operations Commitment)
Cargo handlers are made to commit the time it would take to complete vessel
operations and to strive to hit their target. Committed productivity rates shall not be
lower than PPA contracted productivity standards.
5.4.3 Labor Unions
As part of its commitments, PPA requires cargo handling operators to respect
employees’ rights to self organization and mandates it to recognize employees union
for collective bargaining, grievance handling and Labor-Management Councils
(LMCs).
5.4.4 VTS (Vessel Tracking System)
The Mindanao Container Terminal has a VTS installed in its facility but was not
initially made operational due to the unavailability of qualified personnel as well as
Shipping Costs and Competitiveness In Northern Mindanao 72
lack of budget to operate the system. PHIVIDEC Industrial Authority in cooperation
with the Philippine Coast Guard (PCG) was able to seek funds from the AusAid CIQs
grant to put the system in operation. As of February 2010, the VTS is fully operational
and manned by qualified PCG personnel. It effectively directs vessel traffic and
minimize smuggling and enhance safety at the Macajalar Bay.
5.4.5 PPA Port revenues being plowed back for port infrastructure projects
The Philippine Ports Authority (PPA) has devised a mechanism where port revenues
such as those derived from wharfage, are plowed back to fund port infrastructure
projects in the Cagayan de Oro Port. After the completion of the Cagayan de Oro
Port expansion project phase-2 funded by the International Bank for Reconstruction
and Development (IBRD), major infrastructure projects implemented at the port are
funded by PPA funds.
Quay Cranes and various cargo handling equipment were procured by the cargo
handler as part its modernization commitments to PPA as required.
5.4.6 The Port Management Advisory Council (PMAC)
This is a multi-sectoral organization solely for the purpose of addressing port issues.
The members meet periodically in order to advise PPA on prevailing port issues
affecting the port’s various stakeholders.
6. WAY FORWARD
6.1 Institutional Coordination
Shipping Costs and Competitiveness In Northern Mindanao 73
The Philippine Ports Authority and DPWH needs to thresh out some conflicting
policies on truck load limits. The PPA and commercial truck scale operators weight
the whole truck rather than by axle. Clear and updated guidelines that would specify
maximum truck loads should be established by both port and road agencies. Two
identical 10 wheeler trucks but with different wheel base or different axial spacing will
have different axial load distribution. How cargoes are stuffed inside the container
will also influence axial load distribution. For port cargo pick-up, truckers will have no
idea of truck axial load factors.
The two agencies therefore must harmonize their load limit policies to prevent
confusion by shippers and trucking service providers. Truckers and shippers must
initiate this inter- agency coordination and explain industry practices for the
government agencies to consider. ISO laden container weight and international road
construction standards should also be considered in the harmonizing load and weight
policies.
There are other areas in the soft logistics infrastructure where institutional
cooperation may be explored such as the PPA port traffic authorities and the traffic
management group (TMG) of the local government, and the Highway Patrol Group
for better traffic flow at port access.
6.2 Replicable Best Practices
6.2.1 One-Stop Centers
One-stop processing/documentation export centers as in Northern Mindanao may not
be the best models, but surely they provide some convenience as users don’t have to
go to several offices in order to transact business. Improving such facility would
require regulatory agencies to assign permanent at-field level stationed
signing/approving officers at these centers, so that processing can be done at a
much faster phase.
Learning from the power outages that Mindanao is experiencing for the last few
months (and may even continue till third quarter of this year), online transactions
have their limits. Further, linking these one-stop centers may be a good idea in order
to relay and facilitate better and faster processing with or without the Internet for the
convenience of clients.
Currently, there is no formal one-stop center for imports. As such, existing one-stop
centers may be the best center to provide services in clearing imported cargo in
cases when online transactions fail.
6.2.2 BOC’s VASP
While information communications technology (ICT) is strongly gaining ground in
international and domestic transactions, there is still the need to strengthen the
Shipping Costs and Competitiveness In Northern Mindanao 74
Bureau of Custom’s capability to provide service through electronic processing. The
e2m program of the bureau is a novel idea where clients will be able to transact via
their cellular phones and need not use a computer for virtual access.
6.2.3 Maintaining Free Inspection Areas
The Philippine Ports Authority and the PHIVIDEC Industrial Authority are providing a
customs inspection area inside the port at not cost to the Bureau of Customs. This
service should be maintained permanently and the planned relocation of such service
outside the port should not be adopted.
6.2.4 Wharfage Discounts
According to shippers, the 50% discount on wharfage was extended to exporters till
December 31, 2009 by the Philippine Ports Authority and the PHIVIDEC Industrial
Authority. Inasmuch as this is just a small amount, it translated to a regular savings
for those shippers who ship out on a weekly basis. In accordance with Executive
Order 554, this incentive should become permanent.
6.3 Information Drive
Information drives can be done if the necessary information is at hand. The private sector
through PhilExport-10A and the other organizations like the chambers of commerce initiate
such activities on a regular basis to insure effective information dissemination. However,
these private sector groups are still dependent on the availability of policy updates. Perhaps
some level of corporate communications enhancement systems must be established within
government regulatory agencies in order for them to provide timely updates.
6.4 Logistics Training
There is a need to have tertiary academic institutions consider providing training on logistics.
In Northern Mindanao, the College of Commerce of the Liceo de Cagayan University and the
Capitol University provide some topics on “Logistics” in International Trade subjects.
There is also the need to step-up the use of the VASP. Regular training programs may be
designed with BOC and BSOs cooperation to draw a larger circle of users. This will
enhance productivity and improve transparency.
6.5 Business Support Organizations (BSO)
6.5.1 NORMINSA
Shipping Costs and Competitiveness In Northern Mindanao 75
The Northern Mindanao Shippers Association (NORMINSA) is the leading
organization in Northern Mindanao advocating for globally competitive logistics &
cargo transportation system. It advocates for policies that promote the
competitiveness of the logistics and transport system in Mindanao.
The association so far has met little success in its advocacy to reduce transport cost
of Northern Mindanao products for both local and export markets.
Majority of both domestic and export shippers have not joined NORMINSA and
instead rely on individual capability to negotiate for favorable freight rates. Large and
small shippers have diverse interest preventing the creation of a cohesive
organization for mutual benefit such as the reduction of shipping rates.
As in any sector of business, large firms logically enjoy preferential rates in the
logistics chain simply with the assurance of volume and transport frequency. Even
without having to join shippers’ associations, they always get discounts. This is the
segment of shippers that cause the problem of overbooking, which is a common
shipping line complaint.
However, small shippers always get the shorter end of the stick. Discounts enjoyed
by large shippers are recovered from higher rates and surcharges charged against
small shippers.
The development of a strong shippers association cannot be hinged on this treatment
disparity. Small shippers must band themselves together to form another big
shippers’ block which the shipping lines cannot afford to ignore.
Current shipping association leadership are either large shippers or service
providers. Small shippers need to be supported to take leadership roles and should
be supported by government and development agencies. Slot charter agreements
and/or consistent organized bookings and establishment of volume-induced
discounts by small shippers should be undertaken, without which, the leverage
necessary for effective bargaining is not going to be available to them.
6.5.2 PhilExport-10A
As an organization, PhilExport-10A is also in the same boat with NORMINSA.
Meager resources prevent these organizations from making headways on its
advocacies. Several advocacies had been pursued but failed to catch enough
attention to bring about needed reforms.
PhilExport-10A members must realize that the organization cannot be an effective
transformational agent if its members, particularly the small shippers will not take
seriously the organization’s objectives. Payment of minimal membership and
monthly/annual dues is just the first step in achieving the organization’s development
agenda and advocacies. Participation by all members in the chapter’s activities will
bring about a better deal for Northern Mindanao exporters in all the segment of the
logistics chain.
Shipping Costs and Competitiveness In Northern Mindanao 76
A cardinal rule for many exporter/importer working in difficult customs environments.
Implement controls on the outbound end of shipments, to make sure nothing appears
in (or is missing from) the required paperwork, or in the shipping containers
themselves, that will give an opportunistic official the opening he needs to hold up the
clearance. This approach also makes business sense, as it reduces the likelihood of
delay, additional costs, and corruption in the clearance process. The processes must
be rigorous: veterans of the customs trenches can tell you that it takes just one mis-
checked box to hold up valuable goods at a port. A parallel rule exporters/importers
employ is to have their brokers open the containers for review and confirm that all is
in order before attempting to clear the goods.
Shipping Costs and Competitiveness In Northern Mindanao 77
ANNEXES
Shipping Costs and Competitiveness In Northern Mindanao 78
ANNEX 1.1 PhlExport-10A
Shipping Costs and Competitiveness in Northern Mindanao DRAFT STUDY PRESENTATION WITH LOCAL PARTNERS
(a Validation Session) April 6, 2010
Brewberry Café, Cagayan de Oro City Persons Attended
Name Designation/Office/Org 1. Mr. Wilson C. Amad President, PhilExport 10A 2. Mr. Venchito C. Bullecer VP-External, PhilExport 10A 3. Atty. Roswald J. Pague (for Coll. Abedin
Macapasir) District Legal Officer, BOC-CDO District
4. Ms. Carmelita Bajarla (for RED Lealyn Ramos) Senior Specialist, DA - RFU 10 5. Engr. Jaime H. Pacampara (for Dir. Leon
Dacanay) Chief Eco. Devt. Specialist, NEDA X
6. Ma. Estrella Luz R. Peñaloza Sr. Eco. Devt. Specialist, NEDA X
7. Ms. Elvira Garcia (for Mr. Dante Clarito) OIC for Port Operations, PHIVIDEC
Industrial Authority 8. Mr. Napol G. Garcia (for Dir. Sulta Porcawa Dia) Senior Transport Specialist, LTO X 9. Engr. Virgincita Lomoto (for Dir. Jerome Dela
Rosa) Engineer III, DPWH X
10. Ms. Jenneth Balaba (for Mr. J. Rafael Paguio) Project Development Officer, OroChamber 11. Mila Lasquites (for Dir. Alicia Euseña) Senior Trade & Industry Specialist, DTI-10 12. Ms. Heidi Mendoza MBA, LINC-EG, USAID 13. Ms Lynn Sison Transport Adviser, LINC-EG, USAID 14. Mr. Noel M. Tan Project Consultant, PhilExport-10A 15. Mr. Michael Ignacio Exec. Director, PhilExport-10A 16. Ms. Rema Romualdez Technical Staff, PhilExport-10A
Session Highlights Preliminaries by Michael Ignacio
- Did the welcome, introduced participants - Stated the objectives the session
o to validate findings of the study o solicit comments and suggestions for the study
- Presentation by Michael Ignacio (while the presentation was done, comments and questions were accommodated)
o the study’s background, rationale and objectives o study methodology and approaches o Northern Mindanao’s export profile o Costs of exporting from Northern Mindanao o Profile of target respondents and survey highlights
- Presentation by Noel Tan o Logistics conditions of Northern Mindanao o Problem Areas o Issues and Measures o Best Practices of Logistics Players o Recommendations
Shipping Costs and Competitiveness In Northern Mindanao 79
Discussion Highlights (main discussions only) - query as to why transshipment by RORO is not an option for exports
o Mr. Tan thoroughly discussed the RoRo chain and the activities involved as practiced in the Philippines, highlighting the additional costs incurred due which makes it more costly
- Comment on cost of exporting: if possible to show a comparative how much to export
from Cebu and from other areas Mindanao o Study team will look into it as these area have different conditions from
Northern Mindanao - query on what is Terminal Handling Charge and why is it a problem
o Mr. Tan showed the activities involved on THC as well as the rates charged, he also showed how a particular shipping line would charge THC. (please see attached presentation)
- query on the possibility of exporters grouping together in order to get better rates
since shipping lines only favor large companies as they have the volume o Mr. Tan explained that for as long as there is enough volume to negotiate, its
possible, but small exporters hooking-up with a large exporter for volumes might be disadvantageous for the large exporter.
- query on the possibility of exporters grouping together in order to get better rates
since shipping lines only favor large companies as they have the volume. o Mr. Tan explained that for as long as there is enough volume to negotiate, its
possible, but for small exporters to hooking-up with a large exporter for volumes, the rate might increase for the large exporter’s side.
- query as to how come there’s not much of a best practice from Northern Mindanao
and only issues, is it really that bad? o the project team has not yet fully completed the draft, therefore expect for
more to come. - several queries on the problems of domestic shipping including the mention of the
Cabotage Law. o Mr. Tan again, thoroughly discussed the domestic shipping industry and why
the costs are high - comment as to why some exporters only pay php1,000 for bribes while others pay
more. o the project team, again has yet to fully complete the draft, therefore expect for
more to come. Discussions on Recommendations On road projects
– possibility of prioritizing key road sections indicted in the presentation as these the most critical and accident prone
– Some level of compromise should be made since there is the need to also preserve the life of the roads to as much as 25 years (since these were financed with ODA long term loans)
Shipping Costs and Competitiveness In Northern Mindanao 80
On weigh bridges - for DPWH & PPA to agree on weight capacities as they conflict, encouraging
corruption - DPWH weigh bridges to be positioned in areas where trucks be weighed before they
use the road and not after when the damage has been done once overweight - Northern Mindanao very strict with outbound cargo but in-bound/imported cargo are
not weighed upon arrival at the port, and North harbor nor Cebu port do not have weigh bridges.
Prepared and submitted by:
Michael Joseph R. Ignacio Executive Director, PhilExport-10A
Shipping Costs and Competitiveness In Northern Mindanao 81
ANNEX 1.2 Draft Study Presentation with Local Partners
April 6, 2010 Brewberry Café, Cagayan de Oro City
Shipping Costs and Competitiveness In Northern Mindanao 82
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Shipping Costs and Competitiveness In Northern Mindanao 90
ANNEX 3.1 SHIPPER’S SURVEY QUESTIONNAIRE 1. Company Address _____________________________________________________ 2. Industry Sector � Agri/Aquaculture � Processed Food � Wood/Furniture � Industrial � Other, pls. specify: ______________________________________________________ 3. Type of Business � Production � Trading � Manufacturing/Processing � Services � Other (pls. specify): ____________________________________________________ 4. Business Size (total assets less land)
� Micro (up to Php3M)
� Small (Php3M-15M)
� Med. (Php15M-100M)
� Large (Php100M up)
5. Your Position in the company: ___________________________________________ 6. Please provide your recent year’s (2009) transportation logistics costs incurred. Average pre Month Php ____________ Total for 2009 Php_______________ 7. Approximately what percentage of your company's outbound transportation logistics costs is
associated with trucking logistics?
� Less than 10% � 51% - 75% � 10% - 25% � More than 75% � 26% - 50%
8. Approximately what percentage of your company's outbound transportation logistics costs is associated with Sea Freight logistics?
� Less than 10% � 51% - 75% � 10% - 25% � More than 75% � 26% - 50%
9. Do you outsource any of your company's trucking logistics functions? Yes ___ No ___ 10. Do you use only one trucking company? Yes___ No___ 11. Do you regularly canvass for the cheapest trucking rates? Yes___ No___
12. How many trucking service providers does your company patronize? ______________ 13. Evaluate the quality of infrastructure in use for your logistics operations (pls. check): Very high High Average Low Very low Ports Roads and Highway Warehouse Telecom infrastructure & services 14. Overall, logistics costs are (please indicate per product; include additional sheet if necessary): Cost Item (Pls. specify product
here:
Ranking of
Cost*
Cost Per TEU
(Php)
Remarks
Port charges are Trucking rates are Arrastre rates are Stuffing/Stripping rates are
Shipping Costs and Competitiveness In Northern Mindanao 91
Cost Item (Pls. specify product here:
Ranking of
Cost*
Cost Per TEU
(Php)
Remarks
Customs Facilitation rates are Customs brokerage rates are Warehousing/Reefer Plug rates are Port dues (wharfage etc) rates
are
Informal Cost (bribes) are Freight (shipping) rates are
(Destination)
Others, please specify
* 1: Very Low; 2: Low; 3: Average; 4: High; 5: Very High 15. Evaluate the effectiveness and efficiency of the following processes in your international Nearl
y Alway
s Often Some-
times
Rarely Hardly Ever
Are export shipments cleared and shipped as scheduled?
Are import shipments cleared and delivered as scheduled?
Is Customs clearance a transparent process?
Do you receive adequate and timely information when regulations change?
Can Customs declarations be submitted & processed electronically?
Do shippers demonstrating high levels of compliance receive expedited Customs clearance?
16. Evaluate the incidence on your activity of the following constraints in your logistics operation: Nearl
y Always Often Some
-times
Rarely Hardly Eve
r
Delays due to pre-shipment inspection Criminal activities (e.g. stolen cargo) Solicitation of informal payments
17. Evaluate the evolution of the following factors in your country of work, over the past 3 years: Much
Worse
Worse About the
Same
Better Much Better
Customs clearance procedures clearance procedures Quality of transport infrastructure Quality of telecommunications infrastructure Availability of private sector services Regulatory regime Good governance and eradication of
Shipping Costs and Competitiveness In Northern Mindanao 92
Much Worse
Worse About the
Same
Better Much Better
corruption Overall business environment 18. Would you say that your exported products are still competitive? Yes___ No ___ Why? ______________________________________________________________________ ___________________________________________________________________________ 19. Would you say that your products sold in Cebu or Manila are still competitive? Yes___ No ___ Why?______________________________________________________________________ ___________________________________________________________________________ 20. If the average transportation rate you pay increased by 10% percent, would your annual volumes
decrease? Yes ___ No ___ 21. What do you consider to be the most important issues facing shippers today?
a. __________________________________________________________________ b. __________________________________________________________________ c. __________________________________________________________________
22. How did you address these issues? a. __________________________________________________________________ b. __________________________________________________________________ c. __________________________________________________________________
23. Would you say that your export products are still competitive in foreign markets? Yes__ No___ Why?______________________________________________________________________ ___________________________________________________________________________ 24. How far is your plant/factory from the nearest port facility? ____Kilometers. 25. There are only 3 foreign shipping lines servicing Northern Mindanao, is domestic transshipment a
good option for you? Yes ___ No ___ Why? ______________________________________________________________________ 26. Do you use only one shipping line exclusively? Yes ___ No ___ 27. If not, do you canvass for the lowest freight rates? Yes ___ No ___ 28. Is there a difference for you whether your cargoes are shipped via a RORO vessel or via
conventional container carrier? Yes___ No___ Why?_____________________________________________________________________ 29. For Cagayan de Oro to Manila shipment, would more than 72 hours shipping time still be
acceptable for your shipment? Yes ___ No ___ If no, why? ________________________________________________________________ 30. If a shipping line offer lower rates but will take more than 72 hours to get your cargo to Manila,
would that offer be an attractive option for your cargoes? Yes ___ No ___ Why? _____________________________________________________________________ 31. How much is your current freight cost for your export cargo? (Indicate product: ____________________)
40 footer dry - Php___________ 20 footer dry - Php____________ 40 footer reefer - Php_________ 20 footer reefer - Php__________
Others, please specify packing type & cost_____________________________ 32. How much is your total cost to export last year? (Indicate Product_______________________________)
Shipping Costs and Competitiveness In Northern Mindanao 93
40 footer dry - Php___________ 20 footer dry - Php____________ 40 footer reefer - Php_________ 20 footer reefer - Php__________
Others, please specify packing type & cost_____________________________ 33. How much is your current freight cost for your domestic cargoes (e.g. Manila)? (Pls. indicate commodity __________________)
40 footer dry - Php___________ 20 footer dry - Php____________ 40 footer reefer - Php_________ 20 footer reefer - Php__________
Others, please specify packing type & cost_____________________________ 34. How does the Value Added Tax (VAT) on freight affect your business? ___________________________________________________________________________ ___________________________________________________________________________ 35. If VAT is to be removed from shipping freight (only), would that help your business be competitive? Why?______________________________________________________________________ ___________________________________________________________________________ 36. Geographically, where are the majority of your customers located? (encircle one.)
1. Locally (< 200 kilometers)
2. Regionally (< 750 kilometers)
3. Nationally
4. Globally 37. How are your export goods transported? FOB___ CIF___ Others (specify) ___________________________________________________________________ 38. Who nominates the carrier? Buyer ____ Spot Market ____ Others (specify) ___________________________________________________________________ 39. Employment Profile of the Company/Business
Tasks assigned in this level? 1: Supervision; 2: Operations; 3:Clerical
Men Women
Level/Division/Function
Present number of workers
How many are women
workers?
1 2 3 1 2 3 Management Operations Marketing Finance/Admin. Others (specify)
39.1. Has the ratio of women to men workers always been the same? Yes___ No___ 39.2. IF NO: When did the company or business begin hiring more women? (Year)_________ 39.3. What made it decide to employ more women? _________________________________________________________________________
Shipping Costs and Competitiveness In Northern Mindanao 94
ANNEX 3.2 IMPORTER’S & FORWARDER’S SURVEY QUESTIONNAIRE 1. Company Address: ______________________________________________________________ 2. Industry Sector
� Agri/Aquaculture � Processed Food � Wood/Furniture � Industrial � Other, pls. specify: ______________________________________________________
3. Type of Business
� Production � Trading � Manufacturing/Processing � Services � Other (pls. specify): ____________________________________________________
4. Business Size (total assets less land)
� Micro (up to Php3M)
� Small (Php3M-15M)
� Med. (Php15M-100M)
� Large (Php100M up)
5. Please tick one
Phil. Business importing goods from outside the country for processing Phil. Business importing goods from outside the country for sale Freight Forwarding/Logistics Shipping/Shipping Services Customs Broker/Customs Agent Other (please specify):
6. Does your company use your imported commodities as materials for export? Yes __ No __
If so, do you claim duties drawback? Yes ___ No ___ 7. What are the problems encountered with drawback procedures? Please enumerate if any.
___________________________________________________________________________ ___________________________________________________________________________
8. Please list the top 2 most difficult procedures by the following agencies and rank the same Ranking 1: not a problem 5: very serious problem
Agency Import Procedure Rank 1. 1 2 3 4 5
Bureau of Customs 2. 1 2 3 4 5 1. 1 2 3 4 5
Port Authority 2. 1 2 3 4 5 1. 1 2 3 4 5 Arrastre Service
Provider 2. 1 2 3 4 5 1. 1 2 3 4 5 Bureau of Plant
Industry 2. 1 2 3 4 5 1. 1 2 3 4 5
Bureau of Quarantine 2. 1 2 3 4 5 1. 1 2 3 4 5
DENR 2. 1 2 3 4 5 1. 1 2 3 4 5
BIR 2. 1 2 3 4 5 1. 1 2 3 4 5 Others (pls. specify) 2. 1 2 3 4 5 1. 1 2 3 4 5 2. 1 2 3 4 5
Shipping Costs and Competitiveness In Northern Mindanao 95
9. Other than CDO Port and MCT, does your company use other ports to import? Yes __ No __ If yes, please rank the ports per cost, 1: cheap 2: reasonable 3: expensive, 4: very expensive, pls. encircle
CDO Port: 1 2 3 4 MCT: 1 2 3 4 Other Ports: please name the port(s) below
1. 1 2 3 4 2. 1 2 3 4 3. 1 2 3 4 4. 1 2 3 4
10. Does your company use the VASP (spell out) to submit information electronically to customs
systems? Yes ___ No ___ If yes, what are the advantages enjoyed with the system? ____________________________________________________________________ ____________________________________________________________________
11. Would it be possible for you to clear goods through the port within 24 hours of the ship's arrival? Yes ___ No ___
If yes, please specify your expediting practice(s) and any additional cost(s) incurred:
Practice(s) Cost (Php)
12. Are you able to predict the time it takes to clear goods through the port? Yes ___ No ___
13. In the majority cases, do you aim to move the goods out of the port as early as possible without
maximizing the free storage options that ports offer?
� Yes, we try and get the goods out of the port as quickly as possible � No 14. Within the last 12 months, how many days was the longest you ever had to wait for a particular
consignment to complete the regulatory process in the port? _____ days 15. Which was the main agency responsible for the delay?
� Bureau of Customs � Arrastre Service Provider � Bureau of Quarantine
� Port Authority � Bureau of Plant Industry � DENR
� BIR � Others (please specify)
___________________________ 16. Does someone in your company participate in consultations on regulatory matters (e.g. through
port user groups, Customs consultations, Trade Associations or direct response to formal government consultations) Yes ___ No ___
17. Does your company encourage formal training related to import procedures? Yes ___ No ___ 18. In importing, aside from the cost of the commodity imported, which cost component has the
biggest contribution to your total import cost? Please rank with 1 being the highest Activity Rank Est. cost per entry (Php)
Commodity: __________________________________________________________ (please fill up additional sheets provided if more than one commodity) Freight Arrastre Wharfage Dues Port Storage Charges Trucking Customs Duties Value Added Tax Brokerage Facilitation Cost Bribes
Shipping Costs and Competitiveness In Northern Mindanao 96
19. Is there any other information relating to trade procedures that have effected your inward supply chain operations, which you would like to share? Please outline:
______________________________________________________________________ ______________________________________________________________________
20. Your Position in the company: _____________________________________________________ 21. Employment Profile of the Company/Business
Tasks assigned in this level? 1: Supervision; 2: Operations; 3:Clerical
Men Women
Level/Division/ Function
Present number of workers
How many are women
workers?
1 2 3 1 2 3 Management Operations Marketing Finance/Admin. Others (specify) 21.1. Has the ratio of women to men workers always been the same? Yes___ No___ 21.2. IF NO: When did the company or business begin hiring more women? (Year)_________ 21.3. What made your company decide to employ more women? _____________________________
Shipping Costs and Competitiveness In Northern Mindanao 97
ANNEX 3.3. TRUCKER’S SURVEY QUESTIONNAIRE 1. Company Address: ______________________________________________________________ 2. Business Size (total assets less land) � Micro (up to Php3M) � Small (Php3M-15M) � Med. (Php15M-100M) � Large (Php100M up)
3. Type of Registration � For Hire � Nor for Hire � Mixed 4. What exactly is hauled? � General Cargo/Break-bulk � Containerized Commodities:
_____________________________________________________________________ 5. What kind of trucks do you use? (pls. indicate number of units) Prime Mover ______ 10-Wheeler _____ Wing Van ______ 6-Wheeler________
Other (Pls. specify) ___________________________________________________ 6. Are your trucks? � Brand New � Surplus YES NO 7. How far is the average distance do you provide trucking service? ____________________ 8. Any backloads? � � 9. What is the percentage of your backload? ______% 10. Your prevailing trucking rate per kilometer? Gen. Cargo/Break-bulk
Php ____________ Containerized Php ____________
11. What’s the percentage increase of your trucking rate for the last 5 years? _________________________ 12. Do you have any fuel efficiency programs? � � 13. Your trucking operation’s major costs. Please rank according to cost contribution, No. 1 being the highest.
Items Rank Percent to Operations
a. Business permits & Vehicle registration
b. Driver and helper’s Salary
c. Financing cost
d. Franchise fee and regulatory permits
e. Fuel
f. Garage
g. Insurance and inland marine
h. Oil and lubricants
i. Repairs and Maintenance
j. Tires
k. Weigh bridge
Informal costs
l. Road Bribe
m. Port Bribe
Yes No 14. What is your average waiting time for loading? ________________________________________ 15. What is your average waiting time for unloading? ______________________________________ 16. For containerized hauling, what is the common practice? Van Out ____________ Stuffing @ Shipping Co. CY/Port CY___ 17. Are you paid for empty van positioning/repositioning? � � 18. Will it be beneficial if shipping lines establish an Inland Container Yard in
Valencia, Bukidnon? � �
If yes, please explain why:_______________________________________________________ 19. Are you paid in cash for your trucking services? � � 20. Do you give discounts for cash transaction? � �
Shipping Costs and Competitiveness In Northern Mindanao 98
If yes, how much?______%? 21. For regular clients, do you allow credit? � � 22. Are you paid demurrage? � � If yes, how much _________ % of trucking rate per day? 23. Are you paid for empty container returns? � � 24. How would you consider prevailing trucking rates? Expensive____ Fair____ Cheap____ Why? Please explain ____________________________________________________________ 25. Do you assign dedicated trucks to regular customers? � �
26. Please mark a check (√) which province in Northern Mindanao has the best road conditions while
mark an (x) for the worst road conditions ( ) Misamis Oriental ( ) Misamis Occidental
( ) Lanao del Norte ( ) Bukidnon
( ) Camiguin
Please explain: ____________________________________________________________________ _________________________________________________________________________________ 27. Your top 5 road sections most difficult to traverse:
Road Section Why difficult? a. b. c. d. e. 28. What are your recommended solutions to improve road conditions in these areas? - Expensive solution:________________________________________________ - Low cost solution:_________________________________________________ 29. Your top 5 most accident prone areas.
a. ________________________________________________________________________ b. ________________________________________________________________________ c. ________________________________________________________________________ d. ________________________________________________________________________ e. ________________________________________________________________________
30. What are your recommended solutions to improve road conditions in these areas? - Expensive solution:________________________________________________ - Low cost solution:_________________________________________________ 31. Have your trucks ever had accidents? Yes ____ No____ Where?_________________ Cause(s) of Accident_________________________ Fatalities: Yes____ No____ Cause(s) of Accident_________________________ Fatalities: Yes____ No____ Cause(s) of Accident_________________________ Fatalities: Yes____ No____ Cause(s) of Accident_________________________ Fatalities: Yes____ No____ Cause(s) of Accident_________________________ Fatalities: Yes____ No____ 32. What is the state of highway traffic along your routes? Please check
Destination
Origin CDO MCT
Free Flowing
Light Traffic
Heavy Traffic
Bukidnon (via Sayre Highway) � � � � � Talakag, Bukidnon � � � � � Lanao, Iligan, West Misamis Oriental � � � � � Eastern Misamis Oriental � � � � �
Shipping Costs and Competitiveness In Northern Mindanao 99
33. What is the state of city traffic along your routes? Origin Destination Free Flowing Light Traffic Heavy Traffic
Puerto CDO Port � � � Puerto MCT � � � Bulua CDO Port � � � Bulua MCT � � � 34. If traffic and road conditions are improved, which road would you want to use in delivery/ withdrawal of
cargoes from CDO port? Please rank 1 to 5 in terms of strategic importance, number 1 being the highest. Road Rank Road Rank
Agora Road (Valenzuela Street) Corrales Extension Sergio Osmeña Extension Kauswagan - Puntod Bridge* Julio Pacana (Licoan) Gaabucayan Road
*: on the assumption that the CDO 3rd
Bridge (Kauswagan-Puntod) is operational 35. Do any of the following conditions present problems for freight shipments to or from your company
and/or facility? Rate from 1 to 5 (pls. encircle)
1: not a problem 5: very serious problem Please describe the location
Highway Congestion Bukidnon (via Sayre Highway) 1 2 3 4 5 Talakag, Bukidnon 1 2 3 4 5 Lanao, Iligan, West Misamis Oriental 1 2 3 4 5 Eastern Misamis Oriental 1 2 3 4 5 Highway interferences w/ school crossings, public markets, commercial centers
Bukidnon (via Sayre Highway) 1 2 3 4 5 Talakag, Bukidnon 1 2 3 4 5 Lanao, Iligan, West Misamis Oriental 1 2 3 4 5 Eastern Misamis Oriental 1 2 3 4 5 Turning at traffic lights 1 2 3 4 5 Inadequate local streets capacity 1 2 3 4 5 Roadway turning radius 1 2 3 4 5 Insufficient lane width for wide loads 1 2 3 4 5 Insufficient bridge/overpass clearances (height)
1 2 3 4 5
Truck ban restrictions on movement of large and heavy trucks
1 2 3 4 5
Poor truck access to shipping terminals 1 2 3 4 5 Poor reliability due to accidents & incidents Bukidnon (via Sayre Highway) 1 2 3 4 5 Talakag, Bukidnon 1 2 3 4 5 Lanao, Iligan, West Misamis Oriental 1 2 3 4 5 Eastern Misamis Oriental 1 2 3 4 5 Unsafe roadway geometrics Bukidnon (via Sayre Highway) 1 2 3 4 5 Talakag, Bukidnon 1 2 3 4 5 Lanao, Iligan, West Misamis Oriental 1 2 3 4 5 Eastern Misamis Oriental 1 2 3 4 5 Poor reliability due to weather conditions 1 2 3 4 5 Poor Signage(s) 1 2 3 4 5 Other (specify) 1 2 3 4 5 1 2 3 4 5
Shipping Costs and Competitiveness In Northern Mindanao 100
36. What is your title at your company? _______________________________________________ 37. How long (in months) have you been in this position? _________________________________ 38. Geographically, where are the majority of your customers located? (please check)
� CDO � Bukidnon � Iligan � MisOr � Mla/Ceb 39. Do you own all your trailers? � Yes � No If no, how may are rented? ________
40. Do you operate your own garage? � Yes � No 41. Plans of expanding you’re trucking operations? � Yes � No 42. In the next 3 years,
business will be: � Less
profitable � More profitable � No change in
profitability 43. Your top 5 current problems in the port you encountered lately:
CDO Port Mindanao Container Terminal a. a. b. b. c. c. d. d. e. e. 44. Are illegal road/highways bribe (kotong) a major problem for our trucking operations?______ 45. What current government policies and regulations (if any) adversely affect your operations?
a. ________________________________________________________________________ b. ________________________________________________________________________ c. ________________________________________________________________________
46. Your Position in the company: _____________________________________________________ 47. Employment Profile of the Company/Business
Tasks assigned in this level? 1: Supervision; 2: Operations; 3:Clerical
Men Women
Level/Division/ Function
Present number of workers
How many are women
workers?
1 2 3 1 2 3 Management Operations Marketing Finance/Admin. Others (specify)
47.1. Has the ratio of women to men workers always been the same? Yes___ No___ 47.2. IF NO: When did the company or business begin hiring more women? (Year)_________ 47.3. What made your company decide to employ more women? _____________________________
Shipping Costs and Competitiveness In Northern Mindanao 101
ANNEX 3.4 SHIPPING LINE’S SURVEY QUESTIONNAIRE
1. Company Address ( in CDO): ________________________________________ 2. Service (pls. check ): ( ) Domestic Liner ( ) Foreign Liner
3. How many ships do you have calling at: MCT ___ CDO Port ___
4. Vessel Information: Call Frequency
Direct Service Vessel Type
1 Route Origin-Destination (via)
Weekly Monthly Ave. Port Time
Yes No
Ave. Load
Factor (%)
1 2 3 4 5
1Please indicate: 1: Conventional Containerized; 2: RORO; 3: Conventional; 4: Bulker; 5: Others
5. Vessel Capacity Ship Gear
Vessel TEU Reefer Plugs Type No. of Units
1 2 3 4 5
6. Please Provide the Cargo Tariff/Lease Rates. Type of Service
1 Tariff Table or Lease Rate (Php) Vessel
10-FD 20-FD 40-FD 20-FR 40-FR Published Discounted 1 2 3 4 5
1: 10 footer (FCL Dry); 20 footer (FCL Dry); 40 footer (FCL Dry); 20 footer (Reefer); 40 footer (Reefer)
7. Are any of the following conditions present for freight shipments?
Please check for ranking conditions 1: not a problem; 2: slight problem; 3: manageable problem;
4: really a problem; 5: very serious problem Conditions 1 2 3 4 5
Port Berth Congestion Cargo handling productivity Timeliness of vessel departure Port equipment availability Port and berthing facilities Reefer plug availability Truck and trailer availability Container retention by shippers Timeliness of cargo delivery by shippers Timeliness of cargo withdrawal Overweight containers
Shipping Costs and Competitiveness In Northern Mindanao 102
Please check for ranking conditions 1: not a problem; 2: slight problem; 3: manageable problem;
4: really a problem; 5: very serious problem Truck ban restrictions on movement of large and heavy trucks
Poor truck access to shipping terminals Cargo truck queuing area Other (specify)
8. Please provide information on costs in the table below? Please Check for Ranking of Costs
1:very low; 2:low; 3: average; 4: high; 5:very high Cost Item 1 2 3 4 5
Cost (Php)
Remarks
Port charges are
Arrastre charges are
Stevedoring charges are
Quay crane charges are
Wharfage rates are
Port Storage
Port dues (dockage) rates are
Pilotage rates are
Tug service rates are
Trucking rates are
Stuffing/Stripping rates are
Reefer Plug rates are
Weighbridge rates are
Informal Cost (bribes) are
Others (Pls. specify)
9. Have your vessels experienced delays in berthing? Yes___ No___ Vessel type: _____________________________________________________________
Why?__________________________________________________________________
10. Your vessels are currently charged berthing dues based on GRT per day; do you find this system appropriate? Yes___ No___
11. Would you find it appropriate for the port authority to charge berthing dues based on actual space
occupied rather than by GRT basis? Yes___ No___
12. If your vessel arrived at 10PM and departs at 6AM the following day, are you charged an equivalent of two days port dues? Yes___ No___
13. Does your company deem it necessary to operate your own container yard? Yes___ No___
Why?__________________________________________________________________
14. Your position in the Company: ____________________________________________________
Shipping Costs and Competitiveness In Northern Mindanao 103
15. Employment Profile of the Company/Business Tasks assigned in this level?
1: Supervision; 2: Operations; 3:Clerical Men Women
Level/Division/ Function
Present number of workers
How many are women
workers?
1 2 3 1 2 3 Management Operations Marketing Finance/Admin. Others (specify)
16. Has the ratio of women to men workers always been the same? Yes___ No___
17. IF NO: When did the company or business begin hiring more women? (Year)_____________
18. What made it decide to employ more women? ____________________________________________________________________________
Shipping Costs and Competitiveness In Northern Mindanao 104
ANNEX 4.1 MAERSK LINES THC TABLE
Shipping Costs and Competitiveness In Northern Mindanao 105
ANNEX 4.2 LTO FINES AND PENALTIES
FINES/PENALTIES FOR TRAFFIC AND ADMINISTRATIVE VIOLATIONS: APPROVED RATES Violations In Connection With Licenses 1. Driving without License 1,500.00 2. Driving without delinquent of expired license 400.00 3. Driving with suspended or revoked or improper license 1,000.00 4. Failure to carry Driver’s License 200.00 5. Failure to sign Driver’s License 200.00 6. Driving under the influence of liquor. 5,000.00 - and two (2) months suspension of driver’s license 5,000.00 - for the 2nd offense and three (3) months suspension 6,000.00 of driver’s license - for subsequent violations after the 2nd offense 7,000.00 and six months suspension of driver’s license; after 3rd offense automatic revocation of driver’s license 7. Driving under the influence of drugs 10,000.00 8. Allowing an unlicensed/improperly licensed person to drive motor vehicle. 1,000.00 - suspension of plates, registrations and Driver’s License for 2 months 9. Possession and use of fake/spurious Driver’s License 2,000.00 - if the drivers has been issued an authentic license, it shall be suspended for 1 year in addition to the fine - if the driver has not been issued an authentic license, he shall be disqualified, to secure a Driver’s License for a period of two (2) years. 10. Conviction of the driver of a crime using a motor vehicle 3,000.00 11. Student driver operating a MV without being accompanied by a Licensed driver 500.00 12. Unlicensed conductor of a motor vehicle for hire 500.00 13. Operating/driving a motor vehicle which is unregistered/ improperly Registered - if committed by the driver without the knowledge and 2,000.00 Consent of the owner/operator - if the driver is also the processor of the subject motor vehicle 4,000.00 - in both cases the motor vehicle shall be impounded or the plates if any shall be confiscated and shall not be released until properly registered. 14. Operating a motor vehicle with unregistered substitute or 5,000.00 replacement engine, engine block or chassis - the subject MV shall be impounded until such parts are properly registered 15. Failure to carry certificate of registration or official receipt of registration 150.00 16. Operating /allowing the operation of MV with a suspended / 1,000.00 revoked Certificate/Official Receipt of registration. - the subject MV shall be impounded and its plate held during the suspension - in addition to the original suspension the said MV and plates shall further be suspended for two (2) years. 17. Tourist operating or allowing the use of non Philippine registered 5,000.00 Motor Vehicle beyond the 90 day period of his sojourn in the country.
- the MV shall not be allowed to operate by the confiscation of its plates, OR & CR until properly registered.
- in addition, if the driver is a holder of local driver’s license, the same shall be suspended for one (1) month.
Violations in Connection with Number of Plates 18. Motor Vehicle number plates not firmly attached 200.00 19. Obscure plates 200.00 20. License plates different from body number on Public Utility MV 500.00 21. Improper display of a motor vehicle permanent plate 500.00 22. Display/Use of an expired commemorative plates or stickers 2,000.00 23. tampered/ marked plates or stickers 2, 000.00 24. Illegal transfer or use of MV regularly issued MV plates, tags or 10,000.00 stickers except security plates on authorized Motor Vehicle - Owners/Operators are conclusively presumed to have
Shipping Costs and Competitiveness In Northern Mindanao 106
Committed the illegal transfer. - Drivers of MV involved in illegal transfer of plates, sticker shall suffer the suspension of their Driver’s License for three (3) months - if the MV with illegal transferred plates or stickers in used In the commissions of a crime, its owner shall suffer the penalty of 12,000.00 fine and suspension of plates and registration certificate and Official Receipt for two (2) years Violations Relative to Equipments, Parts, Accessories, Devices and Markings of Motor Vehicle 25. Operating MV with metallic tires in any public high ways 5,000.00 26. Defective Brake 500.00 27. Improper/Defective Horn or signaling device 300.00 28. Use or installation of unnecessary lights in front and rear of a 300.00 Motor Vehicle 29. Operating motor vehicle without head, tail, plate and/or brake lights 300.00 30. Without muffler (should insert windshield) 150.00 31. Without wiper 150.00 32. Dirty or unsightly or unsanitary MV 300.00 33. Dilapidated or defective MV 1,000.00 - to hold release of plates until defect is correct 34. Failure to paint or improper painting of authorize route or PUJ 500.00 Filcabs, Shuttle Services, Trucks For Hire, Taxis and similar for For Hire Motor Vehicles operating with fixed routes. - to hold plates until defect is corrected 35. Non painting of business or trade name 500.00 - to hold plates until defect is corrected 36. Use of unauthorized improvised plates 300.00 37. Without or defective hand brakes 200.00 - to hold plates pending correction of defect 38. Without or defective speedometer 200.00 - to hold plates pending correction of defect 39. Without or defective windshield wiper 200.00 - to hold plates pending correction of defect 40. Without rear view mirror 200.00 - to hold plates pending correction of defect 41. Without interior light 200.00 - to hold plates pending correction of defect 42. Without name or business name and address of operator inscribe 500.00 - to hold Plate or OR/CR until defect is corrected 43. Unauthorized use of bell, siren or exhaust whistle 15,000.00 - forefieture of the said gadgets in favor of the government 44. Without functional spare tire 300.00 45. Without red flag or red lights on projecting end of load extending 500.00 more than a meter beyond the bed or body, and in the evening red lights visible at least 50 meters away. 46. Failure to paint plate number on a motor vehicle for hire 500.00 - to be imposed upon the owner/driver 47. Failure to carry Early Warning Device (EWD) 150.00 48. Failure to install EWD 4 meters from the front rear and of 500.00 the stalled motor vehicle - to be imposed upon the owner/driver 49. Without Capacity marking 375.00 - to be imposed upon the owner/driver
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50. Unauthorized installation of jalosies, painted windshield or 600.00 colored windshield. - to be imposed upon the owner/driver 51. Installation of dim/colored lights, strobe lights, dancing lights 600.00 or similar lights - to be imposed upon the owner/driver of the motor vehicles 52. Use or installation of heavily tinted colored/painted windshield or 600.00 or window glass - to be imposed upon the owner/driver sunvizor or light tinted are allowed 53. Without permanent tail gate with inscription “Not for Hire” 500.00 sign in a private jeepney/jitney - to be imposed upon the owner 54. Use/installation of a glaring/stainless object upon at the front 500.00 and/or rear of a motor vehicle - to be imposed upon the owner Weights and Load Limits 55. Load extending beyond the projected width without permit 500.00 - to be imposed upon the driver 56. Axle overloading – an amount equivalent to 25% of MVUC at the 300.00 time of infringement on owner/operator or driver of trucks and trailers for loading beyond their registered gross weight, vehicle weight. The penalty shall be waived for loads exceeding the registered GVW by a tolerance of less than 5%. No motor vehicle shall exceed thirteen thousand five hundred (13,500) kgs. Or the vehicle load exceeds 150% of the maximum allowable gross weight. 57. Operating a passenger truck (bus) with cargo exceeding 160 kgs. 300.00 - to be imposed upon either the driver/operator or conductor 58. Allowing more passengers and/or freight or cargo in excess of carrying 300.00 capacity of MV 59. Baggage or freight carried on top of truck exceeds 20 kgs. Per sq. meter and not distributed in such a manner as not to endanger the passenger or stability of the truck Prohibited or Illegal Operation of Motor Vehicles 60. Out of line 6,000.00 For Operators/Owners: 1st Offense & addt’l P1, 500.00 per day reckoned from the day of apprehension until the case was settled and suspension of registration and/or impoundment of MV for three (3) months 2nd Offense & addt’l P2, 000.00 per day reckoned from the day of apprehension until the case was settled and suspension of registration and/or impoundment of MV for six (6) monts 3rd Offense & addt’l P2, 500.00 per day reckoned from the day of apprehension until the case was settled, revocation of registration and forever banned from applying for a franchise and/or revocation of franchise if franchise holder
Shipping Costs and Competitiveness In Northern Mindanao 108
For Drivers: 1st Offense 250.00 & suspension of DL for three (3) months 2nd Offense 500.00 & suspension of DL for six (6) months 3rd Offense 750.00 & suspension of DL for one (1) year 61. Colorum operation For Operators/Owner: 1st Offense 6,000.00 & addt’l P1, 500.00 per day reckoned from The day of apprehension until the case was Settled and suspension of registration and/or Impoundment of MV for three (3) months 2nd Offense 6,000.00 & addt’l P2, 000.00 per day reckoned from The day of apprehension until the case was Settled and suspension of registration and/or Impoundment of MV for six (6) months 3rd Offense 6,000.00 & addt’l P2, 500.00 per day reckoned from The day of apprehension until the case was Settled, revocation of registration and forever Banned from applying for a franchise and/or Revocation of franchise if franchise holder For Drivers: 1st Offense 250.00 & suspension of DL for three (3) months 2nd Offense 500.00 & suspension of DL for six (6) months 3rd Offense 750.00 & suspension of DL for (1)year 62. Operating a motor vehicle with expired franchise (CPC) Driver 500.00 Operator/owner/possessor of MV per day from the date 1,000.00 of expiry to the date of the CPC - the plate, OR/CR of the subject MV shall be suspended For six months from the date of apprehension to the fines 63. Operating or using a For Hire Motor Vehicle for driver 1,000.00 different from its types of services mentioned in the CPC for operator 3,000.00 - For Hire Motor Vehicles used by the members of the family of the operator, during emergency cases is allowed. 2nd offense and suspension plates, OR, CR for for driver 2,000.00 six (6) months for operator 4,000.00
Shipping Costs and Competitiveness In Northern Mindanao 109
for subsequent offenses and suspension of DL, for driver 3,000.00 plate, OR/CR for one (1) year for operator 5,000.00 Breach of Condition of Franchise and Related Violations 64. Employing insolent, discourteous drivers and conductors 400.00 - to be imposed against the owner/operator/possessor of MV 65. Discourtesy of drivers and/or conductors towards the passengers 500.00 in addition to the suspension of conductor’s/driver’s license for (2) two months 66. Unreasonable refusal to convey passengers 1,500.00 - to be imposed against the driver and/or the operator in addition To the suspension of the license of the driver of the license of the driver for two (2) months. If the operator has knowledge or consent to the infraction committed, the place, OR & CR shall likewise be suspended for two (2) months. 67. Non – issuance of fare ticket for operator 375.00 - to be imposed against the operator and the conductor for conductor 1,000.00 68. Unauthorized use of commercial or trade name 500.00 - to be imposed against the operator 69. Undue preference or unjust/unreasonable discrimination 600.00 against the passenger - to be imposed against the driver aside from the penalty, The license of the driver shall be suspended for two (2) months. 70. Overcharging/Undercharging of fare 750.00 - for the driver or the conductor as the case maybe and suspension of conductors license for two (2) months - the operator shall also be liable for equal fine if found to have Participated thereto and the plate, OR/CR for the same period Stated above. - for each subsequent violation the license of the driver or conductor and/or the plate, OR/CR of the subject MV shall be suspended for three (3) months. 71. Breach of Condition in the CPC except when already penalized under 500.00 any provisions of this circular. Frauds and Falsities 72. Use of fake plates/stickers/pursuant documents 2,000.00 to 4,000.00 - to be imposed upon the owner and/or driver of the subject MV. 73. Misrepresenting a copy of a document pertinent to a motor vehicle 1, 500.00 Before the Traffic Adjudication Service. - to be imposed upon the driver or owner Traffic Violations 74. Parking 200.00 a. within an intersection b. within 5 meters of the intersection c. 4 meter from the driveway entrance d. within 4 meters from afire hydrant e. in front of a private driveway f. on the roadway side of any unmoving or parked MV at the curved way of the highway
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g. at any place where signs of prohibitions have been installed. 75. Reckless Driving 1st Offense 1, 000.00 2nd Offense 1, 500.00 - and suspension of DL for two (2) months 3rd Offense 2, 000.00 - and suspension of DL for six (6) months Succeeding offense 5, 000.00 - and revocation of DL Such as but not limited to the following: a. Disregarding Traffic Signs (Should be “failure to observe traffic signs and signals”) b. Allowing a passenger to top or cover of a motor vehicle except in a truck helper c. Failure to provide canvass cover to cargos or freight of trucks requiring the same d. Permitting passenger to ride on running board, stepboard or mudguard of MV while the same is in motion e. Failure to dim headlights when approaching another motor vehicle f. Driving For Hire motor vehicle in slippers g. Driving in a place not intended for traffic or into place not allowed for parking h. Hitching or permitting a person or a bicycle, motorcycle, tricycle or skate roller to hitch to a motor vehicle i. Driving against traffic – failure to pass to the right when meeting persons or vehicles coming towards him j. Illegal turn – failure to conduct the motor vehicle to the right of the intersection of the highway when turning to the left in going from one highway to another k. Illegal overtaking – failure to pass to the left when overtaking persons or vehicles going the same direction except when there are two or more lanes for the movement of traffic in one direction l. Overtaking at an unsafe distance – failure to pass at a safe distance to the left of another motor vehicle when overtaking that vehicle. m. Cutting an overtaken vehicle – driving to the right side of the highway after overtaking before his motor vehicle is safely clear of such overtaken vehicles. n. Failure to give way to an overtaking vehicle – failure to give way to another vehicle approaching from the rear that wishes to overtake his vehicle when the former has given suitable and audible signal o. Increasing speed when being overtaken – increasing the speed of the motor vehicle before the overtaking vehicle has completely passed. p. Overtaking when left side is not visible or clear of oncoming traffic - driving to the left side of the center line of a highway in overtaking or passing another vehicle proceeding in the same direction where the left side is not clearly visible and is not free of oncoming traffic for a sufficient distance to pass in safely. q. Overtaking upon a crest of a grade – overtaking or passing another vehicle proceeding in the same direction when approaching the crest of a grade r. Overtaking upon a curve – overtaking or passing another vehicle proceeding in the same direction upon a curve in a highway where the driver’s view along the highway is obstructed within a distance of 500 feet ahead. s. Overtaking at any railway grade crossing – overtaking or passing another vehicle proceeding in the same direction at any railway grade crossing. t. Overtaking at an intersection – overtaking or passing another vehicle proceeding in the same direction at any intersection of highways except on a highway having two or more lanes for movement of traffic in one direction where the driver of a vehicle may overtake another vehicle on the right. u. Overtaking between “men working” or “caution” signs – overtaking or passing or attempting to overtake or pass another vehicle proceeding in the same direction between warning or caution signs indicating that men are working on the highway. v. Overtaking at no overtaking zone – overtaking or passing or attempting to overtake or pass another vehicle proceeding in the same direction in any “no passing or overtaking” zone. w. Failure to yield the right of way – failure of the vehicle on the left to yield the right intersection at approximately the same time. x. Failure to yield the right of way – failure of a vehicle approaching but not having
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entered an intersection to yield the right of way to a vehicle within such intersection or turning therein to the left across the line of travel of the first mentioned vehicle when such vehicle has given a plainly visible signal of intention to turn. y. Failure to yield the right of way – failure of the driver of any upon a highway within a business or residential district to yield the right of to a pedestrian crossing such highway within a crosswalk except at intersection where the movement of traffic is regulated by a peace officer or by traffic signal. z. Failure to stop before traversing a “through highway” or railroad crossing – failure of the driver of a vehicle upon a highway to bring to full stop such vehicle before traversing any “through highway” or railroad crossing. a.a. Failure to yield right of way – failure of a vehicle entering a highway from a private road or drive to yield the right way to all vehicles approaching on such highway. a.b. Failure to yield the right of way to ambulance, police or fire department vehicles – failure of a driver upon a highway to yield the right of way to police or fire department vehicles and ambulances when such vehicles are operated on official business and the drivers thereof sound audible signal of their approach. a.c. Failure to yield right of way at a “through highway” or a “stop intersection” – failure of a vehicle entering a “through highway” or a “stop intersection” to yield the right of way to all vehicles approaching in either direction on such “through intersection”. a.d. Failure to give proper signal – Failure to give the appropriate signal before starting, stopping or turning into a direct line. a.e. Illegal turn – failure of the driver of a vehicle intending to turn to the right at an intersection to approach such intersection in the lane for traffic nearest to be right-hand side of the highway and. In turning, to keep as close as possible to the right hand curve or edge of the highway. a.f. Illegal turn – failure of the driver of a vehicle intending to turn to the left, to approach such intersection in the lane for traffic to the right of and nearest to the center line of the highway, and turning , to pass to the left of the center of the intersection except upon highway laned for traffic and upon one-way highway. a.g. Failure to stop motor and notch handbrake of motor vehicle when unattended – failure to turn off the ignition switch and stop the motor and notch effectively the handbrake when parking a motor vehicle unattended on any highway. a.h. Unsafe towing 76. Obstruction – obstructing the free passage of other vehicles on the 200.00 highway while discharging or taking passengers or loading and unloading freight, or driving a motor vehicle in such a manner as to obstruct or impede the passage of any vehicle Violations involving Taxi Units except those already provided in this circular 77. Fast, Tampered, Defective or non operational, Tampered, broken, fake or altered meter seal. - and suspension of DL for three (3) months 1st Offense 3,000.00 - and suspension of DL for four (4) months 2nd Offense 4,000.00 - and suspension of DL for six (6) months; 3rd Offense 6,000.00 DL will be revoked and franchise will be recommended for cancellation For the said infraction, the operator of the subject MV shall be summoned. Upon determination That he is also liable for the said infraction, the plates, OR/CR of the subject MV shall be suspended for the said duration of the suspension suffered by the driver in addition to the fine equivalent to the amount paid by the driver. 78. Tampered, broken, joint, reconnected, fake or altered sealing wire 1, 500.00 - to be imposed upon the driver or owner whoever maybe responsible. The License of the driver or the plate, OR/CR of the MV shall be suspended for one month for the 1st offense. Two (2) months for the 2nd offense and three (3) months for the 3rd offense - after third violation Dl will be revoked and franchise
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Will be recommended for cancellation. 79. Violation of color scheme, adaptation of MV color or design 500.00 without authority - to be impose upon the owner 80. Old meter seal/or loose triplex seal 500.00 - to be impose upon the and/or driver 81. Flagged up meter and/or operating on contractual basis 750.00 - to be impose against the driver. The License of the driver shall be suspended For forty five (45) days 82. No taxi Meter 1, 200.00 - to be imposed against the driver & 1, 200.00 the total amount of - to be imposed against the operator The total amount of 2, 400.00 83. Failure to paint the word “Aircon” 750.00 - to be impose against the operator / Owner only. 84. Unauthorized installation of Aircon 750.00 - to be impose against the operator/owner and driver 85. No Identification Card 150.00 86. No Taximeter light 200.00 87. Failure to provide top light indicating availability 200.00 - to b impose upon the driver and/or owner 88. Failure to print owner/operator’s name, address and/or 500.00 Capacity markings, type of service on taxi units - to be imposed upon the owner/operator or driver Other Non – Traffic Violations 89. Unauthorized installation of aircon on buses 750.00 90. Non painting of the word aircon for buses 750.00 91. Operating aircon MV with defective aircon 500.00 92. Smoke Belching define under RA 8479 - for the 1st offense and to pass the smoke emission test 1, 000.00 - for the 2nd offense and to pass the smoke emission test 3, 000.00 - for 3rd and subsequent offenses and to pass the smoke 5, 000.00 Emission test and to suspend of plates, CR/OR/ Registration of MV for one (1) year 93. Operating a right hand drive motor vehicles 50, 000 .00 94. Failure to Install Seatbelt as defined under RA 8750 1,000.00 95. Failure to wear/unbuckled seatbelt 250.00 96. Allowing child six years old and below on passenger seat 250.00 97. Display of sign board (PUB & PUJ ONLY) without front panel route 500.00 Copyright © 2009 Land Transportation Office LTO Website Comments:
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No fines for overspeeding, beating the red light, illegal u-turn, entering a no entry zone, parking on wrong side of road, double parking, lane violations, road marking violations, tailgating, counter flow violations, motorcycle without helmet, tridem on motorcycle, stopping on pedestrian lanes, parking on crosswalks, over width mudguards, no side mirrors, trucks with no running lights, red light on front of vehicle, green light at rear of vehicle, no reflecting lenses, fleeing the scene of an accident (hit and run), hit and run with fatality, hit and run resulting to injury, failure to report an accident involving damage to property, driving under the influence resulting in injuries, driving under the influence resulting in fatalities, failure to pay traffic fines within a specified period, diplomatic exceptions, ambulance and fire trucks, etc.
The foregoing document is riddled with vague description of violations, construction and grammatical errors, double listing, inconsistent fines, etc. Some violations are subjective and may result to different interpretations. Recommendations: Review and re categorize violations into General violations (licensing, plates and tags, DUI, etc.), , Moving
violations, violations and traffic signs, signals, speed limits, etc., PUJ, Bus and Taxi, Commercial vehicles, Heavy Cargo and articulated Vehicles,
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GLOSSARY OF TERMS AND ABBREVIATIONS 3PL – Third Party Logistics Advance Against Documents
Load made on the security of the documents covering the shipment. Advising Bank
A bank that receives a letter of credit from an issuing bank, verifies its authenticity, and forwards the original letter of credit to the exporter without obligation to pay
All Risk Insurance - Is a clause included in marine insurance policies to cover loss and damage from external
causes, such as fire, collision, pilferage, etc. but not against innate flaws in the goods, such as decay, germination, nor against faulty packaging, improper packing/ loading or loss of market, nor against war, strikes, riots and civil commotions (See Marine Insurance)
All-Risk Clause - Is an insurance provision that all loss or damage to goods is insured except that of inherent
vice (self caused). (See All Risk Insurance). Alongside - A phrase referring to the side of a ship. Goods to be delivered "alongside" are to be placed on the
dock or barge within reach of the transport ship's tackle so that they can be loaded abroad the ship. Arrastre - Cargo handling, port side Authority (formerly the Bureau of Coast and Geodetic Survey) Authority to Load - shall refer to the approval or permission granted by the BOC or its deputized agencies for
the loading of export goods on board the carrier specified in the covering Export Declaration Authorized Shipyard/Repair Operator - refers to a shipyard operator owner or ship repair facility which has
been given recognition/accreditation/permit and has registered with the Philippine Ports Authority/Maritime Industry Authority.
B/B - Break-Bulk Cargo BFAR – Bureau of Fisheries and Aquatic Resources of the Department of Agriculture Berth Liner Service - Is a regular scheduled steamship line with regular published schedules (port of call ) from
and to defined trade areas
Berth or Liner Terms - Is an expression covering assessment of ocean freight rates generally implying that loading and discharging expenses will be for ship owner's account, and usually apply from the end of ship's tackle in port of loading to the end of ship's tackle in port of discharge.
Bill of Lading - A document that establishes the terms of a contract between a shipper and a transportation
company under which freight is to be moved between specified points for a specified charge. Usually prepared by the shipper on forms issued by the carrier, it serves as a document of title, contract of carriage, and a receipt for goods. Also see Air Waybill and Ocean Bill of Lading.
BIR - Bureau of Internal Revenue BOC - Bureau of Customs Bonded Warehouse - A warehouse storage area or manufacturing facility in which imported goods may be
stored or processed without payment of customs duties. BPI - Bureau of Plant industry Berth - Is the place beside a pier, quay or wharf where a vessel can be loaded or discharged CAD - The acronym meaning "cash against documents," a method of payment for goods in which documents
transferring title are given to the buyer upon payment of cash to an intermediary acting for the seller. Cargo - Is merchandise/commodities/freight carried by means of transportation. Cargo Receipt - Is a receipt of cargo for shipment by a consolidator (used in ocean freight).
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Carrier, Common - A public or privately owned firm or corporation that transports the goods of others over land, sea, or through the air, for a stated freight rate. By government regulation, a common carrier is required to carry all goods offered if accommodations are available and the established rate is paid.
Carrier(s) Containers or Shipper(s) Containers - The term Carrier(s) Container(s) or Shipper(s) Container(s)
means containers over which the carrier or the shipper has control either by ownership or by the acquisition thereof under lease or rental from container companies or container suppliers or from similar sources. Carriers are prohibited from purchasing, leasing or renting shipper owned containers.
Cartel - Is an association of several independent national or international business organizations that regulates competition by controlling the prices, the production, or the marketing of a product or an industry.
Cash Against Documents (CAD) - Payment for goods in which a commission house, or other intermediary,
transfers title documents to the buyer upon payment in cash. Cash in Advance (CIA) - Payment for goods in which the price is paid in full before shipment is made. This
method is usually used only for small purchases or when the goods are built to order. CDO - Cagayan de Oro CENRO – Community Environment and Natural Resources Office of the DENR Certificate of Inspection - A document certifying that the goods were in apparent good condition immediately
prior to shipment. Certificate of Manufacture - A statement in which a producer specifies where his goods were manufactured,
certifies that manufacturing has been completed, and confirms that the goods are at the buyer's disposal.
Certificate of Origin - refers to the declaration of the exporter, certified by the BOC that his export complies with the origin
requirement specified under bilateral, regional or multilateral trading arrangements to which the Philippines is a party.
- A statement signed by the exporter, or his agent, and attested to by PhilExport or a local Chamber of Commerce, indicating that the goods being shipped, or a major percentage of them, originated and were produced in the exporter's country.
Certificate of Shipment - shall refer to the document which the BOC or its deputized agencies issues upon
request of the exporter or his duly authorized representative, certifying to the nature of shipment of his export goods (full shipment effected, shut-off or non-shipment)
cbm - Cubic Meter C&F - Cost and Freight CFR/CIF - Terms beginning 'C' are 'Contracts of Dispatch'. They differ from other INCOTERMS as they
segregate the point at which risk and responsibility passes from the point at which costs pass.
Under all other terms, the point of transferring risk and the point at which responsibility for cost is also transferred are simultaneous. With the 'C' terms this is NOT the case.
CFR (Cost and Freight) has a long history and outside of INCOTERMS a definition with consensus is difficult.
As an INCOTERM risk passes from the seller to the buyer when the cargo crosses the ship's rail at the origin port. However, the responsibilities for the costs of transit only pass from the seller to the buyer at the destination port. CFR and CIF are Monomodal expressions used when the main carriage is by sea and both are suited to the use of Bills of Lading. Because the ship's rail is seen as triggering these terms, it is often inappropriate to use either in a modern port and reference should be made to the notes on this subject under FOB. Buyers are disadvantaged with contracts of dispatch. The buyer must take risks for a period of carriage during which the buyer has no means of controlling or limiting those risks. The carrier used; the costs incurred for carriage and the timing of the carriage are all under the seller's control. The buyer must consider this disparity before accepting a C termed contract. From the seller's perspective, the C terms represent exceptional risk-management opportunities and are actively pursued as a consequence.
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CIF (Cost, Insurance and Freight) represents the condition of CFR with the addition of Insurance. This is the first of only two terms that place a compulsory responsibility for insurance on the seller. Under all other terms, the buyer considers insurance as an optional responsibility. (Refer CIP)
CFS (Container Freight Station) - The term CFS at loading port means the location designated by carriers for the
receiving of cargo to be packed into containers by the carrier. At discharge ports, the term CFS means the bonded location designated by carriers in the port area for unpacking and delivery of cargo.
CFS Charge (Container Freight Charge) - The term CFS Charge means the charge assessed for services
performed at the loading or discharging port in packing or unpacking of cargo into/from containers at CFS. CFS/CFS (Pier to Pier) - The term CFS/CFS means cargo delivered by break-bulk to Carrier's CFS to be packed
by Carrier into containers and to be unpacked by Carrier from the container at Carrier's destination port CFS.
CFS/CY (Pier to House) - The term CFS/CY means cargo delivered break-bulk to Carrier's CFS to be packed by Carrier into containers and accepted by consignee at Carrier's CY and unpacked by the consignee off Carrier's premises, all at consignee's risk and expense.
CPT/CIP (Carriage Paid To) - Is the multimodal equivalent of CFR. The named place where the seller's costs end
can be a point other than a seaport (as well as being a seaport), in the buyer's country.
CPT may be used for airfreight, roadfreight and railfreight as well as for seafreight when the ship's rail serves no purpose. E.g. if the destination is an inland point or a modern port with conditions as discussed under FOB. CPT requires the use of multimodal documents and documents such as Bills of Lading or Airwaybills may prove inappropriate in recording the passage of risks under this term. Under CPT, risk and responsibility passes when the cargo is handed to the first carrier (with a carrier defined as either an Actual or Contractual carrier i.e. a Freight Forwarder or Multi Transport Operator could act as 'carrier' as could an airline or shipping line). However, responsibility for costs only transfer when the goods arrive at the stated place where carriage is 'paid to'. The diagram represents this condition with a brace, indicating that the place where carriage is paid to may be any point in the country of destination. The cautions expressed for buyers using CFR are equally applicable to CPT with added complications in that the transfer of risks can begin earlier. If the carrier is collecting the cargo from the seller's premises then the risks of carriage pass to the buyer at that point, while the buyer's ability to control the costs and timing of carriage only pass at the destination point. Although these reservations warrant serious consideration for a buyer, they represent great risk-management opportunities for the seller.
CIP (Carriage & Insurance Paid to) represents CPT with the inclusion of Insurance. The cautions and notes made
regarding CPT equally apply to CIP. Charter - Originally meant a flight where a shipper contracted hire of an aircraft from an airline. Has usually come
to mean any non-scheduled commercial service. Charter Party - The contract between the owner of a ship and the individual or company chartering it. Among
other specifications, the contract usually stipulates the exact obligations of the ship-owner (loading the goods, carrying the goods to a certain point, returning to the charterer with other goods, etc.); or it provides for an outright leasing of the vessel to the charterer, who then is responsible for his own loading and delivery. In either case, the charter party sets forth the exact conditions and requirements agreed upon by both sides.
Charter Party Bill of Lading - A bill of lading issued under a charter party. It is not acceptable by banks under
letters of credit unless so authorized in the credit.
Chassis - A wheel assemble including bogies constructed to accept mounting of containers. Class Rates - A class of goods or commodities is a large grouping of various items under one general heading.
All items in the group make up a class. The freight rates that apply to all items in the class are called class rates.
Classification - Is a customs term. The placement of an item under the correct number in the customs tariff for
duty purposes. At times this procedure becomes highly complicated; it is not uncommon for importers to resort to litigation over the correct duty to be assessed by the customs on a given item.
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Claused Bill of Lading - Is a bill of lading which has exemptions to the receipt of merchandise in "apparent good order" noted.
Clean Bill of Lading - Is a bill of lading which covers goods received in "apparent good order and condition" and without qualification. Clean Draft - Is a draft to which no documents have been attached.
Commercial Invoice - An itemized list of goods shipped, usually included among an exporter's collection papers. Commercial Risk - Risk carried by the exporter (unless insurance is secured) that the foreign buyer may not be
able to pay for goods delivered on an open account basis. Common Carrier - A firm or individual that transports persons or goods for compensation. Conference - A group of vessel operators joined together for the purpose of establishing freight rates.
RORO/Container Vessel - Ship designed to accommodate containers and roll-on roll-off cargo. It can be self sustaining. RORO/Container/Break-bulk Vessel - Designated to accommodate three types of cargo, usually self sustaining.
Confirmed Letter of Credit - A letter of credit, issued by a foreign bank, with validity confirmed by a U.S. bank.
An exporter who requires a confirmed letter of credit from the buyer is assured of payment by the U.S. bank even if the foreign buyer or the foreign bank defaults.
Confiscation - The taking and holding of private property by a government or an agency acting for a government. Compensation may or may not be given to the owner of the property.
Consignee
- Person or firm to whom goods are shipped under a bill of landing. - The individual or company to whom a seller or sipper sends merchandise and who, upon presentation
of necessary documents, is recognized as merchandise owner for the purpose of declaring and paying customs duties.
Consignee Marks - A symbol laced on packages for identification purposes; generally consisting of a triangle,
square, circle, diamond, cross, with letters and/or numbers as well as port of discharge. Consignment - Is the physical transfer of goods from a seller (consignor) with whom the title remains, to another
legal entity (consignee) who acts as a selling agent, selling the goods and remitting the new proceeds to the consignor.
Consignor - A term used to describe any person who consigns goods to himself or to another party in a bill of
lading or equivalent document. A consignor might be the owner of the goods, or a freight forwarder who consigns goods on behalf of his principal.
Consolidated Shipment - An arrangement whereby various shippers pool their boxed goods on the same
shipment, sharing the total weight charge for the shipment. Consolidator - An agent which brings together a number of shipments for one destination to qualify for
preferential airline rates. Consortium - The name for an agreement under which several nations or nationals (usually corporations) of
more than one nation, join together for a common purpose. It could be for management or exploitation of a natural resource, as in the case of some international petroleum consortiums.
Consul - A government official residing in a foreign country, charged with representing the interests of his or her
country and its nationals.
Consular Declaration - A formal statement, made to the consul of a foreign country, describing goods to be shipped.
Consular Documents - Special forms signed by the consul of a country to which cargo is destined.
Consular Invoice - A document, required by some foreign countries, describing a shipment of goods and
showing information such as the consignor, consignee, and value of the shipment. Certified by a consular official of the foreign country, it is used by the country's customs officials to verify the value, quantity and nature of the shipment.
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Container - means any structure so designed to hold and keep articles, materials and products together inside a
hold in the form of boxes, tanks or the like, for singular or unit handling and transport, generally having any internal volume or capacity of not less than one (1) cubic meter. It is further defined according to their uses as dry cargo, refrigerated, liquid bulk, platform, open top, solid bulk, ventilated, etc.
- The term container means a single rigid, non-disposable dry cargo, insulated, temperature controlled
flatrack, vehicle rack portable liquid tank, or open top container without wheels or bogies attached, having not less than 350 cubic feet capacity, having a closure or permanently hinged door that allows ready access to the cargo (closure or permanently hinged door not applicable to flatrack vehicle rack or portable liquid tank). All types of containers will have constructions, fittings and fastenings able to withstand without permanent distortion, all the stresses that may be applied in normal service use of continuous transportation. All containers must bear manufacturer's specifications.
Container Ship - Ocean going ship designed to carry containers both internally and on deck. Some are self
sustaining. Containerization - Is a concept for the ultimate unitizing of cargo used by both steamship lines and air cargo
lines. Containers allow a greater amount of cargo protection from weather, damage, and theft.
Containers (Air Cargo) - Many types of air cargo containers are offered. The containers are designed in various sizes and irregular shapes to conform to the inside dimensions of a specific aircraft. Containers (Ocean) - Are designed to be moved inland on its own chassis and can be loaded at the shippers plant for shipment overseas. Basic types of containers are; dry van, open top, half high, hi cube, flat rock, tank container, refrigerated container, insulated container, tilting container. Average outside dimensions are generally 20, 35, and 40 feet in length, 8 feet wide and 8 feet high standard and 9’6” high cube. Containerized Cargoes - mean cargoes packed in containers for easy handling or transportation of same as a
unit. Customs Bonded Warehouse - Is a warehouse where imported goods may be stored for a total of three years without the payment of duty or taxes. CIIS - Customs Inspection and Investigation Service, Bureau of Customs Customs Tariff - Is a schedule of charges assessed by the government on imported goods. CY (Container Yard) - The term CY means the location designated by Carrier in the port terminal area for receiving, assembling, holding, storing and delivering containers, and where containers may be picked up by shippers or re-delivered by consignees. No container yard (CY) shall be a shipper's, consignee's, NVOCC's, or a forwarder's place of business, unless otherwise provided. DA – Department of Agriculture DAF (Delivered At Frontier) - Is a monomodal (land) expression which should be further qualified by naming the
frontier (border post) up to which the seller is prepared to take responsibility for transport costs and the corresponding risks of transit.
The frontier is deemed to be on the seller's side of the applicable border unless the term is modified to
express that the point of transfer is the frontier on the buyer's side of the border. The seller must clear the cargo through customs on the export side of the border of handover, whereas the buyer must clear the goods through customs on the import side. Because the Frontier falls on the seller's side of the border, DAF can vary from other D terms in that the seller may not be responsible for all or even a part of the main carriage.
For example, if the transit involved the movement of cargo through several frontiers, the seller may pass risk
and responsibility at the first of these, obligating the buyer to arrange the main carriage thereafter. As a land term the application of DAF is for land-based operations and other D terms such as DDU or DDP should be considered if the transaction is not land-based. (i.e. it is not exclusively road or rail or a road/rail combination)
D.W. - Deadweight (tons of 2,240 lbs.)
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Dangerous Goods - Articles or substance capable of posing a significant risk to health, safety or property, and that ordinarily require special attention when being transported.
Decommissioned Vessels - vessels which are not engaged in commercial trade, as certified to by the Marine
Industry Authority (MARINA) or the Philippine Coast Guard (PCG). Demurrage - A penalty for exceeding free time allowed for loading or unloading at a pier or freight terminal. Also
a charge for undue detention of transportation equipment or carriers in port while loading or unloading. DENR - Department of Environment & Natural Resources DES/DEQ - Terms prefixed 'D' are 'Contracts of Arrival' involving the passing of risk and responsibility at the point
where costs also terminate.
DES (Delivered Ex Ship) is Monomodal. Although not triggered by the use of the ship's rail, the point of handover (ship's side, arrived) will be inappropriate in a modern port. The buyer may not be able to take control at a point in a restricted port area. An alternative D term such as DDU might be better suited to represent an achievable point of handover for both parties. DES will often financially correlate to CFR. But, for the buyer DES represents CFR without the disadvantages of placing risks on the buyer, over which they have no control. (See CFR). From the seller's perspective, DES reverses the risk advantages of CFR, placing all risks with the seller until the cargo arrives at the named port. DEQ (Delivered Ex Quay) extends the shipper's responsibility beyond the arrival of the vessel to the point where the goods are discharged. Although not triggered by the use of the ship's rail, the point of handover (landside on the harbour, duty paid) is frequently inappropriate in a modern port environment. The buyer may not be able to take control at that point and an alternative D term such as DDP may be better suited to identify an achievable point of handover between the two parties.
Seller's using DEQ are cautioned that they must be in a position to pay the destination discharge fees both in
physical terms as well as administratively in accordance with any Exchange Control Regulations applicable in the country of Origin.
Caution is appropriate when using D prefixed terms with Documentary Credits as few 'documents' are
geared to record the passing of risks on arrival. DDP (Delivered Duty Paid) - Is a Multimodal term that must be qualified by naming the place to which the seller
is taking responsibility for transport costs and the risks of transit. These risks and costs include the payment of domestic duties in the buyer's country and any ancillary charges associated with the import clearing process at destination.
As with all of the D prefixed terms, this term is not easy to use in conjunction with a Documentary Credit and
in the case of DDP this payment difficulty extends to any form of Exchange document. As a multimodal term, DDP requires the use of Multimodal transport documents over monomodal documents such as Bills of Lading or Airwaybills.
Sellers are cautioned that the payment of foreign duties and taxes may be contrary to the Exchange Control
regulations of their country and that they should seek clarity on this point from their bank or appropriate authority. Equally, both parties should consider VAT if payable in the buyer's country. DDP may be modified to exclude the seller from having to pay a VAT that the buyer could recover directly. If this is not done, the seller's price may include this amount which otherwise could actually be recovered by the buyer. Regulations regarding sellers claiming VAT paid to foreign revenue services vary from country to country, and there is no clear-cut position in this matter. Both parties should seek guidance in this. Additionally, although the seller will pay Duties, the buyer would be named on the import customs entry and will have the obligation to the domestic Customs Authority for the accuracy of the declared tariff headings used and the rates of duty applied. Should these subsequently prove to be incorrect the buyer will have the obligation to bring any under recovery to account.
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DDU (Delivered Duty Unpaid) - Is a Multimodal term that must be further qualified by naming the place up to which the seller is prepared to take responsibility for transport costs (and the corresponding risks of transit). This is excluding the payment of domestic duties and the ancillary clearance charges associated with the import process at destination.
DDU will often financially correlate to CPT. But, for the buyer DDU represents CPT without the
disadvantages of placing risks on the buyer, over which they have no control. (See CPT). From the seller's perspective, DDU reverses the risk advantages of CPT, placing all risks with
the seller until the cargo arrives at the named port. As with all of the D prefixed terms, this term is not easy to use in conjunction with a Documentary Credit and as a multimodal term, would require the use of Multimodal transport documents over any traditional monomodal documents such as Bills of Lading or Airwaybills. Sellers are further cautioned that, if the intended transit is beyond the point of entry in the country of destination, then their ability to move the goods to the final destination may be dependent on the buyer's ability to first clear the goods through the customs authority. The possibility of delays in transit and any resultant storage charges (should the buyer fail to conduct clearance in good time), should be noted. Seller's should be equally aware of additional charges which may be due for payment resultant from local taxes which do not fall into the category of 'duty', but are nevertheless payable prior to release.
DDU (and DDP) correlates closely to the generic expressions of 'free domicile', 'franco domicile' and 'free
house', which are frequently used in the transport industry. Each should be avoided due to their ambiguous nature.
DMA (Dimethylamine) (CH3)2NH Flammable gas with ammonia aroma, boiling at 7°C; soluble in water, ether, and
alcohol; used as an acid-gas absorbent, solvent, and flotation agent, in pharmaceuticals and electroplating, and in de-hairing hides.
Dockage (at Anchorage) - is the amount assessed against a vessel engaged in international or foreign trade,
including those engaged in barter trade, that do not berth but drop anchor at either a government or privately-owned port whether operated exclusively or commercially.
Dockage (at berth) - is the amount assessed against a vessel engaged in international or foreign trade, including
those engaged in barter trade, for mooring or berthing at a pier, wharf, bulkhead - wharf, river or channel marginal wharf at any national port in the Philippines; or for mooring or making fast to a vessel so berthed.
DOF - Department of Finance DPWH - Department of Public Works and Highways DTI - Department of Trade and Industry Domestic Cargoes - are cargoes brought to a pier, wharf or bulkhead to and from a port within the Philippine
waters. Export Declaration - a document required for every shipment of goods, whereby the exporter or his duly
authorized representative declares and certifies the full particulars of the shipment EDI or EDIFACT - Electronic Data Interchange for Administration, Commerce and Transport, from the UN-
backed electronic data interchange standards body, to create electronic versions of common business documents that will work on a global scale. One digital document under consideration, the International Forwarding and Transport Message will do the jobs of six different electronic messages currently in use.
Ex - Signifies that the quoted price applies only at the indicated point of origin (e.g. "price ex factory" means that
the quoted price is for the goods available at the factory gate of the seller).
EXW - Ex works. Same as the former "Ex Works." - Represents the minimum involvement of the seller and the maximum involvement of the buyer in the
movement of the goods from the point of 'works'.
The statement 'EXW' must be qualified to give the address of the 'works', which may be a factory, site or warehouse etc. Care should be taken to note that the actual point of manufacture might well vary from the place where the seller operates their commercial undertaking.
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Under INCOTERMS 2000, risk and responsibility pass from the seller to the buyer when the cargo is made available on the ground at the 'works', at or on the agreed future date or future time, uncleared through customs. The seller must give advance notice of availability (how much notice would have to be predetermined e.g. through the sales contract). This point is important as the buyer assumes liability for all risks from the time of availability on the ground and is therefore exposed from that moment up to the event of collection. During this period, the buyer is liable for all risks to the cargo, even though they are not yet under the buyer's physical control, and this is further aggravated by the fact that the goods are generally uninsured throughout this period too.
The buyer and seller should only consider EXW when the buyer can actually arrange the customs clearing prior to export and for the immediate collection of the cargo on availability. The Seller should note that the export of the goods is NOT guaranteed under EXW and the buyer may, for example, opt to keep the goods in the country of origin. Although EXW is a popular term it remains complex. EXW is rarely compatible with documentary credits (for example) - and the term FCA often offers a more manageable alternative.
Export Cargoes - are cargoes brought to a pier, wharf of bulkhead intended for shipment to a foreign port. FAS (Free Alongside Ship)
- Seller is responsible for inland freight costs until goods are located alongside the vessel/aircraft for loading. Buyer is responsible for loading costs, ocean /air freight and marine/air insurance.
- is Monomodal in that it may only be used for transaction where the main carriage is by seafreight. Note
that the entire journey need not be by sea, but the moment of 'export' must be.
Under this term, which has a considerably long tradition, risk and responsibility pass from the seller to the buyer when the goods are placed alongside a named ship (or a ship operated by a named service) at a named area within a named port. FAS requires the seller to arrange export customs clearing.
The essential aspect of the term is that the vessel is in port prior to the seller delivering the cargo into the port area. However, in many markets, the seller is not allowed into the harbour area. Even if the seller can enter the port area, most operations involve the placing of cargo into a berth where the vessel in question is intended to arrive, as opposed to it having physically docked prior to the arrival of the cargo. Thus the vessel comes to the cargo rather then the cargo coming to the vessel.
There are significant risks associated with the older seafreight terms (such as FAS, FOB, CFR/CIF etc) specifically with regard to the transport documents issued. Careful consideration should be given to the appropriate section of the official INCOTERMS 2000 text dealing with 'proof of delivery'. In many cases, the modern documents issued by lines may present risk-management complications to the seller when using such an old term as FAS. The use of this term in the charter and bulk markets is attractive as an alternative to many of the traditional chartering terms that are often subject to unique definitions from country to country - or even between ports within one country.
FAK - Freight All Kinds - uniform charging scale applying to a number of commodities; as opposed to SCR
(Specific Commodity Rate) applying to one commodity only. FCA (Free Carrier) - Defines the conditions under which many sellers and buyers actually transfer risks. FCA
must be qualified by both naming the place where risks and responsibilities pass from the seller to the buyer and by identifying the carrier the buyer has appointed.
FCA requires the seller to take responsibility for risks and costs up to this handover, including export
customs clearance. It is important to consider that the nature of the carrier being used, and the various points of transfer that different modes of transport may involve, are subject to extreme variables. It is common that the transport used to deliver or handover is a different than the actual transport to be used for the main carriage (e.g. collected by road for an airfreight export). The term may well involve detailed instruction to make such distinctions and it should be noted that multimodal transport documents better serve this term than traditional documents such as Bills of Lading or Airwaybills.
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For deep-sea transactions, FCA represents an excellent alternative to FOB, which is inappropriate in most modern port operations. However, under FCA the seller hands over risks/control of the cargo at a point prior to the vessel, frequently prior to the port. Although this reflects the physical condition of much seafreight trade conducted using 'FOB'; it is a departure from the commoner financial interpretation of 'FOB'. This normally obligates the seller to pay for the origin handling/loading and/or stowage charges raised by the port.
Under FCA, these charges are for the buyer's account. If this is not acceptable, the term may be modified to represent the passage of FCA risks with 'FOB' costs. FCA may involve the carrier collecting from the seller or the seller delivering to the carrier, dependant on the conditions of the sales contract.
F&D - Freight and demurrage
FOB (free on board) - Seller is responsible for inland freight and all other costs until the cargo has been loaded on the
vessel/aircraft. Buyer is responsible for ocean/air freight and marine/air insurance. - is one of the commoner trade terms in use. Yet this 'common' aspect of the term has resulted in the
myriad definitions found all over the world for FOB. Some of these directly contradict others, and many are supported by domestic legislation making such definitions unique to a specific country or port.
In defining FOB as an INCOTERM, it is expressed as being Monomodal and it can only be used for transactions
where seafreight is the main carriage. Therefore, as an INCOTERM, there is no application for FOB in road, rail or air transport. Under INCOTERMS 2000, risk and responsibility pass from the seller to the buyer when the goods pass over the (named or unnamed) ship's rail at the (named) port of loading, cleared for export by the seller. For FOB to apply, the seller must be in the physical position of being able to load the cargo over the rail under their own direct control i.e. the loading is undertaken by the seller's own labour, or by an agent that is under the contractual control of the seller. Further this process would have to be monitored by both the seller and buyer or their representatives. Generally, from the modern deep-sea export perspective, this control often cannot be achieved as the seller is either not allowed into the harbour area or, even in those extreme circumstances where they are, they have no influence over the party loading the vessel. The INCOTERM FOB still has an application in some markets, but these are more and more in the minority. Note that the use of an 'on-board' Bill of Lading or mate's receipt could be appropriate in recording the passage of risks under FOB making FOB one of the few terms still unavoidably dependant on such documents.
FOD - Free of damage
FPA - Free of Particular Average (Marine Insurance Term). A term used in marine insurance policies to indicate
that while the underwriter is unwilling to assume liability for ordinary partial losses due to the peculiar qualities of the particular article or to its form of package, he is willing to bear partial losses, the direct result of stranding, sinking, burning, collision, or other named peril
Foreign Transshipment Cargo - refers to any article arriving at the port from a foreign port or place and destined for shipment to another foreign port.
Forwarder, Freight Forwarder, Foreign Freight Forwarder - An independent business that dispatches
shipments for exporters for a fee. The firm may ship by land, air, or sea, or it may specialize. Usually it handles all the services connected with an export shipment; preparation of documents, booking cargo space, warehouse, pier delivery and export clearance. The firm may also handle banking and insurance services on behalf of a client.
Free Alongside - Quoted price includes the cost of delivering the goods alongside a designated vessel.
Free In (F.I.) - Cost of loading a vessel is borne by the charterer Free In and Out (F.I.O.) - Cost of loading and unloading a vessel is borne by the charterer.
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Free Out (F.O.) - Cost of unloading a vessel is borne by the charterer. Free Port - A port which is a foreign trade zone, open to all traders on equal terms; more specifically a port where merchandise may be stored duty-free, pending re-export or sale within that country.
Free Storage Period - means the period allowed for any article, baggage and/or container to be stored in any
port premises, cargo sheds and warehouses of the Authority without the payment of storage fee. Freight Forwarder - An individual or company , acting on the behalf of a shipper, who arranges all necessary
details of shipping and documentation for a manufacturer or exporter, which includes employing the services of a carrier of carriers.
Full Container Load (FCL) - means a container loaded with cargoes belonging to a single consignee and/or
covered by only one Bill of Lading. FCL - Full container load, full car load G.R.Wt./G.W. - Gross Weight
Gang/Workgang - Group of stevedores usually 12 members with supervisor assigned to a hold or portion of the
vessel being loaded or unloaded. GRT - refers to the gross registered tonnage of the vessel. General Breakbulk Cargo - means those that are listed in a number of bills of lading, each consisting of different
commodities. These include but are not limited to bagged cargoes, crates, cylinders, cases, baskets, bales, rolls, drums and such other like or similar types of packing including vehicles, live animals, crated or uncrated fowls such as chicken, ducks and the like and other loose cargoes.
Gross Weigh - Entire weight of goods, packing, and container,, ready for shipment. Hatch - The cover of - or opening- in the deck of a vessel, through which cargo is loaded.
Heavy Lift Vessel - Specifically designed to be self sustaining with heavy lift cranes, to handle unusually heavy and/or out-sized cargoes. Heavy Lifts - Freight too heavy to be handled by regular ship's tackle
Hub - A central location to which traffic from many cities is directed and from which traffic is fed to other areas.
Hundredweight (cwt.) - A short ton hundredweight = 100 pounds. Long ton hundredweight = 112 pounds. Husbanding - Term used by steamship lines, agents, or port captains who are appointed to handle all matters in assisting the master of the vessel while in port to obtain bunkering, fresh water, food and supplies, payroll for the crew, doctors appointments, ship repair, etc.
Import Cargoes - are cargoes coming from a foreign country to a pier, wharf or bulkhead by vessel coming from
a foreign port. Irrevocable Letter of Credit - A letter of credit with a fixed expiration date that carries the irrevocable obligation
of the issuing bank to pay the exporter when all of the terms and conditions of the letter of credit have been met. ISO - International Standards Organization also referred to as the International Organizational for Standardization.
Just-In-Time (JIT) - The principle of production and inventory control in which goods arrive when needed for
production or use. Knock Down (KD) - An article taken apart, folded or telescoped in such a manner as to reduce its bulk at least
33 1/3% below its assembled bulk. Knot (Nautical) - The unit of speed equivalent to one nautical mile, or 6,080.20 feet per hour or 1.85 kilometers per hour.
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L & D - Loss and damage L.C.L. - Less than container load
L/C (Letter of Credit) - A document issued by a bank per instructions by a buyer of goods, authorizing the seller
to draw a specified sum of money under specified terms. Issued as revocable or irrevocable. Lay-up areas - The areas designated by PPA for vessels that are laid-up. These are identified by the
corresponding coordinates (latitudes and longitudes) in the Nautical Chart produced by the Mapping and Resource Information
Laid-up vessels - vessel which have been decommissioned or otherwise unemployed and idle while waiting for
better business prospects for their operations or when so authorized by the Authority. Lay-up Fee - is the amount levied against vessels engaged in domestic trade which are temporarily authorized to
lay-up and anchor at designated lay-up areas. LCL Container (Less Container Load) - refer to containerized cargoes owned by or belonging to more than one
shipper/consignee and / or covered by more than one bill of lading. Less than Truck Load (LTL) - Rates applicable when the quantity of freight is less than the volume or truckload
minimum weight. Letter of Credit (L/C) - A document issued by a bank at a buyer's request honoring debt obligations to the seller upon receipt of the document. Letter of Credit - payment by sight draft - The exporter receives guaranteed payment from the confirming bank in the U.S. upon presentation of the sight draft and documents required by the letter of credit.
Lighter - An open or covered barge equipped with a crane and towed by a tugboat. Used mostly in harbors and inland waterways.
Lighterage - The cost of loading or unloading a vessel by means of barges alongside.
Liner - The word "liner" is derived from the term "line traffic" which denotes operation along definite routes on the basis of definite, fixed schedules; a liner thus is a vessel that engages in this kind of transportation, which generally involves the haulage of general cargo as distinct from bulk cargo.
Liquidation - The finalization of a customs entry. Livestock - Common farm animals Lkg. & Bkg. - Leakage and breakage. Lo/Lo - The acronym meaning "lift-on,lift-off," denoting the method by which cargo is loaded onto and discharged
from an ocean vessel, which in this case is by the use of a crane. Load Factor - Capacity sold as against capacity available, expressed as a percentage. Ltge. - Lighterage LUNAC – brand name of an Oleic Acid MCT - Mindanao Container Terminal M/T - Metric Ton (2204 lbs.) M/V or M.V - Motor vessel Manifest - A list of the goods being transported by a carrier. Marine Insurance - An insurance which will compensate the owner of goods transported overseas in the event
of loss which cannot be legally recovered from the carrier. Mark - As used on containers in foreign trade, a symbol or initials shown together with the port of importation and
the final destination, if different. Example A.G. y Cia., Bogota via Barranquilla. Marks are registered at appropriate customs houses; they also appear on bills of lading and invoices. In domestic trade, it is
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common to mark containers with the name and address of the recipient, but this is rarely done in foreign trade.
Marking - Every article of foreign origin, or its container, imported into the United States shall be permanently
marked in a conspicuous place in a manner which would indicate to the ultimate purchaser the English name of the country of origin of the article.
Mate's Receipt - Receipt of cargo by the vessel, signed by the mate (similar to dock receipt).
Measurement Ton - The measurement ton (also known as the cargo ton or freight ton) is a space measurement,
usually 40 cubic feet or one cubic meter. The cargo is assessed a certain rate for every 40 cubic feet or 1 cubic meter it occupies.
MFN - (Most Favored Nation) Designation for countries which receive preferential tariff rates. This is no longer the best tariff structure available.
MMA (Mono-Methyl Amine) - Colorless gas with the strong, fishy, ammonia-like odor characteristic of amines.
Methylamine is a raw material for N-methylpyrrolidone and also for carbamate insecticides and other carbamate-based products. Relatively smaller quantities are converted to alkylalkanolamines, surfactants and explosives.
Min. B/L - Minimum bill of lading MRL (Minimum Residue Level) – minimum quantity of pesticides in agricultural products like fruits and
vegetables mt./mty – Empty MW - Minimum weight factor Minimum Charge - it is the least amount of payment due from port users based on prescribed rates. NEDA - National Economic and Development Authority N n.e.m. - Not elsewhere mentioned (English) n.e.s. - Not elsewhere specified N.O.E. - Not otherwise enumerated N.O.H.P. - Not otherwise herein provided N.O.I. - Not more specifically described N.O.I.B.N. - Not otherwise indicated by number; Not otherwise indicated by name. N.O.S. - Not otherwise specified N.T. - Net tons NVOCC (Non-vessel operating carrier carrier) - An F.M.C. registered cargo consolidator of small shipments in
ocean trade, generally soliciting business and arranging for or performing containerization functions at the port. These carriers issue their own bill of lading referred to as a house bill of lading.
Net Terms - Free of charters' commission Net Weight - (Actual Net Weight) Weight of goods alone without any immediate wrappings; e.g., the weight of
the contents of a tin can without the weight of the can. Non-Tariff Barriers (NTB) - Economic, political, administrative or legal impediments to trade other than duties,
taxes and import quotas
O.D. - Outside diameter O.R. Det. - Owner's risk of deterioration
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O.r.b. - Owner's risk or breakage. O.R.F. - Owner's risk of fire or freezing O.R.L. - Owner's risk of leakage O.R.W. - Owner's risk of becoming wet O.S. & D. O/N - Order notify; own name O/o - Order of O/R - Owner's risk Ocean Bill of Lading - A receipt for cargo in transit, and a contract between the exporter and an ocean carrier
for transportation and delivery of goods to a specified party at a specified foreign destination. Issued after the vessel has sailed and the cargo has been entered in the ship's manifest.
Open Account - A high-risk trade arrangement in which goods are shipped to a foreign buyer without guarantee
of payment. Open Policy - A cargo insurance policy that is an open contract; i.e., it provides protection for all an exporter's
shipments afloat or in transit within a specified geographical trade area for an unlimited period of time, until the policy is cancelled by the insured or by the insurance company. It is "open" because the goods that are shipped are also detailed at that time. This usually is shown in a document called a marine insurance certificate.
Original Equipment Manufacturers (OEM accounts) - Customers who incorporate the exporter's product into
their own merchandise for resale under their own brand names. PPA - refers to the Philippine Ports Authority P.A. - Particular average P.W. - Packed weight Pallet - Load carrying platform to which loose cargo is secured before placing aboard vessel. Perishables - Any cargo that loses considerable value if it is delayed in transportation (Usually refers to fresh
fruit and vegetables). PENRO – Provincial Environment and Natural Resources Office of the DENR Phytosanitary Inspection Certificate - A certificate issued by government indicating that a shipment has been
inspected and is free of harmful pests and plant diseases. Pilferage - As used in marine insurance policies, the term denotes petty thievery, the taking of small parts of a
shipment, as opposed to the theft of a whole shipment or large unit. Many ordinary marine insurance policies do not cover against pilferage, and when this coverage is desired, it must be added to the policy.
Pilotage Rates - fee paid to a harbor or river pilot ; manual navigation or controlling of a ship Port Authority - A government body (city, county or state) which in international shipping maintains various
airports and/or ocean cargo pier facilities, transit sheds, loading equipment warehouses for air cargo, etc. Has the power to levy dockage and wharfage charges, landing fees, etc.
Port Charges - refer to port dues, dockage at berth, dockage at anchorage, usage and lay-up fees, wharfage,
storage fees assessed on the vessel/cargo. Port Dues - is the amount assessed against a vessel engaged in foreign trade based on its total GRT or part
thereof, including those engaged in barter trade for each entrance into and departure from a port of entry in the Philippines.
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Private Port - for purposes of the 1994 Port Tariffs Rates application, a private port is a port duly registered with the PPA and which is owned and operated exclusively or commercially by a private person or entity catering to its own cargo or cargoes owned by third parties.
Port of Discharge - Port where vessel is off loaded and cargo discharges. Port of Entry - A port at which foreign goods are re-admitted into the receiving country.
Port of Loading - Port where cargo is loaded aboard the vessel lashed and stowed
Power of Attorney - A document that authorizes a customs broker to sign all customs documents on behalf of
an importer.
Pre-Advice - Preliminary advice that a letter of credit has been established in the form of a brief authenticated wire message. It is not an operative instrument and is usually followed by the actual letter of credit.
Prepaid Freight - Generally speaking, freight charges both in ocean and air transport may be either prepaid in
the currency of the country of export or they may be billed collect for payment by the consignee in his local currency. However, on shipments to some countries freight charges must be prepaid because of foreign exchange regulations of the country of import and/or rules of steamship companies or airlines.
Pre-Slung Cargo - Cargo shipped already in a cargo sling or net. Usually prepared and loaded at pier ready for
arrival of vessel and subsequent loading (i.e. coffee in bags, coconut shells, etc). Price Quotation/Proforma Invoice - An invoice prepared by the seller in advance of shipment that documents
the cost of goods sold, freight, insurance, and other related charges. It is often used by the buyer to secure a letter of credit, an import license or a foreign currency allocation.
Prima Facie - Latin, "on first appearance." A term frequently encountered in foreign trade. When a steamship
company issues a clean bill of lading, it acknowledges that the goods were received "in apparent good order and condition" and this is said by the courts to constitute prima facie evidence of the conditions of the containers; that is, if nothing to the contrary appears, it must be inferred that the cargo was in good condition when received by the carrier.
Pro Number - A number assigned by the carrier to a single shipment, used in all cases where the shipment must
be referred to. Usually assigned at once.
Proforma - When used with the title of a document, the term refers to an informal document presented in advance of the arrival, or preparation of the required document, in order to satisfy a customs requirement.
Proof of Delivery - Add-on service in express market, delivered either by phone or courier. Often offered free.
Quay Crane Charges – a fee paid in using the waterside platform that runs along the edge of a port or harbor,
where boats are loaded and unloaded. Queuing area - form of waiting line Rebate - A deduction taken from a set payment or charge. As a rebate is given after payment of the full amount
has been made, it differs from a discount which is deducted in advance of the payment. In foreign trade, a full or partial rebate may be given on import duties paid on goods which are later re-exported.
Reciprocity - A practice by which governments extend similar concessions to one another.
Red Clause Letter of Credit - A letter of credit that allows the exporter to receive a percentage of the face value of the letter of credit in advance of shipment. This enables the exporter to purchase inventory and pay other costs associated with producing and preparing the export order.
REFG. - Refrigerating; Refrigeration Regs. - Registered Tonnage Retaliation - Action taken by a country to restrain its imports from another country that has increased a tariff or
imposed other measures that adversely affects the firsts country's exports. RORO (ROLL ON-ROLL OFF) - Direct drive on/drive off wheeled vehicles on specially-designed sea-going
vessels.
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Revenue Tonnage - means 1,000 kgs or 1.1326 cubic meters (40 cu. Ft.) whichever yields the greater amount of revenue.
S. & F.A. - Shipping and forwarding agent.
S.I.T. - Stopped in Transit S.L. & C. - Shipper's Load and Count S.L. & T. - Shipper's Load and Tally
S.O.L. - Ship Owner' Liability S.R. - Shipping Receipt Sanitary and Health Certificate - A statement signed by a health organization official certifying the degree of
purity, cleanliness, or spoilage of goods, and the health of live animals. Self-Sustaining - Vessel has its own cranes and equipment mounted on board for loading/unloading. Used in
ports where shore cranes and equipment are lacking. Shipment - Freight tendered to a carrier by one consignor at one piece at one time for delivery to one consignee
at one place on one bill of lading. Shipper's Export Declaration - A form required by the Treasury Department and completed by a shipper
showing the value, weight, consignee, destination, etc., of export shipments as well as Schedule B identification number.|
Ship's Manifest - An instrument in writing containing a list of the shipments comprising the cargo of the vessel. Ship's Tackle/Ships Gear - All rigging, etc., utilized on a ship to load or discharge cargo. Shut-out Cargoes - are cargoes brought to the premises, cargo sheds and warehouses of the government,
wharf or bulk-head for export or domestic shipment which are not loaded on the intended carrying vessel provided that such carrying vessel has actually docked.
Sight Draft - A draft payable upon presentation to the “drawee”. Compare date draft and time draft. Single Entry Charter - A non-scheduled flight carrying the car Stevedoring - cargo handling, ship side Storage Charge - is the amount assessed on articles, baggage and containers for storage in the port premises,
cargo shed and warehouses of the government. Stowage - The lacing of cargo in a vessel in such a manner as to provide the utmost safety and efficiency for the
ship and the goods it carries. Surety Bond - A bond insuring against loss or damage or for the completion of obligations. Stuffing Report - contains the description of goods to be shipped, number of containers and seal, size of the van Stuffing and Stripping.
- the packing and unpacking of containers - We take care of the loading and unloading of your goods, regardless of size and shape and whether
they arrive loose, wrapped or unwrapped, palletized, crated etc Tally Sheet - List of cargo, incoming and outgoing, checked by Tally clerk on dock. Tare Weight - The weight of the container and/or packing materials only - excluding the weight of the goods
inside the container. Tariff - A general term for any listing of rates, charges, etc. the tariffs most frequently encountered in foreign
trade are tariffs of the international transportation companies operating on sea, on land, and in the air; tariffs of the international cable, radio, and telephone companies; and the customs tariffs of the various countries, which list goods that are duty free and those subject to import duty, giving the rate of duty in each case. There are various classes of customs duties.
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Temperature Controlled Cargo - Any cargo requiring carriage under controlled temperature TEU - Twenty foot equivalent unit of one shipper. Third Party Cargoes - refer to cargoes not owned by the private pier owner/wharf owner/operator. THC - Total Handling Charge TL - Truckload
Ton - Freight rates for liner cargo generally are quoted on the basis of a certain rate per ton, depending on the
nature of the commodity. This ton, however, may be weight ton or a measurement ton.
Ton-Deadweight - Indicates the carrying capacity of the ship in terms of the weight in tons of the cargo, fuel, provisions and passengers which a vessel can carry.
Ton-Displacement - The weight of the volume of water which the fully loaded ship displaces. Ton-Registered - Indicates the cubical contents or burden of a vessel in tons of 100 cubic feet. The space within
a vessel in units of 100 cubic feet. Trade - A term used to define a geographic area or specific route served by carriers. Tramp - A tramp is a vessel that does not operate along a definite route on a fixed schedule, but calls at any port
where cargo is available. Transferable Letter of Credit - A letter of credit that allows all or a portion of the proceeds to be transferred from
the original beneficiary to one or more additional beneficiaries. Transshipment - The transfer of a shipment from one carrier to another in international trade, most frequently
from one ship to another. In as much as the unloading and reloading of delicate merchandise is likely to cause damage, transshipments are avoided whenever possible.
Truckload - Truckload rates apply where the tariff shows a truckload minimum weight. Charges will be at the
truckload minimum weight unless weight is higher.
Trust Receipt - Release of merchandise by a bank to a buyer for manufacturing or sales purposes in which the bank retains title to the merchandise.
Transit Cargo for Export - refers to any article arriving at any domestic port from another domestic port or place
and destined for reshipment to a foreign port. Usage Fee - the amount assessed against a vessel engaged in domestic trade for berthing, for making fast to a vessel so berthed or for mooring at an anchorage area. Valuation Charges - Transportation charges assessed shippers who declare a value of goods higher than value
of carrier's' limits of liability.
VASP - Value Added Service Provider VAT (Value-Added Tax) - A sales or consumption tax which the end user pays. Typically, this is a "hidden" tax,
added to the list price of the goods in question. Ves. – Vessel Volume Weight - Used when calculating air freight when the size of the carton is greater than the average
weight, calculated by multiplying the length times the width times the height and dividing by 166.
Vessel for Drydocking - refer to vessels or watercrafts intending to undergo dry-docking/ repair as required by the Classification Society or other government agencies.
Vessel in Distress - a vessel which has suffered engine trouble, marine accident or has met a typhoon or other
natural calamities or disasters during its voyage that forced her to call at the port for repair, medical help or shelter.
Vessels for strapping - refer to vessels or watercrafts which are no longer seaworthy to undertake voyage and
are eligible only for breaking up.
Shipping Costs and Competitiveness In Northern Mindanao 130
W. & I. - Weighing and Inspection W.G. - Weight guaranteed W.P.A. - With Particular Average W/M - Weight and/or measurement W/R - Warehouse receipt Warehouse Receipt - A receipt of commodities deposited in a warehouse, identifying the commodities
deposited. It is non-negotiable if permitting delivery only to a specified person or firm, but it is negotiable if made out to the order of a person or firm or to a bearer. Endorsement (without endorsement if made out to bearer) and delivery of a negotiable warehouse receipt serves to transfer the property covered by the receipt serves to transfer the property covered by the receipt. Warehouse receipts are common documents in international banking.
Warehouse- to-Warehouse - A clause in marine insurance policy whereby the underwriter agrees to cover the
goods while in transit between the initial point of shipment and the point of destination, with certain limitations, and also subject to the law of insurable interest. When it was first introduced, the warehouse-to-warehouse clause was extremely important, but now its importance is diminished by the marine extension clauses, which override its provisions.
Weight - (a) Gross - The weight of the goods including packing, wrappers, or containers, internal and external. The total weight as shipped (b) Net - The weight of the goods themselves without the inclusion of any wrapper (c) Tare - The weight of the packaging or container (d) Weight / Measurement Ton - In many cases, a rate is shown per weight/measurement ton, carrier's option. This means that the rate will be assessed on either a weight ton or measurement ton basis, whichever will yield the carrier the greater revenue. As example, the rate may be quoted on the basis of 2,240 pounds or 40 cubic feet or of 1 metric ton or 1 cubic meter (e) Weight Ton - There are three types of weight ton; the short ton, weighing 2,000 pounds; the long ton, weighing 2,240 pounds; and the metric ton weight 2,204.68 pounds. The last is frequently quoted for cargo being exported from Europe.
Weight Load Factor - Payload achieved as against available, expressed as a percentage. Cargo is frequently limited by volume rather than weight; load factors of 100% are rarely achieved.
Weight, Legal - Net weight of goods, plus inside packing.
Wet Lease - An arrangement for renting an aircraft under which the owner provides crews, ground support equipment, fuel and so on (of dry lease).
Wharfage
- A charge assessed by a pier or dock owner against the cargo or a steamship company for use of the pier or dock.
- is a charge on all cargoes, whether containerized or not coming in/going out or transhipped through a port on the basis of the total metric or revenue tonnage whichever is applicable.
X Heavy - Extra Heavy
X Strong - Extra strong XX Heavy - Double extra heavy XX Strong - Double extra strong Sources: PPA, DTI, BOC, Shippers, Truckers
Shipping Costs and Competitiveness In Northern Mindanao 131
ACKNOWLEDGEMENT
The Study Team wishes to thank and acknowledge the following: Cagayan de Oro Chamber of Commerce and Industry Foundation, Inc. Mr. Jaime Rafael U. Paguio Ms. Lordilie S. Enjambre Ms. Jenneth Balaba
Cagayan de Oro City Council Hon. Ian Mark Lacaya, Chair, Committee on Transport and Utilities Hon. Roger Abaday, Councilor, Cagayan de Oro City 1st District Confederation of Philippine Exporters Foundation Region 10A Chapter, Inc. Ms. Marlene M. Camat Mr. Wilson C. Amad Mr. Venchito C. Bullecer Ms. Vivian B. Libao Mr. Arturo D. Mercader Mr. Emmanuel C. Soloria Mr. Artemio A. Cruz, Jr. Department of Agriculture Regional Field Unit-10 RED Lealyn A. Ramos Ms. Honey Gladys A. Valledor Ms. Carmelita Bajarla Ms. Hyacinth Flores Department of Finance – Bureau of Customs (DOF-BOC) Atty. Abedin P. Macapasir Ms. Bellarmine C. Valencia Atty. Roswald J. Pague Mr. Santiago Arrabaca, Jr. Mr. Lowell L. Medija Department of Public Works & Highways-10 Dir. Jerome Dela Rosa Engr. Virgincita Lomoto Department of Trade and Industry -10 Dir. Alicia V. Euseña ARD Linda O. Boniao Ms. Liza M. Alcanzar Ms. Emelia A. Lasquites Mr. Nelson N. Catubig Ms. Lodie M. Cadiz Department of Transportation and Communication - Land Transportation Office-10 Dir. Sulta Porcawa Dia Mr. Napol G. Garcia Department of Transportation and Communication - Maritime Industry Authority-10 Dir. Marianito D. Mendoza Department of Transportation and Communication - Philippine Ports Authority Engr Efren B. Bollozos Mr. Reynaldo B. Lumbay Ms. Lolita A. Cabanlet
Engr. Isidro Butaslac, Jr.
Shipping Costs and Competitiveness In Northern Mindanao 132
ETX Trucking Services Mr. Edilberto Tiu Filipinas Port Services, Inc. Mr. Jose Puentespina Loadout TLC Mr. Matildo Helia (Truck Driver) Lorenzo Shipping Inc. Mr. Francisco Descallar
Manila North Harbor Port, Inc. Mr. Ferdinand Inacay MCC Transport Corp. Mr. Edward Peña Mindanao International Container Terminal Services, Inc. Mr. Rafael G. Lauron Mr. Jose Mari G. Fernandez Nathan and Associates, Inc. - LINC-EG Program Mr. Rafael G. Evangelista, Jr. Ms. Lynn Sison Ms. Heidi Grace Mendoza National Economic and Development Authority-10 Dir. Leon M. Dacanay, Jr. Engr. Jaime H. Pacampara Ms. Estrella R. Peñaloza
Oriental Port and Allied Services, Inc. (Cebu City) Eng’r. Emmanuel Perrales OROPORT Cargohandling Services, Inc. Mr. Franklin U. Siao
Mr. Rey Cababaros Mr. Lorimer Moralda PHIVIDEC Industrial Authority Mr. Dante F. Clarito Ms. Elvira Garcia
Portmizer, Inc. (Makati City) Mr. Aris Ramos Quiltrans Prime Carrier Mr. Bartolome Quilab Mr. Jobert Jumawan (Truck Driver) Solid Shipping Lines Mr. Mar Ybañez Stinis (Manila) Mr. Cris Ayonon
Shipping Costs and Competitiveness In Northern Mindanao 133
Online and Other References - A new approach to handling charges by Willy Lin, Chairman - Hong Kong Shippers'
Council
- Asia-Australia Discussion Agreement (AADA)
- Australian Competition and Consumer Commission (ACCC)
- Bureau of Customs Website
- Bureau of Internal Revenue - Tax Information & Value Added Tax
- Calls to Abolish Terminal Handling Charges Intensify in Indonesia
- Cebu Ports Authority
- Confederation of Truckers Association of the Philippines (CTAP)
- European anti-trust legislation
- European Union, the Competition Directorate-General of the European Commission
- Federation of ASEAN Shippers’ Councils (FASC) held a meeting with the Intra-Asia
Discussion Agreement (IADA) on 27 April 2004 in Singapore on the Terminal
Handling Charge (THC).
- Kluwerlaw 2009
- Land Transportation Office (LTO) Website
- Light Rail Transport Authority
- Liner Shipping & EU Competition Law
- Manila North Tollways Corporation
- Metro Pacific Tollways Corporation
- Metro Rail Transit Authority
- Philippine Ports Authority
- Philippine Shippers Bureau
- Port Calls
- Presentations and Materials from the Mindanao Logistics Conference 2009
- Province of Bukidnon Official Website
- Shippers in the greater China area attack surcharges, rates, cartels and conditions of
carriage
- South Harbor, Manila
- Sun Star Cagayan de Oro
- THC Advisory, Maersk Lines
- The ASEAN Senior Transport Officials Meeting (STOM)
- The Shippers' Voice - June 30, 2009 ⋅
- Xinhua News Agency – CEIS 2005
Shipping Costs and Competitiveness In Northern Mindanao 134
Ofelia Elanea D.
Chaves
(Technical Staff)
Rema Weena C.
Romualdez
(Technical Staff)
THE STUDY TEAM
Project Manager
(Michael Joseph R. Ignacio)
LINC-EG
Project Adviser
(Lynn M. Sison)
Project Consultant
(Noel M. Tan)
Project Admin
(Carina B. Sumugat)