The seven-month-long port congestion cost local and foreign businesses at least $500 million, according to estimates made by the European Chamber of Commerce of the Philippines (ECCP), which enjoins the government to implement reforms to avoid more losses, as the peak season for port activity draws near.
Michael Raeuber, president of the ECCP, disclosed his cost estimates for both port-congestion surcharges and trucking rates during the gridlock at Manila’s ports, in a bid to give a better picture of the damage the logjam has cost to exporters and importers.
“Just due to the surcharges, we have a damage of a minimum of $166 million. Subic is not considered nor Batangas. What is also not considered here are other surcharges that other shipping lines have imposed, such as container imbalance surcharges and the like,” Raeuber said.
The average port-congestion surcharges per twenty-foot equivalent unit (TEU) was pegged at a conservative $119.55, based on fees imposed by 11 shipping lines.
The volume that was handled by both Manila International Container Terminal and the South Harbor for at least six months of the peak of congestion was at 13.94 million TEUs, according to official data from the two port operators. Multiplying the volume with the surcharge cost would translate to $200 million.
On the trucking rates, Raueber estimated that an additional $418 million were incurred by businesses in the nine months that the Confederation of Truckers Association of the Philippines increased rates by a minimum of P10,000.
The total trucking cost was estimated from the number of TEU traffic from the March-to-December period, which was at roughly 2 million TEUs, multiplied by $200, representing the increase in trucking rates.
“From the number of containers and known increases of the trucking rates, we have another $418 million. I just took the average increase at $200, or P 10,000, which is conservative, as rates have actually tripled. P10,000 is roughly the increase of trucking rates just from the port area to Calabarzon,” Rauber added.
In sum, tallying the conservative estimates for both trucking rates and congestion surcharges based on only a handful of shipping lines, the cost to business was already at $500 million.“If an economist were to compute this and get a more holistic study, it would be much, much more,” Raeuber said.
With the numbers reflecting substantial damage to businesses, the ECCP hopes the government would consider carefully its strategy in the coming months when port activity is expected to pick up anew.
“Putting the numbers on the table hopefully will send the message that the government must take this seriously; they must help to see to it that this situation does not come back. The situation has stabilized because it is the low season,” said Henry Schumacher, ECCP vice president for External Relations.
The ECCP is pushing a list of reforms, crafted together with other foreign chambers, to prepare for the increase in the flow of goods around May to June.
Among the short-term reforms are putting an end to the midnight gate-pass expiration at Manila container ports, implementation of a 24/7 vehicle-booking system in picking up cargo from the ports, and moving illegal businesses and informal settlers near the port area to maximize the space.
For the long term, the foreign chambers want to see a master plan for the expansion of the port of Subic and the port of Batangas, an access road system from Cavite to Manila ports, and a broad strategy to incentivize businesses to relocate to other development areas outside of Luzon to spread the flow of traffic.
The Department of Trade and Industry, which is part of the Cabinet Cluster on Port Congestion, announced over the weekend that selected shipping lines have withdrawn their port-congestion surcharges and truckers have reduced their rates, as a result of easier movement of cargo at the ports and competition among truckers, respectively.
The ECCP will be having a meeting with concerned stakeholders in the private sector and in the government at the end of April, to discuss the looming heavier flow of goods at the ports come midyear, and air its recommendations anew.
