The domestic shipping industry has expressed concern over the government’s plans to allow foreign players to participate in inter-island shipping, which would have a negative impact on national security as well as the livelihood of local shipowners.
Paul Rodriguez, president of Asian Marine Transport Corp., said domestic shipping has been at the forefront in delivering essential cargoes during the pandemic, and yet it has to face another blow if foreign shipping lines would be allowed to enter the local industry.
“Our concern for the future, among ship industry players in the upcoming revision of the Public Service Act, which is pending in the Senate. The Cabotage law will be opened up. We believe Filipino shipowners can handle the inter-island trade business. No need for foreigners to come in and we know our trade. Foreigners will just be here to take advantage of the Philippine islands,” Rodriguez said.
Cebu-based- Asian Marine Transport operates Super Shuttle RoRo, which provides shipping services for inter-island passengers and cargoes. It is the largest ship-tonnage owner and operator in the Philippines, serving 32 ports of call.
Rodriguez said the entry of foreign players would hurt Filipino shipowners, especially those who already invested on their ships. He said shipping is capital-intensive.
“Filipino ship owners cannot easily acquire brand new or young vessels because the capital is high. You can’t just amortize in long terms. The advantage of foreign ships is the availability of capital,” he explained.
“If Filipino shipowners would vanish because of uncompetitiveness with foreign ship-owners, in the event of calamities or emergencies, we’re not sure if foreign shipowners would be around to help the communities,” he said.
He said they wanted to modernize the ships, but no banks would want to have a long-term financing unlike in Japan and European countries that have long-term bank financing for ships.
Rodriguez said domestic shipping has continued with its operations despite low volumes, as factories were closed in the past months. They remained committed in helping the government move the necessary cargoes, transporting overseas workers, and essential workers.
“Local shipowners have extended all support to the community, by giving them lifeline support. They moved the basic essentials and carried sick person from island province to the mainland.
“It’s not [profit-motived], but it’s more of Bayanihan spirit. We help the island provinces. It’s not the priority of foreign ship owners once there’s a calamity,” he added.
He said great economies like Japan, Korea, and the United States, have never opened up Cabotage because of national security and economic reasons.
He also asked to unbundle the shipping fees to see the real cost. Based on their study, the
land cost or trucking is expensive than sea freight. He added that shipping lines were also burdened by high terminal fees, collected by port operators.
Maritime Industry Authority (Marina) Administrator Vice –Admiral Robert A Empedrad said allowing foreign ships to ply here would be beneficial to the public and would enhance competition. But, he maintained that they wanted to stay the 60 -40 rule on ownership.
“We support the foreign competition and the 60-40 rule must stay. We allow competition with foreign shipping but, the ships would be majority-owned by Filipinos,” Empedrad said.
Despite the achievement of the industry in the past years, domestic shipping lines continue to use smaller and even older vessels in transporting cargo, which was uncompetitive compared to those used by foreign counterparts.
Empedrad said that was the reason why they have to modernize the domestic shipping, particularly the RoRo fleet and declare wooden hull as obsolete.
“There’s a parallel action on how we can improve the capability of domestic shipping, ship repairs, and shipbuilding. We need the intervention of government in lowering taxes, improving the materials needed in shipbuilding, lowering the cost of fuel, and many factors to reduce the cost in order to encourage domestic shipping to grow. They need to modernize. There should be parallel intervention from the government to stimulate economic activities in domestic shipping,” he said.