August 19th, 2014

Manila's ports (de)congested

The problem that has been plaguing Manila's ports since the beginning of this year is slowly starting to ease up, much to the relief of all affected and involved.

State-run Philippine Ports Authority (PPA) claims that they have now taken control of the situation, thanks in part to the toned-down rhetoric between the local government and the private sector.

In a recent report published by GMA Network (one of the country's leading news agencies), it mentions that last August 6th, Senators Francis Escudero and Paolo Benigno Aquino IV asked for a Senate probe on the worsening state of the two major ports in Manila.

The Manila International Container Terminal (MICT) and Manila South Harbor currently have a backlog of 73,500 container vans. There is also a backlog of 12,000 twenty-foot equivalent units (TEU) of empty containers – down from the previous 22,000 TEUs.

GMA also reports that the government's Cabinet Cluster on Port Congestion is also finding ways of decongesting the ports, including the opening up of additional empty container depots with close proximity to Manila's ports, such as a 10-hectare empty lot inside the CCP Complex to temporarily house empty containers bound to be collected by the international shipping lines.

The Office of The President of the Philippines has also approved incentives for shipping companies calling at the Port of Batangas in a bid to decongest Manila's ports.


The congestion was alleged to have been caused "mainly by the daytime truck ban imposed by Manila Mayor Joseph "Erap" Estrada in February of this year. The policy banned cargo trucks from main roads from 5am to 9pm, causing a backlog in deliveries to and from the ports."

Many speculate and believe, however, that the source of the problem lies much deeper in the system, and encompasses far more than what the talking heads of mass media and politics have been proclaiming.

In one of its reports, GMA News reveals that the problem is "actually rooted on lack of planning and foresight to accommodate the economic boom in the past ten years.

The Philippine economy has grown at an average rate of 5 to 5.5 percent over the past decade, according to British banking giant Hong Kong Shanghai Banking Corporation (HSBC) Limited.

Last year, the Philippine gross domestic product grew by 7.2 percent from 6.8 percent in 2012, reflecting Asia's second fastest growing economy next to China."

"The robust economic growth was driven by the manufacturing and services sector," the Philippine Statistics Authority (PSA) said.

Further to the statement of the PSA, Philippine exports have been reported to have increased in June by 21.3 percent to $5.444 billion from $4.490 billion a year ago.

The June performance brought the six-month tally to $29.809 billion, an 8.3 percent increase from $27.515 billion last year.

Socioeconomic Planning Secretary Arsenio Balisacan remarks on the statistics - "the export gains are broad-based, as reflected by increased overseas demand for manufactures, mineral products, agro-based, and forest products. This also indicates that the global economy is ready for a strong recovery."

"Our overall outlook for Philippine merchandise exports continues to be optimistic in view of favorable expectations on the global economy for the rest of 2014, particularly on the growth prospects of advanced countries such as the USA and the Euro Area," said Balisacan.


"As businesses thrive amid the growing economy, more cargoes will definitely pass through the seaports," Sergio Ortiz-Luis Jr., Philippine Chamber of Commerce and Industry (PCCI) chairman, told GMA News Online on Thursday.

"Ten years ago, the PCCI warned of a port congestion taking place," he said.

"About five years ago, we asked the Bureau of Customs (BOC) to bid out the empty containers that have been piling up in the Manila ports, but nothing happened," said Ortiz-Luis who is also president of the Philippine Exporters Confederation (PhilExport).

"To resolve the port congestion, government must fast-track the transfer of empty containers to other under-utilized ports," Ortiz-Luis said. He noted that the process is way too time consuming, and that the best way to move containers is not by using trucks, but by using barges instead.

Earlier this month, Trade Secretary Gregory Domingo said government "is taking measures to ease congestion but it may take a month to decongest the ports. The measures include transferring empty container vans to the ports of Subic and Batangas and opening BOC warehouses during weekends."

This past Wednesday, Manila port operators spent P14 million to ship 3,000 container vans to Subic. "If the port congestion is not resolved quickly, it will have a domino effect on prices of goods, business sentiment and economic growth," economists said.

"Problems are starting to pile up, that's why government should act quickly," Ortiz-Luis said to GMA News Online.


While a final solution is still up in the air, the good news is that the problem is coming from a good place. The country's growth numbers are strong, and are not expected to slow down anytime soon. With a steady improvement in port management, the country will - hopefully and eventually - be able to leverage the full potential of its import/export numbers for continued economic growth.