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CPBRD Discussion Paper

Congressional Policy and Budget Research Department


House of Representatives

Learning from the Manila Port Congestion


By Ricardo P. Mira

Issue No. 1 - May 2015

Learning from the Manila Port Congestion

CPBRD

Congressional Policy and Budget Research Department


House of Representatives
Batasang Pambansa, Quezon City, Metro Manila
Tel. Nos. 931-60-32 or 931-93-92
Website: http:www.cpbo.gov.ph

The views and opinions in this report do not necessarily reflect the perspectives of the House of Representatives as an
institution or its individual Members.

Learning from the Manila Port Congestion*


By Ricardo P. Mira

One of the most pressing challenges facing the Philippines today is the congestion problem in Metro

Manila. Infrastructure development in the country has not kept pace with rapid urbanization and the increasing
demand for infrastructure services. Last year, the imposition of the truck ban magnified the congestion problem
not only at the Port of Manila but also in the entire National Capital Region. This has disrupted normal
port operations causing significant delays in sending out exports and releasing imports. Although the truck ban
has been lifted in September 2014, various factorse.g. Christmas holiday rush, Papal visit in the country in
January 2015, etc.have exacerbated the port congestion problem and the ensuing transport bottleneck with the
concomitant ramifications on the whole expected to make a dent on the growth of the economy. Despite the recent
pronouncement by government officials that Manila port operations have been back to normal, critics claimed that some
backlogs remain and key reform challenges necessary to avert the same problem in the future are yet to be made.

This paper seeks to draw lessons from the said port congestion. It delves into the factors leading to the

crisis, effects on the market, as well as the proposals to mitigate the problem. At the policy front, it is important to
highlight the need to formulate a comprehensive national transport policy, a long-term policy framework aimed at
achieving an integrated and well-coordinated national transport plan.

The Truck Ban and the Port Congestion


The Port of Manila (POM) is an important node in the supply chain especially for the growing
manufacturing sector in Luzon. More than 70% of container traffic in terms of twenty-foot
equivalent units (TEUs) in the country is cornered by the POM (Figure 1). In 2013, about 45.4%
of import- and 35.5% of export-cargo throughput (in metric tons) for Luzon were channeled
through the POM.
Vibrant ports are catalysts for progress because they hasten the flow of goods in the market.
Hence, efficient movement of freight is essential in ensuring the sustainability of the supply chain
of many industries necessary for economic growth. Despite the long-time implementation of the
truck ban in major thoroughfares in Metro Manila by the Metro Manila Development Authority
(MMDA), the problem of congestion was brought to the fore by the Manila port congestion,
which peaked some time in the second semester of 2014.
* This paper benefited from the discussions with Director Manuel P. Aquino, Director Dina de Jesus-Pasagui and CPBRD
Acting Director General Romulo E.M. Miral, Jr. Ph.D.

Learning from the Manila Port Congestion

In February 2014, the City Government of Manila issued Ordinance No. 8366 which banned
trucks from plying its city roads from 5 am to 9 pm every day, except on Sundays and holidays. The
truck ban was Manilas answer to the internal traffic jam in the city, which was said to have caused
businesses and the public around P30 billion in economic losses per day (Cruz 2014).
According to critics, the Manila truck ban aggravated the situation creating even more chaos than
order. While the truck ban eased traffic in Manila, cargoes piled up at the POM. The restricted
road access for trucks adversely affected the natural flow of cargoes in and out of the POM.
Delays in the unloading of international vessels increased container inventory resulted to slower
yard production and higher vessel dwell time and caused undue strain on port resources. Truck
turnaround worsened affecting the normal delivery of supplies and aggravated traffic along major
roads. In short, the whole domino effect led to a breakdown in road logistics cycle, which disrupted
the supply chain especially in Metro Manila area (Perez 2015). What was once a local traffic problem
turned into a national economic concern of crisis proportion.
Figure 1. Container Traffic (In TEUs)
Port of Manila versus Other Ports in the Philippines
.

Source of basic data: ADB Key Indicators for Asia and the Pacific 2013

Despite the lifting of the truck ban in September 2014 through Executive Order No. 67, the port
congestion have been exacerbated by the influx of cargoes in anticipation of the Christmas season
and series of events including the Papal visit in January 2015. At the height of this port congestion
problem, industry experts have devised some measures or indicators in determining the magnitude
of the port congestion problem, as follows:

Congressional Policy and Budget Research Department

1. Yard Utilization Rate. Utilization rate refers to the percentage of the terminals available
space occupied by the shipping containers. According to the Philippine Ports Authority
(PPA), container yard utilization in the POM jumped from 47% to 110% between February
and May 2014. An ideal level of utilization is around 75% to 80% (PPA 2014). Container
terminals, as a rule of thumb, reduce production capability when yard utilization edges up
75%. Thus, utilization rate of 90% and above for months during the port congestion is
unprecedented.
2. Flow Rate of Containers and Port Productivity. Movement inside the POM became
extremely difficult as the release of containers had been significantly reduced to about
3,500 TEUs to 3,900 TEUs daily at the height of the congestion from an average of
5,000 TEUs to 6,000 TEUs daily prior to the truck ban (Hoad 2014).1 Meanwhile, port
productivity or the number of container movement inside the ports was likewise reduced
from 25 moves an hour to only 15 moves in the case of the International Container
Terminal Services, Inc. (ICTSI), and 10 moves per hour from 20 moves per hour in the
case of the Asian Terminal Inc. or ATI (Macairan 2014).
3. Dwell Times. According to Hoad (2014), the dwell timesthe amount of time a
container remains at the port after discharge from the vessel to pick up at the gate by the
truckis 6 to 7 days under normal operating environment. Following the truck ban, the
dwell time stuck at 13 to 15 days because many importers have used the ports as warehouses
rather than a transit zone. In August 2014, ATI had approximately 8,000 TEUs with dwell
times between 7 to 29 days, and another 4,000 TEUs with dwell times above 30 days or
those defined as overstayers by the Bureau of Customs (BOC).
4. Number of Queuing Vessels. The number of ships waiting in anchorage at any given
time for port berths to be able to unload their cargoes has reached about 30 vessels from an
average of about 8 to 10 vessels during summer. Given the seven-month implementation
of the truck ban, a total of 37,000 Manila-bound TEUs have reportedly piled up in the
ports of Hong Kong, Singapore, and Kaoshiung in Taiwan. Foreign shipping lines, i.e.

As cited by Kritz, Ben D. and Periabras, Rosalie in Manila Ports Congestion: Symptom of a Bigger Mess, Manila
Times, 21 September 2014.
1

Learning from the Manila Port Congestion

Hapag Lloyd, Hanjin Shipping and American Presidents Line, have even temporarily
pulled out their vessels from calling at the POM due to the long queuing for berthing as
well as the difficulty of shipping out empty containers (Bayos 2014).

Other Contributors
Aside from the backlog at the POM as a result of the 7-month implementation of the truck ban
in Manila, the following factors also contributed to the port congestion:
Anti-Colorum Truck Campaign. In June 2014, the Land Transportation Franchising
and Regulatory Board (LTFRB) and the Land Transportation Office (LTO) issued the
joint administrative order (JAO) 2014-01 which imposed a fine of P200,000 for operators
of unregistered or colorum trucks/trailers-for-hire.2 Relatedly, the LTFRB also issued a
regulation barring trucks at least 15 years old from securing a franchise. Under this policy,
about 75% of the trucks in the country would be phased out (Port Users Confederation
2014). In effect, the new regulations have worsened the scarcity of trucks and trailers that
could carry, pick up and deliver cargo containers from the ports to regional markets.
Table 1. Comparative Number of Registered Trucks, ASEAN
(In Thousands)
2008
2009
2010
2011
2012

Indonesia
4,452
4,498
4,688
4,959
5,286

Malaysia
909
936
966
998
1,032

Philippines
296
312
318
329
342

Singapore
156
158
158
160
160

Thailand
772
791
817
853
898

Vietnam
398
476
552
597
651

Source of basic data: ADB Key Indicators for Asia and the Pacific 2013

Comparative data in the Association of Southeast Asian Nations (ASEAN) show that the
Philippines has consistently been the second lowest in the number of registered trucks
from 2008 to 2012, only higher than Singapore (Table 1). Comparing the data from the LTO
and LTFRB, out of the 358,445 trucks in the country, around 44,996 have franchises; and
of the 40,145 trailers trucks, only 7,936 have franchises (LTFRB 2014). The lack of trucks
and trailers to handle cargoes obviously does not bode well especially with the coming of

A colorum truck/ trailer refers to those with green plate instead of the yellow plate used by public utility vehicles.
This means that these trucks should not be hired to carry cargo of third party.
2

Congressional Policy and Budget Research Department

the ASEAN Economic Community (AEC), which is expected to boost international trade
among ASEAN-member countries and the rest of the world.
Import Clearance Certificates. According to the World Bank (2015), the complexity of
securing import clearance certificates also contributed to the crawling pace of shipment
releases at the POM. While processes in the BOC have been streamlined, processes in the
Bureau of Internal Revenue (BIR) have seen little improvement as shown in some redundant
and cumbersome processes namely tax declaration, certified true copy of BIR certificate
of registration, authenticated copy of income tax return, details of registration address,
personal profile with ID picture for individuals, standard registration requirements from
Securities and Exchange Commission (SEC) for corporations, and standard registration
requirements from the Cooperative Development Authority (CDA) for cooperatives.

Meanwhile, the Philippines slipped to 65th place in 2015 from 53rd in 2014 in Trading
Across Bordersone of the key criteria used in measuring Ease of Doing Business.
Although higher than Vietnam (75th), the Philippines is lower compared to Indonesia
(62nd), Thailand (36th) and Malaysia (11th). Based on the World Banks Ease of Doing
Business 2015, although the countrys nature of export and import procedures in terms
of documentation, and the amount of time to export and import is within the benchmark,
the cost to export and import is higher than the regional average for East Asia and Pacific
(Table 2).
Table 2.Trading Across Borders (Ranking) and Indicators
Philippines

Indonesia

65
6
15
755
7
15
915

62
4
17
571.8
8
26
660

Trading Across Borders (Rank)


Documents to export (no.)
Time to export (days)
Cost to export (US$/container)
Documents to Import (no.)
Time to Import (days)
Cost to Import (US$/container)

Malaysia
11
4
11
525
4
8
560

Thailand

Vietnam

36
5
14
595
5
13
760

75
5
21
610
8
21
600

East
Asia &
Pacific
-6
20.2
864
7
21.6
895

Source: World Bank Ease of Doing Business 2015

Road Repairs, Constructions and Informal Settlers. The port congestion problem
came at a time when the Department of Public Works and Highways (DPWH) was
implementing major and minor roadwork projects. The traffic congestion partly explained
the slowdown in the truckers turnaround time causing delays in the delivery of cargoes

Learning from the Manila Port Congestion

and containers. According to the Port Users Confederation (PUC), from the 3 to 5 trips
per week, truckers only made 1 to 3 trips per truck per week around Metro Manila. The
growing informal settlers at the port area especially in R10, Anda Circle and Bonifacio Drive
not only worsened traffic congestion but also hampered port operators from expanding
their container yards.

Cost of the Port Congestion


The truck ban that was supposed to address a local traffic problem in Manila triggered the port
congestion issue that had adverse effects in the countrys supply chain networks.
The problem of congestion and the resulting inefficiency of the delivery system in the POM
jacked up prices of related port services including shipping (Table 3 and 4) and trucking services
(Table 5). Local traders complained of higher demurrage and detention charges by shipping
lines that eroded their profitability and the countrys overall competitiveness. Trucking fees also
increased due to higher demand for trucking services and the general uptrend in related costs
such as fuel, spare parts and labor cost. These price increases would later drive higher prices for
imported commodities including those products with imported components at the expense of the
consuming public.
Table 3. Standard Shipping Line Rates for 20- and 40-Feet Containers
(Selected Shipping Lines)
Shipping Lines
Alexandria Marine & General Shipping Agency Inc.
Benline Agencies Philippines International
China Shipping Manila Agency Inc.
CMA-CGM Philippines, Inc.
COSCO Philippines Shipping Inc.
Evergreen Shipping Agency Philippines Corp.
KMTC Philippines Corp.
MCC Transport Singapore PTE. Inc.
Orient Overseas Container Line, LTD.
RCL Feeders Philippines Inc.
SITC Container Lines Philippines, Inc.
Sky International Inc.
Uniship Inc.
Wallem Philippines Shipping Inc.
Wanhai Lines Philippines, Inc.

Doc Fee ($)


20
50
50
45
45
45
45
45
50
35
60
50
50
50
45
45

40
50
50
45
45
45
45
45
50
35
60
50
50
50
45
45

Amount of
Container
Deposit (P)
20
40
2,500
5,000
7,500 10,500
6,000
8,000
7,000 12,000
6,000
8,000
10,000 15,000
5,000
5,000
5,000 10,000
7,000 12,000
9,000 12,000
7,000 14,000
8,000 12,000
2,500
5,000
5,000
7,000
8,000 12,000

Note: 1Does not include chemical washing of containers charge by some shipping lines
Source: Various sources

Cleaning1
20
P300
$10
P400
P500
$10
P400
P350
P1,000
$20
P800
P445
$10
P300
P300
$10.50

40
P600
$20
P800
P800
$20
P800
P650
P1,000
$20
P800
P883
$20
P600
P600
$21

Terminal Charge
(P)
20
5,645
5,645
5,645
5,645
5,645
5,645
5,645
5,645
5,645
5,645
5,645
5,645
5,645
5,645
5,700

40
7,055
7,055
7,055
7,055
7,055
7,055
7,055
7,055
7,055
8,140
7,055
7,055
7,055
7,055
7,150

Congressional Policy and Budget Research Department

Table 4. New Charges from Shipping Lines (for 20- and 40-Feet Containers)
Due to Port Congestion, Selected Shipping Lines
Shipping Lines
Alexandria Marine & General Shipping Agency Inc.
Benline Agencies Philippines International
China Shipping Manila Agency Inc.
CMA-CGM Philippines, Inc.
COSCO Philippines Shipping Inc.
Evergreen Shipping Agency Philippines Corp.
KMTC Philippines Corp.
MCC Transport Singapore PTE. Inc.
Orient Overseas Container Line, LTD.
RCL Feeders Philippines Inc.
SITC Container Lines Philippines, Inc.
Sky International Inc.
Uniship Inc.
Wallem Philippines Shipping Inc.
Wanhai Lines Philippines, Inc.

Source: Various sources

Port Congestion
Surcharge ($)
20
150
150
100
None
100
100
None
300
200
150
100
250
100
None
100

40
300
300
200
None
200
200
None
600
400
300
200
500
200
None
200

Equipment
Imbalance ($)
20
200
200
200
200
200
150
250
150
150
200
200
200
200
250
200

40
400
400
400
200
400
300
500
300
300
400
200
400
400
500
400

Emergency or
Operation
Recovery Cost
($)
20
40
150
300
100
200
150
300
250
500
150
300
200
400
200
400
None
None
100
200
100
200
150
200
250
500
150
300
200
400
150
300

For one, the Philippine Chamber of Commerce and Industry (PCCI 2014)3 identified the socalled port congestion surcharge, empty equipment imbalance and the associated handover and
operation recovery costs as among those new charges introduced by shipping lines at the height of
the port congestion problem. The empty equipment imbalance refers to the surcharge on ocean
freight, imposed by shipping lines, to recover costs related to removing large quantities of empty
containers from a country where there is no export use for those containers. The charge is usually
a flat rate per container, and is not necessarily applied in all trades nor at all times. It is only applied
when such trade imbalances necessitate large expenditure on shifting empty containers from one
place to another.
Based on a survey by the Export Development Council (EDC) on the impact of port congestion
to export industries, Philippine Exporters Confederation Inc. (Philexport) disclosed that food and
garment shippers suffered from losses as much as $450,000 in terms of cancelled orders and lost
opportunities since the port congestion started. Revenue losses from exports of electronics were
pegged at about $1,000 per metric ton. In order to survive in their business, shippers were forced
to send their cargoes via the more expensive air shipment, as well as continued to implement
downsizing, rotation or work stoppage due to delays in the arrival of raw materials.4
As cited by Campos, Othel V. in Port Congestion Shuts Down Two Firms, Manila Standard, 21 October 2014.
As cited by Remo, Amy R. in Port Congestion Problem Sends Exporters Reeling, Philippine Daily Inquirer, 24
November 2014.
3
4

Learning from the Manila Port Congestion

Table 5. Prescribed Rates for Containerized Cargoes


(Old rate vs New rate)1
From MICT/South Harbor to the following
Selected Destinations
Metro Manila
Manila
Port Area, Intramuros, Binondo and Tondo
Ermita, Malate, Sta. Cruz
Sta. Mesa, Sta. Ana, Sampaloc, others
Quezon City
Point not going beyond EDSA
Point beyond EDSA
Caloocan City
Point not going beyond EDSA
Point beyond EDSA
Caloocan North
Navotas and Malabon
Valenzuela
Makati and Mandaluyong
Points not going beyond EDSA
Points beyond EDSA
San Juan
Marikina, Pasig, Pateros, Taguig and Paranaque
Las Pinas and Muntinlupa
Northern Luzon (Selected)
Pampanga
Apalit
Macabebe, San Fernando, Sto. Tomas, others
Candaba, Bacolor, Guagua, others
Sasmuan, Libao, Porac, Angeles
Zambales
Olongapo and Subic
Iba
Southern Luzon (Selected)
Batangas (via Tagaytay)
Laurel, Tuy, Lian, Nasugbu
Balayan, Calaca, Lemery, Agoncillo, others
Calatagan
Batangas (via Sto. Tomas)
Sto. Tomas
Batangas City and San Juan
Laguna
San Pedro and Binan
Sta. Rosa and Cabuyao
Cavite
Bacoor, Imus, Kawit & Noveleta
Gen. Trias, Dasmarinas & Silang

Old

20

40

New

Old

New

7,000
7,630
8,700

10,500
11,400
13,050

8,300
8,700
9,800

12,450
13,050
14,700

9,700
10,900

14,550
16,350

10,600
12,000

15,900
18,000

8,300
9,200
12,000
8,300
11,400

12,450
13,800
18,000
12,450
17,100

9,200
10,300
13,100
9,200
12,300

13,800
15,450
19,650
13,800
18,450

10,500
11,500
10,500
11,500
12,500

15,750
17,250
15,750
17,250
18,750

11,300
12,500
11,500
12,500
13,600

17,250
18,750
17,250
18,750
20,400

15,600
17,800
19,200
20,900

23,400
26,700
28,800
31,350

17,000
19,200
20,600
22,300

25,500
28,800
30,900
33,450

27,500
33,100

41,250
49,650

29,200
34,900

43,800
52,350

23,900
23,600
24,500

35,850
35,400
36,750

24,500
25,300
26,200

36,750
37,950
39,300

16,500
21,800

24,750
32,700

18,400
23,600

27,600
35,400

14,000
14,700

21,000
22,050

15,100
15,800

22,650
23,700

13,600
15,300

20,400
22,950

14,800
16,500

22,200
24,750

Note: 1Old rate effective January 2011, new rate effective March 2014. Actual rates could be higher or lower
than the prescribed rates.
Source: Confederation of Truckers Association of the Philippines, Inc. (CTAP)

Congressional Policy and Budget Research Department

Despite government reports of normalization at the POM, traders continue to lament against
shipping lines exorbitant port charges and truckers fees. A governments review and regulation
of the allowable port-related charges is therefore strongly warranted.

Figure 2. Exports and Imports Growth Rate (In %)


2013 and 2014

Source: Philippine Statistical Authority (PSA)

Indeed, the port congestion problem was one of the dampeners of the countrys accelerating
growth, as perceived by economists. In the third quarter of 2014, the countrys gross domestic
product (GDP) slowed down to 5.3% from 7% in the same period in 2013, the slowest since the
3.7% recorded in the fourth quarter of 2011. The National Economic Development Authority
(NEDA) had attributed the weaker economic growth partly due to the port congestion. The
disruptions in the port operations adversely affected trade as both exports and imports decelerated
to 9.9% and 5.1%, respectively from double-digit increases in 2013 (Figure 2). As a consequence
of the port congestion, the increase in the prices of commodities and services also weighed down
on household final consumption expenditure (HFCE) to 5.1% from 6.2% in 2013.
According to the Citigroup Philippines (2014), the truck ban and the ensuing transport bottleneck
could cost the country up to P320 billion in losses from disrupted trade, job losses, among others,
which could cut the countrys GDP growth by as much as five-percentage points. This could dwarf
the losses attributed to the internal traffic jam in Manila of about P30 billionpartly the reason
why the City Government of Manila issued the truck ban ordinance. The study stressed further
that the truck ban cast a dark shadow especially on non-technology exports in the Calabarzon

10

Learning from the Manila Port Congestion

export processing zones. The Calabarzonwhich includes Cavite, Laguna, Batangas, Rizal and
Quezon, is the countrys second most densely populated region, an industrial hub and one of the
biggest contributor to the countrys economic growth. Meanwhile, technology producers may be
spared because they could avail themselves of airline services in shipping out their goods unlike
non-technology manufacturers such as those producing car parts that use the ports in sending
their products abroad.

Short-term Solutions
As the port congestion was considered as top priority by Malacaang, the Cabinet Cluster on
Port Congestion (CCPC) was created. The CCPC is a multi-agency task force headed by Secretary
Rene Almendras and composed of the DOTC, DPWH, DTI, DoF, NEDA, MMDA, PPA, LTFRB
and BoC.
Following the lifting of the truck ban in the City of Manila, some important short-term measures
were undertaken to help make progress in decongesting the POM, as follows:
1. Shipping out of Overstaying Containers. More than 3,000 containers were shipped out
approaching the peak months last year in an effort to help de-clog the POM. Together with
the PPA, private port operators namely the International Container Terminal Services Inc.
(ICTSI) and the Asian Terminals Inc. (ATI) hired chartered vessels and trucks to transport
cargoes cleared by the BOC and cargoes overstaying for 60 days at the POM to Subic,
Batangas and Laguna.
2. Higher Storage Fee. The PPA also imposed higher storage fees for overstaying BOCcleared inbound cargoes to discourage cargo owners from using the ports as their
warehouses. As provided in PPA Memorandum Circular (MC) No. 12-2014 dated 15
September 2014, a twenty-foot container faced a fine of P5,000 per day beginning the 11th
day of storage. This was in contrast to the old rate of P481.30 per day for the 6th to 10th day
of storage, and P529.43 per day from the 11th to the 15th day (Table 6). This new regulation
effectively gave cargo owners 10 days of free storage at the ports.

Congressional Policy and Budget Research Department

11

Table 6. Storage Fees MC 12-2014 (New Rate)


vs

MC 10-2013 (Old Rate)

Box
20 Footer
35 Footer
40 Footer
45 Footer

Rate Under
MC No. 122014 (New)
5,000
8,750
10,000
11,250

Rate Under MC No.


10-2013
6th to 10th
11th to
day
15th day
481.30
529.43
842.20
926.42
962.60
1,058.86
1,082.90
1,191.19

Source: Philippine Port Authority

3. Last Mile Trucking Routes Scheme. The MMDA implemented a 24-hour Last Mile
Truck Route scheme for two weeks from September 8-22, 2014 to help decongest the POM
from container vans. Sticker passes were issued by MMDA to allow trucks to transport
container vans even during truck ban hours for two weeks, except for specific roads where
truck ban hours were strictly observed namely EDSA, Espana, Ortigas Avenue, Katipunan,
Recto and Taft Avenue.
4. Weekend Operations. The government and the private sector agreed to work on weekends
and Monday mornings to pull out containers from the POM in a cooperative effort to
address port congestion. Terminal operators, truckers, warehouse owners, and other port
stakeholders were forced to utilize weekends even if it entailed additional cost in terms of
man-hours and energy cost.
5. Executive Order No. 172. In September 2014, the President signed Executive Order
No. 172 declaring the ports of Subic and Batangas as extensions of the POM during
congestion and other emergency situations, such as strikes, lockouts and natural calamities.
Consequently, port fees were lowered in order to encourage more shipping lines to call at
these proposed alternative ports. Table 7 shows that in Subic Port, harbor and berthing
fees were down 83% and 88%, respectively, while both port-related fees were slashed by
90% at the Batangas Port.

12

Learning from the Manila Port Congestion

Table 7. Harbor Fee and Berthing Fee


Old Rate vs New US$)
Rate (In US$)
Vessel Charges
Harbor Fee (per GRT)
Berthing Fee (per GRT per day)

Regular Rate

Subic
0.0460
0.0345

Batangas
0.0810
0.0390

Discounted Rate
First 6
Next 6
months
months
0.0080
0.0410
0.0040
0.0200

Source: Cited in SBMA Chairman Roberto Garcias presentation during the 8th Ports and Shipping Conference

Conclusion and Policy Recommendations


The port congestion problem in 2014 was unprecedented. In fact, the PPA had admitted, it was
their first time to experience a port congestion of such magnitude (cited by Macairan 2014).
The PPA had dealt with port congestion problems in the past but only during Christmas season
when there is substantial increase in import volume. But the port congestion last year was far more
complex and urgent triggered by the Manila truck ban ordinance. This prompted the government
to establish a cabinet cluster whose task was solely to address the port congestion. A confluence
of factorsi.e. the Manila truck ban, limited road capacity in Metro Manila and the growing trade
volume, among otherscontributed to the port congestion problem.
Notwithstanding the governments claim of normalcy in the POM, the issue of port congestion
is a much bigger problem that needs long-term solutions. During the Port Summit, various
stakeholders of the port industry have recommended the following reform measures, among
others, in order to avert another port congestion from happening in the future:
1. Upgrade and Modernize the Countrys Infrastructure. Undoubtedly, the root of the
congestion problem in the country is the lack of well-planned and efficient infrastructure.
The countrys infrastructure is among those identified by multilateral companies as one of
the major weaknesses in its growing economy. Notwithstanding the Aquino administrations
commitment to boost infrastructure spending of up to 5% of GDP in 2016, infrastructure
development in the country has not kept pace with rapid urbanization and the increasing
demand for infrastructure services (World Bank 2015). Indeed, solving the countrys
congestion problem requires more investment in infrastructure development.

Congressional Policy and Budget Research Department

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Port stakeholders have suggested the need to build a dedicated elevated expressway
connecting the POM directly with the North- and South-Luzon expressways. Some have
even proposed to revive the railways from POM to Divisoria and Tutuban to Caloocan and
connecting them with North and South Luzon (Cruz 2014). The fast and cost-effective
service by rail transport makes it a preferred mode of transporting passengers and cargoes.

Moreover, amid ongoing efforts to expand the capacity of Manila ports, there were also
proposals to construct a mega port within or outside Manila to support a growing
trade volume in the next five to six years. The countrys remarkable economic growth in
recent years as well as the expected gains from the ASEAN Economic Integration are
seen to facilitate robust international trade to support a consumption-driven economy
and a booming manufacturing industry. Relatedly, the increasing capacity of ships calling
at world ports requires port infrastructure that could accommodate post Panamax vessels5
containing more than 14,000 to 18,000 TEUs from the current 8,000 to 10,000 TEUs.

2. Consider Batangas and Subic Ports as Alternative Ports. It is imperative that the
government seriously consider gradually shifting international container traffic in
Batangas and Subic ports to address the growing congestion problem in Metro Manila
as well as catalyze growth in the adjacent regions. The Joint Foreign Chambers (JFC) of
the Philippines have suggested that the local government units (LGUs) of Metro Manila
could impose higher taxes on factories and warehouses as incentives to move to hubs like
Batangas and Subic (JFC 2014).

Another proposal is to follow what Thailand did in capping the container volume in the
old Bangkok Port in favor of the Laem Chabang Port located in the southern part of
the country (Basilio 2014). The Port Authority of Thailand issued a regulation limiting
container traffic at the Port of Bangkok to around 1 million TEUs per year. The Laem
Chabang Port was built by the Thai government to encourage economic development
outside of Bangkok and take advantage of the proximity of the Gulf of Thailand. Today,
the Laem Chabang Port has overtaken the Port of Bangkok in terms of the container
volume it handles.

Post-Panamax or over-Panamax refer to ships larger than Panamax that do not fit in the Panama Canal, such as
supertankers and the modern container and passenger ships. The first known post-Panamax ships were Japanese
Yamato-class battleships.
5

14

Learning from the Manila Port Congestion

The government, however, is encouraged to study carefully the proposal to cap volume
in the POM and consider the impact of this policy in terms of the potential additional
cost to shippers. A study by supply chain stakeholders shows that around 70% of the
imported raw materials, equipment, supplies and consumer goods go to Metro Manila and
Northern Cavite, Laguna (18%), Batangas and Quezon (6%), and Pampanga and other
areas North of Metro Manila (6%). From this, it follows that much of the exports come
from Metro Manila and Northern Cavite (73%), while the nearby provinces account for
the balancei.e. Laguna (15%), Batangas and Quezon (7%), Pampanga and areas North
of Metro Manila (5%).

Various groups have advocated for the Batangas and Subic ports as alternatives of the
POM to deliberately address the issue concerning the underutilization of these ports, albeit
improving in recent years (Figure 3). Basilio (2014) estimated that around P17.5 billion was
borrowed during the Arroyo administration to finance the development of Batangas and
Subic ports, excluding the additional investments of around P111.1 billion that funded the
expressways6 leading to these ports.

Corollary to this reform measure is to separate the regulatory and operational functions
of the PPA. While the Batangas Port is under the PPA, the Subic Port is owned by the

Figure 3. Comparative Subic and Batangas Cargo Volume (In TEUs),


2013 and 2014

Source: Presentations from the 8th Ports and Shipping Conference

Congressional Policy and Budget Research Department

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Subic Bay Metropolitan Authority (SBMA). Thus, it may seem challenging for the PPA to
strongly promote Subic Port as a competitor to the PPA-owned ports including the POM
because of its potential to erode PPAs revenues substantially.
3. Formulate a Comprehensive National Transport Policy.

One of the major

shortcomings of the countrys infrastructure sector is the lack of an integrated national


transport plan. This is even compounded by the absence of a long-term policy framework
to support a national transport plan. The port congestion problem would have been
prevented had there been a national transport policy in place that guides and harmonize
the development goals of the national and local governments. It is therefore imperative
to put in place a comprehensive long-term National Transport Policy towards achieving
a well-coordinated and integrated multi-modal transport system in the country. This will
also institutionalize and insulate the countrys national transport development plan from
political interventions as the case of the Manila truck ban.

Moreover, it is vital for the transport infrastructure networki.e. port, airport, roads, rail
transportto be planned as a system to ensure the stability and sustainability of the key
industries supply chain. In other words, it should be supportive of trade and commerce
and of the countrys overall competitiveness. For instance, a Transportation and Logistics
Plan for the NCR and Central Luzon should consider that 40% of Manila traffic is linked
to port operations (JICA).7 Hence, further expansion at the port will certainly worsen
traffic problems in the absence of better road access.

The JFC further stressed that the proposed Master Plan should aim, for instance, in
transforming Manila to a financial and service centertourism, finance, education,
medical, and business process outsourcing (BPOs). This would require moving factories
and manufacturing activities to the outskirts of Metro Manila particularly Cavite, Laguna,
Bulacan, Pampanga, Batangas and Subic. Moreover, it is important to equip Batangas
and Subic ports with world-class logistics facilities including warehouses and distribution
centers.

These include the North Luzon and South Luzon Expressways rehabilitation and widening projects, the constructions
of the Subic-Clark-Tarlac Expressway, Tarlac-Pangasinan Expressway, Star Highway, among others.
7
As cited by JFC 2014 in Arangakada Philippines Forum.
6

16

Learning from the Manila Port Congestion

References:
Almonte, Liza. Manila Ports Forum Comes Up with Old, New Solutions to Port Congestion. Port
Calls. 1 December 2014.
Bayos, Kris. Sheer Volume of Backlog Keeps Port Congested. The Manila Bulletin. 21 November 2014.
Basilio, Enrico. Port Congestion in a Congested Metropolis. Philippine Chamber of Commerce and
Industry (PCCI Policy Paper. 2014.
Campos, Othel V. in Port Congestion Shuts Down Two Firms, Manila Standard, 21 October 2014.
Chanco, Boo. Demand and Supply: Santa Claus Stuck in Manila Port. Philippine Star. 27 October 2014.
Cruz, Neal H. Manila Ports Not Congested but the Streets Are. Philippine Daily Inquirer. 13 August
2014.
Dumlao, Doris. Economic Loss from Truck Ban to Hit P320 billion. Philippine Daily Inquirer. 10
March 2014.
Gagni, Lito. Port Congestion: All About Trade. BusinessMirror. 1 October 2014.
Garcia, Roberto. Presentation on Subic Bay Metropolitan Authority. 8th Ports and Shipping Conference.
12 February 2015.
Habito, Cielito F. A Colossal Contradiction. No Free Lunch. Philippine Daily Inquirer. 10 September
2012.
Habito, Cielito F. Truck Ban: The Bigger Picture. No Free Lunch. Philippine Daily Inquirer. 18 March
2014.
Joint Foreign Chambers of the Philippines. More Reforms=More Jobs!. Arangakada Philippines
Forum. 26 February 2014
Kritz, Ben. Port Congestion is a Global Problem. Manila Times. 21 October 2014.
Kritz, Ben and Periabras, Rosalie. Manila Port Congestion: Symptom of a Bigger Mess. Manila Times
Special Report. 21 September 2014.
Macairan, Evelyn. Yearender: Port Congestion May End Next Year. Philippine Star. 29 December 2014.
National Economic Development Authority. Accelerating Infrastructure Development. Chapter 5
Philippine Development Plan 2011-2016. 2011.
Pena, Fernando Martin. Port Congestion is a Disease Part 1 and 2. Philippine Daily Inquirer. 20-21
October 2014.
Perez, Sean. Presentation entitled Supporting Growth: Sustaining Terminal Efficiencies at Manila South
Harbor and Batangas Port. 8th Philippine Ports and Shipping Conference. 12 February 2015.
Pillas, Catherine. Government Mulls Over Building Mega Port. BusinessMirror. 22 February 2015.
__________. Port Congestion Surcharge Scrapped; Trucking Rates Going Down-DTI Official.
BusinessMirror. 12 April 2015.

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Remo, Amy. Port Congestion Problem Sends Exporters Reeling. Philippine Daily Inquirer. 24
November 2014.
World Bank. Making Growth Work for the Poor. Philippine Economic Update Report No. 93530-PH.
January 2015.
World Bank. Trading Across Borders: Ease of Doing Business 2015
ASEAN-Japan Transport Partnership (www.atjpweb.org)
Confederation of Truckers Association of the Philippines (CTAP)
Philippine Ports Authority (www.ppa.gov.ph)
Philippine Statistical Authority (www.psa.gov.ph)