Massive plans for port capacity augmentation-

The augmentation of port-related infrastructure in the Philippines is a high priority for the archipelago. Towards this end, the Philippines Ports Authority (PPA) has made concerted efforts to revamp several port terminals to bring them on par with international standards and improve hinterland connectivity. As part of the drive to expand its port sector, the authority invested PhP 1.19 billion during 2015 on major port infrastructure development projects.

Size and growth

PPA is the state corporation responsible for the governance, regulation, maintenance and operation of ports and harbours in the Philippines. PPA focuses on the development and modernisation of the 10 major gateway ports, namely North Harbor, South Harbor, Manila International Container Terminal, Batangas, Iloilo, Cagayan de Oro, Ozamiz, Davao, General Santos and Zamboanga. All infrastructure development projects by PPA are funded through its corporate funds.

The total cargo carried by Philippine ports stood at 228.82 million tonnes (mt) in 2015, a year-on-year growth of 6.52 per cent. Domestic cargo led the growth with a year-on-year increase of 11.75 per cent; there was a substantial increase in domestic cargo at the ports under Port Management Offices (PMOs), with the highest growth being recorded at four ports – Manila-North at 31.58 per cent, Aurora at 18.66 per cent, Batangas at 13.19 per cent and Panay/Guimaras at 11.04 per cent.

Foreign cargo also grew by 3.44 per cent, spearheaded by the 18.51 per cent increase in the import component. However, the export component went down by 11.23 per cent as compared to the previous year, due to the sudden decrease in the export of metal ores and mineral ores at the private ports in Visayas and Mindanao.

Container traffic registered a year-on-year growth of 5.58 per cent during 2015, with 11.52 per cent and 1.74 per cent growth in domestic and foreign container traffic respectively. The export component of foreign container traffic stood at 1.71 million twenty-foot equivalent units (TEUs), while the import component stood at 1.7 million TEUs in 2015.

During 2015, passenger traffic increased by 18.46 per cent to 66.33 million from the 55.99 million recorded in 2014. The Philippines received 394,908 vessels in 2015, an increase of 8.79 per cent over 2014. Both domestic and foreign ship calls increased by 8.88 per cent and 5.44 per cent respectively.

During January 2016 to March 2016, 50.14 mt of total cargo was shipped from Philippine ports. Of this, 22.93 mt of cargo was carried domestically while the remaining 27.21 mt of cargo was foreign cargo. The container cargo carried in the first quarter of 2016 was 1.24 million TEUs.

Capacity augmentation plans

For the year 2015, PPA spent a total of PhP 1.19 billion on 145 locally funded projects (LFPs). As of end-2015, 35 projects were completed while the remaining 110 were at various stages of development – 66 are ongoing projects, procurement is under way for 41 and three have been suspended. With the completion of these 35 projects, an additional nine roll-on, roll-off (ro-ro) ramps, 307.3 metres of berths and 28,334 square metres of back-up area are now available for utilisation.

During 2015, PPA spent another PhP 174.4  million on various dredging projects. The works included the removal of silt from the ports of Tabaco, Pier 18, Nasipit, South Harbor Fairway Channel, Fort San Pedro, Bulan, San Andres, El Codo and Santa Cruz.

PPA completed 55 hydrographic and topographic surveys during 2015 to support port planning, project development and identification of areas for port zone delineation. In order to maintain the serviceability and safety of existing port facilities, PPA completed 164 repair and maintenance projects worth PhP 2,199.28 million in 2015. During the year, 12 permits to develop private port facilities were approved by PPA. Of these, 11 permits were issued to develop port facilities in Barangay district of the Philippines. Further, PPA completed 10 port infrastructure development projects worth PhP 754 million during January 2016 to May 2016.

At present, at least 46 projects worth PhP 7.84 billion are under way or planned at different ports in the Philippines. Of this, 37 projects worth PhP 5.6 billion are currently ongoing.

Two major projects under bidding are the construction, extension and expansion of the Cagayan De Oroport port and Zamboanga port. The project at the  Cagayan De Oro port involves extension of the wharf, expansion of port backup area and installation of a port lightening system at an estimated cost of PhP 357.15 million. The Zamboanga port involves construction of a shore wharf for rail-mounted gantry cranes at an estimated cost of PhP 553.17 million. The last date to submit bids for both the projects was May 25, 2016, with no further update available.

Maritime logistics and connectivity has been a huge challenge for the Philippines. The shortcomings in maritime logistics and infrastructure have resulted in high turnaround time at the ports, undermining the Philippines’  trade and competitiveness. According to the Global Competitive Index Report, 2015-16, World Economic Forum, the Philippines ranks 103th among 144 countries in terms of port infrastructure.

In February 2014, heavy traffic congestion along the roads within the Manila Port led to the imposition of a truck ban within the city. The reduced operating hours for container trucks in the city resulted in delays in the delivery of goods, accumulation of containers at the port, slowdown in the logistics chain in and out of the port, empty containers returning to the port, and increased shipping line charges. During this period, the Manila Port had a dwell time as high as 29 days. On September 13, 2014, Manila City lifted the truck ban indefinitely. Overall, the problems of port congestion, high transportation cost, and surcharge imposed by shipping lines to remove large quantities of empty containers continue to loom in the background.

Meanwhile, according to a senior offical, PPA, “PPA itself is also facing a number of challenges such as presence of informal settlers; road right-of-way (RROW); environmental issues; political interventions; and safety and security concerns, among others.” To address these issues PPA is taking a number of initiatives to create new infrastructure as well as improve services at the existing ports.

Going forward, in the short term, there are limited available solutions to address port infrastructure issues in the Philippines. Immediate adjustments are being made by PPA, such as increasing port storage fees in order to free up port space, identifying possible container yards outside the port for storage of cargo, and identifying truck routes to optimise their movement. In the medium to long term, PPA is planning to develop better port infrastructure and hinterland connectivity. To conclude, in the long run, better port infrastructure will benefit the Philippines economy and key sectors like logistics and create plenty of opportunities for the private sector.