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Manila Times Business

Shipping group urges infrastructure reforms to cut costs

CEBU CITY, Philippines — The cost of moving goods between Philippine islands could be reduced by scrapping roll-on, roll-off (RoRo) terminal fees and expanding transport infrastructure, the Philippine Coastwise Shipping Association (PCSA), which is seeking reforms to improve connectivity and ease inflationary pressures, said. PCSA Chairman Lucio Lim Jr. said RoRo terminal fees account for 5% to 10% of the total freight cost for a 10-wheeler truck and can reach 15% on some short-haul routes

Context & Analysis

The Philippines' archipelago geography has always imposed a structural tax on economic activity that no other ASEAN economy matches. Moving a container of rice from Cebu to Manila, or a shipment of construction materials from Batangas to Mindoro, requires not just fuel and labor but a chain of port fees, terminal charges, and handling costs that accumulate at every node. The Philippine Coastwise Shipping Association's latest call to eliminate roll-on, roll-off terminal fees cuts at one of the most visible layers of that chain.

What makes this recommendation politically charged is who collects those fees. RoRo terminals across the country are operated by a mix of the Philippine Ports Authority, local government units, and in some cases private concessionaires under government contracts. The fees fund operations and maintenance, which means any proposal to scrap them triggers an immediate budget question: who pays for the ramps, the staging areas, and the personnel that keep these terminals functional? No shipping group has offered a complete fiscal answer, and that gap will likely stall any serious legislative push.

Still, the economics are hard to ignore. An archipelago that spends more on moving goods than it needs to is effectively subsidizing inefficiency at the expense of consumers. When logistics costs climb, the pass-through to retail prices is not theoretical. It shows up in the price of vegetables in Metro Manila wet markets, in the landed cost of imported spare parts in provincial hardware stores, and in the margin squeeze that small distributors feel before it ever reaches a headline. The inflationary pressure angle that PCSA highlights is not rhetorical. The Bangko Sentral ng Pilipinas has repeatedly noted that supply-side factors, including transport and distribution costs, keep core inflation sticky even when global commodity prices stabilize.

The short-haul distortion is perhaps the most telling detail. A fee structure that consumes up to 15% of freight costs on shorter routes penalizes exactly the small and medium enterprises that rely on inter-island commerce for their livelihoods. A large conglomerate with its own logistics arm can absorb that. A provincial trader moving goods between neighboring islands cannot.

What to watch is whether the Department of Transportation or the PPA board signals any openness to restructuring rather than outright elimination — perhaps a graduated fee schedule that exempts short-haul routes or small-volume operators. That would be a politically survivable reform that still delivers meaningful cost relief.

Analysis by IJE Software — original commentary on the story above.

This is an excerpt. Read the full article at the original source:

Source: manilatimes.net

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