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USAIID: LIINC-EG Program USA D: L NC-EG Program

SHIPPING COST AND COMPETITIVENESS IN NORTHERN MINDANAO


A CLOSER VIEW ON NORTHERN MINDANAOS STATE OF COMPETITIVENESS

May 21,, 2010 May 21 2010

Confederation of the Philippine Exporters Foundation Region 10 Chapter, Inc.

TABLE OF CONTENTS

1. Introduction 1.1 Background 1.2 Objectives 1.3 Study Area 1.4 Review of Relevant Studies 1.4.1 Master Plan Study of Cagayan de Oro 1.4.2 RORO for Mobility Enhancement 1.4.3 Master Plan for Strategic Ports in the Phils. 1.4.4 Metro Cagayan de Oro Road Network Development 1.4.5 Domestic Shipping Devt Project of the Phils. 1.4.6 The Cost of Exporting a Container from the Phils. 1.4.7 Phil. Logistics Study 1.4.8 Mindanao Logistics Infrastructure Improvement Project 1.5 Study Methodology and Approach 1.5.1 A Review on Government Infrastructure Initiatives 1.5.2 Collection and Review of Information from Past Studies 1.5.3 Conduct of Surveys & Interviews of Industry 1.5.4 Validation session and Survey Trials 1.5.5 Data Processing and Analysis 1.5.6 Completion of Actual Logistics Cost Structures 1.5.7 Report Writing 2. Logistics Conditions in Northern Mindanao 2.1 Infrastructures Logistics Conditions 2.1.1 Spatial Character of Northern Mindanao 09 06 07 07 08 08 08 08 01 01 02 03 03 03 04 04 05 05 05 06

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A. Corridor 1. Eastern Misamis Oriental B. Corridor 2. Western Misamis Oriental C. Corridor 3. Eastern Bukidnon D. Corridor 4. Western Bukidnon 2.1.2 Freight Corridor and Port Access A. Corridor 2 and 4.CDO Port & MCT Road Access B. Licoan Intersection (J. Pacana St.) C. Osmea Street Extension D. Agora Road 2.1.3 Ports and Port Facilities A. Port of Cagayan de Oro B. Mindanao Container Terminal 2.2 Exports and Imports of Key Commodities 2.2.1 Movement of Commodities A. Corridor 1. Eastern Misamis Oriental B. Corridor 2. Western Misamis Oriental C. Eastern Bukidnon D. Western Bukidnon 2.2.2 Export and Import Volumes 2.3 Logistics Players in Northern Mindanao A. Exporters (Shippers) B. Truckers C. Imports and Importers D. Shipping Lines E. Cargo handling Operators 2.4 Logistics Costs/Charges for Exports and Imports

10 11 11 13

14 15 15 17 18 18 20 21 21 21 22 23 23 24 29 29 29 29 30 31 31

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2.4.1 Trucking and Hauling Rates 2.4.2 Brokerage and Facilitation Charges 2.4.3 Port Charges 2.4.4 Sample Logistics Cost of Exporters 3. Logistics Survey for Northern Mindanao 3.1 Survey Implementation 3.2 Profile of Survey Respondents 3.3 Results from the Survey 3.3.1 Shippers Survey 3.3.2 Importers Survey 3.3.3 Truckers Survey 3.3.4 Shipping Lines Survey 4 Issues and Measures 4.1 On the World Bank Report 4.1.1 Breakdown of Port Related Transport Costs 4.2 Costs and Charges for Shipping 4.2.1 Terminal Handling Charge and Other Surcharges A. Findings B. Legislation is Necessary C. Other Shipping Surcharges 4.3 Transshipment 4.4 Port Operational Issues 4.4.1 Mindanao Container Terminal 4.4.2 Cagayan de Oro Port 4.4.3 Vessel Dues 4.5 Domestic Sea Freight

31 33 34 35 38 38 39 40 40 44 46 48 51 51 51 51 52 54 55 55 55 56 56 56 57 58

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4.5.1 RORO 4.5.2 Freight Quotations and Rates 4.6 Trucking 4.6.1 Empty Backhaul 4.6.2 DOTC-LTO Fines/Penalties 4.6.3 DPWH Weigh Bridges 4.7 Harmony of Policies and Programs 4.7.1 DPWH-PPA Cargo Weight Policies 4.8 Securities, Clearance and Inspection Costs 4.9 Value Added Tax 4.10 Freight Equalization Scheme 4.11 Timely Policy Dissemination 5 Best Practices of Logistics Players 5.1 Exports and Exporters 5.1.1 One Stop Processing Centers 5.2 Trucking Industry 5.2.1 Water Brakes 5.2.2 24 Hour Delivery Service Provision 5.3 Customs Clearing 5.3.1 Value Added Service Provider (VASP) 5.3.2 Inspection Areas for Imported Items 5.4 Port Management 5.4.1 International Shipping and Port Security Code 5.4.2 Vessel Operations Commitments 5.4.3 Labor Unions 5.4.4 Vessel Tracking System

59 64 64 64 65 66 66 66 68 68 69 69 70 70 70 70 70 70 70 70 71 71 71 71 71 72

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5.4.5 Port Revenues 5.4.6 Port Management Advisory Council (PMAC) 6 Way Forward 6.1 Institutional Coordination 6.2 Replicable Best Practices 6.2.1 One Stop Centers 6.2.2 BOCs VASP 6.2.3 Maintaining Free Inspection Areas 6.2.4 Wharfage Discounts 6.3 Information Drive 6.4 Logistics Training 6.5 Business Support Organizations 6.5.1 NORMINSA 6.5.2 PhilExport 10A

72 72 73 73 73 73 74 74 74 74 74 75 75 75

List of Tables Table 2.1 Some Difficult Road Sections by Corridor Table 2.2 Corridor 1 Commodity Flow Table 2.3 Corridor 2 Commodity Flow Table 2.4 Corridor 3 Commodity Flow Table 2.5 Corridor 4 Commodity Flow Table 2.6 Comparative Shipping and Cargo Traffic, PPA Table 2.7 Volume of Exports by Commodity Table 2.8 Comparative container traffic for both ports in TEU Table 2.9 Value of Exports Table 2.10 Top Import Commodities for Northern Mindanao, 2009 13 21 22 23 24 25 25 26 27 28

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Table 2.11 Northern Mindanaos Exporters Table 2.12 Importers for 2009 Table 2.13 Foreign Shipping Lines operating in Northern Mindanao Table 2.14 Transshipment Cargo from Northern Mindanao Table 2.15 Spot Market Trucking Rates for Containerized Cargo Table 2.16 Shipping Lines Trucking Rates for Containerized Cargo Table 2.17 Brokerage and Facilitation of Containerized Cargo Table 2.18 Export and Import Processing Charges by Agency Table 2.19 Comparative Arrastre Rates of Selected Phil. Ports Table 2.20 Arrastre and Stevedoring Charges at MCT and CDO Ports Table 2.21 Exporting Lumber through 40 Dry Van Table 2.22 Exporting a 40 Refrigerated Van Table 2.23 Transshipment Cost Components Table 3.1 Survey Sampling Table 3.2 Profile of Exporters and Importers Respondents Table 3.3 Profile of Trucker Respondents Table 3.4 Profile of Shipping Lines Respondents Table 3.5 Outsourcing of Trucking Logistics by Shippers Table 3.6 Trucking Share to Total Logistics Cost of Shippers Table 3.7 Shipping Share to Total Logistics Cost of Shippers Table 3.8 Evaluation of Quality of Infrastructure by Shippers Table 3.9 Ranked Logistics Cost by Shippers Table 3.10 Logistics Issues from Shippers Table 3.11 Evaluation and Experiences of Selected Export Processes Table 3.12 Perceived Evolution of Logistical Components by Shippers Table 3.13 Freight Costs by Commodity of Exporters

29 30 30 30 31 32 33 33 34 34 35 36 37 38 39 40 40 41 41 41 42 42 42 43 43 43

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Table 3.14 Assessed Port Charges by Importers Table 3.15 Identified Difficult Import Procedures by Importers Table 3.16 Good Practices to Improve Importation Process Table 3.17 Ranked Importation Costs Table 3.18 Actual Logistics Costs Incurred by Importers Table 3.19 Assessed Road Conditions by Truckers Table 3.20 Recommended Solutions for Road Improvements Table 3.21 Identified Problems at Port by Truckers Table 3.22 Ranked Operational Expenses of Trucking Firms Table 3.23 Cargo Tariffs Table 3.24 Rate Port and Freight Conditions by Shipping Lines Table 3.25 Shipping Lines Port Operation Conditions Table 3.26 Ranked Port Charges by Shipping Lines Table 4.1 Comparative Breakdown of transport costs per TEU Table 4.2 Cargo Handling activity & applicability of THC Table 4.3 THC Rates

44 45 45 46 46 47 47 48 48 49 49 50 50 51 52 53

List of Figures Figure 1.1 Study Area Figure 2.1 Carmen Hill Section Figure 2.2: Section of the Highway along Mangima Canyon Figure 2.3: Hazardous Road Section: Mangima Canyon Figure 2.4 Puerto-Bukidnon junction going to Carmen Hill Figure 1.5: Difficult road sections leading to ports from Corridor 2 Figure 2.6 Osmea Extension to the CDO Port Figure 2.7 Motorela 02 11 12 12 14 14 15 16

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Figure 2.8 Pedicab, locally known as Trisikad Figure 2.9 The Cagayan de Oro Base Port Figure 2.10 Vehicular Traffic at CDO Port Southern Gate Figure 2.11 The Mindanao Container Terminal (MCT) Figure 2.12 Export Volumes by Commodity, 2009 Figure 4.1 PPA reported CDO Port's Annual BOR was beyond 65% in 2009

16 18 19 20 27 57

Figure 4.2 Balingoan-Benoni RORO Vessel; Wing Vans ideal for RORO 59 Figure 4.3 Container Vans unloaded from a RORO/Pax Vessel Figure 4.4 Workflow for CHA-RO (RORO/PAX) Figure 4.5 Trailer Horse Figure 4.6 Motorcab Figure 4.7 MCT Weighbridges 60 61 63 66 67

List of Annexes Annex 1.1 Presentation of Study Results to Relevant Stakeholders Annex 1.2 Highlights of the Validation Meetings Annex 3.1 Shippers Survey Form Annex 3.2 Importers and Cargo Forwarders Survey Form Annex 3.3 Truckers Survey Form Annex 3.4 Shipping Lines Survey Form Annex 4.1: Maersk Line THC Table Annex 4.2 LTO Fines and Penalties Glossary of Terms and Abbreviations Acknowledgements The Study Team

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1.
1.1

INTRODUCTION
Background Despite the concentration of rich natural resources and vastly developing agriculture, Mindanao falls far short of national averages in virtually many socio-economic indicators. As far as the private sector (in Northern Mindanao) is concerned, the brunt of the problem still lay on a disproportionate government spending in infrastructure particularly in ports, farm to market roads and highways favoring other areas in the Philippines. Access to agricultural production areas is constrained by poor road infrastructure leading to large postharvest losses. Mindanaos distance to the traditional markets (mainly Manila) and exports is also a major competitiveness issue since the logistics cost in bringing products to the wholesale markets are high in terms of freight and associated costs. Mindanao shippers for decades have complained of high domestic and foreign freight rates and surcharges. This has been a bane for Mindanao shippers as fewer international carriers call Mindanao ports and domestic transshipment is too expensive as an option. Raw materials, fertilizer and rice are Mindanaos main imports. There had been numerous studies undertaken and designed to alleviate Mindanaos logistics woes funded by both national entities and international donor agencies. So as not to duplicate past transport and logistics studies, PhilExport 10A through the assistance of USAIDs LINC EG Program opted to limit the study to Northern Mindanao and take a closer look at issues in the logistics chain through the Cagayan de Oro (CDO) base port and the Mindanao Container Terminal (MCT), being Northern Mindanaos most strategically located gateways.

1.2

Objectives From the private sectors point of view, the primary objective of this undertaking is to establish an updated document on the state of competitiveness of transporting selected key commodities from Northern Mindanao. The study objectives are, thus, as follows: a. Identify present and pressing transport-related issues detrimental to Northern Mindanaos competitiveness of selected export and import commodities; b. Showcase the best practices on the different segments on the logistics chain, aimed at reducing costs and maximizing efficiency; c. Provide recommendations leading to policy changes in ports, shipping, road use and infrastructure at all levels of government.

1.3

Study Area Northern Mindanao consists of the provinces of Misamis Oriental, Camiguin, Bukidnon, Lanao del Norte and Misamis Occidental as well as the cities of Cagayan de Oro (CDO), Gingoog, Malaybalay, Valencia, Iligan Ozamis and Oroquieta. However, focus will be on areas which contribute significant freight volume to the ports of Cagayan de Oro (Macabalan) and Mindanao Container Terminal (MCT). Figure 1.1 shows the spatial coverage of the study, which is divided into four corridors for a more localized view of the logistics conditions and issues.
Figure 2.1 Study Area, Northern Mindanao

Legend: Corridor 1: Eastern Misamis Oriental (green) Corridor 2: Western Misamis Oriental (blue) Corridor 3: Eastern Bukidnon (orange) Corridor 4: Western Bukidnon (violet) Areas along the Butuan-Cagayan de Oro-Iligan Road (BCIR)1 East of Cagayan de Oro (Tagoloan to Magsaysay, Misamis Oriental) going to Butuan City Areas along the Butuan-Cagayan de Oro-Iligan Road (BCIR), West of Cagayan de Oro (Opol to Lugait, Misamis Oriental) to include Iligan, Lanao del Norte & Misamis Occidental Areas along the Sayre Highway from Cagayan de Oro to Quezon, Bukidnon Areas along the Cagayan de Oro-Talakag Road including the town of Baungon, Bukidnon

Formerly known as the Iligan-Cagayan de Oro Butuan Road (ICBR) per DPWH update

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1.4

Review of Relevant Studies The Government of the Philippines, as the principal entity, has conducted several transport studies in the past funded by various donor agencies. Likewise, Business Support Organizations (BSOs) in Northern Mindanao have conducted value chain studies on different commodities but no study has been made recently looking closely at the overall transport logistics of commodities especially exports. The study not only refreshes the information on local logistics conditions but also gives focus on the various transport modes such trucking, ports and shipping. Relevant regulatory costs that impacts on the competitiveness of export commodities from Northern Mindanao is also tackled. There have been a number of studies for the improvement of the infrastructure, transportation and logistics in Mindanao. Relevant studies are as follows: 1.4.1 Master Plan Study for Cagayan de Oro - Iligan Corridor Special Development Project, 1992 The Laguindingan Airport Development Project (LADP), upgrading of existing seaports and the establishment of the Mindanao Container Terminal (MCT) are among the key infrastructures identified for development. Likewise, major road development projects were also proposed. Most of the major infrastructure projects identified in this study are currently either in place or in the pipeline. Implementation status of some of the projects require updating. It is also noted that some of the road and component projects saw delayed completion such as the new RCDG Tagoloan Bridge; the Cagayan de Oro 3rd Bridge and By-pass road crossing the Cagayan and Iponan Rivers to Opol, Misamis Oriental.

1.4.2 RORO for Mobility Enhancement, November 2007 This study highlights the need for a more efficient Roll-on roll-off (RORO) system for the country, linking the existing RORO systems already in place in Northern Mindanao (e.g. CDO-Cebu; Balingoan-Camiguin-Bohol). The study recommends institutional strengthening and development of the Roll OnRoll Off Transport System (RRTS) by authorizing eight Strong Republic Nautical Highways (SRNH) as a National Project. The study encourages institutionalizing SRNH by establishing an SNRH project management office. This mechanism will not just oversee existing developments but also future developments on RRTS, through periodic surveys to update the programs development. The study also encourages the need for a sustainable procurement of RORO capable ships.

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This study includes a plan to establish a RORO terminal for international cargo in the port of Cebu. In Northern Mindanao, transshipment of some export container cargoes is expected via Manila or Cebu through the RORO system.

1.4.3 Master Plan for Strategic Ports in the Philippines, January 2004 This study aims to develop a master plan for major seaports in the country as well as develop a 5-year and 25-year development strategies for priority ports including the Cagayan de Oro base port. Northern Mindanao was identified as high priority for immediate and long term development. The study recommends installing additional equipment at the CDO Port, mainly a Quay crane, establishment of additional 500-meter berth and support facilities for bulk cargo and improvement of RORO facilities. Further, the study recommends that PPA to amend its port tariff from GRT/day to meter/hour basis, introduce lease contract with terminal operator with fixed and variable tariff, simplify port procedures, introduce the Port EDI System/Single Window System and improve port security measures. Most, if not all, of what was recommended in this study has already been implemented by the PPA or by its cargo handling operator for the Port of Cagayan de Oro. The Quay crane was installed and commissioned in early 2005, 250-meters of the proposed 500-meter additional berth is already established in 2009 with back-up facilities including depot for liquid bulk (molasses), improved port procedures had obvious positive results and in 2009 and PPA invested on emergency response equipment (e.g. first aid, fire fighting), as well as close circuit television (CCTV) system for security.

1.4.4 Metro Cagayan de Oro Road Network Development Master Plan, 2004 This is a detailed study of Cagayan de Oros road network including those of the citys neighboring towns. Several road and bridge projects were initially identified for development or improvement by the respective Local Government Units (LGUs) and DPWH. However, only four (4) projects were found to be feasible by the study namely: 1. CDO Western Coastal Road (from Kauswagan, Cagayan de Oro City to Igpit, Opol, Misamis Oriental) linking the CDO 3rd Bridge from Kauswagan to Julio Pacana Street as major alternate for west bound traffic from the CDO base Port. The JR Borja Extension Road connecting the Central business district mainly Cogon Market to BCIR in Gusa, Cagayan de Oro City.

2.

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3.

Proposed CDO 7th Bridge and approaches between the Gov. Ysalina Bridge (at Carmen) and the Emmanuel Pelaez Bridge (CDO 3rd Bridge) in Barangay Taguanao. CDO West Diversion Road connecting Masterson Avenue (near SM City CDO) and the ICBR in Barangay Bulua, Cagayan de Oro through Barangay Canitoan.

4.

All the recommendations of this study have already been implemented. the CDO Western Coastal Road which is currently being implemented is experiencing delays caused by right-of-way acquisition.

1.4.5 Domestic Shipping Development Project of the Philippines, 2004 This study highlights the feasibility of an efficient RORO system in the country. Further the study highlights the contestability of cargo handling services, resolution of port labor issues leading to port privatization. The study also reviewed the deregulation policies in the shipping sub sector.

1.4.6 The Cost of Exporting a Container from the Philippines Study 2007 This study was a joint effort between the Export Development Council (EDC) and Phil. Chamber of Commerce and Industry (PCCI) and the Phil. Exporters Confederation (PHILEXPORT). The study aimed to validate the cost of exporting a container from the Philippines and Identify areas for possible cost reduction, in light of the 2006 World Bank-IFC Cost of Doing Business Report, particularly on Cross-Border Trade where the Philippines was ranked highest in terms of cost in exporting compared to other ASEAN countries like Thailand, Vietnam and Indonesia. The study also proposed for the passage of the Omnibus Maritime Code.

1.4.7 Philippine Logistics Study, November 2002 The study provided a detailed supply chain analyses for key agricultural commodities from Northern Mindanao. It recommended policy reforms such as rationalizing PPAs role as regulator and manager of public ports, deregulation of domestic shipping and shipping rates, lifting of the cabotage law, revocation of Executive Order 59 (creation of a single entity from various stakeholders to manage cargo handling operations in public ports), and campaign against corrupt practices on the road.

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1.4.8 Mindanao Logistics Infrastructure Improvement Project August, 2009 The study aimed at looking for ways in maximizing the utilization of the Mindanao Container Terminal as the countrys Southgate for both domestic and international cargo. The study provided a detailed description of Northern Mindanaos shipping system, as well as the various supply chains of major agricultural commodities of Mindanao, especially export winners such as fresh fruits pineapple & banana, coconut as food and vegetable oil, including promising commodities such as vegetables. The study also reinforced governments plans and programs for agriculture and farmto-market road development which will integrate, improve, and increase productivity and flow cargo. Apart from other recommendations, the study highly recommends for additional official development assistance on the following: 1. Establishment of a Container highway leading to MCT and CDO Port; 2. Establishment of RORO traffic for CDO/MCT and Batangas Port; 3. Additional market researches with focus on the cold chain to encourage more production of other crops such as vegetables; 4. Establishment of an agribusiness center (patterned after the Makubetsu Agricultural Coop in Hokkaido, Japan); and 5. Expansion of MCT. On the whole, these enumerated studies highlighted Northern Mindanaos logistical problems and possible solutions. The study however barely touched on the transport cost structure of Northern Mindanaos exports and imports.

1.5

Study Methodology and Approach The study was conducted from December 2009 till April 2010. The following activities took place: 1.5.1 A review on governments infrastructure initiatives:

a. The regions infrastructure development and improvement programs The data secured for this study were the materials presented by government agencies during the Mindanao Logistics Conference held last November 2526, 2009. While the Medium Term Philippine Development Plan (MTPDP) is the best basis for government programs and initiatives.

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b. Transport policies and enforcement Transport and shipping policies were gathered from various government offices and companies mainly through online information (to ensure said policies are already for public consumption). The team also secured other related policies during mutli-sectoral activities like the CIQS (CustomsImmigration-Quarantine and Security) Northern Mindanao Consultative Committee, the Regional Development Council (RDC) and during other consultations by these respective agencies. PhilExport-10A has also compiled policies issued over the years. These policies are in the form of memo circulars, enacted laws and implementing rules and regulations, department orders and the like.

1.5.2

Collection and review of information from past studies and official data from government agencies and local governments, which include: a. Export data from the Bureau of Customs (BOC) and the Department of Trade and Industry (DTI) b. Import Data from the Bureau of Customs and the Philippine Ports Authority (PPA) c. Port Statistics from PPA offices and from the Philippine Veterans Investment Development Corporation (PHIVIDEC) Industrial Authority d. Socio-economic information from the Department of Trade and Industry and the National Economic and Development Authority

1.5.3

Conduct of surveys and interviews of industry key players and some government officials in the region.

The surveys were undertaken from February till end of March 2010. The target key players and participants were: a. Shippers - exporting PhilExport10A members and other exporters. b. Truckers - PhilExport member service providers and members of the Cagayan de Oro Port Truckers Association as well as other independent truckers. c. Shipping Lines - foreign shipping lines calling the ports of Cagayan de Oro (CDO) and Mindanao Container Terminal (MCT), domestic shipping lines and Non-Vessel Operating Common Carriers (NVOCCs). d. Cargo forwarders and importers - especially companies importing raw materials for export.

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e. OROPORT Cargohandling Services, Inc.; the cargo handling operator of CDO Port and the Mindanao International Container Terminal Services, Inc. (MICTSI), the terminal operator of MCT. Most of the survey sheets were hand delivered with priority given to PhilExport 10A members while the others were either sent through courier, fax or email (as requested by the target respondents).

1.5.4

Validation session and survey trials

The survey questionnaires were drafted early January. A trial survey was conducted on January 14, 2010 which provided feedback in improving the survey mode and survey instrument.

1.5.5

Data processing and analysis

Data collection and processing were done as soon as each data was secured especially for survey sheets. Follow-ups of respondents were done on a daily basis. Most survey target respondents had problems completing the survey sheets due to the daily power interruptions and their need to maximize power availability. Others were apprehensive to respond, fearful of compromising business positions.

1.5.6

Completion of actual logistics cost structures based on transport cost standards

While the survey sheets provided questions on the cost components, separate interviews with key respondent companies (either their managers or their import/export staff) were done to ensure that these data were secured.

1.5.7

Report writing

This final activity documents all interpretation and findings of the study. Study results and recommendations are presented and validated during the stakeholders meeting on April 6, 2010. The attendance list of said meeting is attached as Annex 1.1 and the presentation material is shown in Annex 1.2.

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LOGISTICS CONDITIONS IN NORTHERN MINDANAO


2.1 Infrastructure Logistics Conditions 2.1.1 Spatial Character of Northern Mindanao2

Northern Mindanao is bounded on the North by Bohol Sea; on the South by Lanao del Sur and North Cotabato; on the West by Zamboanga provinces; and on the East by Agusan Provinces and Davao. The region consists of five provinces composed of the landlocked province of Bukidnon in the south; Misamis Oriental in the north; the island of Camiguin in the northeast; Lanao del Norte and Misamis Occidental in the west; the cities of Cagayan de Oro, Gingoog, Iligan, Malaybalay, Valencia, Ozamis, Oroquieta, and Tangub; a total of 85 municipalities, 11 Congressional districts, and 2,020 barangays. The total area of the region is 2,018,617 hectares with a population of about 4,846,579 with an average annual growth rate of 2.4%. Population density in the rural areas is 1,193.05 per square kilometer, while in urban areas; it is 4,685.37 per square kilometer. Bukidnon has vast agricultural resources which are highly suitable for most types of crops like corn, rice, vegetables crops, fruits and other commercial crops such as abaca, coffee, rubber and sugarcane. Moreover, livestock, poultry and dairy are also produced in large quantities in the province supplying the needs of neighboring provinces and cities. It is the region's food basket and primary supplier of raw materials for processing in the various agri-industrial centers of the region. Misamis Oriental is also an industrial hub of the region. It is home to the regional capital, Cagayan de Oro hosting a regional airport, international seaports, first class hotels and variety of agri-based and other manufacturing industries. The island of Camiguin is a place of unspoiled beauty, white sandy beaches, clear mountain springs and waterfalls and rustic old world charm. Camiguin is the perfect place for tourism adventures. Misamis Occidental, a place of natural beauty, wetlands, unspoiled forests and rich fertile soils. It is one of three major prawn, shrimp and squid spawning grounds in the Philippines. It is the base for most of the regions aquaculture industries. Lanao del Norte is the newest province added to the Northern Mindanao region. The province used to belong to the Central Mindanao region. The province is traversed by several rivers, the most important of which is the Agus River which feeds the Maria Cristina Falls and is a major source of hydroelectric power for the Mindanao Grid.

Northern Mindanao Socio Economic Profiles from NEDA-10, DTI-10, DA-RFU 10

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Physically, the region enjoys distinct advantages over other areas in the country. It is geologically a combination of plains, mountains, rolling hills, and coastal areas. It has fertile soil, abundant minerals and forest and aquaculture resources. The region serves as the gateway to and from the rest of Mindanao, linking this resource-rich island to the rest of the country and the world via its relatively modern seaport, airports, and an extensive arterial road network. It is located outside the typhoon belt and enjoys a climate that is favorable to agriculture and industrial activities. The study area is grouped into four corridors based on the locations of the cities, municipalities, road network, and industries for a better grasp of its spatial and transport attributes. The corridors are as follows:
Areas along the Butuan -Cagayan de Oro Iligan Road (BICR)3 East of Cagayan de Oro (Tagoloan to Magsaysay, Misamis Oriental) going to Butuan City Areas along the Iligan-Cagayan de Oro Butuan Road (ICBR) West of Cagayan de Oro (Opol to Lugait, Misamis Oriental) to include Iligan, Lanao del Norte & Misamis Occidental Areas along the Sayre Highway from Cagayan de Oro to : Quezon, Bukidnon Areas along the Cagayan de Oro-Talakag Road including the towns of Baungon, Bukidnon

Corridor 1: Eastern Misamis Oriental Corridor 2: Western Misamis Oriental Corridor 3:Eastern Bukidnon Corridor 4: Western Bukidnon

A. Corridor 1: Eastern Misamis Oriental It is one of the regions largest coconut-producing areas with the presence of small to large coconut-based industries. Corridor 1 is also the home of the PHIVIDEC Industrial Estate along Tagoloan and Villanueva in Misamis Oriental, hosting 29 manufacturing companies and 62 service firms. The two-lane coastal highway is also the major artery that connects Cagayan de Oro City to the agricultural provinces of Surigao del Norte, Agusan del Norte, Agusan del Sur, Surigao del Sur, through Davao del Norte to Davao City. The highway stretches 170 kilometers to Butuan City and is in fairly good condition with periodic maintenance by DPWH. Laden cargo trucks take approximately five hours to bring cargoes from Butuan to Cagayan de Oro Port or to MCT.

Formerly known as Iligan Cagayan de Oro Butuan Road (ICBR)

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B. Corridor 2: Western Misamis Oriental This coastal highway connects Cagayan de Oro City to the cities of Iligan, Ozamis, Dipolog, Pagadian and Zamboanga. The Cagayan-Iligan link was developed in the 1970s and is fairly in good condition with concrete re-blocking undertaken last year. Owing to its relatively flat terrain, this road probably carries the heaviest cargo loads comprising of steel, cement and wood products. Along this very important stretch of national road is the soon to be operational Laguindingan International Airport. Though current airfreight export volume contribution is negligible, improving and protecting this road section is of vital importance as the airports international status is expected to attract cargo traffic.

C. Corridor 3: Eastern Bukidnon Sayre Highway is the portion of the Philippine national highway that starts from Puerto, Cagayan de Oro City to Kabacan, North Cotabato passing through the province of Bukidnon. This also connects Cagayan de Oro to Davao via Buda road which was completed in early 2000 and shortens the north-southeast transit time for both cargo and commuters. The Sayre Highway though paved predominantly by asphalt traverses sections with deep ravines and cliffs such as the Manolo Fortich Section, Mangima section and Damay pass. Accidents involving hauling trucks carrying various Bukidnon products are common occurrences along this stretch of national road. The hazardous road sections are shown in Figures 2.1 and 2.2. Carmen Hill is one of the most difficult sections along Sayre Highway and serves as the main trunk to and from the province of Bukidnon. Carmen Hill section is a narrow two lane road, winding and steep. A short section has been recently rehabilitated but was not widened. The peak hour traffic volume at this section was around 500 vehicles per hour. As vehicles Figure 2.1 Carmen Hill Section, between Puerto, Cagayan de Oro & Ala-e, cannot gain Manolo Fortich, Bukidnon momentum due to congestion, vehicles are reduced to a crawl of approximately five kilometers per hour. This is a no passing section but faster vehicles will always try to overtake laden trucks which poses danger to motorists.

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Mangima Canyon is dubbed as the Kennon Road of the South and the Purple Heart Canyon by American Veterans. the zigzag road of Mangima Canyon at Manolo Fortich awes visitors who visit the place with its naturally scenic spot. The road along the Sayre highway however is a narrow two lane winding and steep affair and is also the site of hundreds of accidents. This has been considered as the most dangerous of the entire Sayre highway stretch. Figure 2.2: Section of the Highway along Mangima Canyon This section is unlit at night and chevron directional highway signs have been stolen. A signage with the warning Watch out for falling rocks ahead warns motorists of numerous dangers ahead. There is Department of Public Works and Highways (DPWH) Rest Area where motorists can cool their brakes and enjoy the fabulous view.

Figure 2.3: Hazardous Road Section: Mangima Canyon

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Shipping Costs and Competitiveness In Northern Mindanao

D. Corridor 4: Western Bukidnon The Cagayan-Talakag road is two lane concrete built and completed in early part of 2000. Except for a few steep and winding sections, this road is in good condition and traffic is sparse. Cargoes truck using this corridor encounter traffic congestion and road friction upon descending from Carmen Hill (west side from SM Mall), with merging traffic at the CDO 2nd bridge. Traffic is heavy along Vamenta Boulevard up to Liceo de Cagayan University before taking a left to Marcos bridge. This vital corridor is also used currently for the Lumbia airport commuter and cargo traffic. At present the airport is utilized for domestic passenger and cargo only. The list of difficult road sections is given by corridor in Table 2.1 as enumerated by the truck operators and drivers.
Table 2.1 Some Difficult Road Sections by Corridor Location Est. length (Kms.) Corridor 1: Eastern Misamis Oriental 26 Puerto-Bukidnon Junction 1 Binuangan to Sugbongcogon 4 Medina Brgy. Maanas 2 Medina, New Mananom to Fiesta Brand 3 Gingoog, Crossing Bal-ason to Anakan 3 Lambuyog Bridge to Artadi 6 Kibunsod to Carmen 6 Corridor 2: Western Misamis Oriental 3.5 Marcos Bridge and approaches 2 Bulua Section 1.5 Iligan City Diversion NA Corridor 3: Eastern Bukidnon 32 Carmen Hill 5 Diclum 3 Lingion to Mangima 4 Dalirig to Maluko Zigzag 5 Maluko to Kulaman Bridge 1.5 Damay Pass to San Vicente 4 Impasug-ong to Kapitan Bayong 4 Impalutao to Stock Farm 0.5 Patpat to Malaybalay 4 Malaybalay Diversion Road NA Corridor 4: Western Bukidnon 11 kms. (Roads) 120meters (bridges) To Baungon Airport to Maasin 1 Maasin Baily Bridge 0.08 Maasin to Imbatug NA (unpaved) Kamatayan section 1 Lipatunan Wooden Bridge 0.03 To Talakag Makahambus Cave to Mambuaya 4 Dansolihon to Langawan 2 Langawon to Menzi 3 Lapok-Talakag to Dominorog NA (unpaved)
Source: Truckers Survey and Truck Drivers Interview. The terrain road geometry along these sections forces trucks to reduce to low speed of 20 km/hour or lower.

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Shipping Costs and Competitiveness In Northern Mindanao

2.1.2

Freight Corridor and Port Access

A. Corridor 2 and 4: CDO Port and MCT Road Access The most vital section of the Butuan-Cagayan-Iligan road for road freight stretches from the municipalities of Laguindingan in the west (the site of the new international airport) to Jasaan in the east of Cagayan de Oro City. Corridor 2 export bound cargoes will have to pass through Cagayan de Oro (CDO) going to Mindanao Container Terminal (MCT) and Figure 2.4 Unsignalled Puerto-Bukidnon junction would encounter urban vehicular traffic. The most critical sections of heavy traffic concentration and roadside friction are the following:
Bulua section Marcos bridge Licoan intersection Gaisano-Nazareno Church section Corrales intersection Osmea intersection Limketkai intersection (un-signaled) Agora intersection Puerto intersection (un-signaled)

For cargoes from corridors 1 and 3 with the port of Cagayan de Oro as destination point, the critical sections are:
- Puerto intersection - Agora intersection - Agora road leading to CDO port South entrance gate - Limketkai intersection and Mindanao University for Science & Technology gate - Corrales intersection and Corrales extension - Corrales extension -Gaabucayan intersection - Gaabucayan-Corrales Street extension intersection

Figure 3.5: Difficult road sections leading to ports from Corridor 2

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Shipping Costs and Competitiveness In Northern Mindanao

The roads are shared by several road users, mainly private cars, trucks, motorela, jeepneys, taxis and buses. There are no comprehensive statistics reported by Northern Mindanao road agencies regarding traffic levels on the roads and the composition of total traffic by vehicle class. As trucks and buses occupy more road space than cars, the contribution of trucks to congestion can be greater than their share of traffic.

B. Licoan Intersection (J. Pacana Street) Cagayan de Oro Port is currently accessed by J. Pacana Street from the west turning left after crossing the Marcos bridge. The road is a 16 meter concrete with asphalt overlay and has been recently rehabilitated up to the corner of Gaabucayan street. Road widening from the crossing of Mendoza street to the corner of the port access road has not helped ease traffic as these are used by cargo trucks as parking spaces. Traffic flow from the highway is smooth unless a gridlock occurs at the un-signaled J. Pacana-Gaabucayan intersection. Intermittent effort by local traffic management officials has not eradicated trisikads from using this road and illegal parking by cargo trucks and trailers. Near the port access, are warehouses that use the road to load and unload cargo and queuing trucks waiting to be allowed entry into the Aboitiz Transport system container yard or trucks loaded with corn grains waiting for buyers and weighing at a nearby weighbridge. When the access road leading to the 4th bridge connecting Puntod and Kauswagan is completed, port related traffic to/from the west can utilize this route and relieve Marcos bridge from some of its excess traffic volume. Even after the opening of 4th bridge, Marcos Bridge will be remaining as a bottleneck of the City, and adjacent section of road networks at both side of river bank will be still suffering serious traffic problem.

C. Osmea Street Extension Osmea Street Extension is the second most important access road to the port from the east turning right from IliganCDO-Butuan Road. This section is four lane concrete road with narrow shoulders. The approach from the highway is by a sharp right turn. Trucks turning right into Osmea extension from the east occupy the middle lane of the three lane highway to be able to negotiate the sharp turn. The left lane vehicles are always in danger of being crushed.

15
Shipping Costs and Competitiveness In Northern Mindanao

The left lane is oftentimes occupied by passenger jeeps loading and unloading passengers leading to the intersection. After turning from the highway, only one of the two lanes of Osmea extension can be used as private cars and unserviceable vehicles occupy the right lane as parking/garage. The opposing two lanes is also tight as unserviceable vehicles, illegal parked trucks, motorelas and debris occupy part of the road and most of the sidewalk. A few meters further is Fiesta Grocers where its delivery trucks are either queuing along the road or trying to maneuver entry into the stores narrow truck bays, thus impeding traffic flow. Traffic along this important stretch of road is further aggravated by delivery trucks of Coca Cola Bottlers which use this road as queuing/parking area. At times, as much as 20 trucks can be seen parking on both sides of the road carrying Coca Cola bottles for delivery to the plant located along the highway. Coca Cola have not provided parking for these delivery trucks.
Figure 2.7: Motorela

Some other obstructions include a barangay outpost, appropriation by some businesses of

the sidewalks, and illegal structures. Delivery trucks that use roadsides as parking and queuing areas are not owned in this case by either Coca Cola Bottlers or Fiesta Grocers as these are operated by third party logistics providers. However, companies with high cargo volume and daily truck traffic should provide these delivery trucks with proper parking and waiting areas and not burden the public by using public roads as private convenience parking. Cargo trucks will then turn right from Osmea street extension to Gaabucayan street before turning right to Corrales street extension leading to the port. This intersection is un-signaled and can often result in gridlocks. This is also used by motorelas and trisikads (pedicabs). Along Gaabucayan Street are structures that impede traffic flow such as a vulcanizing shop, a car repair shop that occupied the sidewalks and a store constructed on the sidewalk. Before reaching the port gate, Cagayan de Oro Construction Supply is also using the road along Corrales Street Extension to load and unload its cargoes and the road shoulders as open warehouse. These impede traffic flow with forklifts using the road to load and unload cement, plywood and steel bars. Figure 2.8 Pedicab, locally known Motorelas and trisikads are also allowed on this road. as Trisikad 16
Shipping Costs and Competitiveness In Northern Mindanao

D. Agora Road The most strategic and most preferred route from the east is the Agora road turning right from the Butuan-CDO road. This has not been made feasible as Agora road has turned into a free for all section. Illegal parking, sidewalk vendors, illegal structures, vulcanizing shops, vegetable stalls, used clothing stalls, etc. has congested the road that truckers have shunned using it. This is aside from trucks unloading agricultural produce, trisikads sharing road space with passenger bus that calls Agora as its primary eastbound terminal. Non containerized trucks such as those carrying rice, corn, sugar are also facing risks of pilferage when using this road. The four lane section with a median divider has been turned to a one lane affair due to illegal parking and illegal structures. Lack of traffic enforcement has made this road unfriendly to trucks delivering or withdrawing cargoes to and from the port. This is most ironic as this road leads directly to the southern gate of the port of Cagayan de Oro where the ports weighbridge is located. The ports southern gate is its most important entry point (see Figure 2.9). For its credit, PPA has opened the ports main gate for the entry of cargo trucks. However, trucks that needs to be weighed needs to go through Agora gate for weighing.

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Shipping Costs and Competitiveness In Northern Mindanao

2.1.3

Ports and Port Facilities

Northern Mindanao boasts of two modern international port facilities with a combined potential capacity of 500,000 TEUs of containerized cargoes. A brief description of both these commercial ports is given below. A. Port of Cagayan De Oro The port of Cagayan de Oro is the biggest port in Mindanao with a total berth length of 1,200 linear meters and over 23 hectares of back up area and container yards (a 50 meter wharf extension and 4,500 square meters of reclaimed back-up area is being planned for implementation this year). Mindanaos traditional gateway is a multi-purpose port catering to domestic as well as import/export cargoes. It is also capable of handling containerized, bulk, liquid bulk, general and break bulk cargoes, passenger and RORO vessels. In 2008, CDO Port cargo handling operator established a cold storage facility with a capacity of 100,000 boxes of fresh banana and pineapple for export markets exclusively used by Del Monte Fresh International.

Figure 2.9: The Cagayan de Oro Base Port

The Cagayan de Oro port has an annual potential capacity of at least 300,000 TEUs of containerized cargo and at least four million tons of general, bulk, liquid bulk and break bulk cargoes. The port is also equipped, as part of its cargo handling fleet, the following: (i) 1 unit of ship to shore gantry crane; (ii) 2 units of 45-ton reach stackers; (iii) 2 units 45-ton toplifts; (iv) 7 units 25-ton forklifts; (v) 43 units of 3ton forklifts; and (vi) 14 units 1.5-ton electric forklifts, etc.

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Shipping Costs and Competitiveness In Northern Mindanao

ORORAMA

Metro Bank

ACTUAL VEHICULAR FLOW


I s l a n d

Island

Okay-okay Area

Okay-Okay Area

Agora Market

Terminal (Underutilized Road)

Proposed Okay-okay Bus Area

Bus Terminal

i s l a n d

Fish Landing (Busy only in early morning)

Island

To Gaabucayan Road

I s l a n d

PPA Agora Gate

Vehicular Flow

Figure 2.10 Vehicular Traffic at CDO Port Southern Gate

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Shipping Costs and Competitiveness In Northern Mindanao

B. Mindanao Container Terminal The Mindanao Container Terminal (MCT) at the PHIVIDEC Industrial Estate, Tagoloan, Misamis Oriental was originally conceptualized to maximize Northern Mindanao's potential as the Philippines' southern gateway, catalyzing Northern Mindanao's role as domestic food basket and agri-industrial exporter.

The MCT has been identified as a Mindanao flagship project, one of the key infrastructure envisioned to jump start the island's economic potential. The MCT was conceived to fill the supply gap for an efficient cargo handling facility with its state of the art facilities and cargo handling equipment, It has been designed to be exclusively operated for fullyFigure 2.11: The Mindanao Container Terminal (MCT) containerized and semi-containerized domestic and foreign vessels with an annual capacity of 270,000 twenty equivalent units (TEUs) with a 9.4-hectare container yard. The port was privatized in 2008 and is now operated as a subsidiary of the International Container Terminal Services, Inc., (ICTSI). The berth length of the port measures 300 meters and 13 meter draft. It can accommodate container vessels up to 30,000 DWT. Port facilities include 2 quayside gantry cranes and four rubber-tired gantry cranes and 262 reefer outlets.

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Shipping Costs and Competitiveness In Northern Mindanao

2.2

Exports and Imports of Key Commodities 2.2.1 Movement of Commodities


The flow of commodities by type is segregated by corridor as described below. A. Corridor 1: Eastern Misamis Oriental These are coastal areas along the Butuan-Cagayan de Oro-Iligan Road (BCIR) East of Cagayan de Oro, covering the towns of Tagoloan, Villanueva, Jasaan, Balingasag, Lagonglong, Salay, Binuangan, Sugbongcogon, Kinoguitan, Balingoan, Talisayan, Medina, Magsaysay and Gingoog City in Misamis Oriental, going to Butuan City in the CARAGA Region. It is one of the regions largest coconut producing areas with the presence of small to large coconut-based industries. It is also the major link to other raw material sources from Camiguin Island and CARAGA such as wood and mineral ore. Table 2.2 gives the origin and destination of export and import commodities. Table 2.2 Corridor 1 Commodity Flow
In-bound Raw Material Fertilizers Grains Fresh Coconut Copra Crude coconut oil Fresh fruit Milk powder Aquamarine products Resins Steel products Petrochemicals Industrial products Agricultural Products Packaging materials Iron ore Silica Lime Source Imported from other countries Imported & other areas in Mindanao via Corridor 3 Local and some from other areas of Mindanao Local and some from other areas of Mindanao Corridor 2 and other areas of Mindanao Corridor 2 and other areas of Mindanao Imported from other countries Corridor 2 Imported from other countries Imported from other countries and from Corridor 2 Imported from other countries Imported from other countries Imported from other countries Imported from other countries Corridor 3 Other areas in Mindanao Main Markets World-wide Japan World-wide World-wide World-wide Japan and Europe Asia USA & Europe China China & USA Europe & Asia

Forest Products Logs

Industrial

Out-bound Commodity Coconut: Desiccated, coconut cream, frozen chunks, coco sugar Aquamarine: Prawns Fresh fruit: pineapple & banana Processed: canned/dried/cooked fruit, raw sugar Coconut: Oleo chemicals, charcoal, fiber & coconut oil Industrial: Sintered ore, Fiber-reinforced plastics, finished rubber, silicon metals, activated carbon Food Iron & Steel: Tin cans, metal scraps

ResourceBased

GTH: Handmade paper Minerals Wood: Lumber & furniture components Others: Pineapple & Sugarcane by-products, raw rubber

Minerals

Source: Compiled from DTI, PhilExport and BOC data, 2009.

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Shipping Costs and Competitiveness In Northern Mindanao

B. Corridor 2: Western Misamis Oriental These are areas along the Butuan-Cagayan de Oro-Iligan Road (BCIR) West of Cagayan de Oro. It covers the towns of Opol, El Salvador, Alubijid, Laguindingan, Gitagum, Libertad, Initao, Naawan, Manticao and Lugait in Misamis Oriental, Iligan City and the coastal areas of Lanao del Norte namely: Linamon, Kauswagan, Bacolod, Maigo, Kolambugan, Tubod, Lala and Kapatagan. This road stretch connects the region with other major agricultural producing areas of Misamis Occidental (via RORO between Ozamis City and Kolambugan) and the Zamboanga Peninsula. Iligan is considered the industrial city of the south as it is home to 17 large manufacturing companies. Similar to Corridor 1, the area also has its share of perennial heavy rainfall during the wet season, destroying some bridges along the BICR, especially along the Lanao del Norte Stretch and flooding between the El Salvador and Alubijid in Misamis Oriental. Table 2.3 Corridor 2 Commodity Flow
In-bound Raw Material Fertilizers Grains (and wheat) Fresh Coconut Copra Tapioca Starch Agricultural Products Steel products Petrochemicals Clinker Packaging materials Industrial Products Source Imported from other countries Imported from other countries & other areas in Mindanao Local and from other areas in Mindanao Local and from other areas in Mindanao Corridor 3 & 4 and other countries Imported from other countries Imported from other countries Imported from other countries Imported from other countries Main Markets USA Japan World-wide World-wide Japan and Europe Asia USA, Europe & Japan China China & USA Europe & Asia

Forest Products - Logs Other areas in Mindanao Out-bound Commodity Coconut: Coconut vinegar Aquamarine: Prawns Processed: Banana chips Food Industrial Coconut: Charcoal, fiber & coconut oil Industrial: Cement Iron & Steel: hot rolled coils, cold rolled coils, metal scraps Minerals: copper and chromite ore Wood: Lumber Others: Abaca pulp, rubber cup lumps

GTH: Handmade paper; wooden toys ResourceBased

Source: Compiled from DTI, PhilExport and BOC data, 2009.

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Shipping Costs and Competitiveness In Northern Mindanao

C. Corridor 3: Eastern Bukidnon Areas along the Sayre Highway from Cagayan de Oro to the towns of Manolo Fortich, Impasug-ong, Maramag and Quezon, Bukidnon, including the cities of Malaybalay and Valencia. Bukidnon is known as the food basket of Northern Mindanao. Large plantations and contract farms of fruit, vegetables and livestock are located along these areas. Irrigation facilities are in place with enough water supply for yearround agricultural production. Similar to Corridors 1 and 2, the area is also perennially visited by heavy rainfall during the wet season, affecting agricultural production despite technologies and techniques applied on ground. Table 2.4 Corridor 3 Commodity Flow
In-bound Raw Material Agricultural Products Fertilizers Grains Feeds Source Imported from other countries Imported from other countries & other areas in Mindanao Imported from other countries & other areas in Mindanao

Industrial -Packaging materials Imported from other countries Resource-based - Raw Rubber Local and from other areas in Mindanao Out-bound Commodity Main Markets Fresh fruit: Pineapples & Bananas World-wide Raw sugar Asia Processed: Frozen fruit Japan Industrial: rubber boots Japan and Europe GTH: handbags and home dcor USA, Europe & Japan Food Cut flowers (via air) Resourcebased Mineral: Copper ore Wood: Lumber Others: rubber cup lumps, pineapple & sugarcane by-products
Source: Compiled from DTI, PhilExport and BOC data, 2009.

Asia China China & USA Europe & Asia

D. Corridor 4: Western Bukidnon These are areas along the Cagayan de Oro-Talakag Road, particularly the hinterlands of Cagayan de Oro, and the towns of Baungon and Talakag, Bukidnon. This area has its share of irrigation, however, because of the terrain, irrigated areas are limited. Major roads are all-weather concrete paved but most of the farm to market roads are either, yet to be developed or needs improvement.

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Shipping Costs and Competitiveness In Northern Mindanao

Table 2.5 Corridor 4 Commodity Flow


In-bound Raw Material Agricultural Products Fertilizers Grains Feeds Source Imported from other countries Imported from other countries & other areas in Mindanao Imported from other countries & other areas in Mindanao Imported from other countries Local and from other areas in Mindanao Main Markets World-wide USA China

Industrial Products -Packaging materials Resource-based Raw rubber Out-bound Commodity Food Fresh fruit: Bananas

Processed: Frozen diced/chunk fruit

Resource-based - Mineral: Copper ore


Source: Compiled from DTI, PhilExport and BOC data, 2009.

2.2.2 Export and Import Volumes


Ports and airports are the regular gateways for exports and imports. For Northern Mindanao, the exports/imports through airports are negligible as only export samples are the usual commodities sent out. The data on export and import volumes passing through the ports are reported by the Philippine Ports Authority based on ships manifests. However, PPA statistics are aggregated to broader categories as to import and export cargo by packing type rather than details on commodities. As such, the PPA data are supplemented with the study teams compiled information by commodity from the local and regional offices of the Bureau of Customs, the Department of Trade and Industry and PhilExports One-stop Export Processing Center. The PPA 2008 and 2009 statistics show a slightly lower volume than the study teams data. But the general trend is the same in that there is a decrease in the total volumes from the previous year 2008 (see Tables 2.6 and 2.8).

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Shipping Costs and Competitiveness In Northern Mindanao

Table 2.6 Comparative Shipping and Cargo Traffic, PPA


Particulars A. Shipping Traffic Number of Shipcalls Domestic Foreign Total G.R.T. Domestic Foreign Total Waiting Time Domestic Foreign Total Service Time Domestic Foreign B. Total Cargo (m tons) Domestic Trade Inbound Outbound Foreign Trade Import Export C. Container Traffic (baseports) Domestic Inbound Outbound Foreign Import Export 2009 12,539 12,172 367 13,403,453 10,226,455 3,176,998 9,499 9,142 357 227,557 208,780 18,777 5,698,477 4,186,618 1,826,712 2,359,905 1,511,860 675,334 836,526 140,860 116,467 57,086 59,381 24,393 14,306 10,087 2008 14,027 13,625 402 14,110,503 10,764,075 3,346,428 10,629 10,019 610 249,812 227,434 22,378 6,090,936 4,232,543 1,847,482 2,385,061 1,858,393 769,741 1,088,652 150,208 123,751 60,921 62,830 26,457 12,821 13,636 Inc (Dec) variance % (1,488) (1,453) (35) (707,050) (537,620) (169,430) (1,130) (877) (253) (22,255) (18,654) (3,601) (392,459) (45,925) (20,770) (25,156) (346,533) (94,407) (252,126) (9,348) (7,284) (3,835) (3,449) (2,064) 1,485 (3,549) -11% -11% -9% -5% -5% -5% -11% -9% -41% -9% -8% -16% -6% -1% -1% -1% -19% -12% -23% -6% -6% -6% -5% -8% 12% -26%

Source: Philippine Ports Authority Statistics, 2008 and 2009

Table 2.7: Volume of Exports by Commodity (in Metric Tons)1


Sector Food Coconut (Food) Aquamarine Fresh Processed (including Sugar) Industrial Coconut (Industrial w Coco oil) Industrial Iron & Steel GTH Resource-based Minerals Wood Others 2006 236,435.78 17,758.45 5,088.49 909.64 212,679.19 254,504.81 101,672.80 119,136.59 33,695.42 187.95 63,837.53 35,924.16 27,905.25 8.13 2007 272,557.82 17,525.58 2,679.31 92,666.78 159,686.15 382,502.30 322,281.01 5,047.19 55,174.09 322.24 69,200.62 6,039.98 34,144.78 29,015.87 2008 557,403.83 12,830.74 2,905.50 189,003.51 352,664.08 456,635.99 295,499.00 23,964.11 137,172.87 2,020.02 278,888.32 109,342.52 148,707.68 20,838.11 2009 386,140.55 16,050.40 2,427.43 134,057.24 233,605.49 412,610.97 333,983.82 26,371.22 52,255.93 216.06 231,460.07 53,974.01 163,192.96 14,293.09 2008-2009 Variance (%) -31 25 -16 -29 -34 -10 13 10 -62 -89 -17 -51 10 -31 Ave. Growth (%) 15.8 -2.4 -13.1 3659.4 2.5 15.5 57.1 -19.5 13.8 3.7 65.6 12.6 121.2 43942.9

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Shipping Costs and Competitiveness In Northern Mindanao

Sector Special Transactions Sub-total (Commercial Ports) Phil. Sinter Corp. HOLCIM Phils. Total NM Exports
1

2006 317.95 555,284.02 5,319,613.76 909,431.00 5,874,897.78

2007 554.45 725,137.43 17,481.36 742,085.01 742,618.79

2008 548.88 1,295,497.03 4,316,104.21 448,793.90 6,060,395.14

2009 1,990.51 1,032,418.16 3,115,361.00 293,053.00 4,440,832.16

2008-2009 Variance (%) 263 -20 -28 -35 -27

Ave. Growth (%) 131.5 21.5 -10.4 -16.9 -6.1

Note: Volume of Phil. Sinter Corp. and HOLCIM Phils., Inc were segregated since they have their own port facilities and 100% of their export pass through their respective ports in bulk. Source: Compiled by the Study Team based on records from BOC, DTI and Philexport10A One-stop Export Documentation Center.

While the overall cargo traffic has gone down compared to the previous year, it is noted that that total FCL (full container load) traffic accounting to about 72,771 TEUs has increased in 2009.

Table 2.8: Comparative container traffic for both ports in TEU


Container Traffic (FCL only) Import Export Total 2008 CDO 10,632 11,803 22,435 MCT 14,172 17,165 31,337 Total 24,804 28,968 53,772 CDO 12,134 8,796 20,930 2009 MCT 33,808 18,033 51,841 Total 45,942 26,829 72,771

For 2009, PPA reports a total of 837,000 metric tons of export cargo while the study teams data shows a total of 1,032,000 metric tons, which excludes the export volumes of large industries using their own ports. On a four-year growth analysis, an average of 21.5% yearly increase in volumes was realized between 2006 and 2009. The top commodity, coconut-based products, posted a strong growth of 57% in the industry sector but a slight dip of -2.4% for the food sector. Other top commodities such as processed food, iron and steel, and wood posted positive growths of 2.5%, 13.8% and 121.2%, respectively. It should be noted that the wood products are of the commercially grown, non dipterocarp types. The markets for these commodities are indicated in Table 2.2 to 2.5. Coconut, fresh and processed food products are exported worldwide. Most of the resource-based products, on the other hand, are exported to China and the USA. Figure 2.7 shows the shares of commodities to total export volumes for 2009. On the whole, industrial commodities accounts for 56% of total export volumes. This is followed by food products (fresh and processed) with 26% and by resource-based products with 18% of total exports. Coconut-based products posted 47% of total volume in the industrial sector and 5% of the food sector.

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Shipping Costs and Competitiveness In Northern Mindanao

Table 2.9 Value of Exports (in Million US Dollars)1


Sector Food Coconut (Food) Aquamarine Fresh Processed (including Sugar) Industrial Coconut (Industrial w Coco oil) Industrial Iron & Steel GTH Resource-based Minerals Wood Others Special Transactions Sub-total (via Commercial Ports) Phil. Sinter Corp. HOLCIM Phils. Total NM Exports
1

2006 135.57 18.75 1.73 5.31 109.77 389.62 245.38 10.92 133.32 1.38 10.69 0.92 9.77 0.0018 0.34 537.60 62.97 27.63 600.57

2007 149.50 21.94 3.20 33.77 90.59 357.67 257.00 36.86 63.81 1.76 31.62 1.73 19.45 10.44 1.92 542.47 288.46 23.50 830.92

2008 252.00 24.02 3.19 67.49 157.30 463.57 323.53 23.43 116.61 1.57 125.59 53.15 26.95 45.49 1.97 844.71 56.43 20.13 921.27

2009 161.30 22.91 4.78 39.41 94.19 245.45 204.21 21.41 19.83 1.53 70.13 3.00 11.71 55.42 0.42 478.83 35.87 12.02 526.72

Ave. Growth (%) 4.7 5.5 44.1 160.5 -3.5 -9.3 -4.2 24.0 -21.3 2.7 139.0 56.5 5.0 5.9 -2.7 -10.8 -14.1 -3.1

Note: Values of Phil. Sinter Corp. and HOLCIM Phils., Inc were segregated since they have their own port facilities and 100% of their exports pass through their respective ports in bulk. Source: Compiled by the Study Team based on records from BOC, DTI and Philexport10A One-stop Export Documentation Center.

Figure 2.7 Export Volumes by Commodity, 2009

Source: Compiled by the Study Team based on records from BOC, DTI & Philexport10A One-stop Export Documentation Center.

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Shipping Costs and Competitiveness In Northern Mindanao

For the import volumes, commodity data compiled by the Study Team is incomplete as it only reflects about 56% of total volume of 675 thousand metric tons reported in the PPA statistics. The data of BOC at the MCT port have not yet been provided and it is expected that the information would complete the overall view of imports in the study area.

Based on available breakdown of imported commodities, the top three products are minerals, foodstuffs and fertilizer. Minerals imports are exporters raw material inputs for their products. Most of the listed commodities are for local use.

Based on PPAs statistics, import volumes are also decreasing from 769,000 metric tons in 2008 to 675,000 metric tons in 2009; a 12% reduction in one year. . Table 2.10 Top Import Commodities for Northern Mindanao, 2009
Commodity Minerals Foodstuffs Fertilizer Corn Chemicals Paper & paperboard thereof Spare Parts Footwear Petrochemical Products Forest Product Plastic/rubber & articles thereof Iron & Steel Products Live Animal Hardware Textiles & textiles articles Electrical Machinery Miscellaneous Items Maize Non-electrical machinery Motor Vehicle Articles of Iron Old stocks Others, raw hides, shin & leather Machine Parts Acc. Total Source: BOC CDO District Vol. (Kgs.) 147,164,493 97,735,684 40,488,025 27,717,124 21,422,033 9,900,250 6,645,759 5,172,683 3,400,000 3,042,084 2,173,291 2,035,912 1,924,510 1,894,254 1,827,945 1,738,983 1,112,478 1,000,000 831,119 380,721 57,208 16,250 6,100 3 377,686,909 Value (Php) 540,967,161.00 2,604,132,298.58 337,429,813.00 259,563,594.00 522,356,023.15 224,637,552.00 90,526,836.67 7,602,797.00 81,953,687.00 26,881,112.00 159,709,649.99 149,461,617.40 79,548,560.00 30,044,606.00 62,020,343.00 69,390,043.00 49,595,870.87 1,892,008.00 98,203,160.00 17,001,433.00 13,015,167.00 187,148.00 37,371.00 3,802.00 5,476,161,653.66

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Shipping Costs and Competitiveness In Northern Mindanao

2.3

Logistics Players in Northern Mindanao A. Exporters (Shippers)


Unlike other areas where export commodities are homogenous, Northern Mindanaos export is relatively diverse in terms of commodities. As such, there are numerous players in the export sector. Listed in Table 2.9 are the exporters from 2006 to 2009 showing a modest growth from 127 to 174. The number of firms recorded under the special transactions is not considered as regular exporters. Thus, the total number of regular exporters in 2009 is 161, which is the target sample for the survey as described in Chapter 3. Table 2.11 Northern Mindanaos Exporters

Sector Food Coconut (Food) - desiccated, coco cream, frozen chunks, coco sugar Fresh - banana, pineapple Aquamarine prawns Processed Sugar - tropical fruit, sugar Industrial Coconut - Oleo-chemicals, Coconut oil, Coco charcoal, Coco husks Industrial - construction materials, processed silica, activated carbon, finished rubber Iron & Steel - hot rolled coils, cold rolled coils, scrap metal GTH - gifts toys and house-ware Resource-based Minerals - copper ore, chromite ore Wood - lumber, furniture components Others - pineapple & sugarcane by-products, raw rubber, abaca pulp Special Transactions Total Source: DTI, BOC and PhilExport, 2009

2006 25 2 8 5 10 34 13 10 11 6 52 10 34 8 10 127

2007 31 2 7 12 10 33 13 11 9 6 79 30 35 14 11 160

2008 35 2 6 17 10 41 18 11 12 7 88 43 37 8 15 186

2009 41 3 6 22 10 44 22 13 9 6 70 22 32 16 13 174

B. Truckers The region has about forty (40) major trucking companies serving both exporters and importers. Most of these players are based in Cagayan de Oro. There are other players based outside the region (e.g. Davao, Cotabato, and Manila) who also operate within the region on a per contract basis.

C. Imports and Importers Northern Mindanaos major imports are raw materials for agricultural production, petrochemicals and minerals for finished and semi-goods of industrial exports. Below is the distribution of importers and import commodities for the region.

29
Shipping Costs and Competitiveness In Northern Mindanao

Table 2.12 Importers for 2009


Corridor 1 Exporters importing raw materials Importers for Domestic Consumption Total Source: BOC CDO District 27 140 167 Corridor 2 9 33 42 Corridor 3 6 1 7 Corridor 4 5 1 6 Total 47 175 222

D.

Shipping Lines

Compared to other areas in Mindanao, Northern Mindanao has a relatively good international connectivity with several domestic liners providing transshipment cargo. Five (5) foreign shipping lines call Northern Mindanao Table 2.12 Foreign Shipping Lines operating in Northern Mindanao
Company American President Lines (APL) Maersk Lines Marianas Shipping Pacific Eagle Lines (PEL) Region Container Lines (RCL) China Shipping Orient Overseas Container Line Nippon Yusen Kaisha (NYK) Call Frequency Weekly Weekly Weekly Weekly Weekly Weekly Weekly Weekly Port(s) of Call CDO-Bugo-MCT MCT MCT MCT MCT Via Cebu Via MICT/Cebu Via MICT

Domestic liners and most Non Vessel Operating Common Carriers (NVOCC) provide transshipment services for export. However, because of the increasing number of foreign ship calls, transshipment volume has been steadily on the decline. Table 2.13 Transshipment Cargo from Northern Mindanao
Period 2006 2007 2008 2009 Vol. (MT) 80,695.14 98,406.33 134,868.35 123,101.51 Val. (USD Million) 54.72 37.39 27.08 20.95

Source: BOC, 2009

30
Shipping Costs and Competitiveness In Northern Mindanao

E.

Cargo Handling Operators

Cagayan de Oro Port is managed by the Philippine Port Authoritys Port Management Office and contracted OROPORT Cargohandling Services, Inc. as its cargo handling service provider. OROPORT, since its merger (between Continental Arrastre and Stevedoring Co., Inc. CASCO (1986) and Gold City Integrated Port Services, Inc. INPORT(1977)) has been providing cargo handling services at the port since 1999. Mindanao Container Terminal is operated by the Mindanao International Container Terminal Services, Inc. (MICTSI), a subsidiary of the International Container Terminal Services, Inc., which took over terminal operations in 2008.

2.4

Logistics Costs/Charges for Exports and Imports 2.4.1 Trucking and Hauling Rates
The trucking fleet in Northern Mindanao is primarily composed of Japanese and American surplus trucks of various age, model and type. Trucking for container cargoes are usually by six or ten wheeler semi-trucks with 20 or 40-footer skeletal or flatbed trailers and/or by 10-wheeler stake trucks equipped with adequate container twist locks. The 10-wheeler semi truck with 40-foot trailers can load two units of 20-foot containers (tandem load). With this system, trucking rates per container unit becomes cheaper; however, overloading becomes a major issue. Prevailing spot market trucking rates are usually paid on cash, short term credit and/or short term credit with diesel cost paid in advance. Table 2.14 Northern Mindanao Spot Market Trucking Rates for Containerized Cargo -including empty positioning/empty return (in PhP)
FCL 20 Footer 40 Footer Tandem (2x20) MCT to CDO w/n 20Km. radius El Salvador, Mis. Or
(Sanwa)

Iligan City (Global Steel) 8,500 14,000 14,000 112 223 P37/km P62/km 31/km/unit

Bukidnon (BUSCO) 11,000 16,000 18,000 127 254 P43/km P62/km 35/km/unit

Medina, Mis. Or.


(Celebes Oil)

2,500 4,000 3,500 6,000 4,000 6,000 Dist. (Kms): 1-way 20 38 Back and forth 20 76 20 Footer P62/km P52/km 40 Footer P87/km P78/km Tandem (2x20) 50/km/unit 40/km/unit Source: Trucker interviews and rate canvass

8,000 12,000 13,000 94 188 P42/km P63/km 35/km/unit

31
Shipping Costs and Competitiveness In Northern Mindanao

The shipping lines also have their own published trucking rates referred to as the Shippers Matrix Guides for an all in door-to-door service, which usually includes empty positioning/return. This is shown in Table 2.15. Table 2.15 Shipping Lines Trucking Published Rates Containerized Cargo Door to Door Service (in PhP)
Distance 20 Footer Dry (Kms) Non-VAT VAT-in MCT, Bugo to CDO proper 1.6 to 18 2,398.22 2,686.00 CDO Proper 18 2,398.22 2,686.00 Carmen/Kauswagan/Bulua 20 to 25 2,877.85 3,223.20 MCT to Eastern Misamis Oriental Villanueva 3.7 2,686.00 Jasaan 15 2,829.75 Balingasag 30 3,996.30 Lagonglong 37 4,578.00 Salay 45 5,076.75 Binuangan 53 5,744.55 Sugbongcogon 64 6,076.35 Kinoguitan 72 6,325.20 Balingoan 76 6,991.95 Talisayan 80 7,325.85 Medina 94 8,990.10 Gingoog 102 10,155.60 Magsaysay 112 10,393.95 MCT to Western Misamis Oriental Opol 28 3,531.50 El Salvador 38 4,322.00 Alubijid 45 4,875.00 Laguindingan 50 5,271.00 Gitagum 56 5,744.50 Libertad 62 6,218.50 Initao 72 7,009.00 Naawan 80 7,642.00 Manticao 84 7,957.00 Lugait 93 8,669.00 Iligan City 108 9,855.00 Source: Philippine Liner Shipping Association (PLSA) Destination 40 Footer Dry Non-VAT VAT-in 4,796.44 5,372.00 4,796.44 5,372.00 5,755.70 6,446.40 5,372.00 5,659.50 7,992.60 9,156.00 10,153.50 11,489.10 12,152.70 12,650.40 13,983.90 14,651.70 17,980.20 20,311.20 20,787.90 7,063.00 8,644.00 9,750.00 10,542.00 11,489.00 12,438.00 14,018.00 15,284.00 15,914.00 17,338.00 19,710.00

32
Shipping Costs and Competitiveness In Northern Mindanao

2.4.2 Brokerage and Facilitation Charges


Services provided by import-export brokers have a standard charge by the quantity of goods exported as shown in Table 2.16. The standard charge for all other activities of processing the exportation and importation of containerized cargoes are established by the brokers association and these are identified per agency as shown in Table 2.17. Table 2.16 Brokerage and Facilitation of Containerized Cargo
No. of units/BL 1 box 2 boxes 3 boxes 4 boxes 5 boxes 6 boxes 7 boxes 8 boxes 9 boxes 10 boxes & Over Brokerage Unit Fee (PhP) 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 2,500 Facilitation Unit Fee (PhP) 30,000 15,000 10,000 7,500 6,000 5,000 4,286 3,750 3,334 3,000 Total Unit Cost (PhP) 32,500 17,500 12,500 10,000 8,500 7,500 7,786 6,250 5,834 5,500

Source: Compiled from Bill of Ladings Table 2.17 Export and Import Processing Charges by Agency
Cost Item Containerized Cargo Due to Customs :Processing Fee Container Security Fee - 40* Container Security Fee - 40* ATRIG: Facilitation Certification Fee Doc Stamps Facilitation (Informal) Miscellaneous Break bulk Cargo (PEZA Registered) Customs Legal Charges: Processing Fee ATRIG: Facilitation Certification Fee Doc Stamps Brokers Facilitation Miscellaneous Brokers: Brokerage Facilitation Fee *: subject to applicable forex Source: CDO Import/Export Brokers Amount (PhP) Php1,000 US$10 US$5 Php3,000/application Php100 Php30 Php5,000/application Php1,000/BL Php1,000/BL Php3,000/application Php100 Php30 Php5,000/application Php1,000/BL Php50,000/BL Php100,000/BL

33
Shipping Costs and Competitiveness In Northern Mindanao

2.4.3 Port Charges


Costs incurred at the port are the arrastre and stevedoring charges. The rates are shown in Table 2.18 for the Northern Mindanao ports in comparison to other international ports in the country. It is evident that a uniform Mindanao-wide arrastre rate is used while those of Cebu and MICT (Manila) are different and much higher. It is interesting to note that the arrastre charges for domestic-bound containers are almost the same as export-bound or import containers at the MCT and CDO ports (see Table 2.19). The 40 footers for the import/export are even slightly lower than the domestic-bound containers. However, stevedoring rates at these ports favor the domestic-bound containers as they are considerably lower than their import/export counterparts. Table 2.18 Comparative Arrastre Rates of Selected Philippine International Ports1
20 Footer FCL 40 Footer FCL Import Export Import Export CDO CDO Port 974.50 974.50 1,797 1,797 PHIVIDEC MCT 974.50 974.50 1,797 1,797 Davao Sasa 974.50 974.50 1,797 1,797 Cebu Cebu Intl. 1,465 1,465 2,448 2,448 Manila MICT 2,646 6,077 3,241 7,436 1Arrastre rates (Terminal Handling) for major ports in Mindanao under the jurisdiction of the Philippine Ports Authority (PPA), namely Cagayan de Oro, Davao and General Santos had been leveled as of August 2009. Source: PPA CDO, Davao Port Tariff, MCT Tariff, CIP, ICTSI Tariff Port

Table 2.19 Arrastre and Stevedoring Charges at MCT and CDO Ports FCL Containers Domestic Import/Export Arrastre 903.50 974.50 20 1,806.00 1,797.00 40 Stevedoring 273.50 603.00 20 273.50 1,207.00 40
Source: PPA CDO and MCT Tariff

34
Shipping Costs and Competitiveness In Northern Mindanao

2.4.4 Sample Logistics Cost of Exporters


Based on several receipts and financial records of exporters and importers, all costs actually incurred are documented. A representative sample of how costs run for a dry and reefer 40-footer are presented in Tables 2.20 and 2.21 for a better understanding of the recent export cost structure to a destination within Asia. Freight cost is shown to account for almost 40% of total cost for a dry 40-footer. The informal cost incurred is quite high at 20% of total cost. Freight cost for a 40-footer reefer, on the other hand, accounts for 78% of export cost.

Table 2.20 Exporters Cost - Exporting Lumber through 40 Footer Dry Van from CDO to Shanghai via MCT
November 2009 Cost Items Ocean Freight Docs Fee (Bill of Lading) THC (Terminal Handling Charge) Seal Fee Wharfage (VAT-in) Weighing (VAT-in) Arrastre (VAT-in) Storage (VAT-in) Trucking (VAT-in) Documentary Stamps (shipper) Commodity Clearance (DENR) Customs Broker's fee Stuffing DENR "Facilitation" BOC Customs on Board Cargo Clearance Facilitation BOC Export "Facilitation" Published (PhP) 5,990.00 150.00 438.03 179.20 2,012.64 134.74 Actual (PhP) 28,740.00 1,437.00 5,987.50 150.00 219.02 179.20 2,068.64 134.74 3,500.00 575.00 20.00/CBM 1,200.00 1,500.00 900.00 1,200.00 1,500.00 7,000.00 900.00 4,000.00 20.3 Share to Total (%) 49.1 2.5 10.2 0.3 0.4 0.3 3.5 0.2 6.0 1.0 1.5 2.1 2.6 Remarks paid to shipping line paid to shipping line paid to shipping line paid shipping line paid to port authority paid to terminal operator paid to terminal operator paid to terminal operator paid to trucker paid to BOC paid to regulatory agency @ 45CBM/40 van paid to Customs Broker paid to trucker informal cost (per "rush" transaction) informal cost (per bill of lading) informal cost (per export declaration)

Total 58,491.09 100.0 Source: Compiled by the Study Team from actual cost disbursements of exporters.

35
Shipping Costs and Competitiveness In Northern Mindanao

Table2.21 Exporter's Cost - Exporting a commodity through 40 Footer Refrigerated Van from CDO to Tokyo via MCT
March 2010 Cost Items Ocean Freight FAF (Fuel Adjustment Factor) YAS (Yen Appreciation Surcharge) Docs Fee (Bill of Lading) THC (Terminal Handling Charge) Documentary Stamps (shipping line) Seal Fee ED Processing (OSEDC) Arrastre (VAT-in) Weighing (VAT-in) Wharfage (VAT-in) C-5 Form (PIA) Trucking Documentary Stamps (shipper) Customs Broker's fee Commodity Clearance (BFAR) BOC Customs on Board Cargo Clearance "Facilitation BOC Export "Facilitation" 2,012.64 179.20 Published (PhP) Actual (PhP) 119,600.00 10,120.00 4,830.00 1,380.00 7,795.00 10.00 150.00 150.00 2,012.64 179.20 437.98 56.00 3,200.00 575.00 1,200.00 900.00 1.2 1,000.00 Share to Total (%) 77.9 6.6 3.1 0.9 5.1 0.0 0.1 0.1 1.3 0.1 0.3 0.0 2.1 0.4 0.8 Remarks paid to shipping line paid to shipping line paid to shipping line paid to shipping line paid to shipping line paid to shipping line paid to shipping line paid to PhilExport (processing fee) paid to terminal operator paid to terminal operator paid to port authority paid to port authority paid to trucker paid to BOC
paid to Customs Broker

5,990.00 150.00

1,200.00

per EO 554 Informal cost (per bill of lading) informal cost (per export declaration)

Total 153,595.82 100.00 Source: Compiled by the Study Team from actual cost disbursements of exporters.

Presently, domestic transshipment of FCL containers is not a viable option for Mindanao shippers/exporters since the cost is too high. Many ports of Northern Mindanao particularly Iligan, Ozamis and Butuan do not have direct foreign containerized shipping calls due to low cargo volume. Presently, due to very high domestic freight rates, handling, and wharfage charges, exporters from these areas truck their products to Cagayan de Oro or MCT to have access to foreign shipping. Table 2.22 gives the build up of costs to be incurred for transshipped goods using the conventional and the RORO. The latter transport system is the development thrust of the government to improve inter-island movement of goods and passengers. Among others, it is meant to bring down transport costs but with the current system of handling employed, the cost benefit of using the RORO as against the conventional is negligible. That is, only a savings of Php1,102.50 for a 20-footer and Php2,053 for a 40-footer is noted with the use of the RORO.

36
Shipping Costs and Competitiveness In Northern Mindanao

Table 2.22 Transshipment Cost Components (Php)


Conventional Item Arrastre (CDO) Wharfage (CDO) Domestic Freight Arrastre (North Harbor) Wharfage (North Harbor) Trucking to MICT Wharfage (MICT) Arrastre (MICT) VAT Total 20 Footer 974.50 202.00 20,913.00 990.00 202.00 2,640.00 202.00 2,646.00 3,418.00 32,187.50 40 Footer 1,797.00 437.98 43,760.00 1,980.00 437.00 3,960.00 437.00 6,077.00 7,032.00 65,917.98 CHA-RO 20 Footer 431.00 202.00 20,913.00 431.00 202.00 2,640.00 202.00 2,646.00 3,418.00 31,085.00 40 Footer (2,053.00) 40 Footer 862.00 437.98 43,760.00 862.00 437.00 3,960.00 437.00 6,077.00 7,032.00 63,864.98

Difference between 20 Footer Conventional and (1,102.50) CHA-RO Source: Compiled from tariffs of PPA CDO, MICT, Shipping lines, and Truckers.

37
Shipping Costs and Competitiveness In Northern Mindanao

3 LOGISTICS SURVEY FOR NORTHERN MINDANAO


3.1 Survey Implementation Surveys to capture the actual logistics conditions for exports and imports within the study area in Northern Mindanao were conducted from the month of February to March 2010. The shippers/exporters, importers, shipping lines and truckers were the main export logistics groups targeted for the survey. The sampling was based on the recorded/registered firms in the study area. The locations and number of players, in terms of shippers, importers, truckers and shipping lines, are discussed in chapter 2. Based on this information, the target sampling was drawn up only for those firms that use the public ports of Cagayan de Oro (CDO) and Mindanao Container Terminal (MCT). As such, the bigger firms with their own private ports (i.e., Philippine Sinter Corporation) are no longer included in survey. On the whole, 26% of total registered firms were targeted and a good sampling rate of 10% was achieved. Table 3.1 presents the sampling rate by logistics group. Table 3.1 Survey Sampling
Particulars Total Firms1 in Study Area Target Samples Number of Samples Share to Total Number of Samples Sampling Rate Shippers/ Exporters 161 46 29% 14 9% Importers 222 36 16% 14 6% Shipping Lines 6 6 100% 6 100% Truckers 40 25 63% 8 20% Total 429 113 26% 42 10%

Data on Shippers DTI, One Stop Export Documentation Center and BOC-CDO/MCT 2009; Data on Importers BOC Accredited Firms and MCT List 2009; Data on Foreign Shipping Lines Philexport10A; Data on Truckers CDO Port Truckers Assn & Others identified by Philexport10A 2009.

The activities for the survey included the following: a) Questionnaire forms were distributed by the surveyors to target respondents located within the four corridors of the study area. The questionnaires are shown in Annexes 3-1 to 3-4. b) Follow ups and collection were extensively done for a month. c) Accomplished forms were reviewed and call-backs to respondents were made for those needing clarification and completion. d) Encoding of the collected forms was done using MS Excel. Moreover, interviews were also conducted for the truck drivers to supplement the trucking questionnaire forms, which were accomplished by the truck operators. The truck drivers gave specifics as to difficult road sections to traverse and the nature of problems. Findings and results of the surveys are given in succeeding sections of this report. Further, the disclosed information on actual charges and costs incurred by the respondents are used

Survey Returns

38
Shipping Costs and Competitiveness In Northern Mindanao

in the comparative cost analysis against the published rates gathered from relevant agencies and entities, which is discussed in section 2.4 of this report.

3.2 Profile of Survey Respondents The profiles of the survey respondents by target group are presented in Tables 3.2 to 3.4. For the shippers/exporters, respondents from all industry sectors are covered with many in the manufacturing type of business. A fair distribution of the respondents by size of business is noted. The importers, on the other hand, are more of the service business types (such as forwarders) servicing the exporters. Some of the importers (i.e., 6 firms) are actually the exporters themselves importing their raw material requirements. Two of the respondents, however, are importers for the domestic market only. The trucker respondents are more on the micro business size owning about 1 to 3 trucks. There is one large sized trucking firm owning a fleet of hundreds of trucks. Most of these firms acquired second-hand or surplus vehicles for their operation and many are operating on a for hire basis. For the shipping companies, five respondents are foreign liners and one is a non-vessel operating carrier company (NVOCC). All firms have vessels calling at MICT port but only one firm has vessels calling at CDO port. The total number of vessels calling at Northern Mindanao is 11 but the frequency of calls is 6 vessels weekly. Table 3.2 Profile of Exporters and Importers Respondents
Exporters Item No. of Respondents Industry Sector1 Agriculture/Aquaculture Processed Food Wood/Furniture Industrial Others Business Type1 Production Trading Manufacturing Services Others Business Size1 Micro (below Php3M) Small (Php3M-15M) Medium (Php15M-100M) Large (above Php100M)
1 Using

Importers No. of Importers 14 0 0 0 6 7 1 0 5 8 0 6 3 1 4 Distribution (%) 100.0 0.0 0.0 0.0 42.9 50.0 7.1 0.0 35.7 57.1 0.0 42.9 21.4 7.1 28.6

No. of Exporters 14 2 2 2 5 3 2 0 12 0 0 2 4 4 4

Distribution (%) 100.0 14.3 14.3 14.3 35.7 21.4 14.3 0.0 85.7 0.0 0.0 14.3 28.6 28.6 28.6

NEDA classifications Source: Logistics Survey, 2010

39
Shipping Costs and Competitiveness In Northern Mindanao

Table 3.3 Profile of Trucker Respondents


Item Total Samples Business Size Micro (below Php3M) Small (Php3M-15M) Medium (Php15M-100M) Large (above Php100M) Operation Type For Hire Not For Hire Mixed Vehicle Acquisition Type Brand New Surplus
Source: Northern Mindanao Logistics Survey, 2010

No. of Truckers 8 3 2 2 1 5 1 2 1 7

Distribution 100.0 37.5 25.0 25.0 12.5 62.5 12.5 25.0 12.5 87.5

Table 3.4 Profile of Shipping Lines Respondents


Vessel Information No. of Ships Calling MCT Port No. of Ships Calling CDO Port Vessel Types Origin/Destination Call Frequency Ship Capacity (in TEUs) Ship Capacity (reefer plugs) 712 & 1,049 220 & 180 Asia, Europe, US Hong Kong Respondent No. 1 1 2 2 2 3 1 4 6 5 1 6 1 -

Conventional Containerized Singapore Weekly 1108 1,114 & 1,338 220 & 449 1,200 220 1,300 100 China Japan Singapore

Source: Northern Mindanao Logistics Survey, 2010

3.3 Results from the Survey 3.3.1 Shippers Survey Most of the shippers or exporters surveyed apparently outsource their trucking logistics instead of maintaining their own fleet. This is true for exporters in all industry sectors especially since trucking cost make up less than 10% of their total logistics cost. This may be explained by the proximity of most shippers of less than 20 Kilometers from the ports. Even with costs reaching 26% to 50% of total cost, trucking still remains an outsourced service (see Tables 3.5 and 3.6). Shipping cost, on the other hand, is substantial for most of the surveyed companies accounting for more than 75% of total logistics cost (see Table 3.7).

40
Shipping Costs and Competitiveness In Northern Mindanao

Table 3.5 Outsourcing of Trucking Logistics by Shippers


Industry Sector of Samples Total Samples Agriculture/Aquaculture Processed Food Wood/Furniture Industrial Others Percentage of Total Samples Distance from Port (kms) <20 20-50 51-100 101-150 Shippers 14 2 2 2 5 3 Shippers 10 1 2 1 Yes No 13 1 2 0 2 0 2 0 5 0 2 1 93% 7% Share (%) 71.4 7.1 14.3 7.1

Source: Northern Mindanao Logistics Survey, 2010

Table 3.6 Trucking Share to Total Logistics Cost of Shippers


Industry Sector of Samples Agriculture/Aquaculture Processed Food Wood/Furniture Industrial Others Percentage of Total Samples
1 Note:

Trucking Share to Total Logistics Cost1 a b c d e 1 1 0 0 0 1 1 0 0 0 1 1 0 0 0 1 1 1 0 2 2 0 1 0 0 43% 29% 14% 0 14%

a: Less than 10%; b: 10% - 25%; c: 26% - 50%; d: 51% - 75%; e: More than 75% Source: Northern Mindanao Logistics Survey, 2010

Table 3.7 Shipping Share to Total Logistics Cost of Shippers


Industry Sectors of Samples Agriculture/Aquaculture Processed Food Wood/Furniture Industrial Others Percentage of Total Samples
1Note:

Shipping Cost to Total Logistics Cost1 a b c d e 0 1 0 0 1 0 0 0 1 1 1 1 0 0 0 1 1 1 0 2 0 0 0 1 2 43% 14% 21% 7% 14%

a: Less than 10%; b: 10% - 25%; c: 26% - 50%; d: 51% - 75%; e: More than 75% Source: Northern Mindanao Logistics Survey, 2010

Based on the evaluation of the present logistics infrastructure shown in Table 3.8, the quality of ports, roads and highways, and telecommunication services are found adequate (either average or highly adequate). Warehouses are just average in quality.

41
Shipping Costs and Competitiveness In Northern Mindanao

Table 3.8 Evaluation of Quality of Infrastructure by Shippers


Logistics Infrastructure Ports Roads and Highway Warehouse Telecom Infrastructure & Services Total
Source: Northern Mindanao Logistics Survey, 2010

Evaluation of Quality (% of answers) Very Very High Ave. Low High Low 36 36 14 14 0 7 0 8 8 29 9 38 29 36 82 31 44 21 9 23 17 1 0 0 2

Among the components of the logistics costs, freight is revealed as highest cost followed by the trucking cost. It should be noted that informal costs are heavily borne by the shippers in the form of customs facilitation and other informal charges (see Table 3.9). The issues of high freight cost and presence of high informal cost repeatedly appears in other survey responses as seen in Tables 3.10 and 3.11. Another nagging issue on the software aspects of logistics is the difficult and time consuming export documentation/ clearance procedures. Table 3.9 Ranked Logistics Cost by Shippers
Rank of Costs (% of responses) Cost Items Port Charges: THC Trucking Arrastre Stuffing/Stripping Customs Brokerage Warehouse Port -Wharfage Freight Customs Facilitation Other Informal Very Low 7 7 7 Low 7 7 7 Average 43 43 57 36 36 29 43 14 43 21 High 21 43 14 7 14 43 29 7 Very High 7 7 7 7 14 7 7 29 7 14

Source: Northern Mindanao Logistics Survey, 2010

Table 3.10 Logistics Issues from Shippers


Identified Issues Freight charges - high Doc Processing - complicated Fuel/Transport Cost - high Shipping Schedules - poor Informal Charges - high Infrastructure - poor Total
Source: Northern Mindanao Logistics Survey, 2010

Number of Samples 8 4 4 3 3 1 23

% of Responses 34.8 17.4 17.4 13.0 13.0 4.3 100.0

42
Shipping Costs and Competitiveness In Northern Mindanao

Table 3.11 Evaluation and Experiences of Selected Export Processes


Evaluation of Selected Export Processes Timely Clearing & Shipping of Export Goods Timely Clearing & Delivery of Import Goods Transparency of Customs' Clearance Process Timely & Adequate Receipt of Regulatory Changes Electronic Processing of Customs' Declaration Experiences of Shippers Delays due to Pre-shipment Inspection Criminal Activities (e.g. Stolen cargo) Solicitation of Informal Payments
Source: Northern Mindanao Logistics Survey, 2010

Frequency of Occurrence (% of responses) SomeHardly Always Often Rarely times Ever 85.7 14.3 42.9 21.4 14.3 50.0 14.3 28.6 35.7 14.3 21.4 14.3 7.1 28.6 14.3 7.1 28.6 41.7 8.3 41.7 8.3 25.0 25.0 33.3 16.7 25.0 58.3 25.0

Despite the poor rating of logistical conditions, the shippers perceived some of the components to have improved in the past 3 years. Improvements were noted for the quality of infrastructure, telecommunications, and private sector services. However, customs, port clearance and business environment are perceived to be same (see Table 3.12). Table 3.12 Perceived Evolution of Logistical Components by Shippers
Logistics Components Evolution in the Past 3 Years Shippers Views Customs clearance procedures Port clearance procedures Quality of transport infrastructure Quality of telecommunications infrastructure Availability of private sector services Regulatory regime Good governance and eradication of corruption Overall business environment
Source: Northern Mindanao Logistics Survey, 2010

Development of Logistics Conditions (in % of responses) About Much Much Worse Better the Worse Better Same 75.0 8.3 8.3 8.3 75.0 8.3 16.7 58.3 8.3 33.3 8.3 66.7 33.3 8.3 66.7 25.0 8.3 25.0 25.0 41.7 8.3 16.7 58.3 16.7 16.7 16.7

Table 3.13 summarizes the freight costs provided by the shippers by type of commodity and by destination. Likewise, those exporters with import activities especially for their raw material inputs provided freight costs of their imports. Table 3.13 Freight Costs by Commodity of Exporters
Export Commodity Freight Cost (PhP) 24,000 87,400 103,000 39,000 Shipment Mode C&F FOB FOB FOB Domestic Shipment Freight Cost (PhP)

Package

Destinations

Package

Wood Silicon Silicon Paper Products

40' 20' 20' 3.12 cbm

China Europe USA Europe

3,000

3.12cbm

43
Shipping Costs and Competitiveness In Northern Mindanao

Export Commodity Freight Cost (PhP) 38,000-45,000 not given not given 69,325 45,825 20,000 Consignee paid 10,000/cbm 6,000/cbm 154,000 120,000 Shipment Mode FOB & CIF FOB FOB C&F C&F FOB Consignee Designated FOB FOB C&F FOB FOB FOB&CIF

Domestic Shipment Freight Cost (PhP) 175,000 16,000 22,000 32,000

Package

Destinations

Package 20' 20' 10' raw material 20'

Paper Products Raw Sugar Cocohusk Chips Fiberglass Fiberglass Abaca Bags Frozen Fruits (coconut) Wood/Native Crafts Wood/Native Crafts Fresh Seafood Ceramics

20' Bulker not given 40' 20' box LCL 20' 40' 20' 40'reefer 20'

Europe USA Japan Japan Japan Europe, USA USA Japan Japan Japan Europe, USA Japan Worldwide

90,000

20' reefer

350,000

bulk shipment

Rubber Boots 20' Consignee paid Fatty Alcohol, Tertiary 36,000 Amines, RG PG (Coco 20' 150,000 Industrial) Source: Northern Mindanao Logistics Survey, 2010

3.3.2 Importers Survey There were 7 respondents from a total of 14 that gave their assessment on charges by port they use. On the whole, the ports of MICT and CDO are found to be very expensive as compared to the ports in Baloy (private port), Davao and Cebu (see Table 3.14). Import procedures were evaluated by all the importer respondents and the top most difficult processes identified per implementing agency are given in Table 3.15. Table 3.14 Assessed Port Charges by Importers
Ports Cheap CDO Port MCT Cagayan Corn Port-Baloy Davao Cebu 0 0 0 0 0 Comparative Port Charges (in % of responses) Reasonable 0 8 8 17 17 Expensive 8 0 0 0 8 Very Expensive 17 17 0 0 0

Source: Northern Mindanao Logistics Survey, 2010

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Shipping Costs and Competitiveness In Northern Mindanao

Table 3.15 Identified Difficult Import Procedures by Importers


Agencies Bureau of Customs (BOC) a) b) c) d) e) a) b) c) a) b) c) d) Identified Most Difficult Procedures Documentations Facilitations Manila-based Tax Refund Manila-based Accreditation Renewal of Permits Processing of Documents and Payments Withdrawal of Cargoes Permit to Load Dangerous Cargoes Withdrawal of Loose Cargoes Heavy Equipment Operation Cargo Stripping of LCL Payments

Philippine Ports Authority (PPA) Arrastre Service Provider

Bureau of Plant Industry (BPI) Dept. of Environment and Natural Resources (DENR) Bureau of Internal Revenue (BIR) Dept. of Finance (DOF)

a) Manila-based Filing of Import Permits a) b) c) a) b) a) Securing Dangerous Goods Certificate Export Permit Ore Certification Process Processing of Authority to Release Imported Goods Tax Clearance Release of Tax and Duties Exemption

Source: Northern Mindanao Logistics Survey, 2010

To compensate for difficulties encountered in import procedures, the respondents have resorted to the use of some measures listed in the questionnaire. The common practice of an early cargo withdrawal from port is done by almost all the firms. Moreover, many of the firms encourage formal training for their staff on import procedures. However, the benefits of using the VASP is not well explored as this is the electronic submission of required import forms, which eliminates a number of steps of the importation process (see Table 3.16).

Table 3.16 Good Practices to Improve Importation Process


1) 2) 3) 4) Practices of Importing Firms VASP submission to Bureau of Customs Early cargo withdrawal from port Participate in consultations on regulatory matters Encourage staff formal training on import procedures
Source: Northern Mindanao Logistics Survey, 2010

Yes 35.7 92.9 42.9 64.3

No 50.0 7.1 28.6 7.1

Similar to the claim of exporters, importers also ranked freight costs as the highest in their incurred logistics costs. This is followed by customs duties and informal costs (Table 3.17). The actual logistics costs and charges incurred by the importers are broken down by component as shown in Table 3.18. Freight is shown as the largest cost component together with the customs duties.

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Shipping Costs and Competitiveness In Northern Mindanao

Table 3.17 Ranked Importation Costs


Importation Cost Items Freight Arrastre Wharfage Dues Port Storage Charges Trucking Customs Duties Value Added Tax Brokerage Facilitation/Informal Cost Total Respondents Ranked Highest 4 0 0 0 1 3 1 2 3 14 Share (%) 28.6 0.0 0.0 0.0 7.1 21.4 7.1 14.3 21.4 100.0

Source: Northern Mindanao Logistics Survey, 2010

Table 3.18 Actual Logistics Costs Incurred by Importers


Import Costs (in PhP) Customs Duties Facilitation/ Informal Cost 14,000 11,000 15,000 20,000 3,230 2,000 2,000 Packing Type Port Storage Brokerage 2,500 5,300 11,000 5,000 5,300 6,500 6,500

Wharfage

Freight

Not disclosed Not disclosed Coffee 3 in 1 (origin - Asia) Not disclosed Not disclosed DMA/MMA LUNAC 20' 20' 40' 40' 150,000 210,000 50,000 63,491 80,000 30,000

1,797 CDO:1,610; MCT:2,013 CDO:1,610; MCT:2,014 1,200 894 MCT:974 MCT:974

779 CDO:1,545; MCT:873 CDO:1,545; MCT:874 1,800 773 MCT:520 MCT:520 539 539 550 MCT: 269 MCT: 269

2,6004,000 5,500 5,5009,,000 3,500 8,000 3,650 3,650 80,000 345,000 70,000 24,915 exempt exempt

zero rated Inclusive Inclusive 60,000 23,716 exempt exempt

Source: Northern Mindanao Logistics Survey, 2010

3.3.3 Truckers Survey There were eight respondents for the truckers survey. Similar to the other surveys, the truckers were made to assess the conditions of their operation in terms of the roads they traverse, the conditions at the ports, and the costs of their operations. For the worst roads traversed, Table 3.19 lists the road with a ranking of the type of difficulties.

VAT

Commodity

Trucking

Arrastre

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Shipping Costs and Competitiveness In Northern Mindanao

Table 3.19 Assessed Road Conditions by Truckers


Ranked Conditions (% of responses) Poor Road Highway Congestion due Design Congestion to Accidents (Geometry) 3 4-5 3 4-5 3 4-5 37.5 25.0 12.5 12.5 12.5 25.0 12.5 25.0 25.0 62.5 25.0 12.5 12.5 12.5 12.5 12.5 12.5 -

Worst Roads

Bukidnon (via Sayre Highway) Talakag, Bukidnon Lanao, Iligan, West Misamis Oriental Eastern Misamis Oriental

Note: Shown here are ranked 3 (quite problematic) and 4-5 (very problematic) responses only. Source: Northern Mindanao Logistics Survey, 2010

The Sayre Highway in Bukidnon is ranked as the worst road due to congestion and accidents. Likewise, other roads in Bukidnon that are enumerated by the truckers as the accident-prone areas are as follows: 5) Manolo Fortich 1) Baloy 6) Carmen Hill Road 2) El Salvador 3) Mangima Road 7) Talakag Road 4) Maluko When requested to provide solutions for the road improvements, the obvious high cost solutions given are new roads and paving of roads (see Table 3.20). The low cost end of the solutions that are notable are the repainting and improvement of road signages as well as the dissemination of strict implementation of allowable weight of trucks. This is recommendation surfaced since there is an inconsistency in the allowable weight of trucks in the port as against that which is allowed by DPWH on the highways. Table 3.20 Recommended Solutions for Road Improvements Improvements for Recommended Solutions Roads High Cost Solutions a) Pave/cement roads; b) Repair of cemented and asphalted roads; and c) Build new roads/ highways. Low Cost Solutions a) Repaint and improve road signages; b) Set up proper road signs; c) Improve pave roads; d) Dissemination and strict implementation of allowable weight of trucks; and e) Deployment of more traffic enforcers.
Source: Northern Mindanao Logistics Survey, 2010

The respondents identified the problems they encounter at the commercial ports of the study area (i.e., CDO port and MICT). Table 3.21 shows that the common problem of both ports is the lack of equipment.

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Shipping Costs and Competitiveness In Northern Mindanao

Table 3.22 gives the operational expense items of the firms and the corresponding ranking in terms of their share in the overall operational cost. Fuel has been ranked by almost all firms as the highest cost incurred accounting for 40% to 55% of total expenses. Table 3.21 Identified Problems at Port by Truckers
Commercial Port Cagayan de Oro a) b) c) d) e) f) g) a) b) c) d) e) f) g) h) Identified Problems at Port Breakdown of Equipment Lack of Equipment Tips to Equipment Operator Misplaced cargoes Stickers Traffic Kotong or Informal Collections Dont allow trailer jack-up Lack of lifting equipment Computer malfunctions Long coffee and lunck breaks of regulatory agencies Long truck queue for loading/unloading of containers Red tape in entering Too many requirements Delays due to heavy traffic upon vessel arrival

Mindanao Container Terminal

Source: Northern Mindanao Logistics Survey, 2010

Table 3.22 Ranked Operational Expenses of Trucking Firms


Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 Source: Operation Cost Item Fuel Financing Cost Repair and Maintenance Drivers and Helpers Salaries Tires Insurance and Inland Marine Business Permits and Vehicle Registration Oil and Lubricants Franchise Fee and Regulatory Permits Garage Port Bribes Road Bribes Weighbridge Northern Mindanao Logistics Survey, 2010 Share of Operation Cost 40 to 55% 1% 7 to 9% 1 to 15% 10 to 25% 1 to 8% 1 to 7% 1 to 5% 1 to 5% 1 to 1.4% 0.3 to 2% 0.7 to 2% 0.5 to 1%

3.3.4 Shipping Lines Survey All the shipping lines in the study area responded the survey. However, not all provide their cargo tariff although the shippers provide information on this (see Table 3.23). In terms of port and freight conditions, shipping lines rated timeliness of cargo delivery by shippers and power outages as serious problems (see Table 3.24).

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Shipping Costs and Competitiveness In Northern Mindanao

Table 3.23 Cargo Tariffs (in USD)


Container Size Origin/Destination 10 Footer Dry 20 Footer Dry 40 Footer Dry 20 Footer Reefer 40 Footer Reefer Source: Northern Mindanao Logistics Survey, 2010 3500 2200 603 1207 603 1207 Respondent Number 1 Asia, Europe, US 2 Hong Kong 3 Singapore 4 China 5 Japan 6 Singapore

Table 3.24 Rate Port and Freight Conditions by Shipping Lines


Port/Freight Conditions Port Berth Congestion Cargo handling productivity Timeliness of vessel departure Port equipment availability Port and berthing facilities Reefer plug availability Truck and trailer availability Container retention by shippers Timeliness of cargo delivery by shippers Timeliness of cargo withdrawal Overweight containers Truck ban restrictions on movement of large Poor truck access to shipping terminals Cargo truck queuing area Other (specify): Power Outages Number of Respondents by Rated Problem Areas 1-2 3 5 5 5 6 6 6 4 3 3 3 3 5 5 2 2 3 3 3 1 1 1 1 3 3 1 1 1 4-5

Note: 1: not a problem; 2: slight problem; 3: manageable problem; 4: really a problem; 5: very serious problem Source: Northern Mindanao Logistics Survey, 2010

Table 3.25 gives the port operation conditions of the shipping lines. All ships are charged berthing dues based on their gross registered tonnage (GRT), which all claim to be appropriate. However, 50% of the respondents are open to charges based on actual space occupied. The operating own container yard is not deemed necessary by half of the shipping firms for reasons ranging from small volumes of cargo to high maintenance cost of equipment.

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Shipping Costs and Competitiveness In Northern Mindanao

Table 3.25 Shipping Lines Port Operation Conditions


Questionnaire Item Average Time at Ports (hrs.) 10. Your vessels are currently charged berthing dues based on GRT per day; do you find the system appropriate? 11. Would you find it appropriate for the port authority to charge berthing dues based on actual space occupied rather that GRT basis? 12. If your vessel arrived at 10 p.m. and departs at 6am the ff. day, are you charged an equivalent of two days port dues? 13. Does your company deem it necessary to operate your own container yard? Justification. Yes Yes 1 2 Respondent Number 3 4 8 12 Yes Yes 5 12 Yes 6 10 Yes

No

No

Yes

Yes

No

Yes

Yes

Yes

Yes

Yes

Yes

Yes

Yes Equipment Monitoring

No volume is very small

No High maintenance cost

No High maintenance cost

Yes For better monitoring

Yes For low cost of operations

Source: Northern Mindanao Logistics Survey, 2010

Table 3.26 reveals that shipping lines find the port storage charge to be quite high. This is followed by informal charge. All other charges are basically assessed by the shipping lines as average or low. Table 3.26 Ranked Port Charges by Shipping Lines
Cost items Port charges Arrastre charges Stevedoring charges Quay crane charges Wharfage rates Port Storage Port dues (dockage) rates Pilotage rates Tug service rates Trucking rates Stuffing/Stripping rates Reefer Plug rates Weighbridge rates
1

Number of Respondents by Ranking of Costs/Charges1 1-2 3 5 5 5 5 5 1 5 4 1 1 4 4 2 4 1 3 4-5 1 1 1 1 1 5 1 2 1 1 1 2 1 3

Informal Cost (bribes) 1 Rank 1-2 = very low and low; 3=average; and 4-5=high and very high. Source: Northern Mindanao Logistics Survey, 2010

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Shipping Costs and Competitiveness In Northern Mindanao

4. ISSUES AND MEASURES 4.1 On the World Bank Report The 2006 World Bank Report-IFC on cross border trade claimed that the cost to export a 20-footer container is US$1,336 in the Philippines as compared to US$ 848 in Thailand, US$335 in China and US$ 382 in Singapore. The breakdown of the US$1,336 transport cost in the Philippines, as cited by the World Bank covers four areas, namely (a) Documentation, (b) Inland Transportation, (c) Customs Clearance and Technical Control, and (d) Ports and Terminal Handling. Ports and Terminal Handling, which entails the biggest chunk at US$994 of the US$1,336, includes domestic transshipment (US$500), cargo handling/arrastre (US$175), terminal handling charge (US$45) and port charges (US$274). 4.1.1 Breakdown of Port Related Transport Costs /TEU, WB Report Port-related costs are those paid to PPA or PHIVIDEC (wharfage) and those paid to the terminal operator (container handling). Table 4.1: Comparative Breakdown of transport costs per TEU
Particulars Domestic Transshipment Cargo handling/ Arrastre Terminal Handling Charge Port charges Total Port & Terminal Handling WB-reported Rates (US$) 500 175 45 274 994 Rates at CDO/MCT NA Php974.50 (US$22) NA PhP259.70 (US$5.86) PhP1,233.70 (US$27.87) Remarks

Charged by shipping lines @US$104/TEU

For export cargoes a 20-footer container from Northern Mindanao will entail wharfage and container handling charges amounting to USUS$5.86 (PhP259.70) and USUS$22 (PhP974.50) only at exit port. Combined port-related export costs (wharfage and container handling) represent a measly 2.0 percent of the total USUS$1,336 WB figure or merely 2.8 percent of the USUS$994 Ports & Terminal Handling component-charges. The World Bank erred in its 2006 World Bank-IFC Cost of Doing Business Report, particularly on Cross-Border Trade where the Philippines was claimed to have the highest cost of exporting compared to other ASEAN countries like Thailand, Vietnam and Indonesia. Ports and terminal handling rates for export/import cargoes in Northern Mindanao are the lowest in Asia.

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Shipping Costs and Competitiveness In Northern Mindanao

4.2.1 Terminal Handling Charge (THC) and other Surcharges Terminal Handling Charge (THC) has been a source of contention since its introduction in 1991. Asian shippers have fought for their removal as the THC has become an extra charge over and above the freight rate. The World Bank-IFC included THC in the computation of port related charges in arriving at its conclusions as the term is indeed misleading. For containers shipped on an FOB (Free-On-Board) terms, which specifies which party (buyer or seller) pays for which shipment and loading costs, and/or where responsibility for the goods is transferred. The shippers at the origin port of shipment are responsible for paying the THC at the port of loading. This is defined as the Origin THC. The consignees or buyers of the cargo are responsible for paying the freight rate and the THC (or equivalent) on the discharge port of destination, known as the destination charge. This is consistent with the Incoterms (International Chamber of Shipping) definition. Since 1991, most shipping lines have introduced separate charges for the freight rate and THC. In Indonesia, the THC has been successfully reduced while in China, the Chinese Government has announced the conclusion of its investigation into the THC issue, stating that THC is in nature an integral part of the freight. The Federation of ASEAN Shippers Councils (FASC) and Asian Shippers Council (ASC) emphasized that THC is an integral part of the freight, that all costs shall be inclusive in the freight as an all in freight rate. Hence, it should be shouldered by the party who secures the shipping service and thus pays the freight. Table 4.2 Cargo Handling activity & applicability of THC
Activity 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. Delivery Empty +all associated clerical work and reporting Receiving full (+all associated clerical work & reporting) Inspection and reporting condition of container/completion interchange Inspection and reporting of seals and wiring, removal invalid labels, re-sealing Movement of container on/from chassis Internal transport of container to or from stack Handling container into or out of stack Storage of full container within time limits defined by port authority Storage charges after free storage period Take laden box out of stack Internal transport from stack to ships side under hook Move of container from ships side to ships rail Move of container from ships rail into ships cell Cranage Opening and closing of hatch covers Lashing of container Covered by Shipper/consignee THC Arrastre Charge Shipping THC Shipping THC Arrastre Charge Arrastre Charge Arrastre Charge Arrastre Charge Shipper/consignee Arrastre Charge Arrastre Charge Stevedoring/Freight rate Stevedoring/Freight rate Stevedoring/Freight rate Stevedoring/Freight rate Stevedoring/Freight rate

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Shipping Costs and Competitiveness In Northern Mindanao

Activity 18. Physical & clerical planning of vessel operation +reporting 19. Overtime 20. Wharfage

Covered by Stevedoring/Freight rate Stevedoring/Freight rate Shipper/consignee

Source: Study Team 2010 Note that actual terminal handling activities with costs borne by the shipping lines are only items 3, 4, and a portion of item 1, which does not warrant the USUS$100 charge. The primary issue against THC in the Philippines however, is that the actual terminal handling (arrastre) charge is paid by the shipper/consignee directly to the terminal operator and not by the shipping line. In effect, THC in the Philippines is an arbitrary charge and has nothing to do with land-based terminal cost recovery. Through the THC, shipping lines are earning more than the cargo handling operator who are actually performing the service. Hong Kong, India, Singapore and China shippers/consignees do not pay the terminal operator handling charges similar to arrastre. Terminal operators collect terminal services from the shipping line and, thus, THC charges by the shipping lines is justified. Whether the rates/charges per country are justified is another matter. Table 4.2 THC Rates Country Currency 20 In USD Charges Philippines USD 100 100 Hong Kong HKD 1,600 206 Japan Yen 25,000 264 Malaysia MYR 300 93 Pakistan USD 90 90 Sri Lanka USD 120 120 Source: Shipping lines THC advisory 2009-2010

40 130 2,400 37,000 450 110 170

In USD 130 309 391 139 110 170

Shipping lines collect a uniform THC for the entire country irregardless of the port of call. However, arrastre rates usually differ from one Philippine port to another making the terminal cost per port of call variable. A comparative arrastre rates for selected international ports in the country is shown in Chapter 2 (Table 2.16). In a research initiated by Center for Research and Communication (CRC) and Philippine Chamber of Commerce and Industry (PCCI) Cost to Export: Is the Philippines (Really) Uncompetitive? claims that the Association of International Shipping Lines (AISL) admitted that a major portion of the THC is paid by the shipping lines to the cargo handler for stevedoring services. THC is a mechanism by which shipping lines recover the expenses of landbased cost. Stevedoring services (service performed on board vessel) has been traditionally for the account of the shipping lines and stevedoring

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Shipping Costs and Competitiveness In Northern Mindanao

charges are bundled with freight. The payment of stevedoring services through THC is not only highly irregular, it is also unfair for Philippine FOB shippers/exporters who are practically subsidizing their buyers freight cost by paying the THC. The admission by the AISL is unfair to the shippers and should be addressed.

A. Findings THC as an Integral Part of the Freight Charge a. When containers are moved across the globe using transshipment points, land based cost in these transshipment points are included in the freight rate. b. When other methods of land transport is used such as rail/road to deliver to inland destinations, all land based cost are included in the freight rate E.g.: Inland, delivery points of USA, Europe & Russia c. Up to 1994 THC was part of Freight. THC is Anti- Competitive and Non Transparent a. It is forced on shippers and thus it is non-negotiable b. There is a profit element as well as a over recovery c. Charges other than the so called Land Based charges are included in the THC d. It violates the principle of free market forces (supply and demand) e. If THC is an actual recovery of land based cost, why are Philippine shippers paying arrastre (cargo handling) charges directly to the cargo handling or terminal operator? (see Maersk Line THC Table) f. It violates the simple principle of no work, no pay.

Effects on Mindanao Exports (on current levels) a. It contributes to making Mindanao exports uncompetitive. b. Increases cost for FOB shippers c. Only a small section of the business community (multinationals and large scale exporters) has the bargaining power of reducing costs. d. THC has continued to increase since 1997. There is no guarantee that THC will not increased further. e. It is a bad reflection on Mindanao port and handling charges which are actually the lowest in Asia.

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Shipping Costs and Competitiveness In Northern Mindanao

B. Legislation is Necessary a. To prove that THC pricing mechanism is an anti-competitive practice in a free market economy. b. Legislation is particularly necessary to protect the interest of the small and medium scale shippers c. There are mechanisms in place in the USA and EU to prevent price fixing (anti trust) d. There are also mechanisms in place in the USA and EU which compels shipping lines to file details of pricing with the authorities. These authorities have wide powers to monitor unfair pricing. e. Helps to keep export products competitive The government, the Philippine Shippers Bureau, PHILEXPORT and various shippers associations should unite and engage the Association of International Shipping Lines (AISL) in a dialogue against the arbitrary imposition of the THC in the Philippines. The large portion of land based cost namely arrastre is already paid by the shipper. Some cost such as reporting, documentation and empty container handling, empty wharfage are some of the terminal costs that are borne by the shipping lines, but which costs are already part freight as these are not in any way related to product shipment. The need for shipping lines to charge some form of THC to recover land based costs is recognized but the cost should be properly itemized and explained to the shippers. THC should be imposed on a port to port basis given the disparities in handling rates among the different ports in the country. C. Other Shipping Surcharge Surcharges should be temporary in nature and should be removed when normality resumes. By having a simplified freight tariff after due consultations, there would be less confusion and disputes, thus paving the way for improved shipper-carrier relationships. 4.3 Transshipment Domestic transshipment of FCL containers have not been an option for exporters. In transshipments, shippers will have to pay on top of domestic freight domestic arrastre and wharfage dues at origin port, at Manila or Cebu discharging port, trucking to international port and again wharfage and export arrastre at the final loading port. All charges are subject to 12% Value Added Tax. Domestic freight rates are higher than foreign freight rates per nautical mile.

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Shipping Costs and Competitiveness In Northern Mindanao

In an interview, an exporter of marine products from Northern Mindanao was offered freight rate that is USUS$1,000 lower than the usual rates his company is paying. The hitch however is that cargo should be shipped from Cebu. Upon checking with local freight rate and charges, he found out that it will cost his company approximately PhP80,000 (USUS$1,770) in freight, handling and associated costs to bring his companys 40footer refrigerated container to Cebu.

4.4. Port Operational Issues 4.4.1 Mindanao Container Terminal With increasing domestic and foreign traffic, MCT cannot just rely on its four units of RTGs and one unit reach stacker for its yard operations. Operationally, prioritizing vessel over yard (withdrawal) operations is strategically appropriate. However, with domestic containers enjoying only two days of free storage privilege, this becomes a problem and complaints of delayed withdrawal will abound. Long waiting time of hauling trucks will prompt trucking service providers to seek for higher rates to compensate for the delays and on their inability to complete multiple trips. Shippers will also need to pay overtime to employees, stripping and warehouse receiving crew or pay overnight charges to truckers. Employing other types of handling equipment such as empty handlers is not feasible at MCT due to the unique design of its yards which employs container slippers. Pavement block construction on the yards has also limited the use of MCTs container reach stacker. This could mean that the container yards were designed exclusively for RTG type of operation and front end loaders (reach stackers, forklifts) were not considered in the ports design criteria. As traffic volume increases, MCT will need to improve its yard handling capacity and additional RTGs may be the only option to keep up with higher demand. Demand versus capacity projection will guide PHIVIDEC and MCT in deciding when port expansion should commence. 4.4.2 Cagayan de Oro Port CDO port has the advantage of having long berths, wide storage areas and covered transit sheds. Efficient container yard operation is however hampered by the exclusive use of container front end loaders, mostly acquired surplus or second hand. Though the cargo handler is well equipped based on inventory, equipment reliability becomes a major issue for the CDO port.

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Shipping Costs and Competitiveness In Northern Mindanao

Until 2009, CDO cargo handling tariff is thirty percent lower than that of the ports of Davao and General Santos. The cargo handling operators ability to acquire modern cargo handling equipment may have been curtailed by issues of affordability. With the approval in 2009 of its tariff leveling petition, it should be in a position to replace ageing front end loaders and improve equipment Figure 4.1: PPA reported that CDO Port's Annual Berth reliability. Occupancy Rate was beyond 65% in 2009 The continued and increasing use of domestic liners of ten footer containers is also a problem in yard and equipment planning. Unlike MCT, CDO port does not have an Electronic Data Interchange (EDI) system and due to apprehensions by domestic shipping lines of higher handling costs, utilization of the CDO port quay crane has not been made compulsory. 4.4.3 Vessel Dues PPA currently charge berthing fees on a GRT-day basis. The Tariff and Customs Code, which originally embodied the berthing fees, did specify that the berthing charges shall be assessed based on the GRT of the vessel for the first 24 hours or fraction thereof. However, in the course of restructuring the port tariff in the early 80s and in order not to deal with the nitty-gritty and assessment conflicts with the shipping lines, the PPA decided to change the charge base to GRT per Calendar Day due to the following reasons: a. There were some problems when to reckon a vessel as having arrived and when to reckon it as having departed; b. The shipping lines were contesting that they should not be made to pay for the x number of hours due to the delay in the arrival of harbor pilot, delay in the arrival of quarantine launch, etc. c. Harbor master clearances and assessments are delayed as shipping agents frequently request for re-computation when the departure of vessel are delayed due to problems such as winch or generator trouble, etc. This resulted in the need for supplemental billings which led to account build up over a period of time because the agents either intentionally or unintentionally forgets to pay charges. This is most prevalent among tramping vessels.

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Shipping Costs and Competitiveness In Northern Mindanao

d. The implementation of the present charging base of Per GRT per Calendar Day has been going on for the last 20 years. However, with the improvement in cargo handling productivity and the employment of quay cranes by port operators, there is a need to revisit the berthing dues currently charged by port authorities. On top of these, vessels arriving before midnight and departs early the next day are charged equivalent of two days at berth. Vessels intentionally slows down when their estimated time of arrival (ETA) will be before midnight to save a days equivalent of berthing fees. Assessing the shipping lines based on Linear Meter Hour instead of GRT days is most appropriate to encourage vessels to arrive on time. This will also give the shipping lines incentive to avoid waiting for cargo or in using the port as parking space. Besides, GRT based charges instead of actual space occupied is not the most appropriate as some vessels have higher GRT but shorter LOA or vice versa. Cebu run vessels (Roro) also berth stern first requiring less berth space. Additionally, shipping lines can demand higher productivity from cargo handling operators and/or strictly observe Vessel Operations Commitments (VOC). Bookings will also be better managed and cargo delivery cut-off strictly enforced. 4.5 Domestic Sea Freight Only Philippine registered vessels may engage in inter-island shipping. Foreign ocean freight shipping lines may not engage in inter-island freight shipping because of restrictions in cabotage. Cabotage refers to the practice of maritime countries of reserving the privilege of navigating and trading along the coast between two (2) ports within the national territory, only to vessels which are registered in that country. The improvement of the inter-island freight shipping will translate into competitiveness or better competitiveness of Philippine exports. The higher cost of domestic shipping service vis--vis foreign shipping can be traced to several factors including: high fuel cost, high interest rates, high insurance premium, low port efficiency and productivity (North Harbor), higher taxes for domestic shipping operations, lack of comparable government support program for domestic shipping, and higher cost in domestic liner operations. Based on industry statistics, majority of the vessels of the major players in the industry Aboitiz Transport System., Negros Navigation Co., Sulpicio Lines, Inc., Lorenzo Shipping Corp., NMC Container lines, Solid shipping, Inc. and Cebu Ferries, Corp. are obsolete by Japanese standards and require higher operating, maintenance and drydock costs.

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Shipping Costs and Competitiveness In Northern Mindanao

4.5.1 RORO (Strong Republic Nautical Highway) Strong Republic Nautical Highway otherwise known as Roll-On Roll-off Transport System (RRTS) is a major project of the government designed to help alleviate transport cost. The original concept is as floating bridges to connect the islands for easier transport of cargo and do away with cargo handling, its role was expanded to cover long haul routes. It is most efficient for short-sea crossing of passenger and cargoes and a big boost to tourism. It saw very limited success in long-haul sea freight. Short Haul RORO The RRTS-SNRH program has been very effective for short sea crossing such as Mukas-Ozamis, Balingoan-Camiguin, Dipolog-Dumaguete, SurigaoLeyte among others. This has not only lowered the transport cost of goods, but more particularly improved mobility and enhanced tourism. Cargoes are efficiently transported via wing vans or open stake trucks and freight rates have been reasonable.

Figure 4.2: Left: Balingoan-Benoni RORO Vessel; Right: Wing Vans ideal for RORO

RORO/PAX Container Carriers RORO/Pax or Roro-Passenger Container vessels are carriers that carry both passenger and containerized cargoes. Containers are mounted on a chassis and is towed to the vessel hold via a terminal tractor and where it is jacked up. Unlike short sea Roro, the chassis mounted containers are lashed to the vessel deck in preparation for voyage. Long Haul domestic shipping have started to change some of their strategies from employing RORO-Passenger (RORO/PAX) Carriers to purely container freighters. Aboitiz Transport System, Negros Navigation, Ocean Transport and Sulpicio Lines operate cellular container carriers and/or pure container carriers in addition to their RORO operations. Shipping companies which ply longer inter-island distances, such as ManilaCebu and Cebu-Zamboanga, among others, are traditionally not dependent on revenues from passengers alone. They earn their profits from cargo.

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Though contributing only roughly thirty percent of revenues, passengers however pay cash while cargo is oftentimes on credit terms. The introduction of the RORO/PAX concept in the Philippines was mainly due to the inability of cargo handling operators to efficiently handle containerized cargo due to lack of suitable equipment. Even today, many cargo handling operators still rely on liner owned equipment to handle containerized cargo prompting the PPA to reverse the 65%-35% rule in favor of the shipping lines. RORO/PAX has provided shipping companies with flexibility and independence from the inefficiencies on the cargo handling service providers during the last decade. Historically, ships carry passengers onboard because it translates to scheduled departures and specific routes, elements that assure a cargo clients that they could plan and manage the movement of their goods. With the increase in fuel prices, and stiff Figure 4.3: Container Vans unloaded from a RORO/Pax Vessel competition from budget airlines, RORO/PAX carriers are burdened by lower ridership and higher fuel costs as they have to maintain speeds which does not contribute to fuel efficiency measures else passengers will complain of delays. Conventional container carriers however can reduce speed and save fuel. Foreign shipping lines have reduced speed of their vessels from 25 knots to 20 knots and save 15 to 20 percent fuel. Survey results indicate that seventy two (72) hours sailing from Cagayan de Oro to Manila is still acceptable to majority of Northern Mindanao shippers. Shippers of perishable cargoes such as tomatoes prefer faster sailing time in the absence of ventilated containers. Northern Mindanao cargo handling operators have also improved vastly on their container handling capabilities. Ship to shore gantry cranes in Northern Mindanao can achieve 20 to 28 moves an hour, a far cry from the seven (7) to ten (10) moves per hour using ships gear thereby reducing port time. This improvement in productivity have nullified RORO/PAX carriers advantage of faster loading and unloading of containerized cargo. Container carrying RORO vessels are further disadvantaged by having to maintain ancillary equipment such as yard tractors and hundreds of chassis. Vessel capacity is not maximized due to dead spaces above and below 60
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chassis mounted containers stowed on its cargo decks. A 180 meter dedicated container carrier can load as much as 600 TEUs or over while a RORO/PAX carrier can only carry 200 TEUs mounted on at least 100 chassis. The difference in handling rates is a substantial saving for RORO operators especially when RORO vessels were exempted from paying stevedoring charges starting in 1997. This despite their continued reliance on cargo handlers to provide stevedores for work on board vessels for trailer landing leg deployment/redeployment, chuck positioning, lashing/unlashing, etc.

Figure 4.4: Workflow for CHA-RO (RORO/PAX)

There is limited cargo handling interplay for pre-mounted outbound RORO containers as the shipping lines own and operate the tractors required to tow containers from marshalling yard to the vessel. There had been debates over this issue as towing of chassis has been claimed by cargo handling operators and part of their function and being the authorized cargo handling operator, should provide the services to the shipping lines. The shipping lines in return argued that the RORO tractors and trailers should be treated as ships gear. The cargo handling operators in return argued that in conventional container carriers, the ships gear (ships crane) is operated by the personnel of the cargo handling operator. This issue has not yet been resolved and the tractors are still owned and operated by the shipping lines and employs their own drivers operating inside port premises.

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Aside from arrastre charges, one of the cost drivers related to cargo handling for RORO containers are Lift-up and Lift-off services. Not all chassis mounted containers are withdrawn from the ships hold directly for delivery thereby limiting cargo handling interplay. From the RORO vessel, most RORO containers are lifted off the chassis and stored at the ports marshalling yard and lifted on to another chassis when ready for withdrawal. The same interplay, but this time in reverse order is performed by the cargo handling operator for containers for loading to vessel. In addition to arrastre and lift-up/lift-off charges, RORO operators are saddled with added cost such as fuel, drivers, repair and maintenance and depreciation in operating terminal tractors and chassis. Some shipping lines load the tractors to the vessel to serve the same function at its next port of call. Cargo interplay is necessary due to the following: a. Chassis are not registered with LTO and cannot operate outside port zone; b. Chassis not designed for highway use (no brakes, no signal & brake lights); c. Not enough tractors to directly withdraw cargo to outside port container yard; d. Time element; e. Not enough RORO marshalling yards to store chassis mounted containers (without spacing, a forty foot chassis will occupy 30 square meters) for inbound/ outbound marshalling of RORO containers, a vessel with 200 TEU capacity would need about one hectare of marshalling yards. If two or three vessels call at the same time, ports will be congested. Conventional container handling can stack containers at multiple tiers and thus save valuable port space. MCC Transport, a domestic shipping line which is a joint venture partnership between MCC Transport Philippines and Aboitiz Transport Systems has been offering freight rates much lower than those offered by RORO vessel operators. RORO/PAX and Cargo Handling The introduction and continued development of the RORO/PAX system in the Philippines have stunted the development of the cargo handling industry. The low level of domestic cargo handling rates relative to freight, the limited interplay model in the RORO/PAX system and the continued use of the ten footer container has contributed to the underdevelopment of the cargo handling system. The inability of many cargo handling operators to procure necessary and suitable equipment can be attributed to low cargo volume, low revenue, and high equipment cost. Similar to the trucking industry, most of the countrys cargo handling operators have deployed second hand container handling equipment. This is the practice even for high volume ports like Cagayan de Oro, Cebu, Davao and North Harbor. Equipment reliability issues are common among these ports. 62
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Due to higher foreign container volume, the port of Cebu have ten units of old second hand rubber-tired gantry for its yards operation, which is more than what is needed to handle its container traffic had the units been new. Similarly, Sasa port in Davao deployed seven brand new and one second hand unit of container reach stackers. However, the cargo handling operators at these ports were able to afford the equipments from foreign stevedoring generated revenue (see table 2.16 and 2.17). The port of Cagayan de Oro despite having higher domestic traffic but majority of which is carried by RORO have only two ageing reach stacker and a second hand top lifter and a variety of second hand 24-ton forklifts. Presently, a brand new reach stacker cost Euro430,000 C&F and would normally have a guaranteed service life of 10 years under Philippine conditions where the labor component in repair and maintenance cost is cheap. Some advocacy group like to Coalition for Shipping and Port Modernization and the transport policy group of the Center for Research and Communication-University of Asia Pacific have even proposed to exempt RORO containers from payment of arrastre charges. Its argument is centered on the limited interplay model. Had their proposal saw fruition, it would have been the demise of domestic port modernization dreams of the PPA and further stunt the growth of the cargo handling industry. The ironically the port of Cagayan de Oro is quay crane equipped as required by PPA but is also designated as Mindanaos primary nautical highway and RORO gateway. Trailer Horse and RORO/Pax Safety The trailer horse is a device which provides added support for loaded chassis lashed on vessel decks. Chassis landing leg failures are common occurrence even on land. In the Philippines, Roro carriers do not employ this device which would assure that chassis and containers would not topple down in rough seas.

Figure 4.6: Trailer Horse

4.5.2 Freight Quotations and Freight Rates

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Freight rate setting has never been transparent. Shippers pay whatever fees shipping lines charge for freight, terminal handling and various surcharges. Most shippers particularly those without the negotiating posture have accepted this as a fact of life. Though complaints are common, shippers have not bonded together effectively to demand transparency by shipping lines. In addition, shipping lines takes approximately one to two weeks to submit freight quotations. This practice by foreign shipping lines has not provided shippers with enough flexibility as to timing and scheduling of exports. This also limits the shippers ability to canvass for competitive rates and/or negotiate the same. This problem is not too prevalent with large shippers which the shipping lines tend to favor not only with lower rates but with better services. Some foreign shipping line offices and/or agents are not empowered by their principals to provide freight quotations which explains the delay as quotations are solely issued by their foreign offices. This could also be a strategy by the shipping lines to prevent over-booking. The fault could also be attributed to some shippers who over-book but does not deliver the cargo for a particular voyage, preventing the shipping lines to accept other cargoes when their vessels are already laden in accordance with advanced bookings. Over-booking is however, a custom by large shippers rather than small ones according to some foreign shipping line representatives interviewed.

4.6 Trucking 4.6.1 Empty Backhaul The number of empty trips is a way to measure the efficiency of road freight transport activities as empty backhaul are a waste of resources for truckers. Some possible explanations for this phenomenon are the technical restrictions for some typical freight transport activities that cannot take return loads (e.g. empty container return or empty repositioning), unavailability of cargo for backloads and time constraints. Empty backhaul and/or empty container repositioning does not allow the trucker the optimum use of transport assets. However, such practices become necessary in the face of cargo security issues. Transport losses due to pilferage, cargo hijacking, theft or cargo loss weight are the primary reasons for empty repositioning. Primarily for added security, sealed containers cannot be opened without owners presence and thus, deter pilferage and theft. Any loss therefore, containers with broken seals without owners presence are chargeable against truckers, port operators and/or carriers; whoever has custody of the container where the breaking of the seal occurred.

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Empty backhaul is however not an efficient way in trucking operations. Together, shippers and trucking providers must find ways to increase truck efficiency through backloads to further reduce trucking costs. Trucks link the inland factories and agricultural production areas with the ports and airports and also play an important role for domestic distribution. Speeding up trucking will decrease transit time and increase supply chain quality. Road safety is an issue with trucking; additionally road quality influences break downs which create congestion on roads. Recommendation of improving road quality and separating trucking from motorbike, motorela, trisikad and other slow moving vehicles on the most frequented streets roads and highway to increase traffic flow resulting in shorter trucking times to and from ports. Clearing roads of illegally parked vehicles, junk vehicles, illegal structures and other road frictions should be immediately implemented. Installation of standard road signs, road markings, pedestrian lanes, and left turn pockets is recommended. Further recommending widening and/or geometry improvement on difficult road sections and intersections to enhance safety. Improvement in road transport infrastructure will enable Northern Mindanao land transport operators to make significant improvements in vehicle utilization and productivity. These improvements will be reflected in significant increases in vehicle payloads and reduced transit times between production areas to vital transit points.

4.6.2 DOTC-LTO Fines/Penalties for Traffic & Administrative Violations The approved rates and listing of LTO fines and penalties for traffic and administrative violations needs to be carefully reviewed. The list is not only confusing, some of the violations listed are vague and/or subjective and could be subject to abuse by apprehending authorities. (See Annex 3.5) The lists lumps up violations for private, commercial as well as Public Utility Jeepneys (PUJs) and taxi service and its confusing as to what applies where. It is filled with grammatical and construction errors. The list is posted on the LTO website. Highway Patrol Local highway patrol units do not really patrol the highway. Probably to save on fuel, highway patrol officers are stationed at strategic points along the highway and act as checkpoints and where trucks are routinely flagged for inspection. They are less concerned of moving violations but rather on the correctness of vehicle registration and franchises. Due to the agencys no approach policy, trucks and other vehicles with probable documentary violations and who may not be willing to pay informal fees will simply park on the side of the road and wait for the Highway patrol or LTO personnel to leave before continuing on their journey. Inconsistencies 65
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Ironically, along the national highway and sometimes passing the checkpoints are motorcabs (a local tricycle designed using 2 stroke engines with no transmission, alternators, lights, chassis numbers etc.) which cannot be registered with the LTO nor franchised as a public conveyance by the LTFRB plies the highway for passengers and not getting apprehended by traffic and transportation authorities. Such vehicles are not road worthy much less appropriate for highway use. They are given authority by the barangay captains and enjoy political protection. These vehicles however poses traffic hazards and danger to the riding and commuting public. They also slow down traffic flow along the Puerto, Tablon, Agusan and Bugo sections of the highway to the consternation of truck drivers and other legitimate motorists.

Figure 5.7: Motorcab

Similar to trisikads, they cannot be issued citation tickets as they do not carry plates or tags and the only way to apprehend them is only through impounding.

4.6.3 DPWH Weigh bridges-DPWH Weigh bridges are located on the right side of the highway prior to entering Cagayan de Oro City from both east and west section of the BCIR. Trucks are weighed before entering the city. This however defeats the purpose of monitoring truck weights to protect the highway from overloading as trucks are weighed after they have already passed the highway. Trucks from Cagayan de Oro going outwards are not weighed.

4.7 Harmony of Policies and Programs 4.7.1 DPWH-PPA Cargo Weight Policies DPWH mandates that vehicles shall have load limits of 13.5 tons per axle. This policy has been a bane to truckers who have no idea what their axial loads are once loaded with containerized cargoes. Shippers also encountered similar problems as they have no idea of the exact weight of their cargoes and will rely on commercial weigh bridges located near or at the port. Cagayan de Oro port and MCT imposes compulsory weighing of outbound cargoes. Inbound cargoes are presumed to be weighed at the port of origin.

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Inconsistencies PPA on the other hand is observing ISO 1995 and allows 20 foot containers up to a maximum gross weight of 24 tons. PPA weighs the whole truck, deduct truck tare weights to determine container gross weight. Information on the Figure 4.9: MCT Weighbridges weight of containers is critical for proper stowage planning by carriers. PPA also allows tandem loads of 2 units 20 footer container on a 40 footer chassis which by DPWH standards may weight more than 13.5 tons per axle. DPWH and PPA should harmonize their load limit policies. Development Strategies To fast tract the development of the land transportation industry in Northern Mindanao, the following recommendations are given: a. Increase the regions share of the total national road budget; b. Introduce immediate development on difficult and dangerous and high traffic density road sections; c. Encourage the participation of the private sector in road infrastructure development; d. Consult transport service providers and players in identifying priority road and bridges for development. A reduction in transactions costs in land transportation can be done through the following: a. Pursue consolidated efforts on the part of the DENR, DILG, DPWH and DOTC to review existing laws/regulations dealing with legitimate transport permits and corresponding fees; b. Institute public information and dissemination mechanisms on the procedures, charges and clearances required by implementing agencies, c. Organize truck operators/owners into a vigilant and unified association; d. Pursue an education campaign among members of truckers associations on awareness and compliance of required transportation permits; e. Minimize the collection of illicit fees by using the media to expose cases of erring/corrupt government personnel;

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f.

Strict imposition of charges against government personnel if the quality of delivered cargoes deteriorate while being impounded by them despite the presence of required documents.

4.8. Security, Clearance and Inspection Costs Despite the issuance of Executive Order 554 issued in 1996 instructing all government agencies to improve the competitiveness of the countrys export sector by eliminating fees and charges imposed on export clearances, inspections, permits, certificates and other documentary requirements, several regulatory agencies have not yet implemented this policy particularly BIR, Bureau of Customs, BFAD and DENR.

4.9 Value Added Tax Mindanao shippers are not only burdened by high freight rates, they are also heavily taxed. Mindanao goods shipped to Manila markets are assessed Value added tax on cargo handling, and wharfage at Mindanao ports, vat on freight and again vat on wharfage and cargo handling at destination port. With this level of multiple taxation, the only way for Mindanao products to be competitive is to lower down production costs e.g. labor, inputs and profit margins. Better else, to produce goods that are not produced anywhere else. Moreover, Mindanao producers, shippers and transport operators pay higher fuel pump prices (PhP2.00 to PhP3.00 per liter) as fuel is also shipped to Mindanao and whose freight and handling is also subjected to VAT charges. Shippers also have to pay VAT on freight, wharfage and cargo handling of raw materials shipped to Mindanao such as animal feed ingredients, locally produced or transshipped fertilizer and packaging materials keeping production costs high. The value added tax, particularly on freight (a function of distance) has inclined the playing field against Mindanao shippers. Competing under this unfair environment does not bore well for Mindanao, the food basket of the Philippines. Not only are some Luzon transport infrastructure and fare structure highly subsidized by government such as the Philippine National Railway, MRT and LRT, commercial users of North Luzon Expressway, South Luzon Expressway, Southern Tagalog Arterial Road among others are not assessed value added tax on their toll fees. It is therefore recommended to zero rate the value added tax for Mindanao freight, cargo handling and wharfage. This will translate into at least twelve percent savings, which affects prices for products and higher margins and better competitiveness of Mindanao products. Legislation is Necessary

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The removal of VAT on Mindanao cargo handling, wharfage and freight may be termed The Mindanao Freight Equalization Program.

4.10 Freight Equalization Scheme Freight equalization through removal of Vat from sea freight of all commodities flowing to and from Mindanao. Freight Equalization can assist in alleviating the comparative domestic freight cost disadvantage incurred by Mindanao products to markets. Its objective is to provide Mindanao industries with equal opportunities to compete in Luzon markets, recognizing that, unlike their Luzon counterparts, Mindanao shippers are burdened by high freight, wharfage, handling and VAT cost. Freight equalization Scheme is a tool for Mindanao economic development in response to the underlying distance cost penalty. The rationale is for equitable treatment of industry with respect to domestic trade and specifically, access to production inputs, and the markets for goods produced. To achieve this, neutrality in terms of access to transport infrastructure is essential. The Philippine Government has actively engaged in pursuing this equity between the three main islands only through its Strong Republic Nautical Highway which has little impact on sea freight cost reduction for containerized freight.

4.11. Timely Policy Dissemination Despite the technology, regulatory agencies including the Bureau of Customs has not provide timely dissemination issuances or policy updates especially for provincial areas. Their information systems including their websites are not regularly updated, that even regional offices, especially at field level, receive delayed updates by as much as a month after the issuance of new policies.

5 BEST PRACTICES OF LOGISTICS PLAYERS

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5.1

Exports and Exporters 5.1.1 One Stop Processing Centers Although the concept of the one stop is literally a single venue with collective agencies to process documents, the realities are not as what is intended. The system of regulation for commodity clearances are yet to be institutionalized (i.e. regional heads of regulatory agencies delegating approving authorities posted at the venue). At present, there are three (3) one stop processing venues in Northern Mindanao at least for exports namely: the PPA One Stop Processing Center located at the CDO Base Port, the MCT Terminal Building where most of the shipping lines, the terminal operator and PHIVIDEC Industrial Authority are housed, and the One Stop Export Documentation Center located at the DTI Regional office operated by PhilExport-10A. The purpose is to facilitate export processing for the convenience of shippers. Though far from the ideal set-up, the various one stop centers has alleviated some of the problems of shippers and has effectively shorten document processing time.

5.2 Trucking Industry 5.2.1 Water Brakes Northern Mindanao Truckers practically invented the Water Brakes for added operational safety. Water brakes comprises of a water tank and a series of hoses with water sprinkles at its end directed at the brake drums of trucks. In traversing steep inclines, truck drivers will engage the water brakes and spray water on the brake drums to reduce frictional heat and keep the brakes from overheating. This will ensure that the brakes will hold once applied. 5.2.2 Twenty-four (24) hour delivery service provision Truckers cover all major routes along the four corridors and trucking rates are almost uniform per kilometer except for short distance door to door trucking. There is no discrimination of cargoes and truckers are willing to provide 24 hour trucking service with no additional overtime charges. 5.3 Customs Clearing 5.3.1 VASP (Value Added Service Provider) The Customs Modernization Act allows for electronic filing of customs documents. EDI services are provided through a proprietary Value-added Network, Direct Trade input through privately-operated network stations and a privately operated port based entry and encoding system. BOC uses ASYCUDA ++ and provides for automatic payment and on-line release of goods to speed up cargo clearance. The introduction of ASYCUDA World will allow greater use of the Internet for submission of BOC documents. For most cargoes, the time for cargo clearance will be reduced to only a few hours. 70
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Additional improvements should be realized as BOC develops its enforcement database and improves its risk management techniques. At present the BOC applies selective enforcement through three physical inspection procedures: Green lane - no inspection of cargo is done other than random sampling Yellow lane - inspection of documents only Red section - 100% physical inspection of cargo is conducted

Both CDO Port is now implementing the e2m (electronic to mobile) system for import clearance while MCT will also be adopting such scheme within the year.

5.3.2 Inspection Areas for Imported Items The Bureau of Customs in partnership with PPA and PHIVIDEC Industrial Authority have provided inspection areas within the port for free. Unlike in other areas where inspection sites are located outside of port zones, costs of customs import inspection are mainly for inspection fees and facilitation services with no additional cost on handling and trucking to bring containers out of the port zones for inspection. 5.4 Port Management 5.4.1 International Shipping and Port Security (ISPS) Code Cagayan de Oro Port in response to security codes enforced by the government of the United States of America for US-bound shipments endeavored to update and cause the compliance of ISPS code standards. OROPORT the cargo handling operator spent a substantial amount of funds to effect the segregation of foreign and domestic cargo and took measures to prevent contamination of all foreign-bound cargoes. PPA and OROPORT security personnel also attended trainings and technical sessions on the ISPS Code security procedures and certification. 5.4.2 VOC (Vessel Operations Commitment) Cargo handlers are made to commit the time it would take to complete vessel operations and to strive to hit their target. Committed productivity rates shall not be lower than PPA contracted productivity standards. 5.4.3 Labor Unions As part of its commitments, PPA requires cargo handling operators to respect employees rights to self organization and mandates it to recognize employees union for collective bargaining, grievance handling and Labor-Management Councils (LMCs). 5.4.4 VTS (Vessel Tracking System) The Mindanao Container Terminal has a VTS installed in its facility but was not initially made operational due to the unavailability of qualified personnel as well as

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lack of budget to operate the system. PHIVIDEC Industrial Authority in cooperation with the Philippine Coast Guard (PCG) was able to seek funds from the AusAid CIQs grant to put the system in operation. As of February 2010, the VTS is fully operational and manned by qualified PCG personnel. It effectively directs vessel traffic and minimize smuggling and enhance safety at the Macajalar Bay. 5.4.5 PPA Port revenues being plowed back for port infrastructure projects The Philippine Ports Authority (PPA) has devised a mechanism where port revenues such as those derived from wharfage, are plowed back to fund port infrastructure projects in the Cagayan de Oro Port. After the completion of the Cagayan de Oro Port expansion project phase-2 funded by the International Bank for Reconstruction and Development (IBRD), major infrastructure projects implemented at the port are funded by PPA funds. Quay Cranes and various cargo handling equipment were procured by the cargo handler as part its modernization commitments to PPA as required. 5.4.6 The Port Management Advisory Council (PMAC) This is a multi-sectoral organization solely for the purpose of addressing port issues. The members meet periodically in order to advise PPA on prevailing port issues affecting the ports various stakeholders.

6. WAY FORWARD 6.1 Institutional Coordination

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The Philippine Ports Authority and DPWH needs to thresh out some conflicting policies on truck load limits. The PPA and commercial truck scale operators weight the whole truck rather than by axle. Clear and updated guidelines that would specify maximum truck loads should be established by both port and road agencies. Two identical 10 wheeler trucks but with different wheel base or different axial spacing will have different axial load distribution. How cargoes are stuffed inside the container will also influence axial load distribution. For port cargo pick-up, truckers will have no idea of truck axial load factors. The two agencies therefore must harmonize their load limit policies to prevent confusion by shippers and trucking service providers. Truckers and shippers must initiate this inter- agency coordination and explain industry practices for the government agencies to consider. ISO laden container weight and international road construction standards should also be considered in the harmonizing load and weight policies. There are other areas in the soft logistics infrastructure where institutional cooperation may be explored such as the PPA port traffic authorities and the traffic management group (TMG) of the local government, and the Highway Patrol Group for better traffic flow at port access.

6.2

Replicable Best Practices


6.2.1 One-Stop Centers One-stop processing/documentation export centers as in Northern Mindanao may not be the best models, but surely they provide some convenience as users dont have to go to several offices in order to transact business. Improving such facility would require regulatory agencies to assign permanent at-field level stationed signing/approving officers at these centers, so that processing can be done at a much faster phase. Learning from the power outages that Mindanao is experiencing for the last few months (and may even continue till third quarter of this year), online transactions have their limits. Further, linking these one-stop centers may be a good idea in order to relay and facilitate better and faster processing with or without the Internet for the convenience of clients. Currently, there is no formal one-stop center for imports. As such, existing one-stop centers may be the best center to provide services in clearing imported cargo in cases when online transactions fail.

6.2.2 BOCs VASP While information communications technology (ICT) is strongly gaining ground in international and domestic transactions, there is still the need to strengthen the

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Bureau of Customs capability to provide service through electronic processing. The e2m program of the bureau is a novel idea where clients will be able to transact via their cellular phones and need not use a computer for virtual access. 6.2.3 Maintaining Free Inspection Areas The Philippine Ports Authority and the PHIVIDEC Industrial Authority are providing a customs inspection area inside the port at not cost to the Bureau of Customs. This service should be maintained permanently and the planned relocation of such service outside the port should not be adopted. 6.2.4 Wharfage Discounts According to shippers, the 50% discount on wharfage was extended to exporters till December 31, 2009 by the Philippine Ports Authority and the PHIVIDEC Industrial Authority. Inasmuch as this is just a small amount, it translated to a regular savings for those shippers who ship out on a weekly basis. In accordance with Executive Order 554, this incentive should become permanent.

6.3 Information Drive


Information drives can be done if the necessary information is at hand. The private sector through PhilExport-10A and the other organizations like the chambers of commerce initiate such activities on a regular basis to insure effective information dissemination. However, these private sector groups are still dependent on the availability of policy updates. Perhaps some level of corporate communications enhancement systems must be established within government regulatory agencies in order for them to provide timely updates.

6.4 Logistics Training There is a need to have tertiary academic institutions consider providing training on logistics. In Northern Mindanao, the College of Commerce of the Liceo de Cagayan University and the Capitol University provide some topics on Logistics in International Trade subjects. There is also the need to step-up the use of the VASP. Regular training programs may be designed with BOC and BSOs cooperation to draw a larger circle of users. This will enhance productivity and improve transparency.

6.5 Business Support Organizations (BSO)


6.5.1 NORMINSA 74
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The Northern Mindanao Shippers Association (NORMINSA) is the leading organization in Northern Mindanao advocating for globally competitive logistics & cargo transportation system. It advocates for policies that promote the competitiveness of the logistics and transport system in Mindanao. The association so far has met little success in its advocacy to reduce transport cost of Northern Mindanao products for both local and export markets. Majority of both domestic and export shippers have not joined NORMINSA and instead rely on individual capability to negotiate for favorable freight rates. Large and small shippers have diverse interest preventing the creation of a cohesive organization for mutual benefit such as the reduction of shipping rates. As in any sector of business, large firms logically enjoy preferential rates in the logistics chain simply with the assurance of volume and transport frequency. Even without having to join shippers associations, they always get discounts. This is the segment of shippers that cause the problem of overbooking, which is a common shipping line complaint. However, small shippers always get the shorter end of the stick. Discounts enjoyed by large shippers are recovered from higher rates and surcharges charged against small shippers. The development of a strong shippers association cannot be hinged on this treatment disparity. Small shippers must band themselves together to form another big shippers block which the shipping lines cannot afford to ignore. Current shipping association leadership are either large shippers or service providers. Small shippers need to be supported to take leadership roles and should be supported by government and development agencies. Slot charter agreements and/or consistent organized bookings and establishment of volume-induced discounts by small shippers should be undertaken, without which, the leverage necessary for effective bargaining is not going to be available to them.

6.5.2 PhilExport-10A As an organization, PhilExport-10A is also in the same boat with NORMINSA. Meager resources prevent these organizations from making headways on its advocacies. Several advocacies had been pursued but failed to catch enough attention to bring about needed reforms. PhilExport-10A members must realize that the organization cannot be an effective transformational agent if its members, particularly the small shippers will not take seriously the organizations objectives. Payment of minimal membership and monthly/annual dues is just the first step in achieving the organizations development agenda and advocacies. Participation by all members in the chapters activities will bring about a better deal for Northern Mindanao exporters in all the segment of the logistics chain.

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A cardinal rule for many exporter/importer working in difficult customs environments. Implement controls on the outbound end of shipments, to make sure nothing appears in (or is missing from) the required paperwork, or in the shipping containers themselves, that will give an opportunistic official the opening he needs to hold up the clearance. This approach also makes business sense, as it reduces the likelihood of delay, additional costs, and corruption in the clearance process. The processes must be rigorous: veterans of the customs trenches can tell you that it takes just one mischecked box to hold up valuable goods at a port. A parallel rule exporters/importers employ is to have their brokers open the containers for review and confirm that all is in order before attempting to clear the goods.

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ANNEXES

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ANNEX 1.1
PhlExport-10A Shipping Costs and Competitiveness in Northern Mindanao DRAFT STUDY PRESENTATION WITH LOCAL PARTNERS (a Validation Session) April 6, 2010 Brewberry Caf, Cagayan de Oro City Persons Attended
Name 1. Mr. Wilson C. Amad 2. Mr. Venchito C. Bullecer 3. Atty. Roswald J. Pague (for Coll. Abedin Macapasir) 4. Ms. Carmelita Bajarla (for RED Lealyn Ramos) 5. Engr. Jaime H. Pacampara (for Dir. Leon Dacanay) 6. Ma. Estrella Luz R. Pealoza 7. Ms. Elvira Garcia (for Mr. Dante Clarito) 8. Mr. Napol G. Garcia (for Dir. Sulta Porcawa Dia) 9. Engr. Virgincita Lomoto (for Dir. Jerome Dela Rosa) 10. Ms. Jenneth Balaba (for Mr. J. Rafael Paguio) 11. Mila Lasquites (for Dir. Alicia Eusea) 12. Ms. Heidi Mendoza 13. Ms Lynn Sison 14. Mr. Noel M. Tan 15. Mr. Michael Ignacio 16. Ms. Rema Romualdez Designation/Office/Org President, PhilExport 10A VP-External, PhilExport 10A District Legal Officer, BOC-CDO District Senior Specialist, DA - RFU 10 Chief Eco. Devt. Specialist, NEDA X Sr. Eco. Devt. Specialist, NEDA X OIC for Port Operations, PHIVIDEC Industrial Authority Senior Transport Specialist, LTO X Engineer III, DPWH X Project Development Officer, OroChamber Senior Trade & Industry Specialist, DTI-10 MBA, LINC-EG, USAID Transport Adviser, LINC-EG, USAID Project Consultant, PhilExport-10A Exec. Director, PhilExport-10A Technical Staff, PhilExport-10A

Session Highlights Preliminaries by Michael Ignacio - Did the welcome, introduced participants - Stated the objectives the session o to validate findings of the study o solicit comments and suggestions for the study - Presentation by Michael Ignacio (while the presentation was done, comments and questions were accommodated) o the studys background, rationale and objectives o study methodology and approaches o Northern Mindanaos export profile o Costs of exporting from Northern Mindanao o Profile of target respondents and survey highlights - Presentation by Noel Tan o Logistics conditions of Northern Mindanao o Problem Areas o Issues and Measures o Best Practices of Logistics Players o Recommendations

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Shipping Costs and Competitiveness In Northern Mindanao

Discussion Highlights (main discussions only) - query as to why transshipment by RORO is not an option for exports o Mr. Tan thoroughly discussed the RoRo chain and the activities involved as practiced in the Philippines, highlighting the additional costs incurred due which makes it more costly Comment on cost of exporting: if possible to show a comparative how much to export from Cebu and from other areas Mindanao o Study team will look into it as these area have different conditions from Northern Mindanao query on what is Terminal Handling Charge and why is it a problem o Mr. Tan showed the activities involved on THC as well as the rates charged, he also showed how a particular shipping line would charge THC. (please see attached presentation) query on the possibility of exporters grouping together in order to get better rates since shipping lines only favor large companies as they have the volume o Mr. Tan explained that for as long as there is enough volume to negotiate, its possible, but small exporters hooking-up with a large exporter for volumes might be disadvantageous for the large exporter. query on the possibility of exporters grouping together in order to get better rates since shipping lines only favor large companies as they have the volume. o Mr. Tan explained that for as long as there is enough volume to negotiate, its possible, but for small exporters to hooking-up with a large exporter for volumes, the rate might increase for the large exporters side. query as to how come theres not much of a best practice from Northern Mindanao and only issues, is it really that bad? o the project team has not yet fully completed the draft, therefore expect for more to come. several queries on the problems of domestic shipping including the mention of the Cabotage Law. o Mr. Tan again, thoroughly discussed the domestic shipping industry and why the costs are high comment as to why some exporters only pay php1,000 for bribes while others pay more. o the project team, again has yet to fully complete the draft, therefore expect for more to come.

Discussions on Recommendations On road projects possibility of prioritizing key road sections indicted in the presentation as these the most critical and accident prone Some level of compromise should be made since there is the need to also preserve the life of the roads to as much as 25 years (since these were financed with ODA long term loans)

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On weigh bridges - for DPWH & PPA to agree on weight capacities as they conflict, encouraging corruption - DPWH weigh bridges to be positioned in areas where trucks be weighed before they use the road and not after when the damage has been done once overweight - Northern Mindanao very strict with outbound cargo but in-bound/imported cargo are not weighed upon arrival at the port, and North harbor nor Cebu port do not have weigh bridges. Prepared and submitted by: Michael Joseph R. Ignacio Executive Director, PhilExport-10A

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Shipping Costs and Competitiveness In Northern Mindanao

ANNEX 1.2
Draft Study Presentation with Local Partners
April 6, 2010 Brewberry Caf, Cagayan de Oro City

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ANNEX 3.1 SHIPPERS SURVEY QUESTIONNAIRE 1. Company Address _____________________________________________________ 2. Industry Sector Agri/Aquaculture Processed Food Wood/Furniture Industrial

Other, pls. specify: ______________________________________________________ 3. Type of Business Production Trading Manufacturing/Processing Services

Other (pls. specify): ____________________________________________________ 4. Business Size (total assets less land) Micro (up to Small (Php3MPhp3M) 15M)

Med. (Php15M100M)

Large (Php100M up)

5. Your Position in the company: ___________________________________________ 6. Please provide your recent years (2009) transportation logistics costs incurred. Average pre Month Php ____________ Total for 2009 Php_______________ 7. Approximately what percentage of your company's outbound transportation logistics costs is associated with trucking logistics? Less than 10% 51% - 75% 10% - 25% More than 75% 26% - 50% 8. Approximately what percentage of your company's outbound transportation logistics costs is associated with Sea Freight logistics? Less than 10% 10% - 25% 26% - 50% 51% - 75% More than 75%

9. Do you outsource any of your company's trucking logistics functions? Yes ___ No ___ 10. Do you use only one trucking company? Yes___ No___ 11. Do you regularly canvass for the cheapest trucking rates? Yes___ No___ 12. How many trucking service providers does your company patronize? ______________ 13. Evaluate the quality of infrastructure in use for your logistics operations (pls. check): Very high High Average Low Very low Ports Roads and Highway Warehouse Telecom infrastructure & services 14. Overall, logistics costs are (please indicate per product; include additional sheet if necessary): Cost Item (Pls. specify product Ranking Cost Per Remarks of TEU here: Cost (Php) * Port charges are Trucking rates are Arrastre rates are Stuffing/Stripping rates are

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Cost Item (Pls. specify product here:

Ranking of Cost *

Cost Per TEU (Php)

Remarks

Customs Facilitation rates are Customs brokerage rates are Warehousing/Reefer Plug rates are Port dues (wharfage etc) rates are Informal Cost (bribes) are Freight (shipping) rates are Others, please specify * 1: Very Low; 2: Low; 3: Average; 4: High; 5: Very High

(Destination)

15. Evaluate the effectiveness and efficiency of the following processes in your international Nearl y Are export shipments cleared and shipped as scheduled? Are import shipments cleared and delivered as scheduled? Is Customs clearance a transparent process? Do you receive adequate and timely information when regulations change? Can Customs declarations be submitted & processed electronically? Do shippers demonstrating high levels of compliance receive expedited Customs clearance? 16. Evaluate the incidence on your activity of the following constraints in your logistics operation: Nearl Always Often Some Rarely Hardly y Eve ti r m es Delays due to pre-shipment inspection Criminal activities (e.g. stolen cargo) Solicitation of informal payments Alway s Often Some- Rarely time s Hardly Ev er

17. Evaluate the evolution of the following factors in your country of work, over the past 3 years: Much Worse About Better Wo the rse Same Customs clearance procedures clearance procedures Quality of transport infrastructure Quality of telecommunications infrastructure Availability of private sector services Regulatory regime Good governance and eradication of

Much Bett er

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Much Wo rse corruption Overall business environment

Worse

About the Same

Better

Much Bett er

18. Would you say that your exported products are still competitive? Yes___ No ___ Why? ______________________________________________________________________ ___________________________________________________________________________ 19. Would you say that your products sold in Cebu or Manila are still competitive? Yes___ No ___ Why?______________________________________________________________________ ___________________________________________________________________________ 20. If the average transportation rate you pay increased by 10% percent, would your annual volumes decrease? Yes ___ No ___ 21. What do you consider to be the most important issues facing shippers today? a. __________________________________________________________________ b. __________________________________________________________________ c. __________________________________________________________________ 22. How did you address these issues? a. __________________________________________________________________ b. __________________________________________________________________ c. __________________________________________________________________ 23. Would you say that your export products are still competitive in foreign markets? Yes__ No___ Why?______________________________________________________________________ ___________________________________________________________________________ 24. How far is your plant/factory from the nearest port facility? ____Kilometers. 25. There are only 3 foreign shipping lines servicing Northern Mindanao, is domestic transshipment a good option for you? Yes ___ No ___ Why? ______________________________________________________________________ 26. Do you use only one shipping line exclusively? Yes ___ No ___ 27. If not, do you canvass for the lowest freight rates? Yes ___ No ___ 28. Is there a difference for you whether your cargoes are shipped via a RORO vessel or via conventional container carrier? Yes___ No___ Why?_____________________________________________________________________ 29. For Cagayan de Oro to Manila shipment, would more than 72 hours shipping time still be acceptable for your shipment? Yes ___ No ___ If no, why? ________________________________________________________________ 30. If a shipping line offer lower rates but will take more than 72 hours to get your cargo to Manila, would that offer be an attractive option for your cargoes? Yes ___ No ___ Why? _____________________________________________________________________ 31. How much is your current freight cost for your export cargo? (Indicate product: ____________________) 40 footer dry - Php___________ 20 footer dry - Php____________ 40 footer reefer - Php_________ 20 footer reefer - Php__________ Others, please specify packing type & cost_____________________________ 32. How much is your total cost to export last year? (Indicate Product_______________________________)

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40 footer dry - Php___________ 20 footer dry - Php____________ 40 footer reefer - Php_________ 20 footer reefer - Php__________ Others, please specify packing type & cost_____________________________ 33. How much is your current freight cost for your domestic cargoes (e.g. Manila)? (Pls. indicate commodity __________________) 40 footer dry - Php___________ 20 footer dry - Php____________ 40 footer reefer - Php_________ 20 footer reefer - Php__________ Others, please specify packing type & cost_____________________________ 34. How does the Value Added Tax (VAT) on freight affect your business? ___________________________________________________________________________ ___________________________________________________________________________ 35. If VAT is to be removed from shipping freight (only), would that help your business be competitive? Why?______________________________________________________________________ ___________________________________________________________________________ 36. Geographically, where are the majority of your customers located? (encircle one.) 1. Locally (< 200 kilometers) 2. Regionally (< 750 kilometers) 37. How are your export goods transported? FOB___ 3. Nationally 4. Globally CIF___

Others (specify) ___________________________________________________________________ 38. Who nominates the carrier? Buyer ____ Spot Market ____

Others (specify) ___________________________________________________________________ 39. Employment Profile of the Company/Business Level/Division/ Present number How many are Function of workers women workers? Management Operations Marketing Finance/Admin. Others (specify) 39.1. Has the ratio of women to men workers always been the same? Yes___ No___ 39.2. IF NO: When did the company or business begin hiring more women? (Year)_________ 39.3. What made it decide to employ more women? _________________________________________________________________________ Tasks assigned in this level? 1: Supervision; 2: Operations; 3:Clerical Men Women 1 2 3 1 2 3

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ANNEX 3.2 IMPORTERS & FORWARDERS SURVEY QUESTIONNAIRE 1. Company Address: ______________________________________________________________ 2. Industry Sector Agri/Aquaculture Processed Food Wood/Furniture Industrial

Other, pls. specify: ______________________________________________________ 3. Type of Business Production Trading Manufacturing/Processing Services

Other (pls. specify): ____________________________________________________ 4. Business Size (total assets less land) Micro (up to Small (Php3MPhp3M) 15M)

Med. (Php15M100M)

Large (Php100M up)

5. Please tick one Phil. Business importing goods from outside the country for processing Phil. Business importing goods from outside the country for sale Freight Forwarding/Logistics Shipping/Shipping Services Customs Broker/Customs Agent Other (please specify): 6. Does your company use your imported commodities as materials for export? Yes __ No __ If so, do you claim duties drawback? Yes ___ No ___ 7. What are the problems encountered with drawback procedures? Please enumerate if any. ___________________________________________________________________________ ___________________________________________________________________________ 8. Please list the top 2 most difficult procedures by the following agencies and rank the same Ranking 1: not a problem 5: very serious problem Agency Import Procedure Rank 1. 1 2 3 4 Bureau of Customs 2. 1 2 3 4 1. 1 2 3 4 Port Authority 2. 1 2 3 4 Arrastre Service 1. 1 2 3 4 Provider 2. 1 2 3 4 Bureau of Plant 1. 1 2 3 4 Industry 2. 1 2 3 4 1. 1 2 3 4 Bureau of Quarantine 2. 1 2 3 4 1. 1 2 3 4 DENR 2. 1 2 3 4 1. 1 2 3 4 BIR 2. 1 2 3 4 Others (pls. specify) 1. 1 2 3 4 2. 1 2 3 4 1. 1 2 3 4 2. 1 2 3 4

5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5 5

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9. Other than CDO Port and MCT, does your company use other ports to import? Yes __ No __ If yes, please rank the ports per cost, 1: cheap 2: reasonable 3: expensive, 4: very expensive, pls. encircle CDO Port: 1 2 3 4 MCT: 1 2 3 4 Other Ports: please name the port(s) below 1. 1 2 3 4 2. 1 2 3 4 3. 1 2 3 4 4. 1 2 3 4 10. Does your company use the VASP (spell out) to submit information electronically to customs systems? Yes ___ No ___ If yes, what are the advantages enjoyed with the system? ____________________________________________________________________ ____________________________________________________________________ 11. Would it be possible for you to clear goods through the port within 24 hours of the ship's arrival? Yes ___ No ___ If yes, please specify your expediting practice(s) and any additional cost(s) incurred: Practice(s) Cost (Php)

12. Are you able to predict the time it takes to clear goods through the port? Yes ___ No ___ 13. In the majority cases, do you aim to move the goods out of the port as early as possible without maximizing the free storage options that ports offer? Yes, we try and get the goods out of the port as quickly as possible No 14. Within the last 12 months, how many days was the longest you ever had to wait for a particular consignment to complete the regulatory process in the port? _____ days 15. Which was the main agency responsible for the delay? Bureau of Customs Arrastre Service Provider Bureau of Quarantine Port Authority Bureau of Plant Industry DENR Others (please specify) BIR ___________________________ 16. Does someone in your company participate in consultations on regulatory matters (e.g. through port user groups, Customs consultations, Trade Associations or direct response to formal government consultations) Yes ___ No ___ 17. Does your company encourage formal training related to import procedures? Yes ___ No ___ 18. In importing, aside from the cost of the commodity imported, which cost component has the biggest contribution to your total import cost? Please rank with 1 being the highest Activity Rank Est. cost per entry (Php) Commodity: __________________________________________________________
(please fill up additional sheets provided if more than one commodity)

Freight Arrastre Wharfage Dues Port Storage Charges Trucking Customs Duties Value Added Tax Brokerage Facilitation Cost Bribes

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19. Is there any other information relating to trade procedures that have effected your inward supply chain operations, which you would like to share? Please outline: ______________________________________________________________________ ______________________________________________________________________ 20. Your Position in the company: _____________________________________________________ 21. Employment Profile of the Company/Business Level/Division/ Present number How many are Function of workers women workers? Management Operations Marketing Finance/Admin. Others (specify) 21.1. Has the ratio of women to men workers always been the same? Yes___ No___ 21.2. IF NO: When did the company or business begin hiring more women? (Year)_________ 21.3. What made your company decide to employ more women? _____________________________ Tasks assigned in this level? 1: Supervision; 2: Operations; 3:Clerical Men Women 1 2 3 1 2 3

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ANNEX 3.3. TRUCKERS SURVEY QUESTIONNAIRE 1. Company Address: ______________________________________________________________ 2. Business Size (total assets less land)
Micro (up to Php3M) Small (Php3M-15M) Med. (Php15M-100M) Large (Php100M up)

3. Type of Registration 4. What exactly is hauled?

For Hire

Nor for Hire

Mixed Containerized

General Cargo/Break-bulk

Commodities: _____________________________________________________________________ 5. What kind of trucks do you use? (pls. indicate number of units) Prime Mover ______ 10-Wheeler _____ Wing Van ______ 6-Wheeler________ Other (Pls. specify) ___________________________________________________ 6. Are your trucks? Brand New Surplus YES NO 7. How far is the average distance do you provide trucking service? ____________________ 8. Any backloads? 9. What is the percentage of your backload? ______% 10. Your prevailing trucking rate per kilometer? Gen. Cargo/Break-bulk Containerized Php ____________ Php ____________ 11. Whats the percentage increase of your trucking rate for the last 5 years? _________________________ 12. Do you have any fuel efficiency programs? 13. Your trucking operations major costs. Please rank according to cost contribution, No. 1 being the highest. Items Rank Percent to Operations a. Business permits & Vehicle registration b. Driver and helpers Salary c. Financing cost d. Franchise fee and regulatory permits e. Fuel f. Garage g. Insurance and inland marine h. Oil and lubricants i. Repairs and Maintenance j. Tires k. Weigh bridge Informal costs l. Road Bribe m. Port Bribe Yes No 14. What is your average waiting time for loading? ________________________________________ 15. What is your average waiting time for unloading? ______________________________________ 16. For containerized hauling, what is the common practice? Van Out ____________ Stuffing @ Shipping Co. CY/Port CY___ 17. Are you paid for empty van positioning/repositioning? 18. Will it be beneficial if shipping lines establish an Inland Container Yard in Valencia, Bukidnon? If yes, please explain why:_______________________________________________________ 19. Are you paid in cash for your trucking services? 20. Do you give discounts for cash transaction?

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If yes, how much?______%? 21. For regular clients, do you allow credit? 22. Are you paid demurrage? If yes, how much _________ % of trucking rate per day? 23. Are you paid for empty container returns? 24. How would you consider prevailing trucking rates? Expensive____ Fair____ Cheap____ Why? Please explain ____________________________________________________________ 25. Do you assign dedicated trucks to regular customers? 26. Please mark a check () which province in Northern Mindanao has the best road conditions while mark an (x) for the worst road conditions ( ) Misamis Oriental ( ) Lanao del Norte ( ) Camiguin ( ) Misamis Occidental ( ) Bukidnon Please explain: ____________________________________________________________________ _________________________________________________________________________________ 27. Your top 5 road sections most difficult to traverse: Road Section a. b. c. d. e. Why difficult?

28. What are your recommended solutions to improve road conditions in these areas? - Expensive solution:________________________________________________ - Low cost solution:_________________________________________________ 29. Your top 5 most accident prone areas. a. ________________________________________________________________________ b. ________________________________________________________________________ c. ________________________________________________________________________ d. ________________________________________________________________________ e. ________________________________________________________________________ 30. What are your recommended solutions to improve road conditions in these areas? - Expensive solution:________________________________________________ - Low cost solution:_________________________________________________ 31. Have your trucks ever had accidents? Yes ____ No____ Where?_________________ Cause(s) of Accident_________________________ Fatalities: Yes____ No____ Cause(s) of Accident_________________________ Fatalities: Yes____ No____ Cause(s) of Accident_________________________ Fatalities: Yes____ No____ Cause(s) of Accident_________________________ Fatalities: Yes____ No____ Cause(s) of Accident_________________________ Fatalities: Yes____ No____ 32. What is the state of highway traffic along your routes? Please check Destination Free Light CDO MCT Flo Tra Origin ffic win g Bukidnon (via Sayre Highway) Talakag, Bukidnon Lanao, Iligan, West Misamis Oriental Eastern Misamis Oriental Heavy Traffic

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33. What is the state of city traffic along your routes? Origin Destination Free Flowing Light Traffic Puerto CDO Port Puerto MCT Bulua CDO Port Bulua MCT

Heavy Traffic

34. If traffic and road conditions are improved, which road would you want to use in delivery/ withdrawal of cargoes from CDO port? Please rank 1 to 5 in terms of strategic importance, number 1 being the highest. Road Rank Road Rank Agora Road (Valenzuela Street) Corrales Extension Sergio Osmea Extension Kauswagan - Puntod Bridge* Julio Pacana (Licoan) Gaabucayan Road *: on the assumption that the CDO 3rd Bridge (Kauswagan-Puntod) is operational 35. Do any of the following conditions present problems for freight shipments to or from your company and/or facility? Rate from 1 to 5 (pls. encircle) Please describe the location 1: not a problem 5: very serious problem Highway Congestion Bukidnon (via Sayre Highway) 1 2 3 4 5 Talakag, Bukidnon 1 2 3 4 5 Lanao, Iligan, West Misamis Oriental 1 2 3 4 5 Eastern Misamis Oriental 1 2 3 4 5 Highway interferences w/ school crossings, public markets, commercial centers Bukidnon (via Sayre Highway) 1 2 3 4 5 Talakag, Bukidnon 1 2 3 4 5 Lanao, Iligan, West Misamis Oriental 1 2 3 4 5 Eastern Misamis Oriental 1 2 3 4 5 Turning at traffic lights 1 2 3 4 5 Inadequate local streets capacity 1 2 3 4 5 Roadway turning radius 1 2 3 4 5 Insufficient lane width for wide loads 1 2 3 4 5 Insufficient bridge/overpass clearances 1 2 3 4 5 (height) Truck ban restrictions on movement of 1 2 3 4 5 large and heavy trucks Poor truck access to shipping terminals 1 2 3 4 5 Poor reliability due to accidents & incidents Bukidnon (via Sayre Highway) 1 2 3 4 5 Talakag, Bukidnon 1 2 3 4 5 Lanao, Iligan, West Misamis Oriental 1 2 3 4 5 Eastern Misamis Oriental 1 2 3 4 5 Unsafe roadway geometrics Bukidnon (via Sayre Highway) 1 2 3 4 5 Talakag, Bukidnon 1 2 3 4 5 Lanao, Iligan, West Misamis Oriental 1 2 3 4 5 Eastern Misamis Oriental 1 2 3 4 5 Poor reliability due to weather conditions 1 2 3 4 5 Poor Signage(s) 1 2 3 4 5 Other (specify) 1 2 3 4 5 1 2 3 4 5

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36. What is your title at your company? _______________________________________________ 37. How long (in months) have you been in this position? _________________________________ 38. Geographically, where are the majority of your customers located? (please check) CDO Bukidnon Iligan MisOr Mla/Ceb 39. Do you own all your trailers? If no, how may are rented? ________ Yes No 40. Do you operate your own garage? Yes No 41. Plans of expanding youre trucking operations? Yes No 42. In the next 3 years, Less More profitable No change in business will be: profitable profitability 43. Your top 5 current problems in the port you encountered lately: CDO Port Mindanao Container Terminal a. a. b. b. c. c. d. d. e. e. 44. Are illegal road/highways bribe (kotong) a major problem for our trucking operations?______ 45. What current government policies and regulations (if any) adversely affect your operations? a. ________________________________________________________________________ b. ________________________________________________________________________ c. ________________________________________________________________________ 46. Your Position in the company: _____________________________________________________ 47. Employment Profile of the Company/Business Level/Division/ Present number How many are Function of workers women workers? Management Operations Marketing Finance/Admin. Others (specify) 47.1. Has the ratio of women to men workers always been the same? Yes___ No___ 47.2. IF NO: When did the company or business begin hiring more women? (Year)_________ 47.3. What made your company decide to employ more women? _____________________________ Tasks assigned in this level? 1: Supervision; 2: Operations; 3:Clerical Men Women 1 2 3 1 2 3

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ANNEX 3.4 SHIPPING LINES SURVEY QUESTIONNAIRE

1. Company Address ( in CDO): ________________________________________ 2. Service (pls. check ): ( ) Domestic Liner 3. How many ships do you have calling at: 4. Vessel Information:
1

( ) Foreign Liner MCT ___ CDO Port ___

Vessel

Type

Route Origin-Destination (via)

Call Frequency Weekly Monthly

Ave. Port Time

Direct Service

Yes No 1 2 3 4 5 1 Please indicate: 1: Conventional Containerized; 2: RORO; 3: Conventional; 4: Bulker; 5: Others

Ave. Load Factor (%)

5. Vessel Capacity
Vessel 1 2 3 4 5 TEU Reefer Plugs Ship Gear Type No. of Units

6. Please Provide the Cargo Tariff/Lease Rates.


Vessel 10-FD Type of Service1 20-FD 40-FD 20-FR 40-FR Tariff Table or Lease Rate (Php) Published Discounted 1 2 3 4 5 1: 10 footer (FCL Dry); 20 footer (FCL Dry); 40 footer (FCL Dry); 20 footer (Reefer); 40 footer (Reefer)

7. Are any of the following conditions present for freight shipments?


Please check for ranking conditions 1: not a problem; 2: slight problem; 3: manageable problem; 4: really a problem; 5: very serious problem Conditions 1 2 3 Port Berth Congestion Cargo handling productivity Timeliness of vessel departure Port equipment availability Port and berthing facilities Reefer plug availability Truck and trailer availability Container retention by shippers Timeliness of cargo delivery by shippers Timeliness of cargo withdrawal Overweight containers

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Please check for ranking conditions 1: not a problem; 2: slight problem; 3: manageable problem; 4: really a problem; 5: very serious problem Truck ban restrictions on movement of large and heavy trucks Poor truck access to shipping terminals Cargo truck queuing area Other (specify)

8. Please provide information on costs in the table below?


Please Check for Ranking of Costs 1:very low; 2:low; 3: average; 4: high; 5:very high Cost Item 1 2 3 4 Port charges are Arrastre charges are Stevedoring charges are Quay crane charges are Wharfage rates are Port Storage Port dues (dockage) rates are Pilotage rates are Tug service rates are Trucking rates are Stuffing/Stripping rates are Reefer Plug rates are Weighbridge rates are Informal Cost (bribes) are Others (Pls. specify) 5 Cost (Php) Remarks

9. Have your vessels experienced delays in berthing? Yes___ No___


Vessel type: _____________________________________________________________ Why?__________________________________________________________________

10. Your vessels are currently charged berthing dues based on GRT per day; do you find this system
appropriate? Yes___ No___

11. Would you find it appropriate for the port authority to charge berthing dues based on actual space
occupied rather than by GRT basis? Yes___ No___

12. If your vessel arrived at 10PM and departs at 6AM the following day, are you charged an
equivalent of two days port dues? Yes___ No___

13. Does your company deem it necessary to operate your own container yard? Yes___ No___
Why?__________________________________________________________________

14. Your position in the Company: ____________________________________________________

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15. Employment Profile of the Company/Business


Level/Division/ Function Present number of workers How many are women workers? Tasks assigned in this level? 1: Supervision; 2: Operations; 3:Clerical Men Women 1 2 3 1 2 3

Management Operations Marketing Finance/Admin. Others (specify)

16. Has the ratio of women to men workers always been the same? Yes___ No___ 17. IF NO: When did the company or business begin hiring more women? (Year)_____________ 18. What made it decide to employ more women?
____________________________________________________________________________

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ANNEX 4.1 MAERSK LINES THC TABLE

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ANNEX 4.2 LTO FINES AND PENALTIES


FINES/PENALTIES FOR TRAFFIC AND ADMINISTRATIVE VIOLATIONS: APPROVED RATES
Violations In Connection With Licenses 1. 2. 3. 4. 5. 6. Driving without License 1,500.00 Driving without delinquent of expired license 400.00 Driving with suspended or revoked or improper license 1,000.00 Failure to carry Drivers License 200.00 Failure to sign Drivers License 200.00 Driving under the influence of liquor. 5,000.00 - and two (2) months suspension of drivers license 5,000.00 - for the 2nd offense and three (3) months suspension 6,000.00 of drivers license - for subsequent violations after the 2nd offense 7,000.00 and six months suspension of drivers license; after 3rd offense automatic revocation of drivers license 7. Driving under the influence of drugs 10,000.00 8. Allowing an unlicensed/improperly licensed person to drive motor vehicle. 1,000.00 - suspension of plates, registrations and Drivers License for 2 months

9. Possession and use of fake/spurious Drivers License 2,000.00 - if the drivers has been issued an authentic license, it shall be suspended for 1 year in addition to the fine - if the driver has not been issued an authentic license, he shall be disqualified, to secure a Drivers License for a period of two (2) years. 10. Conviction of the driver of a crime using a motor vehicle 3,000.00 11. Student driver operating a MV without being accompanied by a Licensed driver 500.00 12. Unlicensed conductor of a motor vehicle for hire 500.00 13. Operating/driving a motor vehicle which is unregistered/ improperly Registered - if committed by the driver without the knowledge and 2,000.00 Consent of the owner/operator 4,000.00 - if the driver is also the processor of the subject motor vehicle - in both cases the motor vehicle shall be impounded or the plates if any shall be confiscated and shall not be released until properly registered. 14. Operating a motor vehicle with unregistered substitute or 5,000.00 replacement engine, engine block or chassis - the subject MV shall be impounded until such parts are properly registered 15. Failure to carry certificate of registration or official receipt of registration 150.00 16. Operating /allowing the operation of MV with a suspended / 1,000.00 revoked Certificate/Official Receipt of registration. - the subject MV shall be impounded and its plate held during the suspension - in addition to the original suspension the said MV and plates shall further be suspended for two (2) years. 17. Tourist operating or allowing the use of non Philippine registered 5,000.00 Motor Vehicle beyond the 90 day period of his sojourn in the country. the MV shall not be allowed to operate by the confiscation of its plates, OR & CR until properly registered. in addition, if the driver is a holder of local drivers license, the same shall be suspended for one (1) month. Violations in Connection with Number of Plates 18. Motor Vehicle number plates not firmly attached 19. Obscure plates 20. License plates different from body number on Public Utility MV 21. Improper display of a motor vehicle permanent plate 22. Display/Use of an expired commemorative plates or stickers 23. tampered/ marked plates or stickers 2, 000.00 24. Illegal transfer or use of MV regularly issued MV plates, tags or stickers except security plates on authorized Motor Vehicle - Owners/Operators are conclusively presumed to have 200.00 200.00 500.00 500.00 2,000.00 10,000.00

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Committed the illegal transfer. - Drivers of MV involved in illegal transfer of plates, sticker shall suffer the suspension of their Drivers License for three (3) months - if the MV with illegal transferred plates or stickers in used In the commissions of a crime, its owner shall suffer the penalty of 12,000.00 fine and suspension of plates and registration certificate and Official Receipt for two (2) years Violations Relative to Equipments, Parts, Accessories, Devices and Markings of Motor Vehicle 25. Operating MV with metallic tires in any public high ways 5,000.00 26. Defective Brake 500.00 27. Improper/Defective Horn or signaling device 300.00 300.00 28. Use or installation of unnecessary lights in front and rear of a Motor Vehicle 29. Operating motor vehicle without head, tail, plate and/or brake lights 300.00 30. Without muffler (should insert windshield) 150.00 31. Without wiper 150.00 32. Dirty or unsightly or unsanitary MV 300.00 33. Dilapidated or defective MV 1,000.00 - to hold release of plates until defect is correct 34. Failure to paint or improper painting of authorize route or PUJ Filcabs, Shuttle Services, Trucks For Hire, Taxis and similar for For Hire Motor Vehicles operating with fixed routes. - to hold plates until defect is corrected 35. Non painting of business or trade name - to hold plates until defect is corrected 36. Use of unauthorized improvised plates 37. Without or defective hand brakes - to hold plates pending correction of defect 38. Without or defective speedometer - to hold plates pending correction of defect 39. Without or defective windshield wiper - to hold plates pending correction of defect 40. Without rear view mirror - to hold plates pending correction of defect 41. Without interior light - to hold plates pending correction of defect 42. Without name or business name and address of operator inscribe - to hold Plate or OR/CR until defect is corrected 43. Unauthorized use of bell, siren or exhaust whistle - forefieture of the said gadgets in favor of the government 44. Without functional spare tire 45. Without red flag or red lights on projecting end of load extending more than a meter beyond the bed or body, and in the evening red lights visible at least 50 meters away. 46. Failure to paint plate number on a motor vehicle for hire - to be imposed upon the owner/driver 47. Failure to carry Early Warning Device (EWD) 48. Failure to install EWD 4 meters from the front rear and of the stalled motor vehicle - to be imposed upon the owner/driver 49. Without Capacity marking - to be imposed upon the owner/driver 500.00 15,000.00 300.00 500.00 500.00 150.00 500.00 500.00

500.00 300.00 200.00 200.00 200.00 200.00 200.00

375.00

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Shipping Costs and Competitiveness In Northern Mindanao

50. Unauthorized installation of jalosies, painted windshield or colored windshield. - to be imposed upon the owner/driver 51. Installation of dim/colored lights, strobe lights, dancing lights or similar lights - to be imposed upon the owner/driver of the motor vehicles 52. Use or installation of heavily tinted colored/painted windshield or or window glass - to be imposed upon the owner/driver sunvizor or light tinted are allowed 53. Without permanent tail gate with inscription Not for Hire sign in a private jeepney/jitney - to be imposed upon the owner 54. Use/installation of a glaring/stainless object upon at the front and/or rear of a motor vehicle - to be imposed upon the owner Weights and Load Limits 55. Load extending beyond the projected width without permit - to be imposed upon the driver 56. Axle overloading an amount equivalent to 25% of MVUC at the time of infringement on owner/operator or driver of trucks and trailers for loading beyond their registered gross weight, vehicle weight. The penalty shall be waived for loads exceeding the registered GVW by a tolerance of less than 5%. No motor vehicle shall exceed thirteen thousand five hundred (13,500) kgs. Or the vehicle load exceeds 150% of the maximum allowable gross weight. 57. Operating a passenger truck (bus) with cargo exceeding 160 kgs. - to be imposed upon either the driver/operator or conductor 58. Allowing more passengers and/or freight or cargo in excess of carrying capacity of MV 59. Baggage or freight carried on top of truck exceeds 20 kgs. Per sq. meter and not distributed in such a manner as not to endanger the passenger or stability of the truck Prohibited or Illegal Operation of Motor Vehicles 60. Out of line For Operators/Owners: 1st Offense & addtl P1, 500.00 per day reckoned from the day of apprehension until the case was settled and suspension of registration and/or impoundment of MV for three (3) months 2nd Offense & addtl P2, 000.00 per day reckoned from the day of apprehension until the case was settled and suspension of registration and/or impoundment of MV for six (6) monts 3rd Offense & addtl P2, 500.00 per day reckoned from the day of apprehension until the case was settled, revocation of registration and forever banned from applying for a franchise and/or revocation of franchise if franchise holder

600.00

600.00

600.00

500.00

500.00

500.00 300.00

300.00 300.00

6,000.00

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Shipping Costs and Competitiveness In Northern Mindanao

For Drivers: 1st Offense & suspension of DL for three (3) months 2nd Offense & suspension of DL for six (6) months 3rd Offense & suspension of DL for one (1) year 61. Colorum operation For Operators/Owner: 1st Offense & addtl P1, 500.00 per day reckoned from The day of apprehension until the case was Settled and suspension of registration and/or Impoundment of MV for three (3) months 2nd Offense & addtl P2, 000.00 per day reckoned from The day of apprehension until the case was Settled and suspension of registration and/or Impoundment of MV for six (6) months 3rd Offense & addtl P2, 500.00 per day reckoned from The day of apprehension until the case was Settled, revocation of registration and forever Banned from applying for a franchise and/or Revocation of franchise if franchise holder For Drivers: 1st Offense & suspension of DL for three (3) months 2nd Offense & suspension of DL for six (6) months 3rd Offense & suspension of DL for (1)year 62. Operating a motor vehicle with expired franchise (CPC) Driver Operator/owner/possessor of MV per day from the date of expiry to the date of the CPC - the plate, OR/CR of the subject MV shall be suspended For six months from the date of apprehension to the fines 63. Operating or using a For Hire Motor Vehicle different from its types of services mentioned in the CPC for driver 1,000.00 500.00 1,000.00 250.00 500.00 750.00 6,000.00 250.00 500.00 750.00

6,000.00

6,000.00

for operator - For Hire Motor Vehicles used by the members of the family of the operator, during emergency cases is allowed. 2nd offense and suspension plates, OR, CR for six (6) months for driver for operator

3,000.00

2,000.00 4,000.00

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Shipping Costs and Competitiveness In Northern Mindanao

for subsequent offenses and suspension of DL, plate, OR/CR for one (1) year

for driver for operator

3,000.00 5,000.00

Breach of Condition of Franchise and Related Violations 64. Employing insolent, discourteous drivers and conductors - to be imposed against the owner/operator/possessor of MV 65. Discourtesy of drivers and/or conductors towards the passengers in addition to the suspension of conductors/drivers license for (2) two months 66. Unreasonable refusal to convey passengers - to be imposed against the driver and/or the operator in addition To the suspension of the license of the driver of the license of the driver for two (2) months. If the operator has knowledge or consent to the infraction committed, the place, OR & CR shall likewise be suspended for two (2) months. 67. Non issuance of fare ticket for operator - to be imposed against the operator and the conductor for conductor 68. Unauthorized use of commercial or trade name - to be imposed against the operator 69. Undue preference or unjust/unreasonable discrimination against the passenger - to be imposed against the driver aside from the penalty, The license of the driver shall be suspended for two (2) months. 70. Overcharging/Undercharging of fare - for the driver or the conductor as the case maybe and suspension of conductors license for two (2) months - the operator shall also be liable for equal fine if found to have Participated thereto and the plate, OR/CR for the same period Stated above. - for each subsequent violation the license of the driver or conductor and/or the plate, OR/CR of the subject MV shall be suspended for three (3) months. 71. Breach of Condition in the CPC except when already penalized under any provisions of this circular. Frauds and Falsities 72. Use of fake plates/stickers/pursuant documents - to be imposed upon the owner and/or driver of the subject MV. 73. Misrepresenting a copy of a document pertinent to a motor vehicle Before the Traffic Adjudication Service. - to be imposed upon the driver or owner Traffic Violations 74. Parking a. within an intersection b. within 5 meters of the intersection c. 4 meter from the driveway entrance d. within 4 meters from afire hydrant e. in front of a private driveway f. on the roadway side of any unmoving or parked MV at the curved way of the highway 200.00 2,000.00 to 4,000.00 500.00 375.00 1,000.00 500.00 600.00 400.00 500.00 1,500.00

750.00

1, 500.00

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Shipping Costs and Competitiveness In Northern Mindanao

g. at any place where signs of prohibitions have been installed. 75. Reckless Driving 1st Offense 2nd Offense - and suspension of DL for two (2) months 3rd Offense - and suspension of DL for six (6) months Succeeding offense - and revocation of DL Such as but not limited to the following: a. Disregarding Traffic Signs (Should be failure to observe traffic signs and signals) b. Allowing a passenger to top or cover of a motor vehicle except in a truck helper c. Failure to provide canvass cover to cargos or freight of trucks requiring the same d. Permitting passenger to ride on running board, stepboard or mudguard of MV while the same is in motion e. Failure to dim headlights when approaching another motor vehicle f. Driving For Hire motor vehicle in slippers g. Driving in a place not intended for traffic or into place not allowed for parking h. Hitching or permitting a person or a bicycle, motorcycle, tricycle or skate roller to hitch to a motor vehicle i. Driving against traffic failure to pass to the right when meeting persons or vehicles coming towards him j. Illegal turn failure to conduct the motor vehicle to the right of the intersection of the highway when turning to the left in going from one highway to another k. Illegal overtaking failure to pass to the left when overtaking persons or vehicles going the same direction except when there are two or more lanes for the movement of traffic in one direction l. Overtaking at an unsafe distance failure to pass at a safe distance to the left of another motor vehicle when overtaking that vehicle. m. Cutting an overtaken vehicle driving to the right side of the highway after overtaking before his motor vehicle is safely clear of such overtaken vehicles. n. Failure to give way to an overtaking vehicle failure to give way to another vehicle approaching from the rear that wishes to overtake his vehicle when the former has given suitable and audible signal o. Increasing speed when being overtaken increasing the speed of the motor vehicle before the overtaking vehicle has completely passed. p. Overtaking when left side is not visible or clear of oncoming traffic - driving to the left side of the center line of a highway in overtaking or passing another vehicle proceeding in the same direction where the left side is not clearly visible and is not free of oncoming traffic for a sufficient distance to pass in safely. q. Overtaking upon a crest of a grade overtaking or passing another vehicle proceeding in the same direction when approaching the crest of a grade r. Overtaking upon a curve overtaking or passing another vehicle proceeding in the same direction upon a curve in a highway where the drivers view along the highway is obstructed within a distance of 500 feet ahead. s. Overtaking at any railway grade crossing overtaking or passing another vehicle proceeding in the same direction at any railway grade crossing. t. Overtaking at an intersection overtaking or passing another vehicle proceeding in the same direction at any intersection of highways except on a highway having two or more lanes for movement of traffic in one direction where the driver of a vehicle may overtake another vehicle on the right. u. Overtaking between men working or caution signs overtaking or passing or attempting to overtake or pass another vehicle proceeding in the same direction between warning or caution signs indicating that men are working on the highway. v. Overtaking at no overtaking zone overtaking or passing or attempting to overtake or pass another vehicle proceeding in the same direction in any no passing or overtaking zone. w. Failure to yield the right of way failure of the vehicle on the left to yield the right intersection at approximately the same time. x. Failure to yield the right of way failure of a vehicle approaching but not having 1, 000.00 1, 500.00 2, 000.00 5, 000.00

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Shipping Costs and Competitiveness In Northern Mindanao

entered an intersection to yield the right of way to a vehicle within such intersection or turning therein to the left across the line of travel of the first mentioned vehicle when such vehicle has given a plainly visible signal of intention to turn. y. Failure to yield the right of way failure of the driver of any upon a highway within a business or residential district to yield the right of to a pedestrian crossing such highway within a crosswalk except at intersection where the movement of traffic is regulated by a peace officer or by traffic signal. z. Failure to stop before traversing a through highway or railroad crossing failure of the driver of a vehicle upon a highway to bring to full stop such vehicle before traversing any through highway or railroad crossing. a.a. Failure to yield right of way failure of a vehicle entering a highway from a private road or drive to yield the right way to all vehicles approaching on such highway. a.b. Failure to yield the right of way to ambulance, police or fire department vehicles failure of a driver upon a highway to yield the right of way to police or fire department vehicles and ambulances when such vehicles are operated on official business and the drivers thereof sound audible signal of their approach. a.c. Failure to yield right of way at a through highway or a stop intersection failure of a vehicle entering a through highway or a stop intersection to yield the right of way to all vehicles approaching in either direction on such through intersection. a.d. Failure to give proper signal Failure to give the appropriate signal before starting, stopping or turning into a direct line. a.e. Illegal turn failure of the driver of a vehicle intending to turn to the right at an intersection to approach such intersection in the lane for traffic nearest to be right-hand side of the highway and. In turning, to keep as close as possible to the right hand curve or edge of the highway. a.f. Illegal turn failure of the driver of a vehicle intending to turn to the left, to approach such intersection in the lane for traffic to the right of and nearest to the center line of the highway, and turning , to pass to the left of the center of the intersection except upon highway laned for traffic and upon one-way highway. a.g. Failure to stop motor and notch handbrake of motor vehicle when unattended failure to turn off the ignition switch and stop the motor and notch effectively the handbrake when parking a motor vehicle unattended on any highway. a.h. Unsafe towing 76. Obstruction obstructing the free passage of other vehicles on the highway while discharging or taking passengers or loading and unloading freight, or driving a motor vehicle in such a manner as to obstruct or impede the passage of any vehicle Violations involving Taxi Units except those already provided in this circular 77. Fast, Tampered, Defective or non operational, Tampered, broken, fake or altered meter seal. - and suspension of DL for three (3) months 1st Offense - and suspension of DL for four (4) months 2nd Offense - and suspension of DL for six (6) months; 3rd Offense DL will be revoked and franchise will be recommended for cancellation 3,000.00 4,000.00 6,000.00 200.00

For the said infraction, the operator of the subject MV shall be summoned. Upon determination That he is also liable for the said infraction, the plates, OR/CR of the subject MV shall be suspended for the said duration of the suspension suffered by the driver in addition to the fine equivalent to the amount paid by the driver. 78. Tampered, broken, joint, reconnected, fake or altered sealing wire - to be imposed upon the driver or owner whoever maybe responsible. The License of the driver or the plate, OR/CR of the MV shall be suspended for one month for the 1st offense. Two (2) months for the 2nd offense and three (3) months for the 3rd offense - after third violation Dl will be revoked and franchise 1, 500.00

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Will be recommended for cancellation. 79. Violation of color scheme, adaptation of MV color or design without authority - to be impose upon the owner 80. Old meter seal/or loose triplex seal - to be impose upon the and/or driver 81. Flagged up meter and/or operating on contractual basis - to be impose against the driver. The License of the driver shall be suspended For forty five (45) days 82. No taxi Meter - to be imposed against the driver & the total amount of - to be imposed against the operator The total amount of 83. Failure to paint the word Aircon - to be impose against the operator / Owner only. 84. Unauthorized installation of Aircon - to be impose against the operator/owner and driver 85. No Identification Card 86. No Taximeter light 87. Failure to provide top light indicating availability - to b impose upon the driver and/or owner 88. Failure to print owner/operators name, address and/or Capacity markings, type of service on taxi units - to be imposed upon the owner/operator or driver Other Non Traffic Violations 89. Unauthorized installation of aircon on buses 90. Non painting of the word aircon for buses 91. Operating aircon MV with defective aircon 92. Smoke Belching define under RA 8479 - for the 1st offense and to pass the smoke emission test - for the 2nd offense and to pass the smoke emission test - for 3rd and subsequent offenses and to pass the smoke Emission test and to suspend of plates, CR/OR/ Registration of MV for one (1) year 93. Operating a right hand drive motor vehicles 94. Failure to Install Seatbelt as defined under RA 8750 95. Failure to wear/unbuckled seatbelt 96. Allowing child six years old and below on passenger seat 97. Display of sign board (PUB & PUJ ONLY) without front panel route 750.00 750.00 500.00 1, 000.00 3, 000.00 5, 000.00 1, 200.00 1, 200.00 500.00

500.00 750.00

2, 400.00 750.00 750.00 150.00 200.00 200.00 500.00

50, 000 .00 1,000.00 250.00 250.00 500.00

Copyright 2009 Land Transportation Office LTO Website Comments:

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Shipping Costs and Competitiveness In Northern Mindanao

No fines for overspeeding, beating the red light, illegal u-turn, entering a no entry zone, parking on wrong side of road, double parking, lane violations, road marking violations, tailgating, counter flow violations, motorcycle without helmet, tridem on motorcycle, stopping on pedestrian lanes, parking on crosswalks, over width mudguards, no side mirrors, trucks with no running lights, red light on front of vehicle, green light at rear of vehicle, no reflecting lenses, fleeing the scene of an accident (hit and run), hit and run with fatality, hit and run resulting to injury, failure to report an accident involving damage to property, driving under the influence resulting in injuries, driving under the influence resulting in fatalities, failure to pay traffic fines within a specified period, diplomatic exceptions, ambulance and fire trucks, etc. The foregoing document is riddled with vague description of violations, construction and grammatical errors, double listing, inconsistent fines, etc. Some violations are subjective and may result to different interpretations. Recommendations: Review and re categorize violations into General violations (licensing, plates and tags, DUI, etc.), , Moving violations, violations and traffic signs, signals, speed limits, etc., PUJ, Bus and Taxi, Commercial vehicles, Heavy Cargo and articulated Vehicles,

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GLOSSARY OF TERMS AND ABBREVIATIONS


3PL Third Party Logistics Advance Against Documents Load made on the security of the documents covering the shipment. Advising Bank A bank that receives a letter of credit from an issuing bank, verifies its authenticity, and forwards the original letter of credit to the exporter without obligation to pay All Risk Insurance - Is a clause included in marine insurance policies to cover loss and damage from external causes, such as fire, collision, pilferage, etc. but not against innate flaws in the goods, such as decay, germination, nor against faulty packaging, improper packing/ loading or loss of market, nor against war, strikes, riots and civil commotions (See Marine Insurance) All-Risk Clause - Is an insurance provision that all loss or damage to goods is insured except that of inherent vice (self caused). (See All Risk Insurance). Alongside - A phrase referring to the side of a ship. Goods to be delivered "alongside" are to be placed on the dock or barge within reach of the transport ship's tackle so that they can be loaded abroad the ship. Arrastre - Cargo handling, port side Authority (formerly the Bureau of Coast and Geodetic Survey) Authority to Load - shall refer to the approval or permission granted by the BOC or its deputized agencies for the loading of export goods on board the carrier specified in the covering Export Declaration Authorized Shipyard/Repair Operator - refers to a shipyard operator owner or ship repair facility which has been given recognition/accreditation/permit and has registered with the Philippine Ports Authority/Maritime Industry Authority. B/B - Break-Bulk Cargo BFAR Bureau of Fisheries and Aquatic Resources of the Department of Agriculture Berth Liner Service - Is a regular scheduled steamship line with regular published schedules (port of call ) from and to defined trade areas Berth or Liner Terms - Is an expression covering assessment of ocean freight rates generally implying that loading and discharging expenses will be for ship owner's account, and usually apply from the end of ship's tackle in port of loading to the end of ship's tackle in port of discharge. Bill of Lading - A document that establishes the terms of a contract between a shipper and a transportation company under which freight is to be moved between specified points for a specified charge. Usually prepared by the shipper on forms issued by the carrier, it serves as a document of title, contract of carriage, and a receipt for goods. Also see Air Waybill and Ocean Bill of Lading. BIR - Bureau of Internal Revenue BOC - Bureau of Customs Bonded Warehouse - A warehouse storage area or manufacturing facility in which imported goods may be stored or processed without payment of customs duties. BPI - Bureau of Plant industry Berth - Is the place beside a pier, quay or wharf where a vessel can be loaded or discharged CAD - The acronym meaning "cash against documents," a method of payment for goods in which documents transferring title are given to the buyer upon payment of cash to an intermediary acting for the seller. Cargo - Is merchandise/commodities/freight carried by means of transportation. Cargo Receipt - Is a receipt of cargo for shipment by a consolidator (used in ocean freight).

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Shipping Costs and Competitiveness In Northern Mindanao

Carrier, Common - A public or privately owned firm or corporation that transports the goods of others over land, sea, or through the air, for a stated freight rate. By government regulation, a common carrier is required to carry all goods offered if accommodations are available and the established rate is paid. Carrier(s) Containers or Shipper(s) Containers - The term Carrier(s) Container(s) or Shipper(s) Container(s) means containers over which the carrier or the shipper has control either by ownership or by the acquisition thereof under lease or rental from container companies or container suppliers or from similar sources. Carriers are prohibited from purchasing, leasing or renting shipper owned containers. Cartel - Is an association of several independent national or international business organizations that regulates competition by controlling the prices, the production, or the marketing of a product or an industry. Cash Against Documents (CAD) - Payment for goods in which a commission house, or other intermediary, transfers title documents to the buyer upon payment in cash. Cash in Advance (CIA) - Payment for goods in which the price is paid in full before shipment is made. This method is usually used only for small purchases or when the goods are built to order. CDO - Cagayan de Oro CENRO Community Environment and Natural Resources Office of the DENR Certificate of Inspection - A document certifying that the goods were in apparent good condition immediately prior to shipment. Certificate of Manufacture - A statement in which a producer specifies where his goods were manufactured, certifies that manufacturing has been completed, and confirms that the goods are at the buyer's disposal. Certificate of Origin refers to the declaration of the exporter, certified by the BOC that his export complies with the origin requirement specified under bilateral, regional or multilateral trading arrangements to which the Philippines is a party. A statement signed by the exporter, or his agent, and attested to by PhilExport or a local Chamber of Commerce, indicating that the goods being shipped, or a major percentage of them, originated and were produced in the exporter's country. Certificate of Shipment - shall refer to the document which the BOC or its deputized agencies issues upon request of the exporter or his duly authorized representative, certifying to the nature of shipment of his export goods (full shipment effected, shut-off or non-shipment) cbm - Cubic Meter C&F - Cost and Freight CFR/CIF - Terms beginning 'C' are 'Contracts of Dispatch'. They differ from other INCOTERMS as they segregate the point at which risk and responsibility passes from the point at which costs pass. Under all other terms, the point of transferring risk and the point at which responsibility for cost is also transferred are simultaneous. With the 'C' terms this is NOT the case. CFR (Cost and Freight) has a long history and outside of INCOTERMS a definition with consensus is difficult. As an INCOTERM risk passes from the seller to the buyer when the cargo crosses the ship's rail at the origin port. However, the responsibilities for the costs of transit only pass from the seller to the buyer at the destination port. CFR and CIF are Monomodal expressions used when the main carriage is by sea and both are suited to the use of Bills of Lading. Because the ship's rail is seen as triggering these terms, it is often inappropriate to use either in a modern port and reference should be made to the notes on this subject under FOB. Buyers are disadvantaged with contracts of dispatch. The buyer must take risks for a period of carriage during which the buyer has no means of controlling or limiting those risks. The carrier used; the costs incurred for carriage and the timing of the carriage are all under the seller's control. The buyer must consider this disparity before accepting a C termed contract. From the seller's perspective, the C terms represent exceptional risk-management opportunities and are actively pursued as a consequence.

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CIF (Cost, Insurance and Freight) represents the condition of CFR with the addition of Insurance. This is the first of only two terms that place a compulsory responsibility for insurance on the seller. Under all other terms, the buyer considers insurance as an optional responsibility. (Refer CIP) CFS (Container Freight Station) - The term CFS at loading port means the location designated by carriers for the receiving of cargo to be packed into containers by the carrier. At discharge ports, the term CFS means the bonded location designated by carriers in the port area for unpacking and delivery of cargo. CFS Charge (Container Freight Charge) - The term CFS Charge means the charge assessed for services performed at the loading or discharging port in packing or unpacking of cargo into/from containers at CFS. CFS/CFS (Pier to Pier) - The term CFS/CFS means cargo delivered by break-bulk to Carrier's CFS to be packed by Carrier into containers and to be unpacked by Carrier from the container at Carrier's destination port CFS. CFS/CY (Pier to House) - The term CFS/CY means cargo delivered break-bulk to Carrier's CFS to be packed by Carrier into containers and accepted by consignee at Carrier's CY and unpacked by the consignee off Carrier's premises, all at consignee's risk and expense. CPT/CIP (Carriage Paid To) - Is the multimodal equivalent of CFR. The named place where the seller's costs end can be a point other than a seaport (as well as being a seaport), in the buyer's country. CPT may be used for airfreight, roadfreight and railfreight as well as for seafreight when the ship's rail serves no purpose. E.g. if the destination is an inland point or a modern port with conditions as discussed under FOB. CPT requires the use of multimodal documents and documents such as Bills of Lading or Airwaybills may prove inappropriate in recording the passage of risks under this term. Under CPT, risk and responsibility passes when the cargo is handed to the first carrier (with a carrier defined as either an Actual or Contractual carrier i.e. a Freight Forwarder or Multi Transport Operator could act as 'carrier' as could an airline or shipping line). However, responsibility for costs only transfer when the goods arrive at the stated place where carriage is 'paid to'. The diagram represents this condition with a brace, indicating that the place where carriage is paid to may be any point in the country of destination. The cautions expressed for buyers using CFR are equally applicable to CPT with added complications in that the transfer of risks can begin earlier. If the carrier is collecting the cargo from the seller's premises then the risks of carriage pass to the buyer at that point, while the buyer's ability to control the costs and timing of carriage only pass at the destination point. Although these reservations warrant serious consideration for a buyer, they represent great risk-management opportunities for the seller. CIP (Carriage & Insurance Paid to) represents CPT with the inclusion of Insurance. The cautions and notes made regarding CPT equally apply to CIP. Charter - Originally meant a flight where a shipper contracted hire of an aircraft from an airline. Has usually come to mean any non-scheduled commercial service. Charter Party - The contract between the owner of a ship and the individual or company chartering it. Among other specifications, the contract usually stipulates the exact obligations of the ship-owner (loading the goods, carrying the goods to a certain point, returning to the charterer with other goods, etc.); or it provides for an outright leasing of the vessel to the charterer, who then is responsible for his own loading and delivery. In either case, the charter party sets forth the exact conditions and requirements agreed upon by both sides. Charter Party Bill of Lading - A bill of lading issued under a charter party. It is not acceptable by banks under letters of credit unless so authorized in the credit. Chassis - A wheel assemble including bogies constructed to accept mounting of containers. Class Rates - A class of goods or commodities is a large grouping of various items under one general heading. All items in the group make up a class. The freight rates that apply to all items in the class are called class rates. Classification - Is a customs term. The placement of an item under the correct number in the customs tariff for duty purposes. At times this procedure becomes highly complicated; it is not uncommon for importers to resort to litigation over the correct duty to be assessed by the customs on a given item.

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Claused Bill of Lading - Is a bill of lading which has exemptions to the receipt of merchandise in "apparent good order" noted. Clean Bill of Lading - Is a bill of lading which covers goods received in "apparent good order and condition" and without qualification. Clean Draft - Is a draft to which no documents have been attached. Commercial Invoice - An itemized list of goods shipped, usually included among an exporter's collection papers. Commercial Risk - Risk carried by the exporter (unless insurance is secured) that the foreign buyer may not be able to pay for goods delivered on an open account basis. Common Carrier - A firm or individual that transports persons or goods for compensation. Conference - A group of vessel operators joined together for the purpose of establishing freight rates. RORO/Container Vessel - Ship designed to accommodate containers and roll-on roll-off cargo. It can be self sustaining. RORO/Container/Break-bulk Vessel - Designated to accommodate three types of cargo, usually self sustaining. Confirmed Letter of Credit - A letter of credit, issued by a foreign bank, with validity confirmed by a U.S. bank. An exporter who requires a confirmed letter of credit from the buyer is assured of payment by the U.S. bank even if the foreign buyer or the foreign bank defaults. Confiscation - The taking and holding of private property by a government or an agency acting for a government. Compensation may or may not be given to the owner of the property. Consignee Person or firm to whom goods are shipped under a bill of landing. The individual or company to whom a seller or sipper sends merchandise and who, upon presentation of necessary documents, is recognized as merchandise owner for the purpose of declaring and paying customs duties. Consignee Marks - A symbol laced on packages for identification purposes; generally consisting of a triangle, square, circle, diamond, cross, with letters and/or numbers as well as port of discharge. Consignment - Is the physical transfer of goods from a seller (consignor) with whom the title remains, to another legal entity (consignee) who acts as a selling agent, selling the goods and remitting the new proceeds to the consignor. Consignor - A term used to describe any person who consigns goods to himself or to another party in a bill of lading or equivalent document. A consignor might be the owner of the goods, or a freight forwarder who consigns goods on behalf of his principal. Consolidated Shipment - An arrangement whereby various shippers pool their boxed goods on the same shipment, sharing the total weight charge for the shipment. Consolidator - An agent which brings together a number of shipments for one destination to qualify for preferential airline rates. Consortium - The name for an agreement under which several nations or nationals (usually corporations) of more than one nation, join together for a common purpose. It could be for management or exploitation of a natural resource, as in the case of some international petroleum consortiums. Consul - A government official residing in a foreign country, charged with representing the interests of his or her country and its nationals. Consular Declaration - A formal statement, made to the consul of a foreign country, describing goods to be shipped. Consular Documents - Special forms signed by the consul of a country to which cargo is destined. Consular Invoice - A document, required by some foreign countries, describing a shipment of goods and showing information such as the consignor, consignee, and value of the shipment. Certified by a consular official of the foreign country, it is used by the country's customs officials to verify the value, quantity and nature of the shipment.

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Container means any structure so designed to hold and keep articles, materials and products together inside a hold in the form of boxes, tanks or the like, for singular or unit handling and transport, generally having any internal volume or capacity of not less than one (1) cubic meter. It is further defined according to their uses as dry cargo, refrigerated, liquid bulk, platform, open top, solid bulk, ventilated, etc. The term container means a single rigid, non-disposable dry cargo, insulated, temperature controlled flatrack, vehicle rack portable liquid tank, or open top container without wheels or bogies attached, having not less than 350 cubic feet capacity, having a closure or permanently hinged door that allows ready access to the cargo (closure or permanently hinged door not applicable to flatrack vehicle rack or portable liquid tank). All types of containers will have constructions, fittings and fastenings able to withstand without permanent distortion, all the stresses that may be applied in normal service use of continuous transportation. All containers must bear manufacturer's specifications.

Container Ship - Ocean going ship designed to carry containers both internally and on deck. Some are self sustaining. Containerization - Is a concept for the ultimate unitizing of cargo used by both steamship lines and air cargo lines. Containers allow a greater amount of cargo protection from weather, damage, and theft. Containers (Air Cargo) - Many types of air cargo containers are offered. The containers are designed in various sizes and irregular shapes to conform to the inside dimensions of a specific aircraft. Containers (Ocean) - Are designed to be moved inland on its own chassis and can be loaded at the shippers plant for shipment overseas. Basic types of containers are; dry van, open top, half high, hi cube, flat rock, tank container, refrigerated container, insulated container, tilting container. Average outside dimensions are generally 20, 35, and 40 feet in length, 8 feet wide and 8 feet high standard and 96 high cube. Containerized Cargoes - mean cargoes packed in containers for easy handling or transportation of same as a unit. Customs Bonded Warehouse - Is a warehouse where imported goods may be stored for a total of three years without the payment of duty or taxes. CIIS - Customs Inspection and Investigation Service, Bureau of Customs Customs Tariff - Is a schedule of charges assessed by the government on imported goods. CY (Container Yard) - The term CY means the location designated by Carrier in the port terminal area for receiving, assembling, holding, storing and delivering containers, and where containers may be picked up by shippers or re-delivered by consignees. No container yard (CY) shall be a shipper's, consignee's, NVOCC's, or a forwarder's place of business, unless otherwise provided. DA Department of Agriculture DAF (Delivered At Frontier) - Is a monomodal (land) expression which should be further qualified by naming the frontier (border post) up to which the seller is prepared to take responsibility for transport costs and the corresponding risks of transit. The frontier is deemed to be on the seller's side of the applicable border unless the term is modified to express that the point of transfer is the frontier on the buyer's side of the border. The seller must clear the cargo through customs on the export side of the border of handover, whereas the buyer must clear the goods through customs on the import side. Because the Frontier falls on the seller's side of the border, DAF can vary from other D terms in that the seller may not be responsible for all or even a part of the main carriage. For example, if the transit involved the movement of cargo through several frontiers, the seller may pass risk and responsibility at the first of these, obligating the buyer to arrange the main carriage thereafter. As a land term the application of DAF is for land-based operations and other D terms such as DDU or DDP should be considered if the transaction is not land-based. (i.e. it is not exclusively road or rail or a road/rail combination) D.W. - Deadweight (tons of 2,240 lbs.)

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Dangerous Goods - Articles or substance capable of posing a significant risk to health, safety or property, and that ordinarily require special attention when being transported. Decommissioned Vessels - vessels which are not engaged in commercial trade, as certified to by the Marine Industry Authority (MARINA) or the Philippine Coast Guard (PCG). Demurrage - A penalty for exceeding free time allowed for loading or unloading at a pier or freight terminal. Also a charge for undue detention of transportation equipment or carriers in port while loading or unloading. DENR - Department of Environment & Natural Resources DES/DEQ - Terms prefixed 'D' are 'Contracts of Arrival' involving the passing of risk and responsibility at the point where costs also terminate. DES (Delivered Ex Ship) is Monomodal. Although not triggered by the use of the ship's rail, the point of handover (ship's side, arrived) will be inappropriate in a modern port. The buyer may not be able to take control at a point in a restricted port area. An alternative D term such as DDU might be better suited to represent an achievable point of handover for both parties. DES will often financially correlate to CFR. But, for the buyer DES represents CFR without the disadvantages of placing risks on the buyer, over which they have no control. (See CFR). From the seller's perspective, DES reverses the risk advantages of CFR, placing all risks with the seller until the cargo arrives at the named port. DEQ (Delivered Ex Quay) extends the shipper's responsibility beyond the arrival of the vessel to the point where the goods are discharged. Although not triggered by the use of the ship's rail, the point of handover (landside on the harbour, duty paid) is frequently inappropriate in a modern port environment. The buyer may not be able to take control at that point and an alternative D term such as DDP may be better suited to identify an achievable point of handover between the two parties. Seller's using DEQ are cautioned that they must be in a position to pay the destination discharge fees both in physical terms as well as administratively in accordance with any Exchange Control Regulations applicable in the country of Origin. Caution is appropriate when using D prefixed terms with Documentary Credits as few 'documents' are geared to record the passing of risks on arrival. DDP (Delivered Duty Paid) - Is a Multimodal term that must be qualified by naming the place to which the seller is taking responsibility for transport costs and the risks of transit. These risks and costs include the payment of domestic duties in the buyer's country and any ancillary charges associated with the import clearing process at destination. As with all of the D prefixed terms, this term is not easy to use in conjunction with a Documentary Credit and in the case of DDP this payment difficulty extends to any form of Exchange document. As a multimodal term, DDP requires the use of Multimodal transport documents over monomodal documents such as Bills of Lading or Airwaybills. Sellers are cautioned that the payment of foreign duties and taxes may be contrary to the Exchange Control regulations of their country and that they should seek clarity on this point from their bank or appropriate authority. Equally, both parties should consider VAT if payable in the buyer's country. DDP may be modified to exclude the seller from having to pay a VAT that the buyer could recover directly. If this is not done, the seller's price may include this amount which otherwise could actually be recovered by the buyer. Regulations regarding sellers claiming VAT paid to foreign revenue services vary from country to country, and there is no clear-cut position in this matter. Both parties should seek guidance in this. Additionally, although the seller will pay Duties, the buyer would be named on the import customs entry and will have the obligation to the domestic Customs Authority for the accuracy of the declared tariff headings used and the rates of duty applied. Should these subsequently prove to be incorrect the buyer will have the obligation to bring any under recovery to account.

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DDU (Delivered Duty Unpaid) - Is a Multimodal term that must be further qualified by naming the place up to which the seller is prepared to take responsibility for transport costs (and the corresponding risks of transit). This is excluding the payment of domestic duties and the ancillary clearance charges associated with the import process at destination. DDU will often financially correlate to CPT. But, for the buyer DDU represents CPT without the disadvantages of placing risks on the buyer, over which they have no control. (See CPT). From the seller's perspective, DDU reverses the risk advantages of CPT, placing all risks with the seller until the cargo arrives at the named port. As with all of the D prefixed terms, this term is not easy to use in conjunction with a Documentary Credit and as a multimodal term, would require the use of Multimodal transport documents over any traditional monomodal documents such as Bills of Lading or Airwaybills. Sellers are further cautioned that, if the intended transit is beyond the point of entry in the country of destination, then their ability to move the goods to the final destination may be dependent on the buyer's ability to first clear the goods through the customs authority. The possibility of delays in transit and any resultant storage charges (should the buyer fail to conduct clearance in good time), should be noted. Seller's should be equally aware of additional charges which may be due for payment resultant from local taxes which do not fall into the category of 'duty', but are nevertheless payable prior to release. DDU (and DDP) correlates closely to the generic expressions of 'free domicile', 'franco domicile' and 'free house', which are frequently used in the transport industry. Each should be avoided due to their ambiguous nature. DMA (Dimethylamine) (CH3)2NH Flammable gas with ammonia aroma, boiling at 7 soluble in water, ether, and C; alcohol; used as an acid-gas absorbent, solvent, and flotation agent, in pharmaceuticals and electroplating, and in de-hairing hides. Dockage (at Anchorage) - is the amount assessed against a vessel engaged in international or foreign trade, including those engaged in barter trade, that do not berth but drop anchor at either a government or privately-owned port whether operated exclusively or commercially. Dockage (at berth) - is the amount assessed against a vessel engaged in international or foreign trade, including those engaged in barter trade, for mooring or berthing at a pier, wharf, bulkhead - wharf, river or channel marginal wharf at any national port in the Philippines; or for mooring or making fast to a vessel so berthed. DOF - Department of Finance DPWH - Department of Public Works and Highways DTI - Department of Trade and Industry Domestic Cargoes - are cargoes brought to a pier, wharf or bulkhead to and from a port within the Philippine waters. Export Declaration - a document required for every shipment of goods, whereby the exporter or his duly authorized representative declares and certifies the full particulars of the shipment EDI or EDIFACT - Electronic Data Interchange for Administration, Commerce and Transport, from the UNbacked electronic data interchange standards body, to create electronic versions of common business documents that will work on a global scale. One digital document under consideration, the International Forwarding and Transport Message will do the jobs of six different electronic messages currently in use. Ex - Signifies that the quoted price applies only at the indicated point of origin (e.g. "price ex factory" means that the quoted price is for the goods available at the factory gate of the seller). EXW Ex works. Same as the former "Ex Works." Represents the minimum involvement of the seller and the maximum involvement of the buyer in the movement of the goods from the point of 'works'.

The statement 'EXW' must be qualified to give the address of the 'works', which may be a factory, site or warehouse etc. Care should be taken to note that the actual point of manufacture might well vary from the place where the seller operates their commercial undertaking.

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Under INCOTERMS 2000, risk and responsibility pass from the seller to the buyer when the cargo is made available on the ground at the 'works', at or on the agreed future date or future time, uncleared through customs. The seller must give advance notice of availability (how much notice would have to be predetermined e.g. through the sales contract). This point is important as the buyer assumes liability for all risks from the time of availability on the ground and is therefore exposed from that moment up to the event of collection. During this period, the buyer is liable for all risks to the cargo, even though they are not yet under the buyer's physical control, and this is further aggravated by the fact that the goods are generally uninsured throughout this period too. The buyer and seller should only consider EXW when the buyer can actually arrange the customs clearing prior to export and for the immediate collection of the cargo on availability. The Seller should note that the export of the goods is NOT guaranteed under EXW and the buyer may, for example, opt to keep the goods in the country of origin. Although EXW is a popular term it remains complex. EXW is rarely compatible with documentary credits (for example) - and the term FCA often offers a more manageable alternative. Export Cargoes - are cargoes brought to a pier, wharf of bulkhead intended for shipment to a foreign port. FAS (Free Alongside Ship) Seller is responsible for inland freight costs until goods are located alongside the vessel/aircraft for loading. Buyer is responsible for loading costs, ocean /air freight and marine/air insurance. is Monomodal in that it may only be used for transaction where the main carriage is by seafreight. Note that the entire journey need not be by sea, but the moment of 'export' must be.

Under this term, which has a considerably long tradition, risk and responsibility pass from the seller to the buyer when the goods are placed alongside a named ship (or a ship operated by a named service) at a named area within a named port. FAS requires the seller to arrange export customs clearing. The essential aspect of the term is that the vessel is in port prior to the seller delivering the cargo into the port area. However, in many markets, the seller is not allowed into the harbour area. Even if the seller can enter the port area, most operations involve the placing of cargo into a berth where the vessel in question is intended to arrive, as opposed to it having physically docked prior to the arrival of the cargo. Thus the vessel comes to the cargo rather then the cargo coming to the vessel. There are significant risks associated with the older seafreight terms (such as FAS, FOB, CFR/CIF etc) specifically with regard to the transport documents issued. Careful consideration should be given to the appropriate section of the official INCOTERMS 2000 text dealing with 'proof of delivery'. In many cases, the modern documents issued by lines may present risk-management complications to the seller when using such an old term as FAS. The use of this term in the charter and bulk markets is attractive as an alternative to many of the traditional chartering terms that are often subject to unique definitions from country to country - or even between ports within one country. FAK - Freight All Kinds - uniform charging scale applying to a number of commodities; as opposed to SCR (Specific Commodity Rate) applying to one commodity only. FCA (Free Carrier) - Defines the conditions under which many sellers and buyers actually transfer risks. FCA must be qualified by both naming the place where risks and responsibilities pass from the seller to the buyer and by identifying the carrier the buyer has appointed. FCA requires the seller to take responsibility for risks and costs up to this handover, including export customs clearance. It is important to consider that the nature of the carrier being used, and the various points of transfer that different modes of transport may involve, are subject to extreme variables. It is common that the transport used to deliver or handover is a different than the actual transport to be used for the main carriage (e.g. collected by road for an airfreight export). The term may well involve detailed instruction to make such distinctions and it should be noted that multimodal transport documents better serve this term than traditional documents such as Bills of Lading or Airwaybills.

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For deep-sea transactions, FCA represents an excellent alternative to FOB, which is inappropriate in most modern port operations. However, under FCA the seller hands over risks/control of the cargo at a point prior to the vessel, frequently prior to the port. Although this reflects the physical condition of much seafreight trade conducted using 'FOB'; it is a departure from the commoner financial interpretation of 'FOB'. This normally obligates the seller to pay for the origin handling/loading and/or stowage charges raised by the port. Under FCA, these charges are for the buyer's account. If this is not acceptable, the term may be modified to represent the passage of FCA risks with 'FOB' costs. FCA may involve the carrier collecting from the seller or the seller delivering to the carrier, dependant on the conditions of the sales contract. F&D - Freight and demurrage FOB (free on board) Seller is responsible for inland freight and all other costs until the cargo has been loaded on the vessel/aircraft. Buyer is responsible for ocean/air freight and marine/air insurance. is one of the commoner trade terms in use. Yet this 'common' aspect of the term has resulted in the myriad definitions found all over the world for FOB. Some of these directly contradict others, and many are supported by domestic legislation making such definitions unique to a specific country or port. In defining FOB as an INCOTERM, it is expressed as being Monomodal and it can only be used for transactions where seafreight is the main carriage. Therefore, as an INCOTERM, there is no application for FOB in road, rail or air transport. Under INCOTERMS 2000, risk and responsibility pass from the seller to the buyer when the goods pass over the (named or unnamed) ship's rail at the (named) port of loading, cleared for export by the seller. For FOB to apply, the seller must be in the physical position of being able to load the cargo over the rail under their own direct control i.e. the loading is undertaken by the seller's own labour, or by an agent that is under the contractual control of the seller. Further this process would have to be monitored by both the seller and buyer or their representatives. Generally, from the modern deep-sea export perspective, this control often cannot be achieved as the seller is either not allowed into the harbour area or, even in those extreme circumstances where they are, they have no influence over the party loading the vessel. The INCOTERM FOB still has an application in some markets, but these are more and more in the minority. Note that the use of an 'on-board' Bill of Lading or mate's receipt could be appropriate in recording the passage of risks under FOB making FOB one of the few terms still unavoidably dependant on such documents. FOD - Free of damage FPA - Free of Particular Average (Marine Insurance Term). A term used in marine insurance policies to indicate that while the underwriter is unwilling to assume liability for ordinary partial losses due to the peculiar qualities of the particular article or to its form of package, he is willing to bear partial losses, the direct result of stranding, sinking, burning, collision, or other named peril Foreign Transshipment Cargo - refers to any article arriving at the port from a foreign port or place and destined for shipment to another foreign port. Forwarder, Freight Forwarder, Foreign Freight Forwarder - An independent business that dispatches shipments for exporters for a fee. The firm may ship by land, air, or sea, or it may specialize. Usually it handles all the services connected with an export shipment; preparation of documents, booking cargo space, warehouse, pier delivery and export clearance. The firm may also handle banking and insurance services on behalf of a client. Free Alongside - Quoted price includes the cost of delivering the goods alongside a designated vessel. Free In (F.I.) - Cost of loading a vessel is borne by the charterer Free In and Out (F.I.O.) - Cost of loading and unloading a vessel is borne by the charterer.

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Free Out (F.O.) - Cost of unloading a vessel is borne by the charterer. Free Port - A port which is a foreign trade zone, open to all traders on equal terms; more specifically a port where merchandise may be stored duty-free, pending re-export or sale within that country. Free Storage Period - means the period allowed for any article, baggage and/or container to be stored in any port premises, cargo sheds and warehouses of the Authority without the payment of storage fee. Freight Forwarder - An individual or company , acting on the behalf of a shipper, who arranges all necessary details of shipping and documentation for a manufacturer or exporter, which includes employing the services of a carrier of carriers. Full Container Load (FCL) - means a container loaded with cargoes belonging to a single consignee and/or covered by only one Bill of Lading. FCL - Full container load, full car load G.R.Wt./G.W. - Gross Weight Gang/Workgang - Group of stevedores usually 12 members with supervisor assigned to a hold or portion of the vessel being loaded or unloaded. GRT - refers to the gross registered tonnage of the vessel. General Breakbulk Cargo - means those that are listed in a number of bills of lading, each consisting of different commodities. These include but are not limited to bagged cargoes, crates, cylinders, cases, baskets, bales, rolls, drums and such other like or similar types of packing including vehicles, live animals, crated or uncrated fowls such as chicken, ducks and the like and other loose cargoes. Gross Weigh - Entire weight of goods, packing, and container,, ready for shipment. Hatch - The cover of - or opening- in the deck of a vessel, through which cargo is loaded. Heavy Lift Vessel - Specifically designed to be self sustaining with heavy lift cranes, to handle unusually heavy and/or out-sized cargoes. Heavy Lifts - Freight too heavy to be handled by regular ship's tackle Hub - A central location to which traffic from many cities is directed and from which traffic is fed to other areas. Hundredweight (cwt.) - A short ton hundredweight = 100 pounds. Long ton hundredweight = 112 pounds. Husbanding - Term used by steamship lines, agents, or port captains who are appointed to handle all matters in assisting the master of the vessel while in port to obtain bunkering, fresh water, food and supplies, payroll for the crew, doctors appointments, ship repair, etc. Import Cargoes - are cargoes coming from a foreign country to a pier, wharf or bulkhead by vessel coming from a foreign port. Irrevocable Letter of Credit - A letter of credit with a fixed expiration date that carries the irrevocable obligation of the issuing bank to pay the exporter when all of the terms and conditions of the letter of credit have been met. ISO - International Standards Organization also referred to as the International Organizational for Standardization. Just-In-Time (JIT) - The principle of production and inventory control in which goods arrive when needed for production or use. Knock Down (KD) - An article taken apart, folded or telescoped in such a manner as to reduce its bulk at least 33 1/3% below its assembled bulk. Knot (Nautical) - The unit of speed equivalent to one nautical mile, or 6,080.20 feet per hour or 1.85 kilometers per hour.

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L & D - Loss and damage L.C.L. - Less than container load L/C (Letter of Credit) - A document issued by a bank per instructions by a buyer of goods, authorizing the seller to draw a specified sum of money under specified terms. Issued as revocable or irrevocable. Lay-up areas - The areas designated by PPA for vessels that are laid-up. These are identified by the corresponding coordinates (latitudes and longitudes) in the Nautical Chart produced by the Mapping and Resource Information Laid-up vessels - vessel which have been decommissioned or otherwise unemployed and idle while waiting for better business prospects for their operations or when so authorized by the Authority. Lay-up Fee - is the amount levied against vessels engaged in domestic trade which are temporarily authorized to lay-up and anchor at designated lay-up areas. LCL Container (Less Container Load) - refer to containerized cargoes owned by or belonging to more than one shipper/consignee and / or covered by more than one bill of lading. Less than Truck Load (LTL) - Rates applicable when the quantity of freight is less than the volume or truckload minimum weight. Letter of Credit (L/C) - A document issued by a bank at a buyer's request honoring debt obligations to the seller upon receipt of the document. Letter of Credit - payment by sight draft - The exporter receives guaranteed payment from the confirming bank in the U.S. upon presentation of the sight draft and documents required by the letter of credit. Lighter - An open or covered barge equipped with a crane and towed by a tugboat. Used mostly in harbors and inland waterways. Lighterage - The cost of loading or unloading a vessel by means of barges alongside. Liner - The word "liner" is derived from the term "line traffic" which denotes operation along definite routes on the basis of definite, fixed schedules; a liner thus is a vessel that engages in this kind of transportation, which generally involves the haulage of general cargo as distinct from bulk cargo. Liquidation - The finalization of a customs entry. Livestock - Common farm animals Lkg. & Bkg. - Leakage and breakage. Lo/Lo - The acronym meaning "lift-on,lift-off," denoting the method by which cargo is loaded onto and discharged from an ocean vessel, which in this case is by the use of a crane. Load Factor - Capacity sold as against capacity available, expressed as a percentage. Ltge. - Lighterage LUNAC brand name of an Oleic Acid MCT - Mindanao Container Terminal M/T - Metric Ton (2204 lbs.) M/V or M.V - Motor vessel Manifest - A list of the goods being transported by a carrier. Marine Insurance - An insurance which will compensate the owner of goods transported overseas in the event of loss which cannot be legally recovered from the carrier. Mark - As used on containers in foreign trade, a symbol or initials shown together with the port of importation and the final destination, if different. Example A.G. y Cia., Bogota via Barranquilla. Marks are registered at appropriate customs houses; they also appear on bills of lading and invoices. In domestic trade, it is

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common to mark containers with the name and address of the recipient, but this is rarely done in foreign trade. Marking - Every article of foreign origin, or its container, imported into the United States shall be permanently marked in a conspicuous place in a manner which would indicate to the ultimate purchaser the English name of the country of origin of the article. Mate's Receipt - Receipt of cargo by the vessel, signed by the mate (similar to dock receipt). Measurement Ton - The measurement ton (also known as the cargo ton or freight ton) is a space measurement, usually 40 cubic feet or one cubic meter. The cargo is assessed a certain rate for every 40 cubic feet or 1 cubic meter it occupies. MFN - (Most Favored Nation) Designation for countries which receive preferential tariff rates. This is no longer the best tariff structure available. MMA (Mono-Methyl Amine) - Colorless gas with the strong, fishy, ammonia-like odor characteristic of amines. Methylamine is a raw material for N-methylpyrrolidone and also for carbamate insecticides and other carbamate-based products. Relatively smaller quantities are converted to alkylalkanolamines, surfactants and explosives. Min. B/L - Minimum bill of lading MRL (Minimum Residue Level) minimum quantity of pesticides in agricultural products like fruits and vegetables mt./mty Empty MW - Minimum weight factor Minimum Charge - it is the least amount of payment due from port users based on prescribed rates. NEDA - National Economic and Development Authority N n.e.m. - Not elsewhere mentioned (English) n.e.s. - Not elsewhere specified N.O.E. - Not otherwise enumerated N.O.H.P. - Not otherwise herein provided N.O.I. - Not more specifically described N.O.I.B.N. - Not otherwise indicated by number; Not otherwise indicated by name. N.O.S. - Not otherwise specified N.T. - Net tons NVOCC (Non-vessel operating carrier carrier) - An F.M.C. registered cargo consolidator of small shipments in ocean trade, generally soliciting business and arranging for or performing containerization functions at the port. These carriers issue their own bill of lading referred to as a house bill of lading. Net Terms - Free of charters' commission Net Weight - (Actual Net Weight) Weight of goods alone without any immediate wrappings; e.g., the weight of the contents of a tin can without the weight of the can. Non-Tariff Barriers (NTB) - Economic, political, administrative or legal impediments to trade other than duties, taxes and import quotas O.D. - Outside diameter O.R. Det. - Owner's risk of deterioration

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O.r.b. - Owner's risk or breakage. O.R.F. - Owner's risk of fire or freezing O.R.L. - Owner's risk of leakage O.R.W. - Owner's risk of becoming wet O.S. & D. O/N - Order notify; own name O/o - Order of O/R - Owner's risk Ocean Bill of Lading - A receipt for cargo in transit, and a contract between the exporter and an ocean carrier for transportation and delivery of goods to a specified party at a specified foreign destination. Issued after the vessel has sailed and the cargo has been entered in the ship's manifest. Open Account - A high-risk trade arrangement in which goods are shipped to a foreign buyer without guarantee of payment. Open Policy - A cargo insurance policy that is an open contract; i.e., it provides protection for all an exporter's shipments afloat or in transit within a specified geographical trade area for an unlimited period of time, until the policy is cancelled by the insured or by the insurance company. It is "open" because the goods that are shipped are also detailed at that time. This usually is shown in a document called a marine insurance certificate. Original Equipment Manufacturers (OEM accounts) - Customers who incorporate the exporter's product into their own merchandise for resale under their own brand names. PPA - refers to the Philippine Ports Authority P.A. - Particular average P.W. - Packed weight Pallet - Load carrying platform to which loose cargo is secured before placing aboard vessel. Perishables - Any cargo that loses considerable value if it is delayed in transportation (Usually refers to fresh fruit and vegetables). PENRO Provincial Environment and Natural Resources Office of the DENR Phytosanitary Inspection Certificate - A certificate issued by government indicating that a shipment has been inspected and is free of harmful pests and plant diseases. Pilferage - As used in marine insurance policies, the term denotes petty thievery, the taking of small parts of a shipment, as opposed to the theft of a whole shipment or large unit. Many ordinary marine insurance policies do not cover against pilferage, and when this coverage is desired, it must be added to the policy. Pilotage Rates - fee paid to a harbor or river pilot ; manual navigation or controlling of a ship Port Authority - A government body (city, county or state) which in international shipping maintains various airports and/or ocean cargo pier facilities, transit sheds, loading equipment warehouses for air cargo, etc. Has the power to levy dockage and wharfage charges, landing fees, etc. Port Charges - refer to port dues, dockage at berth, dockage at anchorage, usage and lay-up fees, wharfage, storage fees assessed on the vessel/cargo. Port Dues - is the amount assessed against a vessel engaged in foreign trade based on its total GRT or part thereof, including those engaged in barter trade for each entrance into and departure from a port of entry in the Philippines.

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Private Port - for purposes of the 1994 Port Tariffs Rates application, a private port is a port duly registered with the PPA and which is owned and operated exclusively or commercially by a private person or entity catering to its own cargo or cargoes owned by third parties. Port of Discharge - Port where vessel is off loaded and cargo discharges. Port of Entry - A port at which foreign goods are re-admitted into the receiving country. Port of Loading - Port where cargo is loaded aboard the vessel lashed and stowed Power of Attorney - A document that authorizes a customs broker to sign all customs documents on behalf of an importer. Pre-Advice - Preliminary advice that a letter of credit has been established in the form of a brief authenticated wire message. It is not an operative instrument and is usually followed by the actual letter of credit. Prepaid Freight - Generally speaking, freight charges both in ocean and air transport may be either prepaid in the currency of the country of export or they may be billed collect for payment by the consignee in his local currency. However, on shipments to some countries freight charges must be prepaid because of foreign exchange regulations of the country of import and/or rules of steamship companies or airlines. Pre-Slung Cargo - Cargo shipped already in a cargo sling or net. Usually prepared and loaded at pier ready for arrival of vessel and subsequent loading (i.e. coffee in bags, coconut shells, etc). Price Quotation/Proforma Invoice - An invoice prepared by the seller in advance of shipment that documents the cost of goods sold, freight, insurance, and other related charges. It is often used by the buyer to secure a letter of credit, an import license or a foreign currency allocation. Prima Facie - Latin, "on first appearance." A term frequently encountered in foreign trade. When a steamship company issues a clean bill of lading, it acknowledges that the goods were received "in apparent good order and condition" and this is said by the courts to constitute prima facie evidence of the conditions of the containers; that is, if nothing to the contrary appears, it must be inferred that the cargo was in good condition when received by the carrier. Pro Number - A number assigned by the carrier to a single shipment, used in all cases where the shipment must be referred to. Usually assigned at once. Proforma - When used with the title of a document, the term refers to an informal document presented in advance of the arrival, or preparation of the required document, in order to satisfy a customs requirement. Proof of Delivery - Add-on service in express market, delivered either by phone or courier. Often offered free. Quay Crane Charges a fee paid in using the waterside platform that runs along the edge of a port or harbor, where boats are loaded and unloaded. Queuing area - form of waiting line Rebate - A deduction taken from a set payment or charge. As a rebate is given after payment of the full amount has been made, it differs from a discount which is deducted in advance of the payment. In foreign trade, a full or partial rebate may be given on import duties paid on goods which are later re-exported. Reciprocity - A practice by which governments extend similar concessions to one another. Red Clause Letter of Credit - A letter of credit that allows the exporter to receive a percentage of the face value of the letter of credit in advance of shipment. This enables the exporter to purchase inventory and pay other costs associated with producing and preparing the export order. REFG. - Refrigerating; Refrigeration Regs. - Registered Tonnage Retaliation - Action taken by a country to restrain its imports from another country that has increased a tariff or imposed other measures that adversely affects the firsts country's exports. RORO (ROLL ON-ROLL OFF) - Direct drive on/drive off wheeled vehicles on specially-designed sea-going vessels.

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Revenue Tonnage - means 1,000 kgs or 1.1326 cubic meters (40 cu. Ft.) whichever yields the greater amount of revenue. S. & F.A. - Shipping and forwarding agent. S.I.T. - Stopped in Transit S.L. & C. - Shipper's Load and Count S.L. & T. - Shipper's Load and Tally S.O.L. - Ship Owner' Liability S.R. - Shipping Receipt Sanitary and Health Certificate - A statement signed by a health organization official certifying the degree of purity, cleanliness, or spoilage of goods, and the health of live animals. Self-Sustaining - Vessel has its own cranes and equipment mounted on board for loading/unloading. Used in ports where shore cranes and equipment are lacking. Shipment - Freight tendered to a carrier by one consignor at one piece at one time for delivery to one consignee at one place on one bill of lading. Shipper's Export Declaration - A form required by the Treasury Department and completed by a shipper showing the value, weight, consignee, destination, etc., of export shipments as well as Schedule B identification number.| Ship's Manifest - An instrument in writing containing a list of the shipments comprising the cargo of the vessel. Ship's Tackle/Ships Gear - All rigging, etc., utilized on a ship to load or discharge cargo. Shut-out Cargoes - are cargoes brought to the premises, cargo sheds and warehouses of the government, wharf or bulk-head for export or domestic shipment which are not loaded on the intended carrying vessel provided that such carrying vessel has actually docked. Sight Draft - A draft payable upon presentation to the drawee. Compare date draft and time draft. Single Entry Charter - A non-scheduled flight carrying the car Stevedoring - cargo handling, ship side Storage Charge - is the amount assessed on articles, baggage and containers for storage in the port premises, cargo shed and warehouses of the government. Stowage - The lacing of cargo in a vessel in such a manner as to provide the utmost safety and efficiency for the ship and the goods it carries. Surety Bond - A bond insuring against loss or damage or for the completion of obligations. Stuffing Report - contains the description of goods to be shipped, number of containers and seal, size of the van Stuffing and Stripping. the packing and unpacking of containers We take care of the loading and unloading of your goods, regardless of size and shape and whether they arrive loose, wrapped or unwrapped, palletized, crated etc Tally Sheet - List of cargo, incoming and outgoing, checked by Tally clerk on dock. Tare Weight - The weight of the container and/or packing materials only - excluding the weight of the goods inside the container. Tariff - A general term for any listing of rates, charges, etc. the tariffs most frequently encountered in foreign trade are tariffs of the international transportation companies operating on sea, on land, and in the air; tariffs of the international cable, radio, and telephone companies; and the customs tariffs of the various countries, which list goods that are duty free and those subject to import duty, giving the rate of duty in each case. There are various classes of customs duties.

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Temperature Controlled Cargo - Any cargo requiring carriage under controlled temperature TEU - Twenty foot equivalent unit of one shipper. Third Party Cargoes - refer to cargoes not owned by the private pier owner/wharf owner/operator. THC - Total Handling Charge TL - Truckload Ton - Freight rates for liner cargo generally are quoted on the basis of a certain rate per ton, depending on the nature of the commodity. This ton, however, may be weight ton or a measurement ton. Ton-Deadweight - Indicates the carrying capacity of the ship in terms of the weight in tons of the cargo, fuel, provisions and passengers which a vessel can carry. Ton-Displacement - The weight of the volume of water which the fully loaded ship displaces. Ton-Registered - Indicates the cubical contents or burden of a vessel in tons of 100 cubic feet. The space within a vessel in units of 100 cubic feet. Trade - A term used to define a geographic area or specific route served by carriers. Tramp - A tramp is a vessel that does not operate along a definite route on a fixed schedule, but calls at any port where cargo is available. Transferable Letter of Credit - A letter of credit that allows all or a portion of the proceeds to be transferred from the original beneficiary to one or more additional beneficiaries. Transshipment - The transfer of a shipment from one carrier to another in international trade, most frequently from one ship to another. In as much as the unloading and reloading of delicate merchandise is likely to cause damage, transshipments are avoided whenever possible. Truckload - Truckload rates apply where the tariff shows a truckload minimum weight. Charges will be at the truckload minimum weight unless weight is higher. Trust Receipt - Release of merchandise by a bank to a buyer for manufacturing or sales purposes in which the bank retains title to the merchandise. Transit Cargo for Export - refers to any article arriving at any domestic port from another domestic port or place and destined for reshipment to a foreign port. Usage Fee - the amount assessed against a vessel engaged in domestic trade for berthing, for making fast to a vessel so berthed or for mooring at an anchorage area. Valuation Charges - Transportation charges assessed shippers who declare a value of goods higher than value of carrier's' limits of liability. VASP - Value Added Service Provider VAT (Value-Added Tax) - A sales or consumption tax which the end user pays. Typically, this is a "hidden" tax, added to the list price of the goods in question. Ves. Vessel Volume Weight - Used when calculating air freight when the size of the carton is greater than the average weight, calculated by multiplying the length times the width times the height and dividing by 166. Vessel for Drydocking - refer to vessels or watercrafts intending to undergo dry-docking/ repair as required by the Classification Society or other government agencies. Vessel in Distress - a vessel which has suffered engine trouble, marine accident or has met a typhoon or other natural calamities or disasters during its voyage that forced her to call at the port for repair, medical help or shelter. Vessels for strapping - refer to vessels or watercrafts which are no longer seaworthy to undertake voyage and are eligible only for breaking up.

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W. & I. - Weighing and Inspection W.G. - Weight guaranteed W.P.A. - With Particular Average W/M - Weight and/or measurement W/R - Warehouse receipt Warehouse Receipt - A receipt of commodities deposited in a warehouse, identifying the commodities deposited. It is non-negotiable if permitting delivery only to a specified person or firm, but it is negotiable if made out to the order of a person or firm or to a bearer. Endorsement (without endorsement if made out to bearer) and delivery of a negotiable warehouse receipt serves to transfer the property covered by the receipt serves to transfer the property covered by the receipt. Warehouse receipts are common documents in international banking. Warehouse- to-Warehouse - A clause in marine insurance policy whereby the underwriter agrees to cover the goods while in transit between the initial point of shipment and the point of destination, with certain limitations, and also subject to the law of insurable interest. When it was first introduced, the warehouse-towarehouse clause was extremely important, but now its importance is diminished by the marine extension clauses, which override its provisions. Weight - (a) Gross - The weight of the goods including packing, wrappers, or containers, internal and external. The total weight as shipped (b) Net - The weight of the goods themselves without the inclusion of any wrapper (c) Tare - The weight of the packaging or container (d) Weight / Measurement Ton - In many cases, a rate is shown per weight/measurement ton, carrier's option. This means that the rate will be assessed on either a weight ton or measurement ton basis, whichever will yield the carrier the greater revenue. As example, the rate may be quoted on the basis of 2,240 pounds or 40 cubic feet or of 1 metric ton or 1 cubic meter (e) Weight Ton - There are three types of weight ton; the short ton, weighing 2,000 pounds; the long ton, weighing 2,240 pounds; and the metric ton weight 2,204.68 pounds. The last is frequently quoted for cargo being exported from Europe. Weight Load Factor - Payload achieved as against available, expressed as a percentage. Cargo is frequently limited by volume rather than weight; load factors of 100% are rarely achieved. Weight, Legal - Net weight of goods, plus inside packing. Wet Lease - An arrangement for renting an aircraft under which the owner provides crews, ground support equipment, fuel and so on (of dry lease). Wharfage A charge assessed by a pier or dock owner against the cargo or a steamship company for use of the pier or dock. is a charge on all cargoes, whether containerized or not coming in/going out or transhipped through a port on the basis of the total metric or revenue tonnage whichever is applicable. X Heavy - Extra Heavy X Strong - Extra strong XX Heavy - Double extra heavy XX Strong - Double extra strong Sources: PPA, DTI, BOC, Shippers, Truckers

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ACKNOWLEDGEMENT
The Study Team wishes to thank and acknowledge the following: Cagayan de Oro Chamber of Commerce and Industry Foundation, Inc. Mr. Jaime Rafael U. Paguio Ms. Lordilie S. Enjambre Ms. Jenneth Balaba

Cagayan de Oro City Council Hon. Ian Mark Lacaya, Chair, Committee on Transport and Utilities Hon. Roger Abaday, Councilor, Cagayan de Oro City 1st District
Confederation of Philippine Exporters Foundation Region 10A Chapter, Inc. Ms. Marlene M. Camat Mr. Wilson C. Amad Mr. Venchito C. Bullecer Ms. Vivian B. Libao Mr. Arturo D. Mercader Mr. Emmanuel C. Soloria Mr. Artemio A. Cruz, Jr. Department of Agriculture Regional Field Unit-10 RED Lealyn A. Ramos Ms. Honey Gladys A. Valledor Ms. Carmelita Bajarla Ms. Hyacinth Flores Department of Finance Bureau of Customs (DOF-BOC) Atty. Abedin P. Macapasir Ms. Bellarmine C. Valencia Atty. Roswald J. Pague Mr. Santiago Arrabaca, Jr. Mr. Lowell L. Medija Department of Public Works & Highways-10 Dir. Jerome Dela Rosa Engr. Virgincita Lomoto Department of Trade and Industry -10 Dir. Alicia V. Eusea ARD Linda O. Boniao Ms. Liza M. Alcanzar Ms. Emelia A. Lasquites Mr. Nelson N. Catubig Ms. Lodie M. Cadiz Department of Transportation and Communication - Land Transportation Office-10 Dir. Sulta Porcawa Dia Mr. Napol G. Garcia Department of Transportation and Communication - Maritime Industry Authority-10 Dir. Marianito D. Mendoza Department of Transportation and Communication - Philippine Ports Authority Engr Efren B. Bollozos Mr. Reynaldo B. Lumbay Ms. Lolita A. Cabanlet

Engr. Isidro Butaslac, Jr.

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ETX Trucking Services Mr. Edilberto Tiu Filipinas Port Services, Inc. Mr. Jose Puentespina Loadout TLC Mr. Matildo Helia (Truck Driver) Lorenzo Shipping Inc. Mr. Francisco Descallar Manila North Harbor Port, Inc. Mr. Ferdinand Inacay MCC Transport Corp. Mr. Edward Pea
Mindanao International Container Terminal Services, Inc. Mr. Rafael G. Lauron Mr. Jose Mari G. Fernandez Nathan and Associates, Inc. - LINC-EG Program Mr. Rafael G. Evangelista, Jr. Ms. Lynn Sison Ms. Heidi Grace Mendoza National Economic and Development Authority-10 Dir. Leon M. Dacanay, Jr. Engr. Jaime H. Pacampara Ms. Estrella R. Pealoza

Oriental Port and Allied Services, Inc. (Cebu City) Engr. Emmanuel Perrales
OROPORT Cargohandling Services, Inc. Mr. Franklin U. Siao

Mr. Rey Cababaros Mr. Lorimer Moralda


PHIVIDEC Industrial Authority Mr. Dante F. Clarito Ms. Elvira Garcia

Portmizer, Inc. (Makati City) Mr. Aris Ramos Quiltrans Prime Carrier Mr. Bartolome Quilab Mr. Jobert Jumawan (Truck Driver) Solid Shipping Lines Mr. Mar Ybaez Stinis (Manila) Mr. Cris Ayonon

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Online and Other References - A new approach to handling charges by Willy Lin, Chairman - Hong Kong Shippers' Council Asia-Australia Discussion Agreement (AADA) Australian Competition and Consumer Commission (ACCC) Bureau of Customs Website Bureau of Internal Revenue - Tax Information & Value Added Tax Calls to Abolish Terminal Handling Charges Intensify in Indonesia Cebu Ports Authority Confederation of Truckers Association of the Philippines (CTAP) European anti-trust legislation European Union, the Competition Directorate-General of the European Commission Federation of ASEAN Shippers Councils (FASC) held a meeting with the Intra-Asia Discussion Agreement (IADA) on 27 April 2004 in Singapore on the Terminal Handling Charge (THC). Kluwerlaw 2009 Land Transportation Office (LTO) Website Light Rail Transport Authority Liner Shipping & EU Competition Law Manila North Tollways Corporation Metro Pacific Tollways Corporation Metro Rail Transit Authority Philippine Ports Authority Philippine Shippers Bureau Port Calls Presentations and Materials from the Mindanao Logistics Conference 2009 Province of Bukidnon Official Website Shippers in the greater China area attack surcharges, rates, cartels and conditions of carriage South Harbor, Manila Sun Star Cagayan de Oro THC Advisory, Maersk Lines The ASEAN Senior Transport Officials Meeting (STOM) The Shippers' Voice - June 30, 2009 Xinhua News Agency CEIS 2005

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THE STUDY TEAM

LINC-EG

Project Adviser (Lynn M. Sison)

Project Consultant (Noel M. Tan)

Project Manager (Michael Joseph R. Ignacio)

Ofelia Elanea D. Chaves (Technical Staff)

Rema Weena C. Romualdez (Technical Staff)

Project Admin (Carina B. Sumugat)

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