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PORT AND ROAD

INFRASTRUCTURE FOR
GREATER LUZON
TRADE
SEPTEMBER 2014
COMPILED BY AND VOICING THE VIEWS OF LEADING TRANSPORATION SECTOR ORGANISATIONS

Asian Terminals Inc. (ATI), Association of International Liner Shipping Lines, Integrated
North Harbor Truckers Association (INHTA), International Container Terminals Inc. (ICTSI),
Manila North Harbour Ports Inc. (MNHPI), Philippine Liner Shipping Association (PLSA),
Philippine Inter-Island Shipping Association (PISA), Port Users Confederation Inc. (PUC)
[In Formation]
CONTENTS


I. Maritime Trade and the Economy
II. Modern Logistics Disciplines
III. Impacts of Bottlenecks in the Supply Chain
IV. Ports and the Markets They Serve
V. Capacity of Ports in Greater Luzon to Meet Trade Requirements
VI. Roads to Match Port Capacity: Coordinated Action Essential
VII. Twin Track Solution: Immediate and Long Term Action Plans
VIII. Experience Shows it Can be Done
IX. Balanced Development

Appendix 1
Origin and destination data for international and domestic container traffic
Appendix 2
Details of the problems associated with the recent truck ban measures
Appendix 3
Data on port capacity and trade the data confirms timely investment in new port capacity to
meet growing international trade
Appendix 4
Aerial shots confirm the large number of sites available that can be cleared to enhance port
activities plus the merit in studying how to improve the port network
Appendix 5
Aerial photos underline the close proximity of high end residential, retail and commercial
properties to mainstream port areas in Melbourne, Australia and Vancouver, Canada
I. MARITIME TRADE AND THE ECONOMY
The World Bank, IMF, OECD and other eminent organisations all confirm that efficient and cost-effective
shipping and port systems that function as key elements of global supply chains play a major part in
fuelling economic development and prosperity.

1. The trade competitiveness of all countries - developed and developing alike - depends heavily
on effective access to international shipping services and port networks. UNCTAD 2013
2. The transportation of cargo and containers by sea underpins the world trading system and
global economic prosperity OECD.

II. MODERN LOGISTICS DISCIPLINES
1. The modern supply chain originating at point of production and finishing at point of
consumption utilises a combination of transport assets and logistics services to deliver cargo
seamlessly to market according to time, price and other criteria designed to meet specific
customer requirements.
2. Supply chain disciplines underpin Philippine international and domestic trade, especially those
based on the use of the container system. Any serious disruption of cargo flow lowers efficiency,
generates additional costs and ultimately represents a cost to the economy.

Import of Raw Materials, Supply Chain Bottlenecks

P
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D
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f

F
l
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Ship Port Road Warehouse/
Container Yard
Factory
Long berthing
waiting time
Bad weather

Crane
downtime/stoppage
Equipment
downtime/stoppage
Overstaying Containers
Strikes
Slow clearances
Shortage of manpower

Traffic
Breakdown
Truck Bans
Strikes
Floods
Security/hi-
jacking
Poor inventory
management
Full container
yards/no space
available
Shortage of
manpower
Congestion of off-
track facilities
Lack of space

Export of Finished Goods Supply Chain Bottlenecks
P
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t
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l

D
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i
o
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f

F
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Point of Production
Factory Backlogs caused by
Warehouse/
Container Yard
Road Port Ship to Customer
Delay in production
Delay in releasing of
releasing documents
Poor inventory
management
Full container
yards/no space
available
Faulty
equipment
Traffic
Breakdown
Truck Bans
Strikes
Floods
Security/hi-
jacking
Crane
downtime/stoppage
Equipment
downtime/stoppage
Overstaying
containers
congestion
Strikes
Slow clearances
Long berthing
waiting time
Delayed arrival
of scheduled
cargo
Bad weather

III. IMPACT OF BOTTLENECKS IN THE SUPPLY CHAIN

1. It is vital for the port and road network to be planned as a system to ensure that the supply
chain is not affected when different stakeholders in the system try to achieve their respective
goals.
2. Independent and uncoordinated actions to reduce congestion imposed by any one of the
stakeholders can create a problem where the economy pays a severe price.
3. For example, reducing congestion problems with truck bans, lead to a much greater truck
population required to meet falling truck productivity, bringing more trucks to the road.
4. The net result of bottlenecks in the supply chain means added supply line costs and in turn a
major cost to the economy as well as a black mark for the Philippines competitiveness.

Appendix 2: Further details of the problems associated with the recent truck ban measures.


III. PORTS AND THE MARKETS THEY SERVE

1. Shipping and logistics follow trade.
2. The major part of international and domestic trade originate from or are destined for Metro
Manila. The Metro Manila ports are therefore the logical, lowest cost path to serve this
concentrated high demand area.

Appendix 1: Shows the information of origin and destination cargo volumes for international and
domestic container trades and illustrates the dominance of Metro Manila. Many other major
metropolitan cities have container ports in the vicinity of their population.


V. CAPACITY OF PORTS IN GREATER LUZON TO MEET TRADE REQUIREMENTS
Current port and terminal capacity as identified below meets the majority of present trade
requirements.

Port/Terminal Operator Location
Asian Terminal South Harbor (ATI) ATI Manila
Manila International Container Terminal (MICT) ICTSI Manila
Manila North Harbor Inc (MNHPI) * MNHPI Manila
Batangas Port ATI Batangas
Subic Port ICTSI Subic
* Domestic Terminal only



1. Traditionally, in the international sector, new port capacity has been installed in advance of
demand as witnessed by the opening of Berth 6 at MICT in 2012 bringing the total available
capacity at MICT to 2.5 million TEU when traffic through the terminal was under the 1.8 million
TEU mark.
2. Today overall available international container terminal capacity in Manila is 3.7 million TEU/yr,
against a throughput in 2013 of just over 2.7 million TEU, highlighting that timely investment by
the private sector has kept the demand/supply ratio well in balance.
3. The development of Berth 7 at MICT, for which foundation work has already been undertaken,
will raise annual international terminal capacity to 3 million TEU/yr at MICT and to 4.2 million
TEU/yr overall for the international terminals.
4. Capacity at Batangas and Subic under normal circumstances i.e. without the knock-on effect of
congestion in the Manila terminals is well matched to the hinterland naturally tributary to
these ports.
5. Domestic trade is expected to go through a strong growth curve and it is recognised that Manila
North Harbor has to formulate clear plans to accommodate the forecast growth.
6. A comprehensive master-plan for the Metro Manila ports going forward is essential with this
addressing port capacity needs based on the current and forecast needs of cargo consumers and
producers.

Appendix 3: Provides further data on port capacity and trade confirms the timely investment in new
capacity to meet growing international trade.


VI. ROADS TO MATCH PORT CAPACITY: COORDINATED ACTION ESSENTIAL
There must be investment in road infrastructure to match the modern new or future installed port capacity.
1. In order to make export, import and domestic cargoes flow efficiently from the ports to and
from consignees and shippers, the road network must be seamless and wide enough to
accommodate truck traffic. The road network must be continuously reviewed and expanded as a
whole system to ensure that growth is not compromised.
2. A direct 'Port Access Road' is essential for port efficiency, vessel berth stay time and optimum
road transport. The root cause of congestion is the lack of a dedicated port access road to the
Manila ports.
3. The NLEX-SLEX Connector road proposed by MPTC (MNTC) with a connection to the three ports
will resolve the current issues and concerns.
4. In Metro Manila there is an urgent need to catch-up with the delivery of the appropriate road
infrastructure and lay solid plans for the future.
5. Overall, a twin-track approach is suggested which aims to play a part in reducing congestion
problems and getting trade moving again.






VII. TWIN-TRACK SOLUTION: IMMEDIATE AND LONG TERM ACTION PLANS
The following twin-track solution is seen as holding major potential to alleviate congestion problems on
a short and long term basis and thereby getting trade moving again.

1. A Immediate Action Plan, and
2. A Long Term Action Plan

Key components of the IMMEDIATE ACTION PLAN are:
o A moratorium on truck bans.
o Operate multiple 24-hour single lanes, especially for the North, the South, and Cavite for all cargoes
[Done on selected routes. Need more to be identified]
o Operate a 24-hour free flow exemption for refrigerated/perishable/dangerous cargoes.
o Exclude truck ban rules from applying on Saturdays
o Eliminate:
o The arbitrary apprehension of trucks by government enforcement agencies.
o The Illegal parking of trucks at the roads within the port zone.
o Approve the North Harbor Link road and the Metro Pacific Port Connector Road system to be
constructed as soon as possible.
o Implement a 24-hour by 7-days vehicle booking system.
o Formulate necessary legislation to transfer long-staying boxes to inland container depots which
penalize those who use the terminals as warehousing.
o Fast track the development of yard capacity behind Berth 7 at MICT.
o Eliminate the bottlenecks of informal settlers and illegal businesses on Bonifacio Drive,
Anda Circle, and R10.
o Speed up the Manila North Harbor Port modernization program including facilities, cranes and
manpower.
o Maximize the efficiency of the port area by identifying and clearing underutilized areas including
relocating informal settlers and providing housing for port workers.
o Study how to improve the Manila Port network.

Key components of the LONG TERM ACTION PLAN are:
o Identify an agency or person with the authority and accountable for the overall planning of the
transport system to ensure that the supply chain for trade is efficient.
o Formulate a Master Plan for the whole Port Area of Manila to accommodate long-term growth
in trade.
o Formulate a Master Plan for staged expansion of the Port of Batangas to accommodate present
and future Laguna and Batangas based trade for both international and domestic cargoes.
With the rerouting of ships to Batangas, the port capacity is full.
o Formulate a Master Plan for staged expansion of the Port of Subic to accommodate present and
future Subic-Clark-Tarlac based trade for both international and domestic cargoes.
o Formulate a Master Plan for an access road system from Cavite going to the Manila Ports, which
would include an underground tunnel from Vito Cruz to the port under Roxas Blvd. with a
waterfront park above it
o Formulate a far-reaching strategy and Master Plan to incentivise businesses to relocate to other
development hubs within or outside of Luzon. (JICA Study? Etc.)
o Batangas and Subic ports are presently too small to absorb current overflows from Manila ports,
all the more since there is a thrust to promote manufacturing and agricultural production and
processing FDIs into these areas
o The overall vision would be to have five excellent ports serving international and domestic
trades so shippers, consignees, shipping lines and logistics providers have a choice that is
efficient, developed not for present trade but for the future

The combination of the Immediate and Long Term Action Plans promises to deliver workable solutions
that play a meaningful part in keeping Metro Manila moving while maintaining the integrity of
international and domestic supply chains.

Appendix 4: A visual insight into the potential that under-utilized port areas and a study of the port road
systems hold to achieve an overall improvement in port operations


VIII. EXPERIENCE SHOWS IT CAN BE DONE



o Integration not separation between city and port is the lesson to be learnt from global
experience. Together, the two entities can deliver a larger critical mass of beneficial commercial
activity one feeds off the other. This positive coexistence, however, requires hard work and
coordinated planning to achieve it. Progressive benefits in terms of positive economic impact in
a primary and secondary context are the result. This is the conclusion of OECD which has studied
this subject in-depth
o Two notable port-city examples are Melbourne, Australia and Vancouver, Canada. Both have
embraced new technology to optimise traffic management and simultaneously are investing in
new infrastructure to ensure peaceful co-existence between port and city. In both cases, key
port areas are in close proximity to high end residential and retail properties

Appendix 5: Aerial photos underline the close proximity of high end residential, retail and commercial
properties to mainstream port areas in Melbourne, Australia and Vancouver, Canada

IX. BALANCED DEVELOPMENT THE GOAL
The template the Philippine Government drew up back in the late 1980s for the privatisation of the main
container terminals in the Metro Manila area has proved a highly successful one. It is most evident
today that the areas container terminals under normal operating conditions offer sufficient capacity to
efficiently meet all market needs. The main Manila international container terminals are also
distinguished by the fact that they rank as international standard terminals performing in accordance
with best practice internationally.


The terminals cannot, however, operate to their full potential when the supply chain is hampered by
inadequate road infrastructure resulting in extraordinary measures such as truck bans in pre-
determined hours. These measures, in turn, lead to other problems increased inland transport costs,
the slower delivery of goods, truck journeys reduced by half on a weekly basis, an influx of more trucks
to make up the gap in available truck capacity and so on and so on...

In the preceding pages Immediate and Long-Term Action Plans are spelt out by transport stakeholders
who believe that these Plans can build towards the ultimate goal of adding new port capacity in tandem
with supporting road system development. This BALANCED DEVELOPMENT is essential to obtain
optimum use of the new port facilities, achieve efficient supply chain operations to support the growth
in overall trade.
APPENDIX 1

Origin and Destination Data for International and Domestic Container Traffic
International Trade
Import Container Inland Destination



Export Container Inland Destination






Domestic Trade
Domestic Container Outbound Trade


*Volumes based on total moved by all members in PLSA. Percentage weightings based on average of all members in
PLSA

Domestic Container Inbound Trade


*Volumes based on total moved by members in PLSA. Percentage weightings based on average of PLSA members


APPENDIX 2

Further details of the problems associated with the recent truck ban measures

During the first half of 2014, business and consumers suffered from the high cost of goods and
goods shortages. This was caused by a lack of coordinated efforts to address the concerns of:
The City of Manila to remove safety risks on citizens posed by container truck bans.
The MMDA to address increasing traffic, especially with the DPWH construction and
rehabilitation programs.
The LTFRB to crack down on colorum vehicles for hire.
Actions taken by these stakeholders were:
The City of Manila:
A one hour reduction of hours a truck could use all streets of Manila.
A complete no-parking policy and elimination of 24-hour dedicated freight corridors both
of which were deviations from the original MMDA ban.
A ban on empty containers during the daytime.
The LTFRB imposed:
A crackdown on trucks and chassis to comply with the nationwide requirement to apply for
franchises.
These independent actions resulted in:
Longer turn-around times and doubling of waiting times for truckers. This meant that
truckers could only do half the normal number of trips when roads were open- i.e. 5500
truck trips per 24 hours serving the port of Manila prior to the truck ban reduced to 2000
trips per 24 hours afterwards.

This resulted in a shortage of trucks and the doubling (or more) of trucking rates (prices)
because of the sudden shortage.
The bottleneck represented by the truck ban slowed down the whole supply line, congesting
terminals and holding Philippines bound cargo up as far back as Hong Kong and Singapore.

Both international and domestic containers were not able to to enter or leave the ports on a
timely basis causing a mounting backlog.
Ships waiting for berth charging exporters and importers with demurrage and other charges.
This is standard practice worldwide
Traffic bottlenecks throughout the city
Initial short term solutions taken were:
City of Manila implemented 24-hour single lanes for trucks on selected routes
LTFRB to address truck shortages allowed an extension of the deadline to August 16, 2014
for collorum trucks to enter the LTFRB system via issuance of franchises. Most of these
trucks were not suited to container traffic.
MMDA imposed 24 hour single lanes for trucks on selected roads
All this resulted in containers piled up in the Manila ports, empty containers stuck all over the City
and Calabarzon, and ships not being able to discharge.




APPENDIX 3

Data on port capacity and trade the data confirms the timely investment in new capacity to
meet growing international trade
Prior to the implementation of the revised truck ban rules during the first half of 2014, the
international-standard rating of each terminals capacity was:
Rated Capacity of Metro Manila Port/Terminal Facilities
Port/Terminal Facility Capacity in Twenty Foot Equivalent (TEU)
South Harbor (ATI) 1.2 Million TEUs
Manila International Container Terminal (MICT) 2.5 Million TEUs
3.0 Million TEUs (with Berth 7)
Manila North Harbor Inc (MNHPI) * 1.8 Million TEUs
2.8 Million TEUs (after modernization)
Batangas Port (ATI) 300,000 TEUs
Subic Port (ICTSI) 600,000 TEUs

Actual capacity utilization of the facilities in 2013 was as follows:
Capacity Utilization of Metro Manila Port/Terminal Facilities 2013
Port/Terminal Facility Utilization
South Harbor (ATI) 77 %
Manila International Container Terminal (MICT) 76 %
Manila North Harbor Inc (MNHPI) * 50 %
Batangas Port (ATI) ?? %
Subic Port (ICTSI) 6%

The breakdown of international volumes by terminal/port in 2012-13 was:
2012-13 International Throughput (by TEU) for Metro Manila Port/Terminal Facilities
2012 % 2013 %
MICT 1,732,446 64.0 % 1,796,571 65.0 %
ATI 922,821 34.0 % 921,536 33.0 %
Batangas 6,754 0.3 % 11,025 0.4 %
Subic 35,216 1.0 % 34,847 1.0 %
Total 2,697,237 100.0 2,763,979 100.0


International Import Container Volume (by TEU), 2012-13
2012 % 2013 %
ICTSI 862,229 63.0 % 912,447 64.0 %
ATI 492,758 36.0 % 486,982 34.0 %
Batangas 4,039 0 % 6,002 0 %
Subic 18,924 1.0 % 17,827 1.0 %
Total 1,377,950 100.0 1,423,248 100.0

International Export Container Volume (by TEU), 2012-13 (includes Empty Containers)
2012 % 2013 %
ICTSI 870,217 66.0 % 884,124 66.0 %
ATI 430,063 33.0 % 434,554 32.0 %
Batangas 2,715 0 % 5,023 0 %
Subic 16,291 1.0 % 17,019 1.0 %
Total 1,319,286 100.0 1,340,720 100.0

Domestic Container Volume (by TEU), 2012-13
2012 % 2013 %
Inbound 255,602 35.0 % 243,534 35.0 %
Outbound 467,322 65.0 % 456,083 65.0%
Total 722,924 100.0 699,617 100.0

Foreign trade compared to the capacity of international ports was:
Available International Container Capacity Versus Demand 2012-13
2012 2013
Metro Manila, Cavite and Laguna cargoes 1,899,432 1,943,935
Metro Manila Port Capacity 3,700,000 3,700,000
Surplus Capacity 1,800,568 1,756,065

Domestic trade (excl road/ro-ro) compared to the capacity of the domestic ports was:
Available Domestic Container Capacity Versus Demand 2012-13
2012 2013
Metro Manila, Cavite and Laguna 621,164 589,111
Domestic Port Capacity 1.800,000 1.800,000
Surplus 1.180,000 1.200,000

Once the modernization of MNHPI is completed from two to five ship-to-shore cranes, the available
port capacity will increase.
APPENDIX 4

The illustrations below clearly highlight two potential areas of improvement that can be addressed
to improve port operations overall:
Figure1: Areas that can be cleared to enhance port activities
Figure 2: Highlights the merit of studying how to improve the port road network
Figure 1: Red areas are underutilized and can be cleared for better port facilities


Figure 2: There is clearly merit in studying how to improve the Manila Port network


APPENDIX 5:

Aerial photos underline the close proximity of high end residential, retail and commercial
properties to mainstream port areas in Melbourne, Australia and Vancouver, Canada