It has finally happened. A foreign shipping firm has decided to throw its hat into the Philippine domestic shipping arena, which has been plagued for decades with the high cost of doing business, lack of economies of scale and poor port infrastructure. This has made the cost of domestic shipping much higher than shipping from abroad.
Friday last week, CNC, the intra-Asia short sea specialist of the CMA CGM Group, announced the launch of a new legal entity named CMA CGM Philippines Shipping, making it the first 100 percent foreign-owned international shipping line to register and operate a domestic service in the Philippines following the government’s expanded regulations permitting foreign shipping lines to venture into domestic shipping.
Headquartered in Singapore, CNC is regionally represented by an extensive agency network throughout Asia. CNC is the sole brand of the CMA CGM Group in intra-Asia. It currently offers over 50 services, continually strengthening its service network according to market demands and shifts.
The new domestic service will be launched with the Philippines-flagged vessel CNC PILIPINAS, a 1,037 twenty-foot equivalent unit vessel. The CNC PILIPINAS will sail on the Luzon Visayas Mindanao Express (LVMX) shipping service, with weekly port calls rotating between Manila, Cagayan de Oro, Cebu, and back to Manila.
The service, according to CNC, will support the establishment of new maritime routes, improving connectivity from major ports in the Philippines to the group’s global network, reducing transit times, lowering logistics costs and fostering stronger economic ties and trade flows across the region.
Just seven months ago, the Maritime Industry Authority was still wondering why foreign shipping firms were not showing any interest in engaging in the Philippine domestic shipping trade even though Republic Act 11659, otherwise known as An Act Amending Commonwealth Act 146 or the Public Service Act, had been in effect for almost two years.
Well, the reluctance stems from the decades old problem that the local shipping sector has faced, as far back to when I first covered the trade and industry beat and subsequently the agriculture beat as a reporter, which is that it is more expensive to ship goods within the Philippines from island to island than to ship from another country to the Philippines.
According to the Philippine Inter-Island Shipping Association or PISA, the domestic shipping sector continues to suffer from the high cost of doing business, which includes the high cost of vessel acquisition, the high cost of fuel and the high cost of drydocking.
Even though the country has shipbuilding capability, the lack of a domestic steel sector has not enabled us to develop a truly viable ship building industry even as we are composed of more than 7,000 islands. Most of the local boats are small wooden boats, although Cebu has been able to create a small niche for yacht manufacturing.
Reference: Foreign competition to perk up domestic shipping | Philstar.com