Shipping firms said they are raising cargo rates by 25 percent while truckers by 30 percent as they invoked “survival” issue amid continuing losses on high fuel cost.
In a radio interview, Philippine Liner Shipping Association President Mark Parco said since they are a deregulated industry, their members have already started raising rates after notifying their principals or customers. Some are raising rates in two weeks, others are at still later date.
“This is a matter of survival,” said Parco noting that fuel cost used to account for 30-40 percent only of operating cost but it has gone up to 50 percent as prices increased to $120 per barrel recently although prices eased to $100 per barrel lately.
“This will protect our members from volatility,” he said. Ships also use different kinds of fuels such as diesel, special fuel and bunker with different price levels.
He said that shipping firms did not increase their rates for the past two years as government appealed to them to hold their rates hikes. They even provided free shipping for relief cargoes during the Tyhoon Odette.
“But now is the time that we need help, this time a matter of survival,” he said
According to Parco, shipping firms have been losing. Based on their members’ record, shipping lines lost P600 million in 2019 and P1.5 billion in 2020. The 2021 record, which is scheduled for submission in June this year yet, also indicates a deeper decline than the 2020 figure.
“This is a matter of survival, this is cash flow problem. So, it is something na di pwede naming uutangin (we cannot borrow),” he pointed out.
MARINA Administrator Robert A. Empedrad, however, stressed that even if shipping rates are already deregulated, ship liners are still required to notify them two weeks prior to rate hike as regional directors have to review if their rates are excessive or not.
In addition, Parco said, cargo volume remained low because people are still scared. Unlike the Philippines, other countries though like the US government have given subsidies to perk up domestic industries.
He further explained that the increase in the prices of goods should not be blamed to increases in shipping cost because they only account for 2-5 percent of total cost of a product. Their rate only covers port to port cost, he said.
Meantime, truckers said they are already implementing 30 percent in fees on top of their position to be granted fuel subsidy.
Mary Zapata, president of the Confederation of Truckers Associations of the Philippines (CTAP), said that as fuel prices more than doubled to P62-P68 from P32, their members are clamoring for as much as 100 percent increase in fees. Trucking cost accounts for 10 percent of total cost of a product, she said.
The CTAP Board, however, prevailed and said that 30 percent increase would be fair enough to cover fuel increases and also in consideration that businesses are still recovering from the pandemic.
Zapata also said that they consulted with industry players and associations and government agencies, including the Department of Trade and Industry on rate hikes.
At 30 percent increase, she said that if the rate for 20-foot container is P10,000 the increase is P3,000. She, however, said that customers and truckers will have to negotiate on the final rate.
“What is important is to recover whatever fuel charges we incurred,” he said.