Mindanao firms expect freight cut
with project
SHIPPERS TO GAIN ACCESS TO METRO MANILA, LUZON MARKETS
By VG Cabuag
Reporter

BY July, a group of shippers in Northern Mindanao expects to begin a cargo pooling project which intends to reduce freight costs and help small and medium-sized enterprises (SMEs) gain access to markets in Metro Manila and Luzon.
       Besides creating a network of ports in Cagayan de Oro, Misamis Oriental and Bukidnon, the plan of the Northern Mindanao Shippers Association (Norminsa) targets an estimated 300 small shippers, mostly member-companies of the Philippine Exporters Confederation, an umbrella organization of entities engaged in selling locally-made products abroad.
       Aside from expressing support for the initiative, officials of the Philippine Shippers’ Bureau said that if successful, the plan could be used as a model for ports located in other parts of the country.
       The project involves the consolidation of the cargo of small shippers to create volume, which will enable them to secure substantial discounts on freight rates.
       “Cargo pooling is not a new idea itself. But it will be the first time that this project will be tried in Mindanao for small shippers, across various trade groups, and different commodities,” the group said, adding that during the first six months, it expects to establish its network with SMEs in the area and undertake at least one test shipment for the pooled cargo.
       Once the pooling practice is institutionalized, the project expects to bid out the cargo among shipping lines.
       “For the second and third years, the same activity can be replicated in other ports like Iligan and/or Ozamiz,” the group said.
       Earlier, the group asked for a P1-million funding from the World Bank to cover the salary of the project manager, who will be hired to convince small shippers to join the project. An office will also be
put up, which will coordinate the project. Norminsa would fork out P200,000 as counterpart funding.
       It said the project will be sustained since the group will charge a facilitation fee of P100 per 20-footer container van from the participating shipper and pro-rated if the shipment is loose cargo.
       “Considering only 10 percent of the 1,000 20-footer vans per week that were shipped out from the Cagayan de Oro Port alone, it would be enough to sustain the project,” the group said.
       Small shippers in Mindanao are unable to sell to markets in Manila and Luzon due to high-transport costs, which is twice higher than the international rate over the same distance. It is cheaper to ship goods from Mindanao to Hong Kong and South Korea than from the island to Manila.
       Since freight rates are controlled by the Philippine Liner Shipping Association, the group said that small shippers in Mindanao are excluded from competing in the markets in Manila, Luzon and other countries.