Eighth Symposium(Presentation of Cebu: Cebu Port Authority)

An Option to Create a Sustainable Port to Win Future Competiotion

I – CEBU PORT AUTHORITY (Power Point Presentation)


II - BACKGROUND

Ten years since its operation in 1996, the Cebu Port Authority has been blessed with operational and financial abundance, thanks to the dedicated efforts of the men and women comprising the Authority. However despite the remarkable performance of the Authority for the past ten years as an autonomous organization, separate and distinct from the national port system, it has never made any inroads towards being a major port player in the country for international traffic, majority of which is shared by privately-operated ports (MICT & South Harbor, both in Manila).

Philippine ports are increasingly becoming more competitive with the emergence of new ports and the expansion of existing port facilities to meet increasing demand for better operational, technological and administrative requirements from shipping lines. On the bigger scale the forces of globalization, rapid advances in transport technology and recent advancement in the shipping industry have impacted the operations of ports.

With this predicament, for CPA to succeed in pursuit of its objectives, it will have to cope up with the current competitiveness of ports both for the domestic and the international front or face the reality of being left behind in the race towards capturing better market share in the future.

Coping up would mean building of a new international port primarily for container operations, procurement of the most effective and efficient equipment available in the market, retraining of personnel to improve their sense of competitiveness and lastly restructuring of port tariffs. All these would entail a lot of capital investment, which the Cebu Port Authority will definitely source out.

Presently, with the Philippine economy going into one of its best performance ever for the past five (5) years and due to an unprecedented confidence of foreign investors on the political stability of the country, there is a phenomenological supply of private sector capital that is being made available for various developmental ventures, given the right incentives and impetus.

It is towards this end that the Cebu Port Authority will endeavor to move for the corporatization and/or privatization of the Authority is herein propounded. This paper attempts to share the direction and option that the Cebu Port Authority can take to be, first and foremost, a respectable player among Philippine ports and eventually find its way to the bigger market in the ASEAN region.


III – FACTS & DISCUSSIONS

Some of the factors that hinder sustained port development are the restrictions imposed by the government itself in the administration of its resources, too much bureaucracy and unfriendly investor policies. Other factors such as the propensity of population to locate/reside in urban areas, particularly areas proximate to the port and thereby impacting the ports in terms of future expansion, operation and congestion.

Most Philippine ports have developed as magnets of abode and dwellings. This situation limits the ports’ freedom of expansion to the very costly alternative of avoiding present sites and constructing new ports in new and uninhabited locations. Not many ports have specified zones or limits defined by executive orders.

Another problem is that arising from the environmental impact of port growth. When port and city interests were synonymous, and when attitudes toward the permissible effects of going maritime commerce and trade were liberal, the environmental impact of economic development was not a major issue then. Today, one of the more serious objections to expansion and development of ports relates to pollution of nearby shorelines and its immediate environs.

While rapid technological development has been of great significance for the evolution of port areas in other developing countries of the world, a question is often asked if the Philippine ports’ experience followed the same pattern.

In so far as Philippine administered ports are concerned, the prevailing situation has been one of “acute port congestion” including the ports under the jurisdiction of the Cebu Port Authority and therefore the selected developmental strategy at the very start usually focused on the need to increase port capacity.

For Cebu, here are some of the identified operational concerns that have to be addressed to with urgency: port roads and city roads convergence zones have also been identified as a major bottleneck particularly at the Baseport; access roads to/from the ports are narrow and congested with undesirable elements and structures; draft of navigational fairway along the Cebu-Mactan Channel is shallow in many points and drafts alongside berths are limited due to original structural design; turning basin is shallow and constricted thus making docking/undocking maneuvers more often than not, unsafe to both ships and port facilities; unavailability of land area for operational expansion at the existing Baseport, unless government expropriates the immediate private real state properties to at least a half kilometer landward from the existing port perimeters.

To address the above-stated administrative, technical and operational concerns, the building of a new port facility for international and domestic traffic have to be very seriously taken into consideration if the Authority intends to be a major competitor in this part of the ASEAN region. As it is now, CPA could not even capture a bigger share in the Philippine international market than what it has for last two decades.

In Cebu, the private cargo handling service provider for foreign traffic has procured some of the more efficient quay crane and yard cranes available in the market today. Likewise some of the domestic cargo handling service providers are implementing their equipment procurement program as required by their respective service contracts with the Authority. But what is the use of these equipment when you don’t have the projected and desired volume of cargo?

The international calls have gone down for the past three years although the container volume has slightly gone up. This could be attributed to transshipment of containers via domestic carriers from the other ports like Manila. Draft limitations both for the Cebu-Mactan Channel and alongside berths have contributed to the reason why lesser vessels are calling directly the Port of Cebu. Other reasons such as the lack of container depot inside and outside the port also contributes to the declining traffic. Cebu could be the ideal distribution center since it is strategically located at the heart of the Philippine archipelago and it being the homeport of the two biggest shipping companies in the country.

Domestic traffic and operations, which utilizes almost 85% of the total Baseport facilities, need to be simultaneously addressed to if only to compliment the international traffic for a more effective operational balance. Vessels in the domestic front are getting bigger and bigger and the need for more backup areas for marshalling and storage have hit an all time high. Other domestic shipping are likewise expanding their respective fleets and are into unitized operations, again needing the much space for effective and efficient operations.

Another very important factor is the re-organization of the Authority from top to bottom including the composition of its corporate board to be more responsive to the mission and vision of the Cebu Port Authority. The right sizing of its different departments, opening of new management offices and the retraining of personnel to improve knowledge and skills for a more cohesive and unified service delivery are mandatory.

However, addressing all of these concerns appropriately have become the constant topics for debate among the members of the Cebu Port Commission, the governing body of the Cebu Port Authority and more so in the Executive and Management Committees. Working out a fast and equitable solution to these concerns with the current rules and restrictions of governmental bureaucracy is next to impossible. One has to go through the bureaucratic maze that seems to lead to dead-ends all the time. Thus the Authority has to think and come up with a more aggressive, long lasting and probably permanent solution to its dilemma.


IV – THE OPTION TO TAKE

The CPA, in its ten years of administration have only undertaken minor developmental port projects mainly to address long overdue needs in terms of infrastructure and basic amenities for the port stakeholders. Thus the corporatization and/ or privatization of Cebu Port Authority when pursued, offers a whole new range of possibilities and opportunities not only in providing the minimum level of basic comfort for our stakeholders but to practically attain and sustain a level of competitiveness to secure an edge over future competition.

With the increasing competitive environment in port management and operations, many ports all over the world have turned to privatization/corporatization as an option based on the belief that having more private sector participation in the ownership, operations and management of ports will bring about an improved operational efficiency and also allows ports to be more flexible. This holds true for ports in the developing countries particularly in Asia where there is a significant shortage of capital and limited access to technology.

As commonly defined, privatization is a divestiture of public enterprises to private owners or generally giving a substantial share of the economy into the private sector. Many ports all over the world have been divested to the private sector by way of commercialization, by liberalizing the port industry or by the sale of port assets. Access to required capital, state-of-the-art technology and efficient management through introduction of efficient business practices, are some of the benefits that can be derived from private sector involvement.

However, privatization should not be taken as the end-it-all solution to all port concerns. There are many schools of thought on privatization and debates have been heard in many forums all over the world. The Singapore experience as reviewed by Dr. Jose L. Tongzon of the Australian Maritime College, showed that the Port of Singapore achieved the distinction of being one of the most efficient hub ports by underpinning it with the pre-existing world-class infrastructure, up-to-date information technology and a well-motivated work force. Its high level of efficiency couple with its strategic location has been mainly responsible of achieving and maintaining its global hub status.





V – CONCLUSION

Privatization and corporatization worked and gave benefits to many ports in the world. It is on this context and belief that the Cebu Port Authority embarks the frequently taken road towards a more effective and efficient port performance. Like the proverbial saying that “time is of the essence” for the Cebu Port Authority to start its quest for a more respectable stature as a major player in the Philippines in particular and the ASEAN region in general.