Shipping costs may rise by up to 25%

MANILA, Philippines — Domestic shipping cost is expected to rise from 15 to 25 percent as fuel prices continue to soar, according to shipping associations.

Philippine Liner Shipping Association (PLSA) president Mark Parco said during a House fuel ad hoc committee hearing yesterday that Brent crude has risen by over 50 percent from the January price of $80 per barrel to $126 per barrel at present.

With fuel accounting for 40 to 50 percent of the operating cost of a vessel, Parco said the increase in fuel prices would impact the shipping industry.

“As you know, shipping is deregulated so different lines charge different things and we all come from different cost bases, so coming up with one surcharge is not as easy as it sounds,” Parco said.

“There are different impacts to different shipping sectors. For RoRo, fuel is a higher item there because they don’t have other cost items unlike container shipping. Tankers, bulk carriers may be different,’’ he said.

Nonetheless, Parco said the PLSA expects shipping expenses to go up by between 15 and 25 percent.

“The higher energy prices do not only hit us in terms of fuel cost. It hits us everywhere else,” Parco said.

“Drydocking, which is when we are required to fix the ships, it’s very heavy in energy needs and they would charge us higher because of the higher fuel cost. Spare parts should be higher because you import it and the international lines charge surcharges. Trucking will go up definitely for them to survive,” he said.

Maritime Industry Authority (MARINA) administrator Robert Empedrad told The STAR the increase in operational costs for domestic ship owners may result in higher prices of transported goods, unless a subsidy would be given to them.

“Actually, a big portion of the operational cost of our domestic shipping is on fuel. So if you increase the price of fuel, which is already increasing, that would have an impact as well on our domestic ships because their operational cost will increase,” Empedrad said.

The PLSA and the Philippine Interisland Shipping Association (PISA) are seeking for a fuel subsidy as well as suspension of excise tax due to the continued increase in fuel prices.

“Of course we join the other transport sectors for a fuel subsidy probably or the suspension of the excise tax which will go a long way in the reduction of the operating cost of the vessel,” Pedro Aguilar of PISA said.

“If not, considering that this fuel subsidy or removal of excise tax will entail legislative or executive action which will take some time, whatwe’re asking is probably a substantial reduction in the charges that is being imposed by government regulating agencies such as the Philippine Ports Authority. We have been subjected by so many increases in port charges by the PPA,” he said.