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FOUR MODES OF CARGO HANDLING 1. 2. 3. 4. Roadways Waterways Railways Airways 1. ROADWAYS Roadway is transport on roads of passengers or goods by the means of lorry or trucks, vans, jeepneys and etc. Advantages:  Provides Door-to-Door o Road transport provides door to door or warehouse to warehouse service. It reduces cartage, loading and unloading expenses.  Service in Rural Areas o Roadway transport is most suited to rural areas which is not served by rail, water and air transport.  Flexible Service o The routes and timings can be adjusted and changed to individual without much inconvenience.  Suitable for Short Distance o Delays in transit of goods on account of intermediate loading and handling are avoided.  Saving in Packing Cost o Goods transported by motor transport require less packing or no packing in several cases.  Rapid Speed o If the goods are to be sent immediately or quickly, motor transport is more suited than the railways or water transport. Water transport is very slow. Also much time is wasted in booking the goods and taking delivery of the goods in case of railway, air and water transport.  Less Cost o The actual cost is less because the motor transport saves in packing costs and the expenses of intermediate loading, unloading and handling charges.  Feeder to other Modes of Transport o The movement of goods begins and ultimately ends by making use of roads. Road and motor transport act as a feeder to the other modes of transport such as railways, ships and airways.  Easy to Communicate Disadvantages  Accidents and Breakdowns o There are more chances of accidents and breakdowns in case of motor transportation.  Seasonal Nature o During rainy or flood season, roads are unfit or unsafe for use.  Unsuitable for Long Distance and Bulky Traffic o Heavy traffic is anywhere in the Philippines, roads are flooded or for repairing. Because of traffic, the goods are delayed.  Slow Speed o The speed of motor transport is comparatively slow and limited compared to other modes of transport or the speed of journey is limited by the law.  Lack of Organization 2. WATERWAYS Waterway is the transport of people, goods, etc by the means of barge, boat, ship or sailboat over a sea, ocean, lake, canal, river, etc. There are two types of Water Transport Advantages:  Larger Capacity o Ships, barge etc. can carry much larger quantities of heavy and bulky goods.  Suitable for products with long lead times o The speed of ships, barge, etc. are slow compared to other mode, some perishable goods might be rotten.  Flexible Service o It can be adjusted to individual requirements. Disadvantages:  Slow o Compared to other mode, waterways are slower.  Limited Area of Operation o It can be used only in a limited area which is served by rivers, ocean, sea, etc.  Longer Lead Times  Seasonal Character o Rivers, canals, ocean, sea, etc. cannot be operated for transportation during typhoon or storm.  Difficult to Monitor  Customs Regulations  There are certain restrictions about transportation of goods or products. 3. RAILWAYS Railway is a means of conveyance of passengers and goods by way of wheeled vehicles running on rail track. In the Philippines there are 3 railway transportation firm, PNR (Philippine National Railways, MRT (Manila Railway Transit) and LRT (Light Railway Transit). But the PNR can do cargo handling.     Advantages: Better Organized o It has fixed routes and schedules. Services are more certain, uniform and regular compared to other modes. High Speed Over Long Distances Suitable for Bulky and Heavy Goods Cheaper Transport o Most of the working expenses of railways are in the nature of fixed costs. Every increase in the railway traffic is followed by a decrease in the average cost. Rail transport is economical in the use of labour also as one driver and one guard are sufficient to carry much more load than the motor transport.  Safety o The chances of accidents and breakdowns of railways are minimum compared to other modes of transport. Disadvantages:  Lack of Flexible o The routes and timing cannot be adjusted to individual requirements.  Monopoly o This monopoly produced inefficiency and high costs.  Unsuitable for Short Distance and Small Loads o It is uneconomical for short distance and small traffic of goods.  Booking Formalities o Involves much time and labor in booking and taking delivery of goods through railways.  Limited Locations o The service of PNR are limited from Tutuban (Manila) to Calamba (Laguna).  Subject for Unforeseen Delays 4. AIRWAYS It is the transport of goods or services using airplanes, helicopters, etc. There are many airlines in the Philippines which offers cargo handling like Philippines Airlines, Cebu Pacific Air, etc. Advantages:  High Speed o Air transport had the highest speed among all the modes of transport.  Comfortable and Quick Service o Provides regular, comfortable, efficient and quick service.  No Physical Barriers o It follows the shortest and direct route as seas, mountains or forests do not come in the way of air transport.  Emergency Services o Can operate even when all other means of transport cannot be operated due to the floods or other natural calamities.  Suitable for Carrying Light Goods of High Value o It is most suitable for carrying goods of perishable nature which require quick delivery and light goods of high value over long distances. Disadvantages:  Very Costly o The fares of air transport are so high compare to other modes.  Small Carrying Capacity o Carrying capacity is very small and hence it is not suitable to carry cheap and bulky goods.  Uncertain and Unreliable o Air transport is uncertain and unreliable as it is controlled to a great extent by weather conditions. Unfavourable weather such as fog, heavy rain etc. may cause cancellation of scheduled flights and suspension of air service. RELATIVE OPERATING CHARACTERISTICS OF CARGO HANDLING MODES OPERATING ROAD WATER RAIL AIR REMARKS Cost 1 2 3 4 Road is the cheapest Speed 3 4 2 1 Air is the fastest Availability 1 2 4 3 Dependability 4 2 1 3 Capability 3 1 2 4 Road is the best since there are many trucking services available Rail ranks best since only the flood and accidents can stop its operation Water is the best CHARACTERISTIC S Frequency 1 3 4 2 Road is the best Composite Score 13 14 16 17 Lowest rank is the Best In the composite score, it shows that the roadways are the best mode of cargo handling in the Philippines. It has the advantages in cost, availability and frequency. It has a modular speed but it depends on the human and natural occurrence like heavy traffic, heavy rains, floods that causes delay. Same for the other modes, they are ahead in other terms like the airways for the speed of transport but with high cost, the waterways for the capability or quantity of goods but slow, the train for the dependability but limited to some destinations. For the summary, it depends on the needs, capital, process or product of the firm or in the situation to identify what is the most feasible mode of logistics in the Philippines. PORT CONGESTION AND TRUCK BANS The effects of port congestion are far wider and burdensome than a mere restaurant failing to serve fried chicken. Effects: 1. Port congestion According to Center for the Advancement of Trade Integration and Facilitation, ideal port optimization should be 70% of capacity, but the current port capacity is at 95%. It even reached 110% last June. At one point, there were more than 75,000 containers at the port, 22,000 of which were empty containers, while the rest were seized or forfeited goods and due for release goods, leaving port equipment with no elbow room to work. 2. Shipping and trucking costs have increased exponentially due to the interruption of the supply chain The delays in shipping affected the flow of delivery of goods. What took 7 days to deliver became three weeks at the minimum. OFW packages, exports and imports of products were delayed as forwarding companies faced problems regarding their contracts with shipping companies, resulting to loss of income for all: the forwarding, shipping and trucking companies. Trucking costs have reportedly increased by as much as 100% to 300%, from 8,000 to 30,000 pesos. The congestion likewise caused additional costs of $1,300 for port stakeholders for terminal handling, container imbalance and emergency recovery fees. 3. Trade Lanes are interrupted The delay in the delivery of raw materials and intermediate goods needed for production in many industries resulted to the decreased production, loss of income and loss of jobs. For the steel industry, operational costs have increased by 50%. For the chemical industry, losses are estimated at 3 to 4 billion pesos and job loss at 5% of workers. For the food industry, the delay in delivery of raw materials has decreased production, job losses and increase in food prices. Semiconductors and Electronics Industry in the Phil. Reported a 43 million pesos loss per day due to lack of materials. The Foreign Chamber warned that an immediate layoff of 18,000 workers will happen because of the resulting delay in delivery of materials. Imagine the far-reaching effects of these lay-offs considering our already very high unemployment rates in the country 4. Decrease in trade volume According to the Food Chamber, the credibility of the Philippines is also at stake as local manufacturers are not able to meet the deadlines set by their customers abroad. According to Citigroup, the negative impact of port congestion to the economy will result to losses of about 61 billion to 320 Billion pesos because Manila ports account for about 1/3 of the total inbound and outbound cargo. The Bureau of Export Trade Promotion reported that the growth forecast from 5.8 % to 7.2% in export growth is no longer feasible due to the decrease in trade volume. Reportedly, if the port congestion is not addressed, GDP may be cut by 5%. Basically, if trade volume decreases, it affects supply and demand, decreasing manufacturing output, leaving thousands of Filipinos out of jobs. 5. Domino effect of inflation Most alarming and basic is that when trade lanes are interrupted, there is a resulting delay in the delivery of goods and raw materials for factories, and agricultural products. The shortages of products began in many supermarkets, leading to increased prices of basic commodities. For example, news reports from the bigger markets like the Mega Q Mart pegged the price of chicken to be at 140 per kilo, or 30 pesos more than the expected current market price even as farm gate prices remained constant. Basically, a 50% increase in queuing time, will increase freight cost, then increase delivery and storage costs, increase the price of basic commodities, thereby increasing inflation rate by 4.9%, the highest so far in 3 yrs, and eventually decreasing our growth rate. Many critics were content to blame the resulting issues on the truck ban implemented by the City of Manila, I do not fully agree. What I believe is that the truck ban has been the proximate cause of the port congestion, as it exacerbated the longstanding problems already existing and other underlying causes that resulted to the port congestion. The search for solutions Of course, our government has made efforts into meeting with all the stakeholders to attempt to reach a compromise agreement and solve the problems, such as: 1. Use the Batangas and Subic ports as presently, only 5-10% of the Batangas Port is being utilized. The DOTC said that it will take as much as 2-3 years for the Batangas port to be fully utilized. 2. Request international shipping lines to temporarily waive some fees for a period of 2-3 months until things have normalized to help lessen the fees being incurred by shippers. 3. Transport empty containers by barges to the Subic port for pick-up should also be studied. 4. Provide a separate 24/7 separate single lane for truckers to ensure the continuous supply of goods and services. The City Government of Manila has responded to this request as some areas were opened to trucks already. 5. Temporary lifting of the truck ban in areas especially in manila, for at least two months is needed to catch up with all the delays and port congestion. Beyond the lifting of the truck ban, the systemic search for solutions However, those are temporary solutions. The resulting port congestion has brought into fore an issue which has plagued the entry and exit of goods into our country for a long time. Before the truck ban was implemented, the ports were already congested beyond a healthy balance. Reportedly, 50% of the containers in the container yards were empty containers. The recommendations I mentioned earlier are mostly palliative or short term solutions and we are in need of more long-term solutions because this is beyond a truck ban problem. 1. The long overdue upgrading of the ports and the supporting infrastructure around the area should be a priority. The facilities surrounding the port will show that they are either dilapidated or not big enough to handle the volume of trade coming in to the Manila Port. The volume of trade increases by 7 to 10 percent annually, the south and north ports were first established back in the 1940’s. The port infrastructure has not met the demands of the increasing trade, nor has it been modernized, nor is it more secure. 2. The other infrastructure problem is the logistics of delivering the goods in the containers in and out of the ports. If we should have an average of 5,000 trucks getting in and out of the port, do we have the road infrastructure to facilitate fast delivery of goods to the stakeholders. Manila is congested, that is a fact we face everyday for decades. Does this not call for additional roads especially for delivery trucks? Or a new skyway maybe? Or the revitalization of the railway system? If one third of the national cross border trade happen in Manila port, how can we not clear the dilapidated and unused buildings around its perimeter, why don't we move the informal settlers within the area, why don't we make the roads safe and unobstructed for the exit and entry of goods in the area. 3. We also have to modernize the Bureau of Customs. When goods arrive in Batangas, they file their import entry electronically, then print out the same, send the docs to Manila port and then the transit permit will be sent by messenger back to Batangas. This takes at least 3 days, which should be only a few minutes if we are fully automated. Computerization, upgrading and use of modern technology will lessen face to face transactions in the Bureau of Customs and will help in faster trade facilitation and curb corruption within the bureau. 4. Lastly, for the part of the legislature, we have to modernize the current Customs and Tariff Law. We cannot ignore the fact that many of the problems regarding port congestion will be addressed by a modernizing our customs policy. To attract more trade, customs must not be treated as a mere income generating agency but principally a gateway for trade facilitation. At par with international standards, better trade facilitation will enhance and simplify procedures, ultimately translating to lesser trade transaction costs- a sure magnet for more investments. Likewise, a centralized and more efficient system will also help in the disposition of all seized and abandoned goods which are going to waste, as we speak, because of delay in its disposition. Conclusion: My fellow legislators, the truck ban served as the catalyst for us to realize that there are deeper and systemic problems in the port congestion issue. Solving the problem of port congestion should not be limited into a narrow scope because the resulting effects go beyond the borders of Manila, because this is an issue that is far reaching and will affect the poor most of all. Let us also not forget that the Christmas season is also fast approaching. If the condition remains the same, the influx of products starting September will even worsen the port congestion. It is expected that the trade volume will increase by as much as 60% of imports due o the Christmas season. Ultimately, it is not only businesses which are affected, as the domino effects came trickling down: congested ports led to delay of delivery of both intermediate and processed goods, which leads to shortages of supplies and increase of prices and eventually, loss of jobs. All these are burdens for our already overburdened fellow Filipinos whose daily living wages are barely enough to cover the needs of their families. As a simple example, coconut products are the biggest export of our country, amounting to 1.5 billion dollars annually. The delays and increased export costs will endanger the credibility of our exporters, likely affecting the volume of their exports, and significantly affecting the livelihood of 3 million farmers or around 20 million Filipinos. In 2010, we were exporting 32,000 kilos of coconut sugar. By 2012, our coconut sugar export increased to 220,000 kilos. This is an outstanding improvement in the industry in 3 years, due to the concerted efforts of the government and the small coconut farmers. If we do not take action, we are therefore sending a message of apathy to the millions of coconut farmers living in subsistence income. If we do not take action, we belittle the great strides this country has taken in achieving a 7% national growth rate. If we do not take action, immediately and comprehensively, our economy, currently one of the fastest growing economy in the world, will surely deteriorate and collapse.