The Operation and Management of Shipping Industry in the Philippines

Dr. Estelito A. Lacambra Isabela College of Arts & Technology Cauayan City,
Isabela, Philippines Email Address: lilac_phd@yahoo.com.ph

Dr. Julius B. Bertillo Arab Open University – Bahrain Branch Manama, Kingdom of
Bahrain Email Address: jbbertillo@yahoo.com.ph

ABSTRACT
The primary aim of this research is to highlight the operation and management of
shipping industry in the Philippines along planning, organising, training, and
staffing; and the degree of compliance of shipping companies with the requirements
prescribed by the National Safety Management Code along safety management system,
environmental protection policy, procedural safety operations, systems of
communication, emergency preparedness and maintenance of the ship and equipment. In
this study, it also identifies the strengths, weaknesses, opportunities, and
threats (SWOT) of the shipping companies on the compliance of the National Safety
Management (NSM) Code; and the extent of support from the government and
nongovernment units in terms of port management, navigational aids and facilities,
education and training, and safety and security. At the end of the study, the
researchers proposed a management model to improve the operation and management of
shipping industry in the Philippines; and determine the relevance of the maritime
curriculum to the NSM Code. To address the research questions, the researcher used
the quantitative and qualitative approach of investigation in this study. This
method is appropriate whenever the objects of any class vary among themselves and
when one is interested in knowing the extent to which different conditions are
obtained among these objects. The basis of utilising this method would be the
information that the data gathered were obtained through a survey questionnaire and
informal interview from the respondents. The data and other information were
consolidated by way of documentary analysis. Hence, this paper is a collaborative
research in maritime education with empirical investigation.

Keywords: Operation, Management, Shipping Industry, NSM Code International Maritime

Organisation, Maritime Industry
2 1. Introduction The officials of the International Maritime Organisation (IMO)
and European Ship owners’ declared their support for the inclusion of the
Philippines in the IMO White List. In all meetings with the IMO officials, European
ship owners’, and IMO Secretary General Koji Sekimizu, expected that: “… everyone
wants the Philippines to get into the White List due to the sheer number of
Filipinos who are on board around the world because it is inconceivable to think of
shipping without the Filipinos”(Huelar, 2000). He pointed out that it is important
other countries recognise the Filipinos’ STCW certificate. Likewise, according to
Filipino Shipowners Association president Carlos C. Salinas, the “Philippine
Shipping and Manpower Industry has always hoped for the continued recognition of
the country as the number one supplier of qualified crew to the world to IMO’s firm
and competent persons in evaluating the Philippines’ compliance to the White List.”
The role played by the maritime industry and the government is to maintain
standards to boost the employability of the seafarers in both the domestic and
international fleet. Former Labour Secretary Patricia Aragon Sto. Tomas, chairs the
Maritime Training Council (MTC) which is responsible for the full implementation of
the STCW ’95 Convention of the International Maritime Organization. In her speech
on the occasion of the signing of the bilateral agreement, she pointed out that the
Philippines through the MTC assures its partners in the international shipping
community that the “certification system for both ratings and officers meet the
requirements of the convention.” Sto. Tomas mentioned that: “Shipowners and other
employers of the Filipino seafarers are assured the crew that they recruit from the
Philippines have gone through the mill and they can perform the tasks on board the
vessel in accordance with international standards”(Seaway Shipping Digest, 2001).
In the above statement, Labour and Employment Secretary Rosalinda Dimapilis-Baldoz
stressed that the Philippines is on track in enhancing the welfare and protection
of overseas Filipino seafarers in line with the highest international-standards
embodied in the International Labour Organisation’s (ILO) Maritime Labour
Convention, 2006, as she signed a memorandum of agreement with five recognized
organizations (ROs) on the conduct of inspection and certification of Philippine-
registered vessels engaged in international voyages. Secretary Baldoz mentioned
that this partnership between the DOLE and the ROs primary aims to uplift the
working conditions of all seafarers (DOLE, 2013). Therefore, in the maritime
industry, it was observed worldwide, that shipping companies either local or
international have different strategies of management. The objective of shipping
companies is to bring great pride towards maritime excellence through safety,
efficiency and excellent service to the riding public – the basic factors for
change and growth, to be at par with the international standards. Likewise, their
dream is to establish an internationally leading
3 shipping company in the area of sea safety, and customers’ satisfaction.
Additionally, they engage in consultations to develop and support the NSM Code for
quality assurance systems. Henceforth, shipping companies engaged in shipping
operations of passenger vessels operating nationwide with a gross registered
tonnage of not less than 5,000 GRT are required to comply with the standards set by
the NSM Code. With this, MARINA, through its assessors, conducts regular monitoring
and evaluation of the compliance of shipping companies in the domestic trade
pursuant to the provisions of the National Safety Management (NSM) Code. Hence,
this study bridged the identified research gap in the transportation industry with
emphasis on the status of operation and management of shipping industry in the
Philippines. It also stressed compliance with the requirements as prescribed by the
National Safety Management Code. Thus, the researcher embarks on this kind of
study.

2. Literature Review Global standards in maritime education and training, and

investigation of shipping disasters, casualties, and accidents over the centuries
have proven that the safe operation of ships requires that they be well designed
and constructed, properly equipped, and competently manned. The most important
element in the safe operation of any ship is the competence and experience of its
captain and crew.A well-trained and experienced skipper and crew can avoid disaster
by compensating for defects in, or damage to, their ship.No ship has been designed
or built that can save an incompetent master or unskilled crew from the effects of
ill-considered action or inaction.Absolute safety in the operation of ships can
never be attained.But, a high degree of maritime safety in their operation is
attainable and can be verified from analyses or accident records of secret
companies, and national fleets (MARINA, 2000).Historically, maritime powers develop
their own individual approach to maritime training and certification, taking into
account their industries and any distinctive needs of their shipping industry. The
leading maritime nations of the world pressed for high standards while the majority
of IMO member states, mainly comprising the developing countries, emphasised the
need for realism taking into account the availability of both financial and human
resources. Hence, the inclusion of many compromises in the STCW Convention of 1978
provided a great deal of flexibility and left much of the responsibility for actual
standards in the hands of each maritime administration. The Philippine Association
of Maritime Institutions (PAMI) is an important maritime partner of the government.
This partnership becomes even closer with the globalization of maritime education
and maritime training under the aegis of the IMO International Convention on
Standards of Training, Certification and Watchkeeping (STCW) for Seafarers of 1978,
as amended in 1995. Quality education should be maintained since the Philippines is
included in the IMO White List. The Philippine ratification of the 1978
International Convention on Standards of Training, Certification and Watchkeeping
(STCW) for seafarers, as amended, ushered a new era of growth and expansion of the
country’s maritime industry. The Convention is an international agreement among
member states of the International Maritime Organisation, aimed to prescribe and
adopt international standards for the education, training and certification of
seafarers with the expectation of improving maritime safety Convention, not as an
international labour agreement (MARINA, 2000).
4 The state parties are required to transmit to the IMO, among others, the list of
maritime training centres and schools that complied with the requirements of the
Convention. According to Philippine submission to the IMO on the list of STCW
complying schools, there were only about 50 schools nationwide, or nearly 42
percent of the 118 schools that complied with the standards set by the
Convention.To ensure the continued employment of the more than 200,000 Filipino
seafarers deployed worldwide, and to guarantee the employment of the more than
20,000 maritime graduates produced every year, the Philippines should strictly
comply with international standards of maritime education set forth by the
conventions of its teaching force (MARINA, 2000). According to Pazzibugan (2013) a
columnist of the Philippine Inquirer, the maritime schools that continue to defy
government orders to shut down their substandard training programs are putting all
Filipino seafarers at risk of being banned from European United (EU) flagged
vessels. The Commission on Higher Education (CHED) has ordered the phaseout of half
of the maritime training program offered by 91 schools since these did not meet
quality standards. The CHED Chairperson Dr. Patricia B. Licuanan appealed to the
defiant schools to stop contesting the phaseout order for the sake of the “national
interest.” This is really in the national interest. It is the Philippines that will
be seen as being noncompliant (with global training standards). We’re no longer
talking about (individual) schools and programs. They certify by country. Even the
best schools will be affected. The Philippines is currently the leading supplier of
seamen in the world, with Filipinos comprise about 30 percent of all seafarers
globally, according to government data. Accordingly, the European Maritime Security
Agency (EMSA) reviewed Philippine oversight practices on maritime training and
deployment to check if the government had addressed deficiencies reported in 2010.
Therefore, Malacañang designated the Maritime Industry Authority (MARINA) as the
central implementing body of the Standards of Training, Certification and
Watchkeeping (STCW) for seafarers. Other agencies involved in maritime training and
deployment, including the CHED, were placed under Marina supervision and ordered to
align their evaluation standards to it. The The EMSA inspectors will have their
choice of maritime institutions to inspect, and may choose to inspect the
notoriously noncompliant schools (Philippine Inquirer, 2013). The STCW Convention
1978 has been amended by the 2010 Manila Amendments and contains new training
requirements for all seafarers. Seafarers revalidating their Certificates of
Competency (CoC) will be required to submit additional evidence to ensure their
Certificate is valid for service on certain types of ships after 31 December 2016.
The 2010 Manila Amendments to the STCW Code bring in new requirements for seafarers
required to hold any of the following safety training courses: 1) Personal Survival
Techniques (STCW Table A-VI/1-1); 2) Fire Prevention and Fire Fighting (STCW Table
A-VI/1-2); 3) Proficiency in Survival Craft and Rescue Boats Other Than Fast Rescue
Boats (STCW Table A-VI/2-1); Proficiency in Fast Rescue Boats (STCW Table A-VI/2-
2); and Advanced Fire Fighting (STCW Table A-VI/3).
5 However, the seafarers required to hold any of the certificates of proficiency
shall, every five years, provide evidence of having maintained the required
standard of competence, to undertake the tasks, duties and responsibilities.
Seafarers revalidating their Certificates of Competency (CoC) after 1 January 2017
will be required to submit documentary evidence of having completed MCA approved
updating-refresher training. There is no requirement to provide documentary
evidence for having completed updating-refresher training if a seafarer applies for
CoC revalidation before 1 January 2017 (Maritime & Coast Guard Agency, 2012). The
International Safety Management (ISM) Code represents the cornerstone of the
International Maritime Organisation’s approach towards a safety culture, with the
emphasis on the human element. The Port State Control inspections reveal that some
ship personnel are not giving the system to the operation of the ship, which in
human element term means that more attention needs to be put on the human
understanding of the system. Perceptions of the ISM Code vary from bluntly negative
to very positive, but it is clear that successful implementation requires a
commitment on the part of key stakeholders – mariners, operators, owners,
classification societies and flag state authorities – together with adequate
preparation and training (IMHEB, 2004). Several studies in maritime education and
training were conducted outside the Philippines. In Spain, Marie (1996) conducted a
survey on “Maritime Accident Investigation: A Way for the Optimization of Maritime
Education and Training.” This survey focused on the training, regulations, accident
investigation, causes tree, and map risks. The findings revealed that training
could not be detached from the results obtained from the investigation and analysis
of accidents, the incorporation of new technologies, and the current organizational
plans of entrepreneurial management and the work aboard, which coincide with the
present real situation, and the one indicated by the trends with a projection in
the immediate future. The analysis of incidents permits to improve future work
procedures eliminating those aspects that disturb the accomplishment before, and
taking advantage of that knowledge for the application informative blocks, the
specificity of such risk activities. Any task identified in the map of risks
obtained from analysis and investigation, and therefore, carrying a meaningful
potential of producing an accident will have to be treated. This is to regard
significantly the conditions and circumstances of the environment (space and
physical conditions present), the work elements necessary to accomplish the
operation (engines and tools) and the equipment considered sufficient and minimal,
taking into account the man-machine relationship and the accomplishment of work,
and finally the personal protective equipment that in the last analysis it could
provide safety to the people when the planning and coordination of actions are
insufficient or defective (Marie, 1996). This research intended to provide evidence
of a justified route of why and how can there be advanced significantly in the
training profitability, and the preventive optimization of accidents, determining
the existing relationship between both. The issue was decided after the accident by
fire aboard, considering that this was one of the most complex cases due to the
numerous variables that conditioned it. So, it is easy to extra pole to the whole
typology of maritime accidents obtaining the same efficiency. A significant factor
contributing to the risk in any industrial activity is the poor instruction of the
people who carry it out. The topic of training
6 in safety matters applied to most professional activities always results to easy
comment, since it can be summarised in very few and simple words, going from the
testimonial reason to the insufficient one. A study on the implementation of
international safety management code on a passenger ship in the domestic trade was
conducted (Guardaya, 2002). He stated that the domestic shipping trade is the basic
concern of maritime countries like Philippines. Indeed, it is one of the tools or
instruments of economic growth and development of this nation. Being an
archipelago, sea transportation remains the most important mode for transporting
people and goods from one place to another.The vessels at sea are prone to hazards
such as risk of collisions. Likewise, fire at sea, grounding, injury/loss of life
and pollution are mostly believed to be caused by human error, inadequate training
of watchkeepers, and inadequate ship-to-shore communication equipment during
emergency and ship equipment failure/breakdown. In view of the above, the
International Maritime Organisation (IMO) promulgated the International Maritime
Code for the Safe Operation of Ships and for Maritime Pollution Prevention known as
the International Safety Management Code which is contained in Chapter IX of Safety
of Life at Sea (SOLAS) 1974, adopted in May 1994. This has extended the attention
of ensuring safety at sea from improving the ship's condition to safety management
system.This study focused on the determination and evaluation of the degree/level
of implementation of the ISM Code on passenger ships in the domestic trade.
Particularly, the evaluation of ISM Code was in accordance to the passenger ships
in relation to safety, pollution prevention, ship maintenance and competency of the
crew. Likewise, the improvements initiated by the ship owners or ship managers in
relation to the above-mentioned safety factors were examined. The survey sought to
assess the degree of implementation of the ISM Code on passenger ships in the
domestic trade in the Philippines. As discussed in the study, most key actors in
the Philippine Merchant Marine Industry (i.e. Master of Vessels, Chief Officer,
Chief Engineer, 1st Engineer, 2nd Engineer, Crew Manager and Ship Owner) observed
satisfactory assessment of the ISM Code on passenger ships in the domestic trade in
the Philippines. Lastly, the study determined the assessment level of
implementation of the ISM Code on passenger ships in the domestic trade in the
Philippines and perceptions of the maritime sector with regards to safety
management of domestic passenger ships. To attain the stated objectives, relevant
data from the maritime shipping industry and legal documents were collected,
reviewed/evaluated, and tested. Statistical tools were also used to determine the
assessment level of evaluation of the ISM Code on passenger ships in the domestic
trade in the Philippines. Perceptions of the maritime personnel as to their duties
and responsibilities aboard ship during an emergency were analysed and
interpreted.After evaluation, it revealed that the passengers’ safety, competency
of the crew, pollution prevention, and ship facilities and operation were very
satisfactory. Therefore, it was concluded that the general assessment of ISM Code
implementation was very satisfactory.For the maritime sector, it was recommended
that shipowners and ship managers should continuously undertake development efforts
upgrade, improve and modernize ship facilities. They should also undergo frequent
emergency preparedness by continuously conducting upgrading training or refresher
training to the crew and office personnel.
7 Bagalay (2002) studied the competency of Filipino seafarers on board. The study
was based on the results of the survey conducted, the following were gathered: The
average age of respondents in the maritime sector was 40 years old, a college
graduate, currently holds a 2 nd Engineer position and be in the maritime industry.
In terms of knowledge, the competency level of Filipino seafarers was found to be
satisfactory. The competency level of Filipino seafarers was found to be
satisfactory. In terms of proficiency, the competency level of Filipino seafarers
was found to be satisfactory. Faith or trust in God as gathered by this researcher
is the main attitude and value required of a Filipino seafarer to comply with the
minimum standards of the STCW ’95. Thus, global competitiveness is gained. In terms
of problems encountered by Filipino seafarers, lack of government support received
the highest number of responses. Hinayon (1994) conducted a feasibility study on
the establishment of an international shipping registry at the Subic Bay
Metropolitan Authority. The study revealed the following aspects: On market
feasibility, the analysis of this aspect revolved on the following: (a) increasing
world and domestic demand and supply; (b) operating revenue registers a 10 percent
yearly increase; (c) lower fees as compared to other leading open registries; (d)
Philippine’s ideal location; (e) no labour and political restrictions; and (f)
SBF’s strategic location. On technical feasibility, the establishment of SBF-ISR
was technically feasible based on the following considerations: (a) abundant
skilled and unskilled labour; (b) managerial personnel with high literary rate; (c)
ready provision of technology and resources; (d) machinery and equipment operation
based on international standards and efficiency standards and efficiency; (e) waste
disposal system as less critical; and (f) time schedule of the project that was
barely eight (8) months. On project management feasibility, the following were the
identified results: (a) Highest positions in the hierarchy are those of the manager
and his assistant; (b) Rank-and-file employees are composed of both technical and
administrative staff; (c) Business activity is subject to provisions and rules of
BCDA and SBMA; (d) Additional roles are stressed under Article 10 of the 1986 UN
Convention on Conditions for Registration of Ships; and (e) Establishment of SBFISR
resulted to the identification of political, legal, institutional and
organizational constraints. On socioeconomic feasibility, the following were the
finding: (a) SBF-ISR is a nonpollutant business; (b) It provides a predominant role
in international shipping; (c) it can be an active player in expansion of local and
international trade; 9d) it is a contributing factor to expansion of local and
foreign investments; (e) It creates an international community; (f) It increases
employment and income; (g) It helps to expand the Philippine overseas fleet; (h) It
enhances the transfer of marine technology; and (i) It increases the country’s
exchange earnings and helps cut fiscal deficits. Lastly, on financial feasibility,
profitability of the project is based on the financial analysis, which results in
an encouraging average ratio of five-year period: (a) working capital ratio = 85
percent; (b) 12 percent fixed assets ratio = 12 percent; (c) profit margin in total
revenue = 51 percent; (d) return to total assets = 39 percent; (e) returned on
equity ratio = 76 percent; and (f) ratio of operating expenses to total revenue =
46 percent. Arcellana Jr., et al (1996) conducted a feasibility study on the
unveiling of a specialised passenger/ro-ro vessel connecting the ports of Lipata,
Surigao and Liloan, Southern Leyte (a vital link for the Pan-Philippine Highway).
Based on the findings, the Pan-Philippine Highway is the vital link between the
Northern and Southern regions. It is not effective since there are still
insufficient links particularly in the Visayan and Mindanao regions. Small
companies fail to
8 extend their markets due to high shipping cost. In this regard, it is deemed
necessary to turn to ferry/ro-ro services to satisfy the unmet demand. The study
indicated that there is a port constraint with regards to the characteristics of
the vessel to be used for the proposed project. Since ro-ro ramps are permanently
constructed at both ports, features of the proposed vessel should correspond to
them. A double-decker was proposed to accommodate cars at the upper deck to
outright double the carrying capacity for rolling cargoes. An analysis of the
projected financial statements for the first five years has shown that the business
will have sufficient funds to meet both short and long term obligations as well as
generate a profit of P 3.1 million in the first year. Since the company is composed
of a small group and will be operating just one vessel, the study came up with a
line type of organization which is the simplest type. The salary scale of its
employees is based on existing industry standards.Businessmen, especially those who
transport their merchandise from/to Mindanao and the Visayan regions will be
benefited by the project because they travel and waiting time will be lessened when
using the Liloan and Lipata route. National and municipal government will also
benefit in terms of taxes. Because of the synergistic effect of the project, there
will be job opportunities to be made which will greatly benefit the residents of
the countries concerned. Ogbinar (1990) made an assessment on the role of
government in the development of the Philippine maritime industry as regard
maritime safety. The salient findings were: [1] There is no direction towards
maritime development. Control and supervision over the industry is fragmented; [2]
Initiative on ship replacement is more on the private sector. Likewise, there are
conflicting policies on replacement and modernisation; [3] The apparent bias
approach of government against shipbuilding is working against its development and
loses its importance to the shipping industry. In spite of the development plans in
ports and harbours system, key ports, and even the ports of Manila are still
congested. Bolilan (2001) made a study on the management of shipboard training of
Mariners’ Polytechnic Colleges Foundation. The salient findings were: Majority of
the responses were “very good” on the goals and objectives and policies of the
MPCF-Legazpi which provide students with the necessary maritime education, and
which stress global standards of training and licensing certificate requirements,
and relate planned activities to actual learning exposures via first hand
experience.“The school facilities like chart room and smoke chamber” obtained the
highest mean rating of 3.91 or “very good” while “the training ship facilities on
radar and ARPA simulator” had a mean yield of 4.15 or “very good”. The majority of
the items was rated “more effective” on the “skill/ability to ascertain the ship’s
position by the use of landmarks as aids to navigation and dead reckoning and/or
electro navigational aids.” The problems most frequently encountered were on
medical certificate, Seafarer’s Identification and Record Book (SIRB), fees
imposed, violation of office rules and regulations, misconduct, dishonesty,
attitudes and traits of crew and officers on board ship. On the basis of the
findings, the following conclusions were drawn: The MPCF-Legazpi maintains the
quality standard of maritime education and meets the international standard of
excellence in maritime training through the effective governance of shipboard
training among its graduates.The trainees are knowledgeable in maritime operations
specifically in the fields of navigation, seamanship, health and safety at sea,
human relations and societal responsibility.It could be noted that there
issignificant relationships between the level of management of
9 shipboard training, and the level of effectiveness along navigation, seamanship,
health and safety at sea, and human relations and social responsibility. Likewise,
the findings further revealed that there were problems encountered in relation to
shipboard training categorised as MARINA policies, shipboard policies, and school
policies. Ang (1999) made a study of the proposed training program on occupational
safety and health at Asian Terminals, Incorporated, South Harbor, Port Area,
Manila. The findings revealed that the proposed training program in occupational
safety and health was based upon: (1) The analysis of the perceptions of the
directors, supervisors and dockworkers on the usefulness of safety
policies/practices in the following areas of concern, namely: working environment;
personal protection; personal health requirements and safe working procedures;
electrical and fire safety; and accident reporting and first aid. (2) Reports of
existing safety and health policies for occupational safety and health in the
Philippines and other countries in Asia; and (3) SWOT analysis of the five areas of
concern on safety policies/practices. To provide a baseline for setting up the
proposed training program, background data of South Harbor such as how it grew and
developed was gathered. A review of related documents in occupational safety and
health was undertaken. There were based on the standard safety policies/practices
recognised by international bodies, safety policies, and rules and regulations as
enunciated by Philippine laws, the missions, goals and objectives of the company
(Asian Terminals, Inc.) and its policies/practices in the five areas of concern in
relation to safety. Regis (2002) conducted a study on the assessment of the
occupational health and safety practices on board Philippine Navy ships. The
findings of the study revealed that the majority of the respondents of this study
were junior rates. Almost one fourth of the respondents were officers, while the
rest were composed of Petty Officers. Almost one half of the respondents had a
length of sea tour between one to five years. Less than twenty percent of the
respondents had sea tour for more than ten years. For length of service, almost one
half of the respondents have served the navy for less than five years. Twenty-five
percent of them have served for more than ten years. For length of service, almost
one half of the respondents have served the navy for less than five years. Twenty-
five percent of them have served for more than ten years. The following was the
twelve safety management criteria used by the Royal Australian Navy: 1) Commitment
of the management, 2) Risk assessment and management, 3) Ship, system, equipment
design and construction, 4) Operation and maintenance, and 5) Management of change.
William M. (2003) studied the Defense Transportation System (DTS), led by the
Military Traffic Management Command (MTMC), depends on the commercial maritime
industry to provide movement of supplies and equipment around the world. The
maritime shipping container is a critical asset in providing for this logistical
support to the war fighter abroad. These 20- or 40-foot containers have become the
backbone of the maritime industry, and will continue to proliferate as global
commerce continues to expand. While the growth in the use of maritime shipping
containers in the 21st century has accelerated the nation’s economic trade
substantially, it may also have become a significant problem. Containers are an
indispensable but a vulnerable link in the chain of global trade; approximately 90
percent of the world’s cargo moves by container. Because of the DoD’s dependency of
the maritime industry and these containers, it will and must continue to ride the
wave of commercial practices, specifically in pursuit of better security throughout
the maritime industry. In the wake of September 11, 2001, and with the new
10 threats of WMD, the maritime shipping container may become a weapons delivery
system. The research findings it need for security improvements for the maritime
shipping container in protecting global commerce and DoD cargo shipments.
Comprehensive reviews of government reports, books, articles, and Internet based
materials, as well as interviews with MTMC personnel, have indicated that DoD is
considering a series of measures to take on these challenges. DoD’s Defence
Transportation System and the commercial maritime industry will be challenged and
tested by new policy requirements. MTMC has already adopted new business processes,
cargo manifest requirements, and technological innovations that assure customers
intransit visibility and total asset visibility (ITV/TAV), including the
Intelligent Road-Rail Information Server (IRRIS) system. Liu (2010) evaluates the
efficiency of container ports and terminals and to study how to improve the scale
efficiency of any particular port/terminal. In particular he studied how certain
factors influence the efficiency of container ports and terminals. Regional
container ports and global container terminals are examined based on the
econometric benchmarking method Stochastic Frontier Analysis (SFA). Two datasets
are used, a panel data set for 32 container ports in the North Mediterranean Sea
over a nine-year period, and a cross-sectional dataset for 165 container terminals
worldwide. Net-effect and gross-effect SFA models are applied to both data sets.
Technical, scale and overall efficiencies of individual ports/terminals are
evaluated. Operation and investment strategies are examined for selected ports and
terminals. The majority of the container ports and terminals in the North
Mediterranean Sea samples is found to be technically inefficient: 90% of container
ports have their technical efficiency lower than 0.80; 95% of container terminals
have their technical efficiency lower than 0.80. The research concludes that
trading volume plays a key role in the efficiency of a container port. The annual
percentage increase in port output is slower than what the technological
improvement allows. Container terminals are proven to be more productive than
multiple purpose terminals. Global terminal operators were not proven to out-
perform local terminal operators as was expected. It was also found that the
container terminal operation industry is over-scaled. The research findings here
can potentially affect decisions made by carriers, terminal operators and policy
makers, as it provides an overview of efficiencies for all container
ports/terminals in the two datasets and also examines in detail the sources of
inefficiency for individual ports.

3. Methodology To determine the operation and management capability of shipping

companies in the Philippines, the descriptive-survey was employed in this study.
This approach is appropriate wherever the objects of any class vary among
themselves and one is interested in knowing the extent to which different
conditions are obtained among these objects. (Good and Scates, 1972). The word
survey signifies the gathering of data regarding present conditions. A survey is
useful in: (1) providing the value of facts, and (2) focusing attention on the most
important things to be reported (Calmorin, 2000). The researcher also used the
five-point scale or Likert’s Scale in this study. The t-test was used to determine
the significant difference among the perceptions of the shore-based personnel and
vessels’ crew on the operation and management capability of shipping
11 companies in the Philippines. The basis of utilising this method would be the
information that the data gathered were obtained through a survey questionnaire and
informal interview from the respondents. The data and other information were
consolidated by way of documentary analysis. There were two sources of data used in
this study. The primary source of data was taken from the responses of the
respondents in shipping companies in the Philippines operating passenger vessels
whose tonnage is not less than 5,000 GRT, plying inter-island routes nationwide.
The respondents of this study were the shore based personnel (managers and
supervisors) and the vessel’s crew (deck and engine officers) of the shipping
companies in the Philippines and the Passengers. The data and information were
collected through a questionnaire-checklist. The secondary data were taken from
various graduate libraries in Metro Manila and Bicol Region such as maritime books,
journals, pamphlets, magazines, internet and other related reading materials. The
researcher considered the unpublished dissertations and theses, which are similar
to the present study. Also, the researcher conducted informal interviews to the
respondents, while retrieving the survey questionnaire. The feedback gathered from
the proved to be beneficial to this study. 4. Data Analysis and Discussion 4.1 The
data analysis of the operation and management of shipping industry in the
Philippines. On Planning. The highest weighted mean obtained was 4.61 or
“Excellent” on “they maintain plans on procedures to control all documents and data
which are relevant to the Safety Management Systems”. The aspect on “the shipping
companies in the Philippines maintain drills and exercises to prepare for emergency
actions are well planned” obtained a weighted mean of 4.57 or “Excellent”; and
“periodically evaluate the efficiency and review the SMS in accordance with
procedures established by the companies” obtained a weighted mean of 4.45 or “Very
Good” rating. The findings of this study revealed that the list obtained a weighted
mean was 3.60 or “Very Good’ on “the shipping companies continuously improve plans
for safety management skills of personnel ashore and aboard ships”. Organising. The
shipping companies provide appropriate orders and instructions in the shipping
operation with a weighted mean of 4.51 or “Excellent” which received the highest
rating of the respondents. The findings also revealed that “the shipping companies
develop processes for reporting accidents and non-conformities to the provisions of
company SMS” had a weighted mean of 4.50 or “Very Good”; and “define levels of
authority and lines of communication between shore-based and shipboard personnel”
obtained a weighted mean of 4.37 or “Very Good” rating. However, the least obtained
weighted mean was 3.21 or “Good” on “the shipping companies provide a continuous
health, safety and environmental protection training and awareness program.”
Directing. “They issue appropriate orders and instructions in a clear and
understandable manner” obtained the highest weighted mean of 4.44 or “Very Good”.
Likewise, “they request company assistance in time, as may be necessary and ensure
that the company policy is implemented and maintained directly at all levels of the
organization both, ship-based and shorebased” with a weighted mean from 4.31 to
4.41 or “Very Good”. The findings further revealed that “the companies ensure that
the task is understood, supervised, and accomplished according to established
standards” with a weighted mean of 3.51 or “Very Good”. Thus, the least obtained
12 weighted mean was 3.16 or “Good” on “the companies directly maintain the safe
operation of ships in compliance with relevant national rules and regulations.”
Controlling. “They ensure that changes to documents are reviewed and approved by
authorized personnel” got the highest weighted mean of 4.52 or “Excellent.”
Likewise, “they ensure that valid documents are available at all relevant locations
with a weighted mean of 4.48 or “Very Good”. The findings also revealed that “the
company audits and reviews are brought to the attention of all personnel having
responsibility in the area involved” got a weighted mean of 4.39 or “Very Good”.
However, the least obtained weighted mean was 3.21 or “Good” on “they conduct
regular testing of standby arrangements and equipment or technical systems that are
not in continuous use”. Staffing. The highest obtained a weighted mean was 4.63 or
“Excellent” on “the shipping companies ensure that each ship is manned by qualified
certificated, and medically fit seafarers in accordance with national regulations
as prescribed by the administrator”. On the other hand, “they also ensure that the
Master is properly qualified for command and is fully conversant with the company
Safety Management System” got a weighted mean of 3.96 or “Very Good”; and “ensure
that the ship’s personnel are able to communicate effectively in the execution of
the ir responsibilities related to the SMS” had a weighted mean of 4.31 or “Very
Good”. The findings further revealed in this study, that the least obtained a
weighted mean was 3.20 or “Good on “the shipping companies establish procedures by
which the ship’s personnel receive relevant and easily understood information on
the Safety Management System”. 4.2 The Degree of Compliance of Shipping Companies
in the Philippines As Prescribed by the National Safety Management Code. Safety
Management System. The highest obtained a weighted mean was 4.55 or “Very High” on
“ensure compliance with mandatory rules and regulations”. The “shipping companies
also continuously improve safety management skills of personnel ashore and aboard-
ships, including preparing for emergencies related both to safety and environmental
protection; maintains the levels of authority and lines of communication between,
and among, shore and shipboard personnel; and implement procedures for reporting
accidents and non-compliances with the preparation of the National Safety
Management Code” had a weighted mean of 4.41 or “High”. This further revealed that
the least obtained weighted mean was 3.72 or “High” on “they establish safety
measures against all identified risks”. Environmental Protection Policy. “Establish
and maintain procedures for identifying any training that may be required in
support to the SMS” obtained the highest weighted mean of 4.48 or “High”. “The
companies ensure the safe operation of each ship and provide a link to those on
board” got a weighted mean of 4.43 or “High”. On the other hand, “the personnel
involved in the SMS have adequate understanding with relevant regulations,
ordinances, codes and guidelines” obtained a weighted mean of 4.40 or “High”. The
findings further revealed that the least obtained mean was 3.49 or “Average” on
“the shipping companies perform and verify work relating to and affecting safety
and pollution prevention.” Procedural Safety Operations. The highest obtained a
weighted mean was 4.50 or “High” on “promote a sense of responsibility among all
personnel towards achieving excellence in shipboard operations”. Ensure that
personnel are qualified, informed, trained and have access to
13 proper and adequate personal protective equipment during the carrying out of
their duties” gave a weighted mean of 4.45 or “High”; “allocate sufficient
resources to effectively implement and maintain safety procedural operations” had a
weighted mean of 4.40 or “High”. It could be noted that “the shipping companies
perform their duties in a manner that ensure their own safety and their clients’’
obtained a weighted mean of 4.37 or “High”; they also provide continuing training
program for procedural safety operations” got a weighted mean of 4.35 or “High”
rating. This further revealed that the least obtained mean on the procedural safety
operations of shipping companies in the Philippines was 4.03 or “High” which was
“assess and demonstrate processes to continuously identify and effect appropriate
measures on avoidance of accident/casualty”. System of Communication. “The
shipboard personnel are knowledgeable of all emergency signals” got the highest
weighted mean of 4.51 or “Very High”. It also revealed that “the shipping companies
in the Philippines maintain a well-defined and established flow of communication”
with the weighted mean of 4.50 or “High”. However, the least obtained weighted mean
was 4.11 or “High” on “the shipboard personnel review the SMS, and report its
deficiencies to the shore-based management”. Emergency Preparedness. “Establish
safety measures against all identified risks” got the highest obtained a weighted
mean of 4.56 or “Very High”. This further revealed that “establish procedures for
the implementation of preventive/corrective actions and establish programs for
drills and exercises to prepare for emergency actions” got a weighted mean from
4.32 to 4.44 or “High”. The least obtained weighted mean was 3.42 or “Average” on
“the shipping companies in the Philippines provide measures for ensuring that the
company’s organization can provide response at any time to hazards, accidents and
emergency situations”. Maintenance of the Ship and Equipment. The highest obtained
weighted mean was 4.62 or “Very High”, on “ensure that records of maintenance
activities are maintained”. Also, “establish procedures in its SMS to identify
equipments and technological systems of the sudden operational failure”, which may
result to hazardous situation” got a weighted mean of 4.22 or “High”. It could be
noted that “the shipping companies conduct regular testing of stand-by obtained a
weighted mean of 4.14 or “High”. The findings further revealed that availability of
genuine spare parts on board for the immediate replacement of worn-out or
damaged/broken machinery parts.” 4.3 The Strengths, Weaknesses, Opportunities and
Threats of the Shipping Industry in the Philippines. The SWOT analysis of the
shipping companies in the Philippines on the compliance of the National Safety
Management Code along: safety management system, environmental protection policy,
procedural safety operations, systems of communication, emergency preparedness, and
maintenance of the ship and equipment was clearly identified by the stakeholders.
This SWOT analysis of the shipping companies in the Philippines was undertaken
towards the formulation of the proposed management model to enhance the management
of shipping operations in the Philippines by the researcher. 4.4 The Significant
Difference among the Perceptions of the Shore-Based Personnel and Vessels’ Crew on
the Operation and Management of Shipping Industry in the Philippines. On Port
Management. The findings revealed that “lighting and security” was Rank 1; “pilot’s
14 availability and scheduling” were Rank 2; and “traffic routing” was Rank 3.
However, “berthing segregation scheme” was Rank 5, considered as the least extent
support of the government and non-government units. On Navigational Aids and
Facilities. The findings revealed that “buoys and lighthouses,” was Rank 1 on the
extent of support by the government and non-government units. However, “weather
forecasting” was Rank 2; “dredging and salvaging” was Rank 3; and “notices to
mariners and other nautical publications” was Rank 5, the least extent of support.
On Education and Training. The findings revealed that “assessment and certification
of seafarers” was Rank 1; “monitoring, control/supervision to the conduct of
mandated trainings” was Rank 2; “publication of maritime journals” was Rank 3; and
“scholarship grants to port and vessels’ personnel” was the least obtained extent
of support or Rank 5. On Safety and Security. The findings revealed that the
“provision of sea Marshals in port and aboard ships” was Rank 1; “law enforcement
in port and at sea” was Rank 2; “disaster preparedness/search and rescue operations
of the Philippine Coast Guard” was Rank 3; and “air and sea patrol” was Rank 5. 4.5
Management Model of Shipping Operations in the Philippines. The proposed management
model for the shipping operations in the Philippines was to address the strengths,
weaknesses, opportunities, and threats identified in the study. Its implementation
could help improve the performance and management of shipping industry in the
Philippines. 4.6 Relevance of the Maritime Curriculum to the NSM Code. The maritime
curriculum is attuned to the National Safety Management Code in as much as the
elements of the code were included in the general and professional education
subjects specifically in the areas of personnel management, marine pollution
prevention, emergency preparedness, shipboard operations, maintenance of the ship
and equipment, deck and engine watchkeeping, as well as applicable maritime laws
and relevant international conventions. Furthermore, the study and training of the
Basic Safety Courses cover the following areas: 1) Fire Fighting and Fire
Prevention, 2) Personal Survival Technique; 3) Personal Safety and Social
Responsibility; and 4) Elementary First Aid. This research paper, the response rate
was 97 percent out of 300 respondents of the shipping companies in the Philippines
operating passenger vessels whose tonnage is not less than 5,000 GRT engaged in
nationwide operation. Statistically, the respondents for Shore-Based Personnel
(83.34%) [Managers (86.67%) & Supervisors (80%)]; Vessels’ Crew (96.67.00%) [Deck
Officers (95%) & Engine Officers (98.33%); and Passengers (100%) out of 150 regular
passengers with a total of 97% retrieval rate. The researchers assumed that the
retrieval rate was statistically fair and significant. Hence, the results of this
study would be beneficial not only to the researchers, but also to the entries
shipping industry in the Philippines. They would serve as the basis for their
improvement. Nevertheless, several parties would also benefit from this study
especially, the Commission on Higher Education (CHED), Department of Labour and
Employment (DOLE), Maritime Training Council (MTC), Philippine Overseas Employment
Administration (POEA), passengers, maritime professionals, seafarers, faculty,
students, and future researchers.
15 5. Conclusions and Recommendations 5.1 Conclusions. Based on the findings, the
following conclusions are derived: 5.1.1 The operation and management capability of
shipping companies in the Philippines as perceived by the shore-based personnel and
vessel’s crew are “Very Good” along: planning, organizing, directing, controlling
and staffing. There is an academic degree of compliance of shipping companies in
the Philippines as prescribed by the National Safety Management Code along: safety
management system, environmental protection policy, procedural safety operations,
systems of communication, emergency preparedness, and maintenance of the ship and
equipment. There are strengths, weaknesses, opportunities, and threats identified
by the respondents on the compliance of the NSM Code of the shipping companies in
the Philippines along: safety management system, environmental protection policy,
procedural safety operations, systems of communication, emergency preparedness, and
maintenance of the ship and equipment. There is a significant difference among the
perceptions of the shore-based personnel and vessels’ crew on the operation and
management capability of shipping companies in the Philippines. There is an
extension of support of the government and non-government units along: port
management, navigational aid facilities, education and training, and safety and
security. The proposed management model could improve the operation and management
of shipping industry in the Philippines for further expansion of the shipping
business/industry in both local and international operations. There is relevance of
the maritime curriculum to the National Safety Management Code.

5.1.2

5.1.3

5.1.4

5.1.5

5.1.6

5.1.7

5.2 Recommendations. Based on the findings and conclusions, the following

recommendations are offered: 5.2.1 The operation and management of shipping
companies in the Philippines along: planning, organizing, directing, controlling,
and staffing should be properly reviewed and assessed relative to the NSM Code. The
shipping companies should demonstrate that they have an enhanced management
16 system ashore- the effectiveness of which is audited onboard and then verified
through a full passenger ship safety survey. 5.2.2 The shipping companies in the
Philippines must conform with the government laws on maritime training, and
continuously upgrade the qualifications of shore-based personnel and vessels’ crew;
maximise the operational readiness of training facilities and equipment; adapt to
the challenges of global-educational and technical aspects of the maritime
industry; and maintain an academic staff who are steeped in the disciplines of the
sea, and administrative staff wounded in shipping management principles and
practices as prescribed by the NSM Code. The strengths of the shipping companies in
the Philippines should be maintained, opportunities should be acted upon, and the
weaknesses and threats should be addressed in accordance with the National Safety
Management Code as well as with other applicable national and international
regulations/conventions. An effective management system to demonstrate a total
commitment to safe operation and continuous safety management scheme for passengers
and clients should be provided. The maritime training facilities for the Filipino
seamen in the entire archipelago should be upgraded; the status as the world’s
biggest supplier of seafarers in the world merchant fleet should be maintained; and
maritime affairs taking centre stage on private education and training centre in
the Philippines ought to be given total tax exemptions on imported training
equipment to upgrade navigational facilities of the educational training centres in
the Philippines. The proposed management model of the shipping operations in the
Philippines must be given preferential attention by the management for proper
implementation. The accredited maritime schools in the Philippines should ensure
compliance on the adoption of a quality standard system in accordance with the
Standard of Training, Certification and Watchkeeping Convention of 1978 as amended
in 1995, and should request the Technical Education and Skills Development
Authority to assist in the governance of applicable trade test, as well as the
choice of the testing venue; and ensure the compliance of 2010 Manila Amendments to
the Standard of Training Certification and Watchkeeping Convention.

5.2.3

5.2.4

5.2.5

5.2.6

5.2.7
17

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