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   Vol. 14  No. 27
Wednesday March 25, 2015

Troubled Manila Ports Impact Air

Troubled Manila Ports Impact Air

     As FlyingTypers reported last year, the U.S. West Coast stand-off between employers and unions, which caused so much disruption, proved a positive boon to air cargo markets, especially on Trans-Pacific lanes. But the U.S. was not the only country to suffer port congestion and shipping delays that prompted modal shifts.
     In Asia, port congestion at Hong Kong and seasonal and weather disruption at ports in Korea, China, and Vietnam all had an impact on air cargo markets. But it was the Philippines where modal shift was most marked. The port of Manila, gateway to the Philippines, suffered a perfect storm of troubles during 2014 and this had immediate benefits for many in the air freight sector, while also having a tangible impact on pricing.
     A trucking ban in Metro Manila between February and September caused chaos, which was then confounded by a surge in imports in the second half. This caused overloaded roads and trucking networks to become even more congested, resulting in a huge build up of empty and laden boxes at the port. Even in the final week of 2014, waiting times for vessels were sometimes as high as 10 days at the port’s main container terminals, while box dwell times fluctuated at 10-18 days. Port delays have now eased, in part due to a seasonal lull in imports, but many fear that any increase in demand could see port delays cause supply chain chaos again.
     Paul Tsui, chairman of the Hong Kong Association of Freight Forwarding and Logistics, said port congestion in Manila was a major factor for Asia supply chain providers for much of 2014 and remained a concern.
     “The current situation is very serious and on top of the port congestion on the U.S. West Coast, it makes the situation worse,” he said. “Air freight rates out of Manila have jumped through the roof, and just before the Chinese New Year until the first week after the holiday almost all carriers were only accepting shipments at premium rates.
     Tsui said for exports to the U.S., shipments currently needed to be tendered two weeks in advance, illustrating “how port issues affect both import and export for Philippines.”
     Another major forwarder based in Manila said it was still possible to charge premiums for shipments to and from the Philippines in the early months of March for air freight. “Backlogs at Manila port have fallen, but there are still delays and for urgent shipments air cargo is the best option,” he added.
Stephen Ly      Stephen Ly, formerly managing director, DHL Global Forwarding Philippines and now DHL’s Managing Director for Singapore, said although ocean congestion at Manila had started to clear, many companies including DHL had benefited from the modal shift from ocean to air as shippers sought to avoid port congestion and supply chain delays.
     While DGF has access to the company’s nightly express freighter network services into Hong Kong from the Philippines, for the most part during the worst of the congestion in 2014, commercial bellyhold capacity was used to meet the supply chain needs of clients.
     “But bellyhold capacity was getting full,” explained Ly. “Imagine a 40-ft. container converted to air freight. That’s a lot of volume. So this led to a lot of aircraft charters in Q3 and Q4 of 2014.”
     Ly said port congestion had caused problems both for inbound raw materials, semi-finished goods, and fully processed exports.
     “This led to a record number of freighter charters for the consumer and many manufacturing industries,” he said.
     “We’ve also done five or six charters this year. This was mainly due to public holidays, the papal visit at the start of the year that saw roads closed, and the Chinese New Year holidays.”

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