An Industry Paper on Domestic Shipping Presented To

Prof. Ricardo Deri

College of Arts and Sciences

San Beda College

In Partial Fulfillment of the Requirements for

ECON3 Macroeconomics
1st Semester, A.Y 2017 - 2018

Submitted By

de los Cientos, Christelle Carnel M.

Fajardo, Matthew B.

December 5, 2017
 TABLE OF CONTENTS

LIST OF TABLES 2

CHAPTER I 3

BACKGROUND AND HISTORICAL ACCOUNT 3

The Significant Personalities Involved in its Operation 4
Significant Events/Major Breakthroughs in its Operation 4

CHAPTER II 6

PERFORMANCE OF THE INDUSTRY 6

Number of Players/Competitors in the Domestic Shipping Industry 6
Market Share 10
Type of Product/Service Produced 15
Type of Competition Existing (to identify the type of market structure) 16
Degree of Competition Among the Players 16
Pricing Behavior Used by the Players for Revenue Generation 16

CHAPTER III 18

MAJOR PROBLEMS 18
Identify the problem/s that significantly affect/s the operation of the industry 18
Specific Actions Done or Doing by the Industry to Address/Remedy the Problem/s 19
Specific government policy/ies to address the problem/s (Laws, Republic Acts, etc.) 20
Discussion on the Strengths and Limitations of the Above Actions by the Industry and the
Government 20

CHAPTER IV 22

AREAS FOR FUTURE POLICY PRESCRIPTIONS AND RECOMMENDATIONS 22

BIBLIOGRAPHY 23

APPENDIX 25

1
 LIST OF TABLES

Table 1 Gross Revenue of Oceanic Container Lines, Inc. for the period 2011-2015​ ​6
Table 2 Growth Rate of Oceanic Container Lines, Inc. for the period 2011 - 2015 6
Table 3 Gross Revenue of Lorenzo Shipping Corp. for the period 2011-2015 7
Table 4 Growth rate of Lorenzo Shipping Corp. for the period 2011-2015 7
Table 5 Gross Revenue of NMC Container Lines, Inc. for the period 2011-2015 8
Table 6 Growth Rate of NMC Container Lines, Inc. for the period 2011-2015 8
Table 7 Growth Rate of the Total Domestic Shipping Industry for the
period 2011-2015 ​ 9
Table 8 Gross Revenue Summary of the Total Domestic Shipping
Industry for the period 2011-2015 9
Table 9 Market Share of the Total Domestic Shipping Industry for the
period 2011-2015 10
Table 10 Income Forecast of Oceanic Container Lines, Inc. for the
period 2016-2020 11
Table 11 Forecasted Growth Rate of Oceanic Container Lines, Inc. for the
period 2016-2020 11
Table 12 Income Forecast of Lorenzo Shipping Corp. for the
period 2016-2020 11
Table 13 Forecasted Growth Rate of Lorenzo Shipping Corp. for the
period 2016-2020 12
Table 14 Income Forecast of NMC Container Lines, Inc. for the
period 2016-2020 12
Table 15 Forecasted Growth Rate of NMC Container Lines, Inc. for the
period 2016-2020 13
Table 16 Income Forecast of the Domestic Shipping Industry for the
period 2016-2020 13
Table 17 Forecasted Growth Rate of the Domestic Shipping Industry for the
period 2016-2020 ​13

2
 CHAPTER I
BACKGROUND AND HISTORICAL ACCOUNT

The Philippines, being an archipelagic country, has made way for the shipping
industry to flourish. Corbett & Winebrake (2008) mentions that transportation has been
called one of the four cornerstones of globalization, along with communications,
international standardization, and trade liberalization. Considering the topography of
Philippines, shipping is the primary means of interisland transport may it be passengers
and/or cargo. Interisland transportation is important as it is the less costly mode of
transportation of goods in terms of ton-mile haulage (Austria, 2003).

Background of the Domestic Shipping Industry

According to Sec. 3 of the Revised Rules and Regulations Implementing R.A. No.
9295, Domestic Shipping means the transport of passengers or cargo, or both by vessels
that are registered in the Philippine law to engage in trade and commerce between and
among Philippine ports within the Philippine territorial waters. In the Philippines, Negros
Navigation Co., Inc., now known as 2GO Group, Inc., is the leading shipping company
which transports passengers.
The Domestic Shipping Industry in the Philippines is a growing industry. It
harbored 0.51% of the total GDP for the year 2016. According to Maritime Industry
Authority (MARINA)latest available data for the domestic fleet inventory, there are 14,336
vessels as of December 31, 2016.

History of the Domestic Shipping Industry

The shipping industry has been an important industry even before the Spanish era.
The Philippines have been trading with China, Brunei and other coastal countries prior to
the arrival of Magellan (Hall, 2008). Maritime trade bloomed even more when the
Spaniards had established new ports mainly in Manila and when the Galleon trade had
been fully functional. The Galleon trade had started on 1571 and was between Manila

3
and Acapulco, Mexico. The trade made way for Far East products to get to Mexico in
exchange for Mexican silver and other high value commodities. It lasted for more than
200 years where it was abolished in 1813. In 1869, the Suez Canal was opened and it
encouraged shipping in different parts of the world, that includes Asia. The shipping
industry in the Philippines broadened when Negros Navigation was established in 1932. It
was only during the 1970s that other shipping companies were established along with
Sulpicio Lines and Lorenzo Shipping Corp. that was founded in 1973.

A. The Significant Personalities Involved in its Operation

​Different personalities are engaged in the domestic shipping industry but there
are powerful people who had done the industry a great cause. Policies and regulations
were made by the administration of Former President Fidel V. Ramos who gave an
executive order in November 1994 that gave way to the shipping industry a guideline and
regulation for its operations.This order are mostly consist of the rates of price the service
that the shipping companies will be providing the community. Routes regulation for the
ships was also mention in the executive order.

B. Significant Events/Major Breakthroughs in its Operation

Many major events had been conducted related to the shipping industry in the
Philippines. Modernization of ships and ports had been done by different companies and
also different sectors of the government in different regions and islands of the Philippines.
Ports were modernized in every certain province that improve the trade of different goods
in different places. It made the market more flexible that can benefit the market. DSMP 1
(Domestic Shipping Modernization Program) helped different companies to upgrade their
ships for the safety of the public. DSMP also wanted to make sure that every shipping
company meet the standards and policies of the government.

One of the best impact was when Japan worked with Philippines to lend private
companies loan for new ships. Increase of people acquiring the different services of ships

4
companies need to add and improve their ships to provide for the people so japan and
philippines work together to lend different shipping companies a loan that is suitable for
the companies to have the ability to meet the standards of a current time.

5
 CHAPTER II
PERFORMANCE OF THE INDUSTRY

This chapter will present the forecast of the industry and the previous
performance of the top three chosen companies in the industry. Growth forecast of the
company will also be provided in this chapter.

Domestic Shipping Industry is a growing industry in terms of gross revenue. The

industry, however, is slowly declining in terms of growth rate. In the year 2016, the GDP
amounted to P8,126,403,000,000. The Service Sector’s gross revenue for that year is
P4,657,547,000,000. For the said year, the gross revenue of the Transport, Storage and
Communication is P581,289,000,000. According to our forecasted income for the
Domestic Shipping Industry, it would earn P41,787,000,000. That makes it 7.19% of the
Transport, Storage and Communication, 0.90% of the Service Sector and 0.51% of the
total GDP for the year 2016.
According to Maritime Industry Authority (MARINA) latest available data for the
domestic fleet inventory, there are 14,336 local vessels as of December 31, 2016. Of the
total, 9,856 are passenger vessels, 3,926 are containers, 290 are tankers, 775 are
tugboats, and the rest are yachts, special purpose ships and other types.

A. Number of Players/Competitors in the Domestic Shipping Industry

In the Business World Top 1,000 Companies in the Philippines for the years 2011
to 2015, he top companies in the domestic shipping industry are (1) Oceanic Container
Lines, Inc., (2) Lorenzo Shipping Corp., and (3) NMC Container Lines, Inc. These
companies provide interisland water freight transport.

Oceanic Container Lines, Inc.

Oceanic Container Lines, Inc. (OCLI) was incorporated in July 22, 1998. The
company has been in the business for almost 20 years. OCLI has 18 reliable and fully
containerized vessels at present. Oceanic Container Lines, Inc., is capable of providing

6
clients with all shipping and cargo requirements such as trucking, hauling, brokerage,
equipment rental, container freight services, cargo consolidation and container yard
operations.

Table 1. Gross Revenue of Oceanic Container Lines, Inc. for the period 2011-2015 (P million)

OCLI 2011 2012 2013 2014 2015

Gross Revenue 1,764 1,996 2,175 2,267 2,581

The gross revenue of Oceanic Container Lines, Inc. for the year 2011 was
P1.764B. For 2012 it increased to P1.996B and in 2013 the gross revenue increased
further to P2.175B. For 2014 the gross revenue was P2.267B and lastly for 2015 it was
P2.581M. For the years 2011 to 2015, the gross revenue of Oceanic Container Lines, Inc.
continuously increased.

Table 2. Growth Rate of Oceanic Container Lines, Inc. for the period 2011-2015

OCLI 2011 - 2012 2012 - 2013 2013 - 2014 2014 - 2015

Growth Rate 13.15% 8.97% 4.23% 13.85%

The growth rate of Oceanic Container Lines, Inc. for 2011-2012 and 2012-2013
was 13.15% and 8.97% respectively. For 2013-2014, the company grew by 4.23% and for
2014-2015, OCLI earned 13.85% more than the past year. For the years 2011 to 2015,
the growth rate of Oceanic Container Lines, Inc. was fluctuating with an average growth
rate of 10.05%.

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Lorenzo Shipping Corp.
Lorenzo Shipping Corporation (LSC) started in 1972 and has been in the business
for already 45 years. It has already proven that it is one of the leading players in the
containerized shipping industry through its experience. L
​ SC's capabilities are further

backed up by strengths of its affiliate companies in the Magsaysay Transport and

Logistics Group, which offer allied services in 3rd-party logistics, trucking, chassis
operation, container and tanker shipping, ship management, ship agency and brokerage,
port equipment and marine consultancy. LSC is also listed in the Philippine Stock
Exchange (PSE).

Table 3. Gross Revenue of Lorenzo Shipping Corp. for the period 2011-2015 (P million)

LSC 2011 2012 2013 2014 2015

Gross Revenue 1,777 1,838 1,926 2,060 2,313

The gross revenue of Lorenzo Shipping Corp. for the year 2011 was P1.777B. For
2012 it increased to P1.838B and in 2013 the gross revenue increased further to
P1.926B. For 2014 the gross revenue was P2.060B and lastly for 2015 it was P2.313B.
For the years 2011 to 2015, the gross revenue of Lorenzo Shipping Corp. continuously
increased.

Table 4. Growth Rate of Lorenzo Shipping Corp. for the period 2011-2015

LSC 2011 - 2012 2012 - 2013 2013 - 2014 2014 - 2015

Growth Rate 3.43% 4.79% 6.96% 12.28%

The growth rate of Lorenzo Shipping Corp. for 2011-2012 and 2012-2013 was
3.43% and 4.79% respectively. For 2013-2014, the company grew by 6.96% and for
2014-2015, LSC earned 12.28% more than the past year. For the years 2011 to 2015, the

8
growth rate of Lorenzo Shipping Corp. was increasing with an average growth rate of
6.87%.

NMC Container Lines, Inc.

NMC Container Lines, Inc. (NMCCLI) was launched on 1997. It ​is engaged in
full-container liner shipping servicing six of the country’s major economic ports – Manila,
Batangas, Cebu, Cagayan de Oro, Davao, and General Santos. NMCCLI accepts
containerized shipments, dangerous goods (DG), break bulk, refrigerated, loose, and
rolling cargoes. NMCCLI’s service modes are pier-to-pier, pier-to-door, door-to-pier, and
door-to-door.

Table 5. Gross Revenue of NMC Container Lines, Inc. for the period 2011-2015 (P million)

NMC 2011 2012 2013 2014 2015

Gross Revenue 1,797 1,956 2,006 2,260 2,228

The gross revenue of NMC Container Lines, Inc. for the year 2011 was P1.797B.
For 2012 it increased to P1.956B and in 2013 the gross revenue increased further to
P2.006B. For 2014 the gross revenue was P2.260B and lastly for 2015 it dropped to
P2.228B. The gross revenue of NMC Container Lines, Inc. continuously increased up to
2014 and decreased in 2015.

Table 6. Growth Rate of NMC Container Lines, Inc. for the period 2011-2015

NMC 2011 - 2012 2012 - 2013 2013 - 2014 2014 - 2015

Growth Rate 8.85% 2.56% 12.66% -1.42%

9
 The growth rate of NMC Container Lines, Inc. for 2011-2012 and 2012-2013 was
8.85% and 2.56% respectively. For 2013-2014, the company grew by 12.66% and for
2014-2015, NMC earned -1.42% more than the past year. For the years 2011 to 2015,
the growth rate of NMC Container Lines, Inc. was fluctuating with an average growth rate
of 5.66%.
Domestic Shipping Industry
The next table shows the growth rate of the total domestic shipping industry.

Table 7. Growth Rate of the Total Domestic Shipping Industry for the period 2011-2015

Domestic 2011 - 2012 2012 - 2013 2013 - 2014 2014 - 2015

Shipping

Growth Rate 109.40% 0.51% 12.15% -45.19%

For the year 2011 to 2012, the growth rate is very high with 109.40% and it dipped
down to 0.51% the following years 2012 to 2013. In 2013 to 2014 the growth rate
increased to 12.15% and for 2014 to 2015 it decreased to -45.19%. The growth rate of
the total domestic shipping industry is fluctuating considering the figures shown above.

B. Market Share

The upcoming tables will show the gross revenue of the total domestic shipping
industry and the market share of each company.

Table 8.Gross Revenue Summary of the Total Domestic Shipping Industry for the period 2011-2015

Gross Revenue (P million)

Company 2011 2012 2013 2014 2015

OCLI 1,764 1,996 2,175 2,267 2,581

LSC 1,777 1,838 1,926 2,060 2,313

10
 NMC 1,797 1,956 2,006 2,260 2,228

Others 15,280 37,385 37,287 42,078 19,553

Total Industry 20,618 43,175 43,394 48,665 26,675

Table 9 shows the gross revenue summary of the top 3 companies and the total
domestic shipping industry for the years 2011 up to 2015.

Table 9. Market Share of the Total Domestic Shipping Industry for the period 2011-2015

Market Share

Company 2011 2012 2013 2014 2015

OCLI 8.56% 4.62% 5.01% 4.66% 9.68%

LSC 8.62% 4.26% 4.44% 4.23% 8.67%

NMC 8.72% 4.53% 4.62% 4.64% 8.35%

Others 74.11% 86.59% 85.93% 86.46% 73.30%

Total Industry 100% 100% 100% 100% 100%

For the year 2011, the three companies combined was only a fourth of the industry
with a market share of 25.9%. In 2012, the three companies in total reached only 13.41%
combined. For the year 2012, the combined market share of the the three companies was
14.07%. In 2014 and 2015, the combined market share of the three companies were
13.53% and 26.70% respectively. The combined market shares of the three companies
are fluctuating.

C. Forecasting

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 The top three (3) companies incomes and growth rates for the years 2016 to 2020
have computed forecasts. The succeeding tables will show the forecasted incomes and
growth rates.

Oceanic Container Lines, Inc.

Table 10. Income Forecast of Oceanic Container Lines, Inc. for the period 2016-2020 (P million)

OCLI 2016 2017 2018 2019 2020

Gross Revenue 2,728 2,919 3,109 3,300 3,490

The forecasted gross revenue for 2016 is P2.728B. For 2017 and 2018 is P2.919B
and P3.109B respectively. Lastly the forecasted gross revenue for the years 2019 and
2020 is P3.300B and P3.490B respectively. The forecasted gross revenues for the years
2016 to 2020 is increasing.

Table 11. Forecasted Growth Rate of Oceanic Container Lines, Inc. for the period 2016-2020

OCLI 2015 - 2016 2016 - 2017 2017 - 2018 2018 - 2019 2019 - 2020

Growth Rate 5.70% 6.98% 6.53% 6.13% 5.77%

The forecasted growth rate of Oceanic Container Lines, Inc. for 2015-2016 and
2016-2017 is 5.7% and 6.98% respectively. For 2017-2018, the company grew by 6.53%
and for 2018-2019, OCLI earned 6.13% more than the past year. Lastly, for 2019-2020
the company grew by 5.77%. For the years 2016 to 2020, the growth rate of Oceanic
Container Lines, Inc. first increased from 2015 to 2016 and then is started to decrease
with an average growth rate of 6.22%.

12
Lorenzo Shipping Corp.
Table 12. Income Forecast of Lorenzo Shipping Corp. for the period 2016-2020 (P million)

LSC 2016 2017 2018 2019 2020

Gross Revenue 2,371 2,500 2,630 2,759 2,889

The forecasted gross revenue for 2016 is P2.371B. For 2017 and 2018 is P2.500B
and P2.630B respectively. Lastly the forecasted gross revenue for the years 2019 and
2020 is P2.759B and P2.889B respectively. The forecasted gross revenues for the years
2016 to 2020 is increasing.

Table 13. Forecasted Growth Rate of Lorenzo Shipping Corp. for the period 2016-2020

LSC 2015 - 2016 2016 - 2017 2017 - 2018 2018 - 2019 2019 - 2020

Growth Rate 2.51% 5.46% 5.18% 4.92% 4.69%

The forecasted growth rate of Lorenzo Shipping Corp. for 2015-2016 and
2016-2017 is 2.51% and 5.46% respectively. For 2017-2018, the company grew by
5.18% and for 2018-2019, LSC earned 4.92%. Lastly, for 2019-2020 the company grew
by 4.69%. For the years 2016 to 2020, the growth rate of Lorenzo Shipping Corp. first
increased from 2.51% to 5.46% and then it started to decrease starting 2016-2017 with
an average growth rate of 4.552%.

NMC Container Lines, Inc.

Table 14. Income Forecast of NMC Container Lines, Inc. for the period 2016-2020 (P million)

NMC 2016 2017 2018 2019 2020

Gross Revenue 2,399 2,516 2,632 2,749 2,866

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 The forecasted gross revenue for 2016 is P2.399B. For 2017 and 2018 is P2.516B
and P2.632B respectively. Lastly the forecasted gross revenue for the years 2019 and
2020 is P2.749B and P2.866B respectively. The forecasted gross revenues for the years
2016 to 2020 is increasing.

Table 15. Forecasted Growth Rate of NMC Container Lines, Inc. for the period 2016-2020

NMC 2015 - 2016 2016 - 2017 2017 - 2018 2018 - 2019 2019 - 2020

Growth Rate 7.68% 4.86% 4.63% 4.43% 4.24%

The forecasted growth rate of NMC Container Lines, Inc. for 2015-2016 and
2016-2017 is 7.68% and 4.86% respectively. For 2017-2018, the company grew by
4.63% and for 2018-2019, NMC earned 4.43% more than the past year. Lastly, for
2019-2020 the company grew by 4.24%. For the years 2016 to 2020, the growth rate of
NMC Container Lines, Inc. was decreasing with an average growth rate of 5.168%.

Domestic Shipping Industry

Table 16. Income Forecast of the Domestic Shipping Industry for the period 2016-2020 (P million)

Total Industry 2016 2017 2018 2019 2020

Gross Revenue 41,787 43,547 45,307 47,068 48,828

For the year 2016, the forecasted income for the industry is P41.787B and
P43.547B for the year 2017. In 2018, it increased to P45.307B. In the years 2019 and
2020 it further increased to P47.068B and P48.828B, respectively. The income of the total
domestic shipping industry is increasing.

14
Table 17. Forecasted Growth Rate of the Domestic Shipping Industry for the period 2016-2020

Domestic 2015 - 2016 2016 - 2017 2017 - 2018 2018 - 2019 2019 - 2020
Shipping

Growth Rate 56.65% 4.21% 4.04% 3.89% 3.74%

The forecasted growth rate of the industry for 2015-2016 and 2016-2017 is 56.65%
and 4.21% respectively. For 2017-2018, the industry’s growth rate decreased to 4.04%
and for 2018-2019, the industry’s growth rate further decreased to 3.89%. Lastly, for
2019-2020 the industry grew by 3.74%. For the years 2016 to 2020, the growth rate of the
domestic shipping industry is decreasing. The industry may still increase in their income
but the industry is not growing anymore.

C. Type of Product/Service Produced

Oceanic Container Lines, Inc., Lorenzo Shipping Corp. and NMC Container Lines,
Inc. provide water freight transport services. These shipping lines do not offer passenger
transport but cater freight or cargo services.

Oceanic Shipping Lines, Inc.

Oceanic Shipping Lines, Inc. provide Freightliner Trucking, Hauling, Brokerage,
Equipment Rental, Container Freight Station, Cargo Consolidation and CY Operations.

Lorenzo Shipping Corp.

Lorenzo Shipping Corp. provide services such as Door to Door wherein the
company picks up cargo from the your premises to your consignee's premises. Pier to
Door wherein the company picks up from the yard of Lorenzo Shipping Corp to your
consignee’s premises. Door to Pier, pick up from from your premises to another pier.
Lastly, Pier to Pier wherein the company picks up the cargo from the yard of Lorenzo
Shipping Corp to another pier.

15
NMC Container Lines, Inc.
NMC Container Lines, Inc. provide Full Container Line Shipping, 3rd Party
Logistics, Warehousing, Distribution, Tankering, Petroleum Barging, Marine Bunkering,
Ship Management, Brokerage, and Terminal Services.

D. Type of Competition Existing (to identify the type of market structure)

Monopolistic Competition
Monopolistic competition means that the company have the same services
produced but it only differs on the perception and interest of the customers. It is a
monopolistic competition industry because all of them provide almost the same services
but influences to the people differs. It is also free market that can make any company go
in and out but it requires a large amount of investment and capital to belong in the
industry. The industry sets their own price that depends in their own cost and profit
margin.

E. Degree of Competition Among the Players

The degree of competition in the domestic shipping industry is high because all of
the shipping companies cater to the mass. The shipping companies have identical
services which gives it a high degree of competition because the customers would just
have to choose which company to support and promote. Having the same services in the
shipping industry would mean customers would take on companies who give quality
services for a minimal cost.

F. Pricing Behavior Used by the Players for Revenue Generation

The pricing of the shipping industry is set by the different ship companies. But
costs are being computed and then applied to the guidelines provided by the government
especially on commercial ships that provide more people with the service. Rate
discounting is one of the pricing behavior that this industry uses. The government
regulates the rate but these rates are sometimes used as benchmarks. The company

16
uses the rates as a base from which to discount. The government is the rate dictator for
the domestic shipping industry but it is still the company who is the price setter. Top
companies may set the price but it will be easily matched by lowering the rates of other
competing companies. The best strategy for the company is to be the number one in
terms of quality service.

17
 CHAPTER III
MAJOR PROBLEMS

A. Identify the problem/s that significantly affect/s the operation of the industry

Domestic shipping lines still experiences some problems that affect their
operations. Some problems that they face are (1) old and ageing vessels, (2) restrictive
government regulations, (3) lack of better port facilities. Companies in the industries also
experience some threats such as fuel costs, taxes, port efficiency, interest rates, and high
insurance premiums. (Lorenzo, 1997)

Restrictive Government Agencies

Before the deregulation of 1996, shipping agencies had problems with the prices
set by the government. The prices set by the government were a burden for new and
small shipping lines as it would require them to have more costs. The small companies
that get less income would be forced out of the industry thus creating a monopoly. (Llanto
et al., 2014)

Lack of Better Port Facilities

Lack of better port facilities is seen as a problem for the shipping line companies.
Without better facilities to accept them, problems may occur to how their operations go.
An example of this is the 2014 Manila port congestion. Discussed in a news article that
the Manila port congestion translated to losses of P2.5 Billion a day. The facilities of the
ports located in different regions in the Philippines does not live up to the standards of the
people and government itself.

Airline Industry
Airline industry is now a threat to the shipping industry because they almost
produce the same services but the airline industry cannot perform some of the current
services of the shipping industry. But the airline industry can perform a particular service
that they both provide much more efficient and better.

18
 B. Specific Actions Done or Doing by the Industry to Address/Remedy the
Problem/s

Some port improvements are on process on different parts of the Philippines. Most
of the ports still needs improvement and renovation to provide quality service to the
community and to decrease port congestion. New safety regulations from the government
is being cascaded in the Philippines for the modernization of the shipping industry. Old
rotting ships will be removed especially ships that do not live up with the standards of the
government will be removed. Subsidy from the government is being conducted for the
building of new ships. In a news article by Agcaoli (2014) stated that the infrastructure
and computer systems along with new equipments and maintaining the ISO certification,
congestion will soon be a problem from the past. In order to do that, Harbor Center Port
Terminal Inc. (HCPTI) seeks to use a bulk conveyor system in order to accommodate
more ships and cargo. Furthermore, Philippine shipping lines agreed to cut prices for
cargos and passengers (Almonte, 2015)

C. Specific government policy/ies to address the problem/s (Laws, Republic

Acts, etc.)

R.A. No. 9295

Also known as the Domestic Shipping Development Act of 2004. This act is
promoting the development of the domestic shipping, shipbuilding, and ship repair
and ship breaking. This act also enables shipowners to invest in younger, if not
new ships.

Executive Order No. 213, s. 1994

This executive order was signed by Former President Fidel V. Ramos on
the 28th of November 1994. This order pertains to the Deregulating of Domestic
Shipping Rates. The government regulatory control has been lifted off as regards
to the Passenger Rates and Cargo Shipping or Freight Rates.

19
 Domestic Shipping Modernization Program
DSMP is administered by the Development Bank of the Philippines and was
funded by Japan. There are two phases of the program. The first phase
(1995-2000) is for the modernization of interisland vessels. The second phase
(1999-2005) is for the development of port facilities in rural areas.

D. Discussion on the Strengths and Limitations of the Above Actions by the

Industry and the Government

Continuous improvement of regulations and projects from the government can help
boost the growth of the industry. Help from the government is needed from this industry
because of the high capital needed for its operations. Renovations of ports in different
parts in the Philippines can benefit the industry and make transactions and services
better. Subsidy from the government is a big help for the improvement and growth of the
industry. Setting a much higher standard for the modernization of the ships is a great
move for the industry because it can attract more customers. Domestic shippings
competitiveness will be improved against the current international companies in the
industry. This can be helpful to the industry as long as shipping companies can adopt
through that regulation. Purchasing of new ship can be costly that can cost the shipping
companies a lot of money. Loans can help the companies improve much faster and better
but loans from banks nowadays are expensive and have higher interest rates.
Government shall work with the shipping companies regarding the loans for a lesser
interest and so that the companies will have lesser cost in its operation because of the
lesser pay for the ships monthly amortization.

20
 CHAPTER IV
AREAS FOR FUTURE POLICY PRESCRIPTIONS AND RECOMMENDATIONS

This industry will be helping the Filipino if the present inconvenience is out of the
picture. Old shipping vessels should be replaced and be modernized to live up the
standards of the people in this time. If replacing the vessels is too expensive, companies
should upgrade their ships and renovate them to live up with the standards of the
government and the public. This action can attract more people to acquire their services
because new ships or good looking ships are more trustworthy than old rusty ships.

Restrictive government rules and regulation restrict some of the abilities of the
shipping companies especially rules and regulations that affect the pricing of their
services that is a big burden for the shipping companies. The government is a big
problem for this industry especially the corruption which is currently occurring here in the
Philippines. The companies should request for the government for help especially on
development of the ports in different regions in the Philippines and also loans that can
benefit the companies because of the need of high capital in this industry.

Teaming up with different companies can also give ways to the whole industry new
opportunities like helping each other for discovering new and faster routes to a certain
destination. This can make transportation much faster and easier for the shipping
company that can improve their efficiency in their operations. Operating 24 hours service
can actually benefit the industry because of the traffic and different port congestion that is
occurring. Working with the government for the different ports in the philippines can be
beneficial for the growth and improvement if the industry.

21
 BIBLIOGRAPHY
Agcaoli (2014) North Harbor operator allots P200 M to upgrade facility. Retrieved from:
http://www.philstar.com/business/2014/12/07/1399849/north-harbor-operator-allots
-p200-m-upgrade-facility
Almonte (2015) PH Domestic SHipping lines agree to cut cargo, passenger rates.
Retrieved from:
https://www.portcalls.com/ph-domestic-shipping-lines-agree-to-cut-cargo-passenge
r-rates/
Austria (2003) Philippine Domestic Shipping Industry: State of Competition and Market
Structure. ​Philippine Journal of Development, Makati City.
Corbett & Winebrake (2008) The Impacts of Globalisation on International Maritime
Transport Activity. ​Global Forum on Transport and Environment in a Globalising
World.
DBP (2015) Domestic Shipping Industry. Retrieved from:
https://devbnkphl.com/UserFiles/Domestic%20Shipping%20Industry%2001212015
.pdf.
Gamboa (2017) Good news, bad news on ROROs. Retrieved from:
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APPENDIX

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