The Container Depot Alliance of the Philippines (CDAP) is considering the closure of recently opened empty container depots (ECDs) outside Metro Manila and declaring a holiday in all member container yards (CYs) to address low yard utilization now that the problem of port congestion has been resolved.
This could mean a shutdown of off-dock depots located outside Metro Manila offering a total space of 204,000 square meters (sqm), CDAP president Roger Torres said in a May 9 letter to the Department of Transportation (DOTr), Bureau of Customs (BOC), Philippine Ports Authority (PPA), Department of Trade and Industry and Association of International Shipping Lines (AISL).
Those depots were opened by some CDAP members at the height of the last port congestion–which occurred from the last quarter of 2018 to the first quarter of 2019– to help alleviate effects of the cargo logjam.
The closure of the CYs would be “disastrous to the economy” and usher in another period of port congestion, according to AISL general manager Atty. Maximino Cruz.
CDAP is composed of 13 container yard operators operating a total of 305,000 sqm with a total capacity of 33,800 TEUs.
In his letter, Torres said member depots have been experiencing for the past weeks low utilization “due to direct returns of empty containers from the consignees/shippers/shipping lines to the port container terminals.”
As of May 6, he noted the average utilization of CDAP-member container depots has dropped to 51%.
Pre-port congestion, CDAP members were handling 17,500 TEUs. This figure shot up to 26,600 TEUs at the height of the congestion. But now that port conditions have returned to normal, CDAP members are just servicing a daily average of 12,400 TEUs.
“Almost all returns of empty containers are now to the container port terminals and only withdrawals are being done in our CYs. These direct returns of empties to the container terminals have greatly affected the financial viability and the very existence of CDAP off-dock depots,” Torres explained.
“You may recall that during the height of the port congestion in October 2018 to March 2019, various government agencies and private entities have urged and cajoled CDAP to open new off-dock yards to help solve and ease the congestion at the container ports. CDAP readily accepted the challenge and opened new off-dock yards,” Torres said, referring to the 204,000 sqm established outside Metro Manila.
But after port operations normalized, he claimed terminals resorted “again to the very same method of building empty pool inside the ports to the detriment of off-dock depots, a charge denied by port operators International Container Terminal Services, Inc. (ICTSI) and Asian Terminals Inc (ATI).
“If yard utilization of CDAP off-dock CYs does not improve satisfactorily two weeks after this letter is sent to the various government agencies concerned and AISL”, the association is “considering to close these new 204,000 sqm (20.4 has) off-dock depots located outside Metro Manila and declare (a) CY holiday in all CDAP-operated CYs in accordance with the approved Resolution by the members of the Board of CDAP held last 03 May 2019…,” Torres said.
CDAP members have been caught in a similar situation before. During the 2014 port congestion caused by the truck ban in Manila, some container yard operators opened new depots to accommodate the increased demand only to close the yards when the problem of congestion had been addressed.
In a text to PortCalls, Torres said he is hoping utilization of members’ yards will go up to 70% two weeks from receipt of CDAP’s letter to government officials and AISL. He said this can be achieved if all parties observe BOC’s rules on the delivery of empty containers inside Manila ports.
BOC last March issued Customs Memorandum Order No. 13-2019, which ordered that only empty containers covered by a Special Permit to Load (SPTL) be allowed entry into designated areas of South Harbor and the Manila International Container Terminal (MICT). Under the order, empty containers covered by SPTL will only be moved to the designated areas within 72 hours prior to the scheduled date and time of loading of the carrying vessel for re-export abroad.
Torres also appealed to “consignees/shippers/shipping lines and port terminal operators to observe and implement best global practice of returning empty containers to designated empty container depots and return to the historic system of no or limited return of empty containers from consignees.”
He pointed out that returning empty containers to ECDs first before the port terminal ensures the sea or cargo worthiness of the empties, making sure they are not damaged and are ready for use by shipper. Container depots also serve as a supply points for reusable empties and facilitates drop-off and pick-up when terminal gates are congested, while also serving as control points to avoid congestion by controlling the flow of empties to the terminals, he added.
The CDAP chief admitted they have yet to reach out to the terminal operators “but I’m sure they are pretty aware of our plight.”
Port operators deny empty pool
ICTSI senior vice president Christian Gonzalez, in an email to PortCalls, said “there are no empty pools in the terminal” and that “everything is booked to a ship” at the MICT.
He noted no difference between MICT’s inventory today and at the height of the empty container problem. “In fact we often had more empties inside before simply because there was not enough capacity outside (according to truckers and shipping lines). So I find it quite surprising, especially while utilization is so low, that all of a sudden the contention is that we are taking too many empties when three months ago they were saying we weren’t accepting enough empties,” Gonzalez said.
ATI, for its part, said Manila South Harbor “only accepts empties which are scheduled for load out by vessels docking at the terminal.”
BOC spokesperson and MICT district collector Atty. Erastus Sandino Austria in a message to PortCalls said the SPTL requirement is still being observed at the two Manila terminals.
Austria denied an empty pool at MICT and noted that BOC had in fact increased the threshold for the number of empty containers that foreign shipping lines must load out so they “can return more direct, provided the carriers evacuate them pronto.”
BOC, several foreign shipping lines, and ICTSI last February agreed to load out 17,500 empty containers every week to help bring down yard utilization and resolve the issue with empty containers.
DOTr officer-in-charge for Maritime Undersecretary Fernando Juan Perez, in a phone interview with PortCalls, said he has not yet received CDAP’s letter but noted the transport department is open for discussions.
Closure will be ‘disastrous’
In an email to PortCalls, AISL’s Cruz said, “International shipping lines acknowledge the fact that off-dock empty container depots are important support facilities of the port. The establishment of more off-dock ECDs should not only be encouraged but their role as a key player in port and shipping operations should be strengthened.”
He added, “With the surging import volume and the widening trade imbalance between imports and exports, the planned closure of newly opened depots and the cessation of operations of existing ones will be disastrous to the economy as this will bring about congestion in the terminals, slow down movement of trade and will have dire consequences to Philippine exports.”
“We expect the DOTr, Bureau of Customs and PPA to call AISL and terminal operators for an urgent meeting soon to discuss plans on how to provide the needed support to the off-dock ECDs,” Cruz added. – Roumina Pablo