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Transcript of Roll on Roll off System (strong republic nautical highway)
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GOVERNA A52
Strong Republic Nautical Highway:
The Roll on/ Roll off (RO-RO) system
Baleña, RaymondChing, Catherine AnnaEspiritu, Maria Nikka
Guzman, Anne Clarisse
8/31/2010
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I. INTRODUCTION
Archipelagic Southeast Asia (aSEA) covers five Association of Southeast Asian Nations(ASEAN) member countries—Brunei Darussalam, Indonesia, Malaysia, the Philippines, and
Singapore—together with Papua New Guinea (PNG) and Timor-Leste.1 The aSEA region
includes the Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area
(BIMP-EAGA) and the Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT).
aSEA has a unique geography characterized by more than 24,000 islands spread across
5,200 km from east to west and 3,400 km from north to south. It has a population of over 350
million, 225 million of whom live in Indonesia with a further 87 million living in the Philippines
(Green, 2008).
To the inhabitants of the archipelago, the sea is at once a link and a barrier, as well as a
resource and a challenge. On the positive side of the ledger, the sea provides food and
employment, while the danger of an unsustainable marine environment and the fact that
proximity to the sea heightens vulnerability to national disaster are potential negatives.
Improved connectivity, especially through transport links, is an essential condition for
economic growth. Transport links not only provide physical access to resources, but also enable
producers to take advantage of opportunities in domestic and foreign markets, leading to
economies of scale and specialization.
At the grassroots level, local transport links—whether provided by road, rail, air or water
transport—are essential if local communities are to sell their produce in neighboring markets and
purchase a range of manufactured goods with the proceeds. The existence of local transport links
make possible specialization of production according to comparative advantage and facilitate the
emergence of a local and regional economy. In many areas of archipelagic Southeast Asia, poor
roads and non-existent rail communications mean that sea or river transport is required to access
local urban centers.
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Since poverty and isolation (the absence of basic transport services) are closely
correlated, improved connectivity is a necessary condition for poverty alleviation. World Bank
experience with rural highways in Africa and South Asia has shown that the provision of basic
access through all-weather roads contributes to the reduction of poverty in rural areas, especially
when combined with programs for socioeconomic development.
Economic growth, made possible by the provision of improved transport links,
contributes to poverty reduction by generating income-earning opportunities for the poor and by
increasing government capacity for income redistribution (Liu and Gannon 1999).
The impact of improvements in connectivity on poverty may be direct or indirect.
Connectivity has a direct impact on poverty where improvements in transport or communications
create additional income and employment. The construction of an all weather local road, a bridge
linking two islands or the provision of a regular shipping service where none existed before will
lead to an expansion of employment opportunities in local industry. Transport improvements
have an indirect impact when investment in a new facility sets off a chain reaction that creates
upstream or downstream employment benefits.
Improved connectivity at a regional level widens the potential market available to local
producers, providing opportunities to specialize in agricultural or industrial production according
to comparative or competitive advantage. The economies of scale generated may enable firms to
lower the unit price of their products and further widen their market. Links between regional
economies may develop within the borders of a country or between regions located in
neighboring countries.
In a globalized world, efficient connections between the aSEA region and international
markets are absolutely essential. The Philippines’ model of “nautical highways,” which has
resulted in seamless connectivity from north to south across seas and islands, is seen as having
great potential for aSEA. Inter-island shipping in an archipelagic economy like the Philippines is
a critical element of development and poverty reduction. As mentioned, the Philippines, as part
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of the aSEA, provide evidence that the absence of connectivity is a significant factor contributing
to poverty and underdevelopment.
Maritime transport is the major means by which the islands are connected, and the
movement of commodities and people is facilitated. The Philippines is likewise primarily linked
to the international trade system via maritime transport. By the 1990s, many countries had
adopted a development strategy that emphasizes integration with the global economy (Clark et
al. 2004). Because the Philippines seeks to integrate itself into the global trading system, an
efficient maritime transport, composed of ports and shipping, is a necessary condition for
successful integration.
However, the country’s inefficient maritime transport has effectively acted as a barrier to
domestic and international trade integration. It has stymied countryside development because of
the high cost of transporting people and goods and has stunted efforts to improve productivity
and the competitiveness of exports and tourism. Inefficiencies in maritime transport intensify
transaction cost, resulting in higher goods prices and the erosion of the competitiveness of
exports.
Transport infrastructure plays an important role in integrating the island economies of an
archipelago such as the Philippines. The country relies heavily on its road network to handle
most of the passenger movement and about half of freight movement. Ports are important for
long-distance logistical needs and inter-island routes provide regular roll-on roll-off vessel
operations that connect the main islands of Luzon, Visayas and Mindanao. Airport and rail
infrastructure provide alternative means of transporting people and goods to major economic
hubs around the country.
During the last decade, the Philippines has attained important improvements in transport
infrastructure and services. A road user’s fund was established and various modes of private
sector participation in toll roads, rail and airports were undertaken after the Build-Operate-
Transfer law was passed. The Government also adopted liberalization and deregulation polices in
the shipping industry in 1994 and civil aviation in 1995, which resulted to increased competition,
lower tariffs and better services.
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Important challenges remain with serious consequences for the country’s competitiveness
and for meeting its growth and poverty reduction targets. Although the road network is quite
extensive, less than half is considered to be in good condition; roads leading to many tourist
destinations and in conflict-affected areas in Mindanao are inadequate and road congestion has
become a major problem in highly urbanized Metro Manila.
Reforms envisioned for the ports, airports, heavy rail transport have yet to be realized.
Private sector participation experience in the transport sector has likewise been less than optimal.
With weaknesses in planning, preparing and executing projects, combined with the highly
politicized decision making, increase uncertainties and risks thereby deterring increased private
sector involvement.
According to Asian Development Bank (ADB), five of the ten poorest provinces in the
country fall into what they termed “island provinces”. These provinces include Sulu and
Masbate, both having the largest percent of poverty incidence (63%), third Tawi-Tawi (56%),
next Romblon (55%), and lastly Camiguin (53%). The isolation and lack of connectivity of
these provinces does not allow them to share the benefits of trade. The absence of connections
with other islands (where larger markets exist) serves as a major constraint on economic and
social interaction and integration. There are limited incentives to increase production and farm
productivity (mainly agricultural products) as their markets remain relatively small. This
translates into low incomes for farmers and fishers. Moreover, inefficiencies and high transport
costs exacerbate the problem.
There are 2,456 ports in the country and most of them are small. The government corporation
Philippine Ports Authority operates the biggest public ports while the Philippine Fisheries
Development Authority manages the big fishing ports/wharves. For municipal ports, funded by
the Department of Transportation and Communication operation and ownership is devolved to
the Local Government Units. There are four other independent port authorities involved in public
port operations:
• the Cebu Port Authority operates Cebu Port and several small neighboring ports in Cebu
island;
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• the Subic Bay Metropolitan Authority operates the Subic freeport;
• the Bases Conversion Development Authority (BCDA), which has jurisdiction over the
San Fernando Port in La Union; and
• the Cagayan Economic Zone Authority operates the Port Irene freeport.
The National Economic and Development Authority provided a classification of existing
ports in the Philippines, as of November 2003, the total number of ports is 2456 composing of
17% private ports, 17% fishing ports, 65% public ports and 1% others.
The biggest common-user ports in the Philippines are in Manila – the South Harbor (for
international cargo), the Manila International Container Terminal, and the North Harbor (for
domestic traffic). These are publicly-owned ports under the purview of the Philippine Port
Authority but are privately operated under long-term concessions.
Apart from owning and operating public ports, the Philippine Port Authority also has the
mandate to regulate private ports. There are about 400 private ports regulated by them. These
ports are mostly for industrial use though some operate as commercial ports.
In addition to traditional shipping services, the Government launched in 2003 the Nautical
Highway system to maximize the use of the roll-on, roll-off system to connect Luzon and
Mindanao through the Visayas islands. The project involves rehabilitating existing ports and
construction of new ones to accommodate roll-on, roll-off vessels. Construction of intermodal
links is also being initiated such as the Western Seaboard Intermodal Link project to complement
part of the roll-on, roll-off terminals in the Eastern Seaboard.
The domestic shipping industry has been deregulated since 1994 and the benefits of the
reforms are already felt through the introduction of better quality shipping services.
Thegovernment of the Philippines consciously set out to accelerate the development of its maritime
industry. Under Presidential Decree 474 (Maritime Industry Decree), the government sought to
enhance the competitive position of Philippine flag vessels operating in foreign trades;
strengthen the balance of payments by increasing the inflow of foreign exchange; and generate
job opportunities. Shipping companies are predominantly privately-owned and operated. In
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2001, there are 585 registered shipping companies in 2001, compared to 223 in 1997. Some
industrial firms own and operate vessels to carry their specialized cargoes, like Liquefied
Petroleum Gas and chemicals. The shipping industry however continues to be highly
concentrated with five major shipping lines accounting for 90 percent of passenger and cargo
markets.
Prior to the beginning of the Ro-Ro policy, the predominant method for shipping was the
load on/load off (Lo-Lo) system. In the Lo-Lo system or conventional liner system, goods were
shipped in containers and were loaded and off-loaded by cranes and other dock equipment. This
presented significant cargo handling and wharfage costs. Usually, cargo handling charges are
priced on a per unit basis such as per sack, per crate, etc. Wharfare is the fee paid by the shipper
for using the port area. Conventional ships still use this method today.
The following characteristics may characterize Ro-Ro policy from Lo-Lo policy: No cargo
handling charges since the cargo is “rolling”; No wharfage dues (specified under EO No.170);
Toll fee consists
of four
unbundled cost
items: (i) a
terminal fee
charged on the
self-powered
vehicle and
passengers for
the use of the
terminal; (ii)
berthing fee
levied on the
RORO vessel by
the terminal
operator for mooring and berthing; (iii) freight or rolling cargo fee, based on the lane meter or
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the actual space occupied by the vehicle, charged to the rolling cargo by the carrier vessel
operator; and (iv) a passage fee levied to the passengers by the RORO vessel operator;
Simplified documentary requirements; and Waiver of port authorities’ share in revenues, with
PPA and MARINA receiving a fixed annual administrative supervision fee.
Ro-Ro is a system designed to carry rolling stock cargo which does not require cranes for
loading or off-loading. Because the cargoes are rolling cargoes—i.e., cars, buses, trucks, etc.—
which simply roll on and off the Ro-Ro ships, Ro-Ro does not require cargo handling services.
This eliminates cargo handling labor and equipment, and reduces the amount of time required to
be in a port which can lead to considerable reductions in sea transport costs. It is meant to
provide greater access to island provinces and better integration among the different regions. It is
a response to the clamor for greater efficiency and lower cost in transporting passengers and
goods from Mindanao to Luzon.
Various types of RORO vessels include ferries, cruise ferries, cargo ships, and barges.
New automobiles that are transported by ship around the world are often moved on a large type
of RORO called a Pure Car Carrier (PCC) or Pure Car Truck Carrier (PCTC). Unlike elsewhere
in the shipping industry where cargo is normally measured by the metric tonne, RORO cargo
will typically be measured in the more convenient unit of lanes in meters (LIMs). This is
calculated by multiplying cargo length in meters by the number of decks and by its width in
lanes (lane width differs from vessel to vessel and there are a number of industry standards).
Aboard PCCs cargo capacity is often measured in RT or RT43 units which is based on a 1966
Toyota or by car equivalent units (CEU).
RO-RO system is said to be the most appropriate mode of inter-island transport for an
archipelagic economy like the Philippines. The Philippines Ports Authority (PPA), which had
the sole power to set cargo handling rates and the one which received a percentage of the cargo
handling fees collected, has a lack of interest regarding about this system. Although this is the
case, there is still an increasingly private sector support for the RO-RO concept. At the regional
level, the business community in Mindanao was particularly active. Many could not understand
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why it was less expensive to ship to Manila from Hong Kong, China or Bangkok than it was
from Mindanao.
Mindanao business communities advocated a RO-RO policy that would primarily
encourage private sector investments in the development and operation of RO-RO terminals and
ships. A strong support in the key government agencies in the RO-RO policy can also be seen.
The principal supporters within the government included the National Economic Development
Authority, Department of Agriculture, Department of Environment and Natural Resources,
Department of Interior and Local Government, and Development Bank of the Philippines.
The key features of the Ro-Ro policy include the removal of cargo handling charges,
removal of wharfage dues, simplified documentary requirements, fixed regulatory supervision
fees, fee based on a “lane meter” basis for all rolling cargoes (as opposed to weight), the
encouragement of existing private portoperators to convert their operations to RRTS (Ro-Ro
Ferry Terminal System)
The country’s Ro-Ro system is governed mainly by the Maritime Industry Authority
(MARINA) and PPA, both of which are under the Department of Transportation and
Communications (DOTC).
The main objectives of the RO-RO policy are:
• To reduce transport costs from Mindanao to Luzon, through the Visayas, and specifically
the cost of inter-island transportation through the establishment of a safe, efficient, and
cost-effective RRTS. This would enable people to transfer goods and products more
effective and less costly to other islands.
• To enhance tourism, transportation, and commerce throughout the country. Since
travelling to inter-islands is easier and less costly, people can then travel to other islands
that can increase one island’s tourism as well as commerce.
• To facilitate the government’s agro-fisheries modernization and food security programs.
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• To promote private sector participation in the establishment, construction, and operation
of RRTS facilities.
• To establish a new policy to promote the development of RRTS.
Moreover, the Ro-Ro policy explicitly sought to encourage private sector participation. The
options for private investment include integrated investment in Ro-Ro links. This includes (i) the
construction, development, and operation of the terminals (origin and destination) as well as the
acquisition and operation of Ro-Ro vessels; (ii) investment in Ro-Ro terminals (including their
construction, development, and operation); and (iii) investment in Ro-Ro vessels (including the
acquisition and operation of Ro-Ro vessels to service the RRTS routes).
The idea of roll-on/roll-off (RO-RO) shipping did not surfaced up until 2002 when it was
proposed as one of the solutions to the problem/issue the shippers had raise; that is the high cost
of transport from Mindanao to Manila.
Prior to this, the Philippine shipping industry was on a bad shape; that it is lagging in the
international arena and that there is so little government attention being given to improve the use
of our waterways for the transportation of people and goods, or for that matter, in the crafting of
laws that would encourage industries related to shipping.
Before we entered the 21st century, our shipping industry, which is tasked to ferry
passengers and cargoes in between islands, was mired by floating coffins, that is wooden hulled
bancas, and new or appropriate second hand vessels were lacking in service. Aside from this,
maritime schools were sub-standard and inadequate, thus producing seafarers that are
uncompetitive and unqualified to such jobs/positions in the said industry. Workable programs or
financing schemes which is a key in attracting investors or new players to venture and participate
in the shipping industry were still a need. Also, policies and laws whose terms and conditions are
acceptable to the industry’s players and to which can broaden the scope and benefit the industry
were either pending or have yet to be made. Hence, an ugly picture, that is inefficient, ineffective
and inefficacious, can be depicted and drawn from the Philippine shipping industry.
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The said picture of the Philippine shipping industry can be rooted to two things, namely,
regulation and competition. Before, the Philippine government had a monopoly on the said
industry. It handles and operates all by itself; that is from the creation and development of ports,
to the administration and management, to the services being provided. But because the
government is not an expert in some fields, it had failed to satisfy the growing demand for better
and lower-priced infrastructure services and greater access by the population. Hence, tapping the
private sector for help was made. In doing this act, competition was made possible. However, the
government cannot easily be disregarded, for its role now is to regulate and protect the said
industry from exploitative and warring firm behavior.
Regulation and competition should neither be that simple (would cause abuse) nor over
(would cause negation of benefits). Rather there should be a right combination of regulation and
openness to potential competition in an industry such as the shipping industry. The two should
not be treated and looked as either mutually exclusive or contradictory, but rather mutually re-
enforcing. (Llanto et.al, 2005).
Opposition to RO-RO in the early 2000 was primarily made by some of the PPA officials
whose in mind was the corporation’s profits and status once the program and policy is passed. If
implemented, its collection of fees would be smaller because of the simplification of payments
and dues. Also, conflict of interest between the regulator (government/PPA) and the operator
(private) may happen if corresponding convention would not be put in place.
Routes of Ro-Ro
The Ro-Ro systems were composed of three major routes: The Western, Eastern and the
Central Nautical Highway. The Central Nautical Highway connects Batangas City, Oriental
Mindoro, Aklan, Iloilo, Negros, and Zamboanga del norte. All in all there are 8 ports that are
operating under this route, two in Oriental Mindoro and in Negros. The Central Nautical
highway connects Sorsogon, Masbate, Cebu, Bohol, Camiguin and Misamis Oriental. There are
10 ports in this route, two in Camiguin, Masbate, Cebu and Bohol. The Eastern Nautical
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Highway on the other hand connects only four ports. One in Samar, Leyte, Sorsogon and in
Surigao del Sur.
The Western Nautical Highway
As mentioned earlier, there is a total of eight ports that are operating in this route. Ever since its
establishment in 2003, passenger and vehicle traffic have increased drastically. The people were
given a choice whether to travel by land and sea or by air. People who couldn’t afford airfares
could still travel through the Ro-Ro network.
*In millions. (Source – Phil. Port Authority)
The figure above indicates that there has been an increase the number of
passengers that have been using the Western nautical highway. The slight decrease
in 2006 may have been caused by the increase of transportation costs due to theincrease in oil prices. Not only did the number of passengers increase, but also the
number of vehicles passing through the nautical system. This is further
demonstrated by the figure below.
*in millions. (Phil. Port Authority)
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Lastly, the frequency of trips has also increased in the Western Nautical ports which made
services in this area a lot faster and more reliable. The increase in the frequency of shipping slots
was caused by the increasing number of passengers and vehicles passing through the Western
nautical system.
*in millions. (Phil. Port Authority)
The Central Nautical Highway
The Central nautical highway was inaugurated in April 2008. The central components of
the highway include Pilar (Sorsogon) – Aroroy (Masbate), Cawayan (Masbate) – Daang
Bantayan (Cebu),Mandaue (Cebu) – Tubigon (Bohol), Jagna (Bohol) Mambajao (Camiguin),
Benoni (Camiguin) – Balingoan (Misamis Oriental). Trade especially in Masbate, one of the
developing provinces in the country significantly increased due to the easy transport of goods
through the Ro-Ro system. The opening of the port in Aroroy served as a major entry point to the
province of Masbate. The port in Cawayan was expanded by the PPA in order to increase its
vehicle and passenger capacity, and to cater to the growing numbers of rolling cargoes in the
area. The frequency of shipping slots also increased in the Visayas area. Lastly the PPA also
increased the port capacity in Jagna which now caters to shipment of agricultural products which
includes copra, bananas, lanzones etc. daily.
The Eastern Nautical Highway
Unlike the previous route, the Eastern nautical highway is shorter and fewer ports are
included in its range. This route included the Philippine-Pan highway or previously known
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Maharlika highway which links Samar to Luzon. The Eastern Nautical highway connects Samar
to Mindanao. Just like in other highways, the roads which were in “bad shape” were fixed
specifically in the Hinabangan-Catbalogan-Calbayog area. One of the ports, which is in Surigao
was not completed until April last year. With this new Ro-Ro facility, shipments to and from the
province are no longer off-loaded for re-transporting. This resulted to a decrease in cargo-
handling time and costs and, consequently, ensuring better quality and lower prices of goods.
Additional ports were also opened in Eastern Visayas which would help in the ensuring the
quality of delivery of services in the eastern part of the country. These ports are the 71.63 million
San Ricardo Port in Southern Leyte and the 55.98 million Naval Port in Biliran.
Routes
*Source- PPA
Impact of Ro-Ro on the Public and Private Sectors
Since the operation of RoRo, the dynamics of inter-island shipping has significantly
affected various sectors in the country. The introduction of this new transportation and cargo
system has rendered effects which are positive or negative, depending on the point of view of a
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member from a certain sector in the society . This portion of the paper is intended for the review
of the impacts brought about by the RoRo project.
The most significant impact of the
project is the reduction in
transportation cost. In the research
conducted by the Asian Development
Bank, USAID and The Asia
Foundation, it was deduced that
transportation cost of shipping
through the RoRo system is
inexpensive as compared to the costs
of traditional shipping. The ADB
said in April 2010 that the RoRo
system has allowed transportation costs to decline by as much as 105 to 60% since the system
was put in place in 2003. The report showed that savings in shipments of beer amounted to 57%
or P13,000 from P30,400 in traditional shipping; dry goods, 20% or P40,000 from P50,000;
medical kits, 60% or P4,000 from P10,000; live cattle, 43% or P51,500 from P90,465; liquid
carbon dioxide, 68% or P71,664 from P225,000; and assorted fish, 27% or P23,360 from
P32,000. The logic behind these decrease in transportation costs is due to the reform in the
procedures one must go through in order to transport goods. The reduction in cost of
transportation logistics has caused the transportation of tomatoes from Misamis Oriental to
Manila post net savings of 33% compared with the containerized mode of shipment .The removal
of cargo-handling costs and wharfage under the Roro policy are important factors in the lowering
of transport costs. Since the introduction of the Roro policy in 2003, the yearly increase in cargo-
handling charges has stopped.
One impact of the project is that it has ameliorated the way goods are shipped throughout
the archipelago. One advantage of the RoRo transport system has resulted to a quicker procedure
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at the terminals: the elimination of cargo handling, quick loading and unloading, and collection
of charges. The efficiency of product transportation has lead to the smooth flow of trade across
the Philippine islands. There has been rapid growth in cargo volumes on the RoRo network . For
example, on the Western Nautical Highway, rolling cargo traffic has experienced steady
increases since its inception in 2003. During the inaugural year of the network, 254, 029 rolling
cargoes passed through. Five years after its opening, rolling cargo traffic has increased by 65%,
reaching 419, 740 vehicles in 2008 (ADB, 2010).
The RoRo connections have been playing an important role as one of the north-south
trunk corridor together with inter-island shipping routes. What makes the RoRo system better is
that short-distance ferries have been serving locations which have not been covered by inter-
island shipping routes. The RoRo route provides a transverse service route that complement
national hub-and-spoke network formed by the inter-island shipping. With the RoRo ferry
service in Visayas Region, the distance of transportation is shortened by direct delivery from
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production zone to consumption zone without the double handling at NCR . Since the RoRo
system eliminates the handling between ship and truck at the ports, duration of the transportation
can be drastically reduced. This means a truck can cover a wide area in other islands and this
encourages the suppliers to reduce the number of warehouses. This all the more justifies how
RoRo could bring down the prices of commodities. Moreover, the shortened transportation of
products can help avoid damaging the products brought about by an excessively long travel. The
consumers can assure that the commodities they purchase are of good quality . On the side of the
producers or suppliers, this means more profit and more willingness to manufacture their
products.
The innovation in the routes created by the RoRo transportation system has fortified theinter-island ad regional relations across the archipelago. RRTS has provided more convenience
not only for the passengers but for the transported goods as well . The RoRo ferry service
between Batangas City and Calapan, Mindoro which was operationalized in the 1970's has been
the food supplier to Metro Manila and rich in coastal resorts. The Mindoro-Panay RoRo ferry
link has given Panay Island full access to all the adjacent islands which make it possible to
deliver goods in a day.
Apart from cutting logistics costs of goods, the Roro system has also been instrumental in
opening up new markets, developing previously isolated island provinces, improving cargo
handling and efficiency in cargo delivery, and facilitating tourism development. The opening of
the Strong Republic Nautical Highways has not only linked the country’s major islands of
Luzon, Visayas and Mindanao, but has also had positive network effects on the economies of the
smaller islands along the major routes. In the case of Southeast Asia, the ADB said that Roro
networks could be centered on Java, Luzon, Bangkok, Singapore and Port Klang in Malaysia.
The tourism industry is also one of the sectors that has greatly benefited from RoRo . The
RoRo infrastructure has greatly boosted the growth of tourism in several areas covered by RoRo
services along the nautical highway. It is very accessible for travellers who want to enjoy the
tourist spots on islands where RoRo ports are situated. In example, the Batangas-Mindoro RoRo
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system can enable the tourists to enjoy world-class beaches at Puerto Galera . The Dangay port in
Roxas, Oriental Mindoro serves as a springboard to the world-renowned Boracay Island in
Aklan. This also brings in more investments from wealthy foreigners who wish to build their
beach resorts in the Philippines. Since transportations costs are lower in RoRo, tourists and
travellers are more encouraged to use this as a mode of transportation . Not only will they be able
to save money, they will also save a lot of time to explore the wonders of the Philippines . RoRo
paves way for other scenic spots in the Philippines to be recognized and appreciated by visitors.
A boost in tourism also means an economic boost in the provinces who would be expecting more
travellers.
The development of RoRo ports serves as a catalyst for the development of their respective areas of influence. Ports as gateways facilitate the flow of goods and people . This
development could result in increased investments, production, employment, income,
consumption, savings and more tax revenues for LGUs. The commercialization of rural areas
means that there would be more efforts to beautify the area in order to attract more tourists.
Moreover, with products reaching more markets via RoRo, there is a greater incentive to produce
more and develop new products. With the expansion of the RoRo network, this experience can
be replicated in other areas situated along the nautical highways, especially in those poor
municipalities or provinces that are now linked with major market economies because of RoRo.
The establishment of the RoRo network has had a tremendous impact on many
companies which previously shipped via conventional shipping. The reduction in transport costs
couple with efficiency has transformed how companies and shippers transport their products
throughout the country. Since the RoRo system is emerging as a more efficient mode of
transportation, this poses a challenge to the shipping lines in terms of trade and passenger
transportation. In order to keep the shipping industry, it needs restructuring and it has to be more
competitive by trying to impose lower rates and more convenience in terms of transportation.
The full implementation of the RoRo transportation system will reduce cargo handling
costs and result in more efficient transport of goods . However, port workers who used to handle
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cargo and related services may be adversely affected. The government has recognized this
potential problem and needs assistance in developing an action plan that provides a safety net for
affected port workers.
The team responsible for the implementation of the project was tasked to draft an action
plan outlining a program for affected port workers, including possible sources of funds to finance
the program.
An action plan was drafted by the team and was included in the original version of the
proposed Executive Order . The proposed program for displaced port workers was included in the
original draft of EO 170-B as one of its provisions.
Essentially, under the EO, the Philippine Ports Authority (PPA) shall collaborate with the
Office of Transport Cooperatives (OTC) of the DOTC in order to organize the port workers into
transport cooperatives so that they can participate in the RRTS as transport service providers .
Moreover, an amount of Php.100 M shall be allocated to finance the undertaking. The said
amount shall come from the PPA's port development fund. Port workers can avail of the fund via
soft loans. Another option for the port workers is that they can also put up a workers enterprise
where they can go into small business. The port workers may also undergo a retooling of skills
with the help of TESDA.
Government Policies
The government issued policies in order to enhance the Ro-Ro systems. First is that
PGMA directed DPWH to declare all roads connecting Ro-Ro terminals part of the Strong
Republic Nautical Highway as national roads. PGMA also issued EO 170-A which removed the
50- Nautical mile which basically made all the roads in the country part of the Ro-Ro operations.“This intervention is designed to improve the development and maintenance of roads forming the
national highway, eradicate illegal imposition of toll fees, as well as increase the participation
of the Department of Public Works and Highways (DPWH) in the strategic development of road
networks that will further expand the SRNH system.”(Agribusiness Week, 2008) She also
ordered that private ports be converted into commercial ports in order to support the
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development of the RO-Ro system. This was stated in EO 170-B, issued in September 2005. The
EO 170 outlines several advantages that will enhance the Ro-Ro system.
• No cargo handling charges (since RO-RO shipping deals with rolling cargoes)
• No wharfage dues
• Freight based on lane meter
• Toll fee consisting of freight, berthing, terminal and passenger fees
• Simplified documentary requirements
• Waiver of port authorities’ share in port revenues (limited to registration/supervision
fee)
• Privatization of public RO-RO ports
• Minimum permit requirements in port construction and operation
• Available financing from the Development Bank of the Philippines (DBP)
*Source – Agribusiness Week, 2008
To further bolster and expand the said Executive Order, in June 9, 2003 and September 19, 2005,
EO170-A and EO170-B were signed and acted respectively. The former amendment practically
declared any route within the entire country eligible for RO-RO operations while the latter
amendment fast-track the expansion of the RRTS through the inclusion of the private ports into
the system. In order for these policies to be effective, supplementary declarations were
made.Aside from the issuing of the EO 170, the Philippine Port Authority also came up with
several Memorandum Circulars that supports the Ro-Ro network. They passed the first circular
in November 2003 (PPA MC 17-2003) which provides standard tariff rates to all ports that are
part of the Ro-Ro network. Following this circular in 2004, were three other MC’s that included
other Ro-Ro ports in the standardization of terminal fees, and declared several routes as part of
the Strong Republic Nautical Highway. This included Batangas – Mindoro (Puerto Galera);
Mindoro (Calapan – Puerto Galera); Mindoro (Roxas) – Romblon; Mindoro (Pola) – Marinduque
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(Balanacan); Mindoro (Apo Reef, San Jose) – Palawan (Puerto Princesa) (PPA MC 29-2004). To
provide efficient and quick services in these ports, the PPA also passed an MC that required the
use of color-coded tickets in the processing of terminal fees. The DOTC also took part in
enhancing the Ro-Ro system by encouraging the participation of the private sector. TIN 2007,
the PPA put all the ports that are part of the Ro-Ro up for auction in order for the delivery of
services to be more efficient. The imposition of additional fees and taxes to the passengers was
prohibited by MC 2006-70, in December 2007. Additional policy recommendations were mostly
directed towards the expansion of the SRNH network. Today the Phil. Port Authority and the
DOTC are working together to insure the quality of services and the stable development in the
privatized Ro- Ro ports.
In providing support to the full implementation of the Road-RORO Terminal System
(RRTS), first, Maritime Equity Corporation of the Philippines was established in 2005 whose
primary objective is to provide finance leasing services for passenger, freight, cargo, vehicle,
goods, and merchandise vessels. It is also tasked to provide sale-leaseback arrangements, hire-
purchase agreements, and financing schemes. Second, RA9295: Promoting the Development of
Philippine Domestic Shipping, Shipbuilding and Ship Repair and Ship Breaking, Ordaining
Reforms in Government Policies towards Shipping in the Philippines, and for Other Purposes
was passed and implemented to promote:
• Filipino ownership of vessels operated under the Philippine flag
• Attract private capital to invest in the shipping industry through healthy competition
• Provide assistance and incentives for the growth of the Philippine marine fleet
• Encourage the improvement and upgrading of the existing marine fleet and Filipino
crew to meet international standards
• Ensure the continued viability of domestic shipping operations
• Encourage the development of a viable shipbuilding and ship repair industry for
expansion and modernization of the Philippine shipping industry.
One of the benefits the RO-RO project of the government is that it discourages and
prevents monopolies and cartels to surface on the industry. It liberalizes and deregulates the
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industry. It helps in correcting the dysfunctional arrangement of our country’s shipping industry
by enhancing the processes one needs to take such as documentation and payments (e.g.
application of the SRNH-RORO tariff, which eliminates cargo-handling and wharfage costs). Other
benefits of the project includes improvement of efficiency and reduce cost, flexibility to determine
the most efficient and cost-effective way of shipping cargoes, enhance tourism, commerce and
unity of the country.
Citizen and Experts’ Responses
As discussed earlier, both the public and the private sectors have benefited largely from
the introduction of the Ro-Ro in the system. The ADB seemed to favor the introduction of the
Ro-Ro systems in the country. Several of their reports have shown that through the Ro-Ro
system development became possible especially in the rural areas. This organization claims that
the Ro-Ro network was able to cut down travel and transport expenses therefore increasing
passenger and vehicle traffic. Big corporations have also largely benefited from this project such
as Nestle, Lemon Squares, Gardenia and KFC. All four have been able to expand their
businesses and reach rural areas through the Ro-Ro system. Local farmers have also been able to
broaden their trading relations and have gained more incentive to produce more agri-products.
Raul Rodgriguez, head of the Asian Marine Transport Corporation has claimed that a lot of small
businessmen have reaped benefits from the newly established Ro-Ro system. Some of these
benefits include lower fuel prices, cheaper and quicker transport of goods and easy access to raw
materials. So far, the Ro-Ro system has been getting positive feedback from the citizens and the
experts. It seems as if that the implementation of this government project was successful enough
that everyone that is part of the system have benefited from it.
CONCLUSION
One of the accomplishments of the Arroyo administration is the creation of the Nautical
Highway System using Roll-On/Roll-Off (RO-RO) vessels. It has reduced passenger and cargo
transport costs as well as travel time within the Philippines. With its integration to the national
highways, a bigger and connected nautical highway, which is valuable and important to the
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country, was made possible and had played a big role in bridging the gap in between islands. To
date, the shipping industry and in particular the usage of RO-RO made an impact by changing
the orientation/view of the people towards water transportation. Now, people have the courage to
ride a boat instead of taking a bus, train or an airplane in going to their destination. Now, people
will not sigh or think twice using ferries for services. To make the project better, government
should focus and be keen on developing a better network such as a spoke to hub or hub to hub
network (Kobune, 2007). The industry is a spur of growth for the country, thus shouldn’t be left-
out. With the country now having a new president, a new administration, local shipping industry
should not be afraid and timid to work and push forward the improvement of shipping laws and
conditions, thus improving the lives of the many Filipinos who toil in the fields under the heat of
the midday sun or who bring their boats in the dark of the night to haul in fish or those who wish
for a safer, reliable and cost efficient means of water transport over our seven thousand islands.
The roll-on/roll-off ship is one of the most successful types operating today. Its flexibility, ability
to integrate with other transport systems and speed of operation has made it extremely popular
on many shipping routes. The roll-on/roll-off ship is defined in the November 1995 amendments
to Chapter II-1 of the International Convention for the Safety of Life at Sea (SOLAS), 1974 as
being “a passenger ship with Ro-Ro cargo spaces or special category spaces…” One of the Ro-
Ro ship’s most important roles is as a passenger/car ferry, particularly on short sea routes.
But despite its commercial success, the Ro-Ro concept has always had its critics. There
have been disturbing accidents involving different types of Ro-Ro ship, the worst being the
sudden and catastrophic capsizing of the passenger/car ferry Herald of Free Enterprise in March
1987 and the even more tragic loss of the Estonia in September 1994.
Although Ro-Ros have proved commercially very successful, some concern has been
expressed about Ro-Ro ships from the safety point of view virtually ever since the first Ro-Ro
ships were introduced. The whole design concept is different from that of traditional ships
because of the introduction of a number of elements which make Ro-Ro ships unique.
On conventional ships, the hull is divided into a number of separate holds by means of transverse
bulkheads, many of which may be watertight.
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In the event of the hull being holed, the bulkheads will limit or delay the inrush of water,
resulting in the ship sinking slowly enough for the evacuation of those on board or even
preventing the ship from sinking at all.
With Ro-Ro ships the installation of unpierced transverse bulkheads is a major obstacle,at least on the upper “through” decks: the whole idea of the Ro-Ro ship depends upon being able
to drive cargo on to the ship at one end and off again at the other. The installation of fixed
transverse bulkheads would prevent this. Although Ro-Ros are all fitted with the watertight
collision subdivision, and engine-room bulkheads below the freeboard deck prescribed by
SOLAS, the huge vehicle decks make it possible for water to enter very rapidly and fire can also
spread very quickly for the same reason.
The fact that Ro-Ro ships generally have a very large superstructure compared with other types means that they can be more affected by wind and bad weather. The high sides of many
modern Ro-Ros, including passenger ships, pose problems regarding lifesaving appliances: the
higher a lifeboat, for example, is stowed the more difficult it can be to launch, especially if the
ship is listing badly.
These factors indicate that Ro-Ros are highly sophisticated ships which require very
careful handling. This makes them exceptionally vulnerable to human error.
With the government touting, and heavily promoting, the “Philippine nautical highway”
there is no better time than to seriously examine the long-term efficacy of the use of Ro-Ro
technology.With our domestic shipping firms deploying joint use ‘passenger-plus-cargo Ro-Ros,
the vessels are clearly playing the role of Grim Reaper in our inter-island waters
The trend towards liberalization in all transport services pervades the Philippine policy
framework. The major transformation however, is felt even more in domestic shipping than in
the overseas maritime transport services. This is because it is in domestic shipping that restrictive
policies have long been implemented. Nonetheless, review of the policy and regulatory regime
of the Philippine international maritime services is being undertaken. The perception that
investors tend to shy away from countries where doing business is deemed to be expensive
because of bureaucratic processes and incompetence serves as one of the basic premises from
which review of policies, laws and regulations is being drawn. Restrictive policies generally
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contribute to the outlook of government officers and regulatory agencies to put unnecessary
pressure on the service operators thereby engendering dissatisfaction among these service
providers.
One area of concern is the increasing interest to make the Philippines a leading maritime
hub in the Asian region as an alternative to the existing leadership of such maritime centres as
Hong Kong and Singapore. Moreover, the reservoir of maritime human resources consisting of
competent and qualifiedmerchant marine officers and professionals as well as ship management
executives shall, in the long run, lead to the development of the Philippines as a competitive
maritime centre.
No less than the Congress of the Philippines had shown enthusiasm towards achieving
liberalizationthough to a limited extent this may cover domestic shipping. Just the same, policies
and laws which will in any way lead to liberalization in the domestic shipping will in all
eventualities affect the existing regime of the overseas shipping sector.
As an emerging maritime centre, the Philippines can hope to generate employment
opportunities for the almost half million maritime graduates and professionals. These
professionals are not limited to those who are in the navigation of ships but also in other related
maritime activities such as stevedoring, ship management, shipbuilding and ship repair as well as
in related maritime consultancy activities.
Expansion of shipping activities in the Philippines is expected to result from
liberalization whereby more ship calls at the ports will also mean marketability of the
shipbuilding/ship repair capabilities of the country. The natural harbours of the country make it
one of the best locations for a shipbuilding industry. In fact, two major shipbuilding
conglomerates have already made the country an extension of their operations. This will have a
trickledown effect on the other service sectors like manufacturing of ship spare parts and other
components of a ship. The ship agency sector will expectedly also expand as a result of this.
The Philippines’ review of existing policies and laws is a manifestation of the very high
expectations it has placed on the results of globalization/liberalization in the area of maritime
transport, notwithstanding the stalled negotiations in the GATS. It is in the operationalization of
the liberalization formula that the country hopes to achieve the accelerated development of the
Philippine international maritime transport services.
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