Roll on Roll off System (strong republic nautical highway)

7/14/2019 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



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.



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



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.



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;



• 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



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



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

http://en.wikipedia.org/wiki/Ferry

http://en.wikipedia.org/wiki/Cruise_ferry

http://en.wikipedia.org/wiki/Cargo_ship

http://en.wikipedia.org/wiki/Barge

http://en.wikipedia.org/wiki/Ferry

http://en.wikipedia.org/wiki/Cruise_ferry

http://en.wikipedia.org/wiki/Cargo_ship

http://en.wikipedia.org/wiki/Barge



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.



• 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.



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



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)



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



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



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



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



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



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



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



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



(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



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



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.



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



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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http://www.bizlinksphilippines.net./031210.html

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USAID/Philippines strategy, Inclusive: 20-27.

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