7,641 islands and 106 million people: crisis or opportunity?

Charlie Bartlett asks Archipelago Philippines Ferry Corporation’s Mary Ann Pastrana how the Philippines’ ferry industry can overcome fuel, safety, regulation and operational challenges

7,641 islands and 106 million people: crisis or opportunity?
Archipelago Philippines Ferry Corporation’s 12 FastCats are connecting all areas of the Philippines

This article was first published in the Autumn/Winter 2018 issue of International Cruise & Ferry Review. All information was correct at the time of printing, but may since have changed.

With 7,641 islands and 106 million people to serve, it’s back-breaking work for the Philippines to maintain a viable transport network, particularly because more than 80% of domestic Filipinos travel by ferry on a regular basis. However, it’s about to get even more challenging thanks to the International Maritime Organization’s (IMO) new global sulphur regulation, which is likely to affect all ferry companies, even those domestic operators that are not bound by its rules. Combating this will be a difficult problem; ferry operators are already strapped for cash and it will be difficult to avoid this hike in operating costs, according to Mary Ann Pastrana, executive vice president of Archipelago Philippines Ferry Corporation (APFC).

“Rising fuel prices are a big concern since fare prices cannot be easily increased – they are market driven,” says Pastrana. “There is also a lack of incentives for modernisation, lack of financing from banks, and a lack of insurance support. The other challenges facing our domestic ferry fleet are the aging and uneconomic passenger ro-ro ships. There’s need for modernisation and expansion of the Philippine Merchant Fleet, and a need to enhance domestic capability for shipbuilding and ship repair and maintenance.”

As the oil price goes up, fuel costs are already rising everywhere in the maritime industry, and even today it is becoming more difficult to offset these increases against ticket revenues. But come March 2020, it will be illegal for international vessels to carry non-compliant fuel. This is likely to have a knock-on effect on the availability and cost of all maritime fuels, particularly for the ferry sector, as large cargo freighters which previously burned cheap bunkers now switch to distillates, eating into supply. The development will yield a sudden and major imperative on operators to invest in their fleets to bring down fuel and other operating expenses while serving an ever-increasing capacity demand. “With the continuous increase in population and 80% of Filipinos using the sea lanes, modernisation of the fleet is the way to go,” Pastrana says. “Modern ships with better speed can get the goods faster and there is reliability in the service.”

According to Pastrana, if old, slow and inefficient vessels are replaced with faster models, ferry lines will not need to dramatically ramp up capacity to meet their customers’ needs. Noting that she believes her company has found the solution, Pastrana says: “APFC is happy to be a pioneer and is at the forefront of modernisation in the Philippines with its current fleet of 12 FastCats connecting the Western, Central, and Eastern nautical highways of the country.”

APFC’s FastCat catamarans are not only faster than conventional monohull ferries, but they are also more stable in bad weather and generally safer. But the catamaran shape isn’t the only advantage to this type of vessel. “These vessels have redundancy on engines and generators,” says Pastrana.

APFC is due to take delivery of 10 FastCat vessels by 2019 and a further 10 in the following year. “They will be able to operate using solar or wind power and they will improve connectivity in the Philippine Islands tremendously,” Pastrana says. “New generation FastCats will be continuously improved taking to mind the needs of customers and the environment where we operate.”

Pastrana believes that there are more ways to increase operational efficiency than merely having the most operationally efficient vessels. “We’re completing the digitisation of our enterprise from ticketing, online booking, accounting and finance, crewing and asset management within 2018,” she says. “We have a vessel tracker system from Germany that enables us to track our vessels, their location, speed, time of departure and arrival, and weather. Meanwhile, geofencing capabilities allow us to ensure vessels are secure and plying within voyage plan. We also have an alliance and partnership with bus operators – we’re modernising not only our vessels, but also the buses and terminals. This, alongside the digitisation of all systems, will provide a seamless service to customers.”

Difficulties with rising fuel costs and the need to build energy-efficient vessels are not the only operational challenges that ferry companies in this region face. Systemic issues threaten the future of the transport network and must be addressed. “The Philippine Maritime Industry Authority (Marina) has a lot of work to do, but has had a leadership crisis,” Pastrana explains. “There are a lot of graft and corruption issues inside the organisation.”

However, Philippines President Rodrigo Duterte has now fired the former head of Marina, Marcial Amaro, and appointed Armed Forces chief of staff Rey Leonardo Guerrero, who has promised a tough stance on corruption. Guerrero was quoted by local press warning Marina employees that “corrupt and non-performing employees will have no place in this organisation”.

Now, Marina is working together with the IMO to host ferry safety conferences in the Asia-Pacific region surfacing issues, coming out with directives, and getting commitments from the stakeholders of the countries to implement. “IMO has done a good job promoting the Sustainable Development Goals (SDGs) and encouraging the alignment of strategies to achieve these,” says Pastrana. “APFC is happy to actively participate in these conferences. In fact, our president Chet Pastrana presented in China last year while I presented in Timor Leste with the Women in Maritime organisation. We share our best practices in these conferences, and we hope that others may learn from our experience.”

Authorities must get involved in cultivating a supportive environment for companies like APFC to grow in expand, if they are to meet the ever-increasing needs of the Filipino population, says Pastrana. “Though there is already Asean integration, there is still a need for better coordination between authorities and alignment of policies on customs, immigration and quarantine,” she explains. “We need our flag state to create a roadmap to address the challenges and issues of the industry. They must provide a conducive environment for stakeholders, as well as technological assistance – or better yet, subsidies to aid operators and further encourage investment in the industry.

“We need all maritime stakeholders to work together to find solutions and make things happen. An important sector that has to be given attention is manning; we need to continuously develop a reservoir of trained manpower.”

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Wednesday, January 30, 2019