- 4 months ago
Beyond the Headlines tackles two key issues shaping public discourse today.
We break down the Philippine economy with Rene Ledesma, chairman of the Association of International Container Lines Port Operations Committee Cebu, and its impact on the shipping industry.
We also unpack the latest on the ALCQ tax settlement with Aldwin Empasis and Atty. Resti Arnaiz.
Join us for expert insights and clear explanations on issues that matter.
We break down the Philippine economy with Rene Ledesma, chairman of the Association of International Container Lines Port Operations Committee Cebu, and its impact on the shipping industry.
We also unpack the latest on the ALCQ tax settlement with Aldwin Empasis and Atty. Resti Arnaiz.
Join us for expert insights and clear explanations on issues that matter.
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NewsTranscript
00:14Good afternoon and welcome to Beyond the Headlines. I'm DJ Moises. Today we'll look at two stories, one driven by
00:21global forces, the other by local decisions, but both with real impact on everyday Filipinos.
00:28How much are we really paying and are we getting fair value in return? Let's begin with the impact of
00:35the rising oil prices on shipping and logistics. To help us understand how this plays out in the ground, we're
00:43joined by Rene Ledesma, Chairman of the Association of International Container Lines Port Operations Committee in Cebu. Hi Rene, welcome
00:52to Beyond the Headlines.
00:53Good afternoon.
00:54Good afternoon, yes. So to start, let's go with something fundamental, especially for our viewers who are not very familiar
01:02about the industry. So how is the rising global prices affecting logistics, especially shipping?
01:12Well, shipping, especially container shipping lines, 50 to 60% of our cost is from fuel. So this will mean
01:23a lot of things. The freight will of course go up. There will be what we call by various names,
01:29emergency bunker surcharges, general rate restoration, or even what I saw recently on CNN, general insurance also goes up.
01:40Because especially ships, which are supposed to be able to pass the state of Hormuz starting today for two weeks.
01:49But that's not still a sure thing, because Israel is still bombing Lebanon.
01:54So we're not sure if that truth will hold. But as I mentioned, 50 to 60% of our cost.
02:02And of course, we need to discuss about other parts of the logistics chain, aside from shipping, which will also
02:12be surely affected.
02:13So you say 50 to 60%, was that the case before? Or is that already the case now that all
02:23the prices have already increased?
02:25That is the case before. Now? Now, I would think even more because the prices have gone up. We are
02:34of course not able to increase right away because of competition. And of course, there is the factor of how
02:45it will affect the consumers.
02:47I mean, at the end of the line, I mean, at the end of the line ourselves. I'm a consumer
02:52myself, so I'm also affected.
02:55And now that we are at it, at least from where you are at, how are you seeing also the
03:04impact on the consumers?
03:07Well, everything has gone up. Of course, the price of these fuel has gone up. Even the price of Pinay
03:15Pai has gone up.
03:17UCC, I bought coffee for the house, Sumiyaki. I asked the waitress there, they said they've increased already.
03:24And this was like two weeks ago. The prices for everything, I don't see any price going down.
03:32And well, that's the situation now. We just have to deal with it.
03:36And then I know that, yes, there is already a widespread price increases.
03:42But if we are to categorize this, where do you think will the greatest impact will be?
03:49Is it on food? Is it in construction? Or is it on other basic commodities?
03:57I'm not sure about the percentages based on the necessities you mentioned, but I would think it would be about
04:03even.
04:04Or maybe higher for construction materials. Because we're importing heavily from China.
04:09And of course, the shipping lines, although a lot of that cost will come from the fuel that our ships
04:17will be consuming.
04:18But we're not only talking about the price, we're also talking about time.
04:24The ships will be running at economical speed.
04:28Meaning?
04:29Meaning, this will slow them down.
04:31We will avoid running at, let's say, medium speed or full speed because that's more fuel consumed.
04:39So, something that might take two weeks, might take three weeks, that's the penalty on the time, as far as
04:47the time of arrival is concerned.
04:49So, speed is also affected.
04:51Speed is also affected.
04:51Maybe you are the best person to ask this question because we guested somebody from PSA, Philippine Statistics Authority.
05:00And then, the pattern that I saw is the Visayas region always have a higher inflation compared to the rest
05:10of the country.
05:10And my assumption, maybe you can comment on that, it's because Visayas is an island economy.
05:16Unlike Luzon and then Mindanao.
05:20But Visayas is composed of islands.
05:23Is that a factor?
05:26A lot of our goods locally are coming from Manila.
05:30Although, I would think that would be making the cost higher.
05:35In fact, if I may divert to another topic, the minimum wage in Cebu is lower than Manila, right?
05:43But in actuality, I heard the cost of living is actually higher here than Manila.
05:51Although, at least from the information that I have, in the ITBPM space, we look at it at around 20
05:59% to 30% lower overall.
06:02Overall?
06:02Now, this one is on the supply chain.
06:06Do you think in the coming days, we will see disruption of supply chain?
06:15Or do you think what we will experience is more of making them more expensive?
06:22Disruption or more expensive?
06:24More expensive.
06:25So, that means the flow of supply will remain to be okay.
06:30It's just that they will be more expensive.
06:34Okay.
06:35So, how are the business assessments, especially in shipping?
06:39And maybe those downstream that you have observed are also adjusting with the rising cost.
06:47Are you seeing a pattern of them passing the cost to the consumer?
06:50Or are you seeing a pattern of them absorbing the cost?
06:55Well, unfortunately, it's always passed on to the consumer.
06:59Be it the shipping lines.
07:02In fact, our vendors have already sent us notices that they're adjusting their cost.
07:12I mean, not actually the basic amount they're charging us, but they have an emergency bunker surcharge,
07:19which is supposed to stay in place until prices go down.
07:22But we don't expect price of fuel to go down as fast as they went up, unfortunately.
07:28And then, in the area of transparency, and this is in the context of consumers like me,
07:37how are the overall logistics or shipping industry also trying to keep our absorption of the costs transparent?
07:53Well, all of our rates per shipping line are published.
07:58And are available on the website.
08:01So, the consignees can see how much their cost is.
08:05How much they pass on to the consumer is up to them.
08:10Because, of course, they also have competitors to think about.
08:13So, you're saying it's just the market will also adjust?
08:18Yes, always.
08:18Always, always.
08:18Always.
08:19Rather than one particular shipping company taking advantage.
08:24Because that would also make, correct me if I'm wrong, that company's pricing higher compared to the market.
08:30No?
08:31No, yeah.
08:31So, in that case, it's the market that will adjust itself, no?
08:36Correct.
08:36Unless if everybody decides to take advantage.
08:39What is sadly the case?
08:43That's actually where I was also concerned, no?
08:47Because if it's just on a per company taking advantage, the market price will correct it.
08:53But if it becomes a trend in a particular industry, then it would look like it's a legit price.
09:02But it's actually more of everybody taking advantage, no?
09:06Which is, as you say, a possible consequence, no?
09:10In a time like this one.
09:12Now, from your perspective, when do you think is passing the cost to the consumer already unfair?
09:22Because I know everybody wants to save, no?
09:25I know also that the shipping liners also would want to stay afloat, given the situation.
09:30But there's also the consumer who also wants to stay afloat.
09:34So, everybody wants to still move forward in a time like this.
09:39So, on the part of the shipping companies, how do you think, at what point do you begin to say
09:45that this is no longer fair to the consumers, the increase in price?
09:52It's more like speaking for, you see, if I may say, I'm the junior vice president for Evergreen Shipping Line,
10:01aside from being the chairman for the Association of International Shipping Lines for Operations Committee, SIBO.
10:07So, I cannot speak for the other lines.
10:09There may be 20 more of them.
10:11All of us, all of them are competitors of Evergreen.
10:14But for Evergreen, we are, especially myself as a Filipino, I try to mitigate what is charged to SIBO's consignees.
10:28So, if our principal wishes to charge $1,000, and I know it's not reasonable because the additional cost, for
10:36example, is only $500,
10:38I try to say, let's just increase by $500.
10:41We don't need to make money out of this situation.
10:45I'm not necessarily speaking about this one, but it's happened in the past.
10:49The port increases the rates by this much, but my principal in Taipei wants to charge more.
10:55So, that's not fair because the other lines might not be charging as much as we do.
11:02I mean, it's just me.
11:04It's just me.
11:05The principal is other ideas.
11:08In the context also of my question is, there are potential also of existing inefficiencies already,
11:17which are also passed on to the consumers.
11:23So, at this point in which the operating cost is already increasing,
11:31and that unfortunately includes inefficiencies that were probably not solved in the past,
11:37at least not necessarily for your company, but in the overall,
11:41how much of the cost is influenced also by inefficiency in terms of operation?
11:51And then eventually I'll tell you why I'm asking that question.
11:54Okay.
11:54Well, I just had a conversation with the VP for finance,
11:59who I played golf with yesterday.
12:00He said their company was able to save, well, 65 million just by cost cutting.
12:10So, that's more of making things efficient.
12:12Yes.
12:13Second, they saved on some other, well, going back to that amount of money,
12:19it's a huge amount of money.
12:20I mean, normally they would not have had to do this except they have to adjust to a major competitor
12:27who is not fairly competing with them because they're not giving what is due to the government
12:35as they should be.
12:36Of course, I cannot give details, but that is what the situation is with everyone.
12:41For example, well, while we were in the lockers, I spoke with the owner of Insular Square.
12:48Here, they said they've all gone EV for themselves, but they still have trucks.
12:56And here in Cebu, I haven't seen any EV truck.
13:01They have trucks.
13:02I have not seen.
13:03And the drivers don't care.
13:05They keep the engine idling while they sit and enjoy the air conditioning.
13:10They don't care about the fuel consumption because it doesn't come from their pocket.
13:14So that's what businessmen are having to deal with, especially in relation to fuel costs.
13:20So you may not have the exact number, but how significant, especially in the Visayas,
13:28in which were islands, how significant is the shipping cost in terms of the inflation
13:36of the country or even the region?
13:42Not much.
13:43Not much?
13:44Well, it's because it's always Imperial Manila importing more.
13:49What comes to the Visayas is those that are to be distributed to the Visayas and Mindanao.
13:55So unless there's a congestion problem in Manila, there will be more volume of imports going
14:02to Manila than coming to the Visayas.
14:07So at least from what you're seeing, the shipping cost is not really a significant factor to
14:13drive inflation.
14:15It might be.
14:16It might be.
14:17Okay.
14:18So the other one also is, I think-
14:20May I add to that?
14:21Sige.
14:21I don't think what would be more inflationary would be the fuel prices.
14:26That is used to justify higher fares, higher fares, higher everything else.
14:34Because if I were a greedy businessman, I said, wow, I have a year stock here at the old price,
14:42but I can sell for higher, why not?
14:45So even if I know that my cost was this before, this situation came about because of Donald
14:56Trump and Netanyahu, then I would make a killing.
15:02I could buy a BYD or a Jayco or, you know, like-
15:06Because the current stocks were bought before the crisis.
15:10Yeah.
15:11Sige.
15:12So I think you've mentioned this also a little bit earlier, but what's also the science or
15:19the reason why it's easy for prices to go up, but it's- so they go up faster than they
15:28go down?
15:30I think the question baffles me as much as it baffles everyone in this room or everyone
15:36who's listening, but to quote Secretary Llamas, he said prices of fuel skyrocket, right?
15:44But then they will fall down like a feather, slowly, very slowly.
15:50So that's the unfortunate fact about all other commodities as well.
15:55But the problem is our salaries don't increase at all.
16:02Sige, kanina lang, and I don't want to put you on the spot, but in the context just within
16:06shipping lang, because I think it also has the same trend now.
16:11The prices could go up faster compared to when it goes down.
16:18No, in shipping, we call them surcharges because the freight will stay the same, but there's
16:26an emergency bunker surcharge or whatever each shipping line calls it, but it's temporary
16:34while the situation in the Middle East continues.
16:38Once it settles down, and hopefully the fuel prices go down per barrel, then that surcharge
16:44will be removed.
16:45So we go back to the old freight.
16:47So we're saying, at least it's comforting to know that at least in the context around
16:51shipping, that's not necessarily the case.
16:55Prices would go up faster than they go down.
16:58No, because it would be a surcharge for a specific period of time.
17:02So now, this is on the area of kanang governance, and maybe you need to clarify the seal.
17:09Oh yeah, I'd like to borrow this jacket from this gentleman here from the governor's office,
17:16and I would just like to say, my wife and I were ecstatic when she won.
17:21Okay.
17:22Now, the reason why I wanted to...
17:24That's why I'm wearing a seal.
17:26Yeah.
17:27No, because my next question is about governance, no?
17:30And at least they know the circumstance around the seal on your chest.
17:35Because do you really think that the government is doing enough in terms of monitoring shipping
17:42costs?
17:43Or do you think, as of this time, the shipping industry is still largely self-regulated,
17:52given the situation?
17:53It's self-regulated.
17:54The government doesn't have any, how would you say, police powers over international container
18:00shipping.
18:01Not yet.
18:01Although there have been plans for several years for that to be in place.
18:08It hasn't happened yet.
18:09So, with such power is also responsibility, especially given the situation.
18:16So, can you share to our viewers, what are the actions also that the industry is doing
18:24so that companies within the shipping industry are also coping with the situation beyond protecting
18:33their bottom line?
18:36Well, many people don't know this aside of the industry.
18:41But there are laws which prevent the shipping lines from coordinating with each other about
18:48our freight, about our schedules.
18:51We're not supposed to be even talking with them or discussing customers or comparing rates
18:56in any manner, especially for Asia to Europe and Asia to U.S., not so much within Asia itself.
19:04So, we basically, for example, the Association of International Shipping Lines, it's just a
19:10body for us to have strength in numbers in case you have an issue with a government agency
19:14or a private party or group of people.
19:17But if you ask me, if I will allow, as a chairman here, to increase, I would say that is
19:26up to
19:26the individual shipping lines who are in Manila.
19:30So, if during a meeting where the managers here in Cebu or the branch heads of the shipping
19:34lines are asked, will you accept an increase for tag boat rates, you're not in a position
19:42to decide.
19:43We're only in a position to relay information to Manila.
19:47So, we don't have much control, actually.
19:52Which, in this context, is good.
19:54It's good.
19:55In this context, no?
19:56Sige.
19:58In times like this, do you see a point, if the situation continues, no, that eventually
20:06the shipping companies will no longer be profitable?
20:10Are we close to that point or are we still far from that point?
20:15It's hard to say.
20:17To share a bit with you about international container shipping lines.
20:25Shipping lines have been bought over and off.
20:28Ceylan was bought by Neptune Orient Lines.
20:30Neptune Orient Lines was purchased by NOL.
20:35Ah, sorry.
20:36By APL.
20:38Then CMA was purchased by MSC.
20:40So many shipping lines.
20:42The Japanese shipping lines, NYK, K-Line, and Mitsui, their container divisions have been
20:49bonded together in what they call one network.
20:52So, because they have, they cannot survive on their own, but they have, of course, cheaper
20:58by the dozen, as they say.
21:01They fuse together so that they can survive.
21:05If I may, with humility, mention, Evergreen shipping line is the only shipping line that hasn't been,
21:12that hasn't had undergone being sold to anyone over the past 30 years that I've been with
21:20the shipping, with Evergreen shipping.
21:22And, well, also, in Cebu, we have about 50% of the market of the Cebu International port volume.
21:31So, well, yeah, as you said, the shipping lines will survive.
21:36They will, you all try to survive, but everything is not, of course, under control.
21:41And then, down to my last question, promise.
21:44I mean, last two questions.
21:47So, the second to the last question, actually, is at least now for the consumers who are watching us today,
21:54what would be your tips, man, or hacks for us to be better prepared?
22:01And the reason, the context of the question, because I also know of some people,
22:05the moment they heard that the Strait of Ormose is open for at least two weeks,
22:10it seems like this is already, like, a point of relief, no?
22:14But some people, some experts would say, not yet, no?
22:19So, yes, what would be, yeah?
22:21I wouldn't even dare to call myself an expert at anything.
22:25Maybe I'm jack of all trades, master of none.
22:27But anyways, I don't think it, sadly, if you look at Gaza,
22:32where there have been supposed to be ceasefires,
22:35I don't think this will last long.
22:38There are too many parties involved, and Trump is too unpredictable.
22:45Like, he wakes up today and thinks, oh, I'll get Greenland.
22:48I want to get Greenland.
22:50In fact, alienating NATO from, you know, but anyway,
22:54I hope I'm wrong, but I don't think it will last two weeks.
22:58So, meaning it can spiral out of control.
23:03It's possible, no?
23:04And hopefully, of course, it might also go the other way and stay longer.
23:09But the thing is, because of this situation,
23:13now the Iranians know they can charge a levy for ships passing through the Strait of Ormose
23:19when there wasn't any.
23:21They didn't know they could do that.
23:23Now they do.
23:24So, that is additional cost for consumers and for shipping lines.
23:30Yes.
23:30And so, for shipping lines and eventually for consumers,
23:33what are the things that you think we need to do to tighten our belts now?
23:38Buy an electric motorcycle like you're planning to do.
23:43But really, it just means, I talked with, I guess, everyone knows Manny Pahes and the Pahes group.
23:52He said this hasn't been affected too much because people are still eating out.
23:57Maybe they're cutting down on other expenses.
23:59Maybe the specialty shops, like the designer clothes.
24:04But then people still need to maybe stress eat because they have so much stress from the cost of living,
24:13they decide to eat out.
24:16So, each one, like you, instead of turning on the aircon a certain number of hours,
24:21like me, when I'm driving an automatic vehicle, instead of relying on drive,
24:27I use the paddle shift to go higher to sixth gear as much as possible.
24:32And it helped the mileage a bit.
24:35Thank you very much, Rene, for joining us today and for helping us make sense of the situation.
24:41Thank you for having me.
24:42So, while global pressures are influencing the cost of goods,
24:47questions are also being raised closer to home about how public resources are managed.
24:53So, for that second story and more, we will be right back.
34:19We're right back.
34:50We're right back.
35:18We're right back.
35:48We're right.
36:26We're right back.
36:53We're right back.
37:18We're right back.
37:34We're right back.
38:06So, yes.
38:19We're right back.
38:44We're right.
38:58We're right back.
39:04We're right back.
39:35We're right back.
39:37We're right back.
40:33through media.
40:39We're right back.
40:42We're right back.
41:41That's part of the
42:11moving forward.
42:41So, yeah.
43:11So, I think,
43:12we're right back.
43:42based on the
44:12president,
44:42defensible,
45:13and the province,
45:4292.
45:43He said,
45:44that we're right,
46:13this,
46:43side.
47:13the province,
47:15the executive branch,
47:44also,
48:14but, but,
48:15we're right,
48:17we're right,
49:13we're right,
49:34We're right,
50:05watching this,
50:35again,
51:05This is just,
51:34and then,
51:36during our,
52:06discussion,
52:09and,
52:11and,
52:12and,
52:12and,
52:14and,
52:14and,
52:20and,
52:21and, and,
52:31so,
52:54and, and,
52:58and, and, and, and,
53:00and, and, and, and,
53:02and, and, and, and,
53:16and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and,
53:17and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and,
53:19and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and,
53:21and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and,
53:22and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and, and,
53:27and, and, and, and, and, and, and, and, and, and, and
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