Philippines port congestion set to worsen

February 15, 2016 at 11:03

Philippines port congestion set to worsen

by Felipe Salvosa | February 12, 2016
Stopgap measures ease Manila logjam, but rising volumes will lead to more gridlock
A worker speaks into a handheld transceiver at Manila International Container Terminal (MICT) at the Port of Manila in Manila, the Philippines, on Friday, Nov. 20, 2015. The Philippines is scheduled to release third quarter gross domestic product (GDP) figures on Nov. 26. Photographer: SeongJoon Cho/Bloomberg©Bloomberg

Worker at Manila International Container Terminal in the Port of Manila

Traffic congestion around the Port of Manila in the Philippines has eased after the gridlock caused by a daytime ban on cargo container trucks imposed by city hall two years ago.

Inbound and outbound container volumes plunged more than 13 per cent year on year at the height of the logjam in the first six months of 2014, turning Manila’s container yards into a huge parking lot for empty containers. By the third quarter of 2015, however, the number of 20ft containers passing through the main island of Luzon was up 18.4 per cent year on year, as the chart shows.

While the year-on-year growth rate again turned negative in the fourth quarter of last year, largely driven by weak exports, total import and export volumes in 2015 were 5.8 per cent higher than in 2014, more than reversing the 1.2 per cent decline registered that year. Container traffic has normalised.

However, the congestion was eased only by stopgap measures such as higher port storage fees, round-the-clock customs clearances and a truck queueing system.

Manila’s problem is the lack of dedicated roads for cargo container trucks. Three major roads going in and out of Manila port — Roxas Boulevard, Osmeña Highway and Circumferential Road 5 — are regularly clogged with container trucks even at long past midnight.

Increasing volumes and traffic build-up could lead to another logjam in two years’ time, according to FT Confidential Research, a Financial Times research service.

Two solutions to the congestion are behind schedule. Both involve elevated toll roads, which will connect the North Luzon Expressway (NLEX) and South Luzon Expressway (SLEX), bypassing the city of Manila.

The first, the 27bn peso ($565m) Metro Manila Skyway Stage 3 — a 14.8km extension of the existing skyway under a joint venture between Indonesian construction group Citra and domestic conglomerate San Miguel — is suffering delays and is unlikely to meet its January 2018 deadline.

The 13.5km NLEX-SLEX Connector Road project proposed by San Miguel’s rival Metro Pacific Investments should face fewer construction obstacles, as it will be built above railroad tracks owned by the state-run Philippine National Railways. But the project was only approved by the government in December and has yet to break ground.

The World Bank’s International Finance Corporation is at the early stages of studying two alternatives that will move container trucks off the roads entirely — the existing railway tracks, and barges that would ply Manila Bay towards a new logistics hub in Cavite province, south of the capital.

But these long-term solutions remain on the distant horizon. In the meantime, traffic will only get worse.

Felipe Salvosa is a researcher covering the Philippines at FT Confidential Research.

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