Subic Freeport set to boost economy

With a total of 15 operational piers and wharves capable of servicing all kinds of vessels, the Subic Freeport is all set to boost the country’s economy.

Over the years the Subic seaport has played a major role in importing and exporting various products in and out of the country. The Freeport has also been helping out in decongesting Manila’s international container port terminals as its serves as an alternative point of shipping for Northern and Central Luzon.

After officials of the Subic Bay Metropolitan Authority (SBMA) were recently reported by the Commission on Audit (CoA) of awarding themselves with extra generous salaries and allowances, cargo handlers at the Subic Freeport are distancing themselves from the controversy, saying that the privately owned Subic cargo handling operations have become the backbone of a progressive Subic international seaport. By VINCE G. LOPEZ - mb.com.ph

Photo taken 16 August 2010 from Vista Marina where an on-going reclamation project is evident. You cant help but notice that majority of ships are actually laid-up in subic bay and not at any of the 15 operational piers and wharves capable of servicing all kinds of vessels

Keppel to pay USD63.6M to raise stake at Subic Shipyard

as Keppel pays $86.5m to raise stakes in Philippines yards

By ANGELA TAN - businesstimes.com.sg

Keppel Corporation Limited, through a subsidiary Keppel Philippines Marine Inc (KPMI), is raising its shareholdings in two associated companies, Subic Shipyard and Engineering Inc (SSEI) and Consort Land, Inc (CLI) to be nearer to its customers in the Philippines.

Keppel will pay $86.5 million (US$63.6 million) to raise its effective stakes from 44 per cent to 83.9 per cent in SSEI and from 33.7 per cent to 38.7 per cent in CLI.

The sale and purchase of shares in both companies is expected to be completed by the end of September 2010, following which, SSEI will become a Keppel subsidiary.

SSEI is a leading shipyard located in Subic Bay, the Philippines, which provides repair, conversion and building services to shipowners and offshore operators in the region. It also carries out routine and specialised machinery reconditioning works, as well as steel fabrication for marine and offshore structures. CLI owns 72 ha of land including the 20 ha on which SSEI is situated.

Shell drill ship to leave Subic for a controversial project

Shell plans to begin drilling in the Beaufort Sea as soon as July 1 and expand drilling operations to the Chukchi Sea soon thereafter. The company’s drilling vessel, the Frontier Discoverer, is expected to depart Subic Bay, in the Philippines, for the coast of Alaska within days. Nearly 700 leases have been sold in the Beaufort and Chukchi, setting the stage for what WWF officials have called an “Arctic oil rush.”

Two engineers with extensive experience in the oil industry said on Capitol Hill today that Shell Oil’s plans to begin drilling off the coast of Alaska in less than six weeks are fraught with risks that have not been adequately addressed by the company.

With oil still spilling into the Gulf of Mexico and threatening the richest fishing grounds in the US from the BP Deepwater Horizon oil rig blowout last month, WWF-US has repeatedly questioned the wisdom of allowing Shell to commence drilling in the Beaufort and Chukchi seas.

Dr. Robert Bea, a former Shell official, and Susan Harvey, who previously worked for British Petroleum, expressed serious concerns about Shell’s drilling plans, noting that a spill in the Arctic could not be cleaned up.

Dr. Bea, who now heads the Center for Catastrophic Risk Management at the University of California-Berkley, said he still considers Shell to be like “family,” but nevertheless is concerned that the company’s proposal does not provide an accurate assessment of the true risks of drilling in the Arctic. “This is imagineering, not engineering,” Bea said.

Shell plans to begin drilling in the Beaufort Sea as soon as July 1 and expand drilling operations to the Chukchi Sea soon thereafter. The company’s drilling vessel, the Frontier Discoverer, is expected to depart Subic Bay, in the Philippines, for the coast of Alaska within days. Nearly 700 leases have been sold in the Beaufort and Chukchi, setting the stage for what WWF officials have called an “Arctic oil rush.”

Harvey, who once headed the state agency in Alaska that oversees oil spill prevention and response, noted that the Alaskan North Slope is a particularly risky area to drill given its remoteness and lack of basic infrastructure needed to deploy oil spill response equipment. “All of that spill response infrastructure you see in the gulf right now, it doesn’t exist in Alaska,” she said.

Harvey explained that the freezing temperatures and icy waters of the Arctic render traditional response procedures inadequate and said oil trapped under ice would be unrecoverable for up to half a year. In that situation, she said, “The only thing you can do is wait six months for the ice to melt and by then [the oil] will have spread far and wide.”

The only practical response procedure in the Arctic environment, Harvey said, would be burning off the oil, but she noted severe limitations in using that technique. She agreed with oil industry claims that it is technically possible to burn up to 90 percent of oil that is in a contained space, but said it would be nearly impossible to contain more than just a small fraction of the oil, given the limited number of vessels that would be able to help with containment and the vast size of the potential spill area. “It’s like trying to mow a 100 acre lawn with one lawnmower,” she said.

Bea and Harvey made their remarks at a Capitol Hill briefing that was co-hosted by WWF and moderated by WWF-US President and CEO Carter Roberts.

As the BP oil spill crisis in the Gulf of Mexico continues to worsen, WWF has called upon President Obama and Secretary Salazar to halt Shell’s planned drilling until the Deepwater Horizon disaster has been fully investigated and the technology and procedures have been put in place to respond to and clean up a spill in the harsh, remote waters of the American Arctic.

“We still don’t have a full picture of what went wrong in the gulf and we need to make sure we don’t sow the seeds of disaster in this very, very special place,” said Carter Roberts, referring to the Beaufort and Chukchi seas.

In a May 20, 2010 letter to Secretary Salazar, WWF addressed Shell’s proposal, point-by-point, illustrating how the technology and procedures have not yet been developed to adequately respond to a spill in Arctic waters.

WWF’s analysis noted that drilling in the harsh, remote environment of the Arctic is far more perilous than in the Gulf of Mexico and that the technology and logistical infrastructure does not exist to contain and clean up a spill in the Arctic waters of the Beaufort and Chukchi seas.

For the native Alaskan communities along the North Slope, an oil spill could be devastating to their culture and way of life, which is entirely dependent on the sea for subsistence hunting and fishing. Several Native Alaskan leaders visited the gulf coast earlier this week to observe the unfolding disaster first-hand. They are now in Washington, D.C., urging federal leaders to prevent a similar catastrophe in their back yards by halting Shell’s proposed drilling.

“What we saw [in the gulf] was very sad,” said Martha Ipalook-Falk, Tribal Council Treasurer of the Inupiat Community of the Arctic Slope, who participated in the Capitol Hill briefing today. “These memories of black plumes will stay with us – especially imagining the contrast to the white of the Arctic that we see around us in our homes.” wwf.panda.org

Kaptanoglu Shipping Lines Take Delivery Of First Philippine Built Tanker from Subic

Turkish-based Kaptanoglu Shipping Lines has taken delivery of their newest vessel, the 114,000 ton deadweight oil tanker Leyla K, in a ceremony at Hanjin Heavy Industries Corp. Philippines (HHIC-Philippines) Redondo Peninsula shipyard.

Attending the event was the shipping lines president Engin Kaptanoglu and senior officials from both Hanjin and the Subic Bay Metropolitan Authority.

The m/t Leyla K is the first oil tanker to be produced by Hanjin’s Subic Bay shipyard and measures in at 241.27 meters (791.4 feet) in length and cost $68 million.

Kaptanoglu now operates three bulk carriers and eight oil and chemical tankers, with an additional three of each on order.

The delivery and continuing orders show that Hanjin’s investment of some $1.7 billion in the Subic Bay facility, which opened in 2006, shows their commitment to the Philippines is well placed. HHIC-Philippines is scheduled to construct 36 more vessels by 2013.

Hanjin launches first oil tanker made in Subic

Korean shipbuilder Hanjin Heavy Industries Corp.-Philippines on Friday unveiled the first oil tanker it manufactured at the Subic Bay Freeport, the Subic Bay Metropolitan Authority (SBMA) said.

The 114,000-deadweight ton tanker named Leyla K is 241.3 meters long and has a breadth of 44 meters—the largest oil tanker built in the country.

The $68-million Leyka K was purchased by Kaptanoglu Shipping Line, a Turkish company.

At present, the $1.7-billion Hanjin shipyard in Subic is the world’s fourth biggest shipbuilding facility. The shipyard has about 17,000 workers.

Hanjin began construction of this shipyard on February 2006 and delivered its first vessel—container vessel MV Argolikos—on July 2008.

Hanjin had already delivered eight bulk and container vessels and would manufacture an additional 36 ships until 2012. BEN ARNOLD O. DE VERA - Manila Times

Sources: US Navy was tracking Chinese sub

Defense officials admit that the destroyer John S. McCain was tracking a Chinese submarine near the Philippines when the vessel became entangled in the McCain's trailing sonar array. MASS COMMUNICATION SPECIALIST JOHN L. BEEMAN / NAVY

By Andrew Scutro - Army Times Staff writer
Two defense officials have confirmed that the crew aboard the destroyer John S. McCain was tracking the submarine that struck its towed sonar array June 10 in the South China Sea off the Philippines.

The officials, who are familiar with the incident but were not authorized to speak on the subject, confirmed the array, which trailed up to a mile behind the ship, was hit by a Chinese navy submarine, although it was not sighted on the surface. Days after the incident, Chinese officials acknowledged that the submarine was theirs.

The McCain crew was able to retrieve the sonar array, which was damaged, although it’s not clear whether it was retrieved intact, the defense officials said. A mishap investigation is ongoing.

The destroyer, based in Yokosuka, Japan, pulled into port in Sasebo after the incident but soon went back to sea.

The officials would not specify whether the submarine was an attack boat or a ballistic-missile sub, and they were unsure of the time of the incident, which occurred in “international waters” south of Subic Bay.

The Associated Press reported that the collision took place 144 miles from Subic Bay, potentially placing it in the Mindoro Strait.

The collision has been described as “inadvertent” by defense officials.

Beyond that, little has been revealed about the circumstances.

The Navy by practice does not discuss operations that could reveal force capabilities, but observers have been looking for answers in this case because of the proximity of the submarine to a U.S. warship. Towed sonar arrays are dragged on a cable about a mile long, with the sensors placed toward the end of the line to avoid absorbing sound from the host ship.

Other incidents
The collision follows recent incidents in the region in which Chinese vessels harassed two U.S. surveillance ships that specialize in undersea listening, using hefty towed sonar. Chinese submarines are based and operate in the area. News reports at the time said the harassing vessels were trying to snag the trailing U.S. sensor gear.

No officials have said that the most recent incident with the McCain was another case of a Chinese vessel harassing a U.S. ship or that the sub was trying to sever the sonar line, although there is precedent for such behaviors.

As recounted in the bestseller “Blind Man’s Bluff,” in October 1983 in the Atlantic, a Soviet sub accidentally snagged a sonar array being towed by a U.S. frigate, detached the cable, got tangled in it and was forced to surface.

“No sub skipper in his right mind would use his sub to damage a towed array,” said Jan van Tol, a former destroyer captain who hunted subs in the South China Sea. “It’s extremely unlikely to be deliberate. You don’t want an array caught in your screw.”

He said those waters are very noisy, making antisubmarine warfare particularly dicey.

“It’s possible it was a blind/blind situation and both sides were surprised,” he said.

Most observers resist putting this incident — or accident — into a pattern of what are thought to be calibrated displays of growing Chinese military prowess, such as the 2006 detection of a Chinese sub in torpedo range of the Kitty Hawk Carrier Strike Group.

More likely, the sub’s intent was to stalk the McCain, test its detection abilities, get proof of its proximity and slink away unseen and unheard, said John Arquilla, author and professor of defense analysis at the Naval Postgraduate School.

To have pulled that off would have been a “perfect success,” he said.

Instead, they got caught.

“We should hear alarm bells go off every time we have incidents of this sort,” Arquilla said. “What I see in this pattern of incidents is a growing capability of the Chinese to use stealthy navy assets to get close to our larger and more visible ships.”

Because of competing economic and strategic interests in the region, differing interpretations of international demarcations and a growing Chinese fleet, such incidents are inevitable, said Bonnie Glaser, a China security expert and senior fellow at the Center for Strategic & International Studies.

“We increasingly operate in close proximity to each other, and the Chinese do not accept the U.S. presence, especially in their [Exclusive Economic Zone], as legitimate,” she said. “They seem increasingly confident and willing to push back.”

Glaser points to the U.S. Navy’s reputation for safety, professionalism and caution. And although she doesn’t believe the Chinese submarine meant to hit the sonar, it’s indicative of that government’s desire to test U.S. responses as well as its differing military style.

“I don’t think you can apply our own standards of behavior to the Chinese,” she said. “They seem to have a higher tolerance for risk.”



'Naval mishap occurred in international waters'
By Jaime Laude - PhilStar


A military official clarified yesterday that a Navy inquiry into the reported collision between a US Navy destroyer sonar equipment and a Chinese submarine in the South China Sea last week showed the mishap occurred in international waters and outside the country’s jurisdiction.

Lt. Col. Edgard Arevalo, Navy spokesman, said the incident could not have escaped the attention of the Navy if the collision occurred inside the country’s territorial waters.

“The Navy investigation showed that there was no incident of such kind happening in our territorial waters within the period in consideration,” Arevalo said.

The reported collision of a Chinese submarine and an underwater sonar equipment of a US Navy destroyer occurred in the vicinity of the disputed Scarborough Shoal located 137 miles away from Palauig, Zambales and about 125 miles west of Subic Bay.

Arevalo said that while the Navy is not yet capable of detecting submarine operations within the country’s territorial waters, it is continuously upgrading its limited surface monitoring capabilities.

“We have the radars and have a recent addition of patrol ships also equipped with modern monitoring equipment like radars and sensors as well as our islander planes that are also conducting routine patrols over our territorial waters,” Arevalo said.

He said an incident that big occurring in the South China Sea could not have escaped the monitoring of the Navy if it indeed happened within the country’s 12-mile territorial waters.

Arevalo said that even reports surrounding the incident that Navy investigators obtained from the United States embassy in Manila were hazy, as they did not specify where and when it happened.

“The US embassy reported only that their ship is damaged. So we could only surmise that Subic was only used as a point of reference of the mishap,” Arevalo said.

He pointed out that foreign vessels are guaranteed free passage within the country’s 200-nautical Exclusive Economic Zone (EEZ).

Defense Secretary Gilbert Teodoro Jr., meanwhile, said the incident, without giving an exact date, occurred 125 miles from Subic.

“So it’s beyond the territorial waters of the Philippines,” Teodoro said, adding that he, too, was not sure if the mishap occurred near the highly contested Scarborough Shoal off Zambales.

He said there is the right to passage for all international ocean-going vessels within the EEZ.

As to the presence of a Chinese submarine in the area, Teodoro said other countries in the world, there is no guarantee that we can monitor the presence of a submarine in our EEZ.

The Navy said that it has established a Coast Watch center in Zamboanga City to effectively monitor all surface activities within the country’s territorial waters.

Coast Watch South is a joint undertaking of the government with active support from the US and the Australian governments, to monitor all surface sealane activities in Southern Philippines and its borders with Malaysia and Indonesia.

Arevalo said Coast Watch South would be replicated first in Luzon and then in the entire country.

“After we have put up Coast Watch Luzon then we will go for Coast Watch Philippines that will monitor all the country’s territorial waters from Mindanao to Batanes,” Arevalo said.

Destroyer McCain in Sasebo after array damage

Navy officials still are not confirming reports that it was a Chinese submarine that collided with a towed sonar array trailing from the destroyer John S. McCain on June 10 off the Philippine Islands.

Lt. Cmdr. Tamsen Reese, a Navy spokeswoman at the Pentagon, would say only that the multi-function towed array sonar was “damaged” after “it hit something.”

The McCain, homeported in Yokosuka, Japan, was conducting “routine operations” in “international waters,” when the sonar was damaged, Reese said. Previous news reports have said the incident took place in or near Subic Bay.

Reese would not say if the Navy knows what the sonar hit or if the equipment separated from the ship and was lost at sea.

The McCain did not return to its homeport and instead is in port in Sasebo, Japan, where the damage can be assessed, she said.

Chinese newspapers reported that it was one of their country’s subs that collided with the towed cable and called the episode an accident.

If the Chinese sub did hit the sonar cable, it will be the latest in a string of close calls involving U.S. Navy ships and Chinese vessels. On May 1, the ocean surveillance ship Victorious was harassed by Chinese fishing vessels 170 miles off the coast of China. On March 8, five Chinese vessels surrounded the surveillance ship Impeccable, 80 miles of Hainan Island. Both ships, of the Military Sealift Command, deploy towed sonar arrays to listen for submarines. By Andrew Scutro - Navy Times Staff writer

China acknowledges incident between sub, US ship

China's Foreign Ministry acknowledged for the first time Tuesday a collision last week between a Chinese submarine and a sonar being towed by a U.S. Navy destroyer.

The incident occurred Thursday, spokesman Qin Gang said, while giving no details.

The U.S. Navy has had little comment on the incident, other than to say that the USS John S. McCain's towed sonar had been damaged. There have been no reports of injuries or damage to either vessel.

While analysts said the collision appeared to be an accident, they have warned of a growing pattern of incidents and confrontations arising from China's growing naval power and willingness to assert territorial claims in waters off its coast.

"What we're seeing are the initial stages of a growing military competition between the United States and China with naval forces rubbing up against each other in a dangerous and largely unregulated posturing for alliances and natural resources in the region," said Hans M. Kristensen, a researcher with the Federation of American Scientists in Washington, D.C.

The incident reportedly occurred in international waters northwest of the former U.S. naval base at Subic Bay in the Philippines. Beijing considers the area its territorial waters as part of its claim to the entire South China Sea and opposes U.S. military operations and data gathering there.  By CHRISTOPHER BODEEN – Associated Press

Subic port cashing in on shipping slump

SUBIC BAY, Philippines: Deep water ports around the Philippines are fast resembling parking lots as shipping companies caught by the slump in global trade look for places to park their unused vessels.

At the former US naval base at Subic Bay, north of Manila, and in waters around the southern city of Davao, dozens of foreign ships are now “laid up” waiting for world markets to pick up.

The global trade collapse has hurt Asia’s export powerhouses and left more than 1,000 vessels unemployed around the world, according to Norway-based shipping risk management foundation, Det Norske Veritas. The Baltic Dry Index, which tracks the cost of shipping raw materials, fell from a record high of 11,793 points on May 2, 2008, to 663 on December 5, 2008, its lowest level in two decades.

Shipping companies are scouring the world looking for deepwater ports where they can park their vessels until markets pick up again but not every Asian nation is being approached. In Malaysia, an official from Port Klang, the national load centre, said there is no large number of laid up cargo ships due to the economic downturn.

But in the placid waters off Subic more than 20 foreign cargo vessels are silently bobbing like toys in a giant bathtub. “We haven’t been aggressively inviting them,” said Armand Arreza, executive director of the Subic Bay Metropolitan Authority. It was the shipping companies that approached Subic officials and some ships have been in Subic since December, said Arreza, whose agency oversees the port.

Another 13 ships are anchored in the waters off Davao City with more applying to come in, said local ports authority supervisor Jacinto Albarracin. Helmut Sohmen, chairman of the shipping and offshore services group, BW Group, said in a recent lecture in Singapore that the world shipping industry was going through bleak times, with demand for ships plunging even as more new ships are completed. He said possible solutions to such over-capacity included putting more ships in dry-docks for maintenance and “laying up more vessels as is happening already”. Arreza believes shipping companies chose Subic because the area is generally protected from typhoons and because its berthing fees are lower than other ports in Asia.

Subic also has ample ship repair facilities. As it faces the South China Sea, ships can easily be redeployed to Hong Kong or China once global trade picks up. “In a moment’s notice, they can pull anchor and leave,” Arreza said. Emerson Lorenzo, head of the shipyard regulation office of the country’s maritime authority, said the Philippines should be very attractive as a site for laid-up ships.

“We can accommodate larger ships of more than 50,000 tonnes,” he said. The berthing fee in the Philippines is a modest $91 a day but there is a multiplier effect as shipping companies use local ship-repair facilities and buy supplies locally, Lorenzo said. Arreza said Subic Bay can earn $230,000 a month from the ships currently laid up. In Subic Bay, resort owners complained that the vessels were marring the view from the beach so Arreza required the ship-owners to move them 2km from the shore. Lorenzo says the pollution from the ships is minimal.

However a senior source in the maritime authority says there have been some concerns by shipowners about berthing in Davao due to violent incidents involving extremists in the southwestern side of the island of Mindanao. To avoid higher insurance premiums for these ships, authorities are compiling military and police statistics to show that Davao ports are largely untroubled by piracy or terrorism and are almost 4,000km away from the areas plagued by unrest.

http://www.youtube.com/watch?v=AYLmDXa2j-k

Video showing on-going dredging operation to declog Kalaklan River mouth and the noticeable number of ships laid up at Subic Bay (Video by Jhec)

RP cashes in on global shipping slump by parking unused vessels

SUBIC BAY – Deep water ports around the Philippines are fast resembling parking lots as shipping companies caught by the slump in global trade look for places to park their unused vessels.

At the former US naval base at Subic Bay, north of Manila, and in waters around the southern city of Davao, dozens of foreign ships are now ''laid up'' waiting for world markets to pick up.

The global trade collapse has hurt Asia's export powerhouses and left more than 1,000 vessels unemployed around the world, according to Norway-based shipping risk management foundation, Det Norske Veritas.

The Baltic Dry Index, which tracks the cost of shipping raw materials, fell from a record high of 11,793 points on May 2, 2008 to 663 on December 5, 2008, its lowest level in two decades.

Shipping companies are scouring the world looking for deepwater ports where they can park their vessels until markets pick up again but not every Asian nation is being approached.

In Malaysia, an official from Port Klang, the national load center, said there is no large number of laid up cargo ships due to the economic downturn.

But in the placid waters off Subic more than 20 foreign cargo vessels are silently bobbing like toys in a giant bathtub.

''We haven't been aggressively inviting them,'' said Armand Arreza, executive director of the Subic Bay Metropolitan Authority.

It was the shipping companies that approached Subic officials and some ships have been in Subic since December, said Arreza, whose agency oversees the port.

Another 13 ships are anchored in the waters off Davao City with more applying to come in, said local ports authority supervisor Jacinto Albarracin.

Helmut Sohmen, chairman of the shipping and offshore services group, BW Group, said in a recent lecture in Singapore that the world shipping industry was going through bleak times, with demand for ships plunging even as more new ships are completed.

He said possible solutions to such over-capacity included putting more ships in dry-docks for maintenance and ''laying up more vessels as is happening already''.

Arreza believes shipping companies chose Subic because the area is generally protected from typhoons and because its berthing fees are lower than other ports in Asia.

Subic also has ample ship repair facilities. As it faces the South China Sea, ships can easily be redeployed to Hong Kong or China once global trade picks up.

''In a moment's notice, they can pull anchor and leave,'' Arreza said.

Emerson Lorenzo, head of the shipyard regulation office of the country's maritime authority, said the Philippines should be very attractive as a site for laid-up ships.

''We offer deeper water ports for ships from abroad, we have capable lay-up agents and other facilities. We can accommodate larger ships of more than 50,000 tonnes,'' he said.

The berthing fee in the Philippines is a modest 91 dollars a day but there is a multiplier effect as shipping companies use local ship-repair facilities and buy supplies locally, Lorenzo said.

Arreza said Subic Bay can earn 230,000 dollars a month from the ships currently laid up.

Empty Ships Flock to Subic Bay

. . . as Lines Battle Plunging Rates

Subic Bay in the Philippines is the busiest it’s been since the U.S. Navy moved out 16 years ago. The traffic surge is coming from ships all carrying the same cargo -- nothing.

Last week, 19 vessels were anchored in the mountain-lined bay awaiting charters near an empty container terminal. The authorities at the port, 110 kilometers west of Manila, were expecting another eight this week.

“If the downturn continues, we’ll probably get even more,” said Ferdinand Hernandez, senior deputy administrator of the Subic Bay Metropolitan Authority.

Hundreds of vessels have been laid up worldwide as container lines try to boost rates depressed by U.S. and European consumers paring spending on Asian-made furniture, toys and other goods. Still, with shipyards set to deliver the largest amount of container-ships by capacity in at least 15 years in 2009, lines may still struggle to post profits.

“It’s only a matter of how much they are going to lose,” said Gideon Lo, a DBS Vickers Hong Kong Ltd. analyst. “It isn’t likely they can cover costs in 2009 or 2010.”

Neptune Orient Lines Ltd., Southeast Asia’s biggest container carrier, is seeking to raise rates for carrying a 20- foot box from Asia to Europe by $250 from April 1, it said in a Feb. 19 statement. Rates have fallen “drastically” for more than a year, added the company, which expects a full-year loss. A.P. Moeller-Maersk A/S, the world’s largest container line, Evergreen Marine Corp. and Orient Overseas (International) Ltd. have also announced similar increases.

“We hope rates return to normal,” said Katherine Ko, acting spokeswoman for Taiwan’s Evergreen Group, parent of Evergreen Marine, Asia’s largest container line.

Car Carriers

The vessels in Subic Bay, which also include car carriers and commodity ships, are typically anchored for a couple of months awaiting charters, said Capt. Perfecto Pascual, general manager of the seaport. Companies use the bay to lay up vessels as it’s secure and offers protection from the elements, he added. As many as 22 ships were anchored there recently, compared with an average of about 10 before the economic crisis began, he said.

Globally, 9.1 percent of container ships, or 427 vessels, have been idled, Lloyd’s List said on Feb. 13, citing Lloyd’s Marine Intelligence Unit, a shipping-data provider. Thousands of containers are also going unused worldwide, leaving ports struggling to find space for them. For instance, Busan International Terminal Co., a wharf-operator in Busan, South Korea’s busiest port, is holding at least 30,000 empty boxes.

“The removal of so much capacity should see a restoration of rates,” said Ken Cambie, chief financial officer of Orient Overseas, Hong Kong’s largest container line. “Rate increases are needed on all trades,” he added.

Capacity Surge

Container lines traditionally raise rates in the second quarter after a first-quarter slowdown caused by the Chinese lunar new-year holiday and reduced demand from U.S. and European retailers selling off excess Christmas stock.

Any increases this year may be smaller than past ones as the global container fleet grows amid slowing demand. New ships with a combined capacity of 3.9 million boxes are due for delivery this year and next, about a third more than in the past two years, according to AXS-Alphaliner data. Shipyards are now completing vessels ordered two to three years ago when trade was booming.

Traffic Slump

This year, global container traffic may fall 3 percent, according to Morgan Stanley, as U.S. and European consumers slash spending. China’s exports to the European Union tumbled 17.4 percent in January. The World Bank forecasts a 2.1 percent decline in global trade this year, the first drop since 1982.

Container lines won’t be “able to raise rates much as demand hasn’t returned to previous levels,” said Jack Xu, an analyst at Sinopac Securities Asia Co. in Shanghai.

Lower fuel costs are helping shipping lines, with prices having tumbled about two-thirds from a record in July. Orient Overseas may spend 49 percent less on fuel this year than in 2008, if prices stay at current levels, Cambie said.

Still, while a drop in fuel prices has lowered costs, it’s not enough to return the industry to profit.

Container lines still “have to increase freight rates because they are below cash costs,” said Ryu Je-Hyun, an analyst at Mirae Asset Securities Co. “If they don’t, their cash will start to burn out.”

To contact the reporter on this story: Wendy Leung in Hong Kong at wleung12@bloomberg.net; Francisco Alcuaz Jr. in Manila at falcuaz@bloomberg.net

SBMA to prioritize shipping firms as terminal operator

The Subic Bay Metropolitan Authority (SBMA) will make available the bid documents for the privatization of the operations of the New Container Terminal-2 (NCT-2) on Feb. 24, with shipping lines as the preferred operators of choice.

Ferdinand Hernandez, SBMA senior deputy administrator for operations, said the SBMA favors shipping lines for the operations of the NCT-2 as a transshipment hub, although port operators will also be accommodated if they partner with a shipping firm. The deadline for bids will be on April 4.

"We are really looking at developing the cargo volume in Subic through the operations of a shipping line," Mr. Hernandez said.

The NCT-1, which is right beside the NCT-2 in Cubi point, was awarded to the Subic Bay International Terminal Corp (SBITC), a subsidiary of the International Container Terminal Services, Inc. (ICTSI). Container handling operations were transferred to the SBITC in April last year.

The construction of the NCT-1 and NCT-2 started in 2004 through a P5.8-billion official development assistance loan from the Japan Bank for International Cooperation (JBIC) for SBMA’s port development project.

Both terminals have a cargo handling capacity of 300,000 twenty-foot equivalent units. The NCT-1 generates about P4 million monthly for the SBMA.

The SBMA will also build six to seven new warehouses this year for bulk and break bulk goods in a 10,000-square meter property in line with its logistics hub modernization project.

Mr. Hernandez also noted that despite the global economic slump, business activity at the SBMA has been holding up due to the opening of the Subic Clark Tarlac Expressway.

The SMBA, he added, was on track to meet its P330-million collection target for the year. After the NCT-1’s opening and the removal of exemptions formerly given to the Philippine Coastal Corp., the SBMA collected about P270 million in 2008, or almost a quarter increase from a year earlier.

"[It] is still difficult to predict [our performance] because of the present economic situation," Mr. Hernandez added.

There are now about 20 vessels in Subic that pay P6 million in monthly anchorage fees. JOSE BIMBO F. SANTOS, BusinessWorld

Carriers parking their vessels in Subic Bay

INTERNATIONAL shipping lines have started to reduce the frequencies of their vessels going to and from the Philippines, and are parking some of vessels in the ports of the country.

Perfecto Pascual, seaport manager of Subic Bay Metropolitan Authority (SBMA), said at least 12 vessels have already been parked in the free port since November last year, most of which are ship agents Ben Line and BOW Marine Services Inc.

“International carriers started to temporarily park their vessels in the third quarter of the year and continue up to this time,” Pascual said.

SBMA is charging $0.0174 per GRT (gross registered ton) per day for every vessel anchored along the territories of the free port on top of the one-time harbor fee of $0.06 per GRT per day. The rate for domestic vessels, on the other hand, is half of that price.

Shipping lines prefer to just park their vessels to reduce the cost as cargo volumes are on a steep downtrend since the third quarter last year due to the global recession. Such move, however, has become a boon to local port authorities as they can still get a significant amount of revenues, even if cargo volumes are decreasing.

“Several other [ship] agents have expressed possibility of parking their vessels to Subic Bay if the shipping business continues to remain slow in the next weeks,” Pascual said.

In the Port of Manila, the Philippine Ports Authority is also allocating spaces for the international lines to lay up their vessels until such time that the economic crisis winds down. By VG Cabuag - Business Mirror

Sidelined ships seek Subic harbor

The global financial meltdown that sidelined many cruise liners and cargo ships could prove to be a golden opportunity for Filipinos, Labor Secretary Marianito Roque said.

According to Roque, several cruise liners and cargo vessels have docked in Subic Bay harbor in the past few months due to lack of business, waiting out the recession that has discouraged their clients from vacationing and reduced cargo orders.

Roque said the government has been in talks with other shipping firms to use the Subic port.

“We would like to invite maritime owners to see the Philippines as a lay-up area for their ships in a bid to generate local employment,” Roque said in a recent media interview.

Sources said around 15 cruise and cargo vessels had docked in Subic, Zambales province.

Previously, Roque said many cruise liners and cargo vessels let go workers and seafarers because of the economic downturn, although he said the government was expecting the situation to improve by the end of 2009.

“It has really affected container vans because it meant that there would be less goods to ship,” the labor secretary said.

He said Filipinos could serve as skeleton crew that could check the liners from time to time. The vessel owners would also need maintenance crew and security guards, he added.

Aside from Subic, Roque said the government also offered the ports in Cagayan de Oro and Davao to shipping and cruise firms.

The labor chief said Filipinos workers were known for being diligent and proficient in English, skills valued by foreign employers. Kristine L. Alave - Philippine Daily Inquirer

$3-B COSCO hub still in the pipeline

The project was supposed to start last year. COSCO had sent a team of experts to look over prospective sites for shipping hubs at Sangley Point in Cavite City, outside Manila, and at the Subic Bay Freeport

The plan of Chinese giant China Ocean Shipping (Group) Co. (COSCO) for a $3-billion regional cargo hub in the Philippines is still on but the facility will “take time” to complete, a presidential adviser said.

Although the volumes of investment flow and trade remain robust, the number of big projects appears to have dwindled following the controversy around the government’s aborted national broadband network (NBN) deal with China’s ZTE Corp., said Francis Chua, presidential adviser on China trade and investments.

“COSCO is still interested, but the project would have to be given time,” Chua said in an interview. “Communication with the COSCO group remains open and meetings are being arranged as usual.”

He added that COSCO officials were supposed to meet with Philippine trade officials last month but this did not push through due to some “miscommunication on the Chinese side.”

Chua said the Philippine Chamber of Commerce and Industry, in which he also holds a position, had lined up at least five business missions this year in an effort to step up trade with mainland China.

“Most of these missions would go to China, but there would also be sorties to the United States and Europe,” he said. “The focus would be on food products, especially those derived from marine resources.”

In an earlier interview, Chua said COSCO Philippine project would be delayed and the company’s top officials had decided to let a Singapore-based subsidiary handle it. He said he was working to have the project, which is crucial for both COSCO and the Philippines, started promptly.

The project was supposed to start last year. COSCO had sent a team of experts to look over prospective sites for shipping hubs at Sangley Point in Cavite City, outside Manila, and at the Subic Bay Freeport, northwest of Manila.

COSCO originally considered building a base at Sangley Point through which it could aggregate shipments from various points in the region for more efficient hauling to the United States and other destinations across the Pacific, Chua said.

However, the COSCO team saw the advantages of locating in Subic as well and did not want to pass up on either site, he added.

Chua said COSCO was prepared to foot the bill for site development, including the cost of land reclamation and port construction. By Ronnel Domingo - Philippine Daily Inquirer

$3-B Cosco Philippine project delayed

China shipping giant Cosco Group remains keen on putting up a $3-billion regional cargo hub in the Philippines, but the project’s implementation may be delayed, said Francis Chua, presidential adviser on China trade and investments.

Chua, who is working directly with Cosco on the project, said in an interview that the company’s top brass had decided to let a Singapore-based subsidiary undertake the venture.

“This would mean the project would be delayed, but we are trying to get Beijing (the main company) to take a direct hand in the venture,” he said.

In previous interviews, Chua had said he was working to have this project -- a crucial investment for both Cosco and the Philippines -- started promptly.

“We don’t know why Cosco decided to assign the project to the Singapore unit,” Chua said. “Things would certainly be carried out much faster if Beijing was directly involved.”

Cosco had sent a team of experts to take a look at prospective sites for the shipping hub, including Sangley Point off Cavite and Subic Freeport, both former naval facilities.

Cosco was originally considering building a base at Sangley Point, outside Manila, through which it could collect shipments from various points within the region for more efficient onward hauling to the United States and other destinations across the Pacific.

While this was developing, President Gloria Macapagal-Arroyo issued an executive order mandating the development of Sangley Point, in Cavite City, into an international logistics hub.

However, Chua said the Cosco team had seen the advantages of locating in Subic as well and that it did not want to pass up on either site.

He said Cosco was prepared to foot the entire bill for site development, including the cost of land reclamation and port construction.

Cosco needs enough land area that could accommodate a pier and a container yard or about 50-100 hectares.

Founded in 1961 as a pioneering international shipping carrier in China, Cosco is a $17-billion corporation that provides services in freight forwarding, shipbuilding, ship repairing, terminal operation, trade, financing, real estate and information technology industry.

Cosco owns and operates a merchant fleet composed of 600 vessels with total carrying capacity of 35 million dead weight tons.

By Ronnel Domingo - Inquirer

UPDATES ON $3B SHIPPING HUB DEAL

Failed farm deals make COSCO wary

The Philippines is trying to seal a $3 billion deal with China’s largest shipping conglomerate, COSCO Group, to develop a logistics hub and other ventures, but will have to fend off rivals Thailand, Malaysia and Indonesia, said Francis Chua, special envoy for trade and investments.

He added that the Philippines needs to show it can deliver on its promises after nearly $5 billion worth of farm deals with China have so far failed to produce results.

China Ocean Shipping (Group) Co is interested in building a regional hub, a maritime school and an industrial zone and investing in mining in the Philippines.

COSCO Group, which earlier announced it was selling its dry-bulk shipping fleet for $4.6 billion to its China COSCO Holdings unit, is looking at several locations in Luzon, including two former US naval bases at Sangley Point and Subic.

If COSCO invested in Subic, north of Manila, it may strike a partnership with local port operator ICTSI, Chua said.

COSCO is also considering investing in Bataan or Batangas provinces, both facing the South China Sea, or in Baler, Quezon province, which faces the Pacific Ocean, he said.

COSCO was not immediately available for comment.

Chua said he would meet COSCO group President Wei Jiafu, a former ship captain, in Beijing this month to discuss possible investment, their second meeting in around three months.

"I want to hear from him what is the bottomline here. What would it take for him to say ‘yes’ immediately?," said Chua, a stockbroker and electronics manufacturer.

"I’ll ask him what are the lingering issues. Once he gives me his minimum requests, then I have to go back to the government ... that will be the clincher," he said.

COSCO is also in talks with other Asian countries about a regional hub as it seeks to expand to meet growing requirements from its Asian, US and European clients, said Chua, who became ambassador for Chinese trade in December.

His task was expanded in June to cover other countries.

After years as a regional laggard, the Philippines is revving up again due to strong consumer demand, a booming outsourcing sector and relative political calm.

The economy grew at 7.5 percent in the second quarter, its fastest annual pace in 20 years, but analysts have said the country needs to attract more foreign investment to keep the momentum going.

Net foreign direct investment reached $2.35 billion last year, less than 2 percent of GDP, as bureaucracy, corruption and creaking infrastructure put off investors.

In January, the Philippine government signed 18 farm deals with China and committed to find large parcels of land for Chinese firms to produce crops at lower cost for the Philippines and China.

The biggest of the 18 deals involved a planned $3.8 billion investment by the Fuhua Group in 1 million hectares of high-yielding corn, rice and sorghum.

But Chua said the government was finding it difficult to make available 1 million hectares for lease due to resistance from local farmers and the difficulty of finding large contiguous parcels of land in the archipelago.

"Frankly, it’s difficult to locate land here in our country." -Reuters

Norwegian company is investing P200 M in shipyard project

By JONAS REYES - Manila Bulletin

SUBIC BAY FREEPORT — A Norwegian firm will invest P200 million in the construction of a shipyard here, further boosting the capability of this former naval base for maritime logistics and services.


The Subic Bay Metropolitan Authority (SBMA) signed recently an agreement with the Subic Bay Shipyard Consortium (SBSC) for the establishment of a shipbuilding and repair facility at the former US Navy ship repair facility (SRF), which is also being developed by another firm into a terminal for international cruise ships.

SBSC president and chief executive officer Nils-Ottar Lonoy said his firm will be utilizing the so-called "slipway and skid system" which can accommodate vessels of up to 90 meters in length for dry docking and repair.

"We really see the necessity to upgrade the domestic fleet," Lonoy said, noting that the shipyard project was conceptualized in 2005 to take advantage of "excellent pier facilities" at SRF.

Lonoy said the company is now studying the establishment of the shipbuilding facility as its contribution to the envisioned Subic Bay Maritime Industrial Park, a pet project of SBMA Chairman Feliciano Salonga.

The construction of the new shipyard will begin next month, and the facility is expected to be completed in three to five years, Lonoy said.

He also said that his company will be conducting skills training for Filipino ship repair workers needed for its 500-strong manpower requirement.

Lonoy added that his company will hire some of the highly skilled workers who were employed in the ship repair facility of the US Navy in Subic.

During the contract signing, Chairman Salonga said the SBMA sees great prospects in the shipbuilding industry as it has been included in the government’s investment priority program.

Salonga said the .68-billion shipyard project of Hanjin Heavy Industries and Construction Corp. in Subic is another magnet that attracts more players in the international shipping industry to Subic.

The Hanjin project is expected to become the fourth largest shipyard in the world, with projected annual sales and export revenues of .6 billion.

SBMA investment processing head Ronnie Yambao said that Subic offers a competitive advantage to players in the shipping industry because of its integrated logistics facilities for storage, cargo loading and unloading, packaging, processing and information, and transportation.

In addition, the SBMA is offering to locators incentives such as tax- and dutyfree importation, a minimal five percent corporate tax on gross income, unrestricted entry of foreign investments, no foreign exchange control, and four to six years of income tax holiday for investors.

Cosco picks two sites for $3-B project

CHINESE shipping giant China Ocean Shipping Co. is splitting between Sangley Point and Subic its planned investment in an Asian cargo hub worth at least $3 billion, having seen both sites during a visit here last month.

Francis Chua, presidential adviser on China trade and investments, said in an interview that a team of experts from Cosco's diverse operations in the region had seen the advantages of both locations and that the group did not want to pass up on either.

In a week-long sortie last month, half of the team visited Sangley Point--the subject of an executive order mandating its development into an international logistics hub--while another went to Subic, which is fast becoming a maritime center in East Asia.

"[They] want Sangley Point because of its nearness to Manila, and Subic, because it offers the best options for eventual expansion of operations," Chua said. "They found the two areas really attractive."

He said the team would meet up with Cosco top brass in Beijing to consolidate and assess their findings, and to figure out their next steps.

"Part of what they would decide on would be a second visit and how to go into a more detailed approach to realize their shipping hub," he said.

Chua, who is also president of the Federation of Filipino-Chinese Chamber of Commerce and Industry, said everything was still subject to a comprehensive assessment and feasibility analysis.

Still, he said that while Cosco was focusing on Sangley and Subic, local government executives in other provinces across the country was offering alternative sites for the project.

In an earlier interview, he said Cosco was prepared to foot the entire bill for the development of whichever site would be chosen, including land reclamation and port construction.

He said Cosco was fully committed to have a cargo hub in the Philippines, which would be a gathering point for shipments from all over the region on the way to the United States.

Cosco needs enough land area that could accommodate a pier and a container yard or about 50 hectares to 100 hectares.

Founded in 1961 as a pioneering international shipping carrier in China, Cosco is a $17-billion corporation that provides services in freight forwarding, shipbuilding, shiprepairing, terminal operation, trade, financing, real estate and information technology industry.

Cosco owns and operates a variety of merchant fleet of some 600 vessels with total carrying capacity of up to 35 million dead weight tons, which help accommodate a yearly traffic volume of at least 300 million tons.

The group has subsidiaries spread in Guangzhou, Shanghai, Tianjin, Qingdao, Dalian, Xiamen and Hong Kong, and owns and operates various types of ocean shipping fleets for the shipment of containerships, bulk carriers, oil tankers as well as specialized carriers.

Cosco's ships and containers call on some 1,300 ports in at least 160 countries and regions worldwide. By Ronnel Domingo - Inquirer

Cosco eyes Subic, Sangley as possible invest sites

By MA. ELISA P. OSORIO
The Philippine Star

Chinese shipping giant China Ocean Shipping Co. is seriously eyeing the 93-kilometer strip between Subic and Clark as a possible location of their multi-billion dollar investment in the country.

“Cosco officials are here on a two-day visit to look at Subic and Sangley Point,” Francis Chua, special Philippine envoy on China trade and investments, said in an interview Tuesday.

According to Chua, Cosco vice-president LiJian Xiong and executive vice-president Li Jianhong went to Sangley Point in Cavite Tuesday and is scheduled to visit Subic Wednesday.

“They want to evaluate the two areas. They want to see if the areas can accommodate the facilities they want to build,” Chua said.

Chua said Cosco’s initial plans include the development of a land where they would put up a “marine school to train maritime sailors. There will be a repairing ships and building ships.”

“They will be using the Philippines as a hub for shipment to Europe and America, so all cargo from Asia will come to the Philippines, using the Philippines as a staging point to go to US, North America, Europe and vice versa,” Chua said.

The move of the Chinese investor is contrary to earlier statements made by Trade Secretary Peter Favila who claimed Cosco has finally decided to pluck in their $3-billion to $5-billion investment in the naval base in Cavite.

“The Chinese liked Sangley Point. They considered other locations but they chose to develop Sangley into a fully operational commercial port,” Favila said last week.

However, Chua said the Chinese are concerned if there is enough space for them in the Sangley Point naval base. “They need a lot of space. They are not certain if the Cavite property will be enough.”

According to Chua, the Philippine Reclamation Authority has told him that Philippine Airlines (PAL) is moving in the naval base to extend the runway of the international airport in order to accommodate the flag carrier’s 747 planes.

Currently, the runway is two kilometers. Chua said the 747 requires seven kilometers so the new runway would eat up five kilometers.

In spite of the confusion as to where the investment is going to be located, Chua said he is confident that the Chinese will not move their business to another country like Vietnam.

“We will not allow that to happen. One thing is sure, Cosco will locate in the Philippines,” Chua stressed.

Founded in 1961 as the pioneer international shipping carrier in China, Cosco has grown into a $17-billion global company. It owns and operates 600 various types of ships operating in 1,300 ports in more than 160 countries and regions worldwide.