SCMAP Perspective is our fortnightly column on PortCalls, tackling the latest developments in the supply chain industry, as well as updates from within SCMAP. On this column, Henrik Batallones looks at the early lessons we can pick up from the recent logistical issues surrounding the closure of the San Juanico Bridge.
Early lessons from Eastern Visayas
The week-long confusion that surrounded the aborted (for now) plans to rehabilitate EDSA had the unfortunate side effect of masking the real-world consequences of the closure of the San Juanico Bridge to vehicles over three tons.
Sure, that’s the “imperial Manila” way of thinking, you might say – and there is something to be said about how the EDSA story had a disproportionately bigger share of attention, at least from the media. But if anything, what’s going on in eastern Visayas is illustrative of what could happen here: a disruption both sudden and slow-moving at the same time.
When the government suddenly announced the closure of the San Juanico Bridge to heavy vehicles due to concerns over its integrity and stability, the reaction in shops and markets was sudden. Prices suddenly went up, with some stores, especially in Leyte, running out of items in the immediate aftermath. A price freeze, as well as manufacturers and distributors adapting to the new circumstances, brought things back to normal, but even then, the cost of these responses continue to creep up.
As it stands, most goods coming to eastern Visayas are sourced via trucks coming from Luzon, and queueing in the congested port in Matnog, Sorsogon, heading to the port in Allen, Samar. From there, these trucks make their deliveries through Samar and, after crossing San Juanico, through Leyte. A limited number of goods are sourced through other ports in both islands, but they are not able to carry a large amount of goods nor ship traffic.
The response of manufacturers and distributors have depended on what systems they have in place. Some decide to source their products from distribution centers in the Visayas, for example, but the challenge would be higher logistics costs due to low trade volume. Meanwhile, those who continue to source from Luzon (and endure the congestion in Matnog) can continue their deliveries as normal in Samar, but before crossing the bridge to Leyte, will have to “break up” their shipments to smaller vehicles that are allowed to cross San Juanico. This also means additional costs.
In many cases, the immediate impact of this on the prices we see on shelves may be minimal. The country’s largest manufacturers may be implementing national pricing schemes, where products cost the same regardless of where you are in the country; price controls such as the Department of Trade and Industry’s suggested retail prices may also come into play. For these basic goods, the profit margins are already razor-thin, just so companies can stay competitive in the market. For agricultural products, there may be no margins at all, so their prices will be even more volatile. And any increase – actual or perceived – is an unnecessary burden for consumers who are already struggling to make ends meet. Eastern Visayas has historically been one of the poorer regions in the country, because of underinvestment and the continued impact of being a “landing zone” for typhoons. Imagine that pain on them.
What’s happening in eastern Visayas is what could happen to EDSA: a disruption that’s both sudden and slow-moving at the same time. Yet, the solutions are different. I still believe that, in EDSA’s case, the best way is to provide stakeholders with as much information as possible about the “rebuilding” project, to allow everyone to plan earlier and plan better. In the case of San Juanico, it shows the little attention we have paid to its transportation network, with alternative ports taking a while to take off the ground – is it because stakeholders are concerned that it won’t be profitable, and decide it’s not worth pursuing?
While it is good that a temporary solution has been established at the Amandayehan port in Basey, Samar – and the Philippine Ports Authority has pledged over PHP 410 million to make it permanent – anyone who can connect the dots can still see the gaps. Other seaports that serve the region remain underutilized because of a lack of ships, or a lack of volume, or some other physical limitation, like a shallow draft. The roads connecting the two islands’ towns are also badly maintained, perhaps partly because trade routes only rely on the same routes. I mean, San Juanico Bridge wouldn’t be this bad if not for it.
Obviously, the answer is better infrastructure. Better ports, better roads, better bridges, and duplicates of those, to ensure continuity and resilience amidst natural calamities or other business disruptions. It’s a long-term solution, but get it right – not just in eastern Visayas, but everywhere – and we might just avert future problems caused by aging infrastructure. But for a quick-ish win… how about expanding our RORO network beyond the three “nautical highway” routes established over twenty years ago? Inter-island trade continues to grow. It’s about time our infrastructure is able to keep up, or even stay ahead, rather than play constant catch-up.