presentation of francisco delgado iv at the 2nd subic bay maritime conference and exhibit

THE COST OF SHIPPING THROUGH SUBIC

April 24, 2015

Subic Bay Convention & Exhibition Center

The 2nd Subic Bay Maritime Conference & Exhibit Subic Bay: Your Gateway To Northern Luzon

Characteristics

Manila

Major vehicular traffic

City not master planned

Road construction projects

Robust economic growth

Truck ban

Flooding

Over-populated

Subic

No vehicular traffic

Master planned by USA

Central location

Available infrastructure

No truck ban

No flooding

Not over-populated

Import Costs Shipping Freight, Arrastre & Wharfage 20 Container (TEU)

Manila Subic

Ocean Freight (From Belawan) US$ 545.00 US$ 750.00

Congestion Surcharge US$ 300.00 NONE

Container Deposit Depends on

agreement with FSL

NONE

Arrastre Php 3,727.00 plus

VAT (Php 4,174.24)

Php 1,863.00

Non-VAT

Wharfage Php 539.73 plus VAT

(Php 604.50)

Php 560.90

Non-VAT

Import Costs Port Container Storage 20 Container (TEU)

Manila Subic

First 5 days free* First 5 days free*

6-10 Php 481.30 plus VAT(Php 539.05) Second 5 days free*

11-15 Php 429.43 plus VAT (Php 529.96) 10-14 US$ 14.53 NON-VAT (Php 639.32)




31-Up Php 5,000.00 or Php 5,000.00 10

days after payment of D&T plus VAT

(Php 5,600.00)

10% increase every 10th day thereafter

*Note: If container remains over 5

days, the storage fee of Php 481.30 is

applied retroactive from day 1 (plus

VAT)

*Note: If container remains over 10

days, the storage fee of US$ 12.11

(Php 532.84) is applied retroactive

from day 1 (NON-VAT)

Import Costs Trucking 20 Container (TEU)

Manila Subic

To Clark Php 31,350.00 plus VAT

(Php 35,112.00)

Php 18,000.00 plus VAT

(Php 20,160.00)

To Manila Php 13,050.00 plus VAT

(Php 14,616.00)


(Php 46,200.00)

To Subic Php 41,250.00 plus VAT

(Php 46,200.00)

Php 6,500.00 Non-VAT

To Bataan Php 44,400.00 plus VAT

(Php 49,728.00)


(Php 20,160.00)

To Tarlac Php 36,750.00 plus VAT

(Php 41,160.00)


(Php 31,360.00)

Import Costs Diversion, Relocation, Demurrage, Detention 20 Container (TEU)

Manila Subic

Diversion of Empties Php 10,000.00 plus VAT

(Php 11,200.00)

NONE

Relocation of

Overstaying Containers


(Php 32,480.00)

NONE

Demurrage First 5 days free

Day 6 - 7 Php 300.00

Day 8 20 Php 1,000.00 Day 21 Up Php 2,000.00

Same as Manila

Detention First 5 days free

Day 6 - Up Php 1,000.00

Same as Manila

Import Assumptions & Scenarios To Clark - 20 Container (TEU)

Manila A Manila B Manila C Subic Manila D

Light Medium Heavy None Like

Subic

Days at port 5 10 30 3 3

Days for trucking &

unloading

3 3 3 2 2

Days for empty

diversion

1 1 1 0 0

Days for handling

overstaying TEUs

0 0 2 0 0

Payment day of

Duties & Taxes

3 3 3 3 3

Days - Demurrage 5 10 30 3 3

Days - Detention 4 4 6 2 2

Total Days 9 14 36 5 5

Shipment delay 30/60 30/60 30/60 0 0

Import Scenario Manila A: Light Congestion - 20 Container (TEU)

Origin Destinatio

n

Ocean

Freight

Congestio

n

Surcharge

Total Freight Container

Deposit

Belawan Manila US$ 545.00 US$ 300.00 Php

37,180.00

Php 5,000.00 Arrastre Wharfage Port Storage Trucking

Php 4,174.24 Php 604.50 Php 0.00 Php 35,112.00

Empty

Diversion

Reposition

Overstaying

Demurrage Detention

Php

11,200.00

Php 0.00 Php 0.00 Php 0.00

Total Cost Total Days Loss of Sales

Php 93,270.74 30/60 + 9 ?

Import Scenario Manila B: Medium Congestion 20 Container (TEU)

Origin Destinatio

n

Ocean

Freight

Congestio

n

Surcharge


Deposit


37,180.00


Php 4,174.24 Php 604.50 Php 5,390.56 Php 35,112.00

Empty

Diversion

Reposition

Overstaying

Demurrage Detention

Php

11,200.00

Php 0.00 Php 3,600.00 Php 0.00


Php 102,261.30 30/60 + 14 ?

Import Scenario Manila C: Heavy Congestion 20 Container (TEU)

Origin Destinatio

n

Ocean

Freight

Congestio

n

Surcharge


Deposit


37,180.00


Php 4,174.24 Php 604.50 Php 107,376.48 Php 35,112.00

Empty

Diversion

Reposition

Overstaying

Demurrage Detention

Php

11,200.00

Php 32,480.00 Php

33,600.00

Php 1,000.00


Php 267,727.22 30/60 + 36 ?

Import Scenario Subic: No Congestion 20 Container (TEU)

Origin Destinatio

n

Ocean

Freight

Congestio

n

Surcharge


Deposit

Belawan Subic US$ 750.00 US$ 0.00 Php

33,000.00

Php 0.00 Arrastre Wharfage Port Storage Trucking

Php 1,863.00 Php 560.90 Php 0.00 Php 20,160.00

Empty

Diversion

Reposition

Overstaying

Demurrage Detention

Php 0.00 Php 0.00 Php 0.00 Php 0.00


Php 55,583.90 0 + 5 ZERO

Import Scenario Manila D: Like Subic Assumptions 20 Container (TEU)

Origin Destinatio

n

Ocean

Freight

Congestio

n

Surcharge


Deposit


37,180.00


Php 4,174.24 Php 604.50 Php 0.00 Php 35,112.00

Empty

Diversion

Reposition

Overstaying

Demurrage Detention

Php 0.00 Php 0.00 Php 0.00 Php 0.00


Php 82,070.74 30/60 + 5 ?

Import Scenario Subic: No Congestion & Stabilized Rates 20 Container (TEU)

Origin Destinatio

n

Ocean

Freight

Congestio

n

Surcharge


Deposit

Belawan Subic US$ 545.00 US$ 0.00 Php

23,980.00

Php 0.00 Arrastre Wharfage Port Storage Trucking

Php 1,863.00 Php 560.90 Php 0.00 Php 20,160.00

Empty

Diversion

Reposition

Overstaying

Demurrage Detention

Php 0.00 Php 0.00 Php 0.00 Php 0.00


Php 46,563.90 0 + 5 ZERO

Import Scenario Summary To Clark - 20 Container (TEU)

Scenarios Total Cost Total Days Loss of Sales

Manila A - Light Php 93,270.74 30/60 + 9 ?

Manila B - Medium Php 102,261.30 30/60 + 14 ?

Manila C - Heavy Php 267,727.22 30/60 + 36 ?

Subic No Congestion Php 55,583.90 0 + 5 ZERO

Manila D Like Subic Php 82,070.74 30/60 + 5 ?

Subic Stabilized Rates Php 46,563.90 0 + 5 ZERO

Actual Case Study Importer from Las Pinas 40 Container (FEU)

Manila Subic

Arrastre & Wharfage Php 10,500.00 Php 4,300.00

Duties & Taxes Php 81,300.00 Php 81,300.00

Trucking Php 15,000.00 Php 34,000.00

Miscellaneous Php 56,800.00 Php 34,700.00

Total Php 163,600.00 Php 154,300.00

Business Loss Php 132,000.00* ZERO

TOTAL LOSSES Php 295,600.00 Php 154,300.00

TOTAL DAYS 21-50 3

Note: * Importer lost US$ 1.5 Million in 2014 due to Manila port congestion; At 500 FEUs

per year, that equates to a loss of Php 132,000.00 per FEU at an exchange rate of Php

44.00 to US$ 1.00.

Export Costs Shipping Freight & Arrastre 20 Container (TEU)

Manila Subic

Ocean Freight

(To Belawan)

US$ 545.00 US$ 750.00

Arrastre Php 3,043.00 plus VAT (Php 3,408.16) Php 1,521.45

Non-VAT

Port Container

Storage

First 5 days free First 5 days free

6-10 Php 60.15 plus VAT (Php 67.36) Second 5 days free

Export Costs Trucking 20 Container (TEU)

Manila Subic

From Clark Php 31,350.00 plus VAT

(Php 35,112.00)


(Php 20,160.00)

From Manila Php 13,050.00 plus VAT

(Php 14,616.00)


(Php 46,200.00)

From Subic Php 41,250.00 plus VAT

(Php 46,200.00)

Php 6,500.00 Non-VAT

From Bataan Php 44,400.00 plus VAT

(Php 49,728.00)


(Php 20,160.00)

From Tarlac Php 36,750.00 plus VAT

(Php 41,160.00)


(Php 31,360.00)

Export Assumptions & Scenarios From Clark - 20 Container (TEU)

Manila Subic

Days for trucking & unloading 1 1

Days at port 1 1

Total Days 2 2

Potential Delays 30 ZERO

Export Scenarios Manila & Subic Assumptions 20 Container (TEU)

Origin Destination Ocean

Freight

Total Freight Arrastre Port

Storage

Manila Belawan US$ 545.00 Php 23,980.00 Php 3,408.16 Php 0.00

Subic Belawan US$ 750.00 Php 33,000.00 Php 1,521.45 Php 0.00

Origin Destination Trucking Cost

Clark Manila Php 35,112.00

Clark Subic Php 20,160.00

Port Total cost Potential Delays

Manila Php 62,500.16 30

Subic Php 54,681.45 ZERO

Other Advantages of Subic

Tax-free incentives

No need to pay customs duties & taxes for entire shipment upfront

Ideal transshipment port within the Philippines

Ideal seaport for disaster management

Marikina Fault (West Valley Fault)

West Valley Fault has moved 4 times in the last 1400 years

Movement interval is estimated every 400 years

Last major earthquake from West Valley Fault was in 1658

Given the above calculations, there is a high probability the West Valley Fault will move in our lifetime

Potential strength of earth-quake is between 6.5 to 7.5 magnitude

Loma Prieta Earthquake San Francisco, CA

October 17, 1989

Magnitude 6.9

Approximately 63 deaths and 3,757 injuries

Estimated US$ 6 Billion in damages

Elevated freeways collapsed, liquefaction of soil in the Marina District (reclamation area) damaged many

buildings, and airport runways and taxiways cracked

Great Hanshin Earthquake Kobe, Japan

January 17, 1995

Magnitude 6.9

Approximately 6,000 deaths and 37,000 injuries

Estimated US$ 150 Billion in damages

Elevated freeways collapsed, around 200,000 buildings damaged, and approximately 80% of ports destroyed

Marikina Earthquake Estimated Damages & Casualties PHIVOLCS Risk Analysis Study 2013

If Magnitude 6.5


Estimated US$ 40 Billion in damages (Php 1.8 Trillion)

6,540 hectares of completely collapsed structures

16,300 hectares of damaged structures

If Magnitude 7.2


Estimated US$ 51 Billion in damages (Php 2.2 Trillion)

8,800 hectares of completely collapsed structures

17,300 hectares of damaged structures

Conclusion

Hands down Subic is cheaper then Manila

Need to engage Subic-based freight forwarders & brokers

Subic enables effective pricing forecasts compared to Manila

Rate premiums will stabilize as volumes in Subic increase

Conclusion

To achieve long term sustainability, Subic needs un-waivering support from all stakeholders

The fruits of this collective investment in Subic is not for the benefit of a select few, but rather, the majority

Thank You!

The 2nd Subic Bay Maritime Conference & Exhibit Subic Bay: Your Gateway To Northern Luzon

presentation of francisco delgado iv at the 2nd subic bay maritime conference and exhibit

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