Truck ban

The truck ban in Manila brought to the fore two important points: Decisions should be fully researched and openly discussed and argued before being made, and local governments cannot be allowed to make decisions that impact on the nation without agreement from the national leadership.

The local ban on open-pit mining and a review of mining taxes were examples of these two points. Then there was the mayor of Manila imposing a ban on trucks entering the city. It, too, wasn’t fully researched before it was imposed. And the impact on the national economy was obvious early on, yet it wasn’t rescinded for a full seven months. Only when the situation reached critical level was anything done.

Well, the damage has been done. I’m going to quote liberally from a friend of mine, Fern Peña, who’s deeply involved in the import/export trade, because his analysis is excellent (I have his permission).

The ban imposed by the mayor meant that not only the delivery of goods but also the return of empty containers to the port couldn’t be done. Thus began much-delayed deliveries and an accumulation of containers at the port, leading to the slowdown of the logistics chain in and out of the port. Exporters and importers as well as customs brokers and truckers were stunned at the situation and took a long time to react.

At the same time that the truck ban was affecting the industry, the Land Transportation Franchising and Regulatory Board issued an order against trucks without “franchise” operating in the port. The LTFRB also imposed a ban on trucks more than 15 years old, which was a good idea but should not have been imposed then, and not without sufficient notice. These two actions led to another slash on the already insufficient number of trucks available for hauling.

Because of the port congestion, trucking costs increased along with port costs and shipping line charges due to the delays that were occurring. With the truck ban, the lack of trucks due to LTFRB issues, and the lessening of road use due to construction (the Department of Public Works and Highways is doing a number of road repair, widening, and construction projects all at once—necessary work, but it adds to the chaos), market forces came into play: The price of trucking containers to and from the port increased dramatically. If you’re thinking how much worse it could get, well, with high demand for limited trucks, trucking costs doubled and shipping lines started charging an extra $600 per container. And with the huge buildup of containers stuck in the port, the Bureau of Customs (BOC) was overwhelmed, further slowing deliveries.

And now we have Christmas shipments arriving. Well, expect all the traditional food and other products we expect to be on the shelves at Christmas to cost an awful lot more—if available at all. Thanks to the mayor of Manila.

As if all this isn’t bad enough, the BOC and the Bureau of Internal Revenue (BIR) introduced new registration requirements for importers and customs brokers. They are part of the government’s transparency and good governance program, so quite reasonable, but requiring all importers and brokers to comply at the same time has overloaded the BOC and BIR staffs, adding to an even greater slowing of imports.

It’s too many deterrents to doing business all at the same time, creating nothing less than chaos. The solution is to have a moratorium on all the measures that have been implemented, though the actions taken by the government are laudable and should under normal times be supported.

The truck ban has been lifted, so that’s a first important step. Now we need a moratorium on the franchising requirements. Implement a monthly quota of renewals, so the LTFRB is not faced with an administrative nightmare in working on 20,000 franchises all at once given the slow process of hearing approvals and paperwork requirements. Moreover, suspend the 15-year age requirement for a year or two to allow trucking firms enough time to fund and be physically capable of refleeting their units with newer models. The capital cost will be quickly recovered with more efficient units that don’t require frequent maintenance. Tied to this is the need to upgrade and professionalize the Land Transportation Office in its capabilities regarding the approval process of roadworthiness for trucks, so that older ones with valid safety records can continue operating for now.

Road repair, closure and widening projects should be coordinated and not be done all at the same time with a greater recognition of the requirements of all stakeholders on the road.

Also, the securing of the new importer clearance certificate from the BOC should be done gradually, similar to the system of motor vehicle registration, on a monthly basis. The registration of all the importers should not be done at once.

The one good thing that came out of all this is that it highlighted the need to really do something about actually using the Subic and Batangas ports, as had been intended but never done.

In the wider context, long-term solutions have to be put in place. Manila as a city is way beyond its design, way beyond a population it can accommodate without major change. A cargo rail line must be built, and MRTs completed, too. Tunnels must be built to move the ever-growing number of vehicles on the roads, or skyways where it’s practicable. Overpasses/underpasses must replace intersections. The well-researched Jica (Japan International Cooperation Agency) report should be implemented in toto, immediately. And the southern and northern areas of Luzon should be more aggressively developed to move people out of Manila and discourage more from entering.