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Golden Opportunities in Philippine Port Sector

A distinctly optimistic view of the future prospects of the local maritime industry pervaded at the Philippine Ports and Shipping 2017 trade show in February. With a strong domestic economy, robust government support and China's Belt and Road Initiative ramping up, the already-booming sector looks set for steady growth in years to come.

A spokesperson for the Philippine Ports Authority (PPA) told delegates at the event that the body is focused on developing the country’s domestic and international port infrastructure, with several modernisation projects earmarked for public-private partnerships.

Bright Prospects

Manila's Harbour Centre Port Terminal
Looking to expand its capacity and facilities: Manila's Harbour Centre Port Terminal
Konecranes
Uplifting experience: Konecranes

The PPA has reason to feel confident about the future. In February, it declared an annual net profit of nearly ₱6.2 billion (US$123 million), an almost 200 per cent overshoot of its official target. The story is similar for many private port operators, including the Harbour Centre Port, Manila’s first and largest private port.

"Our growth is primarily coming from our existing clients, many of whom are significantly expanding their activities, said Geraldine Santos, Marketing Vice-Principal for the Harbour Centre Port Terminal. “As a result, we are looking at expanding and have a reclamation project in development that will add another 32 hectares to the port area. We are also strengthening our intra-island relations and plan to expand our services into such cities as Cebu and Davao."

Growth and port upgrades spell big opportunities for companies that supply them, including Konecranes, a Finnish specialist in cranes and lifting equipment. "We see it as a very important market,” said Kimmo Nyman, Sales Support Director of Konecranes' Port Cranes division. “The Philippines is a big country and home to 100 million people. It also has one of the highest economic growth rates in the region.

"As an archipelago of more than 7,000 islands, it not only needs to build more ports, it also needs to expand the capacity of existing ones. This is what will drive demand for our products."

Market Competition

For foreign companies selling into Asian markets, price competitiveness has always been a problem, particularly given the emergence of China as the prime supplier of cheaper products with steadily improving quality. Mr Nyman, however, believes that this doesn’t pose a major problem for Konecranes' Philippine operations.

"We have been in the lift-truck sector in the Philippines for five years now and business is good and growing. As of the beginning of this year, we have had a broader product range. We now have a product for just about every application our customers are likely to need. We are also developing new products using all the current technology that are priced at pretty much the same level as comparable Chinese equipment.

Similarly confident about the market was Alatas. The UK-headquartered crane parts and maintenance company, whose main markets are Europe and the United States, recently opened a representative office in the Philippines.

"Our competitive edge comes from the fact that we have been in this industry for a long time and that definitely helps,” said Julia Tanquintic, Business Development Manager at Alatas. “The company is also well-known throughout the world and we have a good reputation for precision and attention to detail. To date, we don't see any major obstacles to growing our business here. There are a lot of companies here that need parts and our services."

Shore Power Service

Photo
Looking to expand its capacity and facilities: Manila's Harbour Centre Port Terminal

A number of would-be market entrants also attended the show, including Germany's Stemmann-Technik, a subsidiary of global engineering giant Westinghouse, which specialises in energy and data transfer products.

"For us, the Philippine market is very much on our radar,” said Daiel Hoffmans, the company’s International Sales Manager. “In Europe, at the moment, there are very few big projects emerging, making Asia particularly appealing to us,” said Mr Hoffman, who highlighted the company’s expertise in shore power services, which allows ships to connect to onshore electricity grids.

“Although we are part of a very big corporation, we are still interested in smaller projects – US$2 million to US$3 million. We are also on the look-out for agents as we definitely want to be bigger in Asia," Mr Hoffman added.

One overseas company that has already proved its worth in the local market is 1-Stop, an Australian provider of IT freight and logistics solutions, which introduced a new system for controlling traffic flow in Manila’s port facilities.

"We ran a very successful project here and as a result, we won a lot of new business on the back of it, leading us to open an office here,” said Cam Tran, 1-Stop's Head of Marketing and International Sales Support.

"We now see opportunities beyond remedying the congestion problems of existing ports. In line with this, we are looking to work with newer ports to prevent congestion before it ever becomes a problem."

A recent change in local maritime laws has also led to demand for overseas expertise. The Philippine government last July announced a crackdown on compliance with international cargo weight and loading requirements, a development that Singapore-based Bellmond Technologies has been swift to tap.

"The Philippines is a bit special to us,” said Brian Swan, the Managing Director of the company, a specialist industrial equipment supplier. “Following these recent legal changes, we are now getting a lot of work on the safety side. This is mainly from clients looking to bring their cargo-handling equipment up to the standards required by international law."

For more market opportunities, please visit: http://research.hktdc.com/.

Related Link
Belt and Road

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