SUBIC BAY RELOADED

The Philippines’ premier free port banks on its biggest assets—safe harbor and strategic location—to cement its competitive edge

By HENRY EMPEÑO

SUBIC BAY FREEPORT — With its deep water, sheltered port and strategic location, this former military base is poised to be another springboard for the country’s campaign for a bigger economic role in the Southeast Asian region.

And as the Philippines seeks to increase its foothold in the regional market, the Subic Bay Metropolitan Authority (SBMA), which manages the free port, is increasingly confident that an improved Subic Bay Freeport could deliver the goods as a global logistics center.

The key, according to SBMA Chairman Martin Diño and Administrator Wilma T. Eisma, is to further develop Subic as an international seaport and airport and re-establish its stature as a global gateway.

Diño, during the recent State of the Freeport Address, set the tone for Subic’s renewed growth agenda when he stressed that the SBMA “must maximize all the benefits the Subic Bay Freeport can get from regional and national projects development, and position it as a production and distribution hub in the Asean region.”

“The challenges in Metro Manila are opportunities for us,” Diño added, referring to the growing congestion in Manila, as well as worsening traffic problem that is projected to cost the city some P6 billion a day by 2030.

“Subic must further develop in answer to the challenges that beset the country,” he added.

Toward this goal, Administrator Eisma said that the SBMA intends to improve Subic’s port facilities, intensify its port marketing campaign to improve container traffic and ship calls, establish direct links to other Asean ports, and promote Subic’s capacity for ship-to-ship transfer operations.

Comparative Advantage

The push to develop Subic Bay’s seaport was borne by the fact that Subic’s competitive edge has always been its deep water port.

As early as 1868 when the Spanish military forces surveyed its shore, Subic was highly regarded as superior to other ports and an ideal location for a naval base. This led to the construction in 1885 of a Spanish arsenal at the then village of Olongapo, now the site of the Freeport’s central business district.

When the United States won the Spanish-American War and built the U.S. Naval Station here in 1905, Subic’s natural harbor was again an important factor. That edge became clearer during and after the Second World War when Subic’s status as a naval base took on a strategic importance: Within steaming distance of various flash points in Southeast Asia, Subic served as both a resupply center and a platform to launch American military might in the Asia-Pacific area.

Today, Subic is being developed further for basically the same purpose: a logistics and re-supply center not for military ships but for cargo vessels, a service provider not for naval forces but for investor companies, and as a launching pad not for military dominance but for economic conquests.

Still, Subic’s military past has provided the emerging free port and economic zone with a foundation like no other. When the U.S. Navy left Subic in 1992, it left behind several wharves and piers whereby the modern Subic seaport started.

These include the Alava Pier, which now services military vessels and passenger ships; the Boton and Riviera wharves that now handle bulk cargo; and the Bravo and Nabasan piers that have been turned into specialized ports for grains, fertilizer and fuel.

Likewise, the U.S. military left immovable assets like seaport facilities that, although serviceable, could only muster a cargo-handling capacity of only 20,000 twenty-equivalent units (TEUs).

Alternative Port

To maximize Subic’s potential as a seaport, the SBMA started the construction in 2005 of the New Container Terminal (NCT), which sought to establish Subic as an alternative port to Manila’s South Harbor for loading and discharging both containerized and bulk cargoes.

This was made possible by a $125-milion loan from the Japan Bank for International Cooperation. Aside from construction of a new cargo terminal,  the project also included the rehabilitation of existing wharves and piers in the Subic Bay Freeport to revive or maximize their use.

The NCT-1 project was located at Cubi Point, beside the Subic airport, and was built with two berths, each 290 meters long and 500 meters wide. Two gooseneck-type gantry cranes were later installed at the terminal in 2006, thereby increasing Subic’s cargo-handling capacity three-folds, or from 100,000 to 300,000 TEUs.

At first, the NCT-1 project did not pick up, leading to derisions from critics that it was a white elephant. But two years after, on April 2, 2008, and after the NCT-1 was placed under the management of the Subic Bay International Terminal Corp. (SBITC), a subsidiary of International Container Terminal Services Inc. (ICTSI), the NCT-1 made history when it received the first shipment of containerized cargo from Kaohsiung, Taiwan.

The cargo was delivered by MV Eagle Excellence, a 1,200-TEU container ship operated by the American President Lines (APL).

The unloading of cargo at NCT-1, the first phase of Subic’s $215-million Port Development Project, marked the acid test for Subic as an international maritime port.

As officials at the SBMA Seaport Department recalled, the first unloading operation at the NCT-1 was a sight “we have been waiting to happen for so long.”

They recalled that the first ship call made by APL here in Subic involved only a 500-TEU vessel, because it then lacked proper facilities. But now Subic was ready for the big ones.

Record Firsts

 Since then, the Subic Bay Freeport has made its mark as a transshipment port that is able to service Panamax-type vessels and very large crude carriers. It has also attracted regular ship calls from some major cargo shippers.

Just last month, the SBMA announced the start of ship-to-ship transfer operations for liquefied natural gas at Subic Bay by Jovo, China’s biggest green energy company, which anchored the 105,335-ton LNG carrier Seri Bakti.

STS operation - Subic Bay2

 The initial load of gas, which came from Australia, was transferred to the feeder vessel S/S Polar Spirit, a 72,524-ton Bahamas-flagged vessel.

Also last month, Subic welcomed the arrival of M/V Cape Fulmar, a 1,440-TEU vessel that unloaded 200 twenty-foot equivalent unit (TEU) container vans and 70 forty-foot equivalent unit (FEU) container vans for companies in Subic and Clark like Yokohama, Lepanto Tiles, and Coam Philippines.

The arrival of Fulmar, which is operated by Evergreen Line, the world’s fifth biggest shipping firm, brought to five the number of major shipping lines that operate in this premier free port and connect it to major ports in the Southeast Asian region.

Following this delivery, SBITC, the operator of NCT-1 and 2 announced that they will be expecting a “surge” in cargo traffic as Evergreen launched its Korean-Taiwan-Philippines (KTP) route.

“We thank Evergreen for recognizing Subic as a key gateway in the Philippines. Our inclusion in the KTP service is a clear indication that the markets of Central and Northern Luzon are growing, and will benefit from another large global carrier participating in this growth,” said SBITC general manager Roberto Locsin.

In a separate statement, global terminal operator ICTSI cited Subic Bay as a key port, reporting that the Subic Bay Freeport “has achieved productivity levels similar to ICTSI’s flagship Manila International Container Terminal (MICT).”
Keeping the Edge

The Subic seaport, however, is not about to rest on its laurels. According to SBMA officials, the Subic agency intends to further improve Subic’s port facilities, intensify its port marketing campaign to improve container traffic and ship calls, establish direct links to other Asean ports, and promote Subic’s capacity for ship-to-ship transfer operations.

In a recent statement to the media, SBMA Administrator Wilma Eisma expressed an optimistic outlook for the Subic Bay Freeport, saying the new administration “seeks to build on past accomplishments to bring the Subic Bay Freeport to greater heights.”

“We must look back into the past, so we could build a brighter future,” Eisma added. “Taking into account our performance last year, what we have accomplished can certainly be improved upon.”

With this, Eisma said the SBMA plans to bolster Subic’s port capacity with the expansion of bulk cargo port facilities to the tune of $120 million, and the expansion of Subic’s New Container Terminal at an estimated cost of $200 million.

The terminal expansion project, she said, will bring about two more berths—NCT 3 and 4—for an additional capacity of 600,000 TEUs.

The Subic agency also seeks to construct a new bypass road connecting Subic’s seaport terminals directly to the Subic-Clark-Tarlac Expressway at a cost of $232 million, Eisma added.

cargo ship at NSD - Subic Bay

 

PHOTOS:

[1] The 1,440-TEU M/V Cape Fulmar, unloads cargo at the New Container Terminal-2 in the Subic Bay Freeport, marking the opening of the new South Korea-Taiwan-Philippines route for the shipping giant Evergreen Lines.

[2] Within the placid waters of Subic Bay, the 105,335-ton LNG carrier Seri Bakti (right) transfers liquefied natural gas to the feeder ship S/S Polar Spirit, completing the first ship-to-ship transfer operation for LNG in the country.

[3] A ship operated by the Italian-owned d’Amico International Shipping, a dry bulk and tanker group, unloads cargo at Sattler Pier in the Subic Bay Freeport.

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