Alison Sy dreams of massive cargo ships docking at her automated grain handling facility in the northern Philippines after it opens in May or June. The grains port, the biggest of three such terminals in the country, has ambitions to become a transhipment hub in Asia.
Sy will be the first port operator to test this set-up for grains in Asia, traders said. Singapore and Hong Kong are classified as transhipment hubs for container cargoes, they said.
Her terminal is a minuscule version of Rotterdam, Europe's busiest port, which handled 185 million tonnes of all types of cargo from animal feed, coal and crude oil to soyabeans, tapioca and vegetable oils in the first half of 2005.
"My dream is to bring capsize ships into the country," Sy told Reuters as she leafed through shipping magazines at her office in Manila's Makita business district. "If you order bigger ships to transport grain, it's cheaper.
That's economies of scale," said Sy, whose family has been involved in local trading of rice and corn since 1969. News that Sys Nation Granary Inc will open a 3.2 billion peso ($62.5 million) bulk terminal to accommodate ships holding more than 85,000 tonnes of grain created ripples in the market.
It also raised eyebrows as the facility lies in the sleepy town of Sariaya in Queen province, where there is lack of infrastructure and communist rebels are active.
"I think people would think twice about bringing a capsize with a cargo worth $30-$40 million to the Philippines, where support infrastructure is poor," said a chartering manager with a multinational grains trading firm.
Local grain traders were concerned about the security of the port and their cargoes when they were transported by truck to feedmills and poultry and hog farms in other provinces.
Communist guerrillas have attacked power pylons, telephone towers and police stations in various areas in recent years.
An executive at one of the country's largest feedmills said he had not seen any capsize vessel delivering grains to the Philippines as local buyers import only what they need each month to avoid additional stocking costs.
Capesize vessels can carry 85,000 to 150,000 tonnes of cargo and are built mainly to ship iron ore and coal. "The transhipment concept is a questionable proposition," the executive said, adding it was costly to transfer the grain from a big ship to smaller vessels and then bring it to other countries.
He also said the bulk of Philippine imports of milling wheat come from the United States, while soyabeans and soyameal come mostly from Argentina and pass through the Panama Canal, which can take only Panamax or smaller ships like Handyman vessels.
Panamax vessels carry 60,000 to 84,999 tonnes of freight, while Handyman vessels carry 40,000 to 59,999 tonnes. But Sy insisted her concept was the future of the grain trade. "Capsize for grains is not for today. It's for the future. We expect 20 such ships to be coming on the grains market in 2007," she said.
Sy, chairwoman and chief executive of Nation Granary, recently imported 33,000 tonnes of Chinese corn, 55,000 tonnes of Argentine wheat and 30,000 tonnes of Argentine soyameal to test the unloaded at her port.
They were the first grain imports for Sy, who also brings in liquid petroleum gas for the local market.
Grains experts say the possibility of the Philippines importing from non-traditional suppliers that can handle capsize ship hinges on the price of the commodity and freight charges. "Economics dictate the market. You buy from the cheapest source," a trader said, adding that the Philippines has bought big volumes of feed wheat from Europe in the last two years. The chartering manager with a grain-trading firm agreed.
"It's possible to bring capsize sometimes but not most of the time," he said. "It's nothing you can plan in the long term."
Traders said Nation Granary's new port would be busy handling imports for local consumption even if it does not become a transhipment hub. The Philippines is one of Asia's biggest importers of rice, its main food staple, and other grains and foodstuffs because of its rapidly rising population and poor farming infrastructure.
The country bought 1.8 million tonnes of rice last year. In a typical year, it imports up to 3 million tonnes of both milling and feed wheat, 1.5 million tonnes of soyameal, 400,000 tonnes of soyabeans and sometimes corn.
The Philippines does not grow wheat or soyabeans. "There is business locally," said Eduardo Alino, president of Subic Bay Freeport Grain Terminal Services Inc. "There is enough volume. You don't need to go into transhipment."
Alien's grain bulk handling facility at Subic, a former US military base north-west of Manila, opened in January but he is already planning to double its capacity to 200,000 tonnes to meet the country's growing appetite.
Nation Granary will have capacity of 225,000 tonnes, while the Marvels facility of Asian Terminals Inc in Bataan, also on Luzon Island, has an 180,000-tonne capacity. Rice Pincer, vice president of the Philippine Association of Feedmillers Inc, said more grain ports would eventually reduce the cost of animal feed, bread, noodles, chicken and pork.
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