Draft 3

Abstract

The fiber of PPA-PMO CDO’s port in public service is all about the clients - where they can get a smooth, productive, and hassle-free enterprise from their cargoes. In essence it is all about time, cost and quality of service - how quickly the clients can do their business with a port, what it will cost, how well-informed they are about each step in the process, how accurate is the information associated with their billing and how safe and secure are their products and their transactions. All of this revolves around ABCO, which clearly is getting most of the demands in cargo transactions and serving the public. The paper first cites PPA’s early computerization phases, how its implementation began, and the regressive impact it made, forcing the GOCC to create initiatives in attempting to alleviate complications. The result is a contract with UNISYS to continue the project. From this, it is expressed how officers in ABCO usually operate in sync with the harbour department and with each other using the implemented UNISYS computer program. The roles of stakeholders are also defined. They have varying objectives and interests within the office, which sometimes at some point, overlap and create conflicting mechanisms. The foremost intention of this study is coming up with positive recommendations to improve the operational mechanisms of ABCO.

My study concludes with some

initiatives to guide ABCO’s efforts in coping with its new role in a more modernized environment. I envision four possible approaches to having a resolution to the problems: (a) a web-based, streamlined terminal operations policy; (b) improving or upgrading the available internet services; (c) shipping companies’ initiatives for restructuring their systems mechanism; (d) PPA-PMO CDO mass hiring by outsourcing or otherwise; (e) personnel schedule adjustments and; (f) capacity-building.

Introduction

Ports are the link between maritime and land-based trade. Traditionally ports were located where the geography was favourable. In some cases this meant that the coastline at that point provided a sheltered anchorage, Sydney and Freetown in Sierra Leone are examples. Other ports were located near the mouths of rivers, enabling river and sea traffic to meet. The one in Cagayan de Oro is an example. Others are to be found on straits between landmasses like Istanbul or where major trade routes pass such as Singapore. These advantages resulted in many ports becoming major cities. The convergence of land and sea trade encouraged the growth of industrial and commercial activities in the area, so that many ports became major economic and industrial centers. During the last few decades, however, ports have changed. As trade and industry grew, so did the traditional city-center ports became too small and congested to cope with demand. The Cagayan de Oro port in Macajalar Bay eventually became alive and busy, becoming the largest in terms of revenue, facilities and serviced clients in Northern Mindanao. This supports and encourages commercial activities in the region and the surrounding areas. Ships and their corresponding cargoes grew in size and number. Services should meet this increasing demand. In this regard, a 150-meter wharf is currently being constructed. When completed, the total berth length would be 1,068.00 meters. It is an obvious sign for things to come. And in preparation, PPA-PMO CDO is gearing to handle a wide variety of cargoes from a broad spectrum of business owners and port users. This is the trend slowly happening in the Port of Cagayan. But

experience showed that in addition to physical changes, we need to reconsider our approach to the regulations and paperwork involved in trade. For there is little doubt that in some cases trade is being held back by practices that are no longer suited for modern conditions. Most regulations are essential - but sometimes they come to be not only unnecessary but as a positive burden on the activities we are supposed to control. As the main forum for business transaction in Port of Cagayan, the ABCO (Assessment, Billing and Collection Office) must be significantly strengthened soon to not to get overrun by the upcoming developments.

History Prior to the creation of PPA, port administration in the Philippines was merged with the traditional function of revenue collection of the Bureau of Customs (BOC). Port and harbor maintenance was the responsibility of the Bureau of Public Works (BPW). In the early 1970's, there were already 591 national and municipal ports plus 200 private ports scattered all over the country necessitating the need for long-range planning and rationalization of port development. There was an identified need to integrate and coordinate port planning, development, operations and regulation at the national level. Around this time, the Bureau of Customs had proposed to the Reorganization Committee and to Congress the creation of a separate government agency to integrate the functions of port operations, cargo handling and port development and maintenance to enable the Bureau to concentrate on tax and customs duties collection. Moreover, the World Bank, as a condition for the grant of a port development loan in 1973, stipulated the creation of a port authority to oversee the implementation of projects under that loan. Realizing that the establishment and operation of port authorities in other countries led to improved port operations, it was felt that the same benefits could be derived with a national port authority to administer and manage the country's ports. Hence, the Philippine Ports Authority was created under Presidential Decree No. 505 which was subsequently amended by P.D. No. 857 in December 1975. The latter decree broadened the scope and functions of the PPA to facilitate the implementation of an integrated program for the planning, development, financing,

operation and maintenance of ports or port districts for the entire country. In 1978, the charter was further amended by Executive Order No. 513 the salient features of which were the granting of police authority to the PPA, the creation of a National Ports Advisory Council (NPAC) to strengthen cooperation between the government and the private sector, and the empowering of the Authority to exact reasonable administrative fines for specific violations of its rules and regulations. By virtue of its charter, the PPA was attached to what was then the Ministry of Public Works and Highways (MPWH) which also served as the executing agency for all port construction projects. Under this set-up, PPA prepared the general plans, programs and project priorites while the MPWH was responsible for detailed engineering, actual construction and/or supervision of port construction projects. The PPA was subsequently removed from under the jurisdiction of the MPWH (DPWH) and attached to what is now the Department of Transportation and Communications (DOTC) for policy and program coordination. Subsequently, by virtue of Executive Order No. 159, which was issued in 1987, the PPA is now vested with the function of undertaking all port construction projects under its port system, relieving DPWH of this responsibility. The executive order also granted PPA financial autonomy. PPA-PMO CDO The development of the port of Cagayan de Oro came in two packages. In 1977, the construction of Phase I commenced and was completed in 1980. The port construction was worth P52.31 million. Operations experience the easing of both berthing and storage congestion suffered in the preceding years. The new port is a major takeoff from the old wooden port. The combined spaces of th whole wharf (Phase I and Phase II yield a total area of 18.66 hectares. The infrastructure has completely changed the features of the port from a very limited operational site into a wide, modern and advance port complex.

The ABCO Synergy

ABCO is where you have your cargoes transacted, assessed and billed1. Located inside the PPA-PMO building, it is open twenty-four hours, three hundred and sixty five days a year. More often than not the transaction process is smooth. Although during peak hours, about 10:00 a.m. to 4:00 p.m., things could really get crowded2. Transactions are generally processed through the PPA online computerized system (Appendix). However in cases wherein the internet provider or the UNISYS systems program is unavailable, a breakdown of the computers’ hardware or software, or an event of a blackout, then the ABCO assessment and billing processes can be managed manually (Appendix). Harbor Factor Although not technically part of ABCO, the Harbor Department sort of determines the start of the assessment of cargoes in the PPA. Each docking vessel submits a final manifest report3 and a filled-up Notice of Arrival and Application for Berth/Anchorage form to the Harbor Department supposedly two days prior its actual dockage (at berth or anchorage). The latter carries with it the vessel’s relevant information (Appendix), which the Harbor Master then 1

Comprised of one to three TOO’s (Windows 1 to 3), one to two Cashiers/Collectors (Windows 4 to 5), and one Gatepass Collector in Window 6. 2

3

The schedule and number of arriving/departing vessels correlates with the peak hours.

This shows the needed data on all the ship’s cargoes: BL no., Shipper, Consignee, Description, measurements, voyage no., date of arrival, port of origin/destination, and the shipping company.

encodes into the Port Operations Management System (POMS). This generates the Ship Call Number (SCN) and serves as the base information used in assessing the cargoes for further assessment and billing in ABCO. The Hardy Terminal Operations Officers The actual assessment is done by the Terminal Operations Officers (TOO’s). They use appropriate rates and computations for varying transactions (Appendix). From millions of pesos worth of 40-footer foreign containers to just the current minimum charge of Php22.85, they are able to adjust instantly and constantly. The multi-tasking nature of their function requires them to be flexible, inquisitive, alert, responsible, spontaneous and assertive. After the twelve-digit SCN is generated into the system by the Harbor Master, the TOO on duty can then encode the given data from the port user’s Bill of Lading into the POMS. This records the computed cargo assessment into the system and allows for the issuance of a Cash Invoice to the said cargo. This, along with the Bill of Lading, Arrastre Cash Invoice, and Withdrawal Slip (for withdrawing cargoes), is passed on to the Cashier/Collector. Collection Using the recorded data in the system and the issued Port Operations Cash Invoice by the TOO, the Collector can then determine the amount to be paid by the port user for his/her cargo. After the payment is done, the Collector hands over to the customer his/her copy of the PPA Official Receipt and Port Operations Cash Invoice. These papers, along with his/her copy of the Withdrawal Slip (if withdrawing cargoes), Bill of Lading, and Arrastre Cash Invoice are checked by the security guards and Gatekeepers for the Entry or Exit of cargoes, whichever is applicable. To those who do not have gatepass stickers on their vehicles and need to access the port by means of a vehicle, they would have to buy their Vehicle Passes from the Gatepass Collector at Window 7. Without it, they cannot enter the gate. Each type of entering vehicle has its own corresponding rate and charge (Appendix). Aside from cargoes, they also collect charges from PPA’s services to the shipping vessel itself (Appendix). Dues from violations, access to the photocopying machine, dangerous cargoes, excess storage use, and the like are also collected.

The Computerization Project

The PROMPT In 2002, the PPA started its program called PROMPT (Providing Reliable Operations and Management of Ports Thru Technology) that covers the automation of the PPA’s business processes across functions. These processes and functions include the Port District offices to Port Management offices, and the head office operations in Manila. One of its components is the accounting and financial management system, which deals with the accounting and financial management processes. Contract with UNISYS PPA planned in gearing to fully realize its modernization project by 2006. It ventured beyond PROMPT to look for better, more sustainable options. The technology firm, UNISYS Philippines, was contracted to modernize the state ports’ operations and collect more money. The PPA has earmarked about P141 million in 2006 to establish its project in all over more than a hundred ports in the country that it owns and operates. UNISYS is not perfect A report by the Commission on Audit (COA), however, showed that some reports using the computerized system in 2006 from North Harbor and PPA’s port management office in Davao were “inaccurate” and caused an unrecorded PPA income of P5.35 million.“Management [PPA]

explained that the facility for the ageing schedule of accounts receivable is available in the computerized system. However, the completeness and correctness of the reports generated in the system cannot be ensured with several problems encountered in the modules on Port Operations Management System [POMS] and the Accounting and Financial Management System [AFMS].”4 COA advised PPA management should require the Unisys, the contractor for PPA’s computerization project, to enhance the POMS and AFMS modules in order that the Statements of Accounts of clients are reconciled with the balances of debtor’s accounts appearing in the Ageing Schedule of Receivables.5

Developing Alternatives Web-Based and Streamlined Terminal Operations Policy Quoting Process

4

COA PPA Financial Report, 2006

5

VG Cabuag, BusinessMirror, 2007

After reservations are made through the PPA-PMO CDO’s website traffic center, the quoting process can give customers or port users an estimate of costs long before they enter the port. An entry in the reservation request turns it into an estimate where more detailed needed calculations can be applied. Each ship call is treated like a project in itself. Based on the services needed and/or requested and accurate information on the vessel, cargo and activity involved, ABCO can generate the proper issuance procedure and send by email, fax, or just leave on line instant messages the estimated amount that the client may expect to pay. Billing Process When a vessel arrives in a port, a single click by the port operations manager turns their estimate (or their reservation request if they did not request an estimate) into a Sales Order. Every item of billable service can be recorded using the tariff schedule built into the database manager, and customized calculations for discounts, mark-ups, and rates based on all types of units of measure this port uses to do business. As items in the sales order are complete, invoices can be issued on the completed items long before the vessel departs the port. Harbour fees, berthage, and utilities services may be billed in advance of completing the processing of wharfage of manifests billing. Collections Process The invoices may be delivered as email, PDF-attached files, faxes, or traditional mail invoices. Customers can pay by credit card on-line, wire transfer, ACH or check. The Collections Officers handle all of these transactions.

Financial Control Center

Clients of the seaport experience a real ROI since they can now manage 24/7 their own vessels reservations, monitor the movement and activity while in the port. For instance if the port has web-cams they can click on the berth where loading and unloading is in progress and view the activity. Clients can also view estimates of expense before they enter the port and pay their deposits and fees due on-line to the port.

Your Seaport ROI is greatly increased with no hardware or software to install or maintain and happy satisfied, informed customers. The seaports real-time reporting system keeps them totally on top of their financial condition and audit ready at all times. Setting up the chart of accounts, fiscal year, tariff schedule, bank reconciliation interface, and reporting services essential to a clean internal and external auditing process are easy in i-Seaports. Real IT ROI Satisfied Clients Online 24/7 The competition among ports for business is all about the clients - where they can get the best ROI. ROI is all about time, cost and quality of service—how quickly the client can do their business with a port, what it will cost, how well-informed they are about each step in the process, how accurate is the information associated with their billing and how safe and secure are their products and their transactions. i-Seaports provides this ROI to your clients 24/7 in its Software Oriented Architecture. Seaport Reduced IT Costs and Worry Building your annual Seaport IT budget just became simple - just leave off upgrade costs, webservers, backup service, and website hosting. These are all integral to i-Seaports. One budget line gets them all. You only have to determine the number of "employee" users. Furthermore, iSeaports charges your customers nothing so if you have 1000 clients you want to charge for using this service you can recover your own costs or even profit from this IT investment. Strong Support & IT Security i-Seaports is an Oracle database engine hosted by Level 3 Communications (L3) behind a secure fire-wall with an unprecedented performance record. Streamlined Billing & Collections Processes The Quoting Process After reservations are made through the traffic center, the quoting process can give a customer an estimate of costs long before they enter the port. A single click of the reservation request turns it into an estimate where more detailed calculations can be applied. Each vessel call is treated like a project in itself. Based on the services requested and accurate information on the vessel, cargo and activity involved, i-Seaports can generate and send by email, fax, or just leave available on line an estimate of costs that the client may expect The Billing Process When a vessel arrives in a port, a single click by the port operations manager turns their estimate (or their reservation request if they did not request an estimate) into a Sales Order. Every item of billable service can be recorded using the tariff schedule built into the inventory manager, and

customized calculations for discounts, mark-ups, and rates based on all types of units of measure this port uses to do business. As items in the sales order are complete, invoices can be issued on the completed items long before the vessel departs the port. Harbour fees, berthage, and utilities services may be billed in advance of completing the processing of wharfage of manifests billing. The Collections Process The invoices may be delivered as email, PDF attached files, faxes (using built in telephony), or traditional mail invoices. Customers can pay by credit card on-line, wire transfer, ACH or check and i-Seaports handles all of these transactions. Ecommerce Marketing Center i-Seaports offers extensive marketing advantages for building your port’s business. In addition to a complete Customer Relations Management (CRM) integration, built-in Ecommerce, web-store and web-marketing with their reporting and statistical analysis capabilities give you a competitive edge over other IT solutions. -Seaports begins and ends with winning, and retaining customer loyalty. Over time your seaport builds an incredible source of knowledge about every aspect of its business activity and international trade relations collected in one centrally integrated database. This centralized data store is a goldmine for internal analysis for planning the future of your business, and external marketing campaigns and presentations of performance and capabilities in marketing your port’s services. Market Driven Environment Internal Market Focused Processes Empower Everyone in the enterprise has some relationship with every customer - traffic, communications, security and finance - and i-Seaports enables you to see and manage that effectively. i-Seaports enables you to move from an environment of running processes in compartmented vacuums to treating them as inter-related flows. It enables you to interact with people, processes and technologies across the entire organization to get your job done, help them do theirs and maintain high levels of customer satisfaction. External Market Development Strategy i-Seaports real-time data from all areas of the port enterprise are centralized in one database — all transactions, entities, and reports. These can be customized into snapshots and graphs on key performance indicators and provided through a secure, role based user access. This allows the seaport enterprise to spend more time growing your business and less time analyzing and gathering data from desperate sources. The net result is: • • •

Better informed and more timely decision-making capabilities Greater flexibility to deal with your dynamic, competitive landscape Real-time notifications that improves workflow efficiency

Web-presence Publishing and Campaign Advantage i-Seaports integrated standard and ad-hoc reporting tools let you tap the wealth of information your port already has. Custom tables for berth, cargo, and trade partner analysis provide the basis for targeting new

clients and planning your seaport’s development. Not only can your users get the reports they need but you can publish to the integrated Ecommerce Web-site reports, tariff information, property and leasing opportunities for the public. Customer Relations Focus Customer Relations Management (CRM) i-Seaports provides Sales, Marketing, Service and Extended Enterprise management in one complete solution. By going from multiple disparate systems to one complete solution, you will experience the results of increased visibility into your entire business, more timely decision-making, streamlined workflow, and reduced costs. Lead Generation to Satisfied Customer i-Seaports allows you to run all processes, from lead generation to the sales, to booking, and to ongoing customer service in one solution. It further allows all employees in sales, accounting, marketing, and management to be working in and viewing one set of data regarding any customer. The Customer as 24/7 Partner From the customer point of view, they experience themselves as a partner, not just a billable client. iSeaports provides low cost, high touch e-commerce and customer interaction. Service is 24/7 with this web-based solution. Every phone-call, fax, email, meeting and event involving this customer is at their fingertips for continuous interaction in the business process.

Global Trade Seaport Trade Partnerships are Global Every enterprise today must think globally to survive. Every enterprise is looking for that trading partner advantage in other countries that will let them succeed. Capturing and retaining their business for your seaport depends in large part on how well you can present the assets you already have, and how well you plan and project your future development to retain their loyalty. ERP and CRM are Key to Market Share Global competition is driving enterprises to achieve new levels of efficiency and economies of scale to gain market share. Enterprise Resource Planning (ERP) and management are requirements to be in the game. i-Seaports Accounting platform with its Ecommerce focus is built from this clear understanding. It serves everyone from the dockworker in their own language, to central governments who require global currencies and removes those barriers to global trade. 24/7 Operation is Mandatory Morning here is evening and midnight is noon in your customer's location. The need for a trade management environment that is available and visible to all 24/7 is no longer optional -- it is mandatory. i-Seaports communications, instant notifications, remote management and online 24/7 user access meets the requirement. Remote surveillance by port personnel from wherever they are and collaboration with security and intelligence, is implicit. Client ability to monitor their own activity interactively with your seaport is the answer.

Acronyms

ABCU - Assessment, Billing, and Collection Office BL - Bill of Lading CI - Cash Invoice CBM - Cubic Meter ETA - Expected Time Arrival ETD - Expected Time Departure GOCC - Government Owned and Controlled Corporation MC - Minimum Charge MIS - Management Information Systems

NOA - Notice of Arrival OR - Official Receipt PM - Port Manager PMO - Port Management Office PCCS - Port Charges Computation Sheet POMS - Port Operations Management System PPA - Philippine Ports Authority PROMPT PSD - Port Services Division ROI - Return of Investment RT - Revenue Ton RRTS - Roll-on Roll-off Transport System STOO - Supervising Terminal Operations Officer TOO - Terminal Operations Officer

Definition of Terms

Anchorage - a place with sufficient depth of water where vessels anchor or may ride at anchor within the harbor. Berth - part of the pier/wharf that occupied by a vessel, or a place where a vessel may tie up. Bill of Lading - the written contract of carriage of goods whereby the common carrier for a consideration agrees to deliver on behalf of the consignor of goods to the consignee at a specified time. Container - means any structure so designed to hold and keep articles, materials and products together inside a hold in a form of boxes, tanks, or the like for singular or unit handling and transport.

Containerized Cargoes - cargoes packed in containers for easy handling or transportation of same as a unit. Domestic Cargoes - cargoes brought to a pier, wharf or bulkhead to and from a port within the Philippine waters. Export Cargoes - cargoes brought to a pier, wharf or bulkhead intended for shipment to a foreign port. Computerization - to control, perform, process, or store (a system, operation, or information) by means of or in an electronic computer or computers. Goods - includes animals, carcasses, baggage, and any movable property of any kind. Harbor - protected part of a sea, lake, or other body of water used by vessels as a place of safety. Rates - means any rates or charges including any toll or rent under existing law or imposed by the PPA for facilities used or services rendered. Revenue Tonnage - means 1,000 kg’s. or 1.1326 cubic meters (40 cu. ft.) whichever yields the greater amount of revenue. Port District - It is a territorial jurisdiction under the control, supervision or ownership of the PPA over an area (land or sea). Cargo Manifest - a list of the cargo carried by a ship, made for the use of various agents and port officials. Minimum Charge - it is the least amount of payment due from port users based on prescribed rate. Outstanding Invoice - remaining unsettled or unpaid itemized bill for goods sold or services provided, containing individual prices, the total charge, and the terms. Port - a place where ships may anchor or tie up for the purpose of shelter, repair, loading or discharge of cargo, or for other such activities connected with water-related commerce, and including all the land and water areas and the structures, equipment and facilities related to these functions. Port User - a paying customer engaging with any of the products and services offered by PPA and its constituents. Vehicle Pass - a piece of ticket which allows rolling vehicles to enter the port premises. Voyage - a course of travel or passage by a ship from one port to another. Wharfage - is a charge on all cargoes on the basis of the total metric or revenue tonnage, whichever is applicable. Stevedoring - a firm or individual engaged in the loading or unloading of a vessel.

Stripping - means unloading goods from a container. Stuffing - means loading goods into a container.

Appendices Schedule of Passenger Vessels Port of Cagayan de Oro As of January 17-31, 2008 DAYS

NAME OF VESSEL

ETA

ETD

LASTPORT

NEXT PORT

Monday

Trans Asia 1 or Asia China

0600H

2000H

Cebu

Cebu

Princess of Paradise

0500H

1000H

Manila

Cebu-Manila

Dona Rita Sr.

0530H

2000H

Jagna

Cebu

Super Ferry 12

1700H

2145H

Manila-Cebu

Cebu-Manila

Tuesday

Wednesday

Thursday

Friday

Saturday

Sunday

Appendix

Princess of the South

0600H

1930H

Cebu

Asia Hongkong

0600H

1900H

Tagbilaran

Tagbilaran

Trans Asia 1 or Asia China

0600H

2000H

Cebu

Cebu

Our Lady of the Rule

0630H

2000H

Cebu

Cebu

Trans Asia 1 or Asia China

0600H

2000H

Cebu

Cebu

Dona Rita Sr.

0600H

2000H

Cebu

Cebu

St. Joseph The Worker

0400H

1400H

Mla-Bac-Ilo

Ili-Bac-Ilo-Mis

Super Ferry 02

1000H

1445H

Manila-Ilo

BXU-Cbu-Mla

Super Ferry 09

1000H

1445H

Manila-Ilo

BXU-Cbu-Mla

Princess of the South

0600H

1930H

Asia Hongkong

0600H

1900H

Trans Asia 1 or Asia China

0600H

2000H

Cebu

Cebu

Our Lady of the Rule

0630H

0830H

Cebu

Jagna

Our Lady of Rule

2130H

2359H

Jagna

Dumaguete

Trans Asia 1 or Asia China

0600H

2000H

Cebu

Cebu

Dona Rita Sr.

0600H

2000H

Cebu

Cebu

Princess of Paradise

0500H

1000H

Manila

Manila

Our Lady of the Rule

1800H

2230H

Dumaguete

Cebu

Super Ferry 12

0600H

1045H

Mla-Cbu-Sug

Cebu-Manila

Princess of thlo-Manilae South

0600H

1000H

Cebu

Jagna

Asia Hongkong

0600H

1900H

Tagbilaran

Tagbilaran

Trans Asia 1 or Asia China

0600H

2000H

Cebu

Cebu

Super Ferry 02

1600H

2045H

Mla-Cbu-Bxu

Iloilo-Manila

Super Ferry 09

1600H

2045H

Mla-Cbu-Bxu

Iloilo-Manila

Princess of the South

0300H

1930H

Jagna

Cebu

Dona Rita Sr.

0600H

1200H

Cebu

Jagna

Trans Asia 1 or Asia China

0600H

2000H

Cebu

Cebu

Our Lady of the Rule

0630H

2000H

Cebu

Cebu

Cebu Tagbilaran

Cebu

Cebu Tagbilaran

Vehicle Pass Rates Wheels

Amount with VAT

Four

Php5.60

Six

Php11.20

Eight, Ten, and above

Php16.80

Appendix