Manila Import Dwell Hits 8 Days: 208,000 TEU Excess Inbound, Months to Clear, Officials Warn

The Analysis

Spread the map on the table first. Put a finger on Manila Bay and you are pressing on one of the tightest pieces of port geometry in Asia: container terminals sitting inside a city of roughly fourteen million people, with the consumption on the near side and almost no spare land on any side. Ten years ago the argument about this port was whether the city would ever let it grow. The argument this month is whether it can breathe. On 19 October Agaton Uvero, deputy commissioner at the Philippine customs authority, said what terminal operators had been saying privately for weeks: the congestion could take months to clear.

Here is the arithmetic sitting behind that sentence. Between 1 January and 18 October, Manila International Container Port handled 1.36m import TEU against roughly 1m exported, which puts exports at 74 percent of imports. Take both Manila ports together with Batangas and the complex handled 2.02m import TEU against 1.81m exported, leaving about 208,000 TEU more boxes arriving than leaving loaded. Imports are now sitting in port an average of eight days against a desired five or six. Sweeper vessels to lift empties away and diversion to Subic and Batangas are both on the table. The joint administrative order that would make any of it compulsory has not been signed.

I want to take apart the 74 percent, because it is not a congestion statistic. It is a trade structure statistic wearing a congestion statistic's clothes, and the difference decides whether you are waiting out a backlog or learning to live with a condition. One of those ends. The other one bills you monthly.

Start with what is verified, because everything after this paragraph is my model and I will label the assumptions. Uvero spoke on 19 October and said months. Imports average eight days in port against a desired five to six. From 1 January to 18 October, Manila International Container Port handled 1.36m import TEU against roughly 1m exported, exports running at 74 percent of imports. Across both Manila ports plus Batangas the complex handled 2.02m import TEU against 1.81m exported, leaving roughly 208,000 TEU more boxes coming in loaded than going out loaded. Sweeper vessels and diversion to Subic and Batangas are proposed. The joint administrative order is unsigned. That is the whole list. Note what is not on it: how full the yard actually is, what the spread around those eight days looks like, and who pays to move the empties. Those three decide what this costs you.

Why October, and not June. Ports do not congest because boxes arrive. They congest because boxes arrive faster than they leave, and the leaving side here has been behind since January. Take the 208,000 TEU across the 291 days from 1 January to 18 October and you have roughly 715 TEU a day, or a shade over 5,000 TEU a week, of container capacity that enters the Manila complex full and never leaves it full. That is not a surge, and the shape tells you so. A surge has a peak and a shoulder; it arrives, it hurts, it recedes. This has been flat since January, which is precisely why October is the month it became visible. A reservoir does not overflow on the day the rain starts. It overflows on the day nine and a half months of steady inflow finally exceeds the walls. Nothing happened in October except arithmetic.

Who is carrying it, and how much. The importer of consumer goods into Metro Manila carries the dwell, because eight days against a midpoint of five and a half is two and a half extra days of pipeline on every box and two and a half days closer to the demurrage clock on every box. The exporter carries something less obvious and, on these numbers, mildly counter-intuitive: the complex as a whole has a surplus of boxes, but the surplus is not standing where the exporter needs it, because the imbalance is concentrated in one terminal and the exporters are largely not at that terminal. The carriers carry the repositioning bill, and they will pass it through. Subic and Batangas carry the upside, which is real but smaller than a press statement makes it sound, and I will come back to why.

Go back to the exporter while we are here, because the coverage treats exporters as bystanders and on these numbers they are not. A complex running 208,000 TEU net long on boxes is a complex with plenty of empty equipment somewhere, and an exporter who cannot get boxes at his gate is not short of containers at all; he is short of containers in the right place. If your export boxes come out of Batangas while the empty inventory piles up at MICP, somebody has to drag them down the road, and in a city this congested that drag is measured in hours as much as in dollars. Assume a repositioning leg costs 120 dollars and half a day. On 200 export boxes a month that is 24,000 dollars a year and, more importantly, a booking lead time you have to extend by a day. Ask your carrier where the empties physically are before you promise a loading date.

Put a clock on the transmission, because this is where importers get hurt. Assume your Manila boxes are averaging the published eight days. Two and a half extra days against the target reaches your inventory position immediately, on the next vessel, not next quarter. Assume a monthly run of 40 TEU, which is about 1.33 TEU a day. Two and a half days of extra transit is 3.3 TEU of additional inventory permanently parked in the pipeline to hold the same service level. It reaches your cash in the second month, when the demurrage invoices land. It reaches your customer promise in the third month, when a replenishment that used to be reliable starts missing. And if Uvero's months are right, it does not stop at the end of the year: plan the whole thing through the first quarter, because a congestion that takes months to clear from a statement made on 19 October is a congestion that is still with you at Chinese New Year.

There is a second-order effect that arrives before the demurrage does, and importers usually notice it too late. When a yard runs this tight for this long, carriers stop treating the port as a schedule and start treating it as a risk. They omit the call, or they move it to a sister terminal, or they quietly cut free time inside their own bill of lading terms rather than waiting for anybody to sign an order. Assume one of your three main services drops a Manila call in the next six weeks and lands your boxes at Batangas instead, whether or not the administrative order is ever signed. That is not a policy decision you can lobby. It is a commercial one, taken in a shipping line's network desk, and the only defence is to have already priced the Batangas leg for your consignees before it happens rather than after.

Now the part I have not seen anybody write. Read the phrase months to clear carefully, because it treats a flow as though it were a stock. A stock can be cleared. What the 208,000 figure describes is not a pile sitting in a yard waiting to be drained. It is a rate: about 715 TEU a day, roughly 5,000 a week, that has been arriving since January and has to go somewhere every single week. Sweeper vessels are a pump. A pump works against a stock and does nothing against a rate, because the tap stays open. Unless the export side changes or the import side slows seasonally, the yard refills behind every sweeper that sails. Uvero's own wording gives the game away. Months is the right unit for a flow you are managing. Weeks would have been the unit for a pile you are removing.

The second missed point is more useful, because it is actionable this week. Look at where the imbalance actually sits. Manila International Container Port on its own took in 1.36m and sent out roughly 1m, a gap of about 360,000 TEU over those same 291 days, or roughly 1,240 a day. Yet the three-port complex nets only 208,000. Subtract one from the other and the rest of the complex, meaning the second Manila terminal and Batangas, ran about 150,000 TEU in the opposite direction: more boxes leaving loaded than arriving. Round MICP's export figure up to 1.05m instead of roughly 1m and the two become about 310,000 and 110,000. The signs do not move. The sink is one terminal, and the surplus is somewhere else.

That is not really a fact about terminals. It is a fact about geography. MICP sits against the consumption: Metro Manila, where boxes get emptied. Batangas sits against the factories south of the capital, in the Calabarzon belt, where boxes get filled. The imbalance is not an operational failure at one gate; it is the physical shape of a country that consumes in one place and manufactures in another, with a congested city in between. Which is exactly why diversion reads beautifully in a statement and works unevenly on the ground. A box destined for a plant in Laguna genuinely is better off landing at Batangas. A box destined for a shop in Quezon City is not, no matter how full MICP gets, because the extra road leg costs more than the dwell it avoids.

Which brings up the third thing, and it is the only one of the three with a date attached. The joint administrative order is unsigned, and an unsigned order is not a footnote. It is the difference between congestion that costs you time and congestion that costs you money. Free time at Manila has been generous enough that eight days of dwell has been survivable for most importers; annoying, quotable, survivable. The day an order signs free time down, or sets a mandatory evacuation window, the same eight days turns into an invoice, and it turns into one for the boxes already sitting there, not for the ones you ship next month.

Assume the order lands with a hard free-time cut and assume you have containers on day six when it lands. You do not get a grace period. You get a bill. The sensible posture is to behave as though it signed last Friday, because being early costs a few hundred dollars of repositioning and being late costs the whole demurrage step.

For the slice of your programme that genuinely cannot wait eight days, there is a route question I am the wrong person to answer, and Ömer Kaya is the right one: the corridor that puts a box into Subic also puts a pallet into Clark, and the urgent ten percent of a Manila import programme is worth pricing on that pairing long before it is worth arguing about which terminal the other ninety percent lands at.

What would turn this around. Four conditions, and I would rank them in this order. If the joint administrative order signs with a hard free-time reduction, dwell will drop inside three to four weeks, because importers will pull boxes they would otherwise have left sitting, and your cost will go up while the headline number improves. Watch for that contradiction; it catches people. If the order is never signed, nothing structural changes and you should plan on eight days or worse well into the first quarter. If import volumes ease seasonally after the holiday restocking, the 5,000 TEU a week becomes something nearer 2,000, and the yard drains in six to eight weeks with no policy at all.

And if the export side turns, which in this country means the electronics cycle turning, the ratio improves and the problem dissolves without anybody fixing anything. The first two are inside a quarter. The last two are outside your control, which is why you plan for the first two and track the other two weekly.

Step back and compare for a moment, because comparison is the only way to tell whether this is Manila's fault or Manila's shape. Most of the large Asian gateways solved the land problem a generation ago by moving the container port away from the city: Laem Chabang was built down the coast from Bangkok, Port Klang sits outside Kuala Lumpur, and both have room to park a surplus. Manila never did that, because the bay was already there and the city grew around it. Tanjung Priok did not either, and it carries the same chronic problem for the same chronic reason. This is what matters for the ten-year view: a port that cannot add land can only add process, and process has a ceiling. A decade from now the interesting question will not be whether Manila cleared this backlog. It will be whether the country's import gateway is still a pair of terminals inside the capital, or whether Batangas and Subic quietly took the growth.

Is this a pulse or a turn. In the yard, it is a pulse: a reservoir that filled and will drain. On the map, it is a slow turn, and the turn is more interesting than the pulse. Ten years ago nobody wrote Batangas into a Manila congestion plan. This month a customs deputy commissioner did, and put Subic in the same sentence. That is how gateway systems actually change, not with a decision but with the slow accumulation of months in which the old gate could not cope and the alternatives got named out loud by somebody official. Ports are patient things. They fill slowly, they empty slowly, and the map around them moves more slowly than either.

Run the numbers on a real importer, with the assumptions written where you can argue with them. Assume 40 TEU a month into Manila, which is 480 a year. Assume five free days and demurrage at 120 dollars per TEU per day after that. Assume 60 percent of your boxes breach free time by the 2.5 days that separates eight from five and a half. That is 24 boxes, 2.5 days, 120 dollars: 7,200 dollars a month, or 86,400 dollars a year. Then the inventory: 3.3 TEU of extra pipeline at an assumed 45,000 dollars of cargo value per TEU is 148,500 dollars tied up, and at an assumed 22 percent annual carrying cost that is about 32,700 dollars a year. Put them together and you are at roughly 119,000 dollars a year on 480 boxes, which is about 248 dollars a TEU. Hold that number.

Now set it against diversion. Assume a dray from MICP to a Metro Manila consignee runs 180 dollars a box, and assume the same move from Batangas runs 430 dollars, because it is roughly 110 kilometres of road instead of a city hop. The delta is 250 dollars a TEU, against 248 dollars a TEU of congestion cost. For a Metro Manila consignee, diverting to Batangas is a rounding error that is very slightly negative, and that is before you count the extra day of booking complexity. For a consignee in Laguna or Batangas province the delta flips, because Batangas is nearer to them than MICP is, and you pick up both the road saving and the dwell saving. So the sorting job is geographic before it is commercial: split your consignee list by province, price the two gates for each, and only move the ones where the road maths works.

Then the cost nobody quotes you, which is the empties. Two hundred and eight thousand TEU over 291 days annualises to roughly 260,000 TEU a year of boxes that arrive loaded and leave empty. Assume repositioning runs between 80 and 200 dollars a TEU depending on how far the box has to go and whether a sweeper takes it. That is between roughly 21 million and 52 million dollars a year, call it about 31 million at 120 dollars, and it is a bill the carriers pay first. Annualise the import side the same way and the complex takes in something like 2.53m TEU a year, so the pass-through works out at somewhere between 8 and 21 dollars a TEU, call it about 12. That is the number to look for in your next rate filing. It will not be labelled Manila empties. It will be inside a terminal handling charge or a congestion-related component, and it will arrive about two quarters after the sweeper vessels start sailing.

The traps. The first is planning against eight days because eight is the published average. Averages in a congested yard are the least useful number in the building; the distribution behind an eight-day average in a yard this tight is almost certainly stretched, with a cluster of boxes out in three days and a tail sitting three weeks, and it is the tail that ruins your replenishment. Measure your own boxes. The second is waiting for the order to sign before moving, which is the single most expensive thing on this list. The third is treating diversion as free because it is in a government proposal; on these numbers it is a wash for the majority of Metro Manila consignees and a clear win only for the industrial belt south of the capital. The fourth is assuming that a sweeper programme means the problem is being fixed rather than being managed.

What changed here is not that Manila broke. It is that the arithmetic of a 74 percent ratio finally caught up with a yard that has no room to be wrong, and that somebody in authority said the quiet part out loud for the first time. Plan for the flow, price the empties, sort your consignees by where they actually are, and move before the signature rather than after it.

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— By Tomás Ferreira