Sunday, July 1, 2012


“This is a family business,” stressed Mariano F. Castro, the family patriarch who built Manila Forwarders Corp. (MFC), one of the leading consolidators in the East Coast. And now he worries the proliferation of small, fly-by-night operators is soiling the trade’s credibility and threatening to destroy decades of hard work.

From his warehouse office off Backlick Road in Lorton, Virginia, Mariano prefers to talk about how he launched MFC in 1993, contesting Alexandria, Virginia-based Forex that preceded them by 7 years.

It was his daughter Menchu, who has been running the business since 2004 that expounds on the challenges facing the industry. “It took us years to educate our customers,” she tells the Manila Mail.

“Now there are a lot of these individuals or small companies spreading like mushrooms and they can’t even tell you where their facilities are. They pick up boxes and just dump them with anywhere. They don’t have any accountability. When their customers complain, they would just change their company’s name or get a new phone. Our poor kababayans are left holding the proverbial empty bag,” she explained.

Menchu revealed Filipinos are often duped by the lure of cheaper rates. But she stressed this was often the first sign that something’s wrong.

“We know what the costs are, what the business conditions are today – the rising cost of fuel, the stronger peso compared to the dollar and what that all means. At the cut-throat rates some of these people are offering, we know those boxes will never get to the where they’re supposed to go,” she averred.

In 2010 for instance, the Department of Homeland Security (DHS) intensified inspections of Philippine-bound containers. They charge $2,400 to inspect each container – a cost that has to be absorbed by consolidators and ultimately, customers.

That’s why, Menchu added, they’ve always respected their legitimate competitors. She cited Forex that’s left their rates basically unchanged. “We never had problems with them because they knew what they were doing, they understood the industry. Our frustration is with these fly-by-night operators,” she explained.

Mariano said that respect was anchored on a mutual appreciation of the business.

He was just 55 when he stepped down as Vice President for Administration & Finance of Proton Chemicals – a Filipino-Japanese joint venture that export coconut-based methyl ether – and immigrated here with his wife (she passed away last year) after they were petitioned by their children.

“I told them I will not work here. The companies here can not afford to give me the same pay that I got in the Philippines and there’s discrimination,” he explained, “So I decided to look for a business.”

He found it when he started taking boxes to Forex to ship to the Philippines. He still fondly recalls trying to send an extremely oversized box because at the time, Forex still hadn’t standardized the size of its “Balikbayan” boxes.

“You didn’t say how big the boxes have to be,” he argued but eventually relented and agreed to “pay extra” for his jumbo box.

And that’s how he got into the business. Forex settled for the 6 cubic “Pampers” box but later decided to reduce this to 4.5 cubic feet, Mariano said he waded into the trade by resurrecting the 6 cubic feet boxes.

There are no statistics to show just how many boxes are shipped by Filipinos from the US to the Philippines each year. But the Bangko Sentral ng Pilipinas says they sent home nearly $8.5 billion last year – nearly half of total overseas Filipino remittances during the period.

MFC has resisted so far the temptation to follow Forex’s lead even if it meant improving their margins (smaller boxes mean more boxes can be loaded into a container). 

But they have somehow remained competitive even with the bigger boxes. They have made up for it through other ways. “The more boxes you send, the more you can recoup your expenses,” Menchu explained.

A bigger box, competitive rates and reliability are strong incentives for customer loyalty, she averred.

It takes an average of 45 days from the time the container is sealed to the time it gets to the Philippines (the count down does not start when the customer drops off his box). The containers are usually loaded in Norfolk, Virginia and landed in either Hongkong or Kaoshung (Taiwan) where smaller “feeder ships” take them to Manila.

It takes an average of 3 days for the container to clear customs and eventually delivered to the MFC warehouse in Sucat, Paranaque that is managed by the eldest of the Castro brood. 

“Our customers know when the containers get to Manila it will be opened by my son so nothing gets lost,” Mariano declared. They’ve even asked their customers to put seals on their boxes and tell relatives in the Philippines to reject delivery if the seal is broken. “That is our guarantee,” he added.

And while she decries operators who’re only too willing to “dive” and offer impossibly low rates, Menchu said the only way to fight back for both customers and shippers is intensifying the education campaign.

Just as a suspiciously low price could be a warning sign, she stressed that customers also have the responsibility to check on the people they’re entrusting their boxes to. Many of the information customers need could be in the shipping papers they fill up.

She urged customers, for instance, to verify that the shipper or consolidator is a licensed Non-Vessel Operating Common Carrier or NVOCC (if there is no license number in the shipping invoice, customers can still visit the Federal Maritime Commission website that carries a complete list of NVOCC-accredited service providers.

As a family enterprise, the Castro’s realize its future is inexorably tied to the welfare of their customers, and as they confront challenges ahead, their success will be determined by how well they teach them to be smart shippers

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