Case Study: Cebu, Philippines

Overview

Passenger transport in the Philippines is regulated through franchises issued by central government Department of Transport and Communications (DOTC) and its agencies.
The primary urban passenger transport mode is the Public Utility Jeepney (PUJ). This is typically a 16-seater converted US Jeep. Outside of Metro Manila this is the sole urban passenger transport mode.
The PUJ industry is fragmented consisting of a high percentage of single owner operators. Membership associations exist but are not wholly subscribed to and offer little more than administrative functions.
DOTC seeks to achieve increasing efficiency in the provision of passenger transport. Its first focus is on regional services (more often run by larger companies). Thereafter, increasing levels of control and organization would be applied to urban transport first in Metro Manila.
During 2011, regional services centered upon Manila are being fitted with GPS to enable operators to locate vehicles operating over long distances.
DOTC propose to assist Manila-based urban PUJ owners to fit GPS devices so that PUJs can be monitored. Current plans include cash incentives to owners. It is planned that information will be collected centrally by DOTC and information made available to owner/operators.
In the medium term, this information will be used to restructure the PUJ network as route franchises come up for renewal. In the longer term, this information might be linked to an area wide traffic control system.
Urban transport fares are cash based. There is no electronic information and basic static information. There is currently no fleet control.
The development of a BRT in Cebu has provided an information base from which to work and an ability to explore means by which the passenger transport network can be reorganized to achieve efficiency gains.
The Cebu BRT Pre-Feasibility Study (2010) identified the need for ITS solutions for operational management, payment and co-ordination with the City’s urban traffic control system (SCATS). It is estimated that the BRT will be operational by 2014.
The World Bank is progressing with a study (expected late-2011) that demonstrates the use of low cost mobile vehicle tracking systems in Cebu. This study could provide transport regulators and operators with a low-cost means to improve the performance of informal sector Jeepney fleets and provide traffic engineers with a low cost means of managing road assets and mitigating traffic congestion.

Scope

The focus of this case study is the public sector, both central and local government, coming together in some form to achieve the intention/desire to pursue collective provision of public transport in order to increase operational efficiency and level of service. This will seek to protect public transport mode share and in turn manage congestion to meet environmental, economic and social objectives.

Cebu City

Cebu is the Philippines second City, it sits within a large metropolitan area for which it provides a focus for employment, retail and education. Metro Cebu is a loosely defined term that relates to the conglomeration of several adjacent cities and municipalities that form the urban area of Cebu Province. It is the principal urban settlement of the Central Visayas Region (Region VII) dominating the region’s urban structure. Metro Cebu as a level of governance does not yet officially or legally exist.

The country’s road-based public transport system consists of the following basic components:

a) Planning & Regulation of public carrier service operations

b) Operation of public carrier services

c) Provision and maintenance of infrastructure facilities supporting the system.

The functions and responsibilities involved are done either by the government or the private sector. Generally, the government/private sector responsibilities are described as:

1. Planning & Regulation of Carrier Services Government

2. Carrier Service Operation Private sector (except railway services)

3. Infrastructure Provision Government

Government Agencies Involved in the Planning & Regulation of Public Transportation

Several government agencies are involved in the economic, safety, and traffic management regulation of the public carriers. These are listed below.

Department of Transportation and Communications (DOTC)

In April 1987 the DOTC was formed and under it the Office of the Assistant Secretary for Land Transportation, ie, Land Transportation Office (LTO) which was tasked to perform the safety regulation functions in the road transport sector. The economic regulation function, under this law, was transferred to the DOTC proper. This, however, was further amended with the creation of the Land Transportation Franchising and Regulatory Board (LTFRB) in June 1987 by EO 202, about two months later, which was now tasked with the economic regulatory function. Economic regulation and safety regulation were therefore assigned to different agencies, to the LTFRB and the LTO, respectively.

At present, both the LTFRB and the LTO are under the administrative control and supervision of the DOTC, as line agencies. This means that DOTC issues policy guidelines for these two agencies to follow in the performance of their respective functions.

Both these agencies have regional presence. There are regional offices of these agencies in Region 7, to which Cebu City belongs. Being the primary City in the region, the regional offices are physically located in Cebu City, with administrative jurisdiction over the region.

Land Transportation Franchising and Regulatory Board (LTFRB)

The regulatory body for land transportation dates back to the early 1900s. However the LTFRB was created in June 1987 as the agency under the DOTC tasked with economic regulatory functions for road public transport services. The LTFRB, in connection with its economic regulatory functions, has the following main functions, among several others:

a. To prescribe and regulate routes of service, economically viable capacities and areas of operation of public land transport services in accordance with DOTC transport plans and programs

b. To issue, amend, revise, suspend or cancel Certificate of Public Convenience (CPC) or Franchise authorising the operation of public land transport services and prescribe appropriate terms and conditions thereof

c. To determine, prescribe, approve and periodically review and adjust reasonable fares, rates or charges related to the operation of public land transport services

d. To conduct investigations and hearings of complaints for violation of franchising laws and to impose corresponding fines and/or penalties for such violations

e. To formulate, promulgate, administer, implement and enforce rules and regulations on public land transport services and facilities

f. To coordinate and cooperate with the other government agencies and entities concerned with any aspect involving public land transportation services.

The above functions indicate the authority of LTFRB over public land transport services in terms of:

a. Route/area of operation prescription and regulation in terms of viable route capacities

b. Issuance of CPC (or franchise) to entities worthy to be public transport operators with corresponding franchising terms and conditions

c. Amendment, suspension and cancellation of franchise based on proven facts

d. Prescription of fares/charges on public transport services

e. Promulgation and enforcement of rules and regulations pertaining to public transport service operations

f. Inter-agency coordination on matters relevant to public transport services.

In line with the above authority, the LTFRB supervises and monitors public land transport service operations and can call on public transport operators to follow its prescribed rules and regulations with the end view of providing the general public with efficient and safe public transport services. In exercising its authority, LTFRB issues from time to time Memorandum Circulars (MCs) regarding implementation details of specific regulations for the guidance of all concerned, especially public transport operators and government regulatory and enforcement personnel. These MCs are in accordance with DOTC policy guidelines and the basic franchising laws.

Land Transportation Office (LTO)

The LTO is in charge of the safety regulation of vehicle operations. The basic functions of the agency are based on the Land Transportation and Traffic Code, under RA 4136, which also created the Land Transportation Commission (LTC) in 1964. The present day LTO, like LTFRB, is tasked with functions of several agencies in the past. From LTC in 1964, the agency was renamed Bureau of Land Transportation (BLT) in 1979, under EO 546. With the BOT-BLT merger in 1985 under EO 1011, the agency was again renamed LTC. In April 1987, under EO 125A, the safety regulation function of the LTC, was transferred to the newly created agency which is now called the LTO.

As provided for in EO 546, in 1976, the then BLT was tasked to perform the regulatory and enforcement functions of the LTC (the previous name of the agency), including the registration of the public utility vehicles (PUVs) and the enforcement of the decisions of the then BOT with regards to PUVs. The said regulatory and enforcement functions of the LTC as provided for in RA 4136 are basically the following: (a) Registration of motor vehicles, (b) operation of motor vehicles, particularly on licensing to drive motor vehicles, use of license plates, carriage of passengers and freight and motor vehicle accessories and (c) enforcement of traffic rules.

In connection with the above functions, the LTO is also tasked to:

a. Establish and prescribe rules and regulations for the inspection and registration of motor vehicles

b. Establish and prescribe the corresponding rules and regulations for issuance of licenses to qualified motor vehicle drivers and conductors

c. Establish and prescribe the corresponding rules and regulations for the enforcement of laws governing land transportation, including the penalties for violations thereof, and for the deputisation of appropriate law enforcement agencies in pursuance thereof

d. Establish and prescribe rules and regulations procedure and standards for the accreditation of driving schools.

Local Government Units (LGU)

The Local Government Code of 1991 grants LGUs authority to exercise powers and discharge functions necessary and appropriate to efficient and effective provisions of basic services and facilities, such as:

Maintenance of barangay roads and bridges (for a barangay)
Infrastructure facilities such as municipal roads and bridges (for a municipality)
Traffic signals and road signs (for a municipality)
Infrastructure facilities such as provincial roads and bridges (for municipality)
Adequate transportation facilities (for a City)
Closure and opening of local roads, pursuant to an ordinance
Regulation of the use of any local road or street or thoroughfares
Granting of business permits or franchises to tricycles.

The above functions, although not quite specific, give LGUs the power or authority to provide basic transport infrastructures, such as local roads and to regulate the use of local roads. What is implied here is that traffic management and regulation are among the basic activities to ensure effective and efficient basic services in the locality.

For Cebu City, traffic management regulation is carried out by one of its departments- the Cebu City Traffic Operations Management (CITOM).

CITOM (Cebu City Traffic Operations Management)

The CITOM Board’s membership is composed of 8 appointees of the City Mayor from the public and private sectors. Its functions include coordination and monitoring of traffic management plans, review of traffic engineering and management schemes and routing of public transport.

A city ordinance upgrading CITOM into a city department was passed in June 2010 creating the Cebu City Transportation Office (CCTO). Having it departmentalized means that the traffic office could now afford to have more personnel for their operations and its functions and its power has been broadened to include transportation planning, among other functions. There is a 2-year transition period from the passing of the ordinance to the full transformation of the CITOM into the CCTO.

The new CCTO will have five divisions - the transportation planning division, the transportation engineering division, the public mass transportation division, the traffic enforcement and parking operations division and the support services division. The transportation planning division will be responsible for planning, designing, monitoring and evaluation, traffic education and management of information systems. The transportation engineering division will be responsible for the implementation of all traffic and transportation-related projects, programs, measure, schemes and policies of the city. The public mass transportation division is tasked to implement mass transportation projects and all matters related to mass transportation. For traffic enforcement, mobile operations, parking operations, special task actions, communication, billing and collection, the traffic enforcement and parking operations division will be in charge. The support services division will be responsible for the performance of basic administrative functions such as preparing the budget, payroll, correspondence, procurement and handling of office supplies. It will also act as custodian of major traffic signal spare parts, traffic signs, thermoplastic and painting materials.

Though the city ordinance’s creation of the CCTO has been approved, the actual and full transformation of the CITOM has yet to take place, but is expected to be complete by the middle of 2012. In the meantime, the CITOM functions according to its original mandate of traffic enforcement and management in the City as part of the CCTO.

The CITOM/CCTO focuses primarily upon enforcement and management of traffic control assets such as the SCATS system which controls the majority of the City’s traffic signals. Responsibility for transport planning and more active transport management to improve the performance of the transport network lies mainly with the national government through the Department of Transport and Communications (DOTC) and the Department of Public Works & Highways for national road network development and this planning function is remote and has been, historically, exercised with the lightest of touches. The upgrading of the CITOM into the CCTO aims to address this long-prevailing issue.

The City has been amending the routes of PUJ in coordination with its traffic management schemes through enactment of local ordinances on “travel lines” for public utility vehicles operating in Cebu City. City Ordinance No. 2000 passed in May 2004 and amending City Ordinance No. 1320, otherwise known as “an ordinance regulating the operation of PUJs within the City of Cebu, as amended”, requires PUJ operators/drivers to secure a travel line certificate from CITOM. The certificate contains the official route that the PUJ is allowed to ply. It shall be renewed annually and drivers are required to have them in their possession when they ply their routes. In this set-up, Cebu City can make recommendations on the routes that will be regulated by the LTFRB.

Routes of PUJs operating in Cebu City total around 118 based on City Ordinance No. 2000 (dated May 2004 and amended by City Ordinance No. 2148 dated June 2008).

These routes are numbered from 01 to 65, with variants per route number designated by a number-letter combination. PUJ drivers/operators are required to prominently display the route numbers on their vehicles, for the convenience of the riding public.

Once a franchise is granted there is no ability to ensure it is operated regularly.

Role and structure of existing public transport operators

Cebu City’s intra-City and inter-City public transport is mainly road-based and provided by the private sector in the form of one-unit operations (mostly for PUJs) and multiple-unit operations (for some taxis and buses). For intra-City trips, PUJs currently serve as the main public transport mode. Taxis are also widely available and are generally of high quality due to the City government’s policy of phasing out taxi units more than 10 years old. Shorter trips within travel zones are served by tricycles or three-wheelers, which are regulated by the City government or LGU, as in other places in the country. They are prohibited by law to ply along national roads, although they are allowed to cross them. Most tricycle operations are one-unit operations.

Cebu bus

Current PUJ operations are done on a free-for-all basis, with few rules. Operations are basically individualised, subject to the decision and judgment call of the individual driver/operator as long as they ply along the prescribed route. PUJ drivers have been likened to fishermen who go out into sea (to their assigned route) and “fish” for passengers.

PUJs receive a franchise from LTFRB to operate on a specific route. When they operate, they are required to stick to the routing specified in the franchise document, and to operate from end-to-end. Trip-cutting is a violation. Other than that, it is up to the individual operators/drivers to decide when they field their units (which days, what hours, how long). Operations are not on an integrated, systematised manner.

There is no formal organisation of the routes, no formal terminals for intra-Cebu routes, and no dispatchers. The terminals at SM and Ayala Mall are provided, organised and managed by the Mall owners, who charge the PUJs for use.

In summary the main features of the PUJ industry in Cebu are:

The PUJ sector serving Cebu Province consists of about 250 routes on which there are about 5,776 franchises and about 7,350 authorised units
There are more than 400 franchises associated with the most populated route, with 324 named individual franchise holders
There are 17 routes with more than 100 franchises, accounting for almost half of all franchises. On these routes, the average number of units per franchise is 1.07 and the average number of units on the route per named franchise holder is 1.46
Over 90% of all franchises are for a single unit, and only 2% of all franchises are for more than 2 units. This creates major administrative, communication and organisation burdens
The two main associations CITRASCO and VUDTRASCO are the registered entity for about 1,000 units on 830 franchises, accounting for about 14% of the total supply. Meetings with these associations indicate that their members have small numbers of units, averaging less than 2 units per member.
For the remaining 85% of the supply, there is very little concentration of ownership or organisation within or across routes. The 17 individuals with 10 or more franchises have on average 2-3 franchises and 2-4 units per route
This is an extremely fragmented sector in terms of ownership, operating rights and route assignment. There is no concentration of ownership or organisation.
Discussions with the sector have verified that there is no formal or informal organisation of the services, supply, departures or operations management.

Taking into account that PUJ is the primary passenger transport mode, these two factors combined – lack of concentration of ownership or organisation – make for a very highly fragmented and unorganized passenger transport system.

MCBOA (Metro Cebu Bus Operators Association) and CPBOA (Cebu Provincial Bus Operators Association) are associations of bus operators in Cebu, all provincial but many of which operate to/from Cebu City. Collectively they have less than 500 units.

The main operators are Ceres, Sunways, Rughriders, Librando.

Ceres Liner is a major company with bus operations throughout the Philippines. It has about 2,000 units in total, and is the largest bus operator in the Philippines (Victory Liner has about 900 units). Although present across the Philippines, Ceres Liner does not currently operate urban bus services in major cities. They operate provincial services, including those to and from Manila.

Ceres Liner was established in Cebu several years ago and has since grown and acquired some of the existing operators and franchises. They currently have a fleet of about 200 buses based in the Cebu operations, which includes both services on the island and services to Negros and even Bacolod via RORO. They have a range of bus sizes ranging from 54 seater down to 30+ seater.

Ceres Liner owns all of the buses it uses. It purchases about 100 buses per year. Ceres also has a bus-building facility located outside Cebu in Bacolod.

Urban and Road Passenger Transportation challenges

The primary challenges within the urban passenger transport sector are:

Increasing levels of congestion
Population growth which in turn compound congestion
Decreasing public transport mode share
Inappropriate use of the carriageway
Physically constrained strategic road network
Inadequate side walks
Lack of a clear coherent planning and transport policy for metropolitan area.
Fragmented public transport sector with very loose control.

Objectives of the Road Passenger Transport Stakeholders

DOTC

Mission

To provide the country with efficient, effective and secure transportation systems that are globally competitive, compliant with international standards and responsive to the changing time.

Under President Aquino DOTC has been set four challenges:

One, we have confronted the challenge of weeding out graft in public office – and thus declared in no uncertain terms that the Department will establish a level-playing field in utmost transparency – which consistently applies to DOTC projects and transactions, big or small.
We have confronted the challenge of cleaning up a huge inventory of projects that were “tainted” with corruption – those that went against the basic rules of fairness and honesty, or those that militated against the greater interest of our country and people.
We have seized the opportunity to create and assemble a new management team that shares the vision and ethical standards of the new government – and thus replaced most officials who were either co-architects of ruinous transactions in the past or those that do not share our President’s vision.
We embraced the opportunity to lay the foundation and set the tone for a new transport universe– rejecting projects and programs that do not fit our overall goals, while keeping those that still show potential. We began realigning such projects that effectively mesh with a coherent, integrated, modern and efficient transport system – bound by the higher logic and imperative of making such projects serve our people’s needs and aspirations.

Land Transportation Office

Vision

The LTO envisions a well-developed transportation system that will play a vital role in improving the quality of life of the Filipino people, particularly in providing a more viable means of land transport and a secured travel for transport users and commuters.

Mission

To rationalize the land transportation service and facilities and to implement effectively the various transportation laws, rules and regulations.

Land Transportation Franchising & Regulatory Board

Vision

World-class land transportation services contributing to the over-all development of the country, improvement of the socio-economic status of its stakeholders, and promotion of the welfare of the general public.

Mission

Cebu City Government

Cebu City has no transport function and has, as such, no transport policy or strategy. It is however politically reactive to problems which leads to piecemeal and uncoordinated interventions. The major reclamation currently being developed adjacent to downtown Cebu, known as Cebu SRP, has strong environmental ideals driven in part by the City but also by private investors seeking to create a fertile commercial environment.

The BRT proposal for Cebu was initiated by former Mayor and now Congressman, Thomas Osmeña. It is supported by current Mayor Rama.

Strategies for improvement of Passenger Transport

The strategies for the promotion and improvement of passenger transport are included within the National Environmentally Sustainable Transport Strategy for the Philippines. The strategy seeks to develop:

Cebu station

Fast and reliable transport services
Developed mass transport network
Higher passenger transport mode share
Formalised/improved passenger transport terminals
Rationalised passenger transport routes
Operational BRT in urban areas
Converted transport organisations to cooperatives
Rationalised truck routes
Reduced number of low occupancy vehicles

Strategies to be followed are:

Transport modernisation (through financing) for PUV’s
Promoting mass transport to policy makers
Passenger transport integration
Promote use of passenger transport over private transport
Promote high occupancy vehicles
Promote park and ride facilities
Assess spatial and temporal separation
Develop and deploy ITS

The proposal to develop BRT in Cebu is supportive of this strategy.

Organisational, operational and business challenges facing the industry

Cebu City does not have a transport planning function and has such no professional advisers to decision makers who seek to address transport challenges.
DOTC has a responsibility for urban transport strategy but is remote from Cebu
Fragmented public transport sector with no collective voice.

Previous or On-going Studies

Metro Cebu Public Transport Strategy Study

A Metropolitan Cebu public transport strategy study commenced in 2009. This project sought to understand existing and future travel demand across the region. It commenced with a data collection exercise with the intention to produce a multi modal model from which a public transport strategy will be developed focussing upon corridor interventions and the institutional regulatory context for delivery. The study was however paused during 2010 prior to completion of the data collection.

Cebu BRT

The Cebu BRT pilot route was defined in conceptual and geographic terms through a Pre-Feasibility Study reporting in 2010. The study included operational management requirement, the need to achieve priority through signalised junctions and the desire for electronic ticketing. A further full feasibility and detailed design study is programmed for 2011/12 which will investigate and define these aspects of system provision further.

Transport Crowd-Source ICT Demonstration

The World Bank and Cebu City Government, with support from the AusAid and the Korea ICT4D trust funds, have developed a demonstration program with the following three pilot applications of ICT to support better transport system planning and management:

Application #1 – Using GPS-Enabled Mobile Phones Distributed to Taxis to Support Traffic Data Collection and Dispatch.

Under this component, in collaboration with the Metro Cebu Taxi Operator Association, GPS-enabled phones will be distributed to a sample of taxis. By tracking vehicles’ travel speed and location, the following parameters can be derived temporally and spatially:

Congestion points (and correlations with weather and special events);
Estimated traffic volumes by corridor;
Average travel speeds by corridor;
Estimated congestion impact on network fuel efficiency; and
Unusual occurrences causing traffic stoppages, such as accidents.

Taxis were selected for the demonstration, because many of the Cebu taxis operate nearly 24-hours per day, seven days a week, and traverse about 300 kilometers per day, thereby generating a significant potential data sample.

As an incentive for taxi companies to participate, the Program will provide a visual interface for the participating taxi operators -- vehicle locations for use in dispatch.

Application #2 – Platform for Public Participation.

This application pilots the use of crowd-sourcing to support a 311-type platform. For this demonstration, the Cebu City Government (CCG) has selected a focal topic that: 1) is of concern to both the CCG and the citizenry; 2) affects transport network energy efficiency; 3) is a topic that is within control of participating CCG departments; and 4) is readily “mappable”. To this end, the Project will provide a user-based crowd-sourcing interface for the Cebu City Transportation Office (CCTO) and the Department of Public Works that residents can use to report on potholes and missing signs and receive feedback. This application will include significant capacity building – developing institutional processes for receiving and responding to reports from citizens, as well as providing sufficient training that the City would be able to adjust and expand the system on their own.

Application #3: Using Mobile Phones to Support Jeepney Data Collection and Dispatch

As Cebu prepares for the development of the country’s first bus rapid transit (BRT) system, the City is seeking means to integrate the existing informal transit system into the formal BRT system as feeder routes – with particular emphasis on a slow, step-by-step approach. To this end, the City seeks to pilot crowd-sourcing data collection methodologies as a means to establish a low-cost yet robust dispatch system, as well as to support a more transparent market for routes. The Program will provide GPS-enabled phones to drivers on a select pilot route, as well as a visual interface for piloting a dispatch system. This system would by supported by manual street-side data collection activities facilitated by use of mobile phone-based forms.

The World Bank is currently seeking to assess the potential of mobile capture data devices to gain information on road network performance. This will centre, initially, upon taxi and PUJ drivers. The goal is to provide local transport planners with a low-cost, simple means to collect real time travel time and road condition data, which can be used to more effectively manage road assets, mitigate traffic congestion, and manage mass transport fleets.

Current Level of Implementation of ITS or Computerised Systems

The traffic signals in Cebu City are linked and co-ordinated using a SCATS system, maintained and operated by CITOM. Whilst the system is operational many inductive loops are inoperable and signal cycle times are set so high that traffic queue backs to downstream junctions. The SCATS system does not possess any public transport priority capability but the proposed BRT will seek to address this through appraisal of the SCAT’s system and appropriate traffic control system updates and optimisation.

Financial Capability of Operator to Purchase and Maintain ITS Systems

Bus operators have little ability to invest in ITS systems as profits are marginal. This is in part due to inefficiencies and the domination of single owner operators. Larger operators, only one in Cebu (Ceres), may invest if the benefits are known.

Background availability of Support Systems and Data

Cebu City operate a GIS system that stores road inventory, traffic counts and PUJ franchise details.

Potential initiators/advocates of ITS Deployment

Investment is likely to come through DOTC and the promotion of BRT within the City. The delivery of BRT and ITS has not yet been determined. It is however likely to seek to maximize the involvement of the private sector under the control of a combination of DOTC and Cebu City Government.