IN a previous column, we wrote about a public consultation conducted by customs two months ago on the accreditation of third party surveyors that will be allowed to conduct destination inspection and survey of bulk and break-bulk cargo.
Among the issues raised during the consultation were:
- rationale for implementing a regime when the modern customs paradigm is towards post clearance controls;
- the added costs to be shouldered by the trading community;
- additional layer of documentation and processes that may impact negatively on trade facilitation; and
- criteria for accreditation of third party surveyors.
Bulk and Break-Bulk Cargo
Bulk cargo generally refers to cargoes in a mass of one commodity not packaged, bundled, bottled or otherwise packed; those cargoes (dry or liquid) which are loaded (shoveled, scooped, forked, mechanically conveyed or pumped) in volume directly into a vessel’s hold or cargo that is unbound as loaded; or those without count in a loose unpackaged form. Shipments of commodities (e.g. corn, wheat) and petroleum products fall within this category.
Break-bulk cargo on one hand refers to non-containerized cargo which is grouped or consolidated for shipment and broken down, sub-divided into unitized cargo such as in pallets or packed in bags, boxes or other individual units to be loaded into or discharged from vessels. These cargoes are loaded individually and described in terms of quantity and weight, (e.g. steel coils, logs, sacks of rice) and not in shipping containers or in bulk as with oil or grain.
Cargo surveying of bulk and break-bulk cargo involves the inspection, analysis and computation of bulk or break-bulk cargo. The main purpose of surveying is to confirm and verify the quantity and quality of the shipment in relation to the goods specifications agreed upon between the buyer and the seller. Surveying confirms the agreements and provides support for the final settlement of the price as agreed between the parties.
From a customs perspective, cargo surveying serves as supporting basis for determining the correct dutiable weight, quantity, description of goods in tariff terms, and/or cargo make or quality.
In the Philippines and in most countries, cargo surveying is performed by third parties. The cargo survey report is submitted to customs to support the declarations made upon importation.
Accreditation of Surveyors
Under the proposed customs rules, the load survey and cargo survey shall be performed only by surveying companies duly accredited by customs.
The accredited surveying company shall be required to submit survey reports to customs in electronic and manual formats based on industry standards and within 24 hours from the time and date of sailing of the carrier. However, when the sailing time from the foreign port to the Philippine port is less 72 hours, the survey report may be submitted upon arrival of the vessel.
Accredited companies shall be required to fully automate and interface with the customs automated system within six months from accreditation. Until such time that full automation is made, accredited surveying companies shall be allowed to electronically transmit copies of the ship’s loading survey report of the cargo bound for the Philippines together with soft copies of the surveyor’s report within the prescribed period.
The survey report on bulk and break-bulk cargo will be used by customs to determine the dutiable weight, volume and description of imported articles, without prejudice to physical verification under certain circumstances.
Ensuring Free Competition
Surveying companies not accredited by customs are prohibited from entry into the customs zone and are not permitted to board foreign vessels engaged in foreign trade.
As mentioned in a previous column on customs third party validators, users of cargo surveying services must review the financial impact of this new requirement and ensure that there is free competition among the third party providers. A single provider will certainly result in monopoly pricing. Free competition generally creates a market with better services and cheaper prices.
The author is an international trade consultant, and a licensed customs broker. He is a lecturer on logistics, indirect tax and customs, and a lecturer of Ateneo and BayanTrade on Supply Chain Management. Please contact firstname.lastname@example.org for your comments.