BOC denies proliferation of CY/CFS

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The Philippine Bureau of Customs (BOC) has rejected claims off-dock container yard/container freight stations (CY/CFS) are proliferating, noting that the issue involves only one CFS operator and that the agency has already started to take action.

Atty. Edward James Dy Buco, BOC deputy commissioner for Assessment and Operations Coordinating Group, clarified that the Association of Offdock CY/CFS Operators of the Philippines (ACOP) is only contesting the grant in 2016 to one CFS operator of a Certificate of Authority (COA) to operate.

Dy Buco made the clarification on March 14 during a Lower House ways and means committee hearing on House Resolution (HR) No. 1460 filed by Deputy Speaker Sharon Garin. The resolution seeks to investigate the alleged “proliferation” of off-dock CY/CFS “causing an imperil on the Bureau of Customs’ capacity to closely supervise and control these sensitive areas of customs operations.”

CFS are warehouses that are outside of the ports under customs’ control and that handle only less-than-container-load (LCL) shipments.

Currently, there are 12 operating CFS, of which 11 are ACOP members. The contested CFS operator, PortNet Logistics, is not operating at present, following BOC-Port of Manila’s order stating that no LCL shipments should be transferred to PortNet, Dy Buco said. BOC-Manila International Container Terminal has also not assigned a wharfinger to PortNet, which means the company is unable to handle LCL shipments at the terminal.

PortNet had applied for a COA to operate a CFS in 2015 and was granted one in 2016 by then Customs Commissioner Nicanor Faeldon.

However, ACOP said Faeldon might have been “misled” when he signed the COA, whose basis is a customs memorandum order (CMO) that had been issued an addendum as a result of the protest made by ACOP.

CMO 32-2015, issued in September 2015, details the revised rules and regulations on establishing, supervising, and controlling off-dock CY/CFS and other off-dock customs facilities outside of customs zones.

READ: BOC gets tough on warehouses, other customs facilities

Intended to impose stricter rules on CY/CFS operators, CMO 32-2015 did not, however, include the aggregate capacity utilization (ACU) rule under Customs Administrative Order (CAO) 05-1996.

The CAO states that no new applications for a license to operate a CY/CFS shall be approved unless the ACU of existing CY/CFS for the immediately preceding 12-month period exceeds 50%.

In raising its concern over CMO 32-2015, ACOP said the order could be seen as allowing the entry of new on-dock and off-dock players even when the ACU of existing CFS still had not hit 50%.

In October 2015 BOC subsequently issued CMO 37-2017, which is an addendum to CMO 32-2015 that practically closes the door on new CFS applicants until the rule that the ACU of established warehouses for the immediately preceding 12-month period has topped 50% is met.

In addition, the new application must be supported by figures pointing to a “definite upward trend” over the last 24 months in the volume of consolidated inbound container traffic.

ACOP director Cora Delos Santos, during the hearing, explained that BOC, during the time of Customs Commissioner Guillermo Parayno, Jr., had decided to regulate off-dock CY/CFS operators to stop such warehouses from proliferating and being used as storage by smugglers.

BOC then asked operators to create an association, which has become ACOP, and issued CAO 5-1996 so as to maintain the number of off-dock CY/CFS and be consistent with the business requirements of the port for such facilities as provided by law.

No new CAO has since been issued to replace or amend CAO 05-1996, except the draft CAO covering CFS operations under the provisions of the Customs Modernization and Tariff Act that was signed 2016.

Dy Buco said CMO 37-2015 was “probably overlooked” when the COA to operate was granted to PortNet.

Dy Buco said the issue with PortNet’s CFS operations has already been referred to BOC’s Legal Service, and ACOP and PortNet have been advised to attend the hearings.

He added that aside from PortNet, no COA has been granted to any new CFS operators. He added that he assumes that the ACU has not yet been breached since some ACOP members have not even been active in the past few years, which still means that no new CFS operator are allowed to operate.

ACOP said its members’ utilization as of 2017 is only 23%, which is still below the 50% threshold.  – Roumina Pablo

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