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Business groups and stakeholders are pressing Philippine Ports Authority anew to scrap its container monitoring and registry system for foreign boxes
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The groups describe the system as an expensive, not value-adding regulatory burden that encroaches on the functions of the Bureau of Customs
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By requiring container insurance in lieu of container deposit, PPA is also arrogating itself as the regulator of international shipping lines without legal authority to do so, they say
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They claim many of the issues earlier raised against AO 04-2021 remain unanswered
Business groups and stakeholders are calling anew for the scrapping of the Philippine Ports Authority (PPA) container monitoring and registry system for foreign boxes, calling it a costly, not value-adding regulatory burden that encroaches on the functions of the Bureau of Customs (BOC).
By requiring container insurance in lieu of the container deposit, PPA is also arrogating itself as the regulatory body of international shipping lines without the legal authority to do so, stakeholders said.
“As what we have argued during these consultations, PPA AO [Administrative Order No.] 04-2021 is a tedious, redundant and expensive system,” the Philippine Exporters Confederation Inc., Philippine Chamber of Commerce and Industry (PCCI), Supply Chain Management Association of the Philippines (SCMAP), and Export Development Council (EDC) said in a joint position paper on the proposed implementing operational guidelines (IOG) of PPA AO 04-2021.
PPA AO No. 04-2021 prescribes the policy on the registration and monitoring of foreign containers entering and leaving PPA ports. AO 04-2021 requires foreign containers to register in PPA’s Trusted Operator Program-Container Registry and Monitoring System (TOP-CRMS) and to secure a container insurance policy.
PPA held a public consultation for AO 04-2021’s IOG on January 4 and gave stakeholders until January 10 to submit their position papers.
Various stakeholders have raised concerns about TOP-CRMS since its introduction in June 2021. Fourteen industry associations and organizations earlier called for the immediate revocation of AO 04-2021, citing its potential negative impact on port operations and the economy.
Other groups sought a deferment of implementation, some the nullification of the policy, claiming it has no legal basis and contradicts ease of doing business and trade facilitation.
Stakeholders raised the same arguments during the January 4 public consultation.
The joint position paper by Philexport, PCCI, SCMAP and EDC said the TOP-CRMS’ redundancy “generates additional undue costs to businesses and consumers who are already laden by the skyrocketing inflation rate and delays in the movement of containers that further worsen congestion in the ports.”
They added that the system is inconsistent with President Ferdinand Marcos Jr.’s directive to streamline procedures and lower logistics costs.
They said the arguments and opposition that they, together with other affected stakeholders, expressed in meetings and position papers submitted to PPA last year “have fallen on deaf ears when the PPA proceeded with this latest IOG”, with many of the issues raised against AO 04-2021 remaining unanswered.
The groups said the system’s objective of helping “provide credible data and auditable data to PPA… by means of monitoring container movement…” directly encroaches on the function of BOC to monitor the movement of containers, be it loaded or empty, inside and outside the port.
BOC is already monitoring the movement of incoming and outgoing containers at seaports through Customs Administrative Order (CAO) No. 08-2019, issued in 2019. BOC is also implementing its Electronic Tracking of Containerized Cargo (E-TRACC) System, which tracks the inland movement of containerized cargoes during transit and transfer to other customs territories and facilities.
“While we also have issues on this system [E-TRACC], this is not a concern of the PPA,” the groups pointed out.
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In a separate position paper, the Association of International Shipping Lines (AISL) said PPA’s system “is unnecessary because it replicates the container identification and accountability program of World Customs Organization Cargo Targeting System (CTS)” already being implemented by BOC.
Since November 2019, AISL said all foreign shipping lines operating in the Philippines have been complying with the requirement to submit in advance container and import shipment information to the CTS.
In addition, shipping lines and terminal operators comply with BOC’s mandatory reporting of foreign containers that move through their facilities, including discharge, load, gate-in and gate-out activities.
On TOP-CRMS’ other objective of preventing unlawful acts such as smuggling, the joint position paper by Philexport, PCCI, SCMAP and EDC reiterated that implementation of the system will just duplicate BOC’s mandate. But unlike BOC’s monitoring mandate that covers all ports in the country, the TOP-CRMS project excludes customs facilities and ports under the jurisdiction of other ports authorities.
“This puts in grave doubt the capability of the PPA to effectively and efficiently achieve this objective,” the groups said.
Doubtful legality
Accrediting off-dock staging areas is also of “doubtful legality”, as this again falls under BOC’s jurisdiction as mandated by Republic Act No. 10863, or the Customs Modernization and Tariff Act (CMTA). Under Section 803, Chapter 2, Title VIII of the CMTA, the accreditation, establishment and operation of such facility is subject to BOC approval.
AISL, Philexport, PCCI, SCMAP and EDC also question the claim that TOP-CRMS will simplify procedures and remedy port congestion, noting no convincing explanation was given during the January 4 public consultation.
They also asked how entrusting to truckers the installation of monitoring devices on trucks can ensure no disruptions on terminal operations.
“If these devices are entrusted to truckers, where is the element of control in effective container monitoring especially if the container is separate from the truck?” AISL pointed out.
Another point raised by the groups is that PPA is arrogating itself as a regulatory body of international shipping lines when it states under the proposed IOG that the container insurance must be secured in lieu of the container deposit. There is no government agency exercising oversight and supervision over international shipping lines.
During the January 4 public consultation, AISL president Patrick Ronas said PPA has no authority to prevail on the shipping lines and accept the container insurance in lieu of the container deposit.
AISL added that a container deposit is refundable if the empty container is returned within the free time period and without damage while the insurance premium is an outright cost.
“It is also quite important to note that the posting of container deposit itself is not the real concern of importers/customs brokers. The delay in the return of these deposits by some shipping lines is the core of their complaints,” AISL said.
It noted that the return of container deposit is already among issues that House Bill No. 4933, now being deliberated by the House Committee on Transportation, is trying to address. Under the bill, container deposits may be allowed only if the forwarders or agents of international shipping lines implement an expeditious procedure in refunding the deposits within a non-extendable period of 15 days from the return of the container.
“PPA should therefore give way to Congress, which is the legislative branch of government, to do its job, and desist from assuming a role that is not theirs in the first place,” AISL said.
AISL, Philexport, PCCI, SCMAP and EDC said the issue on the return of container deposits is already being addressed by the Container Ledger Account (CLA), an online system that aims to simplify and speed up container deposit refund. CLA started in December 2021 and has since been gaining more users.
The groups questioned the system’s objective of reducing the cost of transporting goods when it proposes a container insurance cost of P980 plus value-added tax (VAT) per container, as well as service fee of P3,520 plus VAT per container for using the staging facility beyond the first three days.
AISL noted there was no breakdown on how PPA arrived at the amounts while the groups pointed out these are on top of the PPA accreditation fee.
“Ultimately, all the cost incurred will be passed on to the end-consumers of a country presently reeling from the effects of a rising inflation. And the cost will vary depending on the location of the staging facility,” AISL said.
In a separate position paper, the Inland Haulers and Truckers Association (INHTA) said the insurance fee is unconscionable as containers are owned by shipping lines and it is thus within their prerogative to insure such equipment.
INHTA said the estimated 5,000 containers arriving at the ports per day, multiplied by 26 days per month would total to a monthly insurance fee collection of P127.4 million.
“All for an insurance that is not even a prerogative of PPA for the simple reason that it is outside its mandate under the law,” INHTA noted.
Moreover, INHTA said the P3,520 service fee for the staging facility is “without basis and unreasonable.” At 5,000 containers per day multiplied by 26 days per month, the service fee would total P457.6 million monthly “to be paid by shipping lines and eventually be charged to cargo owners”, it said.
The trucking group described PPA’s proposed continuous monitoring of containers as “superfluous and poses (a) threat on the confidentiality, safety and security of the whereabouts of the cargoes, trucks and drivers breaching Data Privacy Law.”
It added that PPA also failed to provide sufficient justification on the need for the continuous monitoring of containers outside its jurisdiction, which is inside the ports.
Philexport, PCCI, SCMAP and EDC, meanwhile, said: “If what the PPA needs are information and data from other agencies, what should be done is to make sure that PPA systems are interoperable with those of BOC, DTI [Department of Trade and Industry] and other stakeholders without entailing additional cost to government and stakeholders. Developing a new system does not guarantee that it will address the information gap. Developing a new system does not guarantee that it will address the information gap.”
They said despite all the negative impact pointed out by stakeholders, it appears PPA has not made a regulatory impact assessment before issuing AO 04-2021 as required by the Ease of Doing Business Law.
“In the interest of public good and consistent with the President’s thrust of ‘reducing transport logistics cost to sustain the country’s economic recovery’, we strongly call for the rescission of PPA AO 04-2021 (TOP-CRMS) and its IOG,” the groups said.
CRMS is an electronic system to track the location of all foreign-owned containers originating in foreign ports, and entering and leaving ports under PPA’s jurisdiction. TOP is a know-your-customer mechanism that aims to help eliminate redundant procedures in container registration and monitoring.
The joint venture of NextIX, Inc. and Shiptek Solutions Corp., the lone bidder for the TOP-CRMS, won the contract at a bid price of P877.6 billion, with the award of contract signed in April 2022 and the notice to proceed issued the month after. – Roumina Pablo
