Cargo industry stakeholders are seeking port concessions, including suspension of demurrage payment, as they battle high costs due to the impact of the enhanced community quarantine (ECQ).
At the recent #ResilienceandRecoveryPH e-forum hosted by the Philippine Exporters’ Confederation, resource speakers also batted for extended free storage period for containers; adoption of the Super Green Lane (SGL) process for Philippine Economic Zone Authority shipments; and greater automation of processes.
The ECQ has caused a container buildup at Manila ports due to limited operations of cargo service providers and the Bureau of Customs. The buildup (with Manila International Container Terminal yard utilization reaching almost 100% in end-March) has, in turn, jacked up logistics costs, including container storage fees and demurrage.
Philippine Multimodal Transport and Logistics Association, Inc. (PMTLAI) president Marilyn Alberto at the e-forum proposed suspension of imposition of demurrage to aid consignees, something that has already been pushed by the Export Development Council, according to e-forum moderator Dr. Enrico Basilio.
Alberto also proposed the extension of the free storage period for containers from five days to 10 days.
The PMTLAI chief noted container withdrawal delays of late were not caused by importers, but were due to ECQ-related challenges in cargo movement and customs clearance. Most consignees, she pointed out, “really want to withdraw their containers” as each day a container stays in the yard means more storage charges and demurrage.
Charlie Villaseñor, chairman of the Procurement and Supply Institute of Asia, concurred and said exporters and importers “need to be incentivized” to remove their containers from the ports rather than be penalized.
BOC assistant commissioner and spokesperson Atty. Vincent Philip Maronilla, during the same e-forum, said the customs bureau is strongly recommending the waiver of demurrage and storage charges even as he noted it is not the BOC, but the Philippine Ports Authority, that has jurisdiction over fees levied by port operators.
Customs commissioner Rey Leonardo Guerrero, in a meeting last April 13, instructed an agency representative to the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (IATF) to “raise this concern and inform the IATF that BOC strongly recommends any proposal to provide for the exemption, if not repeal, the imposition of all storage charges, shipping charges, even charges in the movement of the containers during this time,” said Maronilla.
Apart from higher storage charges and demurrage, Alberto said cargo owners have had to pay some international shipping lines a congestion surcharge for reefers, ranging from US$1,000 to $1,400 per container.
And that’s on top of the problem of vessels skipping certain ports in the Philippines, including Manila, due to port congestion, she said.
In addition, customs clearance has slowed during the ECQ, in part due to the recent bogdown of BOC’s electronic-to-mobile system, and the temporary closure of the BOC-Manila International Container Port building for disinfection. (Both issues have been resolved recently.)
At the time of the e-forum, Alberto said it took more than 10 days to clear sea shipments with BOC compared to the previous 2-5 days.
For airfreight, customs clearance was around 2-3 days from 1-3 days previously.
While there is little customs clearance disruption for airfreight, Alberto noted reduced volumes and higher rates in general as freight forwarders take to chartering cargo flights due to limited airline operations. She noted that from an average of 350 commercial flights a day before, flights are now down to about 12 flights.
In the area of domestic land transportation, Alberto said there has been confusion surrounding the directive on unhampered cargo movement at checkpoints, especially during the first days of the ECQ. The situation has improved through constant coordination between the private sector and government although occasional kinks remain, she said.
In order to hasten shipment clearance, Alberto asked BOC to consider adopting the Super Green Lane (SGL) for shipments bound for economic zones and freeport zones Clark Development Corporation (CDC) and Subic Bay Metropolitan Authority (SBMA).
“Inputs for all these entities for the PEZA, SBMA, CDC locators are for export companies, and if these export companies are not able to meet the requirements of their clients which are also still operating globally, then we might just miss the chance of being able to deliver what they need and they might consider [using] other sources for these particular things that they need from our exporters.”
BOC’s Maronilla said the agency is already discussing the proposal with the Department of Trade and Industry (DTI) but noted granting the request is “not that simple”.
He said there are “risk parameters to look into still in terms of this particular movement or shifting from one process to another one, which in our system is the most liberal of all.” ”We’ve had those particular issues raised with us and I think the ones that are being discussed right now [are] more of identification of which particular industries would be granted” SGL status, he said.
Maronilla continued that the deputy commissioner for assessment and operations is already formulating his recommendations on the issue. ”Initially we have coordinated with our personnel from the port especially the export division and formal entry division to identify the volume and the regular importers that are actually doing some transit activities going to these ports and evaluate them if they can be already encoded.”
Truck bans, single Manila port
Post-ECQ, Alberto recommends lifting of truck bans and the number coding scheme to expedite movement of cargoes; adoption of guidelines to ensure shipping lines have sufficient container yard space for empty containers; and expedited accreditation and activation of inland container depots.
For the long term, Alberto hopes government can consider a single port of discharge in Manila instead of the current two.
The idea of merging the two Manila customs collection districts has long been a private sector suggestion that hasn’t gained support from government. The proposal is aimed at making collection of duties and taxes more efficient, reducing vessel queuing, and improving port operations.
Improvement of IT capabilities and systems of government and full automation of supply chain players are other proposals that came out of the e-forum.
Alberto said some problems of the cargo community are not encountered in other countries that have a high degree of automation.
Corollary to having an automated system, the PMTLAI chief hopes internet speed would improve, a wish shared by Supply Chain Management Association of the Philippines president-elect Carlo Curay, who noted that the way forward is to accelerate digital transformation.
Lastly, Alberto recommends creating a supply chain council involving both public and private sectors, with an end view of making the country’s logistics cost competitive. – Roumina Pablo