Domestic lines ordered to cut agri, food shipping rates by 40%

Manila North Harbor
Manila North Harbor

The Department of Transportation (DOTr) has directed all domestic shipping lines to extend a shipping rate discount of at least 40% on all agricultural and food products.

At the same time, they were ordered to allocate no less than 12% of their vessel cargo capacity per voyage for the exclusive accommodation of such products.

The directives are contained in  Department Order (DO) No. 2020-007 issued on June 24 by Transportation Secretary Arthur Tugade and which took effect immediately.

Under DO 2020-007, agricultural and food products are defined as “any product or commodity, raw or processed, that is marketed for human consumption (excluding water, salt and additives).”

Animal feeds are not considered agricultural or food products under the department order.

DO 2020-007 covers agricultural and food products shipped in “whatever manner or form” such as conventional cargoes (whether loose or bulk) and roll-on/roll-off (Ro-Ro) cargoes.

In coming out with the order, Tugade cited Inter-agency Task Force for the Management of Emerging Infectious Diseases Resolution No. 46, which approved DOTr’s recommendation enjoining all domestic shipping lines to allocate a percentage of cargo space exclusively for food and agricultural products, and to charge preferential rates for such cargoes.

Tugade also cited government’s policy, especially during the coronavirus disease pandemic, “to ensure food availability and affordability, boost domestic agricultural production and food processing; and ensure that their movements shall remain unhampered.”

The Maritime Industry Authority will issue guidelines to implement DO 2020-007 within 30 days from its effectivity.

The Philippine Ports Authority (PPA) will implement, closely monitor, and ensure that domestic shipping companies comply with requirements set in DO 2020-007, and “impose sanctions for non-compliance.”

In a statement, Tugade said, “At this period when the danger of the pandemic is still very real, the people must be assured that the production and delivery of food and agricultural items will not be hampered or delayed. This is important as many parts of the country remain under quarantine measures where movement is restricted.”

“With this department order, our people will be assured of food supply, as each vessel being operated by a domestic shipping line will be carrying needed food and agricultural products to various destinations in the country.”

Trade Secretary Ramon Lopez said the DO is crucial and complementary to the trade department’s recently issued memorandum on lifting of purchase limits on basic goods.

“From the very beginning, the stable supply and unhampered movement of all food and non-food cargoes has always been our priority. This is to prevent the unreasonable increase in the prices of goods, especially at this time of the pandemic when sources of income are limited,” Lopez said.

Agriculture assistant secretary and spokesperson Noel Reyes said the directive will help consumers by easing the tight supply of food necessities and stabilize their prices.

“Agriculture Secretary William Dar welcomes this favorable development, that puts into flesh the recommendation of the IATF Task Group on Food Security to maintain the unhampered movement of food products from the farms and fishing areas to major consumption centers, particularly in Metro Manila. These include products such as pork from Mindanao, where there is surplus, that should be shipped regularly to Luzon and Visayas and thus ease up the tight supply and stabilize prices for the benefit of consumers,” Reyes said.

PortCalls as of press time was still awaiting comments from the Philippine Liner Shipping Association (PLSA), whose members dominate the domestic cargo shipping industry.

PLSA earlier wrote DOTr and the Department of Finance requesting government assistance “to support domestic shipping as a vital and strategic industry that serves the needs of the economy and the Filipino people.”

READ: Local shipping lines seek waiver of port charges amid COVID-19 woes

Philippine Inter-island Shipping Association, of which PLSA is a member organization, also wrote DOTr seeking government assistance by way of waiving port charges for ships and suspending the two-day storage period for domestic cargoes as operations are undermined by restrictions brought about by community quarantines. The organizations have yet to receive a response from any government agency.

PLSA last April said cargo volume handled by domestic shipping lines has been cut to below 50% and revenues by as much as 80%, as over 60% of clients have been affected by the implementation of the Luzon-wide enhanced community quarantine.

READ: Domestic shipping sector fears collapse; cargo volumes down 50%, revenues by 80%

“The situation has become untenable for the domestic shipping operators, and with ECQ being considered to extend until mid-May, shipping lines will not be able sustain its operations without government assistance and support to have some relief on its loans, government fees and other operational costs,” PLSA said in a statement in April.

Latest data from PPA showed domestic cargoes decreased 3.3% to 25.444 million metric tons (mt) in the first quarter of 2020 from 26.305 million mt in the same period last year.

This month, PLSA said cargo volumes sank 70% and, even after community quarantines in the country are lifted, estimates point to cargo traffic being only 50-70% of pre-COVID-19 levels. – Roumina Pablo

Updated June 28, 2020, 1:05pm, to include statements from various government agencies.