DOTr offers 3 solutions to resolve container deposit issue

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  • The Department of Transportation has put forward three solutions to the long-running issue of return of container deposits, including scrapping the deposit
  • Transport Secretary Jaime Bautista also proposed the continued collection of deposits but their refund within 14 days, and subscription to the Container Ledger Account or other service providers that offer an equivalent service
  • Bautista wrote several foreign shipping lines, urging them to accept the alternative solutions

The Department of Transportation (DOTr) has proposed three alternative measures to address delays in the refund of container deposits by foreign shipping lines, including scrapping altogether the practice of collecting container deposit.

Transport Secretary Jaime Bautista in a July 12 letter to several foreign shipping lines also proposed the continued collection of the container deposit but its refund within 14 days; and subscription to the Container Ledger Account (CLA) or other service providers that offer an equivalent service.

Bautista acknowledged the “issue of delays in refund of container deposits and unreturned deposits in millions of pesos continues to burden and create financial difficulties for many importers that now has become an industry problem.”

He noted the issue has been raised by various stakeholders for government intervention.

Association of International Shipping Lines (AISL) president Patrick Ronas, in a phone interview with PortCalls, said the group welcomes Bautista’s letter as it provides carriers with options on how to handle the issue.

The decision to choose any of the three options remains with shipping lines, DOTr said. There is currently no government agency exercising oversight and supervision over international shipping lines.

But as transport chief, Bautista “is empowered to formulate and recommend national policies and guidelines for the fast, safe, efficient, and reliable transportation services and this includes recommending solutions to unresolved issues related to the industry, such as the delayed return of container deposits,” the agency explained.

Since these proposals are recommendatory and not mandatory, DOTr noted, they cannot be construed as a regulation that requires public bidding or submission of a regulatory impact assessment (RIA) to the Anti-Red Tape Authority (ARTA) prior to their issuance.

The DOTr statement is in apparent response to a news report questioning DOTr’s supposed endorsement of CLA, a voluntary online solution to simplify and speed up container deposit refund. The system is a product of Malaysia-based company D&D Control (M) Sdn Bhd tapped by AISL. To date, 20 shipping lines and 559 consignees, freight forwarders, customs brokers, container freight station, and warehouse operators are subscribed to CLA.

DOTr and the Department of Trade and Industry early this year had urged AISL members to subscribe to CLA.

The news report claimed DOTr is favoring CLA in violation of Republic Act 3019 (Anti-Graft and Corrupt Practices Act), noting that the system requires undergoing bidding or a RIA from ARTA.

DOTr said Bautista’s July 12 letter to shipping lines does not offer any undue advantage or preference to CLA, but cited it only as an example, as shipping lines and shipping agents are free to subscribe to any other similar provider.

PPA’s container monitoring system

The issue of container deposit return is multi-faceted. The Philippine Ports Authority (PPA), a DOTr-attached agency, is also trying to address the problem by pushing for the implementation of a container registry and monitoring system contained in PPA Administrative Order (AO) No. 04-2021.

Among others, PPA AO 04-2021 seeks to prevent port congestion; it also requires a container insurance policy in lieu of the container deposit. Implementation of the system, however, has been deferred indefinitely due to widespread opposition from stakeholders and business groups which claim the policy will unduly jack up costs.

For the PPA system, ARTA had found “no sound legal and empirical basis” for its establishment. ARTA recommended that the port agency instead explore “cost-effective alternatives” to “address potential congestion without burdening stakeholders”.

The recommendation followed an ARTA re-evaluation of PPA’s regulatory impact statement on the system’s operating rules based on PPA AO 04-2021.