Several Philippine government agencies have presented to stakeholder organizations the draft joint administrative order (JAO) that will regulate the local charges imposed by international shipping lines and provide measures to address port congestion.
Stakeholder organizations present during the February 14 public consultation have until February 22 to submit their comments on the draft JAO, a proposed joint agreement between the Department of Trade and Industry (DTI), Department of Finance (DOF) and Department of Transportation (DOTr) intended to regulate origin and destination charges imposed by foreign carriers, and lessen or eliminate port congestion.
DTI undersecretary Rowel Barba, in an interview with PortCalls on the sidelines of the public hearing, said the involved government offices will meet “hopefully [on the] first week of March” to finalize the draft JAO, which will then have to be approved and signed by the trade, finance, and transport secretaries.
After the JAO is signed, the Bureau of Customs (BOC), Philippine Ports Authority (PPA), Bureau of Internal Revenue (BIR), and Maritime Industry Authority (Marina) shall craft and issue their own orders to implement the joint order. These agencies’ orders will then be subject to public consultation, Barba noted.
Barba said the JAO was crafted to promote efficient operation of the country’s ports and facilitate the importation and exportation of goods to attract more investments, noting that issues in the ports are one of the reasons reportedly hampering smooth movement of products.
BOC will lead in implementing the JAO, having jurisdiction over foreign shipping lines and container yards under the Customs Modernization and Tariff Act (CMTA).
Space availability at container yards
To maintain a port utilization rate of 70% in the National Capital Region (NCR) and Regions 3 and 4, one of the proposed policies under the draft JAO is for foreign shipping lines to ensure that space is available in empty-container yards and, if necessary, to build or lease container yard space for their empty boxes.
Shipping lines shall also submit to BOC an inventory of their empty containers indicating date of arrival, status, and current location, and submit every month the schedule of exportation of empty containers.
In times of port congestion, as declared by DOTr upon the recommendation of PPA, shipping lines will be mandated to send sweeper vessels to evacuate empty containers.
BOC, for its part, shall immediately dispose of seized or abandoned containers and facilitate their removal from ports.
PPA, meanwhile, shall form a master plan to develop and expand existing ports in the Philippines, as well as develop new ports, to be able to keep up with the country’s economic growth.
Container yard operators and owners shall also submit to BOC a monthly summary of empty containers stored in yards in NCR and Regions 3 and 4, and another monthly report to other concerned agencies for monitoring purposes.
Container yard operators shall also recommend the evacuation of specific empty containers “under the parameter of non-sustainability for export shipment as well as the long dwell time.”
On the regulation of international shipping lines, particularly container carriers, “no origin and destination surcharge other than freight shall be charged by international shipping lines to Philippine consignees if the Philippine consignee does not have any contractual relationship with the carriers, and/or are not obligated to pay them under INCOTERMS [International Commercial Terminology],” says the JAO.
A shipping line representative during the hearing explained, however, that INCOTERMS is between the buyer and seller, and that the shipping lines only transport the shipment.
Inclusive freight charges
The quoted freight rates shall also include all charges, such as but not limited to, terminal handling cost, container imbalance cost, emergency cost recovery charge, and bunker price adjustments.
Other local charges to be applied by international shipping lines that call at Philippine ports must be approved by BOC, which shall issue guidelines for imposing such charges.
All revenues generated by foreign shipping lines from BOC-approved local charges shall be levied appropriate taxes in accordance with the applicable provisions of the National Internal Revenue Code of the Philippines.
On container deposits, all foreign liners, including shipping agents and general agents, must refund them as quickly as possible, and the recommended period is 15 days after the empty container has been returned to the container yard.
Foreign liners will be prohibited from imposing an indirect lien and holding the release of the shipment of a consignee that has an outstanding demurrage and detention collectibles from a previous and different transaction with the shipping line.
Foreign carriers are also prohibited from withholding and holding the refund of container deposits posted for returned empty containers because the consignee has outstanding demurrage and detention collectibles from a previous and different transaction with the shipping line.
The draft JAO also provides for penalties for violations, pursuant to Section 1430 (Violations of This Act and Rules and Regulations in General) of the CMTA.
All concerned agencies shall also regularly review their rules, policies, and programs in relation to the JAO and amend/repeal rules, regulations that are no longer needed, are redundant, or impose undue regulatory burden on exporters, imports, shippers in general, shipping agents, or consumers.
An oversight committee composed of representatives from the DTI, DOTr, DOF, PPA, Marina, and Subic Bay Metropolitan Authority shall be created to monitor the implementation of the JAO. DTI’s Competitiveness Bureau shall act as the Committee secretariat.
The JAO is part of DTI’s commitment to stakeholders during its 1st Logistics Services Philippines Conference held last December to find measures to address the high cost of international shipping, a frequent complaint among stakeholders.
For months now, stakeholders have complained of high utilization at Manila ports and difficulty in returning empty containers to container depots. The problems escalated last year due to a confluence of events that included bad weather leading to delayed vessels and berthing issues; high yard utilization at container terminals due to the peak season; limited capacity of container depots; and trade imbalance (three laden containers coming in against one laden container for export, leading to more empty containers in the country at any given time)—all of which have caused a knock-on effect on the supply chain. – Text and photo by Roumina Pablo