HomeBreaking NewsDTI endorses use of CLA to address container deposit problem

DTI endorses use of CLA to address container deposit problem

  • The Department of Trade and Industry urged members of the Association of International Shipping Lines (AISL) to subscribe to the Container Ledger Account (CLA) as an alternative to address the longstanding issue on container deposits
  • Trade Secretary Ramon Lopez said DTI “believes that the CLA is a viable option in addressing the issue of container deposits”
  • Only nine out of 36 AISL member shipping lines are using CLA
  • CLA is a voluntary solution to simplify container deposit management between the shipping line and consignee/agent
  • The system began pilot-testing in the Philippines in December 2021

The Department of Trade and Industry (DTI) “strongly” urged members of the Association of International Shipping Lines (AISL) to subscribe to the Container Ledger Account (CLA) as an alternative to address the longstanding issue on container deposits.

In a letter dated June 13 addressed to AISL president Patrick Ronas, Trade Secretary Ramon Lopez said DTI “believes that the CLA is a viable option in addressing the issue of container deposits.”

He pointed to the system’s “many positive benefits”, including drastically cutting procedures, time, and cost and improving competitiveness of small and medium enterprises.

CLA is a voluntary solution to simplify container deposit management between the shipping line and consignee/agent. The system began pilot-testing in the Philippines in December 2021.

Lopez’s endorsement is “a clear manifestation of the clamor of the business community to replace the present container deposit practice in the Philippines with a better alternative,” AISL said in a statement.

“The endorsement letter from the DTI Secretary will now prod international shipping lines to revisit their existing procedures on container deposit and introduce an option that will once and for all ease the financial burden currently confronting business and industry stakeholders,” the association added.

AISL earlier tapped Malaysia-based D&D Control (M) Sdn Bhd to offer an alternative solution to the long-standing issue of the return of container deposits in the Philippines.

Currently, only nine shipping lines are onboarded in the CLA, while 51 consignees and freight forwarders, and 99 customs brokers, container freight station and warehouse operators are already subscribed to the system, according to CLA’s Philippine website.

AISL has 36 member lines.

Lopez said several international shipping lines requested DTI’s endorsement of CLA during a meeting last April, and that several industry associations also sent letters to DTI asking to support CLA. These associations apart from AISL are Association of Off-dock CFS Operators of the Philippines, Confederation of Truckers Association of the Philippines, Philippine Liner Shipping Association, Philippine Multimodal Transport and Logistics Association, Inc.; Port Users Confederation of the Philippines, and Supply Chain Management Association of the Philippines.

The DTI chief noted the issue of container deposit refunds is a longstanding issue that the private sector has been raising to the DTI for the past years.

He said DTI recognizes the purpose of requiring a container deposit which is to cover for possible loss, damages, demurrage, or detention of containers, but noted that “much delayed refund of these deposits to consignees or customs brokers is estimated to be reaching an average of three (3) months or longer, resulting in unreturned container deposits reaching millions of pesos.”

He said the “constrained cash flow is a serious concern affecting the competitiveness of stakeholders, especially small and medium enterprises.”

CLA has been implemented since 2018 in Malaysia, which also encountered problems with the return of container deposits. CLA is now being used by 44 shipping lines and over 2,000 consignees and agents in 14 ports in Malaysia. Several of those shipping lines and shipping agents using CLA are also operating in the Philippines.

In the Philippines, D& D has set up a Manila office, Container Ledger Account Phils., Inc. CLA has been granted a patent in Malaysia. Patents in the Philippines and Indonesia have also been applied for last year.

Mahendrarajah Selvaraja (Mahen), president and chief executive officer of D&D, earlier said CLA can help manage container deposit online or replace the deposit with a one-time security payment.

Mahen said CLA will reduce procedures, time, and costs; improve competitiveness, and level the playing field between big and small and medium organizations.

In a presentation last year to industry organizations, Mahen said CLA will eliminate the administrative burden of shippers who have to prepare various documents in order to claim their container deposits from various shipping lines.

The system can improve cash flow of users since they will only need to deal with one party and won’t have to post container deposits for every shipping line they use. Through CLA, users can provide the container deposit or a security amount for use with all their containers regardless of the shipping line.

To use CLA, consignees, importers, freight forwarders, and customs brokers may register on the CLA platform www.clap.ph and choose between two options: deposit ledger and cash ledger.

With the deposit ledger, users will be depositing an amount depending on their TEU (twenty-foot equivalent unit) volumes and this amount will be refunded though the CLA upon request.

Once the empty container is returned to the depot, the stakeholder can already request for a refund through CLA, which will immediately inform the shipping line to release the deposit, which will then be refunded to the stakeholder also through CLA.

For the cash ledger, the user will no longer have to post a container deposit but will have to provide a security amount depending on the user’s monthly TEU volumes.

Another option implemented in Malaysia which can also apply in the Philippines is the CLA Credit, available for VIPs of shipping lines and users with high volumes of containers.

Mahen said they can also sit down with industry associations to discuss the suggestion to allow an association to provide a guarantee so its members won’t have to provide a deposit or security individually.

The fees for the use of CLA are P200 per TEU for using the deposit ledger and P100 per TEU for the cash ledger.

The return of container deposits is one of the long-standing issues in the industry and has been the subject of various meetings and discussions. The government earlier tried to address the issue through a joint administrative order on local charges imposed by international shipping lines, but the order did not materialize. Last January, the House of Representatives has approved on third and final reading House Bill No. 10575 that seeks to strengthen government agencies’ oversight functions over the shipping charges imposed by international shipping lines operating in the Philippines. – Roumina Pablo

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