DTI seeks feedback on draft freight forwarding rules

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DTI seeks feedback on draft freight forwarding rules
Image by Gerd Altmann from Pixabay
  • The Department of Trade and Industry is seeking feedback on draft sea freight forwarding rules
  • The proposed administrative order sets minimum standards for recognizing freight forwarders

The Department of Trade and Industry (DTI) is seeking public comments on proposed rules for freight forwarding.

The draft administrative order aims to establish minimum standards and requirements for recognizing freight forwarders, and intends to amend the obsolete Administrative Order (AO) No. 06-2005 of the defunct Philippine Shippers’ Bureau. This AO, which outlines the current rules on sea freight forwarding, was issued in 2005.

Sea freight forwarders, accredited by the DTI, were previously under the Philippine Shippers’ Bureau until its dissolution in 2014. The proposed DAO aligns with Republic Act No. 11032, the Ease of Doing Business and Efficient Delivery of Government Services Act of 2018, which mandates streamlined services and reduced bureaucratic red tape.

The DAO proposes replacing the Certificate of Accreditation (COA) with a Certificate of Recognition (COR), valid for five years. It also eliminates the need for separate registration for branch offices, as long as their establishment is declared before operation.

It categorizes sea freight forwarders into non-vessel operating common carrier (NVOCC), cargo consolidator (CC), international freight forwarder (IFF), domestic freight forwarder (DFF), and breakbulk agent (BBA).

The proposed paid-up capital requirements should not be less than the following:

  • P5 million for NVOCC
  • P4 million for CC
  • P3 million for IFF
  • P2 million for BBA
  • P1 million for DFF

For companies applying for multiple categories, the paid-up capital requirement will be based on the highest category. Currently, minimum paid-up capital is mandatory only for corporations and partnerships, such as P4 million for NVOCC, P2 million for IFF, and P250,000 for DFF. The proposed regulations introduce new paid-up requirements for CC and BBA.

The DAO also mandates proof of cargo insurance through an insurance policy and official receipt, covering either Merchandise in Transit (Floater) Insurance or a comprehensive cargo liability insurance for freight forwarders and transport operators between the Philippines and international destinations.

It mandates two key officers, like owner, president, chief operating officer, general manager, or operations manager, to undergo training—150 hours for IFFs and 40 hours for DFFs. Across the categories, one key officer must have three years’ experience in shipping, freight forwarding, or related activities. CC and NVOCC applicants need training in consolidating export cargoes as part of their three-year freight forwarding experience.

The filing and processing fees for applications will increase to P12,500 for NVOCC, P10,000 for IFF, and P7,500 for DFF. CCs will have a processing fee of P11,500, while BBAs will be charged P8,500.

Firms applying for an additional category will pay P3,500 for each, with the validity period matching the first recognized category.

A P30 documentary stamp tax applies per application, regardless of the certificate issuance mode. No fee is charged for online-generated CORs, but a P500 fee is applied for a hard copy.

DTI aims to process recognition applications within three working days. COR renewal must be done two months before expiration, with a surcharge of 50% if filed within one month after expiry, and 100% if filed later.

To ensure compliance, the DTI will exercise visitorial power, entering establishments engaged in DAO-covered transactions. The draft DAO lists unlawful acts, including engaging in freight forwarding without recognition and misrepresentation of recognition.

Violations will be addressed under existing uniform procedural rules and regulations. Existing COAs under PSB AO 06-2005 will remain valid until expiry, and applications received before the DAO’s effectivity will be processed based on PSB AO 06-2005 criteria. COR holders issued within a year after the DAO’s effectivity must comply with capitalization requirements within one year of issuance.

In 2021, DTI had public consultations for its proposed DAO on freight forwarding rules. Earlier, in November 2019, it conducted a public hearing for a then-proposed DAO with provisions similar to the new draft. – Roumina Pablo