Home » Customs & Trade, Maritime, Ports/Terminals » House bills propose standardization of foreign carriers’ charges

Two bills have been filed in the Lower House seeking to regulate and standardize local charges imposed by foreign shipping lines operating in the Philippines.

House Bill (HB) No. 4316, filed by Bagong Henerasyon Partylist representative Bernadette R. Herrera-Dy, aims to regulate and standardize local charges imposed at both origin and destination by foreign shipping lines. This is to comply with existing laws and obligations and contracts and the International Commercial Terms (INCOTERMS).

On the other hand, HB 4462 filed by Ang Probinsyano Partylist representative Ronnie L. Ong mandates the Maritime Industry Authority (MARINA) to promote fair and transparent destination and other shipping charges among freight forwarders and agents of international shipping lines.

Ong, together with ACT-CIS Partylist representative Eric Go Yap, also earlier filed House Resolution No. 198 urging the Philippine government to immediately address the high cost of imports resulting from “excessive and questionable” destination charges imposed by international shipping lines and agents.

In her explanatory note, Herrera-Dy said the “excessive and unnecessary fees, charges and surcharges imposed as origin and destination charges as well as unconscionable fees imposed on the management of empty containers by international shipping lines” undermine the country’s competitiveness.

Charges being collected at will

Herrera-Dy said these charges collected at will by international shipping lines have “enormous impact on the economy,” as such charges increase the cost of importing raw materials and intermediate goods, escalate the prices paid by the domestic consumer, impair government collection of correct taxes, and undermine the privity of obligations and contracts principal.

Herrera-Dy said that through the bill, the Philippine government “asserts its inherent right to implement and enforce compliance with existing local and international consumer trade laws” to protect the interests of the consumer, promote general welfare and establish standards of conduct for business and industry, as well as enforce compliance with INCOTERMS “for the protection and fair treatment of Philippine domestic manufacturers, exporters, and importers.”

Ong in his explanatory note said that “despite being an important national concern and despite our neighboring countries already issuing regulations on similar problems, the same, however has not been squarely addressed by the Philippine government.”

“The cry of consumers, port users, and businesses [has] fallen on deaf ears despite them strongly pushing for the issuance of a Joint Administrative Order or an Executive Order in the past,” Ong pointed out.

He noted that government inaction can be attributed to the jurisdictional problem that no government agency is “owning up to the responsibility of addressing the high international shipping costs.”

This was the problem with the JAO crafted by the Department of Trade and Industry (DTI), Department of Transportation (DOTr), and Department of Finance (DOF) to regulate local charges of foreign shipping lines as no law can support the proposed policy. It was later decided to give more teeth to the JAO by turning it into an EO, but the problem is again the lack of a law that will back it up.

Ong said HB 4462 aims to address this problem by mandating MARINA “to be true to its mandate under Presidential Decree (PD) No. 474 and Executive Orders (EO) No. 125 and 125-A, both series of 1987, especially in terms of determining, fixing and prescribing charges pertinent to the operation of public water transport utilities, facilities and services except when rates are established by international bodies and, as included and emphasized in this bill, by free market forces.”

Under HB 4462, MARINA will allow imposition of destination and other shipping charges by freight forwarders and agents of international shipping lines not included in freight charges or freight quotation unless covered by a contractual arrangement between the forwarder and agent of the foreign shipping line and the shipper or consignee.

The proposed policy, however, noted that MARINA will accord due respect to the imposition by foreign shipping lines of freight charges as dictated by free market forces. MARINA will also respect negotiations, collections or modes of transaction between sellers and buyers that incorporate INCOTERMS and any subsequent update or revision to it.

Imposing destination and other charges will also only be allowed when MARINA passes upon the reasonability or legitimacy of the said charge after a public hearing is done where applicant forwarders and agents are required to justify the collection of any destination charge to clarify the nature of the charge and the service rendered in exchange for such charge.

Reasonable limit on charges

In addition, MARINA may set a reasonable cap on the charge to be imposed by forwarders and agents of international shipping lines. These include terminal handling cost, emergency cost recovery charge, container imbalance charge, bunker price adjustment, foreign currency adjustment, document fee, container cleaning fee, and their other variations.

HB 4316, on the other hand, states that no origin and destination charges will be billed and/or charged by foreign shipping lines to Philippine consignees in the absence of contractual relationship with carriers, an/or if they are not obligated to pay them under INCOTERMS.

All revenues generated by foreign shipping lines from approved local charges for local services within the Philippines will be imposed with the appropriate taxes (income tax and value-added tax) in accordance with the applicable provisions of the National Internal Revenue Code of the Philippines.

Return of container deposits

In addition, container deposits must be returned within 15 days after empty containers are received in the yard or container terminal of the shipping line. Demurrage and detention charges, meanwhile, will be limited to the actual lease cost per day rate beyond the allowable free time granted by the shipping line to the consignee, but under no circumstances should these charges exceed the depreciated market value of the container.

Under HB 4462, MARINA will prohibit the imposition of container deposits if the shippers or consignees have already paid the container insurance and given company guarantee to return the empty containers.

After notice and hearing, MARINA may impose penalties on any forwarder or agent found to have violated the proposed policy, ranging from P500,000 for the first offense, not less than P500,000 and no more than P1 million for the second offense, and not less than P1 million but not more than P5 million for the third offense, in addition to the cancellation of the accreditation and/or blacklisting of the forwarder, agent, or shipping line.

HB 4462 also orders MARINA to establish, in coordination with DTI and other concerned agencies and stakeholders, an information portal for publishing and monitoring the daily all-in freight charges per route and allowable destination and other shipping charges imposed by foreign shipping lines, their freight forwarders and agents, and for disseminating shipping cost information to shippers and consignees.

MARINA and DTI will also develop, in coordination with private stakeholders, a program to educate all Philippine shippers and consignees on how to negotiate using INCOTERMS, freight, destination and other shipping charges imposed by forwarders and agents of foreign shipping lines, the best practices to manage and control the supply chain, and updates on the implementation of the bill once passed into law.

Both bills have been referred to the Committee on Transportation where they are now pending. No counterpart bill has been filed in the Senate. – Roumina Pablo

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