Home » 3PL/4PL, Customs & Trade, Ports/Terminals » JAO regulating foreign carriers’ charges out in a week or two—DTI chief

The joint administrative order (JAO) that will regulate local charges imposed by international shipping lines servicing the Philippines will be out in one or two weeks, according to Trade and Industry Secretary Ramon Lopez.

Malapit na ’yun [It’s almost there], so give me about maybe one or two weeks. That draft is with our undersecretaries right now,” Lopez said in a speech at the general membership meeting of the Philippine Exporters Confederation, Inc. on June 18.

Lopez is referring to the undersecretaries of the Department of Trade and Industry (DTI), Department of Finance (DOF), and Department of Transportation (DOTr). These agencies’ secretaries will be the signatories of the draft JAO, a proposed joint agreement intended to regulate origin and destination charges imposed by foreign carriers, and minimize or eliminate port congestion.

The trade chief said finalizing the draft JAO took a while because consultations had to be done and additional comments gathered among agencies concerned. He added that he had spoken with Transport Secretary Arthur Tugade, who committed support for the JAO.

The JAO is part of DTI’s commitment to stakeholders during the agency’s 1st Logistics Services Philippines Conference held last December to find measures to address the high cost of international shipping, a frequent complaint among stakeholders.

After its first presentation at a public hearing last February 14, the draft has since been reviewed and revised by the agencies involved, led by DTI, Bureau of Customs (BOC), and DOTr.

Lopez said that even while the JAO is still being finalized Lopez, BOC has already issued orders resulting in the decline in utilization of Manila’s international terminals, both of which had experienced congestion late last year until early this year.

The trade chief said the JAO will identify allowed shipping charges “that will be included in that charge sheet and no longer including charges that will simply add cost and …[are] really unusual.”

BOC deputy commissioner Atty. Edward James Dy Buco, in a speech last April, said BOC can now regulate international shipping lines and container yards, as well as other third party logistics service providers, with  the passage of the Customs Modernization and Tariff Act (CMTA).

Specifically, Section 1226 (Supervision and Regulation of Third Parties) of CMTA states that third parties such as foreign carriers, freight forwarders, and container yards, among others, transacting with BOC on behalf of importers and consignees shall be treated equally as true importers or consignees.

Key provisions of JAO

One of the salient points proposed in the latest draft JAO, according to Dy Buco, is that other local charges to be applied by all international shipping lines, freight forwarders, and customs brokers that handle import and export cargoes in the Philippines “must be approved by the Bureau of Customs.”

He said BOC shall issue the guidelines on this matter.

To ensure transparency in the imposition of costs, another proposal is for all international shipping lines to submit regularly to the DTI and BOC their monthly average freight rates per route.

All international shipping lines, including shipping agents and general agents, shall also implement a procedure for the speedy refund of container deposits. Container deposits posted with international shipping lines, shipping agents, and general agents shall be refunded within 15 days after the empty containers are received in the container yard or container terminal of the shipping lines.

The cost of recovery of all international shipping lines for demurrage and detention charges shall be determined by BOC, Dy Buco noted.

“In cases when international shipping lines or freight forwarders cannot provide adequate container yard space, detention and demurrage charges shall not be imposed,” he added.

On addressing port congestion, a key point in the draft JAO is for international shipping lines and freight forwarders to ensure that space is available in their designated container yards.

If the designated container yard does not accept the empty container for reasons beyond the control of the trucker, “no demurrage or detention charge shall be imposed by the shipping lines and freight forwarders,” the draft statesd.

Moreover, international shipping lines shall pay truckers, customs brokers, and freight forwarders an empty container rejection fee, whenever applicable.

Terminal operators, on the other hand, shall limit the entry of empty containers to those with special permit to load (SPL), which are empties that are for immediate loading onto the vessel. Dy Buco said this practice is now being done today, pursuant to an order released by BOC.

Another major point is for foreign carriers to co-load their empty containers and ensure that the number of empty containers loaded onto the vessel is almost proportional to the number of containers discharged.

More recommended actions

BOC, for its part, shall expedite the accreditation and activation of inland clearance depots or dry ports, as they can also serve as additional space for empty containers.

Also proposed is for BOC to study and recommend to the Philippine President “the creation of a single district in Metro Manila.” This would mean BOC’s two district offices in Manila—the Port of Manila and Manila International Container Port (MICP)—would be merged into one.

With the merger, Dy Buco said vessel queuing will be lessened because whether the ship’s destination is POM or MICP, it can still load and unload in either of the terminals. He noted, however, that this measure is beyond the powers of the Customs commissioner and requires an order from the President to actualize.

Further, under the draft JAO, terminal operators and container yard operators shall maintain their utilization at 70%, a rate to be strictly monitored and supervised by BOC.

International shipping lines and container yard operators shall also submit an inventory of their empty containers. In addition, foreign carriers need to submit their program on re-exporting their empty boxes.

Dy Buco said that eventually, monitoring will be done electronically as BOC is drafting an order requiring container yards to have electronic coordination with BOC on the submission of inventories.

Dy Buco noted that the draft JAO provides a “permanent solution to congestion.”

After the JAO is signed, BOC, Philippine Ports Authority, Bureau of Internal Revenue, and Maritime Industry Authority will issue their own orders to implement the JAO; these orders in turn will await comment through public consultation. – Roumina Pablo

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