Pasig port to implement lower tariff than originally stipulated

Completed wharf widening project of TMO Pasig Wharf in 2020. Screengrab from PPA Port Construction and Maintenance Department's video.
  • Pasig port’s new operator will implement from June 1 cargo-handling tariff lower than originally stipulated at the terminal
  • The decision comes after some port users had complained that the Tier 3 tariff will drive away clients and jack up the cost of shipments, especially between Manila and Palawan
  • To accommodate port users’ requests, Mega Lifters said it unbundled general cargoes and reduced rates as well as adopted socialized rates on some commodities such as returning empty fish boxes, crates and drum
  • The Pasig Port Users Against PPA Tariff Increases had complained that the Tier 3 tariff increased the rate for dry bulk cargo by 949% and general cargo by 614.94%

Pasig port’s new operator will implement from June 1 cargo-handling tariff lower than originally stipulated at the terminal.

The decision is in recognition of earlier complaints by port users that original rates will drive away clients and jack up the cost of shipments, especially between Manila and Palawan.

Mega Lifters Cargo Handling Corp., in a message to PortCalls, acknowledged that when they took over the management and operation of Pasig port, shipping companies, shippers and consignees “complained of the high Tier 3 rates compared with the 2013 cargo handling rates they used to pay the former port operator.” Mega Lifters won the bidding for Pasig Port’s 15-year port terminal management contract in May 2022 and took over in April 2024.

Pasig Port has been categorized and was bid out under Tier 3 of the Philippine Ports Authority’s (PPA) Port Terminal Management Regulatory Framework (PTMRF). Under PPA Administrative Order (AO) No. 10-2019, operators awarded contracts for ports categorized as Tier 3 will have to use a uniform port tariff as base tariff.

The Pasig Port Users Against PPA Tariff Increases, in an interview with PortCalls, complained that Tier 3 tariff increased the rate for dry bulk cargo by 949% and general cargo by 614.94%.

The group is composed of Movers and Managers Corp., domestic carriers, consignees and consignors.

Mega Lifters said they initially treated the port users’ concerns on a case-to-case basis.

“However, because of the growing clamor for lower rates, Mega Lifters undertook a thorough review of the simplified Tier 3 tariff rates to soften the impact of the Tier 3 tariff on port users, especially small businesses, even if it means losses to Mega Lifters,” the cargo-handling operator said.

“As a result of the study, some general cargoes were unbundled and the rates reduced, socialized rates are imposed on some commodities, such as returning empty fish boxes, crates and drum,” Mega Lifters added. It did not provide further specifics.

Stop Tier 3 tariff

Prior to the bidding of Pasig Port’s contract, the Pasig Port Users group in 2022 had already asked PPA as well as then-President Rodrigo Duterte and President-elect Ferdinand Marcos, Jr. to stop implementation of the Tier 3 tariff.

READ: Pasig river port users seek Palace probe of steep tariff hikes

Aside from the group, stakeholders and business groups, including the National Economic and Development Authority-Regional Development Councils VIII and IX, and Philippine Chamber of Commerce and Industry Tacloban-Leyte Inc., asked PPA in 2021 to suspend implementation of AO 10-2019 in various ports pending thorough consultation with stakeholders.

READ: NEDA regional council backs suspension of new port tariffs in Visayas

The Philippine Inter-island Shipping Association earlier requested the Lower House Committee on Transportation to review AO 10-2019, saying rates contained in the order are higher than the previous rates of Tier 3 ports and of North Port.

The Pasig Port Users said they have no issue increasing tariff at Pasig Port, but this should be at a much lower rate than Tier 3 rates and on a gradual basis. The group earlier proposed a tariff increase similar to that granted by PPA to Manila North Harbour Port, Inc.—operator of North Port in Manila North Harbor—in 2017: a 24% increase implemented in three tranches of 8% annually for three years.

Moreover, the group said they were only notified about the contract signing between PPA and Mega Lifters a few days after the fact. Also the Tier 3 tariff was imposed on May 1, giving them a short period of time to notify consignees and consignors.

The group said the new tariff at Pasig Port will cause clients to consider moving operations to other ports where tariff is lower. Alternate ports include North Port, and Manila Integrated Cargo Terminal, the private port just beside Pasig Port operated by Northstar Shipping & Marine Services, Inc.

They said shippers and, ultimately, the common consumers, particularly in Palawan, will suffer the brunt of the higher tariff.

Pasig Port mainly handles cargoes to various ports in Palawan. These include consumer goods, prime commodities, poultry, meat, motorcycles, and construction supplies. Back loads from Palawan to Manila include fish and other marine products.

The group said they estimate some members have already lost more than 25% of their usual business due to the higher tariff.

They said port users are proposing Mega Lifters lower the rates or to implement much lower increases gradually.

They noted, however, that lowering the rates may mean Mega Lifters may not be able to hit the contractually-fixed annual consignment fee — P166 million yearly or P13.833 million monthly exclusive of taxes — that they have to remit to PPA under their contract.

And even with Tier 3 rates, Mega Lifters will still not be able to achieve the consignment fees given volumes the Pasig Port is capable of handling. The group said it will be difficult to increase volumes in Pasig Port because of the depth of the draft of the river, limiting the size of vessels that can dock.

Aside from the increase in tariff, port users renting warehousing and office space inside the yard of Pasig Port face an increase in rental rates, which the group said may also force them to leave.

Pending case

Moreover, there is a pending case in a Manila court filed in 2022 in connection with the lease agreement between the PPA and Movers and Managers Corp., which for almost 40 years has been leasing the yard area at Pasig Port. The yard is included in the bidding for Pasig Port’s contract.

Movers and Managers has already vacated their office in the yard, and was able to release all empty containers recently. The company is awaiting the court’s decision on the case.

PPA in a statement sent to PortCalls said the impact of the Tier 3 tariff has “minimal impact in terms of absolute peso value.”

PPA added: “Thus, any increase in logistics cost cannot be attributed solely to the implementation of the Tier 3 tariffs. In fact, port charges collected by PPA only accounts for less than 5% in the total logistic cost. What should be observed and avoided is the use by unscrupulous shipping companies and other entities in charging exorbitant fees under the guise that it is the result of the Tier 3 rates.”

The ports authority noted that Tier 3 rates are “heavily regulated while other logistics rates are unregulated.”

It further explained: “PPA tariffs went through thorough evaluation, public hearing and eventually the approval of the PPA Board of Directors before its issuance in 2019. It was only after going such process and after ports have been awarded under the PTMRF that implementation of the new rates commenced. The lapse of time from 2019 up to present is quite significant, which also justifies the use of the new tariff rates.”

The ports authority said Tier 3 tariff “is simplified” and easier to implement compared to the previous tariff structure that had cargo classification that varied per port, which led to confusion in overall implementation.

“Moreover, PPA is fully committed to ensuring the provision of responsive, reliable, and efficient port services, and the Tier 3 tariffs will support port development projects and investments to answer the demand of increased quality of port services,” PPA said.

With regards to port operations, Mega Lifters has already provided and is currently utilizing three brand new forklifts for shifting and handling of cargoes, reducing the volume of vehicles along the apron waiting to be serviced by vessels.

“With an increased backup facility, Mega Lifters is now able to properly manage the flow of cargo vehicles along the port’s working apron. Cargo trucks are directed to the queuing and parking areas until its cargoes are ready to be serviced by the vessel,” Mega Lifters added.

Further, non-traditional cargo vehicles, such as tricycles and kuligligs, are now prohibited from directly delivering or withdrawing cargoes to or from the vessel.

Instead, these vehicles are directed to the port’s staging area where the cargoes are received or released.  Movement of cargoes from and to the staging area and the vessel is through by Mega Lifter’s forklifts or truck. – Roumina Pablo