Fees charged by international shipping lines, container depot operators, and truckers operating in the Philippines will soon be regulated by government agencies, the move designed to lower high shipping charges and address port congestion. Local surcharges by foreign carriers will also be “banned”. In addition, an order “normalizing utilization rate of container depots in Manila back to 70%” will be issued, according to the Department of Trade and Industry (DTI), one of the agencies set to sign the order.
A joint administrative order (JAO) will be released in mid-February specifying “rules that will govern fees and charges of shipping lines, port operators, truckers, and port users to lower operating costs and improve logistics efficiencies,” Trade Secretary Ramon Lopez said in a press statement.
Apart from DTI, signing the JAO are the Department of Finance (DOF), Department of Transportation, Bureau of Customs (BOC), Maritime Industry Authority, Philippine Ports Authority (PPA), and Subic Bay Metropolitan Authority. The drafting of the JAO was announced to several stakeholder organizations in a meeting called by DTI on January 29.
Under the JAO, the BOC will “regulate and monitor all fees concerning empty container returns and charges of shipping lines. Shipping lines will also be banned from charging fees in the Philippines. Instead, all (local) charges should be included in freight and other origin charges,” according to DTI.
Association of International Shipping Lines general manager Atty. Maximino Cruz told PortCalls in a text message that the association “does not really mind government agencies… craft(ing) a Joint Administrative Order aimed… (at) address(ing) congestion and empty container management as long as shipping lines are given the opportunity to comment on the draft JAO and be given the right to be heard for their consideration.”
The JAO is part of DTI’s commitment to stakeholders during its 1st Logistics Services Philippines Conference held last December to find measures to address the high cost of international shipping, a frequent complaint among stakeholders.
For months now, stakeholders have complained of high utilization at Manila ports and difficulty in returning empty containers to container depots. The problems escalated last year due to a confluence of events that included bad weather leading to delayed vessels and berthing issues; high yard utilization at container terminals due to the peak season; limited capacity of container depots; and trade imbalance (three laden containers coming in against one laden container for export, leading to more empty containers in the country at any given time)—all of which have caused a knock-on effect on the supply chain.
Separate from the JAO, the PPA and BOC will issue a Joint Memorandum Circular “aimed at normalizing utilization rate of container depots in Manila back to 70%.”
CMTA as JAO basis
BOC Assessment and Operations Coordinating Group deputy commissioner Atty. Edward James Dy Buco told PortCalls in a text message that BOC will lead the development of the JAO, whose basis is the authority of BOC to regulate foreign shipping lines and container yards under the Customs Modernization and Tariff Act (CMTA).
Section 1226 (Supervision and Regulation of Third Parties) of the CMTA states that “third parties transacting with the Bureau on behalf of importers and consignees shall be treated equally as true importers or consignees.”
Third parties may refer to logistics providers, importers, exporters, carriers, airlines, shipping lines, shipping agents, forwarders, consolidators, port and terminal operators, and warehouse operators, if such persons or entities transacted with BOC.
Regulation of customs facilities and warehouses
Under the CMTA, BOC also has jurisdiction over customs facilities and warehouses (CFWs), which include container yards, container freight stations, seaport temporary storage warehouses, airport temporary storage warehouses, inland container depots, and other premises used for customs purposes.
According to DTI, Dy Buco said there are plans to make charges of container depots at par with other countries to prevent shipping lines from “abandoning” empty containers in Philippine container yards.
BOC has actually drafted the customs administrative orders on the accreditation of third parties and CFWs, but these still await approval by DOF, the bureau’s mother agency.
Prior to CMTA, no government agency had direct jurisdiction over foreign shipping lines, as Marina only covers domestic maritime enterprises.
Overstaying laden containers
Under the JAO, the reckoning period for overstaying of laden containers will also be changed to ensure that empty containers don’t overstay and are evacuated from the country at the soonest time possible.
Dy Buco earlier said a customs memorandum order (CMO) has been drafted for the purpose. Instead of the current practice of counting the 90 days based on the date on the equipment interchange receipt (EIR), the draft CMO orders the reckoning period to be the date of discharge of the last container from the vessel.
BOC spokesperson Atty. Erastus Sandino Austria also earlier explained that shipping lines, which own the containers, may be compliant with the 90-day period if the reckoning period is based on the EIR, but with the new reckoning date, the period prior to the issuance of EIR could be more than 90 days.
The JAO is also looking at “using abandoned containers for low-cost housing, evacuation centers, and cold storage facilities for fish ports.”
To reduce the number of containers entering the port and improve efficiencies, the JAO will “allow shipments to pass through Batangas and Subic Ports, closer to their destination or consignees. This will help locators of the Philippine Economic Zone Authority find a more efficient option than the port of Manila.”
After the issuance of the JAO, Lopez said the DTI and concerned agencies will work on a roadmap for the logistics sector and provide a long-term plan to improve efficiencies and costs.
Three years ago, the private sector had already come up with its own logistics roadmap.
“Our ports, roads, and other infrastructure should be able to handle the added capacity brought about by our robust economic growth. Thus, we enjoin all concerned government agencies and stakeholders to share their insights to formulate a long-term solution,” Lopez said.
Before the issuance of the JAO, a public consultation will be held to gather comments and suggestions from stakeholders. Afterwards, involved agencies will release a corresponding memo/directive to implement their parts in the joint order.
Prior to the plan to issue a JAO, several measures were undertaken to address the problems, including the transfer of empty containers from Manila to Subic port for evacuation out of the country, and implementation of several customs policies to fast-track the release of containers from ports. – Roumina Pablo