Home » 3PL/4PL, Ports/Terminals, Press Releases » PH exporters appeal for measures to ease empty container woes

The Philippine Exporters Confederation, Inc. (Philexport) is calling on government and private sector stakeholders to work together to find solutions to the issue on empty containers, which is hurting the cash flow of exporters and causing delivery problems.

During a recent board meeting with government board members, a number of Philexport trustees sounded the alarm on the issue and resolved to convene an emergency meeting to discuss appropriate measures, PhilExport said in its latest news report.

“This is an issue that needs to be solved first in the short term and eventually with institutionalized long-term measures. The government should accept that this is a real problem that is causing very serious cash flow and delivery problems (for) micro, small and medium enterprises (MSMEs), especially exporters,” Philexport president Sergio Ortiz-Luis Jr. said during the meeting.

A case in point, the confederation noted, is that of furniture exporter and local retailer Designs Ligna, whose president, Nicolaas de Lange, a former PhilExport board member, attended the board meeting to air his complaints.

“We have been experiencing delays of an average of two weeks on our imports. For us MSME-exporters who rely on imported raw materials, it heavily affects our schedule and cash flow,” said De Lange, also the chairman of the Chamber of Furniture Industries of the Philippines.

De Lange said his company is already being charged by shipping lines about US$275 for container imbalance fees. “This should be enough for them to move their empty containers out,” he pointed out.

Container imbalance charge is defined as a cost charged for relocating large quantities of empty containers between countries where there is an imbalance of trade, Philexport said.

PhilEexport and the Export Development Council, together with the Department of Trade and Industry, Bureau of Customs (BOC), Philippine Ports Authority (PPA), Association of International Shipping Lines, Philippine Chamber of Commerce and Industry, and container yard operators, are seeking a holistic solution to the issue.

The confederation said private stakeholders have cited the need for shipping lines, which own the empty containers, to build their own container yards to “park” their empty containers. In the meantime, Philexport said shipping lines will have to send sweeper vessels to evacuate the empty containers to decongest the ports and container yards, which are already at full capacity. However, the confederation said that according to container yard operators, shipping lines have not made any such move so far, presumably due to cost issues.

New congestion factor

Meanwhile, at a separate supply chain forum, private stakeholders concluded that unlike in the 2014 port congestion, queues at the ports are now caused by the big number of empty containers that are being moved back and forth in container yards in search of “parking space”. Philexport said the ideal situation is for all these empties to be used to load export goods.

The reality is far from ideal: there are more imports entering the Philippines than exports (ratio of 3-to-1), leaving more empty containers in the Philippines.

The return of empty containers has been a longstanding issue that has especially escalated in 2018 due to a confluence of events: bad weather that has delayed some vessels and led to berthing issues; high yard utilization at container terminals due to the peak season; limited capacity of outside depots; and trade imbalance—all of which have had a knock-on effect on the supply chain.

Container Depot Alliance of the Philippines (CDAP) president Roger Lalu last October said utilization at CDAP members’ container yards in Metro Manila was at 115%.

He noted that previously, members’ container yards had a capacity of 21,000 twenty-foot equivalent units (TEUs), but this figure has now dwindled to 13,000 TEUs after some members closed their depots.

He added that the dwell time of empty containers has also doubled to 30 days from 15 days.

Lalu said some members are already setting up container yards outside of Metro Manila, particularly in Bulacan. He noted there are two new yards with combined capacity of 7,500 TEUs.

Barging containers to Subic

In a Lower House Committee on Transportation hearing on November 28, 2018, Department of Transportation officer-in-charge Undersecretary for Maritime Fernando Juan Perez said one of the measures the transport department has planned is the transfer of empty containers by barge from Manila to Subic port for pickup and evacuation by vessels there.

Under the plan, Perez said shipping lines will be instructed to direct the return of empty containers to North Port, Manila’s domestic terminal, where barges can transport them to Subic port.

The initial phase of the project was targeted for December 4, but according to PortCalls sources, as of December 14, no shipping line has yet barged their empty containers although some already have plans to do so.

During the same hearing, BOC Assessment and Operations Coordinating Group’s deputy commissioner, Atty. Edward James Dy Buco, said the customs agency has drafted a customs memorandum order (CMO) that will change the reckoning period for the 90-day rule on the stay of containers in the country to ensure that empty containers don’t overstay and are evacuated at the soonest time possible.

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 earlier explained that shipping lines may be compliant with the 90-day period if the reckoning period is based on the EIR, but he noted that the period prior to the issuance of EIR could be more than 90 days.

Under customs rules, if a container stays in the country beyond the allowed period, it will be considered an importation, with duties and taxes to be paid for by the shipping line.

Aside from the CMO, Dy Buco said BOC will also be regulating container yards to ensure the 90-day rule is followed.

According to Dy Buco, under the Customs Modernization and Tariff Act (CMTA), BOC has the authority to supervise and regulate third parties, which include container yards, as defined in Section 1226 (Supervision and Regulation of Third Parties).

PPA, meanwhile, told PortCalls that it is looking to develop another port in Luzon—particularly in Bataan, as one of the infrastructure solutions to the current difficulty in returning empty containers.

Santiago said PPA recognizes the problem with returning empty containers and the need to address it.

The ports authority chief said PPA is “seriously considering” Bataan, where the authority already has existing port facilities in Orion and Lamao.

He noted that PPA will just have to retrofit the terminal it picks to adapt to the requirements needed. Initially, the port will accommodate barges bringing in empty containers, but Santiago said the terminal will be multi-use and will also handle laden boxes. – Roumina Pablo

One Response to “PH exporters appeal for measures to ease empty container woes”

  1. Ken Silvano January 7, 2019

    I personally think that another potential solution is the innovation of collapsible containers and its use worldwide. This could bring in benefits to stakeholders across supply chain and change the landscape of containerization, shipping, and logistics.

    Reply

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