Port users: postpone North Port cargo-handling rate hike plan

North Port. Photo courtesy of MNHPI.
  • Port users want North Port’s proposed 15.33% cargo-handling rate increase delayed
  • The Export Development Council and Logistics and Supply Chain Management Association of the Philippines described the proposal as “untimely” and a huge burden to struggling businesses
  • Any increase will just be passed on to shippers and cargo owners, according to cargo service operators

Stakeholders’ groups called the proposed cargo-handling rate increase at domestic terminal North Port “untimely” and recommended its postponement to give businesses time to recover from pandemic-inflicted losses.

In a joint position paper submitted to the Philippine Ports Authority (PPA) on July 12, the Export Development Council-Networking Committee on Transportation and Logistics (EDC-NCTL) and Supply Chain Management Association of the Philippines (SCMAP) said the “untimely” 15.33% tariff increase proposal of Manila North Harbour Port, Inc. (MNHPI) will be a “huge additional burden” to struggling businesses.

The hike will “ultimately be passed on to consumers, which will result in slower consumption, slower return of consumer confidence, and eventually, slower economic recovery,” the groups said.

For its part, the Philippine Liner Shipping Association (PLSA) recommended deferment of the increase “given the challenges of the COVID pandemic.” The hike, it noted in a position paper submitted on July 9, would add to shipping lines’ cost of operations.

In the July 2 public hearing on the rate increase, the Philippine Exporters Confederation of the Philippines along with SCMAP had already said they want the hike deferred.

MNHPI is requesting a cargo-handling tariff upward adjustment for the years 2015 to 2020. Its last adjustment covered only up to 2014, with no adjustment requests made from 2015 to 2020.

The petition is in keeping with PPA Administrative Order No. 02-2018, which prescribes standard and uniform formula and procedures for cargo-handling tariff adjustment. Under AO 02-2018, which took effect in March 2018, the cargo-handling/terminal operator may apply for a cargo-handling tariff adjustment if the consumer price index computed by the Philippine Statistics Authority has increased by at least 5% within a three-year period.

MNHPI corporate affairs and claim head Mark Vincent Escalona, during the July 2 public hearing on the petition last July 2, said the port operator has complied with requirements under AO 02-2018 and made investments reaching P11.47 billion as of December 2020. For the period 2015 to 2020, actual investment cost was P3.93 billion.

For 2021 to 2024, MNHPI estimated its expenditure would reach P2.60 billion.

EDC-NCTL and SCMAP said that while they support MNHPI’s development programs intended to deliver quality services to port users, “we believe that appropriate timing and careful consideration must be observed before any increases in the port services charges are implemented.”

Added burden

The groups see the proposed increase as having a negative impact on the economy and adding to the burden of micro, small and medium enterprises “still grappling with the impacts the COVID-19 pandemic… on their businesses.”

They said reports showed exporters, which are primarily MSMEs, are still experiencing difficulties returning to normal operations. Majority have either closed or are operating at decreased capacity.

The pandemic has also increased logistics costs due to restrictions on movement, limitations in personnel, and other capacity concerns, they said.

Moreover, the groups noted that MNHPI’s policy implemented last year that requires ships calling North Port to use quay cranes—and subsequently pay a cranage fee—was also “an additional burden, one that did not go through consultation with affected stakeholders.”

EDC-NCTL and SCMAP said they understand port operators have not been spared by the impact of the COVID-19 pandemic. MNHPI, during the public hearing, explained its contract with PPA commits it to develop the port, and the tariff increase would enable it to meet development plans.

“However, logistics costs must not cause more burden for importers, exporters, and consumers,” the groups pointed out.

They said that since MNHPI is the only port operator providing services at North Port, which exclusively serves domestic shipping, “any proposed rate increases should be scrutinized with the consideration that shipping is considered as a public utility; that any improvements to the facilities are made to improve service to the public; and therefore, any costs should be determined with public interest first and foremost.”

The groups requested a copy of MNHPI’s financial statements to “better scrutinize their petition and assess whether it is justified or not” since MNHPI indicated during the public hearing that future development of the port is dependent on the granting of their petition for rate increase—essentially, cost recovery.

PLSA, for its part, said shipping lines “have and continued to support the government’s efforts to maintain the unhampered flow of food and essential cargoes throughout the country” as the Philippines faces unprecedented challenges due to the pandemic.

They said they complied with earlier government issuances to guarantee cargo space and provide discounts to food, agricultural products and other essential cargo shippers.

Further, domestic shipping lines have not increased freight and “hope to continue the same until necessary.”

Still, there is an “urgent need to ensure the viability of shipping lines’ operations… to continue to provide efficient sea transport service to our customers and to the consuming public as a whole,” PLSA said.

It added any mandated increase such as cargo-handling tariff adjustments “will necessarily be ‘passed on’ to shippers/clients/cargo owners as direct cost-recovery mechanism.”

PLSA said it will continue to recommend the adoption of a single domestic terminal handling fee by bundling applicable cargo-handling fees per container size, to be charged to shippers, cargo owners, and customers, in order to facilitate transactions at North Port. – Roumina Pablo