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PPA container monitoring system to jack up logistics cost, carriers say

  • PPA container monitoring system to jack up logistics cost
  • Foreign shipping lines say the Philippine Ports Authority’s container registry and monitoring system will lead to higher trucking costs
  • Port stay of containers may also be longer
  • There are systems in place “more than sufficient” to monitor container movement, according to the Association of International Shipping Lines

The Philippine Ports Authority’s (PPA) container monitoring and registry system will jack up logistics costs, according to the Association of International Shipping Lines (AISL).

At an Anti-Red Tape Authority (ARTA) meeting on May 2, AISL port operations committee chairman Joselito Ilagan presented the potential impact of PPA’s Trusted Operator Program-Container Registry and Monitoring System (TOP-CRMS) and Empty Container Storage Shared Service Facility (ECSSSF). Ilagan said the system will only add to truck transaction time and could potentially lengthen port stay of containers.

He said he saw no benefit arising from the project since the Bureau of Customs (BOC) already monitors foreign containers.

PPA is proceeding with the P877.6-million container and registration project despite opposition from stakeholder groups. PPA signed on May 2 the project contract with winning bidder, the joint venture of NextIX Inc. and Shiptek Solutions Corp.

READ: PPA proceeds with P877.6M container monitoring project

The port agency introduced in June last year a proposal to monitor the movement of import containers aimed at improving trade facilitation and addressing concerns about logistics efficiency and costs, such as the long-standing issue of unreturned container deposits.

In October 2021, PPA issued Administrative Order No. 04-2021, prescribing the policy on registration and monitoring of containers entering and leaving PPA ports, including the scheduling, loading, unloading, release, and movement of all containers.

Foreign containers in PH to require registration, container insurance – Bing video

Stakeholders earlier claimed the system may just duplicate those already in place for containers, particularly those set for discharge from terminals.

An alliance of customs brokers and truckers sought a moratorium on bidding for the CRMS pending a public hearing and clarification of issues by stakeholders.

In March 2022, PPA went ahead and bid out the contract for TOP-CRMS as well as for ECSSSF, which will implement AO 04-2021. On April 27, PPA awarded the project to the lone project bidder.

AISL’s contention of longer container flow times and additional logistics costs that the PPA system will generate are based on available information from PPA AO 04-2021 and the terms of reference (TOR) for the bidding of TOP-CRMS.

AISL said they were hoping PPA could verify information about the system during the ARTA meeting. The port authority representative only said the agency will answer stakeholders’ questions during the May 11 public consultation on implementing operational guidelines of AO 04-2021.

On the system’s aim of tagging inbound containers upon entry, AISL said the tagging and untagging of the device is best made at the quayside to avoid double-handling. Except, the process will add hours to port stay.

To illustrate, Ilagan said work on a vessel with 1,600 containers serviced by two cranes with 25 moves per crane per hour is usually completed in 32 hours. But with tagging on the quayside presumably taking one minute per container, container moves will slow down to 27.3 moves per hour (both cranes) and the vessel will be fully serviced within 58.7 hours, translating to an additional 26.7 hours of port stay.

AISL said with the delay, only 74 of the 136 vessels calling Manila South Harbor and Manila International Container Terminal monthly will be serviced and 62 ships will be waiting at anchorage. This, the group pointed out, could cause port congestion.

For import containers bound for empty container yards, Ilagan said AISL estimates total transaction – from terminal to tagging area, then to the warehouse and to the empty depot – will take 19 hours instead of 14 (without tagging). The additional five hours represents the estimated time spent queuing at the tagging area, as well as the time it takes to get the container tagged, considering there are more than 1,500 containers leaving Manila ports daily.

This will increase trucking costs by 38%, particularly due to additional costs going to the tagging area and the tagging fee.

AISL said these estimates are based on an ideal situation and do not take into account road traffic conditions and other incidental costs. (The tagging area is a facility within a 50-kilometer radius of the international terminals that the winning bidder, pursuant to the TOR, must provide to be used as a container staging facility or container depot for re-exporting empty containers.)

For import containers bound for the terminal, the transaction is estimated to take 25 hours, with an additional 11 hours due to the tagging and untagging by the monitoring device. This is if the tagging area is in Navotas, and assuming there is space in the vicinity; the process may take longer if the site is outside Metro Manila, say in Bulacan.

For this segment, a 55% additional cost is expected, covering trucking cost to the tagging area and the tagging fee.

For export containers bound for the terminal, the total transaction time – from the empty depot to the customer warehouse, to the tagging area and then to the terminal – is estimated to be six hours more, or a total of 18 hours. Additional expense is estimated at 21%, which includes extra trucking cost to transport the container to the tagging area to untag the monitoring device.

Asked about the system’s benefits, AISL’s Ilagan said he sees none because containers are already being monitored by the BOC and by shipping lines as owners of the containers. Containers are considered part of a ship’s gear.

AISL said there is already a system put in place by BOC that monitors the movement of containers as embodied in Customs Administrative Order (CAO) No. 08-2019.

READ: BOC formalizes tracking, control procedures for container movements

Issued in 2019, CAO 08-2019 institutionalizes BOC’s first system of accounting and monitoring of movement of all incoming and outgoing containers.

To monitor containers, the terminal facility’s operator should electronically transmit to BOC the container delivery confirmation (CODECO) and container arrival (COARRI) files upon discharge, loading, gate-in, and gate-out of containers.

BOC Port Operations Service director Bienvenido Rubio confirmed during the ARTA meeting that CAO 08-2019 already monitors dwell time of containers. This is to ensure compliance under a regulation that requires containers arriving loaded or empty to be re-exported within 90 days from date of discharge of the last package; otherwise, they will be considered an importation and must pay duties and taxes.

Rubio said BOC is in the process of automating the tracking of gate-in and gate-out of containers. AISL earlier offered the use of its GoFast Container Monitoring System to help monitor containers.

AISL had proposed to PPA that, instead of the port agency creating a new monitoring system, AISL can just expand its GoFast system to facilitate realization of PPA’s CRMS without the need for monitoring devices.

READ: AISL to PPA: Use GoFast as container monitoring system

Introduced in 2015, GoFast is a web-based trade and logistics platform providing digital connectivity among foreign shipping lines, importers and their authorized customs brokers, terminal operators, off-dock container freight stations, and off-dock depots.

The AISL said these systems by BOC and the shipping lines are already “more than sufficient” as far as monitoring of container movement is concerned.

Furthermore, CAO 08-2019 covers all foreign containers, while PPA’s proposed system will cover only those passing through PPA ports. He noted some ports are not under PPA’s jurisdiction, such as Subic, Cebu, and Mindanao Container Terminal. – Roumina Pablo

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