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Private sector groups back bills curbing shipping charges

  • Various groups expressed support for the passage of Lower House bills regulating local charges imposed by foreign shipping lines operating in the Philippines
  • International shipping costs to the Philippines are expensive compared to other countries in the region, the groups pointed out
  • The groups also support the proposed Philippine Shippers Act designating the Maritime Industry Authority as regulator of local charges imposed by international shipping lines
  • The proposed bills are “important safeguards in ensuring reasonable and competitive logistics costs, by putting in place mechanisms that guarantee transparency, visibility and accessibility of these charges”

Various stakeholder and business groups expressed support for the passage and consolidation of Lower House measures that seek to regulate and standardize the local charges imposed by foreign shipping lines operating in the Philippines.

The groups also showed support for the Department of Trade and Industry’s (DTI)-proposed Philippine Shippers Act (PSA), which will designate the Maritime Industry Authority (MARINA) as regulator of local charges imposed by international shipping lines.

Support for the consolidation of the two measures—House Bill No. 4316 and HB 4462—was contained in a joint position paper submitted to Lower House Committee on Transportation (COTr) chair Edgar Mary Sarmiento on June 8.

READ: Port users, agencies back bills regulating foreign carriers’ charges

Signatories were the Supply Chain Management Association of the Philippines, Philippine Chamber of Commerce and Industry, Philippine Exporters Confederation, Inc., and Export Development Council’s (EDC) Networking Committee on Transport and Logistics.

HB 4316, filed by Bagong Henerasyon Partylist representative Bernadette Herrera-Dy, aims to regulate and standardize local charges imposed at both origin and destination by foreign shipping lines. The bill is meant to comply with laws and obligations and contracts and International Commercial Terms (Incoterms).

HB 4462, filed by Ang Probinsyano Partylist representative Ronnie Ong, mandates the Maritime Industry Authority (MARINA) to promote fair and transparent destination and other shipping charges among freight forwarders and agents of international shipping lines.

During the April 30 hearing on the two bills, COTr approved the creation of a technical working group (TWG) composed of the concerned government agencies and stakeholder organizations to consolidate HBs 4316 and 4462.

The groups in their paper reiterated points raised during the April 30 COTr that “international shipping costs for shipments made to the Philippines are expensive compared to other countries in the region.”

They said local charges cost on average US$592 per 20-foot full container load (FCL) compared to an average of $202 in other countries. Citing a report prepared by the National Competitiveness Council and the EDC in 2017, the groups said a majority of these charges are destination charges, which cost between $1,176 and $2,096 per 40-foot FCL.

“We believe that these high charges are caused by a lack of regulatory oversight as there is no agency assigned to oversee local charges imposed by international shipping lines,” the groups said.

They pointed out that similarly, no regulations exist that will scrutinize whether the charges imposed are arbitrary or based on globally accepted terminology and regulations; are reasonable or not; and are subject to taxes, as these are charged at a local level.

The groups said the issue of high shipping costs “will continue to impact the ability of shippers to sustain their operations, particularly during the pandemic and the resulting uncertainty.”

The cost issue is also seen to affect Philippine competitiveness as a whole, “with high shipping costs leading to high logistics costs, which will lead to higher product costs for customers.” The groups noted that logistics costs account for roughly 27% of total sales costs, based on the Logistics Efficiency Indicators survey conducted by DTI in 2018.

Bills to enhance transparency

With these issues, the groups said the proposed bills are “important safeguards in ensuring reasonable and competitive logistics costs, by putting in place mechanisms that guarantee transparency, visibility and accessibility of these charges.”

They said they “believe the implementation of standardized charges—particularly ones based on Incoterms…would allow businesses to better assess their costs, and also allow shipping lines to be more competitive, by competing on service levels rather than price.”

They added the proposed bills will also impact other charges that are usually outside the purview of shipping lines—and are therefore charged based on market rates—but are offered as added services, such as warehouse storage, drayage from source to port/port to consignee.

In addition, the groups said the bills will have an effect on other logistics players. They noted, for instance, that standardizing charges will provide relevant authorities with the means to gauge and assess petitions for rate increases, such as cargo handling rate increases in the case of port operators.

“These increases can no longer be done unilaterally, i.e., as cost recovery measures, but instead be based on quantitative pricing mechanisms that are accessible to all stakeholders. Any differences in costs—which would hopefully be minimal—will be dependent on other factors, such as differences in port infrastructure,” the groups explained.

Moreover, while primarily concerned with international shipping, the proposed bills may provide a framework to address issues on domestic shipping costs, “which continue to be a problem among businesses in the country and a hindrance to their competitiveness,” the groups said.

The groups also support the proposed PSA, as it is seen to “further bolster the two HBs being discussed and will allow for greater transparency and more avenue for addressing possible concerns.”

Trade assistant secretary Mary Jean Pacheco during the April 30 hearing said the trade department will submit to COTr for consideration a draft bill for the proposed PSA, which is aligned with HB 4462 and supports the expansion of MARINA’s powers and functions to include authority and jurisdiction over maritime enterprises such as international shipping lines and international freight forwarders.

DTI also seeks the creation of an oversight committee to be called the Philippine Shippers’ Board, which will be a policy-making body acting on all issues and concerns on international shipping and transport logistics.

The draft bill has already been submitted by DTI to COTr.

No counterpart bill on foreign shipping line charges, however, has been filed in the Senate. – Roumina Pablo

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