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SHIPPERS are seeking a deferment of the proposed arrastre fee increase by the country’s top two port operators, saying the hike will further slow cargo movement and prolong industry recovery from the global economic crisis.

Asian Terminals, Inc (ATI) and International Container Terminal Services, Inc (ICTSI), respective operators of the South Harbor and the Manila International Container Terminal (MICT), are seeking up to 17% more cargo-related rates or arrastre fee on all international containerized and non-containerized cargo.

The last increase of 22% was in 2004.

ICTSI is looking at a 16% hike implemented in two tranches, the first 10% to take effect immediately and the rest in June.

ATI wants a 17% increase but no implementation schedule was revealed. It is widely believed it would adopt the same scheme as ICTSI's.

In a public hearing held at the Philippine Ports Authority, the Philippine Exporters Confederation (Philexport), Philippine Institute of Supply Management (PISM) and the Supply Chain Management Association of the Philippines argued the hike is untimely as most businesses are reeling from the effects of the global financial meltdown.

Instead, the group said, the two operators should consider more cost-cutting and value-adding measures to avert any increase at this time.

"We would like to ask ATI and ICTSI to defer their proposed rate increase at it is untimely where all are on a downtrend," Philexport vice president for operations Atty Clemente San Agustin said.

"ICTSI and ATI should be more prudent with their investments as both export and import are really down," he added.

While acknowledging the need to improve port efficiency, PISM said enforcing an increase at this point would take a bigger toll on already-reduced cargo volumes.

PISM said it expects business to remain down in the next two years. Most companies, it said, are also cutting back to free up cash and any hike would dampen such initiatives.

"Both ATI and ICTSI are our partners and as private corporations we are the hardest hit. With the proposed rate increase we are hoping that both ATI and ICTSI will still be our partners… through the current crisis," PISM president Paul Hamoy said.

Labor unions did not object to the proposal, claiming their members will benefit from the increase through continued work.

ATI and ICTSI said they can no longer postpone the rate hike and that stakeholders cannot invoke the financial meltdown as a reason for deferment.

The operators noted the investments are for the future and thus need time to implement. Some have commenced, making the increase even more important in order to continue financing projects, they said.

"In this time of crisis, shippers need to have their cargo enter the international supply chain with less delays and spillage," ICTSI vice president for operations and MICT general manager Christian Gonzalez explained at the hearing.

"We believe that the investments, which will be financed through the rate increase, will be of great advantage despite the cut in cargo volume," Gonzalez said.

Among ICTSI projects to be financed by the rate uptick are the construction of Berth 6 at the Manila International Container Port, and procurement of additional cargo-handling muscle such as rubber-tired gantries and chassis.

"The downturn is only temporary and we cannot wait until things go back into normal before making these investments," ATI's executive vice president Ernst Schulze, for his part, said.

"We have to make our plans now as we do not have the time today to wait until the future is okay," Schulze said.

Still, he noted, ATI's short-term plans are being reevaluated to reflect more prudence in investments.

Another hearing, possibly by end April or early May, will be scheduled before any decision is made on the proposed increases.

Panel member Atty. Pedro Vicente Mendoza of the Department of Trade and Industry said this will give other stakeholders such as the Port Users Confederation time to submit a position and for both ATI and ICTSI to reply.

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