Business groups push moratorium on cargo fees

MANILA, Philippines — Local and foreign business groups are calling on the government to suspend demurrage or detention fees and other penalties for cargo stuck at ports, extend the free storage period, and implement other measures to improve transport efficiency and reduce logistics costs of businesses whose operations have been affected by the enhanced community quarantine in Luzon.

The call was made by the Philippine Chamber of Commerce and Industry, Philippine Exporters Confederation Inc., Supply Chain Management Association of the Philippines, Export Development Council (EDC), American Chamber of Commerce of the Philippines, Australia-New Zealand Chamber of Commerce of the Philippines Inc., Canadian Chamber of Commerce of the Philippines, European Chamber of Commerce of the Philippines, Japanese Chamber of Commerce and Industry of the Philippines Inc.,  Korean Chamber of Commerce of the Philippines Inc., Federation of Filipino Chinese Chambers of Commerce and Industry Inc., Philippine Association of Multinational Companies Regional Headquarters Inc., Semiconductor and Electronics Industries in the Philippines Foundation Inc. and Management Association of the Philippines.

The groups are recommending measures to help address the global and supply chain challenges, as well as  businesses affected by the Luzon-wide lockdown to contain the spread of the coronavirus disease 2019 or COVID-19.

“In these trying times, when the government is implementing a socio-economic amelioration program to provide subsidies and assistance to the people, increasing transport logistics efficiency and reducing cost can also help the business sector and consumers at large,” the groups said.

Among the measures being pushed is for government to implement a moratorium on demurrage or detention fees, port congestion surcharges, and other penalties

imposed on cargo or shipments stuck at the ports due to slow bank processing or customs clearance and to apply such retroactively to all affected shipments.

International shipping lines are imposing port congestion surcharges amounting to $1,400 per reefer container, demurrage charges of P1,400 to P2,800 per 40’ dry container or P2,800 to P3,200 daily for reefers, as well as other penalties.

While the EDC wrote to the Philippine Ports Authority (PPA), Department of Finance (DOF), and Department of Transportation (DOTr) earlier this month for government to waive demurrage fees, only the DOTr responded by saying that the request be elevated to the Inter-Agency Task Force.

While the government was looking to issue a joint administrative order (JAO) to set guidelines on charges to be imposed by international shipping lines, freight forwarders or logistics companies, customs brokers, cargo truck operators, terminal operators and container yard operators and improve productivity in the handling of cargo last year, the rules have yet to be signed by all concerned agencies.

“The Department of Trade and Industry and DOTr already signed the JAO. We appeal to the DOF to sign so that it can already be implemented especially at this time,” the groups said.

The groups also want the free storage period for containers to be extended up to 10 days from five days.

At present, shippers are paying storage fees to port terminal operators worth P962 to P1,443 per day for 40’ dry containers and P192.50 per hour for reefers after the five-day free storage period.

The groups are also pushing for a super green lane process for shipments or transshipments going to the Philippine Economic Zone Authority, Clark Development Corp. and Subic Bay Metropolitan Authority.

In addition, the groups want government to lift the truck ban or number coding.

“Because of the lockdown, there are few trucks operating today to transport. This is exacerbated further by the truck ban and number-coding schemes. The issue today is not ‘traffic’, rather the delivery of cargo – food and essential products, raw materials, export-import cargo,” the groups said.

The groups said the Bureau of Customs (BOC) also needs to improve the automation of its processes.

“For a start, something drastic must be done to address the downtime arising from inefficient servers of the BOC. Delay or failure to process documents online is a critical factor behind port congestion,” the groups said.

The groups also pushed for the use of Subic and Batangas as extension ports in cases of port congestion and emergency situations as declared in Executive Order 172 issued in 2014.

In addition, shipping lines should have sufficient container yard space for empty containers and accreditation of inland container depots should be fast-tracked as needed.

The groups also said the Letter of Instruction 1005-A issued in 1980 which allows PPA to get a share in cargo handling revenues, should be rescinded through the issuance of an executive order.

“While this recommendation admittedly will cause a reduction in PPA’s revenue, we have to put a stop to this policy of sharing from cargo handling revenues (10 to 20 percent) which unnecessarily increases logistics cost. The negative impact (damage) such a policy brings to the economy is definitely greater than whatever the government does with the revenue it generates,” the groups said.

The groups added such move would address conflict of interest as the regulator can increase rates not based on merit or financial justification, but on the benefit it can get.

“This will have a long lasting, positive impact, beyond the COVID-19 crisis,” the groups said.

Lastly, the groups said the government must conduct regulatory impact assessment of all COVID 19-related issuances to ensure the rules are consistent, promote efficiency and would reduce costs.