Shippers nix planned arrastre charges on empty containers

MANILA, Philippines — The Association of International Shipping Lines (AISL), a group of shipping players, is opposing a plan by port regulators to impose arrastre charges on empty containers at the ports of Manila and Batangas.

In a position paper submitted to the Philippine Ports Authority (PPA) on Oct. 8, AISL said such charges would mean that international shipping lines would have to pay an estimated additional cost of P5.4 billion based on the 2019 container volume data.

“Shipping lines have to recover the additional cost otherwise the option left to them is to reduce capacity in order to remain efficient. Hence, the need to pass on the estimated cost increase of P5.4 billion to customers becomes the viable option,” AISL said in its paper.

The group said this would also be added to shipping costs, which would be an additional burden for industry players and customers, already struggling with the negative effects of COVID-19.

At present, the Philippines ranks highest in terms of handling costs for 20-footer and 40-footer containers among its Southeast Asian neighbors, including Singapore, AISL said.

“(That is why) applying arrastre on empties will only add to the over-all cost for lines servicing the Philippines, and further skew comparison with the SEA countries,” the group said.

AISL said empty containers were never assessed any tariff or arrastre charges in the past because these were considered as extension of the ship’s equipment or gear.

Even the Bureau of Customs “has never departed from this principle," AISL said.

“Unless manifested as importations, empty containers are exempt from the payment of duties and taxes, they being considered as part of the ship’s gear,” AISL pointed out.

Moreover, AISL noted that arrastre was a form of charge against cargo as defined by Republic Act 1371.

“Thus, the marked distinction between a ship’s gear and a cargo has been well delineated, and the two terms cannot be regarded as interchangeable,” they argued.

The PPA, for its part, said the existing schedule of cargo-handling rates for import and export cargoes handled by Manila South Harbor and Manila International Container Terminal (MICT) does not contain any rate for arrastre services on empty containers.

PPA said prescribing arrastre on empty containers at Manila South Harbor, MICT, and Batangas Port would “ensure that policies on the handling of empty containers in PPA ports are uniform and updated.”