Category: Transport and Logistics

In a recent pronouncement, DTI Secretary Ramon Lopez stated that the Departments of Trade and Industry, Transportation and Finance will issue the Joint Administrative Order (JAO) that will regulate local charges imposed by international shipping lines.

The draft JAO was already signed by the Trade Secretary and still need to be co-signed by the Secretaries of Finance and Transportation.

While the JAO is still to be signed, the Bureau of Customs (BOC) and Philippine Ports Authority (PPA) has already issued orders resulting to normalizing utilization rate of container depots in Manila ports back to 70%.

Specifically, the BOC issued Customs Memorandum Order 13-2019 in February which “disallowed brokers, importers, truckers and other port stakeholders to return empty containers within the premises of Manila International Container Port (MICP) and Port of Manila (POM) beginning February, until further notice”.

On the other hand, the PPA issued a directive stating “all importers, consignees, owners, and shippers of containers already cleared by BOC are notified to withdraw said containers within fifteen (15) days and shall be compelled to transfer these containers to a designated port or inland container depot at their cost”.

Hence, this facilitated the transfer of overstaying containers to Batangas and Subic Ports with the cooperation of the port operators.

International Shipping Lines, for their part, are being required to promptly evacuate empty containers from the Manila ports within the prescribed period given by BOC, either by regular ship calls or sweeper vessels.

Secretary Lopez also assured the government is addressing the infrastructure needs of the country with its aggressive infrastructure program. MJAA

The Department of Tourism recognizes the importance of developing domestic airports in improving competitiveness and enhancing sustainable growth both in tourism and trade. It is also highlighted that the airports are not just gateways but more of economic growth drivers. This objective is included in the National Tourism Development Plan (NTDP).

During the 4^th Annual Philippine Airport Modernization and Expansion Summit, DOT Undersecretary Arturo Boncato, Jr. shared that the tourism sector generated more than 5 million employment and 12.2% contribution to GDP in 2017. Initial data shows that there are about $ 8 billion income generated from tourist arrivals in 2018.

The development of secondary gateways and provincial airports is one of the advocacies of the Export Development Council. By doing so, congestion in the capital, especially in the immediate and medium term, will be reduced, which in turn will mean lower travel cost for passengers.

To date, there are only 19 night-rated airports in the country. According to the Civil Aviation Authority of the Philippines (CAAP), the additional airports with Airfield Lighting System (ALS) are the following: Bohol/ Panglao Principal Airport, Subic Bay International Airport, Tuguegarao Principal Airport, and Naga Principal Airport.

The airports to be provided with ALS this year (2019) and currently being processed are the following: Cotabato Principal Airport, Cauayan Principal Airport, Dipolog Principal Airport and Pagadian Principal Airport.

The other recommendations for the domestic airport development are: (1) Modernizing the infrastructure and facilities of the domestic airports to accommodate direct flights to the major gateway of the Philippines, (2) Funding prioritization for the upgrading of domestic airports to provided night-landing and all-weather facilities for a more efficient operation and to emphasize safety improvements to meet International Civil Aviation Organization  Standards And Recommended Practices (ICAO SARPS), (3) Development of airports through Public-Private Partnership, and (4) Development of a coherent long-term investment plan for the airports.

CAAP assured of its continuous work to make more airports in the country night-rated. Equipping airports with night-rated capabilities will enable these facilities to serve more passengers. MJAA

Department of Trade and Industry (DTI), Department of Transportation (DOTr), and Department of Finance (DOF) jointly presented the draft Joint Administrative Order (JAO) to concerned stakeholders. This aims to regulate the local charges imposed by international shipping lines and provide measures to address port congestion.

The issue on excessive and questionable charges levied by some international shipping lines escalated since February 2017 and numerous meetings and forums have been conducted to discuss the recommendations from both the government and private sector.

The JAO was crafted to promote efficient operation of country’s ports and facilitate the importation and exportation of goods to promote more investments. It is also viewed to address the concern of stakeholders on high utilization at Manila ports and difficulty in returning the empty containers to container depots.

After the JAO is signed, the Bureau of Customs (BOC), Philippine Ports Authority (PPA), Bureau of Internal Revenue (BIR), and Maritime Industry Authority (MARINA) shall craft and issue their own orders to implement the said joint order.

Speaker Gloria Macapagal-Arroyo (GMA) urged the Department of Transportation (DOTr) to revise its plan to develop a Roll-On, Roll-Off (RoRo) transportation system, during the House of Representatives Committee on Transportation oversight committee meeting, which aimed to determine how the government can improve the country’s RoRo system.

Speaker Arroyo ascertained that most of the proposed routes were already operational under the DOTr’s Maritime Industry Development Plan (MIDP). For instance, she said that most of the 30 proposed routes are either an existing port facilities or being served by shipping lines in nearby ports.

Cited example was the proposed Jagna, Camiguin to Cagayan de Oro route by the DOTr which is already being serviced by a shipping line.

During the hearing, Arroyo recommended to DOTr to give missionary routes to shipping lines to address the problem of unserved ports due to lack of operators. A missionary route is an incentive given to a shipping line to service a new route exclusively for five (5) years.

The RoRo transport system was one of GMA Administration’s priority programs to ensure fast and economical movement of goods and people, and to boost domestic tourism and trade.

During the said administration in 2003, 49 RoRo routes from Luzon to Mindanao were established. However, most of the RoRo projects approved during that time were cancelled by the Aquino Administration.

The administration of President Rodrigo Duterte has decided to revive the RoRo system citing it importance to trade and tourism. Today, there are a total 140 RoRo routes all over the country cutting travel time, promoting tourism and increasing trade.

DPWH Undersecretary Catalina Cabral presented in the recently concluded Arangkada Philippine Forum 2018 the convergence programs with other government agencies like DOT, DTI- BOI and DA that will further fuel high growth of domestic investments as well as the surge in foreign direct investments of the country.

Undersecretary Cabral highlighted the masterplan of the Metro Manila Logistics Improvement Program that will enhance the road connectivity around Metro Manila. In addition to the 26 existing bridges crossing Pasig River, Marikina River, and Manggahan Floodway, 12 new bridges will be constructed to provide alternative linkages between major thoroughfares and increase the number of usable roadways that will decongest traffic in Epifanio delos Santos Avenue (EDSA) and other major roads in Metro Manila.

On seaports and shipping, high cost of international and domestic shipping translates to high cost of consumer goods. Hence, Ms. Doris Magsaysay-Ho, president and chief executive officer of Magsaysay Group of Companies, recommends the creation of manufacturing and industry clusters in each region to create trade volumes, lower shipping costs, and make the country competitive. These clusters, she noted, should be developed close to port and airport infrastructures and be designed to make handling products more efficient.

On air, Senator Grace Poe pointed out the P350B NAIA Consortium project that will rehabilitate, expand, operate, and maintain the Ninoy Aquino International Airport (NAIA) for 35 years. Also, she mentioned the unsolicited proposal of Bulacan Airport that is one of the two gateways being prioritized by the government to decongest NAIA’s three terminals, which have been operating over their capacity.

On telecommunications, Senator Sherwin Gatchalian is hoping to fix the dysfunctional dynamics of the infrastructure development by fostering liberalization and competition through reform legislation.

These measures include amendments to the 80-year-old Public Services Act to clarify the definition of public utilities as only those public services which are natural monopolies by nature. This is being sought by Senate Bill No. 1754. He also clarified that easing the country’s foreign investment restrictions is not meant to favor foreign firms over domestic players.

As chair of the Senate Committee on Economic Affairs, Senator Gatchalian pointed out that the Philippines continues to lag behind its ASEAN neighbors in terms of capturing foreign investments due to the country’s relatively restrictive and less competitive economic policies.  (MJA)

House Bill (HB) No. 8005 seeks to separate the regulatory and commercial functions of the Philippine Ports Authority (PPA) and create a new port agency called Philippine Ports Corporation (PHILPORTS) will focus on developing, managing, and operating public ports.

The bill also proposes to transfer the regulatory functions of the PPA to the Maritime Industry Authority (MARINA).

Representative Arthur Yap, author of HB 8005, aims to reform the country’s ports administration to avoid conflict of interest arising from regulatory agencies vested with both regulatory and development or commercial functions.

If enacted, PHILPORTS will collect port fees and dues approved by MARINA, which will fund port development, modernization, and expansion, among others.
PHILPORTS will become more of a service provider than a revenue generating entity. It is not envisioned as earning revenue from cargo handling and/or any service providers contracted by PHILPORTS.

As such, it shall continuously give utmost priority and importance to public service delivery and promotion of public interest. It also addresses the problems of port users (domestic shippers, exporters and importers) such as low service quality, inefficient port operations and ever-increasing port charges.

Under HB 8005, it will be governed by a 15-member Board, which includes representatives from both the government and the private sector.
The Export Development Council together with other stakeholders has been stressing the need for such policy reform to lower the cost of port services for shippers that will eventually benefit the consumers.

The Philippine Ports Authority (PPA) issued Memorandum Circular (MC) No. 07-2018 that approves the 7% increase of cargo handling tariff for international containerized and non-containerized cargoes at the two international terminals in Manila. The new rate takes effect on June 5, 2018.

PPA’s approved rate is lower than the 8.7% hike requested by the terminal operators, Asian Terminals, Inc. (ATI), which operates the Manila South Harbor, and the International Container Terminal Services, Inc. (ICTSI), which operates at the Manila International Container Terminal (MICT).

Under their contracts with PPA, both terminal operators may file for a rate hike every two years. The last cargo-handling tariff rate adjustment was in 2015, when PPA granted an 8% rate increase. Their petitions are in keeping with PPA Administrative Order 02-2018 which prescribes the revised methodology and formula for adjustment of Cargo Handling Tariff.

Prior to the approval of the rate adjustment, the Export Development Council (EDC) expressed its opposition to the original 8.72% request using the Consumer Price Index (All Items) National Capital Region. The CPI (All items) Philippines shall be the factor of adjustment as provided in Section 7 of PPA AO 02-2018. If applied, the rate hike should have been 6.52%.

Hence, for loaded Container Yard/Full Container Load is charged at US$ 105.457 for 20 ft container and US$ 147.517 for 40 ft. container. Empty Container is charged at US$ 88.646 for 20ft and US$ 114.203 for 40ft. Schedule of Cargo Handling Tariff at Manila International Container Terminal and South Harbor can be downloaded at PPA website at  www.ppa.com.ph

Exporters who are shipping out their goods through the Ninoy Aquino International Airport (NAIA) lauded the Bureau of Customs – NAIA decision to discontinue the reprocessing or recording of shipments approved at the One-Stop Export Documentation Center (OSEDC). A memorandum order shall be issued by the BOC – NAIA to this effect.

In February 2018, the Export Division of NAIA issued a directive that “all shipments processed at OSEDC must be re-processed at the Bureau of Customs Export Division’s Documentation Unit”.

In a meeting among the BOC-NAIA, Export Development Council (EDC) and Philippine Exporters Confederation, Inc. (PHILEXPORT), NAIA District Collector Carmelita Talusan clarified that the directive was aimed to record, monitor and collect data of all shipments that are coming out of NAIA, not to reprocess such shipments.

To serve the BOC purpose, OSEDC will send the summary of shipments approved by the OSEDC to BOC-NAIA on a daily basis.

Collector Talusan also bid to work on facilitating trade as one of the thrusts of the BOC, aside from revenue generation and border security. The BOC-NAIA is also working on the implementation of the electronic-to-mobile (e2m) system to further streamline the processes for NAIA shipments. The private sector is encouraged by the BOC-NAIA to be a partner in such endeavor. – Asnia R. Bayabao

Destination fees and surcharges imposed by international shipping lines cost the Philippine economy an estimated US$2 billion to $5 billion in losses annually, according to the joint report by the Export Development Council (EDC) and National Competitiveness Council (NCC).

This report entitled “Potentially Avoidable International Shipping Cost and Other Charges” was initiated by Dr. Enrico Basilio, Chair of the joint Committees on Transport and Logistics of EDC and NCC, and Mr. Michael Raeuber, CEO of Royal Cargo Group of Companies and former President of the European Chamber of Commerce in the Philippines (ECCP).

Highlights of the report were presented during the public hearing conducted by the House Committee on Transportation (COTr) last 17 January 2018 that tackled the Container Deposits and Related Charges imposed and collected by Agents of International Shipping Lines.

The document, based on a series of forums and a survey conducted last year, disclosed that for imports, freight accounts for an average of only 39% of the total amount paid to international shipping lines, while the so-called “destination charges” levied on Philippine importers by the carriers account for 61%.

For exports, freight costs accounts for an average of 25% of the total amount paid to international shipping lines (Carriers) while the so-called “origin charges” levied to Philippine exporters by the Carriers account for 75%.

The report said such costs undermine the country’s export competitiveness by increasing the cost of importing raw materials and intermediate goods. It noted that the hardest hit by these costs are the small exporters and importers (SMEs) because larger and regular importers and exporters are able to negotiate for better rates and terms with international shipping lines.

The report also undermines the competitiveness of domestic producers by increasing the cost of imported raw materials and intermediate products. Surcharges are also seen to make domestic consumers pay higher prices for imported products (for final consumption) since the “added” import cost is passed on to them.

COTr Chairman and Catanduanes representative Cesar Sarmiento said that with these claims and result of the report, the next hearing will be a joint meeting with the House Committee on Economic Affairs to find the best solution for the situation.