The Department of Transportation (DOTr) has issued three department orders as part of the Inter-Agency Task Force’s (IATF) directive to address the high cost of shipping, a longtime source of grievance among port users which drew increased flak during the lockdown.
The three department orders or DOs noted that the “issue on the surcharges of international shipping lines heightened during the COVID-19 pandemic, specifically, the charges on demurrage and detention.”
The orders thus aim to enforce measures to “protect people from pernicious practices affecting the supply, distribution and movement of essential goods whether imported or locally produced or manufactured.”
Department Order (DO) No. 2020-007 directs all domestic shipping lines to allot cargo space for agricultural and food products and give preferential rates to such cargoes.
This means shipment of agricultural and food products will be prioritized to help ensure the viability of food production and delivery, in line with the government’s mandate to provide food security for the people especially during this period of crisis.
Under the DO, all domestic shipping lines must allocate “no less than twelve percent (12%) of a vessel’s cargo capacity per voyage for the exclusive accommodation of agricultural and food products.”
The DO covers cargoes of agricultural and food products, raw or processed, that are marketed for human consumption-excluding water, salt and additives as well as animal feeds-and “shipped in whatever manner or form” including roll-on/roll-off and conventional shipping.
Furthermore, all domestic shipping lines shall “extend a discount of no less than forty percent (40%) from their published shipping rates” for all such cargoes.
Meanwhile, DO 2020-008 creates the Shippers’ Protection Office (SPO) that will protect and assist shippers, both international and domestic, against unreasonable fees and charges imposed by international and domestic shipping lines.
The DO applies to all complaints and issues related to the rates, charges, practices and operations of international and domestic shipping lines in the country.
Before the SPO was created, no government agency monitored and regulated the local fees and charges imposed by international shipping lines. Under DO 2020-008, a competent body is established to assist the public with matters concerning the operations of, as well as the fees and charges collected by, international and domestic shipping lines.
The SPO will also require international and domestic shipping lines to submit comments or position on complaints/issues raised against them, and to appear before the office. This policy is expected to reduce international and domestic shipping costs.
On the other hand, DO 2020-009 prescribes a minimum free time period of eight days from date of discharge for cargoes unloaded by international shipping lines. This is up from the current five days of free storage time given by foreign carriers to shippers and importers and seeks to help port users avoid high demurrage cost. The DO applies to all international shipping lines unloading cargoes in any port throughout the Philippines.
All three orders were signed by Transportation Secretary Arthur P. Tugade and dated June 24, 2020, and took immediate effect.
Early last month, the Port Users Confederation, Inc. (PUC)-an organization that represents industries and service sectors utilizing seaports and airports in the country-appealed to the government for relief from what it called “oppressive port charges” levied on “recession-stricken” companies, many of them small and medium enterprises (SMEs).
The group lamented what it branded as “unwarranted charges” that foreign shipping lines continued to impose, such as demurrage charges, detention charges, and container deposits for all in-bound cargo, even amid a Philippine state of emergency.
“While the whole world suffers from calamity, the foreign lines continue to impose these charges on shipment delays, even if they are beyond the control of importers, consignees, and customs brokers and brokerage firms,” PUC said.
The PUC counts 17 member associations, including the Customs Bonded Warehouse Operators Confederation Inc. (CBWOCI), Confederation of Truckers Association of the Philippines (CTAP), Ecozone Federation of Forwarders/Brokers/Truckers Philippines (EFFORT-PHILS), Federation of Customs Brokerage Companies of the Philippines (FCBC), Philippine Exporters Confederation (PHILEXPORT), Philippine Liner Shipping Association (PLSA) and Semiconductors and Electronics Industries in the Philippines (SEIPI), as well as three associate members.