Port users to gov’t: suspend demurrage fees, extend free storage for cargoes to cut logistics costs

A moratorium on demurrage and other port fees, extension of the free storage period at the port, and adoption of a “super green lane” process for transshipments will help reduce transport and logistics costs for companies, especially micro, small and medium enterprises (MSMEs) and exporters, which have been badly hit by the effects of the COVID-19 outbreak and Luzon enhanced community quarantine.

These recommendations are part of a list submitted April 20 to the Inter-Agency Task Force for the Management of Emerging Infectious Diseases (IATF) by the Philippine Chamber of Commerce and Industry (PCCI), Philippine Exporters Confederation, Inc. (PHILEXPORT), Supply Chain Management Association of the Philippines (SCMAP), and the government’s export promotion arm Export Development Council (EDC).

The group pressed for a moratorium on demurrage/detention fees, port congestion surcharges, and other penalties imposed on cargoes that have been stuck at the port due to slow DO issuances/bank processing/customs clearance. It added that the moratorium should be applied retroactively to all affected shipments.

It noted that international shipping lines are imposing congestion surcharges of US$1,400 per reefer container, as well as demurrage charges-amounting to P1,400 to P2,800 per 40-foot dry container; P2,800-P3,200 a day for reefers-and other penalties on unwithdrawn cargoes.

In early April, the joint statement further stated, the EDC already wrote to the Philippine Ports Authority (PPA), Department of Finance (DOF), and Department of Transportation (DOTr) requesting for a waiver on demurrage fees.

The letter added that a Joint Administrative Order (JAO) drafted last year regulating local charges imposed by international shipping lines, logistics companies, terminal operators and other logistics players has already been signed by the heads of the Department of Trade and industry (DTI) and DOTr and only needs the signature of the finance secretary.

“We appeal to the Department of Finance (DOF) to sign so that it can already be implemented especially at this time,” said the letter.

The group also called on the government to extend the free storage period for containers at the port from the current five days to 10, and the Bureau of Customs (BOC) to adopt the “super green lane” process-the fastest processing system-for Philippine Economic Zone Authority, Clark Development Corporation, and Subic Bay Metropolitan Authority shipments and transshipments.

Other proposed actions are the following:
Immediate lifting of the truck ban/number coding to faciliate delivery of food and essential products, raw materials, and export-import cargoes.
Improvement of automation at BOC. The group said the issue of inefficient servers at the bureau needs to be urgently addressed. “Delay or failure to process documents online is a critical factor behind port congestion,” it said.
Use of Subic and Batangas as extension ports. The group appealed to the DOTr to implement Executive Order 172 series of 2014 which designates the two as extension ports in case of congestion and emergency situations.
Ensuring all shipping lines have sufficient container yard space for empty containers by expediting the accreditation and activation of inland container depots.

At the same time, the group sought the rescinding of Letter of Instruction (LOI) 1005-A series of 1980, the policy that gives the PPA a share in cargo-handling revenues. The immediate impact of repealing the LOI is a reduction in transport and logistics costs, to the benefit of consumers, manufacturers, farmers and fisherfolk, and exporters and importers.

Finally, it batted for the conduct of regulatory impact assessment (RIA) on COVID-19 related issuances, pointing out that a number of policy and regulatory issuances both at the national and local levels have “caused confusion/unnecessary delays and hampered the transport of goods.”

It recommended that the Technical Working Group, with the Anti-Red Tape Authority taking the lead, conduct the RIA to ensure that the rules are consistent, contribute to efficiency, and lower logistics and transport cost.

The joint statement was signed by Amb. Benedicto V. Yujuico, president of PCCI; Sergio R. Ortiz-Luis, Jr., president of PHILEXPORT; Christine S. Pardiñas, SCMAP president; and Senen Perlada, executive director of EDC. It was an offshoot of the discussions during an eForum on Global and Supply Chain Challenges: Quick Assessment and Ways Forward held on April 15.

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