Exporters, other port users demand ‘immediate revocation’ of PPA AO 04-2021

Fourteen trade, industry and transport and logistics groups have issued a solidarity statement seeking the “immediate revocation” of Philippine Ports Authority Administrative Order No. 04-2021, saying the order “threatens to cripple the transport and logistics industries and the national economy as a whole.”

The statement slammed PPA AO 04-2021—the order prescribing the registration and monitoring of containers—for its potential to “negatively impact port operations and disrupt the delicate balance of commerce at the port.”

The groups said PPA has not only flagrantly encroached on a function that is not theirs, but more importantly, “PPA AO-04-2021 threatens to cripple the transport and logistics industries and the national economy as a whole.”

“It is unclear if PPA has even considered the havoc that this will cause to the Philippine economy, especially considering that inflation in the country has already increased to 4.9% in April,” they added.

The solidarity statement was signed by George Barcelon, president of Philippine Chamber of Commerce and Industry; Sergio Ortiz-Luis, Jr., president of Philippine Exporters Confederation; Pierre Carlo Curay, president of Supply Chain Management Association of the Philippines; Jet Ambalada, director of Philippine Association of Meat Processors; Ricardo Papa II, director of Alliance of Concerned Truck Owners and Organizations; Roger Lalu, chairman of Alliance of Container Yard Operators of the Philippines; Patrick Ronas, president of Association of International Shipping Lines; Alexander Ong, president of Association of Off-Dock CFS Operators of the Philippines; Mary Zapata, president of Confederation of Truckers Association of the Philippines; Julita Lopez, president of Customs Brokers Federation of the Philippines; Mark Matthew Parco, president of Philippine Liner Shipping Association; Marilyn Alberto, president of Philippine Multimodal Transport and Logistics Association; Joselito Ilagan, president of Philippine Ships’ Agents Association; and Nelson Mendoza, president of United Portusers Confederation of the Philippines.

Call for probe

The business leaders sought not just the immediate revocation of PPA AO-04-2021 but also the intervention of the Office of the President and the National Economic and Development Authority (NEDA) “to investigate why this measure was introduced despite its harmful potential to stunt the economic recovery of the country still tottering from the coronavirus pandemic.”

The order outlines the rules on the registration and monitoring of containers entering and leaving PPA ports, including the scheduling, loading, unloading, release and movement of all containers. It aims to generate a record of accountability to “enable PPA to monitor the movement of containers from the time of entry, discharge, return and storage, and re-export,” the AO said.

However, the business groups claimed that PPA AO 04-2021, which prescribes the Trusted Operator Program-Container Registry Monitoring System (TOP-CRMS) and Empty Container Storage Shared Service Facility (ECSSSF), impinges on ports outside of the jurisdiction of the PPA.

“AO-04-2021 is incorrectly applied to at least 32% of the total container traffic in Philippine ports, many of which are major ports outside the jurisdictional control of PPA thus, usurping the authority of other independent port authorities,” the groups explained.

PPA AO 04-2021 also duplicates the real-time monitoring of containers already being done by the Bureau of Customs (BOC) under Customs Administrative Order No. 08-2019, making the PPA container monitoring system “an unnecessary redundancy outside of PPA’s own scope of responsibilities,” the statement added.

Impediment to business ease

Further, AO 04-2021 violates the Ease of Doing Business Act, its Implementing Rules and Regulations, as well as international standards of good governance, the dissenters claimed. PPA failed to conduct the necessary Regulatory Impact Assessment on the burden and cost of the regulation on stakeholders before issuing AO 04-2021, they said.

PPA also failed to consult properly with key stakeholders, such as truckers, off-dock operators, and even the BOC, before the order’s release, they continued. “Various stakeholders have submitted position papers expressing their opposition to the PPA’s TOP-CRMS and ECSSSF, but received no written response from PPA to date.”

The critics also pointed to the need for stakeholder engagement in governance as enshrined in the 1987 Constitution, in particular Section 16, Article XIII, adding that engagement with stakeholders is also “an internationally-recognized requirement in the design of regulations,” such as under the ASEAN Guidelines on Good Regulatory Practices.

“PPA disregarded all the foregoing legal requirements and best practices when it issued AO-04-2021 on September 22, 2021,” said the statement.

Also a ground for revocation, according to the groups, is the violation by TOP-CRMS of the Philippine Competition Act and President Duterte’s Administrative Order No. 44, Series of 2021 (the National Competition Policy).

Requiring truckers and other service providers to register under one system which would nominate and assign them to the individual transactions “creates a monopoly where multiple service providers are at the mercy of the winning bidder for TOP-CRMS, violating the Philippine Competition Act,” the statement said.

Moreover, despite PPA’s clear obligation under AO No. 44 to adopt and implement the National Competition Policy, “PPA has done no such competition impact analysis and has therefore violated one of President Rodrigo Duterte’s landmark policies,” it continued.

In rejecting PPA AO 04-2021, the business groups likewise cited the rule’s potential to “create inefficiencies and lead to dramatically higher costs for consumers and businesses especially the micro, small and medium enterprises.”

Under the TOP-CRMS, inbound containers will be tagged upon entry, which is expected to cause significant delays as thousands of containers are fitted with tracking devices. “The expected disruption will not only impact truck availability but also terminal productivity, yard space availability and vessel port stay,” the groups said.

Such additional tagging and untagging time will cause trucks to stay longer in the ports, increasing trucking costs and leading to dramatic price increases for businesses and consumers.

Another issue raised is the possible development of a 10-hectare facility outside the ports to serve as a location for the installation and removal of the tags, which is seen to only create further inefficiencies and additional bottlenecks for all containers going in and out of the Manila Ports.

Moreover, requiring laden containers from the terminal to be transported to an off-dock facility instead of directly to the importers’ warehouse, and vice versa for export and empty containers, will dramatically increase trucking costs.

The statement said PPA appeared not to have considered the havoc this order would cause the economy, as inflation in the country soared by 4.9% in April. “It is likewise unclear if the PPA has even considered reaching out to the National Economic and Development Authority (NEDA) to fully understand the impact of PPA AO-04-2021 and TOP-CRMS, especially at a time when the country is reeling from the effects of the pandemic,” the statement read.

The business leaders warned that the administrative order will not improve port efficiency or attract more commerce through the country’s two international seaports, but will derail any improvements made in recent years and discourage the flow of more cargo.

“With the rising [prices of] goods and commodities brought about by an increase in fuel prices, the lockdowns in key Chinese ports, the geopolitical situation of Europe and the still ongoing pandemic, such disruptions and costs are not only unwelcome and unnecessary, but they are also uncalled for, unjust and ultimately unwarranted,” the leaders stated.

Impact on port users

Earlier this month, Association of International Shipping Lines director Joselito Ilagan in an online forum pointed out that the TOP-CRMS carried potential adverse impacts for three port stakeholder/user groups: customers, transportation providers and the community.

For customers, they face pass-on charges due to the increased logistics cost including from installing the tracking device and the route deviation of trucks.

Transportation providers would likewise feel the effects in terms of the additional cost of deviating the movement of containers; fewer round trips due to the additional transaction time; data privacy issues due to the centralized truck registration database and dispatch; and ad-hoc charges from using TOP-CRMS facility for attaching and detaching and other incidental charges for truck drivers.

To the community, Ilagan foresees congestion at terminals, inland depots, and roads as truck routes get deviated, as well as an environmental impact from the additional carbon footprint.

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