PPA AO 04-2021 seen to hike logistics costs, delay turnaround time

The implementation of a Philippine Ports Authority (PPA) order prescribing the registration and monitoring of containers will trigger substantial transport delays and raise costs, badly affecting port stakeholders and users, warns a shipping official.

PPA Administrative Order (AO) No. 04-2021 will increase the cost of logistics, with the consumer ultimately shouldering the additional charges, Association of International Shipping Lines, Inc. (AISL) director Joselito Ilagan said in a recent online presentation.

PPA AO 04-2021, which prescribes the policy for the Trusted Operator Program-Container Registry Monitoring System (TOP-CRMS), took effect on October 19, 2021. The order has just taken a further step forward with the recent awarding of the contract to the winning bidder, according to Ilagan.

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.

The TOP-CRMS will be launched and rolled out at two pilot ports in the Port of Manila—the Manila International Container Terminal and the Manila South Harbor. Included in the coverage are three Philippine Economic Zone Authority (PEZA) locations for the detachment and reattachment of tagging devices of containers entering and leaving PEZA zones.

The service fee for the program shall not exceed P4,900, exclusive of 12% VAT, per tagged container, Ilagan added.

Highlights of the TOP-CRMS program include these operational mobility features and cloud-native applications: user identification; service registration for shipping lines, forwarders, brokers, truckers, and drivers; service acceptance and dispatch; trucking/trucker location monitoring; container insurance policy coverage availment; delivery and fulfillment confirmation; and electronic payment services.

Another important aspect is the requirement for an available 10-hectare area within a 50-kilometer radius of international container terminals in Manila for use as a container staging facility or as a container depot for reexporting empty containers, the AISL officer noted.

Moreover, the TOP-CRMS directs PPA to ensure enough space within the port terminal or in a strategically located area for installing the tracking devices onto the containers and their decoupling, as well as for stacking prior to loading.

AISL pointed out that the program carries 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, AISL foresees congestion at terminals, inland depots, and roads as truck routes get deviated, as well as an environmental impact from the additional carbon footprint.

The presentation also showed estimates of the cost effects of the tagging requirement on import and export containers.

If tagging is done quayside in the terminal, port stay could increase to 58.7 hours from the current 32 hours for a ship with a total throughput of 1,600 moves. This means an additional 26.7 hours of port stay for the vessel.

“Because of the prolonged stay of the vessel alongside the berth, the terminal can handle less vessels compared to no tagging to be done on the quayside…. Then the rest of the ships will be waiting at anchorage for their time to be berthed and they will have a congestion.”

If tagging and untagging is done outside the terminal due to space constraints, the current flow of import containers of 14 hours’ transaction time could jump to 19 hours with the addition of the tagging stop. The added cost of rerouting the truck to the tagging area plus the cost of tagging could inflate total cost to about P36,000 from the current P26,000 per 40-foot dry container. Also, expect a delay in the turnaround time of trucks, the executive said.

On the other hand, for non-PEZA export containers, Ilagan estimates that with the tagging stop, total transaction time could jump from 12 hours to 18 hours, and cost could soar to more than P29,000 from over P24,000 from the current transport cycle.

Cost of transport will definitely increase and at the end of the day, it will be the man on the street—the consumer—that will bear all this cost, said the AISL spokesperson.

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