Upper House probes rising port fees, logistics costs

Senate committee meetings and hearings are being conducted following a new resolution filed by Senator Risa Hontiveros calling for a legislative inquiry into the rising fees and charges at Philippine ports, which are jacking up domestic logistics costs, already one of the highest in Southeast Asia.

On February 15, 2023, Hontiveros introduced Senate Resolution No. (SRN) 484, or “Resolution Calling for an Inquiry in Aid of Legislation into Increased Logistics Costs in the Philippines Caused by Rising Port Fees and Charges.”

The resolution seeks to look into claims by a major shipping association and various industry groups and trade organizations that several administrative orders (AOs) issued by the Philippine Ports Authority (PPA) have been responsible for the increases.

Identified among these issuances is PPA AO No. 12-2018, or the “Guidelines for the Selection and Award of Contracts under the Port Terminal Management Regulatory Framework.” This AO provides that port terminal management contracts shall be awarded to the eligible bidder offering the highest concession fee.

PPA AO 12-2019, meanwhile, implemented a Central Ticketing System covering roll-on/roll-off and passenger ships calling at ports within PPA jurisdiction.

PPA AO 01-2020, entitled “Prescribed Waste Reception Fee in All PPA Ports,” was also mentioned for increasing the waste reception fee in all PPA ports.

PPA AO 04-2021 established a system for the registration and monitoring of containers entering and leaving PPA ports, known as the Trusted Operator Program-Container Registry Monitoring System (TOP-CRMS), as well as an Empty Container Storage Shared Service Facility (ECSSSF).

PPA AO 08-2021, which amended PPA AO 01-2020, modified the types and classifications of vessels subject to the waste reception fee, including the imposition of a per-round-trip collection of said fee for “short travel time” vessels.

SRN 484 says the Philippine Coastwise Shipping Association (PCSA) has alleged that “the aforementioned administrative orders have led to an increase in port charges within the Philippines by as much as 2,000 percent, thus increasing domestic logistics costs to the detriment of the public.”

The resolution further states that the PCSA—the largest shipping association in the Philippines in membership and tonnage—has also requested for a Department of Transportation review of the awarding of port terminal management contracts.

The association claimed that the awarding has resulted in “the alleged increase in port charges in key ports, such as those in the cities of Ozamiz, Ormoc, Zamboanga, Tagbilaran, Surigao, Tacloban, Legazpi, and Calapan and in the towns of Nasipit and Matnog,” notes the Senate resolution.

Further, various industry groups and trade associations have also expressed fears that the direct costs associated with the TOP-CRMS and ECSSSF, including additional insurance, transaction, and trucking fees, “will result in an almost 50% increase in the cost of importing goods,” the resolution declares.

Hontiveros says these PPA AOs seem to undermine the Updated Philippine Development Plan 2017-2022 strategy to reduce the cost of logistics, which accounts for 27% of the revenues of manufacturing firms in the Philippines, as compared to Indonesia (21%), Vietnam (16%), and Thailand (11%).

The administrative issuances also appear to run counter to Presidential Decree No. 857, which provides that PPA has the duty to provide services, on its own or by contract, within the country’s port districts, including container handling, garbage collection, and other services related to the handling of goods and cargo.

The resolution stresses that increased shipping and logistics costs, by being passed on to the general public, could affect the prices of goods going through these ports.

So far, the resolution, which was submitted to the Senate and referred to the Committee on Public Services last February, has gone through committee meetings and hearings.

In his online participation at a recent Senate hearing, Transport Secretary Jaime Bautista announced that the PPA Board has deferred the implementation of the much-opposed AO 04-2021, which contains the details of the implementation of the TOP-CRMS.

He explained that the Board was still reviewing stakeholder complaints of extra costs and processes involved. Oppositors also included the Bureau of Customs which is also implementing a container monitoring system called E-TRACC or Electronic Tracking of Containerized Cargo, he said.

Meanwhile, based on the agency’s presentation during the hearing, PPA general manager Jay Daniel R. Santiago countered that PPA charges make up only about 5 percent of the total shipping costs. He also defended AO 04-2021, explaining that it is consistent with the PPA mandate to ensure that their ports operate smoothly.

Philippine Chamber of Commerce and Industry president George T. Barcelon, a resource person during the hearing, said AO 04-2021 would not provide any value added and was inconsistent with efforts to ease the flow and reduce the cost of doing business in the country.

For his part, Philippine Exporters Confederation Inc. chief Sergio R. Ortiz-Luis Jr. said exporters were very much concerned that the extra costs would be passed on to them and eventually to the consumers, adding to the country’s inflation and competitiveness issues.

Both business leaders again called for the revocation of AO 04-2021, as proposed in the Open Letter to President Marcos they signed in January this year with 14 other heads of business organizations.

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