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The Bureau of Customs released a draft joint administrative order covering transparency in local charges imposed by logistics providers; port congestion management; yard utilization; and return of empty containers
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The draft revives and significantly expands a 2019 proposal that stalled
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It covers a broad range of customs third parties including shipping lines, truckers, freight forwarders, port and terminal operators, container yards, and warehouse operators, with BOC as lead implementing agency
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Stakeholders may submit position papers on the draft JAO, available on the BOC website, from July 7 to 13
The Bureau of Customs (BOC) has issued a draft joint administrative order (JAO) that seeks to address high logistics costs, port congestion, and inefficient return of empty containers — and is inviting stakeholders to submit position papers to help shape the final version of the policy.
The draft JAO, open for comment from July 7 to 13, is a revival and significant expansion of a 2019 proposal that aimed to regulate origin and destination charges imposed by foreign carriers operating in the Philippines and to ease port congestion. The new version goes further. BOC Office of the Commissioner Deputy Chief of Staff Atty. Chris Noel Bendijo earlier said the new JAO “expressly provides provisions for the BOC to sort of be the lead agency” and will be “all-encompassing” — covering not just shipping lines but truckers, container yards, and other logistics providers.
The issuance of the draft comes amid high yard utilization at Manila international terminals.
READ: PortCalls Special Report on Manila’s Cargo Crisis (Part 1) — When Sea and Air Feel the Squeeze
Manila’s Cargo Crisis (Part 2): Capacity Crunch at the Airport
Manila’s Cargo Crisis (Part 3): What Needs to Happen
Four policy goals
The JAO aims to “promote efficient, transparent, and cost-effective international shipping and logistics, ensure efficient utilization of ports, and facilitate the movement and storage of cargoes.” It pursues four specific policy goals:
- Efficient port utilization
- Transparency in local charges imposed by customs third parties and logistics providers
- Accurate customs valuation
- Controlled temporary admission of containers
The JAO will apply to all customs third parties — including importers, exporters, carriers, airlines, shipping lines, shipping agents, freight forwarders, consolidators, port and terminal operators, and warehouse operators — as well as trucking companies and container yard and depot operators. Under Republic Act No. 10863, or the Customs Modernization and Tariff Act, third parties transacting with BOC on behalf of importers and consignees are treated equally as true importers or consignees.
Agencies with roles under the JAO include BOC as lead implementing agency, the Department of Finance (DOF), Department of Transportation (DOTr), Department of Trade and Industry (DTI), Bureau of Internal Revenue, Philippine Ports Authority (PPA), Maritime Industry Authority, and the Philippine Competition Commission.
Transparency in shipping charges
Under the draft JAO, shipping lines must report to BOC all charges currently collected, including the amount and justification for each. BOC will have authority to standardize the nomenclature of such charges across shipping lines and set ceilings on fees. This authority will include the power to disapprove any increase, or cause its reduction or removal when found unjustified.
Once charges are properly identified, shipping lines will not be allowed to increase rates or impose new charges without BOC approval, DOF concurrence, and public consultation. Provisional increases may be allowed in times of declared national emergency or when market conditions warrant, in coordination with PPA.
Charges found to be legitimate destination charges will be subject to value-added tax and other local taxes.
All international shipping lines and cargo truck operators must also regularly submit to BOC and DTI their monthly average freight rates per route, within one month of the JAO’s effectivity and on a monthly basis thereafter.
Container deposits and demurrage
The draft JAO proposes specific rules on container deposits and demurrage that directly address longstanding industry grievances. Some of these include the following:
- Container deposits must be refunded within 15 days of the shipping line’s receipt of returned empty containers; no container deposit should be imposed if other forms of security are available to guarantee the container’s return.
- No demurrage or detention charges may be imposed if the failure to return the container is due to the fault of the shipping line — such as when it did not acknowledge within 24 hours a request on where to return the container, or did not assign a container yard or port terminal within 48 hours of the request.
- Shipping lines are prohibited from imposing an indirect lien or holding the release of a consignee’s shipment due to outstanding demurrage and detention liabilities from a previous or different transaction.
- Shipping lines are also prohibited from withholding container deposit refunds for returned empty containers beyond the 15-day period.
Port congestion and yard utilization
On port congestion management, PPA must establish and periodically review port-specific congestion indicators covering terminal design, operational capacity, cargo profile, vessel traffic, container dwell time, berth occupancy, truck turnaround time, and other relevant operational indicators.
The DOTr secretary, upon recommendation of the PPA Board, will declare the existence of port congestion or emergency cases resulting in serious disruptions in port operations. If port congestion is declared, PPA may designate extension ports, and foreign vessels in the congested port may be directed to berth there.
On yard utilization, Port of Manila and Manila International Container Port operators, together with BOC and PPA, must determine within 15 days of the JAO’s effectivity the specific percentage of yard utilization deemed normal. Pending such determination, 75% yard utilization will be considered optimal.
When yard utilization within two consecutive weeks increases by 5% above the threshold, BOC will implement the transfer of laden containers in accordance with the JAO’s provisions or under PPA Administrative Order No. 02-2019. When overall yard utilization exceeds 100% or port congestion is declared, foreign vessels may be allowed to berth and unload cargo at an extension port.
Empty container management
The draft JAO proposes a container yard policy that applies regardless of whether port congestion exists:
- Shipping lines must ensure the availability of container yards and their capacity to receive returned containers. BOC may designate an alternative yard if the designated container yard fails to confirm or reject the empty container due to lack of space.
- Shipping lines and/or their agents will not be allowed to impose detention charges and must bear all re-routing costs to the alternative container yard designated by BOC.
- Truck operators, customs brokers, or freight forwarders must ensure that the empty container — upon confirmation of the return date and time — is delivered within 48 hours; violations will be sanctioned by BOC.
- Shipping lines that import international containers in excess of more than 30% of their yard allocation within 15 days will be subject to penalty, unless they have identified an accredited container yard for temporary storage or have provided a sweeper vessel to evacuate excess containers.
All container yards acting as third parties for shipping lines in the storage of temporarily admitted containers must be accredited with BOC and comply with accreditation conditions.
Other provisions
BOC will also create or accredit automated systems to monitor container movement from discharge to load-out, including intermediate transfers. The proposed JAO provides penalties for violations ranging from P5,000 to P10,000, depending on the nature of the offense. An oversight committee composed of all agencies with identified roles under the JAO will be formed to oversee implementation and conduct periodic reviews of the policy. – Roumina Pablo
