BOC targets signing of JAO addressing port congestion within September

The Bureau of Customs (BOC) now aims to get the proposed joint administrative order (JAO) addressing port congestion, high logistics costs, and inefficient return of empty containers signed within the month, according to Customs commissioner Ariel Nepomuceno.

The draft JAO was ready last month, but the BOC asked its mother agency, the Department of Finance (DOF), for a one-week extension to ensure all details are thoroughly reviewed, given the bureau’s role as the main implementing agency, Nepomuceno told media on September 8.

He said 42 entities submitted comments or position papers on the proposal, which also took time to integrate into the draft. BOC had earlier targeted signing the JAO in August, ahead of the “cyclical occurrence” of port congestion that typically begins in October. Nepomuceno has said the JAO “will start helping resolve the congestion issue” at the Port of Manila, while acknowledging that congestion is a “complex problem” the order alone will not fully resolve.

Asked how BOC will penalize foreign shipping lines that do not implement the JAO once issued, Nepomuceno said: “We need their support and cooperation but we don’t need their approval.”

Lead agency, wide coverage

Under the JAO, BOC will be the lead agency, with DOF, the Department of Transportation (DOTr), the Department of Trade and Industry, the Bureau of Internal Revenue, the Philippine Ports Authority (PPA), the Maritime Industry Authority, and the Philippine Competition Commission also involved.

The draft is a revival and significant expansion of a 2019 proposal that aimed to regulate origin and destination charges imposed by foreign carriers and ease port congestion. 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 measure is one of several BOC steps to address high yard utilization, particularly at Manila’s international terminals. Manila International Container Port (MICP) and Manila South Harbor saw yard utilization breach 100% at points earlier this year, a convergence the Association of International Shipping Lines attributed to seasonal, operational, and logistical factors observed since mid-December. Conditions improved from March before climbing again in late April; at South Harbor, overall utilization has since eased, reaching over 60% in July and early August.

READ: Manila’s Cargo Crisis — When Sea and Air Feel the Squeeze

The draft JAO notes that industry stakeholders have flagged high logistics costs, excessive and non-transparent fees, port utilization inefficiencies, and other regulatory constraints as factors hurting the sector’s competitiveness. It aims to promote efficient, transparent, and cost-effective shipping and logistics, ensure efficient port utilization, and facilitate cargo movement and storage, pursuing four policy goals: efficient port utilization; transparency in local charges by customs third parties and logistics providers; accurate customs valuation; and controlled temporary admission of containers.

It will apply to all customs third parties — 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 the Customs Modernization and Tariff Act (CMTA, Republic Act No. 10863), such third parties transacting with BOC on behalf of importers and consignees are treated the same as true importers or consignees.

Charges and transparency

Shipping lines will be required to report to BOC all charges currently collected, including the amount and justification for each. BOC will have authority to standardize how these charges are named across shipping lines, set fee ceilings, disapprove increases, and order reductions or removals when charges are found unjustified.

Once charges are identified, shipping lines will not be allowed to raise rates or impose new charges without BOC approval, DOF concurrence, and public consultation — except for provisional increases during a 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. International shipping lines and cargo truck operators must also submit their monthly average freight rates per route to BOC and DTI, starting within a month of the JAO’s effectivity and monthly thereafter.

Container deposits and demurrage

The draft JAO takes direct aim at longstanding industry grievances over container handling:

• Container deposits must be refunded within 15 days of a shipping line’s receipt of the returned empty container; no deposit may be imposed if other forms of security are available.
• No demurrage or detention charges may be imposed if the failure to return a container is the shipping line’s fault — for instance, not acknowledging a return-location request within 24 hours, or not assigning a container yard or terminal within 48 hours of the request.
• Shipping lines cannot impose an indirect lien or withhold a consignee’s shipment over demurrage or detention liabilities from a separate, prior transaction.
• Shipping lines cannot withhold container deposit refunds beyond the 15-day period.

Managing port congestion and yard utilization

PPA must establish and periodically review port-specific congestion indicators — covering terminal design, operational capacity, cargo profile, vessel traffic, container dwell time, berth occupancy, and truck turnaround time, among others. The DOTr secretary, on PPA Board recommendation, will declare port congestion or emergencies causing serious operational disruptions; PPA may then designate extension ports and direct foreign vessels at the congested port to berth there instead.

On yard utilization, Port of Manila and MICP operators, together with BOC and PPA, must determine within 15 days of the JAO’s effectivity what percentage of yard utilization is considered normal; pending that determination, 75% will serve as the optimal threshold. If utilization rises 5 percentage points above that threshold for two consecutive weeks, BOC will implement the transfer of laden containers under the JAO or PPA Administrative Order No. 02-2019. If overall utilization exceeds 100% or congestion is declared, foreign vessels may be allowed to berth and unload at an extension port.

Separately, and regardless of whether congestion exists, the draft JAO sets a standing container yard policy:

• Shipping lines must ensure container yards are available and have capacity to receive returned containers; BOC may designate an alternative yard if the assigned one cannot confirm or reject an empty container due to lack of space.
• Shipping lines and agents cannot impose detention charges in such cases and must bear re-routing costs to the BOC-designated alternative yard.
• Truck operators, customs brokers, or freight forwarders must deliver the empty container within 48 hours of a confirmed return date and time, or face BOC sanctions.
• Shipping lines that import containers exceeding 30% of their yard allocation within 15 days face penalties, unless they have arranged accredited temporary storage or a sweeper vessel to evacuate excess containers.

All container yards acting as third parties for shipping lines in storing temporarily admitted containers must be BOC-accredited and comply with accreditation conditions. BOC will also create or accredit automated systems to monitor container movement from discharge to load-out, including intermediate transfers.

Penalties and oversight

The draft JAO sets penalties ranging from ₱5,000 to ₱10,000 depending on the offense. An oversight committee made up of all agencies with roles under the order will be formed to monitor implementation and conduct periodic policy reviews.

While the JAO remains pending, BOC has continued coordination meetings with stakeholders on high yard utilization at Manila’s international terminals, and issued a memorandum dated June 19 outlining three immediate measures to address the problem. Nepomuceno has also said legislated solutions are “better,” when asked about pending congressional bills that likewise seek to strengthen government oversight of shipping charges imposed by international carriers in the Philippines.