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The Department of Trade and Industry is extending to June 30, 2025 the deadline for complying with capitalization and training requirements under new rules for sea freight forwarding
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Memorandum Circular 25-02 said the extension will give sea freight forwarders additional time to fulfill obligations under DTI Department Administrative Order No. 24-09 (New Rules for Sea Freight Forwarding)
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Under MC 25-02, the minimum paid-up capital will depend on any of these three forwarder categories: non-vessel operating common carrier, P5 million; international freight forwarder, P3 million; and domestic freight forwarder, P1 million
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Training must be conducted by the national association such as the Philippine Multimodal Transport and Logistics Association, Inc., or by training entities accredited by the Technical Education and Skills Development Authority or the Professional Regulation Commission
The Department of Trade and Industry (DTI) is extending to June 30, 2025 the deadline for complying with capitalization and training requirements under new rules for sea freight forwarding.
The extension will give sea freight forwarders additional time to fulfill obligations under DTI Department Administrative Order (DAO) No. 24-09 (New Rules on Sea Freight Forwarding), according to Memorandum Circular No. 25-02 dated February 17 and signed by Trade assistant secretary and Fair Trade Group supervising head Atty. Agaton Teodoro Uvero.
READ: DTI issues new rules on sea freight forwarding
The original deadline for the new capital requirement was January 1, 2025.
MC 25-02 covers new applicants and existing holders of Certificate of Forwarding Accreditation, including those for renewal.
The circular acknowledged challenges in meeting the paid-up and training requirements, including the “limited availability of accredited training centers and courses, as well as financial difficulties faced by businesses in raising the required paid-up capital.”
It specified that the training must be conducted by the national association, such as the Philippine Multimodal Transport and Logistics Association, Inc., or by training entities accredited by government agencies such as the Technical Education and Skills Development Authority or the Professional Regulation Commission.
Approved and signed on October 29, 2024, DAO-24-09 amends the almost 20-year-old Administrative Order (AO) No. 06-2005 issued by the defunct Philippine Shippers’ Bureau (PSB).
The new order, among others, increased the paid-up capital/equity requirement for sea freight forwarders.
The minimum paid-up capital will depend on any of these three forwarder categories:
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non-vessel operating common carrier (NVOCC), P5 million
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international freight forwarder (IFF), P3 million
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domestic freight forwarder (DFF), P1 million
The requirement compares with the previous P4 million mandated for an NVOCC, P2 million for an IFF, and P250,000 for a DFF.
The order also requires key operating officers, who may be the owner, president, chief operating officer, general manager, or operations manager, to have relevant training of at least 60 hours for NVOCCs and IFFs and a minimum of 40 hours for DFF.
At least one of the key operating officers must have at least three years’ experience in shipping, freight forwarding and/or related activities.
For those applying as NVOCC, the three-year freight forwarding experience must include trainings on consolidation of export cargoes.
The DAO applies to all sea freight forwarders, namely, NVOCC, cargo consolidator (CC), IFF, breakbulk cargo agent (BBA) or cargo consolidator agent (CCA), and DFF. All are required to first secure a DTI accreditation certificate before they can legally engage in their function and/or operations.
Companies applying for more than one category will have to comply with the paid-up capital/equity requirement for the higher/highest category applied for.
The new rules also place the validity of the Certificate of Accreditation (COA) at five years from two years.
An accredited firm may apply for additional category, with the validity period co-terminus with the first accredited category/ies.
The DAO no longer requires firms to apply for a separate accreditation for their branch offices so long as they provide DTI of the list of their branches.
The DAO requires proof of cargo insurance coverage, which must come in the form of insurance policy and official receipt showing payment of premium. IFFs and DFFs should submit Merchandise in Transit (Floater) Insurance while those applying for NVOCC category should submit valid Standard Global Comprehensive Transport Operators’ Liability Insurance.
The insurance should cover:
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Losses and damages due to loading and unloading
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Losses and damages while the vehicle is on stop overnight at an allowed territory
The minimum amount of insurance coverage remains the same as the previous rule:
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NVOCC – P1 million
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IFF – P600,000
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DFF – P300,000
For companies applying for more than one category, the category with the higher/highest minimum amount of insurance coverage will apply.
Filing and processing fees for application will be increased to P12,500 for NVOCC; P10,000 for IFF; and P7,500 for DFF.
An accredited firm applying for additional category will be charged a filing and processing fee of P3,500 for every additional category applied for. The validity period of the additional category will be co-terminus to the first accredited category/ies.
A documentary stamp tax of P30 will still be charged per application regardless of the mode of issuance of the certificate.
No fee will be collected from the applicant for the COA issued and generated via the online system, while P500 will be charged for a hard copy.
Certified copy of a lost or destroyed COA will be charged P500, while other relevant certifications, including system-generated copy of the certificate, will also be charged P500.
Applications for accreditation should be processed by DTI within three working days from receipt of complete requirements and payment of the filing fee.
The COA must be renewed within two months before expiration. An application for renewal of the COA filed after the expiry date will be subjected to a surcharge of 50% of filing and processing fee if filed within one month after expiration, and 100% of the fee if filed one month after expiration.
To ensure the DAO and other relevant issuances meet objectives, DTI will still exercise its visitorial power by entering, when necessary, any establishment, office, and premises of a firm reported to be engaging in transactions covered by the DAO.
The DAO lists acts that are grounds for suspension or revocation of the COA, including:
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engaging in the freight forwarding business without prior recognition
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misrepresentation by a firm that it has a subsisting recognition
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using of a subsisting recognition by another entity
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failure to deliver cargo as required in the transport document, including cases of missing items or damaged package or goods
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failure to submit required reports, documents, and/or papers
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breach of the existing Code of Conduct and Ethical Standards for Freight Forwarders
Complaints for violations of the DAO should be filed and processed in accordance with DTI’s existing uniform rules of procedure for handling or processing of administrative complaints under DTI Department Order No. 7 series of 2006 and its amendments.
Depending on the violation and the order of offense, penalties/sanctions range from stern warning, issuance of cease-and-desist order, and monetary fines.
All COA issued before the effectivity of the DAO in accordance with PSB 06-2005 will be effective and valid until their respective expiry date, provided that, they shall comply with the training and capitalization requirement.
Sea freight forwarders, unlike other transport services regulated by agencies under the Department of Transportation, are accredited by DTI, previously through PSB. When PSB was dissolved in 2014 under DTI’s rationalization plan, it was replaced by the Supply Chain and Logistics Division, while PSB’s regulatory powers and functions were transferred to the Fair Trade Enforcement Bureau. – Roumina Pablo
