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The Federation of Indian Chambers of Commerce Phils. Inc. recommends the adoption of a single all-in freight rate for foreign shipping lines calling the Philippines, replacing all separately imposed destination and local charges
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This is part of FICCI’s position paper for the proposed joint administrative order on port yard utilization and handling of cargoes by customs third parties and other logistics providers
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FICCI also recommends, among others, to prohibit container deposits to when other guarantees already exist, recognize importers’ withholding tax rights, immediate issuance of delivery orders, prohibition of indirect liens, and mandatory refunds of 15 days
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All regulated charges must also be reviewed annually with stakeholders
The Federation of Indian Chambers of Commerce Phils. Inc. (FICCI) recommends the adoption of a single all-in freight rate for foreign shipping lines calling the Philippines, replacing all separately imposed destination and local charges.
This is part of FICCI’s position paper for the proposed joint administrative order (JAO) that will provide guidelines on port yard utilization and transparency on charges in the handling of cargoes by customs third parties and other logistics providers.
“All mandatory cost of carriage including, but not limited to, terminal handling, documentation, release, equipment, administrative, and similar charges should be incorporated into a single all-in freight rate, disclosed and agreed before booking, similar to how this was already done prior to (the 2014) port congestion,” FICCI past president and chair and Philippine Chamber of Children’s Products Industries, Inc. president Rex Daryanani said in a presentation during the Bureau of Customs’ (BOC) recent 6th Customs Industry Consultative and Advisory Council (CICAC) general assembly and 12th Central CICAC.
“This will allow the forces of demand and supply to play free where importers negotiate rates in advance in the same way we buy airline tickets in advance,” he said.
The all-in freight should be disclosed in writing before booking and should be binding upon acceptance.
Daryanani said currently, freight is computed at a minimum or “even crazy zero levels to appear attractive” with refunds and rebates given to suppliers abroad instead of benefiting importers in the Philippines.
The importer “becomes captive once the cargo has sailed and must pay the destination charge just to obtain a delivery order (DO) and release the goods”, he noted, adding that this is “an anti-transparent and an anti-competitive system.”
He also said destination charges “intensified following the 2014 port congestion.”
READ: Manila port congestion ‘very likely’ to recur – gov’t study
Citing the prevailing system with airlines, Daryanani noted that prices are disclosed before booking so passengers are able to compare prices, and there are no surprise mandatory fees on arrival to destination.
Other recommendations
Aside from the single all-in freight, FICCI also recommends for importers to retain the right to withhold and remit applicable taxes. Daryanani said every shipping line charge needs a Bureau of Internal Revenue-compliant invoice or official receipt.
Container deposits should also be prohibited where guarantees, contractual remedies, and marine insurance already exist, he added.
All undisputed refunds such as overpayments, duplicates, and cancelled charges, should also be released within 15 days. Delayed refunds should automatically earn interest plus sanctions.
DOs, refunds, bookings, or services must never be withheld over obligations from unrelated transactions.
Relatedly, electronic and manuals DOs must be issued immediately upon payment and completed documents, and never withheld for unrelated claims. DOs must also always state the container yard where the empty container should be returned.
Daryanani also said container cleaning is an ordinary operating expense of shipping lines. Charges should be allowed only for abnormally dirty, contaminated, or damaged containers.
On the proposed 75% optimum yard utilization level at the port and 30% limit for excess capacity of shipping lines’ container yards in the draft JAO, Daryanani said these thresholds “must rest on real capacity studies and stakeholder consultation– not an arbitrary fixed figure.”
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
All regulated charges must also be reviewed annually with stakeholders. FICCI also proposes a biennial State of the Philippine Logistics Report that tracks costs, dwell times, and compliance.
Moreover, FICCI suggests that BOC’s CICAC be formally utilized as principal industry consultative and advisory body under the proposed JAO’s Oversight Committee. Daryanani said CICAC should formally and consistently be consulted on major changes affecting logistics costs and operating standards before, not after, rules are set.
CICAC is BOC’s consultative body with industry groups to enlist their support and active participation in advancing the reform agenda of the bureau, and aims to help in addressing existing and potential issues related to Customs and industry matters.
Customs commissioner Ariel Nepomuceno, during the same CICAC event, said they are aiming to get the JAO approved within August. BOC received a total of 20 position papers from stakeholders during the submission period for comments from July 7 to 13.— Roumina Pablo
