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The proposed joint administrative order that will address port congestion, high logistics costs, and inefficient return of empty containers has been signed by the Department of Finance
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Other signatories were given until this week for comments and if there is none, they can all sign by next week, according to Finance undersecretary Rolando Ligon Jr.
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Other signatories include the Department of Transportation, Department of Trade and Industry, Bureau of Customs, Bureau of Internal Revenue, Philippine Ports Authority, Maritime Industry Authority, and Philippine Competition Commission
The Department of Finance (DOF) has signed the proposed joint administrative order (JAO) to address port congestion, high logistics costs and the slow return of empty containers, a finance official said.
The other signatory agencies have until this week to submit comments. If they raise none, they can all sign the order by next week, Finance Undersecretary Rolando Ligon Jr. told reporters on the sidelines of a forum earlier this week.
Based on the draft, other signatories include the secretaries of the Department of Transportation (DOTr), and Department of Trade and Industry, as well as heads of the Bureau of Customs (BOC), Bureau of Internal Revenue, Philippine Ports Authority (PPA), Maritime Industry Authority, and Philippine Competition Commission.
BOC earlier aimed to get the JAO signed in August, then moved to September after requesting DOF, its mother agency, for more review time and incorporating comments from 42 entities.
The proposed JAO will provide guidelines on port yard utilization and transparency on charges in the handling of cargoes by customs third parties and other logistics providers.
One step in addressing a ‘complex problem’
Customs commissioner Ariel Nepomuceno earlier said the JAO “will start helping resolve the congestion issue” at Manila ports, while acknowledging that congestion is a “complex problem” the order alone will not fully resolve.
READ: Manila port congestion may take months to clear: BOC
The draft is a revival with a 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 (Port of Manila) 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.
The initial draft of the JAO was subjected to comments from stakeholders and concerned government agencies in July.
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. Its proposed policies include efficient port utilization; transparency in local charges by foreign shipping lines; collection of lawful revenue; and controlled temporary admission of containers.
It will apply to persons and entities involved in the handling, movement, storage, release, or re-exportation of international containers, or the imposition or collection of charges related thereto. These include international shipping lines and their agents, truck operators, offdock container yard (OCY) operators, port terminal operators, inland container terminal/depot (ICT) operators, importers, exporters, and customs brokers.
Latest draft
Under the latest draft seen by PortCalls, shipping lines and their agents should observe transparency, uniformity, and reasonableness in the imposition and collection of charges relating to the handling, release, movement and return of cargo and containers, including origin, freight and local charges BOC will oversee compliance with this requirement.
BOC, in coordination with PCC, DTI, and MARINA, and in consultation with shipping lines and relevant stakeholders, will prescribe and maintain a standard schedule and nomenclature of shipping line charges, and prescribe maximum rates or ceiling on shopping line charges, taking into consideration several factors. Any adjustment should be disclosed to BOC and the public within a period, and no hidden or misleading charges will be allowed.
Shipping line charges, which are in nature of costs associated with the transport of imported goods, will form part of the dutiable value for purposes of computing duties and taxes.
Shipping line changes which are for services rendered or use of property in the Philippines will form part of the taxable income in the Philippines and subject to value-added tax and other taxes applicable.
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 equipment interchange report.
- Demurrage should be imposed on a per-container basis. No demurrage or detention charges may be imposed on any laden container that is released from the port within the free period, notwithstanding that other containers covered by the same bill of lading remain in the port beyond the free time.
- Detention charges may be charged based on rules set under the JAO
PPA must establish the conditions for declaring port congestion based on the guidelines prescribed and approved by the PPA Board, taking into account port-specific congestion indicators, after due consultation with international shipping lines, port terminal operators, and other stakeholders, including BOC.
The DOTr secretary, on PPA Board recommendation, will declare the existence of 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 default normal threshold. If utilization rises 5% above that threshold for 15 consecutive days, 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 OCYs or ICTs are available and have capacity to receive returned containers;
- In all instances, shipping lines should ensure a yard allocation of at least 130% of the projected daily inventory of containers based on historical data as determined by bC after consultation
- If actual inventory exceeds 130% of the projected daily inventory for 15 consecutive days, the shipping line will be subject to penalty, unless additional OCT or ICT has been secured to accommodate the excess containers, or a sweeper vessel is provided
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.
The draft JAO sets penalties ranging from ₱5,000 to as much as ₱100,000 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.
A complaint handling mechanism will also be set up for any affected party that wants to file a complaint with BOC involving shipping line charges and practices covered by the proposed JAO.
