Port operator, the Philippine Port Authority, has been issuing orders that the logistics and movers find objectionable and unjustifiable, including the 949 percent increase in tariff rates, which is supposed to fund the rehabilitation of ports damaged by recent typhoons.
Logistics companies and movers urged Malacanang to stop the planned 949 percent hike in tariffs of the Philippine Ports Authority amid rising fuel prices and a looming food crisis, which it said, “is against the interest of the people.”
Calling the planned hikes as “unjustifiable” it is said the PPA would implement the new rates once the new operator takes over the Port of Pasig.
“We urgently and humbly seek your intervention in the PPA’s attempt to unjustifiably and unconscionably increase arrastre, mooring and other tariffs at the Port of Pasig by as much as 949 percent for dry bulk cargo, 615 percent for general cargoes, and 71 percent for prime commodities,” the Pasig Port Users Against PPA Tariff Increases said in a full-page newspaper ad on Monday.
Signed by representatives of 54 companies, the appeal was addressed to President Rodrigo R. Duterte, President-elect Ferdinand R. Marcos, Jr., National Economic and Development Authority (NEDA) Secretary Karl Kendrick T. Chua, and incoming NEDA Secretary Arsenio M. Balisacan.
The 54 companies, which include Movers and Managers Corp., J-Tram Integrated and Marketing Corp., CQ Heirs Shipping Lines, San Nicholas Lines, Inc., JCAP Shipping Lines, JVS Journey Sea Trans., Inc., and Masuda Marine Corp., said the new tariffs are “exorbitant (and) without justification.”
The companies argued that raising tariffs amid rising fuel prices and a looming food crisis is “against the interest of the people.”
Tier 3 ports
The tariff hike, which is applicable to all “tier 3” ports including the Pasig Port, is expected to affect the prices of grains used for flour and bread, animal feeds, construction materials, sugar, rice, and cooking oil, among others.
The port tariffs are “without consideration for the minimum wage of the locality of the affected port users,” they said.
“If tariffs are increased at the Port of Pasig, which ships to and from Palawan, the increase in tariff rates at Palawan will be added on to the increase in rates at the Port of Pasig for products shipped to the Port of Pasig, and vice-versa,” the group said.
The statement was published a week after the PPA awarded the terminal management contract for the Port of Pasig to the Manila-based Mega Lifters Cargo Handling Corp.
The Port of Pasig, which is situated near the M. Roxas Jr. Bridge (Delpan Bridge) spanning the Pasig River, covers 43,247.07 square meters on both banks of the river. It handled 848,960 metric tons of domestic cargo last year, the PPA said.
“In other words, for dry bulk cargo imported at both Pasig and Palawan, the Palawan increase of 215 percent will be added to the 949 percent increase of Pasig, for a punishing 1,164 percent increase to the end consumer,” the Pasig Port users also said.
The group said they issued a similar appeal to the PPA Board of Directors on April 11 but did not receive a reply.
In their petition in April, port users Movers and Managers Corp., J-Tram Integrated and Marketing Corp., CQ Heirs Shipping Lines, TBB Enterprises, San Nicholas Lines, Inc., and JVS Journey Sea Trans., Inc. proposed that the “tariff increase be similar to that granted to MNHPI (Manila North Harbor Port, Inc.) in 2017, i.e. 24% increase implemented in three tranches of 8% each over three years.”
Two communications officers of the PPA received and acknowledged receipt of Business World’s request for comment on Monday, but the agency did not yet issue one.
Fund improvements of port facilities
Earlier the PPA clarified that tariff adjustments under Tier 3 classification will help fund the needed improvements in port facilities, to reduce logistic costs.
PPA General Manager Jay Daniel Santiago said that there is a need to improve ports to bring down the logistics costs.
"If we have efficient ports, the logistics cost will be lowered in the long run, but we need to invest now and we don't have any source of investment, except the tariff rates. PPA does not derive any subsidy from the national government, it's self-sustained, so we need to improve and modernize our facilities," he said.
PPA Administrative Order (AO) 10-2019 provides uniform port tariffs for Tier 3 ports under the port terminal management regulatory framework (PTMRF). The AO covers the rates to be imposed for Tier 3 ports under the PTMRF such as cargo handling charges, RoRo terminal fee, passenger terminal fee, porterage rate and waste reception fee.
The upward adjustment of port tariffs will be every three years. The contractor is entitled to apply the adjusted rates for as long as the financial obligation and liabilities and operational obligations and key performance indicators set by PPA have been complied with.
He explained that when there is an adjustment, other components of logistics would follow and increase as well. It's unfair in so far as cargo handling cost is concerned because that's not the bulk of our cost. The bulk of the cost is all the costs outside of the port such as warehousing, trucking, labor, fuel, etc.
"As far as cargo handling is concerned, it's less than 5 percent. When you look at commodities, that adjustment is only less than 10 centavos per sack of, let's say rice or flour. It has a little impact. The 300-percent increase looks glaring but in terms of absolute value, it's small," he said.
The Tier 3 tariff uses as reference the Cagayan de Oro port to maintain the uniform tariff. He explained that having a different tariff in another area is hard to determine as far as logistics planning is concerned.
Previously, the rates were not transparent, but now the rates are listed and itemized, and have been simplified for port users.
Last April 27, the PPA said collections from vehicles and rolling cargoes in all PPA ports shall be waived from March 29 until June 30, 2022.
PPA issued Memorandum Circular 02-2022, which provided the waiver of terminal fees that served as financial assistance to agencies and organizations involved in the relief and reconstruction efforts to areas devastated by Tropical Storm "Odette" using PPA ports.
Among the severely affected Odette-hit areas include Dinagat Island, Siargao and Surigao City in Surigao del Norte, Bohol and Palawan as well as several areas in the Samar and Leyte provinces.
PPA is continuously rehabilitating the ports severely damaged by the typhoon, such as Lipata in Surigao City, Liloan, and San Ricardo in Northern Samar, as well as several ports under the Port Management Office of Bohol to bring them back to full commercial operations at the soonest time possible.
Another AO opposed
Last May 10, industry stakeholders and port users strong denounced the implementation of PPA AO04-2021 saying it should be scrapped for duplication of tasks, discourages business and investment, lacked transparency and its impact on transport and consumer costs.
Opposition to PPA AO 04-2021, which prescribes the policy governing the registration and monitoring of containers, was expressed by participants at a recent multi-stakeholder meeting organized by the Association of International Shipping Lines Inc.
The order sets the policy on the registration and monitoring of containers entering and leaving PPA ports, including the scheduling, loading, unloading, release and movement of all containers.
It aims to generate a record of accountability to "enable PPA to monitor the movement of containers from the time of entry, discharge, return and storage, and re-export," the AO said.
Further, the order
"shall apply to all containers originating from foreign ports that will be unloaded at government and/or private ports under the administrative jurisdiction of the PPA."
Members from affected sectors, in a forum, said that too many agencies were already monitoring containers, and PPA could be encroaching into the jurisdiction of the Bureau of Customs (BoC).
"There are two tags to remove from containers. There is from the Bureau of Customs, and PPA, and there is a tag from the Department of Agriculture?" he asked.
Vicente Suazo Jr., a former PPA official and currently a shipping consultant, concurred that the order duplicates the tasks being done by BoC. He added that PPA should just share data with BoC without needing to establish its own monitoring system.
Suazo added that PPA cannot contribute to economic growth, one of its mandates, when it is discouraging doing business in the Philippines through such "unnecessary impositions."
Another said the AO contradicts Republic Act 11032 or the "Ease of Doing Business Act" by adding another layer to business transactions.
"Right now all these proposals of PPA are already in place. Then there are from the Bureau of Customs. And then the port operators. This is just duplication," the attendee said.
AISL director Joselito Ilagan, who was the other meeting resource speaker, said
"this is something unacceptable to us because [we can see]its disastrous impact operationally for customers, transport providers and the community.”
Pass-on charges
Customers face pass-on charges due to the increased logistics cost including from installing the tracking device and the route deviation of trucks.
Transportation providers would likewise feel the effects in terms of the additional cost of deviating the movement of containers; fewer round trips due to the additional transaction time; data privacy issues due to the centralized truck registration database and dispatch; and ad-hoc charges from using the container monitoring facility for attaching and detaching and other incidental charges for truck drivers.
To the community, AISL foresees congestion at terminals, inland depots, and roads as truck routes get deviated, as well as an environmental impact from the additional carbon footprint.
Ma. Flordeliza C. Leong, vice president at the Philippine Exporters Confederation Inc. (Philexport), expressed support for the move to scrap the policy, citing duplication, administrative and logistics complications and higher cost of doing business for exporters.
All the participants stressed that the AO would only serve to add to the burdens of Juan de la Cruz, the ordinary Filipino. They noted that it would deal a crippling blow to industry and that its impact would be particularly harsh on importers and end-users.
"Cost factor alone [will be] shared by all port users [and] we're all going to be affected and [this will] set us back decades," said one of the participants.
It was also claimed that the order lacked transparency or a clearly defined purpose, and fears were raised about the possibility of hidden or additional costs coming to light later.
Another stakeholder noted the measure as problematic for containers brought to domestic ports that are not under PPA jurisdiction, as it would open the question of how un-tagging would be done unless the container is brought back to Manila. She said this indicated that the program may not be well thought out.
It was also brought up that the container monitoring system runs contrary to free trade market practices, discouraging negotiation, business relationships and performance review.
Additionally, the program is seen to worsen yard space issues, especially during the peak season. It was further pointed out that PPA AO 04-2021 comes just as the Philippines is suffering serious delays in shipments because of the shutdowns in China. The measure would also "ensure that we remain to be the most expensive country to do business in, especially in the ports."
The participants agreed that the order should be scrapped and be immediately brought to the attention of the government, especially the Anti-Red Tape Authority and the Department of Trade and Industry, for its "very bad effect for all commodities sold in the market."
Tags: #PPA, #logisticsandmovers, #increasingtariffratesopposed, #Palacehelpsought, #transportation