The Philippine Exporters Confederation, Inc. (PHILEXPORT) is calling for an analysis of the impact on port users of the proposed increase in storage charges for foreign containerized cargoes at all Philippine Ports Authority (PPA) ports.
In a position letter signed by its president Sergio R. Ortiz-Luis, Jr., PHILEXPORT recommended that the planned rate hike undergo a regulatory impact assessment (RIA) as a standard operating procedure under the Ease of Doing Business (EODB) law.
“This is to prevent causing undue regulatory harm that might arise from the higher charges. As proposed, we are already seeing the immediate harm they will cause to shippers and the economy in general,” the letter dated November 8, 2023 and addressed to PPA general manager Jay Daniel R. Santiago said.
Last October 18, PPA in a public consultation sought stakeholder feedback on its intention to raise storage charges for foreign containerized cargoes at all its administered ports nationwide.
The port regulator proposed to increase the storage charges as follows:
• 32% increase for import, export, and transshipment containers
• 150% surcharge of the corresponding storage rates with increase for reefer containers
PPA said foreign cargoes are assessed for storage charges when they remain at PPA ports beyond the free storage period (FSP). Foreign containers include import cargoes, export cargoes and transshipments.
In justifying its proposal, the Authority insisted this would ensure optimal use of the container yard and encourage immediate withdrawal of containers to prevent congestion.
But PHILEXPORT in its letter pointed out that a major policy like this should initially go through an RIA as required under Republic Act No. 11032 or the Ease of Doing Business and Efficient Government Service Delivery Act of 2018.
The EODB Act seeks to provide a detailed appraisal of the potential impacts of a new regulation and ensure that this regulation will enhance stakeholders’ welfare, with the benefits exceeding the costs.
In its letter, PHILEXPORT also underscored the lack of a copy provided of the PPA’s proposed order, forcing the trade organization to rely on information gathered during the public consultation held last month.
“We were informed that the deadline for the position paper is five days after the hearing on October 18. However, that assumes that PPA has already provided us with a copy of the proposal,” it stated.
“However, for record purposes, please note that as of this writing, we have not received this document which should have been the basis of our position despite our repeated email request for a copy. This position was then made based on the pieces of information that were quickly flashed on the Zoom screen during the hearing,” the letter continued.
During the PPA hearing, PHILEXPORT had already asserted that “any additional cost will hurt the economy and stakeholders that are facing inflation and weak global economy.”
The Supply Chain Management Association of the Philippines also remarked that the proposed rate increase was ill timed with the recent rise in transport fare, minimum wage, and prices of basic commodities.
Other attendees suggested either deferring the rate hike or spreading the increase in tranches over a three-year period.
Aside from an RIA of the proposed regulation, Ortiz-Luis in the PHILEXPORT letter also recommended the following in relation to the storage rate hike.
• No fees should be imposed in situations when containers overstay due to reasons beyond the shipper’s control
• Exclude national and local holidays in counting the days to be charged beyond the FSP
• Base the rate of increase on the average inflation level recorded since the last fee adjustment, as PHILEXPORT said the PPA’s proposed storage rate increases were too onerous
• Pressure shipping lines to put up their respective yards for parking containers or keep track of container yards with available storage space
As port regulator, PPA is empowered to levy dues, rates, or charges for the use of the premises, works, appliances, facilities, or for services provided by or belonging to the Authority.
However, industry experts and observers have been critical of the dual function of the PPA since besides regulatory function, the body also performs commercial functions to generate income from its operations. This duality has led to a conflict of interest and the erosion of Philippine competitiveness in the shipping industry, they insisted.