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House panel starts debating bills regulating shipping rates

THE HOUSE Transportation Committee started discussing on Friday two proposed measures seeking to regulate the charges imposed by international shipping lines.

Transportation Committee Chairman Edgar Mary S. Sarmiento said it was “urgent” to hear the two bills filed with his committee because of rising shipping costs.

House Bill No. 4316 filed by Bagong Henerasyon Party-list Rep. Bernadette Herrera-Dy seeks to regulate the application of fees charged at origin and destination by shipping companies.

House Bill No. 4462 filed by Ang Probinsyano Party-list Rep. Ronnie L. Ong seeks to empower the Maritime Industry Authority (MARINA) to ensure fairness and transparency in shipping charges levied by forwarders and agents of international shipping lines.

Mr. Sarmiento, citing a report by Enrico L. Basilio, chairman of the Export Development Council’s networking committee on transport and logistics, said the Philippines has the highest shipping cost of $592 per 20-foot container at full container load in Asia. The average for other countries such as Japan, China, Singapore, South Korea, Thailand, Indonesia, Vietnam, Malaysia, and Bangladesh is $202.

“I wonder why the Philippines seems to be topping costs, hindi naman po tayo mayaman (We’re not exactly wealthy) … every time we jack up the price, there is no other way to address it but to pass it to consumers,” Mr. Sarmiento said.

Ms. Herrera-Dy’s bill prohibits origin and destination charges… by international shipping lines to local consignees or importers “without a contractual relationship.”

“Quoted rates shall be transparent and inclusive of all charges; and the Department of Trade (DTI), Bureau of Customs (BoC), Department of Justice (DoJ), and Philippine Competition Commission (PCC) (will) primarily implement the provisions of the law.”

Mr. Ong’s bill wants MARINA to supervise the rate-fixing mechanism of forwarders and agents of international shipping lines.

Association of International Shipping Lines, Inc. (AISL) General Manager Maximino T. Cruz said during the hearing when asked if AISL supports the bills: “There are provisions wherein we have to comment on, specifically on the provisions on the jurisdiction of the Bureau of Customs to regulate the destination charges…”

“They are not in a position to be the regulatory body as far as the imposition of destination charges of shipping lines is concerned. We are more inclined to give this authority to MARINA,” he added.

According to shipping industry officials who requested not to be identified, freight rates are still above pre-pandemic levels of about $2,000 per box for long-haul routes like Europe and the US.

They said there is now a downtrend in freight rates and do not expect freight rates to return to pre-pandemic levels in the foreseeable future “due to trade-related pressure coming from China,” which is still the world’s manufacturing center.

“The growth of the volume from China has been very dramatic.  The stores in America and Europe are now restocking and therefore cargo has moved without let up. The Philippines imports a lot from China and (goods from there are) now 60% to 70% of cargo coming to major ports in the country,” one of the officials said.

“Export boxes further decreased due to the recent quarantine classification imposed within and along the country’s trade corridors. Imports, however, posted minimal increases.”

The United Nations Conference on Trade and Development (UNCTAD) released a policy brief on container shipping last week, which noted that containers and container ships are in short supply.

“The increase in demand was stronger than expected and not met with a sufficient supply of shipping capacity,” it said. “The container crisis is also a reflection of a slowdown in and delays across the maritime supply chain due to strains caused by the pandemic.”

UNCTAD said policymakers should therefore focus on trade facilitation and digitalization for resilient supply chains, tracking and tracing, and competition in maritime transport.

Asked to comment on April 28, the PCC said via e-mail that it “has an ongoing investigation of potentially abusive behavior in the industry.”

“The Competition Unit of UNCTAD has been facilitating cooperation and sharing of experiences among national competition authorities, especially benefiting young competition authorities, such as PCC, in developing countries,” it said.

“Logistics, including shipping, is one of PCC’s sector priorities, considering that this sector is vital during the pandemic and to economic recovery. We have been coordinating with DTI on the issue of high freight rates,” the PCC added.

Philippine Exporters Confederation, Inc. (Philexport) Assistant Vice-President Flordeliza C. Leong said via e-mail on April 29 that the increasing freight rates by shipping lines have “long been an issue and considered one of the impediments to export growth.”

“Addressing this will help lessen trade costs and make us more competitive,” she added.

Philexport’s suggestion, she said, is for the PCC “to unbundle the freight cost and check each item if valid.”

“I know there are fees such as cleaning fee, congestion fee, container deposit fee, imbalance fee, etc. Brokers and freight forwarders have long ago been complaining that their container deposit fees have not been refunded or slow to be refunded. They estimate this to be in the billions already,” she explained.

“Maybe the PCC can also look at which agency, if possible at all as benchmarked with other countries, to regulate international shipping lines to avoid or lessen such issues,” she added.

Also sought for comment, Chelsea Logistics and Infrastructure Holdings Corp. President and Chief Executive Officer Chryss Alfonsus V. Damuy said in a phone message April 27 that the three recommendations of UNCTAD “can help.”

However, on the competition item, it is “not much of a concern in the Philippines as there is too much competition already, which also drives the prices low actually,” he noted. — Arjay L. Balinbin

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