Port users decry ‘arbitrary’ shipping lines’ fees

Port users decry ‘arbitrary’ shipping lines’ fees
Bernie Cahiles-Magkilat May 19, 2019 https://business.mb.com.ph/2019/05/19/port-users-decry-arbitrary-shippin...

Truckers, brokers and importers decried what they alleged as “arbitrary” fees imposed by shipping companies, as they urged government to intervene in this logistical nightmare that they said is causing prices of consumer products to skyrocket and affecting the economy.

Mary Zapata, vice-president of the Confederation of Truckers Association of the Philippines (CTAP), told a press conference that port users have to endure with all kinds of “arbitrary” fees such as demurrage, detention, container imbalance surcharge, control fees, peak season, among others.

A pioneer in the trucking industry, Zapata said importers used to pay P40,000 per container overall cost, but now they have to pay as much as P100,000 per container.

For instance, importers are given up to 5 days of free storage after which they will be slapped with demurrage fees of P500 per day to P1,000 per day of delay.

Once they have emptied the containers, the empties have to be returned to the shipping lines within a specific timeframe. But, Zapata said that, shipping lines no longer have space to accommodate their empties. As such, they are directed to park at privately-owned container yards (CYs) where truckers need to line-up for a long time to be accommodated.

Worse, they are slapped with detention fees (P5,000 a day for 20-footer and P10,000 for 40-footer container) for not being able to return these containers on time.

Since it is taking longer to return their empties, truckers can no longer make second trips. The slow turnaround has already affected their profitability and the income of drivers and helpers. There are 10,000 trucks servicing Manila ports and employing 20,000 workers.

These highly skilled drivers earn P2,000 per trip. Should they be able to make a second trip, their salaries could have been very competitive compared with the rates for truck drivers in Saudi Arabia.

It is also no longer profitable for truckers. Most have scaled down operation while others have closed. Zapata, who used to have 1,500 trucks, is now down to 500. “I’m tired,” she said.

Zapata stressed it is the responsibility of these shipping firms to provide for warehousing facilities for their empties but, “they are just busy collecting fees.”

“Your warehouses are full so we cannot unload our empties on time and you are charging me for your own fault. I am talking here about fairness,” said an importer, whose current 20-container shipments have been withheld by a shipping company unless he settles the P6 million fees for his 40 empties that cannot yet be accommodated by the shipping line.

In the meantime, Zapata said consumers are the ones affected as importers have to pass on all these high logistics cost to prices of these goods.

Zapata said that this problem has been there for the past three decades but only worsened in the last few years because of the country’s reliance on imports. This was highlighted in 2014 when Manila City Mayor Joseph Estrada imposed the truck ban.

In fact, shipping lines also imposed container imbalance surcharge, which is a penalty to importers because for every five containers of imports, there is only one container of export that they can carry.

In one meeting, Zapata said all CY operators admitted of 125 percent utilization rate but in one instance some CYs outside of Manila said they have utilization rate of only above 50 percent and yet they could not accommodate their empties.

Zapata was skeptical about the utilization rate. She noted that some empties are actually being dumped into the country because it is cheaper (P30 to P50 only per container) to stock these empties here than in other countries.

This congestion is expected to further worsen with the anticipated 2.8 million metric ton rice importation this year as a result of the rice tariffication law. Flour traders are also expected to import 200,000 MT this year.

Traders expect port congestion to aggravate starting July this year.

Port users have been urging the government to intervene but they could not find a government agency that is directly in charge of regulating the shipping companies’ operations.

Zapata said there are 39 foreign shipping firms, which are dominated by Chinese owners.

“Government should look at the operation of shipping lines,” said Zapata.
So far, Zapata claimed that only Department of Trade and Industry was responding positively and listening to the plight of the traders but the agency cannot do anything other than facilitating all these meetings and discussions.

The only solution they see is the implementation of the Joint Administrative Order (JAO) of the Department of Trade and Industry, Department of Finance and the Department of Transportation. DTOR Secretary Art Tugade has yet to sign the JAO.

Once implemented, the JAO will put the Bureau of Customs on top of regulating shipping firms’ operations, including their charges and fees. But Zapata said the JAO has been pending for 5 months already.

“In the port congestion problem, some parties are making money, it is a fortune to others, but it is a misery to us truckers,” as she pointed out to specific firms and sectors that made fortunes and displacing small port service providers.

Frustrated over this inaction, Zapata expressed hope that this issue will reach President Duterte, who she said “hates” those who take advantage of others.

Zapata traced the port logistics problem to the high volume of imports that caught government off guard or “they have the intention not to be effective”, saying the issue can be simply addressed operationally.