Proposed storage fee hike sparks concerns

THE Philippine Ports Authority (PPA) has presented its planned increase in storage charges for foreign containerized cargo at ports nationwide to stakeholders.

During a public consultation on October 18, PPA discussed the proposed increases, including a 32-percent rise for import, export, and transshipment containers and a significant 150-percent surcharge for reefer containers.

PPA stressed the importance of optimizing container yard usage and facilitating swift container withdrawal to prevent congestion. Storage charges are applied to foreign cargoes that remain at PPA ports beyond the free storage period (FSP), encompassing import, export and transshipment containers.

This proposal has sparked concerns among industry players. The Philippine Exporters Confederation Inc. (Philexport), a trade organization, called for a thorough analysis of the potential impacts on port users.

Philexport President Sergio Ortiz-Luis Jr. urged the PPA to subject the planned rate hike to a regulatory impact assessment — a standard operating procedure under the Ease of Doing Business (EODB) law.

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The EODB Act, enacted in 2018, aims to provide a detailed evaluation of the potential impacts of new regulations, ensuring that the benefits outweigh the costs and enhance stakeholders’ welfare.

“To prevent causing undue regulatory harm that might arise from the higher charges, we are already seeing the immediate harm they will cause to shippers and the economy in general,” he said in a letter addressed to PPA General Manager Jay Daniel Santiago, dated Nov. 8, 2023.

Ortiz-Luis outlined several recommendations in the letter, including exempting fees in situations where containers overstay due to reasons beyond the shipper’s control, excluding national and local holidays from the counting of days beyond the free storage period, basing the rate increase on the average inflation level recorded since the last fee adjustment, and pressuring shipping lines to provide container storage space.

During the public consultation, Philexport expressed concerns over the potential adverse effects of increased charges, asserting that any additional cost would harm an economy already grappling with inflation and a weak global economy.

The lack of a copy of the PPA’s proposed order fueled the fire.

Philexport highlights this issue in its letter, stating that the trade organization had to rely on information gathered during the public consultation held the previous month.

Meanwhile, the Supply Chain Management Association of the Philippines stated that the proposed rate increase was ill-timed, given recent hikes in transport fares, minimum wages, and basic commodity prices.

Various stakeholders at the hearing suggested alternatives, such as deferring the rate hike or implementing a phased increase over a three-year period. These proposals indicate a shared concern for the economic implications of the PPA’s plan.

PPA is empowered to levy dues, rates, or charges for using the premises, works, appliances, facilities or services provided by or belonging to the Authority.

However, beyond the specifics of the rate hike, industry experts have raised broader concerns about the dual function of the PPA. While it serves as a port regulator, it also performs commercial functions to generate income. This duality has led to accusations of a conflict of interest and the erosion of Philippine competitiveness in the shipping industry.