DTI credits DOTr orders to address high shipping costs

By DTI-Office of the Secretary
June 28, 2020

MAKATI CITY – Department of Trade and Industry (DTI) Secretary Ramon Lopez credited and supported the initiatives taken by Department of Transportation (DOTr) Secretary Arthur Tugade to address mounting complaints against unreasonable shipping charges. This, following the transportation department’s issuance of multiple Department Orders to bring down the cost of shipping and provide redress on complaints against shipping lines.

Sec. Tugade issued an order creating the Shippers Protection Office (SPO) to assist shippers that have been assessed unreasonable fees and charges by shipping lines. Under Department Order 2020-008, the SPO is authorized to accept complaints pertaining to rates, charges, practices, and operations of international and domestic shipping lines.

“The creation of such an office is very important as importers, exporters, forwarders, and brokers will now have a venue to ventilate complaints against shipping lines charging exorbitant and unreasonable fees,” said DTI Secretary Lopez.

“The intervention of DOTr in addressing this issue could not have come at a better time, considering that this has been a recurring problem for shippers, which affects the general cost of goods and has further aggravated the economic difficulties that all businesses have been experiencing due to the pandemic,” Sec. Lopez said.

“At the end of the day, it’s consumers who will bear the burden of these high costs in terms of higher prices of final products. Shippers may file their complaints directly at the SPO,” the trade chief added.

Further, Sec. Lopez cited Executive Secretary Salvador Medialdea for his leadership in finding all possible solutions to the high shipping charges. Other agencies cited were the departments of Finance (DOF), Agriculture (DA), as well as the Philippine Ports Authority (PPA), Bureau of Customs (BOC), and the Maritime Industry Authority (MARINA) for helping to address issues to make logistics in the country more efficient and to reduce logistics cost, especially during the pandemic.

Sec. Tugade also issued Department Order 2020-009 prescribing a minimum free time period of eight (8) days for cargoes unloaded by international shipping lines. The eight-day period extends the period of five (5) days currently granted by shipping lines before collecting demurrage charges on containers. This again is a very welcome intervention in lowering the overall charges applied to shippers and consignees.

Studies have shown that the five-day free time period granted by shipping lines to Filipino importers is one of the shortest free time periods in Asia. The eight-day free time period aligns the free time period granted by many shipping lines to importers in other countries.

Moreover, under the government's policy of ensuring adequate supply of food at affordable prices, Sec. Tugade also issued Department Order 2020-007 directing all domestic shipping lines to allocate cargo space and provide preferential rates for agricultural and food products.

The order enjoins all domestic shipping lines to allocate no less than 12% of a vessel’s cargo capacity per voyage exclusively for agriculture and food products and provide a discount of 40% of published rates for cargoes of said products. The said order is also expected to benefit farmers by way of boosting demand for locally produced agricultural products. It will likewise help ensure the unhampered movement of said products across the country.

“The longer free time of minimum of eight days prescribed under DO 2020-009 is expected to minimize, if not eliminate, demurrage charges to be incurred by consignees on imported products,” Sec. Lopez explained.

He also pointed out that importers that are able to release their shipments within eight days no longer have to pay demurrage charges.

For locally-produced agriculture and food products, the allocation of a vessel’s cargo capacity and provision of discounted rates as provided under DOTr’s order can lead to increased competitiveness and demand for such products. This will contribute to the viability of domestic food production, as well as help sustain the government's efforts to attain food security for the country.