CHANGING a light bulb requires three engineers: One to hold the ladder, one to hold the light bulb and the third to interpret the Japanese text. Now, how many Bureau of Customs (BOC) employees would it take to implement Administrative Order (AO) 13?
Such is no joke for the BOC, especially as it was tasked under Section 4 of AO 13 to “prioritize the unloading and release of agricultural products imported” in the country.
“Remember that the agencies that were given instructions by the President [Rodrigo Duterte] are the regulatory agencies; the design of the BOC is that it is an enforcement agency,” Port of Manila District Collector Erastus Sandino B. Austria told the BusinessMirror. “We don’t regulate, we merely enforce the regulations of these other agencies. Now, they are being directed to remove other barriers. But the tariff barriers, which is ours, will stay.”
Issued by Duterte last September, AO 13 believes “removing nontariff barriers [NTBs] and streamlining administrative procedures on the importation of agricultural products” would tame spikes in prices that ultimately impact on inflation. The removal of nontariff barriers is seen to help address any shortfall in supply within the local market.
NTBs, interchangeably used with NTMs (nontariff measures), “may include any policy measures other than tariffs that can impact trade flows,” according to a paper by the World Trade Organization (WTO).
The first category of NTMs are those imposed on imports, including import quotas, import prohibitions, import licensing and customs procedures and administration fees.
Berth space
AUSTRIA said that, as an enforcement agency, the BOC is merely tasked to prioritize the release of vessels containing agricultural products that are docking at the country’s ports nationwide.
He said the country’s ports can only accommodate a certain number of vessels containing various goods, with berth spaces in the ports being very limited.
“We have a fixed berth space—that’s what you call it for the vessels. It depends on the size of the vessel. For example, the berths in the South Harbor can accommodate four small or two large vessels. That said, there is a limit in the berth space,” he added.
Berth spaces fall under the control of port operators, which would be private entities. Private operators are being regulated by the Philippine Ports Authority. The tariff rates imposed on vessels also come from the PPA since they are the regulatory entity.
“The port operators are private entities accredited by the PPA, which is ultimately managed under their supervision, and not the BOC,” Austria explained. “We only supervise them as far as their operations relate to import and export, but everything else is regulated by the PPA.”
If the PPA controls the berth spaces, the BOC, in turn, controls the berthing of the containers or vessels entering the country’s ports, according to Austria.
“Essentially, in coordination with the port operator, we manage the berthing of vessels and implementing all the customs formalities when the vessels arrive,” he added. “What the AO says is that when the vessel carries onboard agricultural products, the container will automatically be first in the berth window.”
Congestion fears
AUSTRIA said some businessmen have expressed concern on prioritizing the berthing of agricultural shipments under AO 13. He echoed businessmen’s request that queueing should be followed, as they were experiencing delays in the release of their containers.
“With regard to port congestion, the DTI [Department of Trade and Industry] secretary was here to conduct ocular inspections, to meet with the customs commissioner and to look into the matter of port congestion,” he said. “There are some complaints about it from various sectors and stakeholders of the BOC [who] are also stakeholders of the DTI.”
Based on available data from the BOC, the bureau reported an average yard utilization of 85 percent from January to September this year, with the import dwell time of vessels at the ports averaging seven days and berth occupancy rate averaging 56 percent. Vessel traffic reported to the BOC through the ports averaged at 94 calls for the same period.
A Japan International Cooperation Agency report defines yard utilization as the ratio of number of storage slots (number of containers on hand) to the number of available slots (terminal capacity).
Austria explained that under international standards, a 70-percent to 80-percent yard utilization rate reported by port operators is still within manageable levels and does not fall under port congestion yet, as well as an import dwell of 10 days or lower.
“Anything going beyond that [80 percent], then that’s going to be the initial stages that you are heading to port congestion. But that is not the only indicator. The other indicator is dwell time, specifically import dwell time. In simplest terms, what that means is the number of days the containers stay in the yard before it’s released,” he said.
Different actors
AUSTRIA said it must also be noted there are different actors in the logistics chain. The BOC is not the sole entity responsible for the transfer of goods from the ports to the market.
“When people talk about ports, boats and trucks, they immediately say it’s customs; but there are a lot of actors that are in between,” he said. “And the idea behind this AO is to make sure everybody does their part. If you are the importer when your vessel arrives, it will still depend on your resources.”
Austria cited as example: “If you only have two trucks, it may take you until December to finish discharging your shipment.”
He further explained that the reason for the high yard utilization at the ports was because of the empty containers being parked at the yards. Under the law, shipping lines are given a 90-day dwell time for containers entering the country.
“Shipping lines want their containers [to] stay at the yard and they get [these] whenever they want to. If we let it stay that way, the empty containers will fill the yard and then there will be no more room for the import-laden that carries the load. So the workflow will be disrupted inside, which, in turn, will cause long queueing outside.”
Austria floated the idea that shipping lines should be regulated either through a new government agency or by expanding the mandate of the Maritime Industry Authority (Marina), “since they are not currently regulated.” The shipping lines can be instructed to maintain their own yards since it is heavily connected to their business operations, according Austria, who is also the BOC’s spokesman.
“Actually, the BOC can regulate to a certain extent. But what we are saying is that there has to be a dedicated government agency [for this]. Or Marina’s mandate should be expanded so that the shipping lines, which are not regulated, by the way, can be put under government regulation. So their business practices can be controlled and regulated by the government.”
Austria added that Asian Terminals Inc. (ATI) will be investing P8 billion for the rehabilitation and expansion of the Port of Manila South Harbor. And that the PPA and the Department of Transportation are the main agencies that can make plans for rehabilitation or increasing the number of ports come into fruition.
“A high yard utilization is reported in the North Harbor right now because they are expanding. They have new key trains and berths. This is exactly one of the things that the government should flag as a priority project [the expansion of the ports],” he said.
Policy changes
THE BOC has already asked the Department of Finance (DOF) to approve its draft guidelines changing the reckoning period for containers staying in the country, in line with freeing up more space in container yards to hasten the logistics of imported goods.
Austria told the BusinessMirror the BOC has submitted a draft guideline changing the process on the reckoning period for containers staying in the country, which will take the form of a customs administrative order (CAO) once approved.
“My suggestion, and it’s with the DOF already, is not to use the issuance of the EIR [equipment interchange receipt] for the start of the 90-day staying period but rather when the container was shipped out from its point of origin so that the importers and shipping lines will have only 90 days to bring the container here and evacuate, as well.”
Austria explained that when the BOC conducted its assessment of the yards available for containers, it pointed out that it was a practice by port operators to allow empty containers to park at the yards.
This practice needs to be stopped since empty containers will overflow at the yards, making no room for import-laden ones and will disrupt logistics workflow, according to Austria.
“A container belongs to the shipping line and, under the law, they are given 90 days for it to get here, harvest its contents and for it to be returned back to the country of origin whether for export or just an empty container. Otherwise, the container will be considered as an imported commodity and duties and taxes should be paid,” he added.
Under CAO 01-2015, which was issued in 2015, the BOC shortened the dwell time period allowed for containers to 90 days from 150 days without paying duties and taxes.
“The problem with that is in the reckoning period to determine the 90-day overstaying period. Because per policy written by [Customs] Commissioner [John P.] Sevilla during his term, the reckoning period is the issuance of the EIR and it’s the shipping company that issues that,” he said.
Decongesting ports
LOGISTICS stakeholders have proposed measures to the BOC against port congestion. One of these is transferring empty containers to Batangas City and Subic Bay.
The move is expected to ease the high utilization rate experienced at Manila ports and congestion at empty container yards.
During the Export Development Council-Networking Committee on Transport and Logistics (EDC-NCTL) meeting last October, the agency’s chairman, Enrico L. Basilio, reported other recommendations. These include increasing capacity of empty container depots, shipping lines sending sweeper vessels dedicated to moving out empty containers, domestic terminal North Port being allowed to temporarily handle international cargoes and shippers utilizing weekends and Mondays and increasing their double transactions.
The Confederation of Truckers Association of the Philippines (CTAP) also earlier pointed out that turnaround time for trucks going into ports has been slow, citing the long queue at the Manila North Harbor that was experienced by truckers in October.
The CTAP said some truckers refused requests to pull out laden containers from the Port of Manila since their trucks were still carrying empty containers. The truckers also cited the difficulty in returning empty containers.
The Container Depot Alliance of the Philippines (CDAP) also pointed out that utilization of off-dock depots in Metro Manila was already at 90-percent capacity, with the average dwell time being recorded at 30 days from the previous 15 days for empty containers.
The CDAP explained that the high utilization of off-dock depots in Metro Manila was because of an imbalance in import and export shipments in the country.
As the Duterte administration banks on AO 13 as one of its tools to fight inflation, a couple of issues need to be addressed to untangle the Gordian knot of a transit of goods.
Image credits: Alexey Kornylyev | Dreamstime.com, Nonie Reyes