Last week, I began discussing about the many challenges that logistics firms in the Philippines continue to face, such as the truck ban, number coding, the various and redundant national and local government permits that need to be secured and the so-called checkpoints, legal or illegal, by the many enforcers on the road. This week, I will dwell a little more on what logistics companies face at the waterfront, where containers of goods are either picked up or delivered. Together with the discussions we had last week, this all adds up to making the cost of the delivery of goods in the country more expensive—the highest in the Southeast Asian region.
An offshoot of the port congestion problem during the previous administration, the Truck Appointment Booking System is a private initiative by terminal operators to better control the inflow and outflow of trucks in the ports that they are servicing. Though well-meaning and, in fact, working, the TABS comes with a price to the truckers, especially if one needs to move the cargo at peak hours, which is usually the case. These fees are, of course, passed later on to the consumers as part of the cost of doing business. With the new road developments, such as the connector road initiatives of the private sector, such booking system may not be as heavily necessary like before, and if ever, a reduction of its present costs be implemented. Also, it should also be the proper time for government to consider taking hold of this booking system, given that, after all, the authority to require enrollment in such a system is with government, with enrollment fees of the truckers possibly subsidized or given for free.
Somewhat related to the monitoring objectives of TAB, the Electronic Tracking of Containerized Cargo system of the Bureau of Customs is another additional layer of the process and also of costs that are imposed on the logistics providers. The ETRACC monitors the transshipment of containerized shipments, including those destined to (import) and coming from (export) the PEZA and the freeport zones. The problem is that such a system is redundant with similar systems already present in the PEZA and Freeport zones.
Another additional expense for logistics companies that operate at the ports is the terminal handling charges that are imposed on both export and import containerized cargoes to recover costs incurred at container terminals. There are contradicting views on this, with the shipping lines insisting on passing the costs of loading and unloading containers to the account of the shipper/consignee. On the other hand, shippers believe that such costs are already part of loading and unloading costs that must be borne by the carrier, and therefore incorporated in the freight rate. One thing is for sure, costs are again also passed on eventually to the consumers.
Then we have the unavoidable deposit fees that shipping lines impose on shippers on their containers. Though these are fees deposited and therefore, technically, are not considered as an expense, these are rarely returned without deductions. Worse is the fact that deposits are rarely returned on time, taking several months in most cases. This, of course, impacts on the operating expenses of logistics providers, who have no other recourse but to have their end users bear the expense of “cushioning” such costs.
From the point of view of logistics providers, much of the costs they bear and the delays they endure—not to mention the many signatures that are needed to bring a cargo out—all add up to higher costs that industries then pass on to the consumers. Costs can be brought down by an honest to goodness streamlining that is long overdue. Now that we are moving out of the pandemic with so much catching up to do economically, it is imperative for all government entities at the ports to look and act on this without further delay.
The author may be reached via e-mail: thomas_orbos@sloan.mit.edu