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PIA Press Release
2007/09/21

PPA reduces wharfage dues in ports despite high revenue losses

Davao City (21 September) -- Philippine Ports Authority is now implementing the PhP20.00 and PhP40.00 wharfage fees for the 20 and 40 footer vans of containerized export cargoes pursuant to the demands of the export industry to cope with the strengthening peso and upon the approval of the President.

Down from PhP 259.70 and PhP 391.05, respectively, the rate reduction has been in place since April 20 up to July 20 this year and subsequently renewed starting August 13 up to December 30, 2007.

In the Southern Mindanao ports, said wharfage cut benefits mostly bulk exporters of fresh fruits such as bananas and pineapples and the growing export-oriented wood product industry.

"We welcome this development with both relief for the exporter groups which are burdened by more expensive exports and reservation on PPA's part as the government stands to lose substantial revenues," PPA Port District Manager Abdussabor Sawadjaan expressed during the recent budget hearing for next year's corporate plans and programs.

PPA General Manager Oscar Sevilla earlier expressed that the move is greatly detrimental to PPA's revenue targets for the year as it loses PhP 30 million a month from all ports nationwide.

Port revenues like those derived from wharfage, GM Sevilla furthered, are plowed back to fund all local infrastructure projects of PPA for both medium to long term to sustain its operations as well as to realize its corporate vision.

Moveover, Sevilla maintains that PPA's fees are only a measly "less than 1% of the total shipping charges" paid by exporters and that the shipping lines, which, to date, have no regulatory body to oversee their operations and charges get the bigger slice of the pie without potential financial risks.

This was revealed in a resolution arising from an earlier meeting of the National Port Advisory Council (NPAC) held in March 20.

NPAC members include representatives from the Department of Transportation and Communication (DOTC), Maritime Industry Authority (MARINA), Bureau Of Customs (BOC), Department of Labor and Employment (DOLE), and Department of Trade and Industry (DTI)/Public Standards Bureau as well as delegates from the private sector consisting of the foreign and domestic shipping associations, Philippine Chamber of Commerce and Industry, Port Users' Federation and cargo handlers' association.

They (NPAC) notably recognized the need for further study to rationalize Ports and Terminal Handling Charges imposed by foreign shipping companies or their agents to shippers. This move was prompted by a presentation of PPA clarifying a World Bank report attributing the bulk of expenses shouldered by an exporter of a 20 footer container to Port and Terminal Handling Costs.

In an effort to unbundle the shipping cost, PPA was able to establish that export wharfage is the only direct port charge and this comprises only of about 0.52% of Ports and Terminal Handling Costs or 0.39% of Total Transport Costs which includes customs documentation and other administrative fees of shipping companies.

Another cost item which may be said to be indirectly attributed to PPA is Container Handling, although this goes to the cargo handling operator yet this is equivalent to 4.63% only of Ports and Terminal Handling Costs and 3.44% of Total Transport Costs.

In sum, what may be attributed to port costs is equivalent to 5.15% and 3.83 % respectively of Ports and Terminal Handling Costs and Total Transport (Export) Costs.

Likewise, Sevilla brushed aside the private exporters' clamor for the outright abolition of wharfage dues as it definitely is not within the jurisdiction of PPA. Wharfage collection is explicitly provided for in the PPA Charter (Presidential Decree 857) and rates of port charges are subject to the approval by the President.

What will repeal a provision of law is a subsequent law itself and this could only be done through Congress and if PPA is such in a close rein in terms of regulation, then shipping lines should also be subject to review, he added.

"Results of the NPAC study should clarify and rationalize charges which will benefit the shippers particularly the members of Mindanao Federation of Shippers Association (MINFESA) in terms of more cost-effective rates but allow me to emphasize that wharfage which is less than one (1) percent of costs will hardly create a dent in the pocket of exporters but will go a long way in enabling PPA finance the development of non-viable ports, most of which are located in Mindanao," Sevilla concluded. (PPA-PIA XI) [top]

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