Why PPA wants digital registration, monitoring of container vans implemented

The failure of shipping lines and their agents in the Philippines to return container vans on time and in returning container deposits are two of the main reasons why the digitalization in the registration and monitoring was conceptualized, a top official of the Philippine Ports Authority (PPA) has disclosed.

PPA General Manager Jay Daniel Santiago explained that the delay, and sometimes, failure in returning container vans, and the issue of the difficulty in getting back container deposits are decades-long problem that has been repeatedly raised by shippers, importers and custom brokers—complaints that he personally encountered since he first assumed the leadership of the agency in 2016.

In fact, when a Shippers’ Protection Office was set up in the middle of the term of then President Rodrigo Duterte, Santiago revealed that 80 percent of the complaints received by the joint maritime agencies tasked to act on the shippers’ concerns were related to container deposit.

“Based on that we tried to find a solution and eventually the idea basically is, the idea came up that instead of requiring the importers to pay the container deposit upfront, If you can get the entity or a personality who is credible enough to stand up and tell shipping lines, you can trust me. I will be the one to pay the container deposit so that you can forfeit the container deposit if it is needed, I can be the one you can talk to, and these are the insurance companies,” said Santiago.

The TOP-CRMS, which was approved during the Duterte administration under the PPA Administrative Order (AO) 04-2021, uses technology for up-to-date container tracking allowing customers, carriers, freight forwarders, and shippers to access the status of their cargoes and containers.

It is expected to keep a registry and monitor all inbound shipping containers that will track every foreign-owned container’s location and movement using the industry- accepted data interchange formats through encrypted channels.

Santiago said the digitization program aims to address the decades-long issues of hefty container deposits and poorly managed empty containers that congest the ports.

3 major complaints

Santiago cited three main issues being raised by importers based on the assessment and analysis conducted by the PPA.

First, was the hefty amount of container deposits which is pegged at P30,000 per container.

Second, Santiago said the usual complaint is that the empty container vans do not return in time: “If ever they are returned, there are a lot of deductions which the importers cannot dispute.”

And third, Santiago said there were cases that the container deposits were never returned.

He cited the case of an international shipping line which is yet to return more or less P500 million container deposits which later declared bankruptcy—which translates to impossibility of seeking the container deposit back on the part of the importers.

The importers’ burden

Santiago explained that importers have no other choice but to accept the terms in the importation process, particularly in the payment of various charges being imposed.

“When you ship a container, there are two types of charges. The first charge is the freight charge which covers the charges from the port origin of the container up to until it reaches the Philippines. then, there is a destination charge wherein upon its arrival in the Philippines, there are so many other charges which are imposed by the shipping lines on the destination,” said Santiago.

“The one who determines the contract with the shipping lines are the ones from the point of origin who engage the shipping lines to ship it to the Philippines. our importers who are the recipients of those containers have no say in those contracts.”

“So when it arrives all of the destination charges which the shipping lines charge them, all the importers, they don’t have any, they can’t argue, they don’t have any choice but to accept the charges,” he added.

Santiago further disclosed that it is only in the Philippines that container deposits are charged to the importers.

Cut in logistics cost

Instead of paying the P30,000 deposit for each of the containers, the TOP-CRMS would only require a payment of P980 per container, inclusive of the P250 container deposit insurance.

The payment of the P250 container deposit insurance would relieve importers and customs brokers of the existing P30,000 container deposits as this would be delegated to insurance companies.

“So, meaning instead of paying the container deposit upfront, we have now a group of insurance companies which are willing to say, you can trust us if you have acclaim against the shipper for the container deposit then we will be the one to pay it when the incident happens,” said Santiago.

Based on the PPA study, only 10 percent of containers incur problems on a yearly basis.

The streamlining of transactions, according to Santiago, leads to reduced logistics costs that trickle down to the benefit of Filipinos.

Santiago earlier said that should the TOP-CRMS be implemented, it would reduce the logistics cost of importation by 85 percent—which he said, could translate to reduction of prices of the commodities.