At the Oct. 16 Senate hearing on port congestion chaired by Sen. Bam Aquino, a government official said regulation was no longer the approach used by the government on trade matters. But an Alyansa Agrikultura representative stated that unless there was more government intervention, the congestion would continue to significantly harm not only trade, but also the livelihood of poor people such as small farmers and fisherfolk.
Where there is market failure such as abuse of power, the government should intervene. This can be done through moral suasion or, when necessary, government regulation.
Unfair Trade. When some advocate free trade, they make this an excuse for abusing their power to indulge in unfair trade. Free trade should also be fair trade. Unfair trade is best corrected not so much by penalizing the erring parties, but more so by establishing systems that will prevent these abuses.
At the regular Friday public-private multi-sectoral meeting on port congestion last Oct. 24, National Competitiveness Council Logistics chair Meneleo Carlos focused on unfair shipping line charges. The shipping lines are charging importers costs that the shipping lines, not the importers, are responsible for.
At prior meetings, the consensus was that shipping lines should be responsible in making arrangements with shipyards where they can leave their empty containers. This is the case in most countries but, unfortunately, not in the Philippines.
Here is what usually happens at Manila’s main port today:
1) The shipping line identifies in the interchange receipt the shipyard where its empty containers should be returned.
2) Very often, when the trucker reaches the shipyard, it is already full. The trucker looks for another shipyard, which may take 2 to 5 days.
3) The shipping line charges the importer a daily “detention charge” beyond 72 hours from the time the container is picked up. Meanwhile, the trucker cannot use his truck because it carries the empty container. This could be at an opportunity cost of about P10,000 a day because the trucker cannot do any other deliveries.
4) Shipping lines are not motivated to arrange for more shipyards because they get more revenue from the detention charges if the empty containers are not returned to a shipyard on time.
5) Using private sector initiative, Carlos requested a two-month moratorium from the shipping lines in the payment of “detention charges.” He argued that shipyards are the responsibility of the shipping lines, not the importers. His request got no response.
6) Rina Papa, Alliance of Concerned Truck Owners and Organizations (Actoo) vice president, argued that truckers are likewise not responsible for the shipyards. She cited a memorandum of agreement where shipping lines would pay the truckers a daily penalty to compensate for the lost time due to shipyard non-availability. Today, compliance with this agreement is less than 10 percent.
At the Oct. 24 multi-sectoral meeting, a two-part proposal was recommended. The first is that shipping lines should no longer levy importers with “detention charges.” The second is that if a shipyard designated by the shipping line does not receive the empty container, the shipping line should immediately identify an available shipyard and pay for the time lost by the trucker.
Government action. The situation described above has been going on for eight months. Is it appropriate for the government to continue waiting for the private sector to resolve this? Or should it take on the role of moral suasion and even regulation to correct this problem?
We have seen the government successfully address major components of the port congestion problem. After six months of letting the private sector trying to resolve this problem, the government took decisive action in the areas of truck ban and truck availability.
As a result, movement of goods to and from the port has increased by a significant 30 percent and port congestion decreased. However, congestion remains a very serious problem. With the backlog of imported containers that have been left in Singapore, Hong Kong and Kaohsiung, as well as the Christmas season import surge, the congestion can even become worse if completely left to private sector initiatives.
The commendable government action previously taken on specific port congestion components should immediately be replicated in other areas such as the one described here. It is only with government intervention through moral suasion or regulation that our still serious port congestion can successfully be addressed.
(The author is chair of Agriwatch, former Secretary for Presidential Flagship Programs and Projects, and former Undersecretary for Agriculture, Trade and Industry. For inquiries and suggestions, email agriwatch_phil@yahoo.com or telefax (02) 8522112).