Destination fees and surcharges imposed by international shipping lines cost the Philippine economy an estimated US$2 billion to $5 billion in losses annually, according to the joint report by the Export Development Council (EDC) and National Competitiveness Council (NCC).
This report entitled “Potentially Avoidable International Shipping Cost and Other Charges” was initiated by Dr. Enrico Basilio, Chair of the joint Committees on Transport and Logistics of EDC and NCC, and Mr. Michael Raeuber, CEO of Royal Cargo Group of Companies and former President of the European Chamber of Commerce in the Philippines (ECCP).
Highlights of the report were presented during the public hearing conducted by the House Committee on Transportation (COTr) last 17 January 2018 that tackled the Container Deposits and Related Charges imposed and collected by Agents of International Shipping Lines.
The document, based on a series of forums and a survey conducted last year, disclosed that for imports, freight accounts for an average of only 39% of the total amount paid to international shipping lines, while the so-called “destination charges” levied on Philippine importers by the carriers account for 61%.
For exports, freight costs accounts for an average of 25% of the total amount paid to international shipping lines (Carriers) while the so-called “origin charges” levied to Philippine exporters by the Carriers account for 75%.
The report said such costs undermine the country’s export competitiveness by increasing the cost of importing raw materials and intermediate goods. It noted that the hardest hit by these costs are the small exporters and importers (SMEs) because larger and regular importers and exporters are able to negotiate for better rates and terms with international shipping lines.
The report also undermines the competitiveness of domestic producers by increasing the cost of imported raw materials and intermediate products. Surcharges are also seen to make domestic consumers pay higher prices for imported products (for final consumption) since the “added” import cost is passed on to them.
COTr Chairman and Catanduanes representative Cesar Sarmiento said that with these claims and result of the report, the next hearing will be a joint meeting with the House Committee on Economic Affairs to find the best solution for the situation.