AISL nixes plan to impose arr astre charges on ‘empties’

THE Association of International Shipping Lines ( AISL) is opposing an unprecedented plan by the Philippine Ports Authority (PP A) to charge arras tr era te son empty containers, stressing that any addition to shipping costs will not augur well with the country’ s effort store bound from the impact of the Covid- 19 pandemic.

In a position paper sent to the PPA Board on October 8, AISL said that the imposition of arrastre charge on empty containers at the Manila and Batangas Ports would mean that international shipping lines will have to pay an estimated additional cost of P5.4 billion based on the 2019 container volume data.

“Shipping lines have to recover the additional cost. Otherwise the option left for them is to reduce capacity in order to remain efficient. Hence, the need to pass on the estimated cost increase of P5.4 billion to customers becomes the viable option,” AISL told the PPA board.

AISL also pointed out that passing additional cost to customers could“further increase the cost of freight and logistics to the detriment, in particular, of small and medium- size enterprises.”

Andi ft hear ra st recharges on empty containers are imposed, this could adversely affect the country’s competitive edge in the shipping industry compared to its Southeast Asian ( SEA) neighbors.

As it is, AISL pointed out, the Philippines already ranks highest in terms of handling costs for 20- footer and 40- footer containers among its SEA neighbors, including Singapore.

“[ That is why] applying arrastre on empties will only add to the overall cost for lines servicing the Philippines, and further skew comparison with the SEA countries,” he said.

AISL said the imposition of arrastre charges on empty containers is so ill- timed, as the Philippine economy is already under severe stress from the coronavirus pandemic.

“It strikes a big blow to the cost of doing business in the Philippines,” one of the directors said.

AISL also emphasized that empty containers were never assessed any tariff, or arrastre charges, in the past because these were considered an extension of the ship’s equipment or gear.

In fact, AISL pointed out, even the Bureau of Customs “has never departed from this principle.”

“Unless manifested as importations, empty containers are exempt from the payment of duties and taxes, they being considered as part of the ship’s gear,” AISL argued.

Moreover, AISL also noted that arrastre was a form of charge against cargo as defined by Republic Act 1371.