The Department of Trade and Industry (DTI) has given sea freight forwarders until December 5 to submit their comments on the proposed revised rules on sea freight forwarding.
DTI Consumer Protection and Advocacy Bureau (CPAB) director Domingo R. Tolentino, Jr., during a public hearing on November 26, said the proposed department administrative order (DAO) aims to streamline the rules on sea freight forwarding, increase the validity of the accreditation, and remove the requirement of separate accreditation for branch offices.
CPAB said it aims to submit the final draft DAO for approval before the end of the year.
The draft DAO intends to shorten the processing of accreditation application from 21 days to just three days, and lengthen the validity of certificate of accreditation from two years to three.
Covered under the draft DAO are all entities engaged in transporting goods for a fee by sea or by land from point of receipt to point of destination.
Under the proposal, the required paid-up capital/partner’s contribution/equity that shall appear in the articles of incorporation/partnership are as follows:
P5 million for non-vessel operating common carriers (NVOCC)
P4 million for cargo consolidators (CC)
P3 million for international freight forwarders (IFF)
P2 million for breakbulk agents (BBA)
P1 million for domestic freight forwarders (DFF)
Notably the same freight forwarding categories are in place under the current rules, but currently, the minimum paid-up capital is required only for corporations and partnerships, specifically P4 million if an NVOCC, P2 million if an IFF, and P250,000 if a DFF.
Entirely new are the paid-up requirements proposed for CC and BBA.
For companies applying for more than one forwarding category, the paid-up capital/equity requirement for the highest category will apply under the proposed rules.
The draft order requires the paid-up capital to be maintained throughout the validity of the accreditation.
Firms no longer need to apply for a separate accreditation—which is currently the case—for their branch offices so long as they declare the establishment of these offices prior to their operation.
The proposed minimum amount of insurance coverage remains the same as the current rules and is as follows:
NVOCC – P1 million
CC – P800,000
IFF – P600,000
BBA – P400,000
DFF – P300,000
Proof of cargo insurance coverage must come in the form of insurance policy and official receipt showing payment of premium referring to either the Merchandise in Transit (Floater) Insurance or any standard global comprehensive cargo liability insurance for freight forwarders and transport operators covering destinations between the Philippines and the outside world.
The current rules regulating sea freight forwarders are contained in Administrative Order (AO) No. 06, Series of 2005 of the Philippine Shippers’ Bureau’s (PSB). However, PSB is now defunct, dissolved in 2014 under DTI’s rationalization plan, and replaced by a new office, the Supply Chain and Logistics Management Division. PSB’s regulatory powers and functions have been transferred to the Fair Trade Enforcement Bureau, another DTI unit.
Sea freight forwarders are the only cargo transport service providers accredited by DTI, previously through PSB. Others, including airfreight forwarders, are regulated by the Department of Transportation.
The draft DAO noted the need to revise current rules as they are still governed by PSB AO 06-2005 and have to be realigned with the “present organizational makeup of DTI.”
The draft DAO lists unlawful acts and omissions, including engaging in or transacting business without prior accreditation; misrepresentation by a firm that it has a subsisting accreditation; using a subsisting accreditation by another with or without authority from an accredited firm; non-compliance with relevant lawful orders/administrative issuances and/or circulars of DTI; and violation of the Code of Conduct and Ethical Standards for Freight Forwarders;
Others include collecting and charging of fees not prescribed by DTI; failure to deliver cargo as required in the transport document; failure to deliver cargo to its rightful owner; failure to comply with its contractual obligation to the shipper; and grant of rebates.
The proposal requires a copy of the export freight tariff rates and local charges for NVOCCs and domestic rates for DFFs.
In addition, accredited firms must submit reportorial requirements for cargo statistics report every semester (July and January of next year) and audited annual financial statements not later than May 15 of the year.
Failure to comply will cause the payment of applicable fees ranging from P1,000 to P12,000, depending on the period of delay.
The fee for the certificate of accreditation will still be P200, but with a documentary stamp tax of P30.
Filing and processing fees will be doubled to P10,000 for NVOCC; P8,000 for IFF; and P6,000 for DFF. Processing fee for CCs will be P9,000, and for BBAs, P7,000.
To ensure objectives of the proposed DAO and other relevant issuances are met, DTI will still exercise its visitorial power by entering, whenever necessary, any establishment, office, and premises of a firm reported to be engaging in transactions covered by the DAO.
The proposed policy seeks to be consistent with Republic Act No. 11032, or the Ease of Doing Business and Efficient Delivery of Government Services Act of 2018, which mandates all government agencies and offices to re-engineer their systems and procedures to streamline services and reduce bureaucratic red tape and processing time.
Meanwhile, DTI is encouraging sea freight forwarders to submit a request for the amendment of PSB Memorandum Circular No. 01-2005 (standard freight forwarding services, rates and charges for containerized shipments) so the agency can also conduct a public hearing on the matter.
Sea freight forwarders who attended the hearing on November 26 noted that rates under the 2005-issued order no longer reflect the costs incurred and rates imposed by sea freight forwarders. – Roumina Pablo