Home Top News PPA to hike cargo fees by 16%, says Philexport

PPA to hike cargo fees by 16%, says Philexport

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By Justine Irish D. Tabile, Reporter

THE PHILIPPINE PORTS Authority (PPA) will be increasing cargo handling fees by 16% at the Manila ports by August, the Philippine Exporters Confederation, Inc. (Philexport) said in a bulletin.

According to Philexport, the increase was confirmed by PPA Manager for Commercial Services Mark Jon S. Palomar’s letter in response to Philexport’s petition “to defer cargo handling tariff hikes until the export industry has recovered.”

Citing Mr. Palomar’s letter, Philexport said that the hike in fees was approved by the PPA board of directors during its regular meeting on May 28.

This involves a 16% increase in cargo handling tariffs at the Manila South Harbor and the Manila International Container Terminal (MICT).

Manila South Harbor is operated by Asian Terminals, Inc., while the MICT is operated by International Container Terminal Services, Inc.

“[The increase] is based on the consumer price index adjustment factor from 2020 to 2023 considering the relevant provision of the Terminal Operators Contract with the Authority,” Philexport said, citing Mr. Palomar’s letter.

The Philippines’ annual average inflation rate stood at 6% in 2023, higher than the 2022 annual average inflation rate of 5.8%.

The increase, which will be implemented no earlier than Aug. 5, will be executed in two tranches.

The first tranche will involve a 10% increase in cargo handling fees. The second tranche, which will involve a 6% increase, will be implemented six months after the first tranche takes effect.

According to the export group, it has been opposing, together with the Export Development Council, any cargo handling rate increases at Philippine ports.

“The PPA has a share in cargo handling revenues generated by cargo-handling contractors and port-related service operators,” Philexport said.

“Thus, the approval of any cargo handling tariff hike constitutes a ‘conflict of interest’ as the PPA, being the regulator, also benefits from its own regulation, giving the agency the incentive to increase the rate to improve its financial health,” it added.

Sought for comment, Philippine Chamber of Commerce and Industry Chairman George T. Barcelon said that the business group does not think the PPA should implement any hike in fees at this time.

“The PPA at this point in time should not be increasing their service charge because this would be challenging to the importers and exporters who are already facing the increase in shipping costs,” Mr. Barcelon said in a phone interview.

“I don’t think it would be prudent for them to increase… Maybe this is not the right time because businessmen are already having challenges,” he added.

Mr. Barcelon said importers and exporters are already facing higher shipping costs due to geopolitical tensions in the Middle East.

“If you will notice, this week, there will be an increase in oil prices. All of this, somehow, would be passed on to consumers… and this might affect our inflation,” he added.

Pump prices for petroleum products are expected to climb this week, driven by “continued geopolitical tensions and supply risks,” according to the Department of Energy.

Inflation rose 3.9% in May, the fastest rise since November.

British Chamber of Commerce Philippines Executive Director Chris Nelson said on Sunday that the increase is “government-mandated” and reflects the inflation uptrend over the last three years.

“It’s based on the last three years of inflation, so if inflation drops, then obviously going forward, the increase should be less,” Mr. Nelson said in a phone interview.

But more than the increase in cargo handling fees, Mr. Nelson said the bigger challenge that companies face today is the “exceptionally high” shipping rates.

“So, look, it’s a mandated increase by the government. It covers inflation, (which) we understand. But if you look at the cost in the system, what’s more of a challenge for exporters and importers is actually the shipping rates, which are, again, very high,” he added.

The pending increase also comes after the 32% increase in storage charges for foreign containerized cargoes.

“Trade groups, including Philexport, had also opposed the increase of 32%, noting it was too high and would hurt the economy and the stakeholders already facing inflation and a weak global economy,” the group said.

The PPA implemented an increase in storage fees as well as a surcharge for the storage of reefer containers on Jan. 6, despite calls from the business sector to defer or reconsider the increase last year.

Meanwhile, other chambers that opposed the proposal include the American Chamber of Commerce of the Philippines, Inc., the German-Philippine Chamber of Commerce and Industry, and the European Chamber of Commerce of the Philippines.

Asked to comment, the PPA has yet to respond to BusinessWorld’s inquiry as of press time.

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