Mendoza bats for lower cargo-handling rates

Transport and Communications Secretary Leandro Mendoza backs moves to scrap multi-layered delivery costs, bloated service fees and related cargo-handling rates at the ports to boost trade and shipping volume and thus pursue the overall thrust to make the country globally competitive.

Mendoza supported the initiative of the Philippine Ports Authority (PPA) under general manager Alfonso Cusi, who has just ordered an audit on the operations of cargo-handlers suspected of collecting service fees above published rates.

It was also learned that port operators or cargo-handlers have allegedly been charging shippers more than the officially-approved tariff rates.

Cusi also earlier noted the unnecessary increase in a sea transport costs that are directly linked to multi-layered delivery costs widely attributed to domestic shipping at the North harbor.

Even if the irregular rates cover only the domestic ports, they still affect overall export competitiveness as many of the exported products, particularly agricultural commodities, go through the local ports first before they are finally shipped through the South Harbor where ocean-going foreign vessels dock, Mendoza said.

Cusi, who is pushing for the modernization of the century-old North harbor as the country’s premier local terminal, has introduced a new pricing and bidding formula, which will effectively discourage or stamp out port operators from charging bloated service rates.

He explained that under a revised Terms of Reference (TOR) in bidding for cargo-handling contracts, port operators will no longer be allowed to submit financial bids with built-in incremental flexible price ceilings.

By amending the terms of reference pegging government’s share at 10 percent of total port revenues, he explained, cargo-handling bidders have no reason to create hypothetical revenue markups or submit "high" financial bids.

Mendoza also lauded the suspension of PPA’s earlier approved increases in wharfage and usage fees. He said this will reduce overall cargo-handling costs.

He supported the ongoing reforms at PPA as he spelled out his preference to pursue the development of ports and ships as the correct strategy for an archipelagic country like the Philippines.

Speaking like a technocrat, Mendoza who has a U.P. law and a U.P. master’s in public administration to his name, said that "there is actually economic logic in lowering rates. Over the long-run, lower rates which can generate volume business can actually mean more profits for port operators.