The Department of Trade and Industry (DTI) seeks to set minimum standards and requirements for the recognition of freight forwarders to address the growing trading activities and boost the logistics sector.
A recent draft on new rules of freight forwarding aims to “upgrade the quality of services, capabilities, resources and expertise of the covered firms” so they can “meet the demands of the Philippines’s new global trade and growth on domestic trade.”
The proposed department administrative order, which recently underwent public consultations, seeks to reduce potential risks for the freight-forwarding sector to secure its growth, while protecting the interests of the businesses and the general public.
The draft discusses the documentary requirements for application, qualifications of key operating officers for the company, processing of application for recognition and payment of fees, among others.
It shall apply to all freight forwarders, including non-vessel operating common carrier (NVOCC), cargo consolidator (CC), and international freight forwarder (IFF), domestic freight forwarder (DFF) and break-bulk agent (BBA).
The Certificate of Recognition will have five-year validity, unless it was suspended, canceled or revoked earlier. It shall be renewed within two months before the expiration.
“No recognized firm shall transfer its Certificate of Recognition or allow the use thereof by any other firm or individual,” the draft reads.
Under the draft measure, recognized firms are tasked to submit reportorial requirements, such as cargo statistics report, on a semestral basis. The annual audited financial statements must be submitted within 30 days from the deadline of income tax return filing, while a copy of cargo insurance policy must be provided within 30 days from renewal or coverage.
The required paid-up capital or partner’s contribution for NVOCC is proposed at P5 million; CC, P4 million; IFF, P3 million; BBA, P2 million; and DFF, P1 million.
“For companies applying for more than one category, the paid-up capital/equity requirement for the higher/highest category shall be applied,” the draft noted.
“The proposed measure also requires the minimum amount of insurance coverage. “Proofs shall be 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 worldwide,” it said.
The pending order suggests a minimum insurance cover for NVOCC at P1 million; CC, P800,000; IFF, P600,000; BBA, P400,000; and DFF, P300,000.
The insurance shall cover several truck risks, including fire, explosion, collision, upset of conveyance, collapse of bridges, flood, lightning, cyclone and tornado. In addition, it shall include coverage for robbery and hijacking; losses and damages due to loading and unloading; and losses and damages while the truck is on stop overnight at an allowed territory.
Meanwhile, the proposed order also mandates freight forwarders to adhere to existing code of conduct and ethical standards for the industry.
The unlawful acts and omissions, as listed in the proposal, are operating without appropriate authority, use of subsisting recognition issued to another entity, failure to deliver cargo as required in the transport document, failure to deliver shipments to the rightful owner and delay in the cargo delivery, among others.