Documente Academic
Documente Profesional
Documente Cultură
Copyright 2017
by Philippine International Seafreight Forwarders Association
vi
Trade Performance .......................................................................................................................................................... 37
Investments in the sector .............................................................................................................................................. 41
Industry Costs .................................................................................................................................................................... 42
Supply and demand ......................................................................................................................................................... 46
Sea and Costal Freight Transport .......................................................................................................................... 46
Freight Transport by Road....................................................................................................................................... 48
Air Freight Transport ................................................................................................................................................. 49
Inland Water Freight Transport ............................................................................................................................ 51
Challenges and Issues ..................................................................................................................................................... 54
Institutional and Regulatory Concerns ............................................................................................................... 54
Physical infrastructure .............................................................................................................................................. 56
Information and communications technology infrastructure................................................................... 57
5. Industry Advantages and Pitfalls: Strengths, Weaknesses, Opportunities, and Threats .................... 59
Strengths .............................................................................................................................................................................. 59
Weaknesses ......................................................................................................................................................................... 59
Opportunities ..................................................................................................................................................................... 60
Threats .................................................................................................................................................................................. 60
6. Support to Industry Development ............................................................................................................................. 61
7. Impact Mapping................................................................................................................................................................. 65
8. Recommendations............................................................................................................................................................ 68
9. References ........................................................................................................................................................................... 70
vii
LIST OF FIGURES
viii
LIST OF TABLES
ix
FOREWORD
The achievement of the Philippines development goals of rapid, sustained growth and shared
prosperity presumes a well-functioning services sector that is critical to reducing transactions
costs and raising productive capacity. In this quest for inclusive development, an efficient
transport and logistics industry is essential.
Logistics integrates transport, storage, freight forwarding, and information services in the
process of managing the flow of goods, services, and information from the point of origin to the
point of use. As an economy undergoes structural transformation and industries increasingly
take on higher-value-added activities, the demand for seamless connectivity to support the
greater intersectoral linkages is bound to increase. The involvement of multiple services across
the supply chain, however, requires a high degree of coordination in the actions of various
private service providers in order to ensure the efficient and timely delivery of the product or
service to the end-users. Fragmented and uncoordinated public policies and regulations that
influence the behaviors of private actors multiply the risk of coordination failures, exacerbate
inefficiencies, and raise the cost of doing business leading to loss of competitiveness and a
lower level of societal welfare.
As transport is a central component of logistics, improving the efficiency of the various modes
of transport and facilitating the coordination and smooth interchange of different transport
modes easily come to mind as low-hanging fruits.
Industry associations equally play an important role in logistics development; they can be
effective channels of communication amongst various industry players themselves and
between industry players and the government. Amongst actors in the supply chain (e.g.
suppliers, manufacturers, distributors, end-users), they can contribute towards improving
coordination. Between logistics industry stakeholders and the government, they can help
overcome the effects of fragmentation in the scope and design of regulation arising from the
diversity of stakeholders' objectives and government regulators' mandates.
The Philippine Multimodal Transportation and Logistics Industry Roadmap which follows is
the result of a private sector initiative to open a dialogue with government on the basis of
concrete and specific proposals aiming to catapult the Philippines to the status of a logistics
hub in Southeast Asia by 2030 capitalizing on a robust multimodal transportation system. The
x
Roadmap describes the industry structure, discusses key concerns, does a SWOT assessment,
and maps out specific goals and time-bound strategies.
Among the issues highlighted that constrain the development of an efficient multimodal
transport and logistics industry are: the underdeveloped transport infrastructure, inconsistent
and outdated government regulations, bureaucratic red tape that breeds corruption, the
absence of a national skills training program for new hires and industry professionals,
government's non-compliance with international agreements, and the lack of a national
masterplan to guide industry stakeholders on the future direction of the logistics industry.
By no means the last word on the subject matter, the Roadmap nevertheless provides a starting
point for thinking about the strategic direction of transport and logistics services in the
Philippines. The present administration's thrust to develop agriculture and manufacturing and
raise the contribution to GDP of regions outside the national capital on the one hand, and the
opportunities opened up by ASEAN Economic Community on the other hand certainly make the
Roadmap a timely contribution to current policy discussions.
xi
ACKNOWLEDGEMENTS
Our thanks to officials of the following companies, organizations and agencies for providing inputs
to and supporting this roadmap:
xii
36. Procurement and Supply Institute of Asia
37. Royal Cargo
38. Subic-Clark Alliance for Development
39. Subic Bay International Terminal Corp
40. Supply Chain Management Association of the Philippines
41. TNT
42. UPS
43. United Portusers Confederation
44. Philippine Exporters Confederation, Inc
45. Philippine Chamber of Commerce and Industry
46. World Bank
xiii
EXECUTIVE SUMMARY
The main purpose of this roadmap is to produce a common vision for the Philippine multimodal
transportation and logistics industry by mapping the structure of the industry, identifying key
concerns, and providing specific goals and time-bound strategies for the sector.
This roadmap was prepared by the Institute for Development and Econometric Analysis (IDEA)
with inputs from various private and public transport and logistics industry stakeholders who
attended four focus group discussions over a period of more than one year, from December 2014 to
February 2016. A number of other stakeholders submitted their written recommendations. The
roadmaps core group regularly met to incorporate all inputs.
The industry organizations, associations and government and multilateral agencies that
participated in the focus group discussions are listed in the Acknowledgements page.
During the focus group discussions, many of the problems facing the industry came to the fore.
These included:
1. Poor infrastructure
2. Governments non-compliance to international agreements
3. Lack of a national master plan
4. Absence of one central, coordinating agency
5. Unclear, confusing and sometimes conflicting and outdated government regulations
6. Red tape that has led to corruption; and
7. Lack of a national skills training program for both new hires and industry professionals
These problems have led to uncompetitive practices that contribute to high logistics costs in the
Philippines.
On the other hand, considered favorable to the industry are the countrys large and young
workforce; the growing consumer base; the governments renewed focus on infrastructure
development, manufacturing and agriculture; and the promise of a bigger market resulting from
ASEAN integration and the countrys participation in various free trade agreements.
Recommendations were divided into three phases: short term, covering the period 2015-2017;
medium term, 2018-2022; and long term, 2023-2030. The recommendations identified government
agencies whose participation was critical to effect any kind of change in the process or system.
xiv
Chapter 6, the role of supporting government agencies; Chapter 7, impact mapping; and Chapter 8
recommendations, prioritization of strategies, activities and implementation of strategies.
xv
ABBREVIATIONS
xvi
39. NEDA National Economic and Development Authority
40. OECD Organization for Economic Cooperation and Development
41. OTS Office of Transport Security
42. PAL Philippine Airlines
43. PCCI Philippine Chamber of Commerce and Industry
44. PCG Philippine Coast Guard
45. PDEA Philippine Drug Enforcement Agency
46. PDO Port Development Office
47. PEZA Philippine Economic Zone Authority
48. PIP Public Investment Program
49. PNP-HPG Philippine National Police-Highway Patrol Group
50. PPA Philippine Ports Authority
51. PPP Public-Private Partnerships
52. PSA Philippine Statistics Authority
53. PSIC Philippine Standard Industrial Classification
54. RORO Roll on-Roll off
55. SEC Securities and Exchange Commission
56. TESDA Technical Education and Skills Development Authority
57. TEU Twenty-foot Equivalent Unit
58. TRB Toll Regulatory Board
59. UNCTAD United Nations Conference on Trade and Development
60. UNESCAP United Nations Economic and Social Commission for Asia and the Pacific
61. WB World Bank
xvii
1. INTRODUCTION
The link between logistics, economic growth, and poverty reduction has long been established,
evident in growth experienced by developed and emerging economies.
According to the United Nations Economic and Social Commission for Asia and the Pacific
(UNESCAP), logistics encompasses the planning, implementation and control of forward and
reverse flow of goods, services, and information from the point of origin to the point of
consumption. Logistics also involves the storage of goods and information.
The Transport and Communications Bulletin for Asia and the Pacific No 70 published by UNESCAP
(2001) offered a simplified structure of logistics systems (Figure 1). The model focuses on the
customers perspective, from the point of supply through to the end user. The objective is to deliver
superior value at the lowest cost. The competencies required depend upon building strong
customer partnerships, client-specific solutions, and innovation and supply-chain systems
integration. This model clearly takes a holistic approach and is the trend in modern economies.
(UNESCAP, 2001).
1
The World Bank (WB) considers an efficient and effective logistics sector as one of the pillars of
trade competitiveness. With ASEAN Economic Integration (AEI), the role of logistics in helping
ensure the Philippines is competitive becomes even more critical.
Under the Philippine Development Plan 2011-2016, logistics has been identified as one of the key
elements in achieving inclusive growth and reducing poverty incidence. The full potential of the
local logistics sector, however, remains largely untapped and, in its current condition, may even
dampen gains of the AEI.
In 2014, the World Bank reported a lower logistics performance index (LPI) for the Philippines,
57th out of 160 countries, down from 44 out of 155 countries in 2010 (Table 1). The country trailed
ASEAN nations such as Singapore, Malaysia, Thailand, Vietnam, and Indonesia in 2014.
The logistics sectorpart of transportation and storage under the Philippine Standard Industrial
Classification (PSIC)contributed 6.1% to the countrys total gross domestic product during the
third quarter of 2014. The sectors impact on economic growth is certainly extensive considering
logistics cost, according to the Department of Trade and Industry (DTI), accounts for 24% to 53% of
the wholesale price of goods in the country.
2
2. VISION, GOALS, AND TARGETS
Industry players envision the Philippines as a competitive logistics hub in Southeast Asia by 2030
with an integrated multimodal transportation1 system. This goal will be achieved in three phases, as
seen in Figure 2.
Phase I (2015-2017): Capacity Building. Phase I involves the formulation of soft infrastructure as
well as refining and concretizing existing policies essential for a solid and environmentally
sustainable logistics system. Soft infrastructure includes policies with the corresponding
implementing rules and regulations that will facilitate execution of hard infrastructure and other
programs for capacity building. These policies consist of programs in the following areas: (1)
institutions, (2) skills development and (3) information and communications technology (ICT)
readiness.
Phase II (2018-2022): Capacity Extension and Efficiency Enhancement. Phase II involves the
material implementation of policies, including building and expanding transport and storage
infrastructure, and the adoption of efficiency measures, specifically programs that promote skills
development.
1 Under the United Nations Convention on International Multimodal Transport of Goods (Geneva, 24 May
1980), "international multimodal transport" means the carriage of goods by at least two different modes of
transport on the basis of a multimodal transport contract from a place in one country at which the goods are
taken in charge by the multimodal transport operator to a place designated for delivery situated in a different
country.
3
Phase III (2023-2030): Integrated Multimodal Logistics. Phase III creates information and
physical linkages with the global community embracing multimodal transport links.
4
3. STRATEGIES AND TIMELINES
This chapter identifies concrete strategies under each phase. The strategies aim to address issues
that obstruct growth of the logistics sector, and are directed at facilitating the integration of all
modes of freight transport and other nodes of the logistics network.
2The United Nations Convention on International Multimodal Transport of Goods (Geneva, 24 May 1980)
defines multimodal transport operator as any person who on his own behalf or through another person
acting on his behalf concludes a multimodal transport contract and who acts as a principal, not as an agent or
on behalf of the consignor or of the carriers participating in the multimodal transport operations, and who
assumes responsibility for the performance of the contract.
5
Franchising and Regulatory Board [LTFRB]), road transportation being a
component of multimodal transport. See Figure 3 for ideal setup of forwarding
sector.
ii. If the issuance of an Executive Order is not immediately practicable, the transfer of
the function of accreditation and supervision of seafreight forwarders from DTI to
DOTr-Maritime Industry Authority [MARINA] should be effected instead. (Save for
seafreight forwarders, MARINA, under its present charter, already supervises all
other maritime enterprises.) It should be noted that while this transfer to MARINA
rationalizes the setup of the forwarding sectoreffectively placing all freight
forwarders under one agency (the DOTr, with seafreight under attached agency
MARINA and airfreight under another DOTr-attached agency CAB)it still does not
allow forwarders to operate as multimodal transport operators because of the
absence of a national competent body.
c. The ASEAN Framework Agreement on the Facilitation of Goods in Transit must be fully
adopted. (Action required from DOF, DOTr, DTI)
d. Government needs to support the action items on transport facilitation and green logistics
from the ASEAN Kuala Lumpur Transport Strategic Plan 2016-2025. (Action required from
DOTr, DPWH, DTI, DENR)
6
2. Institutions must be strengthened.
a. A Transport Logistics and Supply Chain agency composed of both public and private
sector representatives must be created via an Executive Order. (Action required
from Office of the President, DOTr, DTI, DPWH, DILG, DOF, Department of
Agriculture [DA], Department of Environment and Natural Resources [DENR], and
all other agencies overseeing regulated products and requiring transport and
transport-related permits).
i. The agency will play a key role in drafting the integrated long-term national
master plan for supply chain and transport logistics.
ii. The agency will ensure consultation and coordination with stakeholders at
all times so that policies affecting all industry players are aligned, not
contradictory with other policies, and subsequently complied with.
iii. The head of the agency must be a Career Executive Service Officer with
wide-ranging experience in the field of logistics and supply chain.
b. The PPA must add at least two more private sector representatives to its Board.
These representatives should head a major stakeholder organization to ensure
proper industry representation.
c. MARINA should fully exercise its mandate to accredit and regulate maritime
enterprises, including international shipping lines (both principal and ship agents).
3. The policy and regulatory environments must be streamlined to reduce the cost of logistics.
7
to the adjacent Beijing Development Area, the most important economic
zone in Beijing. The park has attracted a number of overseas and local
developers such as Globle Logistics Properties and China Merchants
Logistics. (Action required from DTI, DOTr, DPWH, DOF, DILG, National
Economic and Development Authority [NEDA], Philippine Economic Zone
Authority [PEZA], Board of Investments [BOI]).
iii. The implementing rules for Republic Act 10863 or the Customs
Modernization and Tariff Act (CMTA). These will overhaul of the Bureau of
Customs (BOC) and update the Tariff and Customs Code of the Philippines.
(As of the writing of this Roadmap, only a few provisions of the CMTA have
been operationalized.)
2. The use of hybrid buses that ferry both passenger and cargo must be
explored.
vii. A freight transport data collection system, with logistics operators required
to regularly report certain information, in order to improve the basis for
evidence-based policy-making and to enhance monitoring of policy
implementation. (Action required from DOTr, DTI, DOF, NEDA, Philippine
Statistics Authority [PSA])
viii. An order that actively encourages use of Batangas and Subic ports as well as
other international sea ports and airports outside Metro Manila as gateways
to cater to the needs of industry in and around such ports, and for purposes
of decongesting urban areas. (Action required from Office of the President,
DOTr, DTI, PEZA and other free ports)
8
ix. A program for the rehabilitation and use of the rail network for cargo
transportation. Railways should ideally be connected to production,
manufacturing and dry ports. (Action required from DOTr)
x. An order that jump starts discussions on leveling the playing field for
domestic and international shipping. Foreign shipping lines enjoy benefits
not accorded to ships plying the domestic trade. Foreign carriers, for
instance, do not pay duties on fuel and lube oil while their domestic
counterparts pay duties and the 12% VAT. (Action required from DOTr, DTI,
DOF, NEDA)
xi. Policies that will make data and information work for the growth and
development of the cargo and logistics sector. To this end:
1. The PSA must adopt standard data measurements and indices for all
industry sectors (e.g. 20-foot container for shipping, kilos for
airfreight, etc.)
xiii. Consultation program with the cargo community related to DoTr efforts to
formulate a checklist for infrastructure projects.
9
xvi. A redefined logistics industry via a review of the PSIC to reflect these
changes:
xvii. The designation of PEZA and/or the Philippine Chamber of Commerce and
Industry (PCCI) as the certifying body/ies in the issuance of the Certificate of
Origin under the Generalized System of Preferences. (Action required from
PEZA, PCCI, BOC)
xviii. A BOC order mandating sea and airport terminal operators to provide truck
holding areas and drivers' lounges. (Action required from BOC, PPA, CAAP,
sea and air port operators)
i. Truck ban, road users fee and toll fees (Local government units adopt
varying policies leading to much confusion among road users.) (Action
required from DILG, LGUs, Mayors League)
ii. LTFRB requirement for truck operators to operate trucks no more than 15
years old. (This impending regulation would mean an estimated 80% of
trucks will no longer be given a franchise and therefore banned on the
streets. The policy could trigger another round of port congestion.) The
implementation of a reasonable transition period to comply with the
requirement to phase out old trucks is recommended; a public consultation
that will look into incentive schemes for truck fleet modernization would
also be helpful. (Action required from DOTr and LTFRB)
iii. LTFRBs mandate and screening procedures in the grant of truck franchises.
LTFRB should ensure franchised truckers comply with all safety and
operational requirements such as liability insurance and personnel training.
(Action required from DOTr and LTFRB)
iv. Gross vehicle weight regulations under the Anti-Overloading Law (Republic
Act No 8794). Under the law, most trucks operating in the Philippines are
10
already considered overloaded. Road weight limitations should be aligned
with ASEAN cross-border trade agreements. (Action required from DPWH,
DOTr)
vii. Philippine National Police (PNP) list of controlled chemicals. Some chemicals
in the list are commonly used in manufacturing, and are thus now more
difficult to procure.
viii. Requirements for transportation and storage of dangerous goods. Too many
requirements (sometimes redundant) create much confusion. (Action
required from PPA, CAB, CAAP, PCG, BFP, Philippine Drug Enforcement
Agency [PDEA], Environmental Management Bureau [EMB])
xi. All other regulations pertaining to transportation and logistics activities that
are deemed redundant, obsolete, and inconsistent with other regulations.
(Action required from DOTr, DTI, DOF)
xii. Application for other business licenses, permits, and other procedures.
(Action required from DTI, DOTr, DOF, DPWH, DILG, DA, DENR, Securities
and Exchange Commission [SEC])
SKILLS DEVELOPMENT
The absence of a skills certification program in the cargo transportation industry has been
identified as an immediate concern among players, prompting a call to create a National
Qualification Framework that is in keeping with ASEAN standards. This would ensure that
whatever manpower advantages the industry has is preserved, even enhanced, with the constant
supply of labor properly trained and always updated on industry developments.
11
The establishment of a skills development programs for all stakeholders in the cargo and logistics
industry (freight forwarders, terminal and warehouse personnel, container yard and port operators,
truckers, shipping line personnel, airline staff, ground handlers, express operators and integrators,
etc.) is necessary to promote market-relevant skills. This activity is now ongoing with the Technical
Education Skills and Development Authority (TESDA) as lead agency. As of the writing of this report,
only a few industry associations are building their certification programs, including the Philippine
International Seafreight Forwarders Association and Supply Chain Management Association of the
Philippines.
a. The BOC in order to reduce, if not entirely eliminate, submission of hard copies of
documents.
b. Application for business license and requirements of LGUs.
12
PHASE II (2018-2023): CAPACITY EXTENSION AND EFFICIENCY ENHANCEMENT
This phase involves carrying out of physical projects that will advance both infrastructure and skills
development. The projects are intended to expand capacity and enhance transport efficiency.
HARD/PHYSICAL INFRASTRUCTURE
SKILLS DEVELOPMENT
The greatest asset of an organization is its people. Hence, sustained investment in human resource
must be pushed. The following can be implemented in the medium to long term:
1. Creation of ASEAN Virtual Learning Resources Centers. AVLRC aims to foster greater
information and knowledge sharing about ASEAN and its member countries by using IT
technology to make it easier to access and share information about the people, culture,
history, places of interest, and economies of each ASEAN Member State. (ASEAN-Australia
Development Cooperation Program)
2. Formulation of ASEAN common core curriculum for multimodal transportation and logistics
management. This could include tertiary curriculum or applied graduate programs for
logistics professionals.
3. Institutionalization of mandatory training for truckers and logistics operators on safe and
eco-driving, preventive maintenance and truck fleet financial management.
13
4. Building of national/sub-regional centers of excellence (e.g. training centers).
An integrated and seamless logistics service is inseparable from the seamless exchange and
communication of information. Hence, improving ICT infrastructure is crucial in attaining the 2030
vision of the industry.
ASEAN defines ICT infrastructure as any fixed, mobile or satellite communication network, as well
as the internet. Also included are software supporting the development and operation of these
communication networks.
The following strategies are part of the ASEAN Roadmap for Integration of Logistics Services and
should therefore be adopted:
3. Promoting increased use of telematics as a promising area for fuel efficiency and safety
improvements in truck transport; data collection; and monitoring (e.g. driver training, low-
rolling resistance tires and other improvements that affect fuel consumption).
14
PHASE III (2024-2030): INTEGRATED MULTIMODAL LOGISTICS
This phase involves programs and projects intended to connect the Philippines to ASEAN countries
and other economic regions. Some form part of the Roadmap and Master Plan for ASEAN
Connectivity:
1. Reevaluation of projects with the view toward upgrading and expanding infrastructure to
further implement the ASEAN Framework Agreement on Multimodal Transport.
4. Upgrade of road quality of missing links in the ASEAN Highway Network (AHN). In the 2010
status report of the AHN Project, around 211 kilometers of the designated transit transport
routes in the country remain to be upgraded to at least Class III roads.
15
4. STATE OF THE INDUSTRY
STRUCTURE
SECTORAL COVERAGE
Being an archipelago, the Philippines intermodal logistics system is anchored on its maritime
transport system, supported by a road network linking ports to production areas, markets and
logistics terminals; and an air transport system with strategic regional and local airports (Lidasan &
Castro, 2009).
There is currently no comprehensive profiling of the Philippine logistics industry. The PSIC
provides a listing of the industrys major subsectors and their corresponding activities: (1) freight
rail transport, (2) freight transport by road, (3) sea and coastal freight water transport, (4) inland
freight water transport, (5) freight air transport, (6) storage and warehousing, and (7) support
activities to freight transport, including freight forwarding.
Freight Rail Transport (PSIC Code: 4912). This sector includes freight transport using
railroad rolling stock on mainline networks, usually spread over an extensive geographic
area. It covers inter-urban, suburban and urban railways as well as freight transport over
short-line railroads. Activities of the freight rail sub-sector are negligible as of this writing.
The Duterte administration has, however, identified the building of rail infrastructure as
one of its key projects to address the countrys growing passenger and freight
transportation requirements.
Freight Transport by Road (PSIC Code: 4933). Operations that provide over-the-road
transportation of freight using motor vehicles such as trucks and tractor-trailers comprise
this sector. Table 2 lists subclasses contained within the road freight transport group.
16
Sea and Coastal Freight Water Transport (PSIC Code: 5012). The transport of freight on
vessels designed for operating on sea or coastal waters, whether scheduled or not; and
transport by towing or pushing of barges, oil rigs, etc are part of this sector. Table 3 lists
subclasses contained within the sea and coastal freight water transport group.
Inland Freight Water Transport (PSIC Code: 5022). The sector covers transport of freight
via rivers, canals, lakes and other inland waterways, including harbor and ports.
Freight Air Transport (PSIC Code: 5120). The sector encompasses transport of freight by
air over regular routes and on regular schedules; non-scheduled airfreight transport;
launching of satellites and space vehicles; and renting of air transport equipment with
operator for the purpose of freight transportation. Table 4 lists subclasses contained within
the freight air transport group.
Storage and Warehousing (PSIC Code: 5210). This group covers warehousing of all types
of goods, including blast freezing, but excludes operation of self-storage facilities and
parking for motor vehicles. Listed in Table 5 are subclasses in this group.
17
TABLE 5: STORAGE AND WAREHOUSING
Support Activities to Freight Transport (PSIC Code: 5220). Activities incidental to and
supporting freight transport, such as operation of transport infrastructure, cargo handling,
and forwarding are part of this group. The sub-groups are listed in Table 6.
18
Another sector classified under the industry is postal and courier service. This involves
pick-up, transport, and delivery of letters and parcels under various arrangements. Table 7
lists down activities under this sub-sector.
INDUSTRY PLAYERS
According to the final results of the 2010 Annual Survey of Philippine Business and Industry
(ASPBI), the entire Transport and Storage sector (including both passenger and cargo transport)
comprised 2,891 establishments. Support activities for transportation topped the sector with 1,433
establishments or 49.6 percent. Majority of establishments under this industry group were engaged
in freight forwarding services and customs brokerage (ship and aircraft), comprising 78.4 percent
of the total establishments in the industry group. This was followed by other land transport and
transport via buses, industries with 639 establishments (22.1%) and 303 establishments (10.5%),
respectively. Figure 4 shows the percent distribution of establishments by industry group in 2012.
Gross revenue earned by the whole Transport and Storage sector reached P284.1 billion in 2012.
Passenger air transport industry was the top contributor with revenue of P102.9 billion or 36.2
percent of the total. Support activities for transportation industry were second with P76.7 billion
(27.0%), followed by sea and coastal water transport with P48.5 billion (17.1%).
The SECs Top 25,000 Corporations List for 2010 identified 908 players under the 12 considered
subsectors of the logistics industry. Listed firms had consolidated revenues amounting to P141.51
billion while consolidated assets hit P141.53 billion.
Among the 12 sub-industries, the Freight Forwarding Services sector stood out as the largest;
estimates place the sectors revenue share at 33.8 percent of the entire industrys earnings. The top
10 firms from the freight forwarding services sector cornered 12.1 percent of the entire industry
revenue. Four firms grabbed a lions share of the entire industrys revenues, due largely to the
status accorded to them by the government, by virtue of their respective exclusive 25-year port
management concessions. Figure 5 shows the revenue share by sub-industry in 2012. Table 8
shows the major logistics industry players in 2012.
19
FIGURE 4: PERCENT DISTRIBUTION OF ESTABLISHMENTS BY INDUSTRY GROUP,
TRANSPORTATION AND STORAGE SECTOR (2012)
20
FIGURE 5: REVENUE SHARE BY SUB-INDUSTRY, 2012 (IN %)
Net
Revenues Income
Firm Subsector
(in million P) (Loss), (in
million P)
SMC Shipping and Lighterage Interisland water freight
5,346 494
Corp. transport
Interisland water freight
Oceanic Container Lines, Inc. 1,996 84
transport
Interisland water freight
NMC Container Lines, Inc. 1,956 28
transport
Interisland water freight
Lorenzo Shipping Corp. 1,838 62
transport
Storage and Warehousing,
Redsystems Co., Inc., The 4,047 153
N.E.C.
International Container Terminal Service activities incidental to
16,692 3,037
Services, Inc. water transportation
Service activities incidental to
Philippine Ports Authority 10,482 3,158
water transportation
Service activities incidental to
Asian Terminals, Inc. 4,644 1,585
water transportation
21
Service activities incidental to
Lufthansa Technik Philippines, Inc. 5,437 (327)
air transportation
DHL Express (Philippines) Corp. 2,904 (25) Freight forwarding services
Federal Express Corp. 2,734 (1,101) Freight forwarding services
Schenker Philippines, Inc. 2,558 61 Freight forwarding services
Panalpina World Transport
1,785 18 Freight forwarding services
(Philippines), Inc.
Nippon Express Philippines Corp. 1,645 107 Freight forwarding services
LF (Philippines), Inc. 7,717 92 Logistics services
Analog Devices Gen. Trias, Inc. 6,649 798 Logistics services
Toyota Tsusho Philippines Corp. 4,962 158 Logistics services
JR & R Distributors, Inc. 4,950 9 Logistics services
SIIX Logistics Phils., Inc. 4,858 115 Logistics services
Sumitronics Phils., Inc. 3,062 2 Logistics services
Hitachi Cable Asia Pacific (HCAP)
1,582 3 Logistics services
Pte. Ltd.
Mitsui Bussan Frontier
1,579 (112) Logistics services
(Philippines), Inc.
Nagase Philippines International
1,463 (12) Logistics services
Services Corp.
22
Air
Average revenues registered by this sector grew by 20.8 percent to P99.7 million in 2010 after a
slump of 21.8 percent in 2009. Profits, however, experienced a slight dip of 1.9 percent to P4.4
million. Average firm size in 2010 stood at P89.26 million, an increase of 7.7 percent from 2009.
According to the CAB, cargo traffic handled by air freight forwarders has been on an uptrend since
2003, except for slumps in 2009 and 2011, and a slight dip in 2012. In 2013, air freight chargeable
weights increased by 15.7 percent to 57.39 million kilograms. Direct shipments made up more than
half of the total, followed by consolidations (47.3 percent) and breakbulking (0.06 percent).
FIGURE 6: DOMESTIC AIR FREIGHT FORWARDERS CARGO TRAFFIC, 2002-2013 (IN KILOGRAMS)
Cargo traffic handled by domestic scheduled air services also registered positive growth for 2013,
increasing by 9.8 percent to 226.89 million kilograms.
23
FIGURE 7: DOMESTIC SCHEDULED CARGO TRAFFIC (2004-2013)
Water
Almost 100% of commodity movements are carried by water transport vessels, which conveyed
P638.83 million worth of goods in 2013.
Domestic interisland shipping consists of liner, tramping, tanker, ferry/fast craft, roll on-roll off
(RoRo), and barging operations, according to the Center for the Advancement of Trade Integration
& Facilitation (CATIF, 2012).
Liner ships transport passenger and cargo with fixed sailing schedules.
Trampers are freight vessels that are chartered, hence they do not have a regular route or schedule,
and only handle cargoes.
Tankers specialize in oil, liquefied petroleum gas, and chemicals. Ferries or fastcraft and roll on-roll
off (RoRo) vessels have fixed schedules and routes but travel short distances; the former carry
passengers while the latter carry both passengers and vehicles as rolling cargo.
Barges and tugs are used in the ship-to-shore movement of cargo while some companies own
industrial carriers to transport their own cargo using their own ports. An inventory is shown in
Table 9.
24
TABLE 9: NUMBER OF VESSELS BY TYPE OF OPERATION (2012)
25
Road
Trucks are the main mode of transporting cargo from producers to ports and markets. There were
341,505 trucks, 33,564 buses, and 37,458 trailers registered in 2012. A breakdown of registered
motor vehicles is provided below.
26
LINKAGES WITH OTHER I NDUSTRIES
The logistics industry, owing to its nature, has extensive linkages with several industries.
According to the 2006 NSO Input-Output Table, primary inputslabor, capital, taxes and surpluses
account for 38.4 percent of total inputs, while the remaining 61.6 percent come from various
industries.
Intermediate demandor demand from other industries where logistics services are used as inputs
in producing other commoditiesconstitutes 48.9 percent of the total. Final demand, pertaining to
demand driven by end-user consumption, accounts for the remaining 51.1 percent.
Backward linkages
The manufacturing sector has the biggest contribution with 59.5 percent share in total value of all
intermediate inputs. Most come from the manufacture of materials used in vehicle maintenance
such as leather, machines and non-electric machinery and equipment, rubber tires, and wires and
cables.
The next largest source of intermediate inputs is the transportation, communication and storage
sector with a 17.2 percent share (or, equivalently, nearly 11 percent of total inputs). The majority of
these inputs come from the communications sector, such as telephone services and wireless
telecommunications.
The finance sector is the third largest source of intermediate inputs, accounting for almost 16
percent of the total intermediate inputs. Contributing the largest from this sector is insurance.
Operating surplus is another important input (accounting for 16.8 percent of total inputs) to
finance investment costs and other operating expenses. All other industries share the remaining 7.3
percent.
One other main input of the logistics industry is labor, accounting for 6.2 percent of the combined
value of all inputs. The industry relies on quality workers to operate transport vehicles and ensure
the orderly and cost-efficient movement of cargoes.
Another item that affects the industrys backward linkages is oil. The price of oil has considerable
effect on the sectors ability to keep its fees and charges at competitive rates.
27
TABLE 11: INPUT REQUIREMENTS FOR THE LOGISTICS INDUSTRY
Forward linkages
The demand for logistics services comes mostly from two sources: (1) transactions owing to
personal consumption and (2) the manufacturing sector, accounting for the bulk of total output.
Personal consumption refers to the purchase of households and individuals of logistics services for
their own use. Manufacturing firms, mostly those involved in radio and TV, toys, machines and
other heavy equipment, purchase logistics services as an input in producing their products.
In the Philippines, the manufacturing and agricultural sectors heavily utilize containerized cargo for
their production and trading requirements.
After manufacturing, the transport, communication and storage sector is the second largest source
of intermediate demand. Most of this demand comes from telephone services. The transport,
communication and storage sector is followed by the private service sector, with banks and hotels
cornering the biggest share in demand.
28
The logistics industry is expected to face stable demand since almost all industries that produce or
manufacture and consume or utilize physical goods require the sectors services.
Share in demand
Intermediate demand 0.489
Agriculture, Fishery, and Forestry 0.036
Mining and Quarrying 0.004
Manufacturing 0.216
Construction 0.001
Utilities 0.028
Transportation, Communication, and Storage 0.128
Trade 0.009
Repairs 0.001
Finance 0.024
Ownership of Dwellings and Real Estate 0.000
Government Services 0.006
Private Services 0.036
Final demand 0.511
Personal Consumption Expenditure 1.325
Gross Government Consumption Expenditure 0.000
Gross Fixed Capital Formation 0.000
Changes in Stocks (0.001)
Net Exports (0.814)
Total demand 1.000
REGULATORY FRAMEWORK
The Philippine Port System has four categories: (a) the PPA ports system consisting of public and
private ports; (b) ports under the jurisdiction of independent port authorities (IPA); (c) municipal
ports under LGUs; and (d) the RORO terminal system (RRTS).
29
The PPA port system is the largest and most extensive of the four categories, comprising more than
100 PPA-owned ports and over 500 commercial and industrial private ports. The largest common-
use ports in the country the Manila International Container Terminal (MICT), South Harbor and
the North Harbor are under the supervision of PPA.
Llanto, et. al. (2005) noted the conflicting roles of PPA, a government-owned and -controlled
corporation attached to the DOTC. In addition to being developer, operator and regulator of public
ports, it carries out regulatory functions over private ports. It also approves cargo-handling rates
and port charges. PPA has the power to limit entry of private port operators if potential entrants
can pose a threat to the operations of PPA. Table 13 summarizes the regulatory roles of PPA.
Port Functions
1. PPA develops, owns, maintains and regulates its ports.
2. It sets and collects port charges such as wharfage dues, berthing/usage
fees, and terminal handling costs.
3. It approves increases in cargo-handling rates and receives 10% and 20%
from cargo handling revenues on domestic and foreign cargo, respectively.
Public 4. It awards contracts to private terminal operators (e.g., 25-year
management contract with International Container Terminal Services, Inc
for the operation of MICT; and the 10-year contract with Asian Terminals
Inc for South Harbor), and cargo-handling operators (two-year
probationary contract/10-year contract without public bidding). Under
such concessions, port charges and cargo handling rates are set by the
PPA.
5. The regulation comes in the form of issuance of permit to construct and
operate the port.
Private Ports 6. It approves increases in cargo-handling rates and port charges such as
berthing/usage fees and wharfage dues.
7. It collects shares from port charges (50%).
Source: World Bank Meeting Infrastructure Needs, Philippine Transportation Sector Review (2004)
30
Regulation of Shipping Industry
The MARINA is the primary regulatory body in the shipping industry. It is under the supervision of
DOTr, and carries out developmental and regulatory functions. The other regulatory agencies, with
their corresponding functions, are listed in Table 14.
Source: World Bank Meeting Infrastructure Needs, Philippine Transportation Sector Review (2004)
31
HISTORICAL PERFORMANCE
The logistics industry is generating greater value than before, primarily due to the birth of a more
competitive environment and the fragmentation of the production process especially in the
manufacturing sector.
The transport and storage sectors jointly generated P48.57 billion of gross-value added (GVA) in Q3
2014, of which P25.64 billion was generated by land transport, P14.23 billion by storage and
services incidental to transport, P5.63 billion by air transport, and P3.08 billion by water transport.
For the Q1-Q3 2014 period, GVA grew 11.7 percent year-on-year from P143.13 billion in Q1-Q3
2013. The transport and storage sector made up 3.05 percent of Philippines total GVA from Q1-Q3
2014. On a quarterly basis, however, the combined GVA of the transport and storage sectors fell
19.5 percent in the third quarter of 2014 compared to the previous quarter.
The year 2013 also registered positive growth with the combined GVA rising 6.6 percent (modest
compared to 2012s 8.3 percent growth), to P190.47 billion from P178.75 billion in 2012. In 2011,
GVA grew 7.1 percent. The robust growth in personal and household consumption has driven the
strong performance of the logistics industry in previous years.
32
The total quantity of domestic trade transactions in 2013 also increased by 0.6 percent, from 21.57
million tons reported in 2012 to 21.7 million tons in 2013. Likewise, the total value of commodities
that flowed within the country increased by 10.8 percent, from P578.21 billion in 2012 to P640.51
billion, in 2013. The local water transport sector was responsible for more than 99 percent of the
countrys volume and value of domestic trade commodities movement.
TABLE 15: QUANTITY AND VALUE OF DOMESTIC TRADE BY MODE OF TRANSPORT (2012-2013)
2013 2012
Quantity Value Quantity Value
(in tons) (in P '000s) (in tons) (in P '000s)
Philippines 21,697,595.00 640,509,026.00 21,567,772.00 578,205,973.00
Water 21,663,010.00 638,828,737.00 21,532,690.00 575,923,076.00
Air 34,585.00 1,680,289.00 35,082.00 2,282,898.00
Source: PSA
A 2005 survey on Inter-Regional Passenger and Freight Flow conducted by the University of the
Philippines National Center for Transportation Studies shows that road transport had, by far, the
largest share of freight transport in terms of volume and tonne-kilometers, whereas other modes
were comparatively negligible. The Australian Agency for International Development (AusAID) in
2008 reported a more balanced yet still prevalent share of 58% for road freight and 42% for sea
freight.
Weight Ton-km
Mode (thousand Share travelled Share
metric tons) (thousand)
Road 178,797.89 86.61% 34,643,567.46 99.97%
Rail 2.14 0.00% 0.30 0.00%
Water 27,581.68 13.36% 11,455.26 0.03%
Air 48.68 0.02% 33.04 0.00%
TOTAL 206,430.38 34,655,056.06
Despite the lack of more recent data, it is safe to assume that road transport remains the countrys
principle freight mode. This skewed distribution strengthens the case of this roadmap to improve
33
multimodal transportation, thus shifting freight from road to other, more environment-friendly
modes such as rail. It also underscores the need to focus energy-efficiency actions on the road
freight sector.
Data on the significance of the freight transport sector in terms of energy consumption or emissions
in comparison to other sectors in the Philippines is limited. According to DOE (2010), utility
vehicles and trucks are the main sources of transport greenhouse gas (GHG) emissions, comprising
only about 5% of total vehicle stock but emitting as much as 37% and 33%, respectively, of the total.
This is consistent with evidence from other Asian countries where despite generally fewer vehicle
numbers, freight transport accounts for a disproportionate share of emissions and fuel
consumption. Transport (passenger and freight) consumes more energy than any other sector in
the Philippines. In 2009, it accounted for 37.7% of total energy consumption, about 80% of which is
typically consumed by the road sector.
The National Capital Region (NCR) accounted for the largest share among the regions at 36.1
percent (P230.25 billion) in the total value of domestic trade in 2013. Central Visayas was next with
transactions amounting to P103.09 billion (16.2%). Western Visayas followed, contributing P79.92
billion (12.5%). Northern Mindanao was fourth with P59.30 billion (9.3%) and Central Luzon fifth
with P40.03 billion (6.3%). Cagayan Valleys domestic trade contributed the least share with only
P177,000.
34
Of the total value of commodities coming from NCR, the major regions of destination were Central
Visayas (P59.96 billion), Western Visayas (P52.14 billion), Northern Mindanao (P35.00 billion),
Davao Region (P29.56 billion), and Zamboanga Peninsula (P16.47).
The top three commodities traded from NCR were food and live animals, manufactured goods
classified chiefly by material, and machinery and transport equipment with values amounting to
P66.36 billion (26.8%), P52.02 (22.2%) and P31.76 (14.5%), respectively.
SHARE TO EMPLOYMENT
Consistent with its share to the economy, the services sector of which logistics is a part also
contributes the largest to the countrys total employment, and this has been on an uptrend.
In 2012, this sector contributed 52.6% to total employment. Preliminary results of the Labor Force
Survey (LFS) show that for 2014, this increased to a 53.6% share to total employment.
35
Among all industries under the services sector, wholesale and retail trade, as well as repair of
motor vehicles and motorcycles employed the most number of persons, contributing 34.9% to the
total employment in the services sector (or 18.7% of total national employment). This was followed
by the trade and storage sector, registering a 13.0% share of the total employment in the services
sector (or 7.0% of total national employment).
The transport and storage sector is one of the top five biggest contributors to total employment in
the Philippines. It follows the agriculture, hunting and forestry sector (comprising 26.9% of total
employment), wholesale and retail trade and repair of motor vehicles and motorcycles (18.7%),
and manufacturing (8.3%).
36
TRADE PERFORMANCE
The logistics sector plays a critical role in trade facilitation. Reducing cost and improving the quality
of logistics and transport systems improve international market access and lead directly to
increased trade.
According to data from the World Trade Organization (WTO), the Philippines accounted for 0.3%
(or USD56.7 billion) of the worlds exports in 2013, of which 73.4% were manufactures, 11.3%
were agricultural products, and 9.8% were fuels and mining products.
Top destinations were Japan (cornering 21.2% of Philippine exports), the United States (14.5%),
China (12.2%), European Union (11.4%), and Hong Kong (8.2%). For imports, the country
registered a 0.34% share (or USD65.1 billion), of which 64.9% were manufacturers, 23.7% were
fuels and mining products, and 11.0% were agricultural products. The main import sources were
China (13.1% of imports), the United States (10.9%), European Union (10.0%), Japan (8.6%), and
Chinese Taipei (7.8%).
In the ASEAN region, the Philippines ranked 6th out of 11 countries in terms of merchandise
exports, cornering 4.5% of ASEANs exports to the world after Singapore (representing 32.2% of
ASEANs exports), Thailand (17.9%), Malaysia (17.9%), Indonesia (14.4%), and Vietnam (10.4%).
In terms of imports, Philippines also ranked 6th out of 11 countries, representing 5.2% of ASEANs
imports from other parts of the world.
TABLE 18: DISTRIBUTION OF ASEAN MERCHANDISE TRADE WITH REST OF THE WORLD, % SHARE (2013)
37
According to data from the United Nations Conference on Trade and Development (UNCTAD), about
7.2 percent of the total services export in 2013 is from the transport sector a decline from ten
years ago when the transport sector registered a 28.1 percent share of total services export. The
same trend can be seen in imports despite the increase in both exports and imports of the total
services sector. From a 45.2 percent share of total services imports in 2003, the share of the
transport sector to total services imports declined to only 24.0 percent in 2013.
The Philippines has relatively balanced trade flows, with total service exports comprising 50 to 60
percent of the total. The situation is different for the transport sector in terms of trade balance.
Transport imports generally account for 70 to 75 percent range of the total transport trade.
TABLE 19: PHILIPPINES EXPORT AND IMPORT IN TOTAL SERVICES AND TRANSPORT SECTOR,
Trends on the frequency of shipcalls at Philippine ports and the volume of cargo handled suggest an
overall positive impact on trade, especially for domestic cargo.
From 1999 to 2013, shipcalls by domestic vessels increased 21.6 percent. Compared to 2012,
shipcalls by domestic vessels slightly increased by 0.5 percent. The number of shipcalls by foreign
vessels, however, remained almost constant, probably because the Philippines is not a major
destination of foreign vessels in the same way that Port Klang in Malaysia and the Port of Singapore
are major transshipment hubs for ASEAN, according to Llanto and Navarro (2012).
38
FIGURE 11: SHIP CALLS, AT BERTH AND ANCHORAGE (1999-2013)
Figure 12 shows total cargo throughput handled at Philippine ports generally increased from 1999
to 2013. Foreign cargo led the growth, with foreign cargo exports growing 280.5 percent and
imports growing 23.2 percent for the period in review. Compared with 2012, foreign cargo
throughput handled at Philippine ports in 2013 increased by 4.5 percent. Domestic cargo handled
in ports, on the other hand, decreased by 0.4 percent from 1999 to 2013 and increased only slightly
by 1.7 percent from 2012 to 2013. The data must be interpreted with caution, given the growing
population and demand for domestically traded goods. Llanto and Navarro (2012) cite the growing
inter-island trade via RORO ferries as reason for some cargoes no longer being measured by port
authorities.
Data from the Philippine Statistics Authority (PSA) reveals that total external trade in goods
increased by 4.9 percent from USD9.87 billion in October 2013 to USD10.36 billion in October 2014.
The growth is primarily driven by an increase in imports due to the positive performance of eight
out of the top ten major commodities for October 2014. These were: Plastics in Primary and Non-
Primary Forms; Iron and Steel; Other Food & Live Animals; Miscellaneous Manufactured Articles;
Mineral Fuels, Lubricants and Related Materials; Telecommunication Equipment and Electrical
Machinery; Industrial Machinery and Equipment; and Cereals and Cereal Preparations.
39
FIGURE 12: CARGO THROUGHPUT, IN METRIC TONS (1999-2013)
FIGURE 13: PHILIPPINE TOTAL TRADE ANNUAL GROWTH RATES, % (OCTOBER 2013-OCTOBER 2014)
40
INVESTMENTS IN THE SECTOR
Based on DTI figures, the total approved investments for the transport and storage sector increased
20.6% to P7.39 billion for January-June 2014 from P6.12 billion in the same period in 2013. This is
a turnaround from the slump experienced in the previous year, where investments dropped 64.7%
from P17.23 billion in the first half of 2012 to P6.12 billion during the same period in 2013.
On a yearly basis, investments for the transport and storage sector declined 7.8% from P84.15
billion in 2012 to P77.60 billion in 2013. Investments in the sector comprised 10.3% of the total
investments in the country in 2013. The industry followed electricity, gas, steam and air-
conditioning supply which cornered 45.8% of the total investments; real estate activities, 15.2%;
and manufacturing, 14.2%.
Tables 20 and 21 present the levels and growth rates of approved investments by industry,
respectively.
TABLE 20: TOTAL APPROVED INVESTMENTS BY INDUSTRY (2012-2013; JAN-JUN 2012 TO 2014)
41
TABLE 21: YEAR-ON-YEAR GROWTH OF TOTAL APPROVED INVESTMENTS BY INDUSTRY, %
Jan-Jun Jan-Jun
2012 2013
2013 2014
TOTAL APPROVED INVESTMENTS (6.62) 8.08 51.49 10.96
Electricity, gas, steam & air conditioning
(5.55) 120.40 104.30 (9.98)
supply
Real estate activities (37.38) (4.43) 72.95 6.57
Manufacturing (20.34) (47.33) (29.98) 147.67
Transportation and storage 217.48 (7.78) (64.45) 20.61
Accommodation and food service activities 250.65 63.10 181.64 (33.51)
Administrative and support service activities 17.73 44.85 95.85 20.13
Information and communication 412.28 (84.11) 108.33 43.79
Agriculture, forestry and fishing 357.73 (50.51) (84.29) 188.92
Construction 17,998.65 (96.94) (93.32) 4,258.35
Others (72.14) (55.42) (56.90) (51.34)
Net foreign direct investments (FDI) for the transport, storage and communications sector were
highest during the January-October 2014 period since 2010. Based on Bangko Sentral ng Pilipinas
(BSP) data stretching back to 2005, the industry registered net FDI of USD 85.1 million, compared
with the whole of 2013s USD 21.3 million and 2012s USD 3.8 million.
INDUSTRY COSTS
According to CATIF, Costs for operating the transport and storage industry summed up to P204.22
billion, according to the 2010 ASPBI. Passenger air transport industry incurred the highest cost
with P84.9 billion (41.6%) followed by support activities for transportation with P38.8 billion
(19.0%). Sea and coastal water transport industry came in third with P35.6 billion (17.4%).
Based on the World Bank Doing Business data for 2015, it takes Philippine firms an average of 15
days to export and 15 days to import (Table 22). Both figures are better than the East Asia and
Pacific average of 20.2 days and 21.6 days, respectively, but are worse than the Organization for
Economic Cooperation and Development (OECD) average of 10.5 days and 9.6 days, respectively.
The cost of exporting is lower in the Philippines (USD755.0 per container) than the East Asia and
Pacific (USD864.0 per container) and OECD (USD1,080.3 per container) averages. Importing,
however, costs more in the Philippines (USD915.0 per container) than the East Asia and Pacific
42
TABLE 22: EXPORT AND IMPORT PROCEDURES DURATION (NUMBER OF DAYS)
Customs
Ports and Inland
Export procedures duration Documents clearance
terminal Transportation TOTAL
(number of days) Preparation and
handling and handling
inspections
Brunei 11 2 3 3 19
Cambodia 14 3 3 2 22
East Timor 14 4 8 2 28
Indonesia (Jakarta) 11 1 2 3 17
Laos 15 2 3 3 23
Malaysia 5 1 2 3 11
Myanmar 12 3 3 2 20
Philippines 8 2 3 2 15
Singapore 2 1 1 2 6
Thailand 8 1 3 2 14
Vietnam 12 4 3 2 21
Customs
Ports and Inland
Import procedures duration Documents clearance
terminal Transportation TOTAL
(number of days) Preparation and
handling and handling
inspections
Brunei 11 1 2 1 15
Cambodia 15 3 4 2 24
East Timor 12 5 7 2 26
Indonesia (Jakarta) 13 4 7 2 26
Laos 13 7 2 4 26
Malaysia 3 1 2 2 8
Myanmar 10 4 6 2 22
Philippines 8 2 3 2 15
Singapore 1 1 1 1 4
Thailand 8 2 2 1 13
Vietnam 12 4 4 1 21
43
(USD895.6 per container) average but less than the OECD average (USD1,100.4 per container). The
import and export procedures cost among ASEAN countries (plus East Timor) is shown on Table 23.
44
TABLE 23: EXPORT AND IMPORT PROCEDURES COST (US$)
Customs Ports
Inland
Export procedures Documents clearance and
Transportation TOTAL
cost (USD) Preparation and terminal
and handling
inspections handling
Brunei 190 50 240 225 705
Cambodia 220 275 100 200 795
East Timor 140 50 120 100 410
Indonesia (Jakarta) 135 125 165 160 585
Laos 290 150 160 1350 1950
Malaysia 85 60 120 260 525
Myanmar 175 80 165 200 620
Philippines 105 85 225 340 755
Singapore 120 50 150 140 460
Thailand 175 50 160 210 595
Vietnam 160 100 150 200 610
Customs Ports
Inland
Import procedures Documents clearance and
Transportation TOTAL
cost (USD) Preparation and terminal
and handling
inspections handling
Brunei 150 80 315 225 770
Cambodia 225 280 225 200 930
East Timor 145 50 120 100 415
Indonesia (Jakarta) 210 125 165 160 660
Laos 205 195 160 1350 1910
Malaysia 120 60 120 260 560
Myanmar 165 80 165 200 610
Philippines 90 185 300 340 915
Singapore 100 50 150 140 440
Thailand 135 255 160 210 760
Vietnam 130 95 175 200 600
45
SUPPLY AND DEMAND
Production Capacity
Located within the Greater Capital Region (GCR), the Port of Manila is the premier trading hub for
the Philippines maritime trade. It hosts three major facilities: Manila International Container
Terminal, Manila South Harbor and Manila North Harbor. From 1995 to 2013, the utilization rate at
the Port of Manila averaged 63 percent with the 60 percent in 2012 as its lowest point (see Table
24). During the same year, the container traffic at Manila reached 2.7 million twenty-foot equivalent
units (TEUs).
In comparison, the combined capacity of the Batangas and Subic ports was 1 million TEUs with a
utilization rate of only 5 percent, according to a 2014 study commissioned by the Japan
International Cooperation Agency (JICA) and NEDA. The Roadmap for Transport Infrastructure
Development for Metro Manila and Its Surrounding Areas (Region III and Region IV-A) pointed out
that due to increasing congestion at Manila ports, for the short-term, incentives to encourage
shippers to use the ports of Subic and Batangas as well as placing a capacity limit for future
expansion of Manila ports are necessary.
Source: PPA
46
According to the study, the main challenge to the development of the ports of Manila is
tempering its continued growth, so that more cargo can flow into Subic and Batangas. JICA
helped build the Subic and Batangas ports. The study said the phaseout of the ports of Manila,
as called for by certain sectors, is not tenable in the short- to medium-term period because
the total capacity in the two alternate ports (Batangas and Subic) is insufficient to handle all
the container traffic (in Manila ports)which in 2012 exceeded the 2.7 million TEUs mark.
Demand
According to the Center for the Advancement of Trade Integration and Facilitation or CATIF (2012),
almost 100% of commodity movements are by water transport vessels. Trends on the frequency of
shipcalls and cargo volume suggest an increasing demand for water transport service. From 1999
to 2013, shipcalls by domestic vessels rose 21.6 percent and total cargo throughput generally
increased. Shipcalls by foreign vessels, however, remained almost constant, the Philippines not
being a major transshipment hub like Singapore.
When it comes to container demand, imports trumps exports (Table 25). This trend is likely to be
sustained given robust growth in the consumption and investment sectors. The concentration of
economic activity in the GCR, which accounts for around two-thirds of national output, also
indicates continued growth in container traffic in the Port of Manila. Given capacity constraints, this
points to the need for steady port capacity investments and expansion.
*-partial estimates
Excludes empty containers in either direction
47
FREIGHT TRANSPORT BY ROAD
Production Capacity
Road transport is the prime option for conveyance of freight and people within the Philippines,
with trucks and trailers the main mode of transporting cargo from producers to ports and markets.
This is evident in the consistent increase in number of registered trucks and trailers in the past
seven years. From 2007 to 2012, the number of registered trucks increased by 21 percent and the
number of registered trailers by 49 percent.
The capacity of this sub-sector is highly contingent on the countrys road infrastructure. The road
network is composed of two types in the GCR: private and national roads. The DPWH continues to
upgrade its national road network through local and foreign-aided funding. According to the DPWH,
the national road runs through 29,479 kilometers. The table below breaks down the length of
national road by region.
48
Demand
The main driver of demand for road network is the number of vehicles on the road. In terms of type
of vehicle used, two- and three-wheeled vehicles posted the fastest expansion of almost 11% from
2000 to 2010 (Table 27). In comparison, buses and utility vehicles posted growth rates of 2.17
percent, and .61 percent, respectively. With trucks being older than 15 years, the situation points to
problems with fleet renewal and poor fuel efficiency.
Production Capacity
Air transportation is a significant contributor in the transport and storage sector in terms of supply.
In 2006, there were a total of 85 airports servicing air transport in the Philippines, of which 10
were classified International Airports; 15 Principal Airport Class 1; 19 Principal Airport Class 2; and
41 Community Airports. Table 28 provides a summary of registered airports in the Philippines from
1986 to 2006.
There are three domestic air carriers, which dominate air transportation services in the country,
namely: low-cost carrier Cebu Pacific Airways, Philippine Airlines (PAL), and PALs low-cost carrier,
PAL Express. PAL was the only airline carrier allowed to operate in Philippine airports until 1986,
when the aviation industry was liberalized.
49
TABLE 28: SUMMARY OF REGISTERED AIRPORTS IN THE PHILIPPINES
Demand
According to the Civil Aeronautics Board (CAB), cargo traffic handled by air freight forwarders has
been on an upward trend since 2003, except for slumps in 2009 and 2011. In 2013, air freight
chargeable weights increased by 15.7 percent to 57.39 million kilograms. Cargo traffic handled by
domestic scheduled air services also registered positive growth for 2013, increasing by 9.8 percent
to 226.89 million kilograms. Table 29 illustrates the summary of aircraft movements by region in
2006. The highest number of movements of aircraft and passengers was observed in NCR.
50
TABLE 29: SUMMARY OF AIRCRAFT, CARGO, AND PASSENGER MOVEMENTS BY REGION (2006)
Production Capacity
The inland water freight sector refers to the transport of passengers or freight on inland waters,
involving vessels not suitable for sea transportation. Rivers, canals, and lakes are among the
passageways for inland transport. According to the Census on Philippine Business and Industry
(CPBI), there were 49 firms engaged in the sector with overall revenues of P285 million in 2009.
Being an archipelago, the Philippines has few large land masses that host waterways and which
allow for inland water freight. In a few cases, such as in the Pasig River and Laguna de Bay, inland
water freight is not a well-developed mode of transport as sea and coastal freight. Thus, there is
limited data on the sector. But if small inter-island vessels that operate within archipelagic waters
are considered, domestic shipping tonnage may be used as a proxy for capacity for this sector.
51
Among five PPA port groups, the Visayas Region has the highest gross registered tonnage (GRT);
Southern Mindanao Region has the lowest GRT.
52
Demand
As noted earlier, limitations on data availability and the underdeveloped nature of the inland water
freight sector prevents direct estimates of demand for services. Domestic shipping data is again
used as a proxy for the sectors demand. Container traffic is highest in the Manila-Northern Luzon
area, and lowest in the Southern Luzon region as shown in table below. In terms of passenger traffic,
Southern Luzon has the most significant figure and ManilaNorthern Luzon the least significant.
2. Cargo
Inward 39,967,037 9,545,820 6,380,623 11,483,649 6,029,607 6,527,338
Throughput
Outward 36,094,053 14,624,216 6,130,494 6,674,524 5,682,867 2,981,952
(m.t.)
3. Container
Inward 1,042,658 486,465 45,211 143,407 160,642 206,934
Traffic (in
Outward 1,008,020 501,753 39,331 134,029 156,831 176,077
TEU)
53
CHALLENGES AND ISSUES
Industry stakeholders cited red tape, unclear and redundant government regulations, and non-
standard implementation of policies and inefficient transport infrastructure as causes of
inefficiencies in the supply chain which have translated to high transport costs in the Philippines.
Red Tape. Stakeholders concur that red tape and the presence of various government regulatory or
coordinating agencies with no clear delineation of supervisory functions are barriers to efficient
logistics.
According to the World Banks 2014 Logistics Performance Report, around five agencies monitor
import shipments and four agencies monitor export shipments in the Philippines. Equally
numerous are forms required to clear shipments: seven for import shipments and four for export
shipments. This leads to two-day clearance processing time, which could lengthen to five days if
inspection is required. This compares with one-day clearance or two days processing (with physical
inspection) in Malaysia, and one-day clearance in Thailand, including for shipments requiring
inspection.
1. BIR and BOC accreditation for importers and customs brokers are not integrated leading to
submission of similar documents to two agencies that are under one department, the DOF.
2. Despite the push for the National Single Window, only a handful of government agencies are
plugged into the system. This means shippers have to submit the same documentary
requirements to different government agencies each time they deal with these agencies.
3. Similar documentary requirements for transportation and handling of dangerous goods are
required by the CAB and the CAAP, both of which are attached agencies of the DOTC.
4. The BOC still requires submission of hard copies of manifests even if manifests are already
electronically lodged under the electronic-to-mobile (e2m) system.
Unclear and poorly thought-out government regulations. The unclear and often confusing
regulations implemented by some government agencies lead to uneven implementation of policies
and instability in the supply chain. Public consultation on issues affecting the entire supply chain is
also lacking or sometimes cursory.
54
A few examples of these:
2. Implementation of importer and customs broker accreditation when the BIR and BOC have
few personnel to attend to the rush in entities seeking accreditation. The policy caused
much confusion among stakeholders and caused delays in trade;
3. Rule requiring the presence of BOC personnel during stuffing of export containers when
there are not enough staff to do this. (This policy was eventually scrapped by former
Commissioner John Phillip Sevilla but only after much lobbying from the export industry);
4. The adoption of the joint administrative order (JAO) on higher penalties for colorum
(unfranchised) trucks at a time when port congestion was at its peak. Trucks were later
given provisional authority to avoid apprehension for violation of the JAO;
5. The imposition of new storage rates for overstaying containers to counter congestion at
Manila ports in 2014. At a public consultation on the issue, the private sector was led to
believe there would be more discussions on the subject. But very soon after, the storage
rates were increased; and
6. The PNP list of regulated shipments, which included chemicals commonly used by the
manufacturing sector, making it difficult to import the same.
Informal payments. Corollary to the problem of unclear regulations is the issue of informal
payments which jack up logistics costs. Informal payments, many times related to transactions at
the BOC, are usually resorted to in order to quickly settle disputes in the interpretation and
application of unclear government rules or tariff regulations.
In the 2014 Enabling Trade Index Report by World Economic Forum, the Philippines ranked 103rd
out of 138 countries in terms of irregular payments in exports and imports. In terms of customs
transparency index, it ranked 102nd.
55
PHYSICAL INFRASTRUCTURE
Poor transport infrastructure has resulted in longer lead times and consequently high logistics
costs. Frequent calamities and the transport infrastructure's inability to deal with them have also
impaired the supply chain many times over.
In the World Bank 2014 LPI Report, the country ranked low in infrastructure index. In the 2014
Enabling Trade Index Report by the World Economic Forum, the country was ranked 96th out of
138 countries in terms of availability of transport infrastructure. The latter report also ranked the
country 107th in terms of seaport infrastructure, and 105th in airport infrastructure.
Bhattacharyay (2010), who estimated infrastructure needs in Asia from 2010-2020, noted that
transport infrastructure occupied the largest share of the total infrastructure needs in the
Philippines, followed by energy infrastructure, then ICT infrastructure.
The lack of planning and coordination with utility companies undertaking repairs of facilities has
also been noted by stakeholders.
According to a study by the Joint Foreign Chambers of Commerce in the Philippines, in spite of
increased budgets directed to infrastructure, road rating remains low. Funds were primarily
directed to barangay roads, side stepping national highways. In 2007, around 60.7% of total
growth in road length was accounted for by barangay roads; national roads only accounted for
14.5%.
In the 2013 road assessment made by the DPWH, around 27% of respondents ranked national
roads from bad to poor, while 63% gave a fair to good mark.
The government has tapped public-private partnerships (PPP) to implement some road
infrastructure projects. This setup has its own complex issues though. For example, the
construction of rural roads via PPP is not as attractive to the private investor due to lower financial
returns. Even if it offers high social benefits, roads connecting economic centers constructed via
PPP may just be a pipe dream.
Seaport facilities. Government-operated seaports outside the National Capital Region are in dire
need of modernization, lacking cargo-handling equipment required for an efficient supply chain.
56
The privatization of Davao-Sasa, one of Mindanao's key ports, has been held in abeyance for years
due to opposition from local groups who claim they were not properly consulted about the project;
and that the project is harmful to the environment and its contract price too high.
Cebu port has not kept pace with growth of volume in the region and is now congested and in need
of major expansion.
Airport Facilities. There is no provision for adequate air cargo facilities, much more a dedicated
cargo facility, including a truck holding area.
Rail Freight. While acknowledged as the most efficient and eco-friendly among all modes of
transport, rail freight is deemed a non-existent subsector in the Philippines. Rail freight services
initiated previously by port operator International Container Terminal Services, Inc. did not
prosper because of poor volumes.
Seamless connectivity in logistics requires automation and adoption of IT solutions in its processes.
Although ICT infrastructure in the country has improved in previous years, much needs to be done
to attain a cloud readiness level that will benefit various sectors, foremost of which is the logistics
industry.
In the 2014 Cloud Readiness Index in the Asia-Pacific, the country went up two notches. The
country received the lowest ranking in the following indices: (1) government regulatory
environment and government usage, and (2) broadband quality. The regulatory environment index
assesses the extent to which the national legal framework facilitates ICT penetration and safe
development of business activities. The government usage index evaluates the implementation of
ICT policies intended to enhance competitiveness and well-being of citizens, as well as the efforts to
develop ICT. It also measures the number of services the government provides online.
Adoption of ICT in operations not only speeds up processing time but can also be a tool to minimize
the presence informal payments due to red tape.
Internet penetration in the Philippines was among the lowest in ASEAN although improvement has
been seen in recent years. From 2009-2010, the number of internet users per 100 people doubled,
and this has continued to increase since.
Still, the connection speed in the country leaves much to be desired; a report by the ASEAN DNA
states that the Philippines may have the slowest internet connection speed in the region.
57
FIGURE 15: INTERNET USERS PER 100 PEOPLE, 2000 TO 2014
FIGURE 16: INFOGRAPHIC: AVERAGE INTERNET CONNECTION SPEED AMONG ASEAN COUNTRIES, 2014
58
5. INDUSTRY ADVANTAGES AND PITFALLS: STRENGTHS,
WEAKNESSES, OPPORTUNITIES, AND THREATS
STRENGTHS
The strength of the sector rests primarily in its young labor force, providing the industry with a
large and stable supply of manpower.
The workforce is also adaptable, educated and proficient in the English language. A more educated
labor force increases labor productivity and promotes versatility among members of the force.
WEAKNESSES
Institutional and structural issues mainly constitute the industrys weak points.
Poor and inadequate transport infrastructure restricts provision of logistics services translating to
high transport costs. The country's archipelagic makeup makes transportation even more
challenging. Infrastructure projects are sometimes poorly planned, leading to legal challenges and
delays in project completion.
The industry is fragmented. Despite players being classified under one PSIC, overseeing agencies
for different activities of the industry are varied. For example, seafreight forwarders are under the
jurisdiction of the DTI while airfreight forwarders are under the DOTr.
Unclear, uncoordinated, overlapping and sometimes even contradictory regulations and policies
result in red tape and corruption, leading to informal payments and sometimes agency turfing.
There is much to be desired when it comes to the role of government in the industry, with
collaborative efforts between the government and the private sector seemingly limited. This
became especially evident in 2014 when it took government a few months to finally address the
problem of the Manila port congestion.
Government's information campaign for new or revised major policies is not institutionalized.
Oftentimes, the private sector has to take the initiative to educate stakeholders about new
government regulations.
National and local government policies are not aligned. Case in point is the adoption of truck bans
with different times by various local government units.
The lack of a national curriculum, including technical courses, specific to transportation and
logistics industry practitioners is a major weakness. This oftentimes means new hires have to learn
on the job, translating to higher costs for companies.
59
OPPORTUNITIES
The large domestic market with a growing middle class is a key opportunity. The stable growth of
middle-income families will keep consumption demand high in the next few years, a development
that can only be favorable for the industry.
The market is expected to grow even more with the Philippines entering into various free trade
agreements as well as the advent of the ASEAN Economic Community, a market of 600 million
people. As the fourth-largest exporting region in the world and cornering 7% of global exports,
ASEAN offers enormous opportunities for trade and therefore logistics.
The relative ease of market access to the Philippines, partly due to favorable trading conditions
(zero or lower tariffs), is another opportunity for the sector. In the 2014 Enabling Trade Index
Report, the country ranked 11th out of 138 countries in terms of market access, 19th in domestic
market access index, and 26th in terms of foreign market access. Similarly, the countrys exporters
have favorable access to foreign markets, enabling greater trade.
THREATS
Non-compliance with international agreements such as the ASEAN Framework Agreement on
Multimodal Transport is a grave threat. The countrys multimodal transport operators will lose the
ability to operate as such in other ASEAN countries if the Agreement is not implemented.
For smaller home-grown and undercapitalized companies, the entry of more competitive foreign
firms once ASEAN Economic Integration is in full swing may be considered a threat.
Due to the expected easing of restrictions on labor flow among ASEAN countries due to integration,
the industry may suffer from brain drain, with Filipino nationals seeking higher pay overseas.
Calamities are a constant source of threat for the industry. Year in and year out, the supply chain
suffers from much disruption due to flooding and repair of damaged infrastructure. This has led to
delivery delays and consequently higher transport costs.
Another threat is the lack of awareness of green logistics. As the world gears toward greener jobs
and procedures, the industry's lack of awareness to meet global standards means its inability to
participate in reducing the global carbon footprint and contribute to national energy efficiency and
climate goals.
60
6. SUPPORT TO INDUSTRY DEVELOPMENT
Logistics is critical to industry development. The government recognizes that inadequate and poor
logistics networks are developmental constraints, thus vital infrastructure and logistics chains have
to be built and expanded. Under the governments 2011-2016 Philippine Development Plan (PDP),
the capital outlay for infrastructure is targeted at 5 percent of GDP by 2016.
Transport and logistics have also been identified as priority sectors under the PDP. The plan aims
to:
The PDP is supported by the Public Investment Program (PIP) 2011-2016, which encompasses the
National Logistics Plan. Part of this plan is the Central RORO Spine Project, which aims to facilitate
seamless, expeditious and economical movement of passengers, vehicles and goods along the Luzon
Island-Panay-Negros-Cebu-Bohol-Mindanao route.
Among recently NEDA Board-approved projects also under the PIP are:
The PIP is complemented by the PPP Program, which taps into private sector resources and
expertise for the development of key public infrastructure and services. Many of the PPP projects
under the program will support the development of the logistics industry, such as the following:
61
Metro Manila Skyway Stage 3 (under a Joint Venture Agreement; construction in progress)
Other projects in the procurement stage but have encountered delays are the regional airports
development project, the Davao Sasa Port Modernization Project, the NLEX-SLEX Connector Road,
and the Laguna Lakeshore Expressway-Dike Project.
Helping plan and implement projects related to trade, logistics, and transportation are the following
government agencies:
Bureau of Customs
Under the DOF, the BOC regulates import and export shipments. Among its responsibilities
are accrediting importers and customs brokers; implementing tariff and customs rules; and
preventing smuggling.
Department of Energy
The DOE has developed the Philippine Energy Efficiency Roadmap 2014-2030 which eyes a
40% reduction in energy intensity compared to 2010, of which one quarter will be achieved
by the transport sector. Short- and medium-term measures (2014-2020) include fuel
efficiency standards, tax incentives for energy-efficient vehicles, promotion of energy-
efficient vehicle technologies, driver education and fleet management programs. From 2020
to 2030, the roadmap foresees energy efficiency programs beyond road transport
(passenger and cargo ships, aviation fuels), reintegration of urban planning and transport
energy use.
The DENR is in charge of setting fuel and emission standards for vehicles. Per
Administrative Order 2015-14, all new vehicles to be used and introduced in the market by
2016 should comply with Euro 4 emission standards.
Through Project Jobs Fit, DOLE is able to recognize occupations that are in demand and
hard to fill, including those for transport and logistics. In-demand jobs are checkers and
maintenance mechanics while hard-to-fill ones include gantry operators, ground engineers,
heavy equipment operators, long-haul drivers, pilots, machinery operators, and aircraft
mechanics.
The DPWH is responsible for the planning of infrastructure and other public works, as well
as their design, construction, and maintenance. As such, it is the engineering and
construction arm of the government tasked to develop technologies that ensure the safety,
quality and efficiency of all infrastructure facilities such national roads and bridges, flood
control and water projects, and other public works.
62
Department of Trade and Industry
The DTI is tasked to expand Philippine trade, industries and investments as a means to
generate jobs and raise incomes. The agencys FTEB accredits seafreight freight forwarders
while the Supply Chain and Logistics Management Division oversees supply chain activities.
Department of Transportation
The DOTr is the primary government agency responsible for the Philippines' land, air, sea
and rail activities. It has the following attached agencies:
PPA oversees management, operations and financing, of public ports throughout the
archipelago.
CAB regulates commercial air carriers, including airfreight forwarders, and issues
Certificates of Public Convenience to domestic and international airlines allowed to
operate in the Philippines.
CAAP regulates airports and enforces traffic rules under the mandate of the Civil
Aviation Authority of the Philippines. CAAP has corporate attributes and powers by
virtue of RA 9497 enacted in 2008 to restructure the civil aviation system and to
promote, develop, and regulate the technical, operational, safety, and aviation
security functions under the civil aviation authority.
LTFRB is the regulator of public land transportation services supporting the supply
chain (e.g., trucking services) As a regulator, LTFRB leads the testing,
implementation and monitoring of traffic routes and issuance of Certificate of Public
Convenience or franchise to operate
LTO is responsible for implementing laws, rules and regulations pertaining to land
transport in the country. Its services include the registration of motor vehicles and
issuance of drivers licenses, and its functions include the enforcement of safety
standards for land transport.
The MMDA implements the Unified Vehicular Volume Reduction Program to prevent both
public and private vehicles from using all national, city, and municipal roads in the
metropolitan area based on certain hours of the day.
63
Another related regulation is the truck ban, which is implemented from 6:00 a.m. to 10:00
a.m. and from 5:00 p.m. to 10:00 p.m. every day except Sundays and holidays on specific
roads and highways.
NEDA is the countrys premier socioeconomic planning and policy coordinating body,
providing high-level advice to policymakers in Congress and the Executive Branch. Its key
responsibilities include the coordination of policies, plans and programs; review, evaluate,
and monitor infrastructure projects; and undertake policy reviews and analyses of
development issues.
TESDA is responsible for helping manage the country's labor pool. Through its Technical
and Vocational Education Training programs, individuals undergo training to equip them
with skills, enhance their competence, and boost their ability of being hired.
64
7. IMPACT MAPPING
A well-coordinated and integrated logistics sector will have multi-tier effects, positively affecting
the performance of various stakeholders, ultimately translating to inclusive growth and effective
poverty reduction.
An integrated logistics sector is seen to increase trade competitiveness, as well as expand market
reach and depth.
65
INCREASED TRADE COMPETITIVENESS
Buoyed by efficient operation at all nodes, particularly in goods clearance, the industry can take on
the competitiveness challenge posed by an increasingly integrated global market.
With improved timeliness and effective delivery of both intermediate and final goods, costs could
be minimized. Patalinhug, et. al. (2015) outlined the cost of delayed trucking and delivery of goods
due to transport policies, including the truck ban and yellow-plate requirement. They reported that
trucks in order to enter the port had to queue for at least five days, which could extend up to 14
days. Without the truck ban, the queue took only two days. Moreover, long lines resulted in lost
business among trucking companies due to lower turnaround per truck, creating an artificial
shortage of trucks. Smaller trucking companies had to shut down due to significant reductions in
revenue. Patalinhug, et. al also noted several manufacturers lost customers due to delayed delivery
of time-sensitive freight, and spoilage of perishable goods. The congestion also resulted in high fuel
waste as trucks idle and crawl forward.
Coupled with higher demand, lower logistics cost will promote increased production and
profitability among companies. This should trigger business expansion, higher employment and
output in the economy. In addition to improved profitability among companies in the logistics
sector, other sectors stand to benefit, including the agriculture and manufacturing industries which
employ logistics services extensively.
Business activity spillovers from centers of economic development to less developed regions can be
facilitated through a more efficient value chain. With improved farm-to-market and farm-to-
industry roads, the cost of transporting agricultural produce from small farmers in underdeveloped
rural areas to centers of economic activities and industrial zones can be reduced. Lower logistics
expense could boost the profitability of small farmers, as well as the wholesale and retail traders in
rural areas.
66
The DA estimates that the interventions under the Philippine Rural Development Project (2014-
2020), including construction of farm-to-market roads and food terminals in rural areas, could
result in the following: (1) at least 5% increase in real farm income of beneficiaries, (2) around 30%
increase in income for the enterprise development beneficiaries, and (3) around 7% increase in
value of annual marketed output.
The logistics market can expand internationally, particularly in ASEAN. Overcoming clearing
systems and regulatory barriers in member countries could lead to expansion of operations in
various untapped markets in ASEAN. Southeast Asia is a particularly exciting market because of a
growing middle-class that is expected to double by 2020, according to Nielsen (2014). From 28% of
total population in 2012, the middle class in Southeast Asia is expected to increase to around 55%
in 2020.
67
8. RECOMMENDATIONS
1. An integrated long-term national master plan for supply chain and logistics should be
crafted in consultation with all stakeholders. This master plan must include nationwide
infrastructure requirements and the development of a strong nautical highway and a roll-
on/roll-off terminal system linking the entire country. The plan must be reviewed regularly
to ensure it remains responsive to industry requirements.
2. An agency for Supply Chain and Logistics should be created to coordinate all initiatives
related to the supply chain and to follow through on implementation and compliance to
national and international policies and commitments.
4. Automation in government agencies must be pushed to the greatest extent possible to boost
efficiency and eliminate corruption.
5. The countrys compliance with international agreements it entered into is essential. The
ASEAN Framework Agreement on Multimodal Transport, signed by the DOTC in 2005, must
be immediately implemented. The Agreement requires the creation of a national
accreditation system for multimodal transport operators that will allow freight forwarders
based in the Philippines to operate as multimodal transport operators in other ASEAN
member states.
a. Dedicated access roads to sea and air ports, freight centers and railway stations as
well as dedicated air cargo facilities must be constructed.
b. Manila ports need to be further expanded to keep pace with expected volume
growths owing to an expanding economy. But this expansion will only be more
consequential if there is corresponding expansion of support facilities outside ports
(roads, warehouses and other off-dock facilities) to match ports development.
c. The capacity of Subic and Batangas ports as well as all other international sea and
air gateways need to be expanded in anticipation of larger volumes but always
keeping in mind that infrastructure outside the gateways need expansion too.
68
d. In the interest of more efficient and eco-friendly transport solutions, it is time to
harness the railway network to service not only passengers but also cargo
requirements.
69
9. REFERENCES
Asia Cloud Computing Association (2014). Cloud Readiness Index 2014. Philippines
Asian Development Bank (2012). Infrastructure for Supporting Inclusive Growth and Poverty
Reduction in Asia. Philippines
Association of Southeast Asian Nations (2007). Roadmap for the Integration of Logistics Services.
Makati, Philippines
Association of Southeast Asian Nations (2011). Master Plan for ASEAN Connectivity. Indonesia
Association of Southeast Asian Nations (2012). ASEAN Connectivity Project Information Sheets.
Indonesia
Bubner, N., Bubner, N., Helbig, R. and Jeske, M. 2014. Logistics trend radar: delivering insight today.
Creating value tomorrow. Accessed online:
http://www.dhl.com/content/dam/downloads/g0/about_us/logistics_insights/DHL_Logist
ics-TrendRadar_2014.pdf
Carruthers, R., Bajpai, J. and Hummels, D. Trade and Logistics: an East Asian perspective. Accessed
online: http://www.apec.org.au/docs/10_tp_supply/7.%20trade%20and%20logistics%20-
%20an%20east%20asian%20perspective.pdf
Center for the Advancement of Trade Integration & Facilitation (CATIF). July 2012. Philippine
agribusiness and benchmarking study: component on trade facilitation and logistics.
Prepared for the International Finance Corporation (IFC). Accessed online:
http://www.catif.org/wp-content/uploads/2013/10/PhilAgribusiness_Final-
Report_July2012_IFC.pdf
ALMEC Corporation (2014). Roadmap for Transport Infrastructure Development for Metro Manila
and Its Surrounding Areas (Region III and Region IV-A). Japan International Cooperation
Agency (JICA) and National Economic and Development Authority (NEDA). Philippines.
Lidasan, H. and Castro, J. 05 February 2009. Philippine Intermodal Logistics System and Policies.
Presented in Logistics Conference, Dusit Hotel, Makati, Metro Manila, Philippines. Accessed
online: http://philexport.ph/philippines/RP%20Logistics%20Policy-Feb09.ppt
Llanto, Gilberto and Adoracion Navarro (2012). The Impact of Trade Liberalization and Economic
Integration on the Logistics Industry: Maritime Transport and Freight Forwarders.
Philippine Institute for Development Studies (PIDS), Discussion Paper, 2012-19
70
Neilsen (2014). ASEAN 2015: Seeing Around the Corner in a New Asian Landscape.
Porter, M. 1985. Competitive advantage: creating and sustaining superior performance. The Free
Press. New York, USA.
Technical Education and Skills Development Authority (2012). Labor Market Intelligence Report:
Logistics Industry. Philippines
The World Bank (2014). Connecting to Compete 2014: Trade Logistics in the Global Economy.
Washington, DC.
The World Bank (2014). The Philippine Rural Development Project. Accessed online:
http://www.worldbank.org/projects/P132317/philippine-rural-development-
program?lang=en&tab=overview.
United Nations Economic and Social Commission for Asia and the Pacific (2001). Transport and
Communications Bulletin for Asia and the Pacific No 70. Logistics for the Efficient
Transportation of Domestic Goods. New York, USA.
World Economic Forum (2014). The Global Enabling Trade Report 2014. Geneva
ASEAN Briefing
PortCalls
71