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Philippines logistics cost among highest in Southeast Asia
MANILA, Philippines — The Philippines has the highest logistics cost compared to three other Southeast Asian countries, a study undertaken by the Department of Trade and Industry (DTI) and the World Bank showed.
The DTI and World Bank’s policy brief, titled “An Assessment of Logistics Performance of Manufacturing Firms in the Philippines,” released during the Logistics Services Philippines Conference and Exhibition 2018 held yesterday, showed the Philippines has the highest logistics cost with 27.16 percent of sales of firms going to logistics services.
Other Southeast Asian countries such as Indonesia had a logistics cost over sales of 21.4 percent. Vietnam had 16.3 percent and Thailand 11.11 percent.
Logistics cost over sales is composed of transport cost over sales, warehousing cost over sales, inventory carrying cost over sales, and logistics administration cost over sales.
Results of the study were based on a survey covering 159 firms in major cities such as Clark, Batangas, Cebu, Iloilo, Davao, Tagaytay, Cagayan de Oro, Gen. Santos and those in Metro Manila.
By island group, logistics cost over sales in Luzon was at 17.48 percent, Visayas at 25.08 percent and Mindanao at 30.32 percent.
The study showed logistics cost differs depending on the sector.
“Firms operating in higher value sectors often have lower logistics costs than firms in lower value sectors. As compared with Indonesia, Vietnam and Thailand, the Philippines has higher logistics cost in the following sectors: chemical, textile and garments and electronics,” the study said.
The Philippines likewise has high logistics cost over sales in the food sector as it is expensive to transport food products within the Philippines which is an archipelago.
When asked about the logistics performance in the Philippines, the study showed the most important issue for manufacturers in the country is reliability (44 percent), followed by cost (30 percent) and time (26 percent).
“Although cost is highly important, it is also seen as a by-product of low logistics reliability. Hence, if reliability is not improved, cost issues may continue to persist because its level is highly affected by obtained reliability,” the study said.
The study was undertaken to present an initial baseline assessment of the logistics performance of manufacturing firms in the country.
Based on the results of the study, Trade Secretary Ramon Lopez said the government would seek to reduce logistics cost over sales in the country.
“Realistically, we want to bring it down to 21 percent,” he said.
The transport and logistics sector is among the 12 industry priorities under the DTI’s Inclusive, Innovation-led Industrial strategy.
As such, the DTI is actively promoting the transport and logistics sector by encouraging investments and initiating reforms to provide benefits to logistics service providers, businesses and consumers.
Source: https://www.philstar.com/business/2018/12/07/1874773/philippines-logistics-cost-among-highest-southeast-asia#7rS7bs8SR4Oz40FZ.99