Logistics Business in Philippines: Ken Research

1. Philippine Logistics Industry grew in 2022P owing to the surge in demand from e-commerce and increased investment in infrastructure by the government.

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The logistics sector in the Philippines is expanding rapidly (CAGR – 6.3%), owing primarily to the growth of the e-commerce sector and the increased use of cutting-edge technology such as supply chain automation and digital platforms to improve efficiency. Another growth driver that is driving the logistics market in the country is increased infrastructure investment in projects following Covid-19 to improve the transportation and logistics sectors in general. Major industries contributing to the revenue of the logistics market in the Philippines include F&B, Manufacturing, Electronics, Automotive, Pharma, and more.

2. The Logistics Industry in the Philippines is expected to witness a Rise in International Trade, Improvement in Infrastructure, and Growth in Automation in the next few years.

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Major infrastructural development plans are taken up by the Government of the Philippines like ‘Build Build Build” which is to drive the infrastructural development in the country. In addition to this, the cold storage industry is experiencing a new wave of technological developments that are critical for end users of cold storage services as well as the organic growth of cold storage companies. The warehousing industry will see an increase in the use of technology and automation as major players adopt robotics technology. Moreover, contract logistics and express providers will benefit from rapidly modernizing retail and a growing automotive sector.

3. Covid had an impact on the Philippines’ logistics market in a variety of sectors, including transportation and the CEP market.

Supply chains were severely impacted during Covid-19 all around the world. The Philippines also suffered from the scarcity of raw materials, factories closed, and disruption in the supply chain due to cross-border restrictions. With this, the transportation industry in the country also suffered during covid crisis. For instance, there was a huge drop in the revenue generated by cold transportation market. The cold transportation market fell in 2020. But even after all this the E-commerce industry in the country experienced positive growth during Covid. It was a major contributor to the GDP during the period.

4. Inefficient custom clearance process, high dependence on human resources, and traffic congestion in major regions such as Metro Manila are some of the major challenges faced by the logistics industry.

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Customs clearance has been a major barrier and source of pain for importers in the Philippines. It can take up to 20 days to complete the entire process. Moreover, the reliance on human resources increases the possibility of errors, resulting in dissatisfied customers. Furthermore, traffic congestion in areas such as Metro Manila is a major cause of delays in goods delivery, and the islands that are further away from economic centers have poor connectivity and high logistics costs.

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