PHILIPPINE logistics cost is highest among Asean neighbors, with traffic as one of the barriers to supply chain management, industry players said.
“So our logistic costs, percentage of sales is 25 percent, meaning it takes almost one-third of the cost of the product to get to you, that’s very high,” Insight Supply Chain Solutions CEO Pierre Carlo Curay said during the General Membership Meeting on May 4 via online.
Curay emphasized that the Philippines is actually the highest among Association of Southeast Asian Nations (Asean) members in terms of logistic cost.
Meanwhile, the average logistics cost among the developed countries are ranging from 10-11 percent, which according to Curay, “makes the Philippines more than double in terms of cost.”
Curay cited traffic and transportation problems as some of the culprits behind the high cost.
“Most of the time transport is one of the industries that’s being penalized by different policies that slows down traffic and increase cost. We have a truck ban, single lane, we have the number coding scheme, this is something that adds more burden aside from the traffic,” said Curay.
For his part, former Consultant on Urban Transport for Japan International Cooperation Agency (JICA) Engineer Rene Santiago laid out the things to consider in the post-Covid situation of traffic in Metro Manila.
Santiago said the good news is that “the travel demand is likely to shrink below 18 percent, below the pre-Covid level,” citing as an example a giant business process outsourcing (BPO) firm which opted to stick to the work-from-home arrangement. The BPO giant, which Santiago did not name, has thousands of employees working from home.
Another perspective to look at in terms of traffic situation is the increasing volume of cars on the road because they feel safer riding their private cars, shying away from the crowds to avoid infection. Santiago noted that car sales went up by 19 percent in 2021.
He also thinks there will be a shortage of buses and jeepneys. In fact, the government intentionally reduced 8,000-plus buses to 4,500 by canceling their franchises.
“It required all jeepneys, about 60,000 of them, to reapply on new routes that have not yet been defined up to now,” said Santiago.
On top of these transportation problems, Santiago said, “we have made the streets of Metro Manila very dangerous with concrete barriers all over the place, so they promote accidents.” He highlighted that the only “bright spot” are the motorcycles, as they have been the lifeline during the Enhanced Community Quarantine (ECQ).
With these observations, Santiago said that “public transport is a private sector obligation being regulated by government.”
He thinks that the only solution is to decouple mobility from urban and income rise.
“This is what I call the urban dynamics: as the metropolis grows, it attracts more population or more employees, more work force lead to more trips and longer trip businesses,” said Santiago.
For his part, Curay added that the Philippines must eye for a “working railway” to curb the country’s supply chain problems.
“However when we develop the railway, when we push for the railway, it has to be integrated with the supply chain with the ports, with the airports, with the seaports, and you know that cuts across,” said Curay.
On seaports, Curay said: “One of our recommendations again is seaports capacity adjustment, so we’ve been asking if we can spread out the distribution of the containers, not only in Manila; we decongest Manila and then put it to our North and South ports that can handle this container, transport delivery.”
The more integrated the supply chain is, according to Curay, the more efficient it becomes.