By Justine Irish D. Tabile, Reporter
THE PHILIPPINES is deemed a potential growth market for logistics companies looking to expand in response to growth in international trade, US supply chain services company C.H. Robinson said.
C.H. Robinson Vice-President for Southeast Asia Stephen Ly told BusinessWorld that the Philippines remains a vibrant growth market for companies in the industry.
“The increased demand for freight and logistics services continues to escalate due to higher levels of international trade and exports, with the Philippine logistics industry expected to reach a market size of P1.16 trillion by 2027,” Mr. Ly said via e-mail.
“This presents a valuable opportunity for logistics companies, such as C.H. Robinson, looking to expand its operations,” he added.
C.H. Robinson recently opened a Philippine office focused on serving the Southeast Asian trade.
“C.H. Robinson has also selected the Philippines for its strategic location in Southeast Asia, which allows it to serve a wider customer base and enhance its global supply chain connectivity,” Mr. Ly said.
“With seamless connections with key trading partners like the US, Singapore, South Korea, and China, the Philippines is an ideal hub for regional and international trade,” he added.
Aside from increased trade, Mr. Ly noted that traditional trade routes are now being diverted to focus on Southeast Asia, putting the Philippines in prime position to capture growth.
“With recent geopolitical tensions across the world as well as spillover effects from the COVID-19 pandemic, companies are increasingly diversifying their production bases to Southeast Asian countries,” he said.
“This diversification strengthens the region’s role in global supply chains but also enhances its attractiveness as a manufacturing hub. As a result, these countries, including the Philippines, are experiencing a surge in foreign direct investment,” he added.
However, Mr. Ly said that the logistics industry still faces challenges such as infrastructure limitations, regulatory hurdles, and fluctuating shipping costs.
“These challenges can impact the efficiency and cost-effectiveness of logistics operations, thereby affecting the overall economy,” he said.
He described Philippine ports as inadequate, the road network congested, and inter-island connectivity limited, leading to delays and increased costs.
“These limitations not only hinder the efficient movement of goods within the country but also impact its competitiveness in the global market,” he added.
On the topic of regulatory hurdles and bureaucratic processes, he said complex customs procedures, the absence of harmonized local regulations, and tedious documentation requirements can delay cargo clearance and increase operating costs.
“These inefficiencies can deter potential investors and limit the growth of the logistics sector, ultimately affecting the country’s economic development and its ability to fully participate in regional and global supply chains,” he said.
He also noted volatile shipping costs, the result of global disruptions, as among the hurdles for logistics companies.
“With the suspension of shipping routes through the Red Sea, for instance, shipping fees are 15% more expensive for the Philippines, inflating the overall cost of goods and services in the country,” he said.
