Two miniature logistics managers surrounded by boxes

4 Logistics Challenges in the Philippines

September 3, 2020

 

What are some of the logistics challenges in the Philippines?

  1. Inconsistent regulations
  2. High shipping costs
  3. Poor infrastructure
  4. Underemployment and bureaucracy

 

The country’s eCommerce industry is no doubt a thriving one. Especially now, as many people turn towards more convenient forms such as online shopping in order to procure a wide array of merchandise. However, this does not underscore the fact that there are many logistics challenges in the Philippines that continue to hamper this sector of the economy.

There have been many cases of disgruntled consumers due to lost and damaged parcels or delayed shipment of goods. However, these are all just part of a deep-seated problem that finds itself confined within the country’s regulatory framework. To successfully improve the overall status of the logistics industry in the country, it’s important to understand the obstacles that face it. Continue reading to learn more.

 

Inconsistent Regulations

A logistics boat taking a while to dock

Inconsistent regulations may be the reason for the inefficient logistics sector of the Philippines. This is largely evident across the freight cargo situation, particularly in the country’s ports.

With inconsistent regulations, it takes a much longer time for ships that are arriving at the ports in the country to be able to dock or berth at their respective locations. As you may know, these cargo are carriers of shipping containers that house many of the international goods that are due for distribution to the end-consumers.

Currently there are two key players in port regulations in the Philippines, namely the Cebu Ports Authority and the Philippine Ports Authority. With the lack of competition, it’s fairly common to experience such situations as inconsistent rules. Without a larger body regulating these port authorities, increases in cost tend to happen in a more regular fashion.

This kind of situation creates confusion among the various shipping carriers, again creating a longer time frame before docking has been made possible.

 

High Shipping Costs

An online shopper shocked at high shipping costs

The high shipping cost is another factor that hampers good logistics practices. These costs are predominantly put on the burden of the consumer. Due to this, they might feel discouraged from increasing their consumption habits.

As mentioned before, the absence of a larger authority to monitor the movement of goods in and out of the country’s ports creates inconsistencies on the cost of shipping. A percentage of these costs are then shouldered by the consumer. It’s likely that you’ve gone online shopping at least once or twice in your life. Even before you continue on with the checkout process, you’ll find that the cost of the shipping fee may be just a bit much for you — hence leading you to cancel your order and to look elsewhere.

On a broader scale, you’ll find that this situation creates a domino effect that affects not only you as the consumer, but the sellers, suppliers, and freight forwarders as well.

 

Poor Infrastructure

Traffic jam in the Philippines

There’s no questioning that the status of transportation infrastructure in the country could be better — for a lack of a more all-encompassing term. The Philippine urban scene is known for its congested streets, including major thoroughfares.

With the poor infrastructure, it takes a long time before the merchandise reaches its final points of distribution. There are not enough physical structures that can adequately accommodate trucks and other kinds of carriers. This is especially problematic when it comes to the transfer of perishable goods — they may eventually become rendered unfit for consumption if they expire before reaching their destinations.

 

Underemployment and Bureaucracy

Forklifts not in use

Let’s take a look into the warehousing situation in the country. Some of the main problems that face it include the lack of heavy equipment as well as the low number of trained machine operators. When warehouses aren’t able to maximize their available resources at hand, they’ll be operating at an inefficient rate — they might not necessarily be able to properly handle overflow situations. Operating at a low capacity creates unfavorable outcomes that may eventually be reflected in the logistics provider.

Some of the most common equipment that you might find inside a warehouse include forklifts, pallet jacks, side loaders, or even conveyor belts. Out of all these, the forklift is the one that may take a long time before it can be utilized. This is because the rate of vehicle approval in the country can be too inefficient. Long lines at the respective government offices and the large bulk of documents to accomplish are contributors to this situation.

Once a fleet of vehicles do get approved, the problem doesn’t stop there. Logistics companies would also need to find skilled heavy equipment operators that can operate them. You might already be aware of the unemployment situation in the country. Those in this sector aren’t necessarily made aware of these kinds of opportunities. This prevalent job-skill mismatch is what leads to untapped employment opportunities and in turn, less-than-ideal warehousing.

 

Key Takeaway

A common denominator across many of the logistics challenges in the Philippines is stringent regulations and worsening red-tape situations. These two factors create a low-output environment where shipment delays are all-too-frequent, customers are unsatisfied, and providers are performing badly.

If the status of the logistics sector should improve, then it will all be due to the work of the responsible authorities. They can enact policies that can improve infrastructure, lower shipping fees, and create more beneficial outcomes for everyone in this invaluable economic sector.

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