The Challenges and Future Outlook of the Domestic Freight Forwarding Industry in the Philippines
Opportunities abound in the Philippines’ domestic freight forwarding industry.
With the country’s continuous high consumption, bright economic prospects, booming e-commerce industry, and growing population, the Philippines has a rising need for an effective goods and service delivery and transport system.
A report from ResearchAndMarkets.com, shows that the country’s domestic freight and logistics industry is estimated to reach a market value of USD 60.22 billion by 2023. True enough, we are already seeing the growing demand for storage facilities, particularly for apparel, food, beverage, and other products.
With this foreseen industry growth, it is crucial that key people in the domestic freight forwarding industry remain up-to-date with what’s new in the market.
Domestic Freight Forwarding Industry: The Challenges
Unfortunately, the Philippines’ freight forwarding industry is disjointed. Despite players being categorized under one Pre-Shipment Inspection Certificate (PSIC), the agencies that oversee different industry activities vary.
For example, air freight forwarders are under the Department of Transportation and Communications (DOTC), while sea freight forwarders are under the jurisdiction of the Department of Trade and Industry Philippines (DTI). Moreover, global players dominate the Philippines’ air freight forwarding market and the domestic inter-island freight movement is rather low.
The lack of innovation and technology processes in domestic companies is the key reason why global players are dominating the industry. Currently, the opportunity for establishing domestic economic zones is underutilized. Such zones are crucial to integrate the existing Freeport zone and economic activities within the domestic economy. Many firms remain vulnerable to natural hazards and are unable to proactively cope with the adverse effects.
The future of the domestic freight forwarding industry is contingent on newer and bigger vessels, better port facilities, and more reliable, timely deliveries. More standard factory buildings are also necessary to support the country’s booming export and import industry. Domestic shipping is both an opportunity and a challenge, with high taxes and bureaucracy hindering local business owners from creating enough capital base to compete better with global players.
Philippines Freight Forwarding Industry: Future Outlook and Projections
Over the forecast period, the Philippines is expected to witness the construction of many new roads and bridges. This will help address the country’s congestion problem and positively affect the trucking industry, thus supporting the domestic logistics.
Projections show that the domestic freight forwarding industry in the Philippines will continue to dominate the overall logistics market in the future. The Philippine government has initiated a “Build, Build, Build” program under which numerous projects have started construction in the cargo transportation industry.
Important Market Developments
Through a partnership with Airfreight 2100, Inc., UPS plans to expand its presence into 1,600 postal codes across seven key areas in the Philippines. These areas include North Luzon, South Luzon, Caloocan, Malabon, Navotas, and Valenzuela (CAMANAVA), Visayas, and Mindanao. This collaboration combines the strengths of AIR21’s domestic network and UPS’ global reach. Together, they aim to provide quality, reliable service that can support local business growth needs. The company strives to make trade simpler by expanding access to UPS’ technology-powered portfolio of trade management services, transportation, and contract logistics.
Some of the major players include, 2GO Group, ICTSI, DHL, Nippon Express Philippines, Yusen Logistics, Yusen Logistics, DB Schenker, and Trans-Global Consolidators, Inc. among others.
The Bottom Line
The domestic freight forwarding industry in the Philippines has tremendous potential.
By lowering taxes, removing red tape in government, enhancing port facilities, and improving our technologies, companies will be able to boost their competitiveness – both in the domestic and international platforms.
By taking concrete actions to improve the various areas of the logistics industry, the country can become a major logistics hub by 2023, or even earlier.