With our ever-growing population and the rise of domestic consumption, the Philippine economy continues to expand. And with the rise of the economy, also comes the rise of the logistics and transport industry. As the production and distribution of goods increase, so does the need to move these items. However, the geographic layout of the Philippines is a complex one, with thousands of islands connected through hundreds of links to form one big archipelago. The trucking sector plays a crucial role in bridging this gap.
Philippine Trucking and Logistics Industry: The Challenges
The trucking and logistics industry in the Philippines is growing. However, new and persistent challenges are affecting everyone in the industry, particularly the drivers.
Below are six critical challenges that the Philippine trucking and logistics industry is facing today:
- The Maximum Gross Vehicle Weight (MAGVW) According to the Confederation of Truckers Association of the Philippines (CTAP), the biggest issue that they need to overcome this year is the implementation of the Maximum Gross Vehicle Weight (MAGVW) for trucks. While the purpose of this regulation is to avoid overloading by limiting the weight of trucks, the maximum weight permitted for truck codes 12-2 and 12-3 (41,500 and 42,000 kg) is a problem. This is because trucks generally carry containers weighing around 30,000 – 36,000 kg, and if the average weight of the tractor head and trailer (about 15,000 kg) would be added, the truck will reach a total weight of approximately 45,000 kg which violates the MAGVW regulation.
- Oil Price Hike An oil price hike occurs when the cost of oil increases by a certain percentage. Several factors can influence the country’s oil prices, such as the price of oil in the world market, the supply and demand, and the currency exchange rate. Unfortunately, many trucking companies prefer not passing the cost to their clients, which means that they sustain a huge financial loss in the process.
- Fuel Excise Tax Along with the implementation of the TRAIN Law in 2018, the Philippine government has also added an excise tax on fuel. Diesel users such as trucks will experience a 3-tranche increase: HP 2.50/liter in 2018, PHP 4.50/liter in 2019, and PHP 6.00/liter in 2020. Fuel taxes has the same effects as the oil price hike as it adds more burden on truckers.
- Traffic Congestion Some people say that heavy traffic is a sign of a booming economy. However, that is not always the case. Heavy traffic can cause several negative effects on the environment, health, and economy of a country. For instance, it can negatively affect the productivity of truckers as they are forced to waste a significant amount of time. It may also lead to the creation of various traffic policies, such as city-wide truck bans and odd-even schemes.
- Age Restriction on Trucks The Department of Transportation (DOTr) suspended its regulation to phase out trucks that are more than 15 years old. In its place, they will be using a roadworthiness test to be executed by the Land Transportation Office’s (LTO) Motor Vehicle Inspection System (MVIS). The suspension of the age restriction on trucks is beneficial for the trucking and logistics industry. However, truck phase-outs in most areas of the country are still in danger of this regulation.
- Implementation of Customs Memorandum Order 05-2019 The Bureau of Customs now requires trucking services to register with the agency, despite many concerns that truckers are already heavily regulated. With the implementation of the Customs Memorandum Order 05-2019, truckers offering services to Customs ports are now required to register under the bureau’s client profile registration system. Registration is mandatory before they can continue to ferry goods from ports to Freeport zones, exit ports, Customs warehouses, or consignee premises.
The trucking and logistics industry in the Philippines is crucial to the growth of the economy. However, these new and persistent issues are preventing the industry from moving forward.