Lo­gis­tics costs in Philip­pines sig­nif­i­cantly higher than In­done­sia, Viet­nam, Thai­land — study

Business World - - Corporate News - D.A.Valdez

PHILIP­PINE man­u­fac­tur­ing com­pa­nies face sig­nif­i­cantly higher lo­gis­tics costs than those in In­done­sia, Viet­nam and Thai­land, ac­cord­ing to a re­port re­leased by the De­part­ment of Trade and In­dus­try (DTI) on Thurs­day.

Con­ducted in part­ner­ship with the World Bank, the study ti­tled ”An As­sess­ment of Lo­gis­tics Per­for­mance of Man­u­fac­tur­ing Firms in the Philip­pines” showed lo­gis­tics costs as a per­cent­age of sales in the Philip­pines reached 27.16%. This com­pares to In­done­sia’s 21.4%, Viet­nam’s 16.3% and Thai­land’s 11.11%.

The study was con­ducted in 2017, cov­er­ing 159 lo­cal com­pa­nies — mostly from the food in­dus­try (42%), con­struc­tion ma­te­ri­als sec­tor (12%) and fur­ni­ture and decors sec­tor (11%).

Aside from high costs, the study also found the most im­por­tant is­sue for man­u­fac­tur­ers is re­li­a­bil­ity.

“Al­though cost is highly im­por­tant, it is also seen as a by-prod­uct of low lo­gis­tics re­li­a­bil­ity. Hence, if re­li­a­bil­ity is not im­proved, cost is­sues may con­tinue to per­sist be­cause its level is highly af­fected by ob­tained re­li­a­bil­ity,” the study said.

In the Philip­pines, the abil­ity of a trans­port com­pany to de­liver goods in full and on time is low, par­tic­u­larly for con­struc­tion ma­te­ri­als, chem­i­cal prod­ucts, food and elec­tron­ics. This re­li­a­bil­ity is­sue “forces man­u­fac­tur­ers to rely on in­ven­tory and ware­houses, fur­ther in­creas­ing the lo­gis­tics cost for the users.”

The study also noted lo­gis­tics per­for­mance in the Philip­pines varies depending on is­land group. For ex­am­ple, Visayas has a cash con­ver­sion cy­cle of al­most one month, while in Min­danao it is only two weeks, mak­ing it more fi­nan­cially chal­leng­ing for firms in Visayas than in Min­danao.

Given that both the Philip­pines and In­done­sia are archipelagic in struc­ture, Trade and In­dus­try Sec­re­tary Ra­mon M. Lopez said the gov­ern­ment is tar­get­ing to reach the lo­gis­tics cost level of In­done­sia. —

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