Road map for integration of logistics' services

Road map for integration of logistics’ services

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FRIDAY, APRIL 27, 2018 advertise@manilastandard.net

SPURRING THE GROWTH OF THE LOGISTICS’ INDUSTRY By Darwin G. Amojelar

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HE country’s strong domestic economy and the growth of e-commerce have attracted local conglomerates to enter into the logistics’ industry. Pangilinan-led Metro Pacific Investments Corp., Henry Sy’s SM Investments Corp and Dennis Uy’s Chelsea Logistics Holdings Corp. are expanding their business into logistics for future growth. MPIC acquired a number of small logistic firms, while SMIC and Chelsea have taken in the 2GO Group Inc., the country’s largest shipping and logistics company. Metro Pacific ventured into the logistics and distribution business in May, 2016 when it acquired the assets of mid-sized corporate logistics provider Basic Logistics as it saw a strong demand for logistics services in the country. It then formed a new company called Metro Pacific Movers Inc. in a joint venture with the shareholders of Basic Logistics to provide logistics, shipping, freight forwarding and ecommerce services. In January, 2017, Metro Pacific through its subsidiary Premier Logistics Inc. acquired some of the assets and business of Ace Logistics worth P280 million. “We want to build up a significant substantial logistics group … I think it’s a very basic need of the country, to have a more efficient logistics’ infrastructure because the cost of moving goods back and forth between Manila and for example, Mindanao, is, we understand more expensive than moving the goods from here to Europe for example. That’s something we should cure,” Pangilinan said. In 2014, the World Bank reported a lower logistics performance index (LPI) for the Philippines, 57th out of 160 countries, down from 44 out of 155 countries in 2010 . The country was behind Singapore, Malaysia, Thailand, Vietnam, and Indonesia in 2014. The logistics’ sector – part of transportation and storage under the Philippine Standard Industrial Classification (PSIC) – contributed 6.1 percent to the country’s economic growth during the third quarter of 2014. The sector’s impact on economic growth is certainly extensive considering logistics’ cost, according to the Department of Trade and Industry (DTI), accounts for 24 percent to 53 percent of the wholesale price of goods in the country. Pangilinan said its new venture will complement with its existing businesses. “The group as a whole moves quite a bit of goods and equipment throughout the country so this will help the group as well in facilitating how we operate. PLDT, Meralco, the tollways and to some extent, Maynilad and so forth,” he added. Metro Pacific committed to invest P5 billion in the logistics’ business over a five-year period. Chelsea, meanwhile, is working toward becoming the prime mover of vital goods, cargoes and passengers in the Philippines and eventually a regional player by expanding organically and creating synergies with 2Go Group Inc. and affiliates within the Udenna Group. Udenna started its shipping business in 2006 through Chelsea Shipping Corp. to support the operations of the country’s leading independent and fastest-growing oil company, Phoenix Petroleum Philippines, Inc. It currently has the largest tanker fleet in terms of capacity with a total of 39,271.64 gross registered tonnage. Chelsea acquired a 28.15-percent indirect economic interest in 2Go Group in March and subsequently took over its management. Chelsea also acquired Worklink Services,

MICT is the flagship operation of ICTSI, the Philippines’ leading port operator with a portfolio of 30 terminals in 18 countries.

The sector’s impact on economic growth is certainly extensive considering logistics’ cost, according to the Department of Trade and Industry (DTI), accounts for 24 percent to 53 percent of the wholesale price of goods in the country.

Inc. (WSI) to expand its logistics business. “WSI will augment our logistics and manpower businesses as well as create additional synergy within the group,” Chryss Alfonsus V. Damuy, Chelsea president and chief executive said. “The acquisition will prove even more valuable in steering CLC to greater heights by bringing in an experienced and competent management and staff, who have been in the logistics business for more than 20 years,” he added. WSI was established in 1994 for the primary purpose of providing efficient, effective and reliable courier, forwarding, trucking and logistics services to a growing domestic industry. “In every investment put into expanding our operations, we strive to ultimately provide better shipping and logistics ser-

vices to Filipino businesses and consumers as well as create more jobs and support the economy’s growth,” Damuy said. REGULATION BARRIERS Despite optimism from local conglomerates, state think tank Philippine Institute for Development Studies (PIDS), in a study, said the government must reduce regulatory burdens in the logistics’ industry to boost the country’s export competitiveness. In 2016, the Philippines’ overall logistics performance index was “way below those of the older members of the Association of Southeast Asian Nations”, the study said, adding that it was even lower than Vietnam—one of the transition economies in Southeast Asia. “In the field of logistics, the Philippines has one of the most restrictive set of regulations which, together with other factors,

are responsible for its relatively poor logistics performance,” PIDS said. PIDS identified various regulatory issues and challenges in the sector, particularly in the implementation aspect. The study revealed that the lack of awareness about the importance of integration and coordination in the logistics’ chain has resulted in “inconsistent, overlapping, and sometimes contradictory policies”. This issue, according to the authors, has caused loss of major logistics providers and foreign investors in the country. Furthermore, the uncoordinated logistics’ system in the country can also be attributed to the absence of a single coordinating agency. At present, various agencies have different sets of regulations for the transport, logistics, and distribution sectors in the PhilTurn to E4