Market Trends of Philippines Freight and Logistics Industry
Growth in e-Commerce to Drive the Logistics Market in Philippines
According to Lazada Group, the Philippine e-commerce market is expected to grow faster than its regional competitors. In the next five to ten years, Lazada expects e-commerce in the Philippines and the rest of Southeast Asia to grow "a lot higher" as these countries recover from the pandemic despite the global economic slowdown and rising prices.
Moreover, in 2022, cross-border e-commerce sales also witnessed a growth rate, and as per a United States Department of Agriculture (USDA) study, more than 70 million online users in the Philippines participated in cross-border e-commerce (CBE), mostly purchased non-food items accounting for the fourth largest contribution to the e-commerce sales market. The unprecedented growth in border e-commerce sales is majorly driven by Filipino consumers' shift towards acquiring a variety of imported goods directly.
In addition, the growing awareness among Filipino consumers regarding imported products and food and beverages further bolstered the CBE sales, from zero in 2019 to almost USD 1 million in purchases in 2022. Also, the developments in cross-border e-commerce sales further drive demand for freight forwarders, warehouses, other value-added services, etc. Meanwhile, in 2022, electronic goods witnessed significant sales from e-commerce platforms, and the sales amounted to more than USD 6 billion, followed by personal and household care, furniture, fashion, etc. Thus, the growing e-commerce sales create huge opportunities for logistics providers in the country.
Increased Spending on Infrastructure to Propel the Freight and Logistics Market in the Philippines
In the customary areas of transportation, energy, and WASH, the Philippines has announced new projects for 2022. (water projects). The local firms continue to hold the majority of the market share, but some collaborations with international players are being formed in new or emerging industries (such as a planned public-private partnership for a data center) when the local players lack the necessary technological expertise.
Government programs, such as the Philippines Cold Chain Project (PCCP), funded by the United States, are also helping to improve the Southeast nation's cold chain logistics infrastructure. The PCCP is a four-year project funded by the US Department of Agriculture (USDA). It is attempting to organize producer groups to increase agricultural productivity and meet international food safety standards by providing improved technologies, expanding cold chain-related markets, and strengthening intermediate organizations.
The Philippines' PHP 11 Bn (USD 214 Million) public-private partnership to rehabilitate Kennon Road has received expressions of interest from possible bidders, including China First Highway Engineering and JFE Engineering Corporation of Japan (PPP). Local building firms First Balfour and Riofil Corporation were among the others. The National Economic and Development Authority (NEDA) of the Philippines is where the DPWH will present the Kennon Road project for final approval. The 33km road has to be widened, 18 bridges need to be upgraded, and slope protection needs to be built.
The Philippines' railway network is undergoing a rebirth after decades of neglect and underspending that has left it in a decrepit state. Among the government's top priorities is the flagship North-South Commuter Railway in Manila, its largest-ever individual infrastructure investment. NSCR is envisaged as a 163 route-km suburban railway network connecting the regional growth centers of Clark and New Clark City in the north with central Manila and Calamba City in Laguna province to the south of the capital.
However, in January 2022, according to the Department of Public Works and Highways, 15 out of 119 flagship infrastructure projects of the Philippine government had been completed, which includes the improvement of remaining sections along the Pasig River. Meanwhile, 77 projects remain at the construction stage, while 27 are in the pipeline. Thus, the increasing logistics and infrastructure projects across the country are expected to fuel the freight and logistics operations.
