The Burden Brought By Traffic To The Logistics Market

Cebu, Philippines is one of the biggest and most progressive cities in the country. Despite this, the logistics costs continue climbing because of a number of factors including limitations set by the port and the traffic that seems to be getting worse every day. This is putting a lot of burden to the transportation equipment specialist of the companies in the cities.

These issues are the main reason why data from the Philippine International Seafreight Forwarders Association Inc. or PISFA revealed that logistic costs in the country is still one of the most expensive in the Asian region.

PISFA Cebu Chapter’s vice president, Rose Garcia, said that the roads around the city are quite small therefore the traffic is now worse than before. A few years back, it is possible for their truck to transport multiple containers every day but the worsening traffic brought it down to one container each day. This is why the cost is adding up.

The big difference between the Philippines and other countries is that they have better public infrastructure which makes it possible to transport goods easily. Garcia also noted that though there are international port facilities in the city, it is not up to par yet in order to handle the international market.

The current Cebu International Port does not have a lot of space therefore it would cause delays to the docking of the vessels. This is another factor which adds to the already high logistic costs.

According to the policy brief that was developed by the International Finance Corp concerning countries in Southeast Asia, Philippines have the highest cost in terms of logistics. On average, logistics cost constitutes 27.16 per cent of the average sales. Indonesia has 21.4 per cent, Vietnam with 16.3 per cent while Thailand has 11.11 per cent only.

Another problem they are facing in Cebu is the container imbalance. Based on average in a month, a transportation equipment specialist said that 75 per cent of the containers are for import while only 25 per cent are designated for export. When imbalance occurs, the shipping lines are the ones paying the cost in order for the containers to move.