Consolidation, increased efficiency can lower logistics costs

Consolidating logistics services and increased efficiency can help lower logistics costs in the country, an official of Academy of Developmental Logistics (ADL) said.

In a webinar, ADL president and chief learning officer Samuel Bautista said logistics service providers can consolidate in terms of transporting goods in the same area.

Bautista said other logistics companies are implementing a program for backhauling entailing transport planning and scheduling.

The backhaul program, he said, hopes to address the problem of some companies when they dispatch goods in an area and have their trucks return empty.

“There might be fresh produce from the area which you can talk about with the traders,” Bautista said, noting a logistics company can also inform others about its shipment in an area and they might want to also deliver goods along with these.

“This is being done in other transport modes like in the airline, they have regional cooperation… (For example) pag konti ang pasahero ni PAL (Philippine Airlines) papunta ng Cebu, isasakay ka nila sa eroplano ng (If PAL has few passengers going to Cebu, they will board you in the plane of) CebuPac and vice versa. So there is competition but there is what we call as “coopetition” -let’s compete and cooperate at the same time for a common good,” he added.

Apart from consolidation, Bautista also underscored the importance of increasing efficiency in lowering logistics cost in the country.

“Probably kaya mahal kasi hindi maganda yung road network, ang daming ikot, ang daming permits. Issue pa rin namin itong pass-through permit. (Logistics costs in the country are probably high because the road network is not good, there are many turns, there are many permits. The pass-through permit is still an issue),” he said.

Citing the 2017 study undertaken by the Department of Trade and Industry (DTI) with the assistance of the World Bank, Bautista said the Philippines had one of the highest logistics costs among other Southeast Asian countries accounting for 27.16 percent of the total operating cost.

He said this cost represented high transport cost, followed by inventory carrying cost, warehousing cost, and logistics administration.

Bautista attributed the high warehousing cost to one’s tendency to store more products, resulting also in a high inventory carrying cost.

He said that once the flow of transport flows become efficient, warehousing and inventory carrying costs become lower so “we might become more competitive”.

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