Why the Philippines’ Trading Activity might Change with China

Shipping containers in portIn the Philippines, traffic congestion produces inefficiencies in road transport. Difficult, tracking and tracing, and logistics competence prompts shippers in Metro Manila to consider shipping to Hong Kong or Taiwan as they are less expensive than sending cargoes to return with empty hauls on land.

Companies opt for freight forwarding services to address the difficulties in logistics in the Philippines. Since freight forwarders have partnerships with multiple logistics companies around the country or globe, price checking for logistics services is much higher.

Shipping companies in the Philippines will likely focus more on shipments bound for China, which became the country’s third biggest export market based on The Philippine Statistic Authority’s (PSA) data.

At the same time, improving the road network in the country will increase the logistics efficiency of freight trucks. China’s growing trade presence in the Philippines means that bottlenecks in transport should be resolved soon.

Export Shipments

According to the reports from the PSA, exports to mainland China rose by almost 9% to $761.4 million in May from nearly $700 million in the same period last year. It contributed to $4.68 billion of exports to the Philippines’ top 10 market destinations for the month.

If you plan on expanding your business in China, a freight forwarder is efficient as they have more options for transporting your goods with their logistics company partners.

China also ranked as the biggest source of imports for the Philippines with imports costing $1.92 billion, according to the PSA data. This figure represented more than 20% of the total imports for the month. While the statistics show promising growth, it may not be sustainable if the country fails to resolve logistics problems on freight truck transportation.

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Trucking Efficiency

Trucks arguably account for the biggest share of cargo transportation in and out of the Philippines. A study noted that trucking is responsible for almost 60% of freight traffic, which means their environmental footprint is quite significant as well.

Aside from having a broad range of prices freight forwarders could also cut logistics costs among truckers by coordinating them to avoid overloading and empty hauls. This is particularly effective in Visayas and Mindanao where expenses are 43% and 73% more expensive than in Luzon.