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Wednesday August 15, 2018

Green freight program needed

A NEWLY released study is calling for the establishment of a “green freight program” in the Philippines, saying it will not only reduce air pollution and greenhouse gas emissions, but also improve overall logistics efficiency and lower freight costs, particularly for the trucking industry.

The study, entitled “Green Freight and Logistics Policy Development in the Philippines,” focuses mostly on land transport, explaining that freight activity in the country is dominated by road transport, which carries 58 percent of cargo traffic compared to 41.95 percent for water and 0.06 percent for air.

In a presentation of the study findings earlier this month, study co-author Pia May Agatep of Clean Air Asia noted that average logistics costs in the Philippines are high, accounting for about 24 percnet to 53 percent of product cost.

Logistics costs in the Philippines comprise 27.16 percent of sales, higher than Thailand (11.11 percent), Vietnam (16.3 percent), and even Indonesia (21.40 percent), she added.

Some of the key components of the costs are transport (10.71 percent), warehousing (5.20 percent), inventory carrying (8.78 percent), and logistics administration (2.47 percent).

Further examination of logistics costs/sales by region shows the large difference in logistics costs of cargoes from Mindanao and Visayas compared to those from within Luzon.

“Total logistics cost/sale in Visayas and Mindanao are 43 percent and 73 percent higher than in Luzon. Shippers in Metro Manila even consider shipping to Hong Kong or Taiwan as less expensive than sending their cargoes to some parts of Visayas and Mindanao,” said Agatep.

The worsening traffic congestion in the country aggravates inefficiencies in road transport, reflected in poor timeliness, tracking and tracing, and logistics competence, she added.

Reliability of the logistics sector is also a challenge, “exacerbated by poor transport infrastructure and cumbersome processes managed and/or regulated by different government agencies in an uncoordinated manner.” Other challenges in the industry are overloading and empty trips.

“While overloading is a problem, as it induces premature damage to the road network and compromises road safety, empty haul is also a problem in terms of efficiency,” said Agatep.

“As high as almost 80 percent of outbound trips are empty trips. It is one of the drivers of high freight transport costs in the Philippines as shippers are likely charged for two-way-trips.” To improve truck efficiency, the study recommends introducing fleet management mechanisms to institutionalize measures to increase truck efficiency, such as establishing a periodic maintenance schedule.

The study was conducted by Clean Air Asia, a Manila-based international NGO with a regional mission to promote better air quality in Asia, with support from the Department of Trade and Industry Supply Chain and Logistics Management Division. (Philexport News and Features)


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