Logistic costs ate up about 27 percent of sales of manufacturing firms in the Philippines last year, the highest among selected Southeast Asian countries.
This was according to a policy brief made by the International Finance Corp., a member of the World Bank Group, which conducted a survey on this.
In the Philippines, the survey covered about 159 companies in major cities such as Clark, Cebu, General Santos and those in Metro Manila. The majority of these are small- and medium-sized enterprises.
The policy brief, which was submitted to the Department of Trade and Industry (DTI), gave for the first time an initial baseline assessment of the local logistics landscape.
Due to limited data, the Philippines was compared only to Indonesia, Vietnam, and Thailand — where a similar methodology was applied.
But even then, the cost-sales ratio varies across sectors, with companies whose products were considered “low value” feeling the pain of expensive logistic costs.
For example, the food sector, which accounted for 42 percent of the surveyed respondents, was more likely to be adversely affected by high logistics costs.
“When you’re in electronics, you don’t really care about the logistics costs because the value of your goods is high,” said Ruth Banomyong, consultant for the IFC-World Bank in a briefing yesterday.
“If you have goods like rice, cassava, fruits and vegetable, even a one cent increase is a very big issue,” he added.
Also, the cost-sales ratio varies across major islands in the country, with Mindanao’s logistics cost eating up 30.32 percent of its sales, higher when compared to those of Luzon (17.48 percent) and Visayas (25.08 percent).
According to the IFC document, the cost of logistics in the Philippines took up 27.16 percent of sales on average, the largest cost to sales ratio when compared to the three other countries.
Indonesia followed with 21.4 percent, a figure that Trade Secretary Ramon Lopez said the Philippines should eventually match.
Vietnam ranked third with 16.3 percent. Thailand had the lowest at 11.11 percent.