Logistics cost in the Philippines accounts for 27.5% of GDP, a very high level compared to Japan, the United States, and other ASEAN countries. Worse, the logistics performance index score is lower than major economies, studies showed.
Trade and industry Undersecretary Mary Jean Pacheco cited separate 2017 studies from the World Bank and the Organization for Economic Cooperation and Development (OEDC) in her speech at the launch of Logisticsnews.PH, a website that focuses on logistics, mobility, and supply chain, on Feb. 24, 2025, showing the huge disparity in the Philippines logistics numbers compared to its neighbors and developed countries.
Based on the OECD data, the Philippines total logistics cost was way higher than its neighboring countries. Indonesia’s logistics cost accounts for 21% of the country’s GDP, 18% in Vietnam, and 13.8% in Thailand. Japan’s logistics cost of GDP was 9% and the US at 8%.
Worse, data from the World Bank showed that the Philippines logistics performance index score was lower at 3.3 slower than most ASEAN countries, except Indonesia, and other developed economies such as Japan, US, China, UK, among others.
A DTI data, however, showed that the Philippines logistics cost had gone down to 25.5% in 2020.
Despite the situation, Pacheco noted that the transport and storage sector still posted a high growth in the fourth quarter of 2024, performing the third fastest growing sector in the country, after health and other services. The sector grew 9.5% percent in the last quarter of 2024 compared to the same quarter in 2023. For the entire 2024, the transport and storage sector was higher by 8.8% versus 2023, according to the Philippine Statistics Authority.
Aside from the island structure of the Philippines, the high logistics cost in the country was also blamed to the lack of reliability of the logistics system.
Pacheco cited the need for logistics infrastructure, and early improvement to strengthen international competitiveness.
The Japan Transport and Tourism Research Institute (JTTRI) cited port enhancements including the Manila Ports, which handles 70% of domestic container cargo, with planned upgrades to reduce congestion.
Port expansions in Batangas, Subic, are also on their way. Expressways connecting Subic and Batangas to Manila also also in place.
JTTRI also proposed integrating and enhancing the functions of Manila, Batangas and Subic ports to improve capacity and reduce bottlenecks. It also called for continuous infrastructure development such as double track railways, proper maintenance, installation and upgrading of freight stations.
Other issues and measures to improve logistics in the country include reduced load on local roads through barge transportation, securing more backyard spaces in Manila port, establishment of a stable RORO network, establishment of logistics hubs in key areas near the major ports and expansion of logistics networks outside of metropolitan areas, and limited multimodal transport and insufficient cold chain infrastructure.
