Challenges Logistics Services Providers Are Facing Today

April 14, 2021

Logistics services in the Philippines became more essential due to COVID-19. There’s a substantial need for trades and deliveries especially in the aspect of food, beverages, pharmaceuticals, critical medical supplies, clothing, and other daily necessities. Though it might seem a big break for logistics services providers in the country, there’s actually a bunch of challenges present that they are struggling to overcome. We’ve listed their common dilemmas along with their applied solutions below.

Rising Transportation Costs

Transportation already constitutes about 30%-40% of total expenses and can go up to 50% given the rising fuel prices. In an attempt to reduce costs, some companies decreased the number of their carriers. Some also tried consolidating shipments to get cheaper and bulk rates. The only downside is that it increases the risk of delays which highly impacted consumer satisfaction.

The most feasible solution so far is having fleet management routing software that helps ensure the shortest and most efficient routes for freight carriers. It works by showing traffic congestions and road restrictions by vehicle type in real-time. Not only it reduces the total miles taken and maintenance costs but also lowers violations and safety risks.

Government Regulations & Freight Limitations

The quarantine policies placed throughout the country significantly affected the state of deliveries from different sellers to buyers. Reports show that manufacturers dealing with shipments of raw materials from countries deemed as hot zones of the virus had to shut down operations.

Some countries even closed off their borders to trade as a precautionary measure against COVID-19. Not to mention those zoning permit laws, customs, and taxation on international and domestic shipping that continuously impact logistics. For now, logistics services providers in the Philippines practice compliance with the regulations and limitations even though the costs exceed their benefits since business survival is crucial.

Supply Chain Financing

Access to supply chain finance is critical for logistic companies to ensure smooth business operations. Remember, the fuel of any business is cash. With enough funds, continuous transactions, consistent profits, and no existing debts, facing unforeseen situations is much easier.

But with today’s geopolitical tensions, unexpected custom duties, exchange rate fluctuations, and natural disasters, managing finances became more difficult. Fortunately, many financial institutions offer many loan products and options for logistics services providers in the Philippines. They understand that logistics is a cash-intensive business, that’s why interest rates are low and payment terms are flexible.

Given these challenges, can logistics services providers in the Philippines meet customer expectations, while still generating profits? The answer is yes, but they must be flexible and committed to upgrading their business processes and finding long-term solutions. The one who adapts wins the game.