I.

The Philippine Logistics Industry

The Philippine Development Plan (PDP) 2011-2016, DOLE PJF and the
Arangkada Report have identified transport and logistics as a priority sector.
Moreover, the PDP has cited the priority creation of an integrated and multi-modal
national transport and logistics system.

Transportation and logistics is a main catalyst of economic growth which

impacts on other sectors such as agriculture and manufacturing, among others.
According to the Department of Transportation and Communication (DOTC),
transportation and logistics costs accounted for as much as 43.8 percent of
wholesale food prices.

The characteristics of the transport system in the country is basically

intermodal in character involving inter‐island as well as intra‐island movement
normally combining air, sea and road transport modes (please see Figure 1).
The intermodal transport systems and their connections to the hinterland play a
crucial role in the socio‐economic development of the widely dispersed regions of the
country.
Fig. 1.Intermodal Transport System

Batanes Link

East Luzon Link

East Corridor
Northern Luzon and Corridor (Pan-Philippine
Highway)

Palawan Visayas Link

West Corridor
(Strong Republic Nautical Highway)

Source: DOTC
West Mindanao Link
North Mindanao Land Corridor
 Passenger Traffic, 2006

Air, 0.49%
Water, 1.22%
Rail, 0.15%

Road, 98.14%

Cargo Traffic, 2006

Water, 41.95%

Road, 57.99%

Rail, 0.00% Air, 0.06%

The DOTC data for 2006 showed that the predominant mode of transport is
by road pegged at 98.14% passenger traffic or approximately carrying 1.71 billion
passengers and 25.9 million tons of freight in 2006.

Logistics encompasses an array of essential activities to move goods across

borders covering transport, warehousing, cargo consolidation, border clearance,
distribution, payment systems. Accordingly, the institutional framework for logistics
in the country has always been reviewed in the context of other sectors such as
transport and agriculture and not as a logistics sector by itself. Thus, the logistics
component has minimal data available.

With the forthcoming ASEAN 2015, increased competition and trade would
mean greater movement of goods and services, thus the need for an efficient
transportation and logistics system.
 The World Bank’s Logistics Performance Index (LPI) survey is a
comprehensive index of logistics performance in 155 countries which covers the
entire supply chain. It consist of two parts-International and Domestic LPI. The
International LPI is based on the assessment of foreign operators located in the
country’s major trading partners which measures six dimensions of country
performance, namely: 1) Efficiency of the border clearance process; 2) Quality of
trade and transport infrastructure; 3) Ease of arranging competitively priced
shipments; 4) Competence and quality of logistics services; 5) Ability to track and
trace consignments; and 6) Frequency with which shipments reach the consignee
within the scheduled or expected time. On the other hand, the domestics LPI is
based on logistics professionals’ assessment of the country where they work and
contained detailed information in individual aspects of logistics performance such as:
1) quality of trade-related infrastructure; 2) Competence of service providers; 3)
Efficiency of border procedures; and 4) Data on the time and cost of moving goods
across borders. The index ranges from 1 to 5, with a higher score representing better
performance.

Under the LPI, the Philippines has shown potential growth in logistics with its
ranking of 44th place out of 155 countries in its 2010 survey. It has leapfrog from its
former ranking of 65th place in the 2007 LPI ranking. In comparison with its ASEAN
neighbors, the Philippines performed relatively better but still lags behind Singapore,
Malaysia and Thailand.

Table 1: ASEAN Countries Over-all Ranking in the LPI 2010 Survey

Country International LPI Rank
Singapore 2
Malaysia 29
Thailand 35
Philippines 44
Vietnam 53
Indonesia 75
Lao PDR 118
Cambodia 129
Myanmar 133
Brunei (data not available)
Source: World Bank LPI 2010 survey
 Table 2: ASEAN Countries Ranking in the LPI 2010 Survey by Sub-Index
Country LPI Customs Infrastructure International Logistics Tracking Timeliness
Overall Shipments Competence and
Score Tracing
Singapore 4.09 4.02 4.22 3.86 4.12 4.15 4.23
Malaysia 3.44 3.11 3.50 3.50 3.34 3.32 3.86
Thailand 3.29 3.02 3.16 3.27 3.16 3.41 3.73
Philippines 3.14 2.67 2.57 3.40 2.95 3.29 3.83
Vietnam 2.96 2.68 2.56 3.04 2.89 3.10 3.44
Indonesia 2.76 2.43 2.54 2.86 2.47 2.77 3.46
Lao PDR 2.46 2.17 1.95 2.70 2.14 2.45 3.23
Cambodia 2.37 2.28 2.12 2.19 2.29 2.50 2.84
Myanmar 2.33 1.94 1.92 2.37 2.01 2.36 3.29
Brunei –data not available
http://www1.worldbank.org/PREM/LPI/tradesurvey/mode1b.asp

Based on the data, the country needs to implement reforms and beef up
investments especially in infrastructure where it generated the lowest score at 2.57.
The creation of an integrated and multi-modal national transport and logistics system
under the PDP is a significant step to catch up with its ASEAN neighbors. The
government is on the right track with plans to complete a Logistics Master Plan
under the PDP. Accordingly, the Logistics Master Plan will promote sub-regional
economic-cum-logistics cooperation and will fully utilize the logistics systems that link
the regions traversed by the logistics corridor (e.g., Central Luzon, Metro Manila and
Southern Tagalog for the SCMB corridor). Moreover, it is important for the country to
learn from the best practices of model countries such as Singapore.

The Supply Chain Management Association of the Philippines (SCMAP) a

professional organization of a group of manufacturing companies with over 100
corporate and individual members provided a typical picture of the logistics industry
in the country:

 Logistics providers (depending on size)

 Office workers about 50 - 350
 Warehouse: 500 – 5,000
 Field (drivers, helpers, etc) up to 4,000
 Traders
 Office: 30 – 50
 Warehouse: 50 - 300
 Field: mostly outsourced
  Service
 Office: 40 -100
 Warehouse: 30 -300
 Field: 0 – 5

II. Employment and Skills Demand

The SCMAP foresees the growth of the industry by 5%-20% in the next 3
years with the following critical positions:

 Forklift & Materials Handling Operators

 Truck drivers that possess the full knowledge of the whole logistics process
 SAP proficient clerical positions (i.e., Encoders, Inventory Clerks, Checkers,
Pickers, etc.)
 Demand Planners & Transport Analysts
 Supervisors with leadership abilities
 Safety and Quality Supervisors

Similarly, Toplis Solutions, a local company that provides solutions in the field
of warehousing and logistics, promotions and marketing, and manpower services
expressed the need to develop training programs for entry level positions such as
warehouse personnel and inventory controller among others. Currently, logistics
curriculum is integrated in degree courses such as BS in Business Management
which is geared towards practicing supply chain management professionals. There is
no existing training program offered for entry level positions where the bulk of
workers can be found.

Thus, in various consultations with industry associations and government

agencies concerned, priority skill/s requirement was determined for the industry
using the technique known as the functional analysis.

A functional analysis is part of the industry consultation process. It is a

technique used to describe whole industry functions at a level above individual
occupations or jobs. It provides an overview on how the sector is organized to deliver
its goal (please see Annex A-Functional Map). With the functional analysis map,
Warehousing Services was determined as the in-demand skills requirement of the
industry.

III. Priority TechVoc Qualifications in the Logistics Industry

Pursuant to TESDA’s mandate of encouraging active participation of

various concerned sectors, particularly private enterprises, being the direct
participants in and immediate beneficiaries of a trained and skilled workforce,
in providing technical education and skills development opportunities (Section
2, RA 7796), industry consultations are conducted with industry association and
other concerned stakeholders in identifying g the skills demand for a particular
industry. In 2013, TESDA has done consultations with SCMAP, DHL Supply Chain
and Toplis Solutions to identify the most critical and in-demand qualifications/skills
for the industry that need the development of training regulations (TRs). The
identified TR for development is Warehousing Services.
 The prioritization of the said qualification was approved during the 86th
TESDA Board Meeting held on 18 September 2013. This was approved based on
the critical need for the said qualification and the employment and investment that it
will generate.

IV. Implications to Technical Education and Skills Development

With emerging workplace demands, new set of skills are required in order to
perform competently as a knowledge worker. Strategic actions should be undertaken
in order to realize the opportunities offered by the industry:

 Expedite the development of the training regulation for the prioritized

qualification (Warehousing Services) in the industry
 Review the TR on Heavy Equipment Operation (Forklift) with companies such
as DHL Supply Chain to address the new/emerging requirement for skilled
workers
 Strengthen TESDA-Industry Partnership especially with SCMAP for the
development of TRs for the prioritized qualifications and in the implementation
of strategic actions to meet the changing demands in the industry. The
partnership will also be in terms of policy and planning, labor market
intelligence, training delivery, assessment and certification and financing.
 Once the TRs/standards have been promulgated, TESDA should looked into
and pursue enterprise-based trainings like dual training system (DTS) and
apprenticeship with the member companies of the industry association.
 Purposively direct scholarships and other training assistance to these critical
and hard-to-fill skills requirements/qualifications
 Consistently improve the quality of information and career guidance to
students on their career choices and employment opportunities in the
industry.
Sources:

Gus Arguelles, “Supply Chain Management Association of the Philippines” (ppt

presented at the 15th TESDA Board Direction Setting Meeting Committee,
TESDA, Taguig, September 16, 2013).

Supply Chain Management Association of the Philippines (SCMAP) website at

www.scmap.org

Suzie Mitchell, “Investing In The Future Supporting Growth In The Philippines”

(ppt presented at the TESDA Industry Consultation meeting on May 3, 2013).

Alex Imperial, “Project Concept for Certification course on Warehouse personnel”(ppt

presented at the TESDA Industry Consultation meeting on May 3, 2013).

Enrico C. Ferre, “Transport Infrastructure. Investments under the Aquino

Administration”
(ppt presented at the TESDA Industry Consultation meeting on May 3, 2013).

Miguel R. Camus and Paolo G. Montecillo. “To ease shipping costs, govt turns to
IFC.” Philippine Daily Inquirer. May 9th, 2013. Accessed December 5, 2013.
http://business.inquirer.net/120971/to-ease-shipping-costs-govt-agency-
turns-to-ifc

Enrico C. Ferre, “Philippine Presentation” (ppt presented on the Regional Seminar

on Development of Efficient and Effective Logistics System. Hangzhou,
China. May 7-8, 2013.downloaded from
http://www.unescap.org/ttdw/common/Meetings/TFS/Efficient-Logistics-
May2013/1.7.Philippines.pdf

Henry Sandee, “ Logistics Performance Index: Connecting to Compete 2010”

Accessed Dec. 27, 2013.
http://www.unescap.org/ttdw/FFmeeting/FFForum_2010/5.pdf

Logistics Performance Index . Accessed Dec. 26, 2013.

http://www1.worldbank.org/PREM/LPI/tradesurvey/mode1b.asp

Philippine Development Plan 2011-2016. NEDA. Accessed December 26, 2013.

http://www.neda.gov.ph/PDP/2011-2016/
 ANNEX A
Functional Analysis of the Logistics Industry

Key Purpose Major Individual Sub-Functions/Core Competencies

Minor Function
Function