Impact of E-commerce Growth in the Philippines Freight & Logistics Market

Logi-Sys gaining popularity among Philippines forwarders
Amit Maheshwari, Softlink Global CEO

The COVID-19 pandemic has led to a significant increase in e-commerce activity in the Philippines due to lockdowns and restricted movement. This growth in e-commerce is expected to significantly impact the country’s freight and logistics market, as demand for efficient and reliable delivery services continues to rise as more consumers turn to online shopping.

Consumers expect to receive their products quickly and on demand, putting pressure on the logistics industry to meet these expectations, leading to a shift in the supply chain strategy.

This trend is predicted to persist, with e-commerce players expected to continue growing and presenting potential opportunities for local and international merchants in the Philippines.

Recognizing the significance of e-commerce for the Philippine economy, the government has committed to implementing a roadmap for its development. In this effort, the government has made progress in several key areas, such as

Infrastructure – The government is working towards improving Internet access, implementing eGovernment systems, promoting eBanking, and ePayment options, simplifying tax systems, protecting consumers, and streamlining logistics.

Investments – The government is actively supporting and promoting opportunities for foreign direct investment and capital flows to encourage growth in the e-commerce market.

Innovation – The government is also fostering an environment for digitalization by encouraging innovation and skill development to support growth.

Impact on the Logistics Sector

Consumers now expect low-cost and on-demand delivery, which poses a challenge for traditional logistics and supply chain models. To meet these demands, companies are incorporating just-in-time delivery, consolidating storage facilities and investing in smaller vehicles for shorter, more frequent deliveries. Freight forwarders now place an increased focus on reverse logistics as a significant portion of online purchases are returned and it is crucial for them to make the return process seamless.

How logistics service providers are adapting to changing customer demands

Logistics providers are adapting to customer demands by implementing strategies such as JIT delivery, consolidating storage facilities and investing in smaller vehicles for last-mile deliveries. They are also focusing on better communication, transparency, real-time tracking, streamlined systems, cost reduction, on-time delivery and reverse logistics to ensure a smooth return process.

The goals and standards for freight forwarders catering to e-commerce include:

  • Improved communication throughout the supply chain
  • Regular customer updates
  • Greater transparency
  • Increased inventory management capabilities
  • Real-time shipment tracking
  • Streamlined order management systems
  • Reduced costs
  • On-time delivery to enhance customer satisfaction
  • Greater emphasis on reverse logistics for a smooth return process.

Emphasis more on digitalization

Logistics companies are investing in automation and Big Data solutions to stay competitive, optimize services and handle larger data volumes. They are also shifting to digital payment methods and utilizing online platforms for market forecasting and analysis. Mobile integration is also becoming important, with companies providing shipment information through mobile applications.

Focus on customer support

E-commerce logistics is focused on increased collaboration with customers and offering customized services. Technologies enable personalized experiences, such as chatbots for delivery-related inquiries and prompt resolution of any issues. Effective communication, including 24-hour support through helplines and a customer visibility portal, is essential for smooth same-day delivery.

Exploring unconventional modes of delivery

The E-commerce industry is turning to unconventional delivery solutions, such as drones and robots, to meet the demand for faster and more efficient delivery. Examples include Amazon’s Prime Air using drones for under an hour of delivery. Drones can quickly transport lightweight packages and are used globally for time-sensitive deliveries, particularly for urgent pharmaceutical products. Drone delivery combined with self-driving vehicles has the potential to revolutionize last-mile logistics.

However, the logistics and freight forwarding industry must embrace digital transformation to automate manual tasks and improving customer service to stay relevant with current trends. Overall, the growth of e-commerce is likely to drive innovation and improvements in the Philippines’ freight and logistics market.

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