The market for courier, express, and parcel (CEP) in the Philippines is estimated to record a CAGR greater than 8% during the forecast period.
The COVID-19 pandemic disrupted global supply chains in unprecedented ways and had a significant economic impact with GDP contractions in most ASEAN member states, including the Philippines, in 2020. However, due to the COVID-19 outbreak, the use of e-commerce has increased abruptly and sharply. The COVID-19 pandemic will lead to long-term changes, accelerating the shift to e-commerce. Many brick-and-mortar businesses will also evolve, offering services beyond retail, including last-mile deliveries.
The Philippine e-commerce industry has witnessed a moderate rise over the last 5-6 years, with an increase in internet penetration into the country. Escalation in the number of smartphones in the country, fast-growing middle-class population, high consumer confidence, changing consumer preferences, etc., have augmented the growth of e-commerce, leading to surging demand for e-commerce logistics in the country. Manila and some other cities, including Central Quezon City, Cebu, and Davao, have emerged as the key hubs for the demand and supply of e-commerce logistics. The COVID-19 pandemic has also pushed the demand in the market as the need for social distancing has forced people to rely on online shopping. The growth in E-commerce orders for logistics has been majorly driven by an increase in internet affinity and demand for value-added services. The growing e-commerce market and continuous retail expansions are driving the demand for last-mile delivery hubs, inner-city distribution centers, cold storage, and warehouse facilities in the Manila region.
Key Market Trends
Growing E-commerce in the Country
The Philippines is continuing to rely on e-commerce and the digital economy to manage its economic recovery in the aftermath of the COVID-19 pandemic. With brick-and-mortar businesses being hit by lockdown measures, the Philippine e-commerce sector has seen a surge in the midst of the pandemic. As a result, the Philippines acknowledges the significance of e-commerce and the digital economy as key engines of growth and economic recovery.
According to data from the Philippine Department of Trade and Industry (DTI), e-commerce contributed 3.4%, or USD 12 billion (PHP 599 billion), to the country’s GDP in 2020. The Philippines’ current goal is to increase e-commerce revenue to USD 20.82 billion (PHP 1.03 trillion), or 4.3% of GDP, by 2022, and to USD 23 billion (PHP 1.2 trillion), or 5.5% of GDP, by 2023.
The Philippine government aims to address or reform challenges and barriers that hinder the country’s full potential for e-commerce development. Part of the expectations and it is observed that in the future, there would be a more systematic government regulation for proper taxation, protection of consumers, and infrastructure improvements.
Some popular e-commerce platforms include Shopee, Lazada, Zalora, and Beauty MNL.
Growing Transportation and Storage Sector
In 2021, the gross value added (GVA) generated from the transportation and storage industry in the Philippines reached approximately PHP 602 billion. This reflected a significant increase from the previous year’s total. The sector was significantly affected by the pandemic, but it is recovering. It is expected to grow further during the forecast period.
In order to increase efficiency and profitability, warehouse operators are adopting new technology, such as the Automated Storage and Retrieval Systems (ASRS), and adding new services. Additionally, developers are exploring the fringes of Manila and the regions for the next site of their industrial investments, capitalizing on the rising demand in various hubs across the country.
With the country’s ever-growing population and the rise of domestic consumption, the Philippine economy continues to expand. Moreover, with the rise of the economy also comes the rise of the logistics and transport industry. As the production and distribution of goods increase, so does the need to move these items. However, the geographical layout of the Philippines is a complex one, with thousands of islands connected through hundreds of links to form one big archipelago. The trucking sector plays a crucial role in bridging this gap.
Logistics and warehousing are two of the most important industries in the Philippines. Warehousing experienced huge growth due to a high increase in trade activities in and around the country.
The Philippine CEP market is fragmented, and the market is expected to grow during the forecast period due to rapid growth in the e-commerce market. Demand for warehouses and last-mile delivery is increasing. DHL, FedEx, UPS, and LBC Express dominate the market.
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