5 Tips That Help Lower Logistics Cost in the Philippines

A reduction in logistics expenses can simplify your whole business operations. A 2024 study by blueFocus, a Spain-based consultancy, revealed that maritime transportation and inland logistics constitute 45-50% of domestic logistics cost in the Philippines. Although it isn’t realistic to drastically cut costs in a short amount of time, businesses can still employ strategies to gradually lower their logistics expenses.

There are different approaches to reducing logistics costs, and it may depend on the nature of your shipments, shipping frequency, behavior, and relationships with logistics companies. Find out some of the ways you can mitigate high shipping expenses.

Factors that Affect Logistics Cost in the Philippines

Logistics makes up a large portion of the supply chain, and many factors aside from supply and demand can potentially increase or decrease operational expenses. Examples include:

• Distance of Travel – Longer distances in a short amount of time (ex. Expedited delivery) can cost more but delivers faster results.
• Inventory Management – Poor inventory management and handling of goods can cause unnecessary expenses.
• Fuel Costs – Rising fuel costs affects all modes of transport and causes logistics companies to impose increased upfront fees.
• Labor Costs – A high volume of goods or even high-value goods may entail higher labor costs.
• Mode of Transport – A logistics company in the Philippines uses transportation modes with varying capacities, fuel consumption, and space allotment that can affect your logistics costs.
• Size and Volume of Goods – The type of goods, its size, and volume might require special handling processes.
• Warehousing – Operational costs that include facility maintenance and storage expenses can bring about unexpected increased costs.

5 Useful Ways to Reduce Logistics Cost in the Philippines

1. Consolidate your shipments

   If your business has a small amount of shipments, try optimizing your logistics cost through freight consolidation. A dependable logistics company in the Philippines would typically provide consolidation options, such as less-than-container-load (LCL) shipping. It is a cost-effective way for small and medium enterprises to ship out goods in small batches.

2. Explore multimodal transport

   Utilize different modes to transport your goods. This way, you can maximize your time and combine a variety of transportation to achieve more efficient delivery times. A logistics company in the Philippines like Chelsea Logistics offers a diverse range of solutions, such as warehouse logistics and distribution, trucking, cargo freighter vessels, passenger vessels, roll-on/roll-off (RoRo), and small parcel delivery.

   Using both land and sea transport for your goods saves more on your logistics cost in the Philippines compared to air freight. Multimodal transport also helps you reach remote areas in an archipelagic country.

3. Partner with a reliable logistics company in the Philippines

   In-house logistics operations can become expensive and hard to maintain, especially if your business does not ship out goods frequently. The best remedy is to look for a reliable third party (3PL) logistics company in the Philippines that can take the burden off your shoulders.

   These logistics companies have readily available solutions and customizable options for your cargo shipping needs. Choose a logistics partner with a positive reputation, so you are assured your items will be in good hands.

4. Optimize your packaging

   Minimize the use of materials when packaging your item to reduce the weight or space it takes up. Opt for recyclable and reusable packaging to reduce waste. Depending on the nature and size of your items, you can use uniform box sizes for all your shipments. For bulky commodities, look into bulk cargo shipping services that can arrange and handle your goods efficiently at a low cost.

5. Negotiate reasonable rates with your 3PL carrier

   If your business is in the early stages of partnering with a logistics company, consult ways in which your logistics costs can be reduced. Many logistics services offer customizable and flexible options based on your shipment and goals.

   But if you intend to partner with a third-party logistics company in the Philippines for a long period of time, you must maintain a good relationship with them. In the long run, you can negotiate lower logistics costs with them, especially if they are aligned with your business goals. This way, you can strengthen your ties with them and achieve improved service agreements.

The key to lowering your overall spending on logistics is streamlining your process. By maintaining healthy communication with your partner logistics company in the Philippines, you can achieve long-lasting, more efficient business operations.

ALSO READ: 12 Essential Reasons Why You Should Partner with a Logistics Company in the Philippines

Chelsea Logistics is your one-stop logistics company in Manila, South Luzon, Visayas, and Mindanao. As one the leading freight forwarders in the country, Chelsea Logistics offers a wide variety of solutions from trucking and passenger vessels to cargo shipping and tankers. Connect with us today and let us know how we can help you grow.