Logistics firms press policy changes amid difficulties

MANILA, Philippines - Logistics firms around the world will continue to face tough times as a result of high prices of goods, which have not only raised costs, but has slowed demand for their services. AerOceaNetwork, a group of logistics and freight forwarding companies worldwide that met in Manila late last week to discuss business opportunities, said its members have started reeling from slowing economic activity worldwide. Guilbert B. Purcia, president of local cargo forwarding firm, Purcia Transport System, Inc., said "we are not earning the money we used to earn." He said revenues have been going down, but declined to be more specific. He said that aside from high oil prices which have been raising operation costs, demand for its services — especially from exporters — has gone down as much as 80% in the Philippines. ‘Dramatic’ impact Anthony Bucci, president of Italian logistics firm, Bucci Worldwide S.p.A., said economic conditions "are affecting us dramatically." Aside from oil prices bringing up costs, he said companies which have both maritime and air freight operations have seen their revenues go down as more clients now want their freight shipped via sea, which he said is 80% cheaper than air transport. He recalled that before oil prices started rising in the first quarter, 85% of the cargo his company carried was through air. Now, however, he said 90% of clients prefer shipping by sea, even if shipping that way takes much longer. Oil prices spiked to $101 a barrel late last week on supply fears brought by the hurricane "Ike" in the US, shortly after going under $100 last week. Sales manager of Germany-based Skyline Express Worldwide Logistics Joachim Weber, meanwhile, said stricter safety standards in Europe are also hurting companies. He said logistics firms in Europe are mandated to buy their own set of expensive safety equipment like cargo x-ray scanners. Hence, companies which can otherwise share use of such equipment to cut cost are forced to buy their own. But in the Philippines, Mr. Purcia said the real problem for companies is that "we never improve on how we do things." Wrong policy Unlike Singapore, which is the world’s busiest port, where customs and port officials work 24 hours a day, seven days a week, counterparts in the Philippines put work on hold during weekends. If a forwarder wants its products processed during weekends, that company will have to pay extra. This raises costs and entail lost opportunities for those companies, he said. A related factor that raises costs, he said, is the administration’s "holiday economics" that aims to stimulate consumer spending by celebrating non-working holidays on the nearest Monday to make the weekends last longer. Such days translate to production losses, he said. He said the Philippines’ ports can be as productive as Singapore, owing to the Philippines ideal location in the region. However, government policies which slow down business processes have been hindering growth. Still, companies have been finding ways to avert losses. Mr. Bucci said his company has been investing in advanced equipment that lets the company do more things with less people. Meanwhile, Mr. Weber said job cuts have been avoidable for a lot of companies, though he declined to be specific.