How to Start a Transportation and Logistics Business in the Philippines

Thinking about starting a transportation and logistics business in the Philippines? The logistics industry in the Philippines is a crucial part of the economy. From freight forwarding to warehousing, there is a wide range of services and rapid growth in the market.

This guide will walk you through what you need to know before starting this booming industry. From finding the right options for transportation business to navigating logistics landscapes in the Philippines, we’ve got you covered. So, get ready to embark on a new entrepreneurial journey in the transportation and logistics sector in the Philippines.

How to Start a Transportation and Logistics Business in the Philippines

Starting a transportation and logistics business in the Philippines can be a rewarding venture, considering the country’s growing economy. Here are some things you need to know before you start in this kind of industry.

Drafting a Business Plan

As seen in a report by Mordor Intelligence about the growth trends and market analysis of the logistics industry, the Philippines Freight and Logistics Market size (estimated at around USD 18 billion in 2023), is expected to reach around USD 25 billion by 2028, forecasting a CAGR (Compound Annual Growth Rate) of 7.08% during this period.

While the market may be favorable in the upcoming years, one still needs to carefully draft a business plan. Without a well-thought-out plan, the journey can seem daunting. A business plan serves as more than just a document for potential investors; it acts as your navigational tool from inception to expansion.

Know your competitors

Take a moment to size up the competition. It’s like mapping out your game plan before hitting the field. This step helps you figure out what you need to aim for and what goals you want to reach.

Checking out the competition also gives you a chance to understand what your potential customers are looking for. It’s like doing a little detective work to see what’s missing in the services your rivals offer. Once you’ve got that insight, you can swoop in and offer something special that they haven’t thought of yet.

Funding and Investments

So, when you’re gearing up to start your own logistics company, one thing on your checklist is securing some investment. Now, how much you need really depends on what kind of services you want to provide for your clients. If you’re thinking about keeping it simple with brokering and freight management, you won’t need as much capital upfront. It’s a good way to get your foot in the door and lay down a solid foundation for your logistics business.

Take some time to figure out exactly what niche services you want to focus on and then come up with a plan for how much investment you’ll need to make it happen. You could explore loan options or even team up with a partner to pool resources and get the business off the ground. It’s all about finding the right approach that fits your vision for the company.

Acquiring Trucks

After securing funding, the subsequent step entails procuring delivery transport trucks. Ensure these vehicles align with your chosen market and acquire a sufficient number to meet projected operational needs.

Upon identifying suitable trucks, complete the acquisition process and ensure that the Official Receipt (OR) and Certificate of Registration (CR) are registered under your name to facilitate the acquisition of necessary business permits.

Secure Insurance Protection

Operating a logistics company demands a robust risk management approach. For instance, imagine one of your company’s trucks encounters an accident, resulting in significant damage to both the driver and the vehicle. Additionally, if such an incident leads to the loss of your clients’ products, your company would bear the responsibility of compensating for the damages incurred.

To mitigate the risks associated with such scenarios, obtaining an insurance policy is crucial. This ensures your company’s security in the face of unforeseen damages down the line. With accessible insurance premiums available, acquiring coverage is a prudent investment that can save you substantial expenses when the need arises.

Requirements for Transportation and Logistics Business in the Philippines

Establishing a trucking and logistics business in the Philippines entails obtaining various documents and permits prior to commencing operations. The following outlines the prerequisites but not limited to the following:

Letter of Request addressed to the Director General of the Philippine Economic Zone Authority (PEZA)
At least one endorsement Letter from potential PEZA clients
List of both PEZA and non-PEZA clients
Notarized application form of Annex “A” – Anti-Graft Certificate
Notarized board resolution authorizing the application’s filing
Audited financial statements for the last three years or an audited balance sheet for newly established companies
Certificate of registration from either the Securities and Exchange Commission (SEC) or the Department of Trade and Industry (DTI)
Articles of incorporation for corporations and partnerships
Updated Bureau of Internal Revenue (BIR) clearance or certificate of registration
Mayor’s Permit
Annual permit to operate from the Philippine Port Authority (PPA)
For licensed customs brokers, Professional Regulation Commission (PRC) certificate and ID, and Bureau of Customs (BOC) accreditation
Common bond with BOC
Civil Aeronautics Board (CAB) authority to operate for air freights
Philippine Shippers’ Bureau (PSB) accreditation certificate for sea freights
Name and address details of agents and principals abroad for freight forwarding
Certified list of vehicles signed by a company official
Copy of franchise from the Land Transportation Office (LTO) with a decision from the Land Transportation Franchising and Regulatory Board (LTFRB)
Updated OR/CR of vehicles
Standard service rate schedule
Personal history statement of principal officers
List of employees with designations
Complete list of drivers and assistants along with their personal history statements
National Bureau of Investigations (NBI) or barangay clearance for drivers and assistants
Certification of No Derogatory Information (CNDI)
Copy of Provisional Authority (PA)

Furthermore, you may want to explore the 5 Business Expenses for Business Owners in the Philippines just to make sure you wouldn’t miss any payments.

Examples of Logistic Business

Freight Forwarding Company: These companies specialize in arranging the transportation of goods from one location to another. They may work with various transportation modes such as air freight, sea freight, road freight, or rail freight. Examples include DHL, FedEx, and UPS.
Warehousing and Distribution Center: These businesses provide storage facilities and distribution services for goods. They manage inventory, pick, pack, and ship orders on behalf of their clients. Examples include Prologis, XPO Logistics, and CEVA Logistics.
Courier Services: These companies offer door-to-door delivery services for parcels and documents. They often specialize in fast and reliable delivery within a specific region or country. Examples include LBC Express, JRS Express, and 2GO Group.
Third-Party Logistics (3PL) Providers: These companies offer comprehensive logistics services, including transportation, warehousing, inventory management, and supply chain optimization. They serve as intermediaries between manufacturers, retailers, and consumers. Examples include C.H. Robinson, Kuehne + Nagel, and XPO Logistics.

Last-Mile Delivery Services: These businesses specialize in delivering goods from distribution centers to the final destination, typically within urban areas. They often focus on efficient and timely delivery to residential and commercial addresses. Examples include GrabExpress, Lalamove, and GoGo Xpress.
Cold Chain Logistics: These companies specialize in transporting and storing temperature-sensitive goods such as food, pharmaceuticals, and chemicals. They maintain controlled temperature environments to ensure the quality and safety of the products. Examples include Lineage Logistics, Americold, and Preferred Freezer Services.
E-commerce Fulfillment Services: These businesses provide order fulfillment services for e-commerce companies, including storage, picking, packing, and shipping of orders. They help online retailers streamline their logistics operations and meet customer demand efficiently. Examples include ShipBob, ShipStation, and Red Stag Fulfillment.
Supply Chain Management Consulting: These firms offer consulting services to help businesses optimize their supply chain operations, reduce costs, improve efficiency, and mitigate risks. They provide strategic advice and implement solutions tailored to their clients’ specific needs. Examples include Accenture, Deloitte, and Bain & Company.

These are just a few examples of logistics businesses, and the industry encompasses a wide range of services and specialties to meet the diverse needs of businesses and consumers.

Transportation Options for Your Logistic Business in the Philippines

The first option is the popular choice for businesses – rental. With this option, you can choose from a wide range of vehicle types and sizes to suit your specific needs. Plus, many rental companies offer special discounts and rewards programs for businesses. However, if you’re in the business of delivering products, you’ll consider using a delivery service. Whether you’re shipping locally or nationally, there are plenty of options to choose from. Just do your research and read reviews to verify that you’re working with a reliable and trustworthy provider.

Lastly, a newer trend in transportation is called ride-sharing. It gives convenience and cost-effective solutions for businesses. Plus, many ride-sharing services offer business accounts with special perks like discounted fares and centralized billing.

Whether you choose to go with a car rental, a delivery service, or ride-sharing, it’s important to consider your specific needs, budget, and values to make the right choice for your business.

Tips for Successful Business in the Philippines

Success in the transportation and logistics business in the Philippines requires a combination of strategic planning, operational efficiency, and adaptability to changing market dynamics. Scroll down for a few tips to succeed in this industry.

Embrace cutting-edge technologies such as GPS tracking, RFID, and telematics to enhance visibility and real-time tracking of shipments.
Ensure end-to-end visibility in your supply chain. Real-time tracking and monitoring of shipments can help with customer satisfaction.
Develop a comprehensive risk management strategy to mitigate potential disruptions in the supply chain, like unforeseen circumstances.
Implement efficient warehouse management practices, such as just-in-time inventory management, to reduce holding costs.
Stay updated on local and international regulations governing transportation and logistics.
Communicate proactively with customers about shipment status and potential delays.
Keep your team updated on industry trends, regulations, and new technologies through training.
Explore strategic partnerships and collaborations to enhance your capabilities and reach.
Regularly assess and update your processes, technologies, and strategies to stay competitive in transportation and logistics.

Running a logistics company could be a reliable venture for the long haul. Just ensure you have the right equipment and a skilled workforce to uphold its adaptability and resilience as a business.