[B-SIDE Podcast] Warehousing and logistics: a bright spot in an otherwise battered economy

Thanks to e-commerce and changing consumer habits, the logistics and warehousing sector still expects to grow by 8% in the next three years despite the pandemic. This is a bright spot in an otherwise battered economy that dropped by 16.5% in the second quarter.

Sheila G. Lobien, CEO of property consultancy firm Lobien Realty Group, speaks with BusinessWorld reporter Denise A. Valdez about the impact of new consumer patterns on the future of the industry, and how the Philippines compares with the rest of Southeast Asia—8% growth is good, but that rate is slower when compared to the likes of Vietnam. Ms. Lobien shares insights on what the country has to do to get a bigger slice of the warehousing pie.

TAKEAWAYS

E-commerce and the demand for essentials—food or medical goods—is driving the logistics and warehousing sector, which continues to grow despite a general drop in real estate demand during the pandemic.

“The warehousing industry is one of the luckiest sectors,” said Ms. Lobien, who added that the pandemic has sped up the growth of the logistics and warehousing industry.

To maximize the potential of the logistics and warehousing industry, government must make good on its ‘Build, Build, Build’ projects.

Due to limited space in Metro Manila, rental rates in Central Business Districts have increased to P1,000/square meter from about half that price two years ago.

Big players such as Ayala Corp. and SM Prime Holdings are eyeing building warehousing facilities outside Metro Manila. Cavite, Bulacan, and Laguna are ideal locations since they are accessible, flood-free, and near the center.

For warehouse operators to locate in the provinces, they need better infrastructure to ensure the seamless transfer of goods.

The Philippines’s logistics and warehousing sector still has a lot of room to grow to level with its regional peers.

Local demand is fueling the growth of the logistics and warehousing industry. The 8% growth rate cited by Ms. Lobien is slower compared to, say, Vietnam’s warehousing industry, which is booming thanks to government support, lower cost of utilities, better road networks, and low COVID-19 numbers.

To catch up, the Philippines must address red tape, port congestion, and the sorry state of the country’s roads. The government must also step up its response to the worst COVID-19 outbreak in Southeast Asia.

Meanwhile, warehouse operators have to adapt to e-commerce and employ artificial intelligence and robotics to make the transfer of goods faster.

Recorded remotely on September 3. Produced by Nina M. Diaz, Paolo L. Lopez, and Sam L. Marcelo.