Limited multimodal connectivity has been a major challenge for the Philippines’ transport sector as economic growth and consumer demand accelerate, driving shipping costs to unsustainable levels and leading to the launch of a new multimodal transport and logistics roadmap in 2016. Emphasising construction of new access roads and sweeping maritime transport upgrades, the plan is expected to be adopted by the Department of Trade and Industry (DTI) as part of its long-term logistics strategy. An official call for improvements to multimodal connectivity bodes well for future logistics growth, while recent announcements from the new administration of President Rodrigo Duterte indicate strong support for multimodal connectivity.

Shipping Costs

The Philippines’ logistics sector is a significant economic contributor, comprising around 6% of GDP, according to the Philippine International Seafreight Forwarders Association (PISFA). Logistics growth is being driven by robust macroeconomic expansion and rising consumer demand. Highlighting the domestic express delivery market as particularly high potential, Dublin-based Research and Markets wrote that premium-priced express delivery services had gained significant popularity, with market growth led by players such as LBC Express, PHL Post, 2GO and Air 21. This rising prevalence for higher-priced express delivery comes at a time when the country’s logistics network, particularly its maritime shipping industry, is facing a widening array of growth constraints, including severe congestion at the Port of Manila that has been exacerbated by the lack of local and national multimodal connectivity. The country fell on the World Bank’s 2016 Logistics Performance Index survey, falling from 57th out of 160 in 2014 to 71st.

While International Container Terminal Services (ICTS) stopped moving containers from the Port of Manila to Laguna in the year 2003, traffic volumes in the city have continued to increase significantly in the years following. As a result, the DTI estimates that logistics costs account for between 24% and 53% of wholesale goods’ prices in the Philippines.

Multimodal Roadmap

In March 2016 a new multimodal development roadmap, spearheaded by PISFA and the Port Users Confederation, was officially launched. The Multimodal Transportation and Logistics Roadmap was developed over a year in close consultation with the private sector and is expected to be adopted by the DTI’s Supply Chain and Logistics Management Division in drafting its own national logistics plan. The roadmap includes three stages: 2015-17, 2018-22 and 2023-30. Actionable items are separated into legislative, executive and administrative measures.

The plan notes several long-standing challenges facing the sector, including poor infrastructure, governmental non-compliance with international agreements, the lack of a cohesive national strategy for the sector, absence of a coordinating agency, unclear and conflicting government regulations, red tape and limited national skills training programmes for new hires. It also calls on industry stakeholders to play to the Philippines’ competitive strengths, such as its large, young workforce, strong macroeconomic fundamentals driving consumer spending and new regional opportunities brought on by ASEAN integration.


The plan’s key recommendations include development of an integrated, long-term national strategy for supply chain and logistics, which will detail schemes for necessary multimodal infrastructure, including a strong nautical highway and roll-on/ roll-off terminal system linking the entire country. The plan also recommends an administrative agency for supply chain and logistics be created to ensure policy implementation and compliance, as well as reforms to streamline and standardise logistics policies under various government agencies.

Road development was highlighted as the most important priority, especially access roads to sea and airports, freight centres, rail networks and air cargo facilities, with the plan reporting that an anticipated surge in cargo volumes due to economic growth will exacerbate congestion on roads around ports. The roadmap should positively impact multimodal connectivity and logistics, given than many of its priorities align with the transport agenda and focus on improved project delivery under President Duterte.


Promisingly, the Duterte administration appears to be making good progress on many much-needed infrastructure projects, including those bolstering multimodal connectivity. The 2017 budget features higher allocations to the Mindanao Logistics Infrastructure Network, a project aiming to improve linkages between key ports and nearby roads on southern Mindanao Island, as well as other neighbouring production areas. Funding for the project will be increased by 61.5% in 2017, from P19.5bn ($412.5m) in 2016 to P31.5bn ($666.4m). The Metro Manila area is also set to benefit from efforts to boost multimodal connectivity, with its new Light Rail Transit (LRT) Line 7 expected to link to a station shared by Metro Rail Transit 3 and LRT-1 lines, in addition to an intermodal transport terminal connecting to the Northern Luzon Expressway via public utility vehicles (see overview). The National Economic and Development Authority (NEDA), which is responsible for approving all public-private partnerships in the transport sector, has also announced that new port developments remain an important prerogative. In August 2016 the NEDA announced it had instructed the Department of Public Works and Highways to design the final configuration for upgrades at the country’s Batangas and Subic ports (see analysis), which are also slated to benefit from new railway connections.

Cargo Rail

Indeed, in a 100-day progress report released in October 2016, the Department of Transportation announced that multimodal connectivity will benefit from a planned cargo rail line linking Clark to Subic, and connecting the Manila International Container Terminal (MICT) and Laguna Gateway Inland Container Terminal. The P10bn ($211.6m) rail line’s first phase will run from Manila to Calamba in Laguna, and includes the purchase of eight new locomotives and 120 coaches. Its second phase will extend the line from the Port of Manila to Clark, and the third stage will link Clark to Subic. A final fourth phase will close the loop, running from Calamba to Batangas. It involves restoring the Philippine National Railways tracks connecting Tutuban to the Port of Manila, as well as construction of a stabling yard in Calamba to be used for container trains. The project, under joint development by Manila Electric Company subsidiary MR ail and ICTSI, MICT’s private owner, is significant because it is specifically targets road congestion to and from Manila’s ports. It is expected to reduce the number of trucks operating the route from over 600 to around 200 per day. Construction is scheduled to take two years, with stakeholders expecting to receive final approval for the project in the first half of 2017.