ASEAN German Technical Cooperation | Energy Efficiency and Climate Change Mitigation in the Land Transport Sector

Energy Efficiency and Climate Change Mitigation in the Land Transport Sector

Green Freight and Logistics Policy Development

in the Philippines
Assessing Freight Transportation in Support of a
National Green Freight Programme

July 2018
 Acknowledgements

This report was prepared by Dr. Jane Romero

and Pia May Agatep, EnP. of Clean Air Asia for
the GIZ Energy Efficiency and Climate Change
Mitigation in the Land Transport Sector in the
ASEAN Region project, also known as the
Transport and Climate Change (TCC) Project.
Disclaimer This document was edited by Hannah Ebro and
Findings, interpretations and conclusions Friedel Sehlleier of GIZ, and Kathleen Dematera
expressed in this document are based on and Glynda Bathan of Clean Air Asia.
information gathered by GIZ and its consultants, Contributors to this report include Tali Trigg and
partners and contributors. Cristina Villaraza of GIZ, and Alan Silayan and
Mark Tacderas of Clean Air Asia.
GIZ does not, however, guarantee the accuracy
or completeness of information in this The survey implementation was supported by the
document, and cannot be held responsible for Philippine Department of Trade and Industry
any errors, omissions or losses which emerge Supply Chain and Logistics Management
from its use. Division (DTI-SCLMD).
Green Freight and Logistics Policy Development
in the Philippines
Assessing Freight Transportation in Support of a National
Green Freight Programme

Jane Romero and Pia May Agatep

The Project Context

The TCC Project ‘Energy Efficiency and Climate TCC’s regional activities are in the area of fuel
Change Mitigation in the Land Transport Sector efficiency, strategy development, green freight
in the ASEAN region’ (Transport and Climate and logistics, as well as data, indicators, and
Change (TCC) aims to develop strategies and MRV. At the national level, the project supports
action plans for more sustainable transport. The relevant transport and environment government
project is funded by the German Federal Ministry bodies in Indonesia, Malaysia, the Philippines,
for Economic Cooperation and Development Thailand, and Viet Nam for the development of
and implemented by GIZ in cooperation with the national action plans on sustainable transport and
ASEAN secretariat. More information can be improvement of policy monitoring systems. TCC
found at www.TransportandClimateChange.org. also offers capacity building through different
training courses.
Table of Contents
List of acronyms ............................................................................................................ 3
Executive summary ....................................................................................................... 6
1. Introduction ............................................................................................................... 7
1.1. Background ............................................................................................................................. 7
1.2. Objectives and scope of the green freight assessment ..................................................... 8
2. Freight and logistics in the Philippines .................................................................... 9
2.1. Philippine country profile ..................................................................................................... 9
2.2. Logistics performance and challenges ..............................................................................12
2.3. Transport infrastructure......................................................................................................14
2.4. Climate change and energy demand..................................................................................14
2.5. Vehicle profile ......................................................................................................................16
3. Policies and stakeholders .........................................................................................18
3.1. Stakeholders..........................................................................................................................18
3.2. Policies and initiatives .........................................................................................................23
4. Road freight sector assessment ............................................................................... 28
4.1. Freight assessment survey for trucking companies ........................................................28
4.1.1. Profile of respondent companies ............................................................................29
4.1.2. Fleet characteristics ...................................................................................................33
4.1.3. Trucking operations ..................................................................................................34
4.1.4. Vehicle fleet management and maintenance..........................................................38
4.1.5. Fuel-saving technologies and strategies ..................................................................41
4.1.6. Emissions reporting ..................................................................................................43
4.1.7. Institutional framework and Green Freight Programme planning ....................44
5. Recommendations and conclusion ......................................................................... 46
5.1. Recommendations for greener freight and logistics in the Philippines .......................47
5.2. Conclusion ............................................................................................................................50
Annex: Freight assessment survey for trucking companies ....................................... 52
List of tables .................................................................................................................61
List of figures ................................................................................................................61
References ................................................................................................................... 63
List of acronyms
ASEAN Association of Southeast Asian Nations
ASPBI Annual Survey of Philippine Business and Industry
ATOME Anti Truck Overloading Mobile Enforcement
BBB Build Build Build programme
BMZ Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung (Germany’s
Federal Ministry for Economic Cooperation and Development)
CALABARZON Administrative region consisting of the five provinces Cavite, Laguna,
Batangas, Rizal, and Quezon
CAR Cordillera Administrative Region
CO Carbon monoxide
CoA Certificate of Accreditation
CO2 Carbon dioxide
CO2e Carbon dioxide equivalent
COMPETE Advancing Philippine Competitiveness (USAID project)
CPC Certificate of Public Convenience
CTAP Confederation of Truckers Association of the Philippines
DO Department Order
DOTr Department of Transportation (formerly DOTC)
DOTC Department of Transportation and Communications (now DOTr)
DTI Department of Trade and Industry
DTI-SCLMD Supply Chain and Logistics Management Division
EO Executive Order
EST Environmentally sustainable transport
FGD Focus group discussion
GDP Gross domestic product
GHG Greenhouse gas
GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (Germany’s
international development agency)
GVW Gross vehicle weight
ITS Intelligent transport system
IFC International Finance Corporation

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JICA Japan International Cooperation Agency
KLTSP Kuala Lumpur Transport Strategic Plan
ktoe kilotonne of oil equivalent
LEI Logistics Effectiveness Index
LGU Local government unit
LPI Logistics Performance Index
LTFRB Land Transportation Franchising and Regulatory Board
LTO Land Transportation Office
MIMAROPA Administrative region consisting of the five provinces Mindoro (Occidental
and Oriental), Marinduque, Romblon, and Palawan
MRV Monitoring, reporting and verification
MSME Micro, small and medium enterprise
MTCO2e Million tonnes of carbon dioxide equivalent
MVIS Motor Vehicle Inspection System
MVUC Motor Vehicle User’s Charge
NCR National Capital Region
NESTS National Environmentally Sustainable Transport Strategy
NGO Non-government organisation
NIP National Implementation Plan on Environment Improvement in the
Transport Sector
NLMP National Logistics Master Plan
NOX Nitrogen oxides
PDP Philippine Development Plan
PM Particulate matter
PSA Philippine Statistics Authority
PUV Public utility vehicle
RORO Roll-on/roll-off
SEC Securities and Exchange Commission
SM Shoe Mart
SME Small and medium enterprise
TCC Transport and Climate Change
TESDA Technical Education and Skills Development Authority
TITL Transport Infrastructure, Trade and Logistics
TRAIN Tax Reform for Acceleration and Inclusion

4
TSC Transportation, storage and communications
UNCRD United Nations Centre for Regional Development
USAID United States Agency for International Development
VOC Volatile organic compound
WB World Bank
WEF World Economic Forum

5
Executive summary
In recent years, the freight and logistics sector of the Philippines has been growing steadily along with
the national economy. As most of the freight transport activity is road-based, the sector’s growth
increases greenhouse gas (GHG) emissions from the transport sector. Therefore, initiatives to improve
the overall efficiency of the sector are imperative, especially to mitigate negative environmental
impacts. Greening freight transport logistics can help decouple transport impacts from economic
growth. A crucial part of this is to ensure that goods are transported efficiently and with the least
emissions.
This study provides an overview of the freight and logistics sector and lays out the next steps to develop
a Green Freight Programme in the Philippines, in Sections 1 and 2, respectively. Section 3 contains a
review of existing policies in the freight transport sector and other relevant development plans, and a
discussion about the roles of each stakeholder in advancing the improvement of freight and logistics.
Noting that road transport is the dominant mode of moving goods in the country, the study focuses
on understanding the trucking industry, including its structure and the needs of the stakeholders. It
delves into how the industry operates, its structure, the relevance of the modes, the characteristics of
the vehicles, and the operational characteristics of freight travel, among others. The study recognises
that available and disaggregated trucking data are limited, so surveys and consultations were conducted
with truckers, freight forwarders and logistics service providers to generate insights. This effort was
done in close coordination with the Department of Trade and Industry (DTI). The green freight survey
gathered information on the following aspects: (i) profile of respondent companies; (ii) fleet
characteristics; (iii) trucking operations; (iv) vehicle fleet management and maintenance practices; (v)
fuel-saving technologies and strategies; (vi) emissions reporting; and, (vii) institutional framework and
Green Freight Programme planning. The results of the survey and focus group consultations are
presented in Section 4.
Finally, in Section 5 provides a list of specific recommendations focusing on increasing efficiency of
trucks and improving the trucking industry that the government and private sector could implement
through coordinated actions. Recommendations include: 1) improving trucking data collection, as well
as monitoring and reporting frameworks; 2) professionalising the logistics industry; 3) improving truck
efficiency; 4) consolidating small and medium enterprises (SMEs) in the trucking industry; 5) reducing
empty miles; 6) decongesting Manila, and improving efficiency and performance of freight operations
in other urban areas; 7) enhancing multimodal freight transport connectivity; 8) establishing public-
private partnerships through a Green Freight Programme; 9) participating in regional and international
initiatives; and, 10) establishing an interagency coordination for the freight and logistics sector.
Ultimately, the study recommends the establishment of a Green Freight Programme in the Philippines
that includes an action plan to improve the overall efficiency of the freight and logistics sector.

6
1. Introduction

1.1. Background
The Philippines is a rapidly growing emerging economy with an expanding freight transport and
logistics industry that facilitates the nation’s economic development. This industry is not only a major
employer but also has a significant and increasing environmental footprint. To address the latter,
mitigation actions are necessary, and environmental as well as socio-economic sustainability needs to
be embedded in the country’s relevant sectoral strategies and plans.
The concept of green freight and logistics (see definition below) has arrived in the policy and corporate
agendas in Asian countries in recent years, driven by a number of factors, including: climate change
mitigation; the need to improve logistics performance; technological advancements; demand by
multinational shippers and logistics service providers; and the interest of companies in opportunities
to become more efficient and cut costs. However, compared to other emerging economies in the
region, the Philippines has seen little discussion or initiative on green freight and logistics thus far.
The Philippines became a signatory to the Global Green Freight Action Plan in 2013. This is a
voluntary, multi-lateral, multi-stakeholder global partnership to enhance the efficiency of global goods
movement in ways that significantly reduce the impacts on climate, health, energy, and the economy.
In 2016, the ASEAN Transport Ministers developed the Kuala Lumpur Transport Strategic Plan
(KLTSP) 2016-2025 which highlights the role of green freight and logistics in the region. While the
Philippine Development Plan 2017-2022 and the National Logistics Master Plan 2017-2022 prioritise
the improvement of transport and logistics services in the country, there is limited coverage on the
environmental impacts of increasing freight and logistics or on how to green the sector. This report is
a first milestone to assess the status quo and to lay the foundation for moving from intention to action
by working across ministries to include environmental sustainability in the planning of freight and
logistics.
In a nutshell, a Green Freight Programme intends to assist governments and businesses to promote
trade in a cost-efficient way, thereby improving people’s quality of life while preserving the
environment. It is an important strategic pillar for a sustainable transport system and for improving
logistics performance of countries and their economies. A report1 by GIZ in 2017 found that such
policies and measures can produce a myriad of co-benefits and contribute to the achievement of 13 of
the 17 Sustainable Development Goals.
Green freight and logistics can be realised by following the strategy of ‘Avoid – Shift – Improve’.2
‘Avoid’ strategies generally reduce the number of trips and the travel distance of road vehicles. ‘Shift’
strategies move freight activities towards more energy-efficient and environment-friendly transport

1Green Freight in Asia in the Context of the Sustainable Development Goals. GIZ. Presented during the Intergovernmental
Tenth Regional Environmentally Sustainable Transport (EST) Forum in Asia. 14-16 March 2017.
http://www.uncrd.or.jp/content/documents/4949Background%20Paper%20(1)-EST%20Plenary%20Session%2011.pdf
2Sustainable Urban Transport: Avoid- Shift-Improve. GIZ.
http://www.sutp.org/files/contents/documents/resources/E_Fact-Sheets-and-Policy-Briefs/SUTP_GIZ_FS_Avoid-
Shift-Improve_EN.pdf

7
 modes. And ‘Improve’ strategies address the energy efficiency in road transport vehicles and systems
through operational and technological enhancements. Close cooperation among governments,
businesses, academia, NGOs and other key stakeholders is necessary to ensure a cohesive and
successful implementation of green freight initiatives.

What is green freight and logistics?

A set of strategies, policies, practices and standards…
…targeted at the movement of goods via road, rail, marine, inland waterways and air…
…aiming to:
• reduce the environmental, climate and public health impacts through reduced
air pollution and greenhouse gas emission intensity;

• improve social conditions, including road safety, and health and working
conditions of people involved in freight movement; and
• enhance economic development through improved energy efficiency, fuel
security, and efficiency and competitiveness of the freight and logistics sector
overall;
…developed and implemented by government, the private sector and other stakeholder
groups jointly or individually.

(Source: UNCRD, 2014)

1.2. Objectives and scope of the green freight assessment

The main objectives of this report are the following:
• Assess the status quo concerning elements necessary to establish a Green Freight
Programme.
• Propose policies, measures and institutional mechanisms to develop a Green Freight
Programme in the Philippines.
The assessment focuses on land transport, as freight activity is dominated by road transport, which
carries 58% of cargo in the Philippines (while water and air transport carry 41.95% and 0.06% of
goods, respectively), mostly by truck fleets owned by small and medium enterprises (Asian
Development Bank, 2012). Desk research was done to understand the status of freight transport in
the Philippines and to review the current policy framework. Primary data gathering through surveys
and focus group discussions with key stakeholders augmented the desk research to gauge the status of
truck fleets and their operating characteristics. Discussions and analyses looked more closely into

8
environmental performance linked with energy and operational efficiency. The assessment of the social
impacts was more limited, due to the limited data available.
The recommendations were based on the survey results and on the insights from consultation
workshops with the Department of Transportation (DOTr), the Department of Trade and Industry
(DTI), and the private sector.
This report is a product of the cooperation between DOTr, DTI, Clean Air Asia, and Germany’s
international development agency, the Deutsche Gesellschaft für Internationale Zusammenarbeit
GmbH (GIZ). The GIZ project titled Energy Efficiency and Climate Change Mitigation in the Land
Transport Sector in the ASEAN Region (also referred to here as the Transport and Climate Change
or TCC project), with funding from Germany’s Federal Ministry for Economic Cooperation and
Development (BMZ), supports transport ministries of its partner countries, such as the Philippines, in
developing sustainable transport strategies and action plans aligned to the ASEAN Kuala Lumpur
Transport Strategic Plan (KLTSP) 2016-2025.

2. Freight and logistics in the Philippines

2.1. Philippine country profile
Demography and geography
The Philippines is an archipelago made up of about 7,641 islands stretching across 300,000 square
kilometres bordered by the waters of Bashi Channel to the north, Sulu and Celebes Seas to the south,
the Pacific Ocean to the east, and the South China Sea to the west. Luzon, Visayas and Mindanao are
the three major groups of islands. The country’s population is estimated at 103.3 million based on 2016
census data of the Philippine Statistics Authority (PSA). With a population still increasing at a rate of
1.89% per year, about 48.8% of the total population live in urban areas in 2011 following a 2.16% rate
of urbanisation in the last 5 years. Major urban areas include Metro Manila (12.88 million people),
Davao (1.63 million), Cebu (0.92 million) and Zamboanga (0.88 million).
The Philippines’ archipelagic setting and growing urban population highlight the need for improved
accessibility and mobility to support the people’s needs and the country’s economic growth. The
islands need to be linked by a seamless transport infrastructure network to enable cost-efficient
movement of people, goods and services within the country to achieve inclusive growth.

Economy
The country’s gross domestic product (GDP) is expected to be among the fastest-growing in Asia, at
6.9% and 6.8% projected annual growth in 2018 and 2019, respectively.3 In 2017, the Philippine
economy grew by 6.7%.4 Industry players project that the logistics sector could grow faster than the
rest of the economy.5

3 World Bank, 2017. Global Economic Prospects. pp. 78

4 Philippine Statistics Authority, 2018.
5 I. Sayson et al, 2017. Article: Billionaire Sy’s Group Counts on Logistics Growth, CEO Says. Bloomberg.

9
In 2017, the PSA also reported that the transportation, storage and communications (TSC) sector
collectively posted a 5.4% growth. The growth of TSC benefited from positive contributions of the
subsectors: land transport, 1.9%; water transportation, 1.4%; air transportation, 6.7%; and storage and
services incidental to transport, 8.5%.
Latest available data from the 2014 Annual Survey of Philippine Business and Industry (ASPBI)
showed that there were 1,108 establishments with 20 or more employees engaged in the transport and
storage sector in the Philippines. Many more trucking operators are small-scale enterprises with less
than 20 employees. This information is captured in the primary survey conducted in partnership with
DTI’s Supply Chain and Logistics Management Division (DTI-SCLMD). Within the sector’s
businesses counting at least 20 staff, the largest single category was made of support activities for
transportation such as warehousing and logistics services, with 445 establishments or 40%. This was
followed by industries engaged in other land transport with 287 establishments (26%) and transport
via buses with 151 establishments (14%), as shown in Figure 1.
At the regional level, more than half (54.9%) of the number of establishments were in the National
Capital Region (NCR), comprising 608 establishments. The region of CALABARZON (consisting of
the provinces of Cavite, Laguna, Batangas, Rizal, and Quezon) followed, with 125 establishments
(11.3%), and Central Visayas came in third with 94 establishments (8.5%).

sea and coastal courier activities

water transport 4%
10% other industries
6%
transport via buses
14%

support activities
for transportation
40%
other land
transport
26%

Figure 1. Percentage distribution of establishments by industry group (Source: ASPBI, 2014)

The sector had 138,573 employees in 2014 (see Figure 2). Of the total, 99.0% were paid employees
(137,251) and the rest were unpaid workers.6
Among the different industry groups, support activities for transportation had the largest number of
employees with 50,921 or 36.7%. Transport via buses ranked second, employing 30,001 people or
21.6%, and other land transport came in third with 17,120 or 12.4%. Figure 2 shows the distribution
of employment by industry group.

6Unpaid workers are mostly family members or apprentices and learners without regular pay who work for at least one-third
of the working time normal to the establishment.

10
 60
51
Employment (in thousands) 50

40 Total employment
30 138,573
30
17 18
20 14
9
10

0
support activities transport via other land sea and coastal passenger air all other
for buses transport transport transport industries
transportation
Industry

Figure 2. Distribution of employment of transport and storage establishments with total employment of
20 and over by industry group in the Philippines (Source: ASPBI, 2014)

By region, NCR was the highest employer with 81,266 employees (58.6%). CALABARZON came in
second with 11,051 employees (8.0%), closely followed by Central Visayas with 9,704 employees
(7.0%).
Value added for the sector was estimated at PHP155.3 billion (US$2.9 billion). Support activities for
transportation contributed more than half (55.6%) of the total value added, or PHP86.3 billion. Both
sea and coastal water transport and passenger air transport industries followed, with value added of
PHP18.5 billion or 11.9%. Inland water transport generated the least with PHP148.6 million. Figure 3
shows the distribution of value added for the sector.

100
Value Added (in billion pesos)

90
Value Added PHP 155.3B
80
70
60
50
40
30
20
10
0
support sea and passenger air transport via warehousing all other
activities for coastal water transport buses and storage industries
transportation transport
Industry Group

Figure 3. Value added for transportation and storage establishment with employment of
20 and over by industry group in the Philippines (Source: ASPBI 2014)

11
2.2. Logistics performance and challenges
The country’s Logistics Performance Index (LPI), as monitored by the World Bank, has been
deteriorating over the past six years. The Philippines ranked 44th out of 155 countries in 2010 and
71st out of 160 countries in 2016. Details of its LPI performance from 2010 to 2016 is shown in Table
1 while a comparison among selected ASEAN countries based on the 2016 LPI is shown in Table 2.
Table 1. Philippine LPI scores 2010-2016 (Source: World Bank, 2016)

Year LPI LPI Customs Infra- International Logistics Tracking Timeliness

Rank Score structure Shipments Competence and
Tracing

2016 71/160 2.86 2.61 2.55 3.01 2.70 2.86 3.35

2014 57/160 3.00 3.00 2.60 3.33 2.93 3.00 3.07

2012 52/155 3.02 2.62 2.80 2.97 3.14 3.30 3.3

2010 44/155 3.14 2.67 2.57 3.40 2.95 3.29 3.83

Note: Scores are out of 5 (5 being the perfect score).

Table 2. LPI scores of select ASEAN countries (Source: World Bank, 2016)
Country LPI LPI Customs Infra- International Logistics Tracking Timeliness
Rank Score structure Shipments Competence and
(out of Tracing
160)
Philippines 71 2.86 2.61 2.55 3.01 2.70 2.86 3.35
Singapore 5 4.14 4.18 4.20 3.96 4.09 4.05 4.40
Malaysia 32 3.43 3.17 3.45 3.48 3.34 3.46 3.80
Thailand 45 3.26 3.11 3.12 3.37 3.14 3.20 3.56
Indonesia 63 2.98 2.69 2.65 2.90 3.00 3.19 3.46
Viet Nam 64 2.98 2.75 2.70 3.12 2.88 2.84 3.50
Brunei 70 2.87 2.78 2.75 3.00 2.57 2.91 3.19

The worsening traffic congestion problem in the country is reflected in low scores on timeliness,
tracking and tracing, and logistics competence. The recent consolidation of logistics companies and
the entry of big players such as SM Investments and Chelsea Logistics can improve logistics
competence and move the sector away from being fragmented and dependent on small enterprises.
Reliability is also a challenge, as it is hampered by poor transport infrastructure and cumbersome
processes managed or regulated by different government agencies in an uncoordinated manner. The
2016-2017 edition of the Global Competitiveness Report7 placed the Philippines 8th among ASEAN
countries, beaten by Viet Nam, Lao PDR, and Cambodia. The Global Competitiveness Index (GCI)

7 Global Competitiveness Report 2016-17. World Economic Forum. (https://www.weforum.org/reports/the-global-

competitiveness-report-2016-2017-1)

12
measures national performance using 114 indicators that are grouped into 12 pillars, one of which is
infrastructure and connectivity. Table 3 shows the historical ranking of the Philippines in several
indicators within that pillar that assess the quality (extensiveness and condition) of road, port, and air
infrastructure.
Table 3. Philippine ranking in infrastructure indicators in 2012-2013 and 2016-2017 editions* (Source: WEF
Global Competitiveness Report)

Indicator 2012-2013 2016-2017

Quality of roads 87 106
Quality of railroad infrastructure 94 89
Quality of air transport infrastructure 112 116
Quality of port infrastructure 120 113
* The ranking shows the Philippines' position on each of the indicators among the economies covered by the respective
editions of the GCI. GCI 2012-2013 covered 144 economies, while GCI 2016-2017 covered 138.

In 2016, the World Bank surveyed the manufacturing logistics performance in selected provinces in
collaboration with DTI to better understand the granularity of varying transport and logistics costs
and to identify areas for cost reduction (Banomyong, 2017). The study revealed that the logistics costs
as a percentage of sales in the Philippines is 27.16%, which is higher than Thailand (11.11%), Viet
Nam (16.3%) and Indonesia (21.40%). Transport and cargo handling costs represent a significant
percentage of the sales (10.71%), followed by inventory carrying costs (8.78%), warehousing costs
(5.20%), and logistics administration costs (2.47%). Businesses in Mindanao8 have the highest logistics
costs as a percentage of sales (Table 4). Shippers in Metro Manila likewise find shipping to Hong Kong
or Taipei to be less expensive than sending their cargoes to some parts of Visayas and Mindanao.
Table 4. Logistics cost as percentage of sales, by region (Source: World Bank, 2016)

Logistics Costs/Sales Region Average

Transport and cargo handling cost (including Luzon 7.78%
transport packaging) Visayas 9.40%
Mindanao 10.93%
Warehousing (cost of running own warehouse or Luzon 3.94%
buying the service) Visayas 3.80%
Mindanao 5.79%
Inventory carrying cost (including cost of capital Luzon 4.17%
tied in inventory) Visayas 9.60%
Mindanao 10.85%
Logistics administration (10% of above costs) Luzon 1.59%
Visayas 2.28%
Mindanao 2.76%
Total Logistics Cost/ Sales Luzon 17.48%
Visayas 25.08%
Mindanao 30.32%
Source: Banomyong, Ruth (2017). The Importance of Measuring Philippines Logistics Performance [PowerPoint
presentation at PhilExport GMM, September 2017]

8 Most of their respondents were small- to medium-sized enterprises (SMEs).

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2.3. Transport infrastructure
As of 2015, 97.19% (31,242 km) of national roads, 61.80% (15,377 km) of city roads, and 28.65%
(31,075 km) of provincial roads were paved, and 347,160 linear metres of bridges along national roads
were made permanent. Road-based transport infrastructure is a key point of convergence with other
productive sectors, but its quality remains poor. Though the country’s air transport sector exceeded
by 25.8 percent its overall target increase of 52.51 million annual international and domestic passenger
volume, air traffic congestion remains an issue among the major airports. The lack of night-time flying
capabilities in other airports adds to the day-time airport congestion. Cargo transported through the
country’s port system increased from 166.40 million metric tonnes in 2010 to 223 million metric tonnes
in 2015. The country’s port system benefitted from a number of projects, but infrastructure quality
and operational efficiency still need to be improved. Overall, gaps in connectivity remain. A network
perspective must be adopted in mobilizing the government’s PHP 9 trillion ($180 billion) Build, Build,
Build programme to develop not only the landside, airside and portside facilities but also access roads.
The Philippine Development Plan (PDP) 2017-2022 intends to enhance the efficiency of the transport
sector to sustain economic growth and increase competitiveness by providing adequate, accessible,
reliable, and safe access for people and goods across the country, neighbouring regions, and the world
by implementing the following strategies:
– Physically link production areas to markets through road and rail-based transport, inter-island
water transport and logistics systems.
– Improve backbone services, such as financial, telecommunications, distribution, transport,
and logistics services to facilitate the movement of people, goods, services, knowledge, and
ideas as well as link firms, especially MSMEs, to domestic and global markets.
– Improve the business climate by implementing structural reforms to create more open, well-
functioning, transparent, and competitive markets, including the creation of a competent
national body for multimodal transport.
– Provide adequate infrastructure and logistical support to achieve connectivity, ensure efficient
flow of goods and services domestically and internationally, and lower the cost of production
and delivery.
Chapter 19 of PDP 2017-2022 focuses on addressing such transport issues, recognizing the inadequacy
of current transport systems vis-à-vis the growing demand. In the short term, road-based transport will
be improved by addressing traffic congestion through ‘engineering, enforcement, and education,’ but
the road network will ultimately be upgraded and expanded to the highest standards. The government
will exhaust all possible means to improve the operational efficiency of airports and to address capacity
bottlenecks. Port facilities will be improved to ensure that inter-island shipping, including a stronger
roll-on/roll-off (RORO) network, will remain a viable option for transporting people and cargo.
The government also plans to enhance trade facilitation and strengthen linkages and connectivity, and
review and implement laws, rules and regulations to reduce costs to exporters and importers as well as
facilitate and streamline procedures for engaging in trade.

2.4. Climate change and energy demand

The Philippine’s per-capita GHG emissions are relatively low at 1.6 tonnes of carbon dioxide
equivalent (CO2e) emissions in 2012 compared with the global average of 6.5 tonnes. However, the
14
trend is increasing with 4% annual growth between 2006 and 2012. The country’s GHG inventories
show an increase in transport emissions in absolute terms and relative to other sectors from 1994 to
2000 (see Figure 4).

Figure 4. GHG emissions from energy sector for 1994 and 2000, in MtCO2e (Source: DENR and Manila
Observatory, 2010)
Transport consumed the largest share of energy at 36.8% or 9,063 kilotonnes of oil equivalent (ktoe)
in 2010, which emitted about 15% of the total emissions of the whole country amounting to 23.5
million tonnes of carbon dioxide equivalent (MtCO2e).9 Almost 80% of energy consumed by the
transport sector was from road vehicles. Using 2010 data as baseline, a 2017 study by the Asian
Development Bank (ADB) projected the fuel consumption of the land sector up to 2050, as shown in
Figure 5. The projection shows that the demand for gasoline (or petrol) will be higher than diesel due
to a projected increase in private cars. Gasoline consumption is projected to increase by 900% while
diesel consumption by 400% from 2010 to 2050.

Figure 5. Projected fuel consumption of the road transport sector (Source: ADB, 2017)

9Source: Department of Energy. Key Energy Statistics 2010. https://www.doe.gov.ph/key-energy-statistics-

2010.

15
According to the same study, the corresponding annual emissions from road transport might increase
seven-fold to 139.9 MtCO2e by 2050, wherein trucks would account for 19% of total emissions (Figure
6). This contribution is significant given that trucks only account for about 5% of vehicles on the road.

Figure 6. Projected emissions of the road transport sector (Source: ADB, 2017)

2.5. Vehicle profile

The share of trucks in the Philippine’s total vehicle population has been about 5% in recent years but
it is the second fastest increasing vehicle class after motorcycles and tricycles, as shown in Table 5.
Table 5. Number of registered vehicles (Source: DOTC and LTO, 2007-2013)

Vehicle 2007 2008 2009 2010 2011 2012 2013 AAGR

class
Cars 744,830 755,108 776,155 804,825 824,829 849,047 868,148 2.6%
Utility 1,788,625 1,790,518 1,865,575 1,961,703 2,032,154 2,081,541 2,140,968 3.1%
Vehicle
Buses 30,113 29,703 33,006 34,909 34,434 33,564 31,665 1.0%
Trucks 281,128 296,121 311,496 317,774 329,309 341,505 358,445 4.1%
Motorcycles 2,647,263 2,982,296 3,200,961 3,482,139 3,881,449 4,116,682 4,250,667 8.3%
and tricycles
Note: AAGR= annual average growth rate
Source: Department of Transportation and Communications and LTO. Registered motor vehicles by
classification and region (2007-2013).
The 2017 National Logistics Master Plan (NLMP) estimates that as much as 80% to 90% of the current
truck population is more than 15 years old. In addition, the estimated GHG emissions from road
transport for 2007 was 23.8 MtCO2, of which 70% was from trucks and utility vehicles. Vehicles also
account for significant portion of other pollutants such as particulate matter (PM), carbon monoxide
(CO), nitrogen oxides (NOX), and volatile organic compounds (VOCs).
Table 6 shows the average loading by type of truck based on an origin-destination survey conducted
as part of the Study of Masterplan on High Standard Highway Network Development in the Republic
of the Philippines (JICA & DPWH, 2010). The same study found out that about 16% of trucks are
overloaded.

16
Table 6. Average loading by type of truck (in kg) (Source: JICA, 2010)

Type of Agriculture, Mining, Manufacturing Gross Net Average

truck Fishery, Construction Average Loading**
Forestry Loading*

2-axle truck 5,840 5,060 3,589 4,917 2,401

3-axle truck 14,069 13,990 11,509 13,323 6,943

Truck-trailer 16,067 18,197 11,911 15,663 8,294

Delivery van 3,370 2,960 1,760 2,573 1,559

Weighted 7,667 10,694 5,033 7,413 4,008

mean across
truck types
Notes: *Empty trucks are excluded
**Empty trucks are included
While overloading is a problem as it damages the road network and compromises road safety, empty
haul is a problem in terms of efficiency and fuel wasting. As reported by Castro (n.d.), about 79.4% of
trailer trucks and 62.4% of three-axle trucks entering Metro Manila are running empty (Table 7). Such
empty trips could be a significant driver of high freight transport costs in the Philippines as shippers
are usually charged for two-way trips.
Table 7. Percentage empty miles (Source: Castro, n.d.)

Type of truck Inbound (in %) Outbound (in %)

2-axle trucks 39.4 No disaggregated data available
3-axle trucks 62.4
Trailer trucks 79.4
Overall 56.1 35.4

For city logistics, a study titled Establishing of City Logistic Concept in Improving the Freight Distribution in
Metro Manila collected data on vehicle types used, vehicle weight and fuel consumption, as summarised
in

17
Table 8.

18
Table 8. Vehicle types and fuel consumption (Source: Cueto, et al., 2015)

Vehicle type/Application10 Gross Empty Typical Typical Typical fuel

weight weight payload fuel consumed (gal
range range capacity economy / 1000 tonne-
(lbs) (lbs) max (lbs) range in miles)
2007 (mpg)

Large pick-ups, utility vehicles, 8,501- 5,000- 3,700 10-15 38.5

multi-purpose, minibus, step 10,000 6,300
van

Utility vehicles, multi-purpose, 10,001- 7,650- 5,250 8-13 33.3

minibus, step van 14,000 8,750

City delivery, parcel delivery, 14,001- 7,650- 7,250 7-12 23.8

large walk-in, bucket, 16,000 8,750
landscaping

City delivery, parcel delivery, 16,001- 9,500- 8,700 6-12 25.6

large walk-in, bucket, 19,500 10,800
landscaping

City delivery, school bus, large 19,501- 11,500- 11,500 5-12 20.4
walk-in, bucket 26,000 14,500

City bus, furniture, 26,001- 11,500- 18,500 4-8 18.2

refrigerated, refuse, fuel 33,000 14,500
tanker, dump, tow, concrete,
fire engine, tractor-trailer

3. Policies and stakeholders

This section briefly describes the relevant stakeholders for freight and logistics efforts in the
Philippines, highlighting their roles and responsibilities and their interests in transport development.
The section also examines relevant policies and initiatives.

3.1. Stakeholders
Several institutions play an important role in the freight and logistics sector in the Philippines. Table 9
shows roles and responsibilities of key institutions from the government, the private sector (including
associations) and civil society.

10 Refer to https://blog.municibid.com/truck-classification/ for more details about truck classifications.

19
Table 9. Stakeholders in freight and logistics in the Philippines

Roles and responsibilities in relation to freight

Government agencies

Department of The DOTr is the primary policy, planning, programming, coordinating,

Transportation implementing and administrative agency to promote, develop and regulate a
(DOTr) dependable and coordinated transport network in the country. It has been
designated as the competent national body to accredit and supervise Philippine
multimodal transport operators, through the planned creation of the DOTr Office
of Multimodal Transport and Logistics (OMTL), which will place all freight
forwarders under the jurisdiction of a single agency.

Land Transportation The LTO is the attached agency of the DOTr responsible for the licensing of
Office (LTO) drivers and conductors, and inspection and registration of all private and public
vehicles nationwide.

Land Transportation The LTFRB is the attached agency of the DOTr responsible for regulating routes
Franchising and and issuing franchises, and which authorises the operation of public transport
Regulatory Board services. Relevant to freight activity, the LTFRB, as a regulatory entity, determines
(LTFRB) restrictions on equipment usage, vehicle rental, and fleet size as requirements for a
franchise.

Philippine Ports The PPA is an attached agency of the DOTr and is the lead executing and
Authority (PPA) regulatory agency in the planning, development, financing, operation, supervision,
and maintenance of ports and port districts in the country. As part of its
developmental function, the PPA prescribes rules and regulations that govern the
operation of ports or any structure within a port district, formulates a
comprehensive Port Development Plan to programme priority port development
projects, and provides and assists in the provision of training programmes and
training facilities for port operators and users. The regulatory functions of the
agency, which has financial autonomy, include setting and collecting of
administrative fees for port operations and services.

Maritime Industry The MARINA is the attached agency of the DOTr responsible for the registration
Authority (MARINA) and licensing of vessels, rationalisation of routes, zones or areas of operations, and
the setting of safety and operational standards for vessels. Moreover, the MARINA
inspects all vessels to ensure compliance with regulations, ensures the financial
capacity of operators to provide passenger and cargo services, and determines the
impact of new services on a given locality.

Department of Trade The DTI is the primary coordinating, promoting, and regulatory agency
and Industry (DTI) responsible for the trade, industry, and country investment activities, which
includes the logistics sector as a key investment area. The DTI collaborates with
the United Port Users Confederation and Procurement and Supply Institute of
Asia for the development of a comprehensive national multimodal transport and
logistics development plan. Broadly, the DTI is responsible in effectuating reforms
and mechanisms to address gaps in the logistics chain, such as, adopting and
implementing port promotion packages, and providing inputs in marketing and
pricing strategies to increase utilisation of ports. The DTI also promotes the

20
 establishment of new local-based trucking, freight forwarding and logistics
consolidation centres and inland container depots.

Supply Chain and The SCLAC is a high-level inter-agency advisory council established by the DTI
Logistics Advisory that oversees and monitors the implementation of the National Logistics Master
Council (SCLAC) Plan through the Trade Infrastructure Transport Logistics Working Group. The
SCLAC functions as a joint committee between the National Competitiveness
Council and Export Development Council, each having respective transport and
logistics committees. Composed of the DOTr, DOF, DOT, DPWH, NEDA,
DOST, DA, MMDA, DILG, and representatives from various industry
associations, the SCLAC conducts regular meetings to advance action plans and
submit policy recommendations and other programme-specific actions to the
Cabinet Economic Cluster. Included in the focus areas of the SCLAC are the
modernisation of selected domestic ports into regional hubs and the adoption of
climate change-resilient infrastructure.

Supply Chain and The SCLMD, which is under the DTI Competitiveness and Ease of Doing
Logistics Business Group (CEODBG), is responsible for the drafting of the National
Management Division Logistics Master Plan that aims to lower logistics costs, address challenges that
(SCLMD) affect the logistics industry, such as lack of infrastructure, and create a unified
strategy to streamline the process of trade and logistics. The SCLMD functions as
the secretariat to the SCLAC. SCLMD also formulates policies and measures
pertinent to supply chain, trade facilitation, and logistics to support exporters,
importers and traders. Moreover, the SCLMD supports traders through ensuring
competitive rates and equitable terms and conditions.

Export Development The EDC is a public-private partnership that is responsible for overseeing the
Council (EDC) implementation of the Philippine Export Development Plan and advocates policy
reforms to strengthen national exports, such as imposing or removing tariff
measures and other regulatory measures. The EDC also plays a key role in
providing inputs to adopt and implement port promotional and incentive packages
and in marketing and pricing strategies to increase port utilisation. The EDC forms
part of the SCLAC, which highlights its dominant role in the implementation of
the National Logistics Master Plan.

National The NCC-IWG forms part of the SCLAC, which highlights its dominant role in
Competitiveness the implementation of the National Logistics Master Plan. The NCC-IWG is
Council (NCC) – composed of members from the government agencies, such as the DPWH, DOTr,
Infrastructure DTI, FTEB, EDC, SCMAP, and foreign and local business chambers. A priority
Working Group (IWG) activity of the NCC is the promotion of a logistics hub in Luzon.

Fair Trade The FTEB, under the DTI, is responsible for the implementation of all restrictions
Enforcement Bureau on government and private cargoes that are loaded onto Philippine vessels. In
(FTEB) addition, the FTEB is responsible for the accreditation of maritime freight
forwarders

Department of The DENR is the lead agency in the overall implementation of the Philippine
Environment and Clean Air Act, which provides the policy framework for air quality management of
Natural Resources the country and which addresses air pollution from the transport sector. The
(DENR) DENR is among the key agencies that work on issues relating to climate change
mitigation and collaborates with DOTr in promoting and streamlining of

21
 environmentally sustainable transport (EST) activities. Included in the jointly
developed National Environmentally Sustainable Transport Strategy (NEST) is the
development of freight transport policies.

Department of Public The DPWH ensures the quality of infrastructure facilities and services, provides
Works and Highways criteria and standards for public highways, and is committed to road planning
(DPWH) activities pertinent to establishing the connectivity to the port areas. In addition,
the DPWH is responsible for determining and regulating vehicle weight limits. To
synchronise weighing operations and limits for each vehicle type, the DPWH
coordinates with other agencies and stakeholders.

Department of The BOC is mandated to assess and collect all tariff and customs dues, supervision
Finance (DOF) - and control over the entrance and clearance of import and export cargoes, landed
Bureau of Customs or stored cargoes in piers, airports, terminal facilities, container yards, and freight
(BOC) stations. The BOC also implements technology for customs management and is
directed towards an agenda of undertaking the automation of lodgement entries,
payments, cargo release, accreditation of importers, provision of IT support
facilities and equipment, and capacity building.

Metro Manila The MMDA is the government regulatory and supervisory authority that is
Development responsible for the delivery of services, which includes transport and traffic
Authority (MMDA) management, within Metro Manila. Specifically on traffic management, the
MMDA is responsible for the enforcement of traffic operations, including the
Truck Ban Ordinance, which prohibits the operation of cargo trucks on assigned
times of the day in Metro Manila.

Philippine Economic The PEZA is tasked with promoting investments, extending assistance to,
Zone Authority registering, granting incentives to, and facilitating the operations of economic zone
(PEZA) facilities that provide warehousing and logistics services.

Freight associations

Philippine PISFA is a recognised association of the freight forwarding industry composed of

International private and government entities that promotes exchanges on freight forwarding
Seafreight Forwarders practice and management. The PISFA also initiated the development of the
Association, Inc. Philippine Multimodal Transport and Logistics Roadmap that identifies key
(PISFA) challenges and gaps in the logistics industry and provides recommended activities
and strategies for the sector. PISFA also conducts training courses on freight
forwarding.

Confederation of CTAP is an organisation of truckers that allows its members to freely negotiate
Truckers Association trucking rates and is active in the discussions with government on the plan for re-
of the Philippines fleeting to phase out trucks older than 15 years.
(CTAP)

Association of AISL is a leading international container shipping association in the country that
International Shipping influences and provides policy inputs on shipping operations. AISL also introduces
Lines, Inc. (AISL) reforms in shipping and port operations that would enhance the efficiency of cargo
movement to meet international standards. An integrated system implemented by
the AISL involves a web-based 24-hour integrated truck dispatching, appointment,

22
 and booking system to retrieve empty containers is designed to interconnect
shipping lines, truckers and depots.

Private sector, government-recognised groups

International ICTSI is a port management company in the Philippines responsible for the
Container Terminal management, operation and development of container terminals and directly
Services, Inc. (ICTSI) operates the Manila International Container Terminal. Responsibilities include
port management, operations, administration, port development and construction
including planning and programming the supply of all equipment.

Philippine Chamber of PCCI is the local business chamber that is recognised by the government and
Commerce and international institutions that partners with government, other business chambers
Industry (PCCI) and organisations through providing technical inputs on efforts and initiatives that
affect competitiveness. PCCI leads the PCCI INVEST initiative that includes
advocating and monitoring developments in the logistics and transportation sector.
Jointly with the SCMAP and the FEDFAP, the PCCI implements the Certified
Logistics Master Plan (CLMP), a comprehensive practitioner-oriented certification
programme that professionalises the logistics industry. The PCCI is also actively
engaged with the DTI-NCC-IWG in discussing issues in infrastructure,
transportation and logistics.

Development agencies, multilateral institutions, banks

Japan International JICA extended loans for a logistics infrastructure development project that
Cooperation Agency involves the provision of distribution infrastructure to optimise maritime and intra-
(JICA) island transportation. The project covers terminal systems, toll roads, local
government unit (LGU) roads, and maintenance equipment, packaging,
distribution facilities. JICA also conducted the Masterplan on High Standard
Highway Network Development that established cargo movement patterns.

United States Agency USAID, through the “Advancing Philippine Competitiveness (COMPETE)
for International Project”, submitted a comprehensive study on a National Logistics Master Plan
Development for enhancing the Philippine logistics sector, which includes key actions for
(USAID) implementation in the short and medium term (2016-2022).

International Finance IFC-WB implements the Logistics Efficiency Indicator (LEI) Project, which aims
Corporation - World to create a logistics database that can be used for decision making and policy
Bank (IFC-WB) development. LEI will identify at least 3 to 5 key significant logistics indicators (e.g.
customs dwell time and logistics cost).

Other stakeholders

Academic institutions Academic institutions such as the University of the Philippines - National Center
for Transportation Studies (UP-NCTS), UP National College of Public
Administration and Governance (UP-NCPAG), and De La Salle University
(DLSU) have played a key role in research on urban goods movement, commodity
flow, transport measures, and effects of policies. Data gathered could be used to
assess trends in the transport and logistics industry.

23
 External Engagement DTI-SCLMD participated and required engagement in various supply chain and
and Participation logistics international technical working groups meetings, conferences and related
events where the Philippines has an international commitment (e.g. ASEAN-IMO,
APEC, UNESCAP-ICT Logistics, among others).

3.2. Policies and initiatives

Recent discussions among relevant government agencies have identified DOTr as the competent
national body to accredit and supervise Philippine multimodal transport operators. The Executive
Order to formalise the creation of the DOTr-Office of Multimodal Transport and Logistics (DOTr-
OMTL) is in the pipeline for signature. The Executive Order will place all freight forwarders under
the jurisdiction of a single agency, the DOTr-OMTL. Under the current setup, sea freight forwarders
are accredited and supervised by the DTI-Fair Trade Enforcement Bureau (DTI-FTEB) while air
freight forwarders are under the jurisdiction of DOTr-Civil Aeronautics Board (DOTr-CAB). DOTr-
OMTL will also accredit and supervise operations of cargo and delivery vehicles, which is currently
being undertaken by the Land Transportation Franchising and Regulatory Board (LTFRB).

Logistics services
The freight forwarding industry is not highly regulated. The primary regulatory requirement for service
providers wanting to enter the market is accreditation by the Philippine Shippers’ Bureau, a unit under
the DTI. A firm cannot operate a freight forwarding business without a Certificate of Accreditation
that is valid for two years. Prices are not regulated, and entry and exit are dictated by market forces
(Llanto, Navarro, Detros, & Ortiz, 2013).
A major investment restriction in the logistics industry is the 60:40 rule on Filipino equity-foreign
equity mix that also applies to foreign investments in domestic freight forwarding business in
accordance with the Corporate Code of the Philippines. DTI is spearheading the Project Repeal to
repeal/amend the Public Service Act to delist transport and logistics from the list of public services
enumerated in the Act requiring the 60:40 Filipino equity-foreign equity mix.11 It is intended that the
opening of the logistics industry to foreign players will: (i) provide consumers with alternative transport
service providers that can meet their consumption preferences; (ii) increase positive pressure for
transport service providers to improve their services amidst competition from foreign entities; and (iii)
drive down consumption costs for both cargo shippers and passengers.

Land transportation
For land transport services supporting the logistics supply chain (e.g. trucking services), the LTFRB
was set up under Executive Order (EO) 202 series of 1987 as the economic regulator. Economic
regulation covers regulation of routes and franchises to operate vehicles. The LTFRB also examines
the appropriateness of the vehicle before granting approval of the franchise. For example, if the
cargoes would be perishable goods or liquefied petroleum gas, the trucks to be used by the applicant

11 Project Repeal is a systematic way of studying rules, regulations, regulations and laws that have outlived their
relevance or have been overtaken by developments. It is an initiative to clean up regulations and legislation by
repealing provisions or rules that are no longer necessary or may be detrimental to the economy.

24
should be technically equipped to handle such items. The LTFRB also regulates the maximum age of
utility vehicles (15 years from manufacture) but this is not yet being implemented at the time of writing.

Vehicle age
DOTr issued Department Order (DO) 2017-09, which reinforces DO 2002-030 on the mandatory 15-
year age limit for buses and trucks for hire covered by Certificate of Public Convenience (CPC).
Enforcement of DO 2017-09 will require truckers to submit a certificate of date of manufacture, such
as a sales invoice or other competent document. As per DO-2002-030, a unit that exceeds the
minimum age, as specified by the time of expiration of the covering CPC, cannot file a new application
for franchise, for extension of the validity of CPC, for substitution of unit, of for an increase in the
number of units. A joint memorandum circular (JMC) from LTO and LTFRB is supposed to be issued
within 30 days of effectivity of DO 2017-09 to implement the mandate of the policy. However, the
JMC remains unreleased as DOTr is still considering the inclusion of roadworthiness as a possible
main criterion, rather than vehicle age, in determining truck performance, as advocated by trucking
associations.

Overloading
DPWH and DOTr, through the Land Transportation Office (LTO), enforce the anti-overloading law
with the operation of 24/7 weighbridge stations and portable weighing machines at strategic locations
through Anti Truck Overloading Mobile Enforcement (ATOME) along national roads, and the
imposition of penalties on overloaded vehicles. The anti-overloading policy is pursuant to the
provisions of Republic Act 8794 otherwise known as An Act Imposing a Motor Vehicle Users Charge
on Owners of all Types of Motor Vehicle and for Other Purposes. This aims to promote motorist
safety and prevent early deterioration of roads caused by overloading. Under the law, overloaded trucks
are fined 25% of the Motor Vehicle User’s Charge (MVUC) applicable to the vehicle at the time of
infringement.
The maximum allowable gross vehicle weight (GVW) under Code 12-2 for trucks consisting of semi-
trailers with three axles at the motor vehicle and two axles at the trailer, for a total of 18 wheels, has
been 41,500 kg since January 1, 2018, while the maximum GVW under Code 12-3 for trucks consisting
of semi-trailers with three axles at the motor vehicle and three axles at the trailer, for a total of 22
wheels, has been 42,000 kg. The previous deadline for these limits of 30 June 2017 was moved as per
requests from the Confederation of Truckers Association of the Philippines (CTAP).
DPWH issued DO-22 series of 2011 on minimum pavement thickness and width of national roads to
upgrade the design standards of national roads to avoid early deterioration of pavement due to
uncontrolled overloading. The agency is also looking at the possibility of using intelligent transport
system (ITS) for contactless apprehension12 and at the same time, is being more proactive in creating
awareness among truckers the extent of damage subjected to the road by overloading.

Emission standards
The DENR Department Administrative Order No. 2015-04 was issued in 2015, mandating that all
new vehicles to be used or introduced in the Philippine market by January 1, 2016 be equipped with

12 For more information, refer to: http://www.mmda.gov.ph/20-faq/2040-no-contact-traffic-apprehension-policy-11-

things-you-need-to-know.html.

25
Euro 4/IV engines and compliant with Euro 4/IV emission limits/standards. Then, from 1 January
2018, all vehicles purchased, including trucks, must be equipped with Euro 4/IV engines and be
compliant with Euro 4/IV limits/emission standards. Pursuant to Republic Act 4136, otherwise
known as the Land Transportation and Traffic Code, motor vehicles, including heavy duty, are
required to register annually at LTO. Requirements include Certificate of Emission Compliance (CEC)
which is secured from private emission testing centres upon the mandatory inspection. The veracity
of the results of the emission tests are in question as there are reported cases of falsification for profit
of private emission testing centres. This issue can be rectified once a government-controlled and -run
motor vehicle inspection system is in place.

Clean Air Act

The Clean Air Act of 1999 is a comprehensive air quality management policy and programme which
aims to achieve and maintain healthy air for all Filipinos. It outlines the government’s measures to
reduce air pollution and incorporate environmental protection into its development plans. However,
until now, it has not been fully enforced. The Clean Air Act sets the national total suspended particulate
matter (TSP) target of 90 µg/Ncm but recorded data have exceeded it. Annual average concentration
of PM10 and PM2.5 levels at monitoring stations close to roads often exceed the national ambient air
quality standard of 60 µg/Ncm, according to the 2012-2014 data of the Environmental Management
Bureau. Incidentally, there is a growing awareness of the health impacts of air pollution to health,
estimated at $2.5 billion or about 1.55% of GDP in 2009 (Asian Development Bank, 2009), which
magnifies the urgency to find low-emission and low-carbon transport alternatives, including for
handling freight and logistics.

Intended Nationally Determined Contribution (INDC)

The Philippines’ INDC to the Paris Agreement on Climate Change pledges to reduce emissions by
70% relative to business-as-usual by 2030, if sufficient international financial and technical support is
provided. The 70% goal is among the highest reduction values pledged by a country but the Climate
Change Commission (CCC) is currently consolidating inputs from various sectors to align the country's
development agenda and timeline with the emission reduction goal.

Other relevant policies and projects related to transport and logistics

Table 10 below shows a summary of current and future policies and projects, which are not limited to
road transport, as envisioned by respective agencies. It also shows the status and plan of action of the
different initiatives.
Table 10. Future policies and plans on freight and logistics

Policy / Plans Description Status Responsible

agency

Improvement of Broadly outlined as a future priority Plan of DoTr

freight action listed in the Philippine National action
transportation Implementation Plan on Environment
complex, truck Improvement in the Transport Sector
terminals and (NIP)
physical distribution
centres

26
Regulatory reforms Includes: the removal of opportunities Proposed DoTr,
to improve shipping for incumbents to object to the granting reform MARINA,
services of a certificate of public convenience; the PPA
removal of dry dock requirements and
repair of domestic ships exclusively in the
Philippines; facilitating the chartering of
foreign vessels to operate in domestic
routes by clarifying tax liabilities; the
replacement of PPA share of cargo
handling fees with a fixed rate to reduce
conflict of interest; and providing more
information on cargo flows and
passenger services to the public

MMDA Resolution Covers cargo trucks that are identified Implemented MMDA
No. 3, s.2015: through license plates, including trucks,
Reimplementing of vans, tankers or other delivery vehicles,
uniform truck whether loaded or empty, having a gross
regulation in Metro capacity weight of more than 4,500 kilos
Manila are not allowed to pass along 10 major
routes, and a total truck ban is
implemented in EDSA except on
Sundays and holidays; Violation of the
Truck Ban Ordinance is subject to a fine
of PHP500-2000 ($10-40) or
imprisonment of 7-30 days.

RA 9295 Domestic Lays out investment incentives, Implemented DoTr,

Shipping deregulation of the shipping industry and MARINA
Development Act of authority of MARINA, setting of cargo
2004 rates, shipbuilding and ship repair.

Certification system International certification standards on Implemented DENR

for low carbon environmental management systems is
companies adopted in the Philippines as a national
standard. The Philippine Environment
Partnership Program (PEPP), pursuant to
DENR Administrative Order No. 2003-
14 encourages establishments to adopt
mandatory self-monitoring and
compliance to environmental standards
by awarding those with superior
environmental performance with DENR
Official Seal of Approval.

27
Tax incentives for Executive Order No. 396 of 2004 reduces Implemented DOE,
efficient vehicles import duties for hybrid and CNG Bureau of
vehicles; EO no. 397 of 2004 reduces the Customs
rates of import duties on completely
knocked-down parts and components for
assembly of low engine displacement and
hybrid vehicles; several bills have also
been submitted on incentivizing
alternative fuel vehicles.

National Logistics Focuses on infrastructure development Final draft DTI - Supply

Master Plan (countryside development via logistics available, Chain and
(NLMP) corridors, roads and bridges awaiting Logistics
development), capacity enhancement of launching of Management
agencies in planning and regulation and NLMP Division
policy implementation, transport
regulation, and logistics resiliency;
creation of an advisory committee that
will oversee and monitor the
implementation of the roadmap.

Philippine Private sector roadmap that is recognised Launched Philippine

Multimodal by DoTr’s NIP and DTI’s NLMP; lines International
Transportation and up strategies in a phased approach to Seafreight
Logistics Industry address issues on the logistics sector. This Forwarders
Roadmap includes capacity building (phase 1), Association
capacity extension and efficiency
enhancement (phase 2), and integrated
multimodal logistics (phase 3)

Executive Order Promotes collaboration between private Implemented DOTr (PPA,

170, series of 2003 sector and LGUs in the establishment of MARINA) &
RORO links as part of the national Cebu Ports
Promoting private highway network. Vehicles under their Authority
sector participation own power passing through such links (CPA)
and investment in shall not be burdened by transport
the development procedures and costs, unless otherwise
and operation of the provided by law.
road roll-on/roll-off
(RO-RO) Terminal
System

28
 Public-Private Among the task forces created by this Implemented DTI,
Sector Task Force policy, a Task Force on Logistics was NEDA,
established. This task force envisions the DoF, Tariff
Under EO 372 (Oct Philippines as becoming a world-class Commission,
2006) logistics hub. To attain the task force’s Bureau of
goal, it focuses on the consolidation of Customs
logistics services especially in automotive,
appliance, food, and electronics sectors.

4. Road freight sector assessment

Road transport is the predominant mode of moving cargo in the Philippines. Roads carry 58% of cargo
traffic in the Philippines (water: 41.95%; air: 0.06%), and freight is mostly by truck fleets owned by
small and medium enterprises (Asian Development Bank, 2012). It also links other modes, particularly
ports and airports. As commercial activities multiply as a result of enhanced economic growth, logistics
and last-mile distribution will become even more critical. A JICA study in 2010 revealed that truck
trips per day are estimated to reach 1 million by 2030, of which 60% will be in Metro Manila. In 2013,
53% of all trucks in the Philippines operated in Luzon. (LTO, 2013).
There are opportunities to minimise the impact of road freight transport and make the logistics sector
more environmentally sustainable by shifting road freight transport to other modes such as rail and
water transport. However, the present assessment will focus only on road freight transport, specifically
on trucks, to identify actionable short- and medium-term opportunities to green the freight and
logistics in the country.
Availability of disaggregated data on truck fleets is scarce. A primary survey was conducted for this
study to gather a decent sample size to be able to characterise the logistics industry that uses trucks,
understand current operations, and identify potential measures to improve its overall performance.

4.1. Freight assessment survey for trucking companies

In consultation with DOTr, DTI and GIZ, Clean Air Asia partnered with DTI’s Supply Chain and
Logistics Management Division (DTI-SCLMD) to conduct surveys, focus group discussions (FGDs),
and workshops in eight cities including La Union (Region I), Tuguegarao (Region II), Balanga (Region
III), Tagaytay (Region IVA), Puerto Princesa (Region IVB), Bacolod (Region VI), Zamboanga (Region
IX) and Metro Manila (NCR). The said workshops were conducted between September to December
2017.
The green freight survey was conducted on the sidelines of DTI-SCLMD roadshows, wherein DTI-
SCLMD and the World Bank (WB) shared results and validated information gathered for the Logistics
Effectiveness Index (LEI) study, which was administered by DTI-SCLMD and supported by the WB
in 2016. Complementing the LPI monitored by WB, the LEI study intends to pinpoint specific
indicators that make logistics costs in the Philippines relatively high compared to other ASEAN
countries, and to explore measures on how it can be lowered.
While the LEI-related discussions delved more into trade facilitation aspects, the green freight
component provided a venue to focus on transport-related problems enriching the depth of focus
29
group discussions (FGDs) and/or workshops with invited SME representatives and local
policymakers. The FGDs and workshops engaged a wider audience composed of SME representatives
from various industries, government officials, local policymakers, academia and local NGOs. The
discussions often revolved around the inadequacy of available transport infrastructure, lax
enforcement of rules, regulations and standards, the lack of funding, and spatial concerns affecting
locations of key logistics facilities. It also provided an open venue to raise awareness of the importance
of greening the freight industry. It is valuable that trucking and logistics companies understand,
embrace, and appreciate efforts to shift to green freight, and to prefer green freight services if available.
The green freight survey was structured to gather information on the following aspects: (i) profile of
respondent companies; (ii) fleet characteristics; (iii) trucking operations; (iv) vehicle fleet management
and maintenance practices; (v) fuel-saving technologies and strategies; (vi) emissions reporting; and
(vii) institutional framework and Green Freight Programme planning.

4.1.1. Profile of respondent companies

Demographics of respondents
A total of 75 respondents from 10 regions were surveyed during the eight roadshows. It should be
noted that respondents from some regions joined workshops in their respective neighbouring regions.
This sample represents about 5% of truck operators nationwide. In 2014, LTFRB received 33,000
applications from truck operators, of which 2,145 have port-related operations. About 1,634
applications for CPC for trucks for hire were approved, with some franchises covering applications
for more than one truck unit (Almonte, 2014). The archipelagic nature of the country is captured by a
well-distributed sample size wherein 29% of respondents were from island provinces, 4% from
Mindanao and 67% from Luzon as shown in Figure 7.
Region IX Cordillera Administrative
Region VII 7% Region (CAR)
5% 4%
Region VI
4% NCR
15%
Region I
3%

Region IVB
24%

Region II
25%

Region IVA
3% Region III
11%

Figure 7. Demographics of the green freight survey respondents

Profile of respondentsFigure 8 shows that out of 75 respondents, 88% are engaged in trucking services,
25% are freight forwarders, 8% are third-party logistics providers and 25% are truck owners engaged
in businesses such as hardware, palay (unhusked rice grain) trading, and the provision of farming
supplies. Note that some of the companies offer dual services, providing trucks for hire as well as
trucking services. A company may even have multiple lines of business, for example freight forwarding,

30
third-party logistics, and other activities. Seasonal demands can trigger companies to engage in more
than one type of business.

70
60
No. of respondents

50
40
30
20
10
0
Third party logistics Freight forwarder Others Trucking
Figure
8. Number of companies by nature of business
The respondents are mostly SMEs, with 43 out of 75 companies under sole proprietorship and
registered under the DTI, while 27 companies are corporations registered under the Securities and
Exchange Commission (SEC). Five respondents did not specify the status of their business.

Types of goods transported

Most of the companies transport agricultural products, both raw and processed, as shown in Figure 9.
Other dominant cargoes are construction materials and manufactured items. The profit margin of
those transporting raw agricultural products is tight, so transport costs are often squeezed, resulting in
turn in overloading and the use of old and dilapidated trucks.
Those transporting manufactured items usually have negotiated time schedules for the delivery of
goods, so time and reliability are essential to avoid penalties for delays. Few companies follow just-in-
time delivery operations, but it is becoming more popular for delivery of high-value products such as
medicines and other pharmaceutical supplies.
45
40 52%
48%
35 44%
No of companies

30
35%
25 29%
20 24%
15
10
8%
5
0
Others
goods
(computers Processed Constructi
Consumer Manufactu
Minerals and agricultural on Agriculture
products red items
gadgets, products materials
documents
etc)
Number of companies 6 18 22 26 33 36 39

Figure 9. Types of goods transported

31
Truck delivery routes and frequency of trips
Most trucks are registered to operate to any point of Luzon. However, as shown in Figure 10, only
17% said that they operate on a national (or inter-regional, e.g. Region I to Region II) scale. About
42% have regional operations that cover inter-provincial transport of goods (e.g. Cagayan to Isabela
or Palawan to Romblon) while 21% of the companies have provincial operations that cover inter-city
or inter-municipality route delivery (e.g. Quezon City to Makati City, or Meycauayan to Guiguinto,
Bulacan). There are also those that operate at a city level or cover short distances for delivery purposes.

international barangay or short distance

0% (less than 10 km)
national 5%
17% city or municipal
15%

provincial
21%

regional
42%

Figure 10. Truck delivery routes

About a quarter of the respondents indicated a range of 1 to 10 trips per month for those operating at
a national scale while 17% of respondents have 11 to 20 trips per month. About 8% usually do 21 to
40 trips per month, while those operating on short distances, 11% of respondents, said their trips range
from 41 to 80 trips per month.

Profile of employees
As mostly SMEs, more than half of the respondents have 1 to 10 employees including drivers,
administrative staff, mechanics and other staff. Other staff include labourers (full-time and/or
seasonal), ‘kamaderos’13 and checkers. Some respondents do not employ mechanics in-house and only
seek their services during routine maintenance or mechanical problems. Figure 11 shows the
breakdown of employees.
Demand for trucking services is seasonal, especially in agricultural regions. One respondent from
Region II, a trader of palay (unhusked rice grain), shared that they tend to employ more staff during
harvest seasons, usually from April to May, and October to November.

13Kamaderos (n). Tagalog word for a person who organises and loads goods in the trucks. It is from its root word
kamada or an orderly pile of goods.

32
 Number of Drivers
2% 7% 41 to 60
7%
61 to 70
From 70 and above
21 to 40
57% 27% no answer
11 to 20
1 to 10

Number of Mechanics

7%

1 to 10
37% as needed
56% no answer

Number of Administrative Staff

3% 1 to 10
14%
1% 11 to 20
1% 21 to 40
4%
41 to 60
8% 61 to 70
From 70 and above
69% Others
no answer

Number of Other Employees

8% 3% 0%
1 to 10
10% 11 to 20
21 to 40
8% 52% 41 to 60
61 and above
Others
19% none

Figure 11. Number of employees

33
4.1.2. Fleet characteristics
Table 11 shows that the enterprises use both articulated and rigid trucks.14 The highest number of
trucks were used for dry, general goods. In that category, 57% of trucks were rigid, with an average
tonnage in the range from 15 to 50, and 43% were articulated, with tonnage ranging from 25 to 50.
Results also show that the use of light commercial vehicles is widely used especially for deliveries up
to 5 tons.
Table 11. Types of trucks used by type of goods

Type of goods Rigid/ No of Percentage Average

articulated trucks/unit per type tonnage

Dry, general goods R 251 57% 15 to 50 tons

A 186 43% 25 to 50 tons

Refrigerated goods R 81 19% 5 to 30 tons

A 335 81% 5to15tons

Flatbed transport R 69 27% 25 to 50 tons

A 187 73% 25 to 50 tons

Liquid or bulk goods R 19 63% 5 to 40 tons

A 11 37% -

Re-use/recycle R 12 67% 5 to 50 tons

A 6 33% -

Specialty or others R 6 50% -

A 6 50% -

Light commercial 389 100% Up to 5 tons

Container chassis A 61 100% -

Most respondents (85%) indicated that their fleets were composed of trucks with manual transmission.
They preferred this type of transmission because of its lower price. Some of the respondents also said
that trucks with manual transmission have more available parts in the market and can be repaired more
easily compared to trucks with automatic transmission. Only 10% of the respondents said that they

14 A rigid truck is a vehicle with two axle sets, a driver’s position, a steering system, motive power and a single
rigid chassis while an articulated truck is a vehicle which has a permanent or semi-permanent pivot joint in its
construction, allowing the vehicle to turn more sharply.

34
selected automatic transmission vehicles for the convenience of the driver, which results in faster
turnover for deliveries especially on long hauls.
Vehicle age, especially for trucks, is a contentious issue. Often, owners only count the years since their
purchase of a vehicle, even if second hand. Some used vehicles are packaged as refurbished, some even
claiming as good as brand new, without disclosing prior years of service. As shown in Figure 12, 30
companies said that their fleet vehicles have average age of 4-6 years, while 23 companies had fleets
that average a vehicle age of 7 to 10 years. Eleven companies answered that their trucks were relatively
new at 1 to 3 years old. Nine of the companies answered that their vehicles were 11- 15 years old. It is
interesting to note, however, that only 1 company said that the vehicles in its fleet were older than 15
years.

9% 15%
1%

12%

23% 40%

1-3 years old 4-6 years old 7-10 years old

11-15 years old Over 15 years old No answer

Figure 12. Average age of truck fleet

4.1.3. Trucking operations

Monitoring empty miles
Freight efficiency can be determined through the amount of freight hauled per litre of fuel used. Dead
mileage or empty miles is when a truck or trailer operates without carrying cargo. It is important to
monitor empty miles to limit fuel wastage and increase freight efficiency. Figure 13 shows that more
than half of the companies or 59% said that they monitor this, while 28 companies or 37% said
otherwise. Three of the respondents did not provide an answer.
Out of the 44 companies that monitor their empty miles, 50% said that empty miles consist of 21 to
30% of their total trips while five companies (11%) said about 1 to 10% and 18 companies (39%) said
11 to 20% of their trips run empty.

35
 4%

37%

59%

yes no no answer

Figure 13. Responses of companies when asked if they monitor empty miles

Allocation of operating expenses

Figure 14 shows that 48% or 36 of the respondents said that around 21 to 30% of their expenses is on
fuel costs while 14 or 19% of the respondents said fuel expenses is around 31 to 40%. Seven
respondents or 9% said that as high as 51% to 60% of their operational expenses goes to fuel costs.
On the average, fuel costs accounts for about one-third of their operating expenses.

1% 1%
10%
17%
4%
1 to 10%
11 to 20%
21 to 30%
19% 31 to 40%
41 to 50%
51% and above
No Answer

48%

Figure 14. Distribution of respondents based on how much they allocate for
fuel costs out of the total operational costs

On maintenance costs, 42 respondents or 56% said that around 11 to 20% of operational expenses is
allotted to maintenance costs of their fleets, shown in Figure 15. This includes oil changes, brake
maintenance, part replacements and repair, and repainting among others. Four respondents said that
they spend up to 50% of operational expenses on maintenance. When asked further, they responded
that some of the units in their fleets are old and require more repairs and rigid maintenance. One also
indicated that they purchased cheap trucks with low quality which would need more repairs over time.

36
 5% 1% 3%
7%
19%
1 to 10%
9%
11 to 20%
21 to 30%
31 to 40%
41 to 50%
51% and above
No Answer

56%

Figure 15. Distribution of respondents based on how much they allocate for
maintenance costs out of the total operational costs

Depicted in Figure 16 are the responses of companies regarding salaries and other benefits for their
employees. A total of 44 respondents (59%) said that up to 30% of their operational expenses goes to
salaries of their employees while 17 respondents (23%) indicated that salaries of their employees cover
up to 20% of their operational expenses.
0% 1%
5% 3%
9%
23%
1 to 10%
11 to 20%
21 to 30%
31 to 40%
41 to 50%
51% and above
No Answer

59%

Figure 16. Distribution of respondents based on how much they allocate for salaries and
compensation out of the total operational costs
Other operational expenses include registration fees, business permits, fees for truck stickers, lagay or
under-the-table payments, overhead expenses, and food of employees, insurance, among others.
Twenty-four of the respondents (32%) said that around 20% of their operational expenses go to the
payments, and two of the respondents or 3% said that they go beyond 50% of their operational
expenses due to unexpected payments especially when their trucks are apprehended for violating the
truck ban or are towed.
Based on the results, fuel expenses consist of around 30% of the overall operational expenses, an equal
share as salaries. Up to 20% goes to maintenance costs, and the same goes to other operational
expenses.

37
Measures to maximise fuel efficiency

When asked about what measures to maximise fuel efficiency they are familiar with, 87% (65 out of
75) of the respondents said that they use different measures with the hope of reducing their expenses
on fuel and increasing the longevity of their trucks. The remaining 13% said that they have not availed
themselves of any measures to maximise fuel efficiency. When asked why these companies were not
using measures, respondents gave answers ranging from a lack of technical knowledge on new
technologies, to high costs for such measures, to a belief that the measures would not have much
impact on fuel efficiency.
For the respondents who are using measures to maximise fuel efficiency, preventive maintenance tops
the list with 61% of 65 respondents doing it followed by tire pressure monitoring at 57%, route
planning and management at 56%, and wheel alignment checks at 51% as shown in Figure 17.

Preventive maintenance 46
Tire pressure monitoring 43
Route planning and management 42
Wheel alignment 38
Consistent monitoring of fuel efficiencies of… 32
Enforcement of company policies (e.g. idling… 29
Consider fuel efficiency as a main criteria for… 28
Conduct drivers’ training (eco-driving) 25
Vehicle speed limiters 16
Low-viscosity oils and lubrication 14
Tire inflation systems
Measures

14
Improved efficiency accessories 11
Lightweighting via material substitution 11
Idle reduction technology 11
Engine efficiency technologies 10
Truck aerodynamics 10
Transmission technologies 9
Improved efficiency axle configuration 5
Low rolling resistance tires 4
Trailer aerodynamics 4
In-cab fuel efficiency coaching software 3
Others 2
Telematics and fleet management software 1
0 5 10 15 20 25 30 35 40 45 50
No. of respondents

Figure 17. Measures to maximise fuel efficiency

According to the respondents, the top four answers are the most practical measures to be employed
without much additional investment. They also said that those measures are required to properly
maintain their fleets. Some respondents shared that they are not familiar with some measures listed
and are interested to know more about them.
On monitoring their fleet fuel efficiency, more than half or 39 companies (52%) said that they measure
their fleet’s fuel efficiency, as shown in Figure 18. Some of the respondents use downloadable mobile
applications that compute fuel usage and evaluate driving performance, while some of the respondents
38
use logbooks to monitor fuel consumption and manually compute against distance travelled. Some
more advanced companies use scan gauges to keep track of everything from fuel cost to distance
travelled. However, some truck owners said that this kind of technology requires additional
investments.

No answer
16%

Not applicable
1%

Yes
52%

No
31%

Figure 18. Monitoring fleet fuel efficiency

Of the 39 companies that answered the question on measuring fuel-saving effectiveness of a new
technology or feature that they invested in, 16 of the respondents said that they measure or monitor
the effectiveness of a technology after investing while 24 of the respondents skipped the question.
When asked about their motivation to measure, they said it was to know whether their investment is
worth it and to know better technologies that they should invest more in. However, 35 of the
respondents said that they do not measure the effectiveness of the technology or feature. Respondents
that answered ‘no’ said that they are yet to design a monitoring and evaluation mechanism to evaluate
the effectiveness of the measures they have invested in.

4.1.4. Vehicle fleet management and maintenance

The respondents were asked to rank the factors they consider when buying a truck with 1 as the highest
priority and 8 as the least priority, as shown in Figure 19. Results show that cost of unit is the highest
priority with an average ranking of 1.84 followed by fuel efficiency at 1.95 while companies ranked
aftersales service and country of origin as their least priorities at 5.46 and 4.76, respectively.
When buying a truck, 32% said that they prioritise investing in a brand-new unit to ensure quality and
to not have to worry about repairs for three years. About 27% of the respondents said that they usually
invest in second-hand vehicles. Some of the respondents who prioritise buying second-hand said that
they usually have mechanics to check whether the units are still in good condition or will only require
minor repairs. Interestingly, 31% of the respondents said that they usually invest in a mix of brand
new and second-hand units depending on the need or situation.

39
 Cost 1.84

Fuel efficiency 1.95

Brand and model 3.52

Factors in buying

Power 3.57

Emission standards 4.63

Body Configuration 4.64

Country of origin 4.76

After sales service 5.46

0.00 1.00 2.00 3.00 4.00 5.00 6.00

Average ranking

Figure 19. Average ranking of parameters considered when buying a truck (scale: 1-highest, 8-lowest)
When asked if the manufacturer’s claims regarding fuel efficiency affect their buying decision, 45% of
respondents said yes while 16% said no and 39% had no answer. Some of the respondents who
answered ‘yes’ said that they usually consider the manufacturer’s claim so that they will have a basis on
whether they should invest more in the brand or not. They also said that they consider fuel efficiency
features of the trucks for the long-term management of their fleet.
Respondents were asked how often they replace their units. Based on Figure 20, about 36 (48%) of
companies said that they replace their trucks as needed. They said that it is more practical to invest
when it is needed rather than having a fixed plan for investing in new units. Twenty companies (27%)
said that they usually replace their units after 9-10 years. Those who answered that they replace units
at 9-10 years are usually the ones who answered that they prefer buying brand new units with
consideration of the brand, performance and durability.
After 3-4 years
no answer After 5-6 years
1%
9% 7%
After 7-8 years
8%

After 9-10 years

27%
As needed
48%

Figure 20. Number of years considered by companies when re-fleeting/replacing units

40
Figure 21 shows that many respondents (63%) said that they have a fixed schedule for maintenance to
increase the longevity of their units (either monthly, quarterly, semi-annually or annually). The
respondents who also answered this question are usually the ones operating in long distances that
answered that their areas of operations are provincial, regional or national scale. They said that they
are motivated to have a fixed maintenance schedule for safety and reliability of their units while 11%
said that they do not have fixed schedule for maintenance.

Others
12%

Monthly
39%

As needed
25%

Annually
3%
Semi-annually Quarterly
8% 13%

Figure 21. Frequency of inspection and maintenance of fleet

Other than those with fixed schedules of maintenance, 25% of the respondents said that they only
check as needed. Definition of ‘as needed’ varied, with some saying this included a check before every
trip, and others only in case of necessary repair or breakdowns. Others (12%) answered that they check
the vehicles every week or every two months. Listed in Figure 22 are the types of maintenance
measures normally performed by the respondents to their fleet.

70
60
50
no of respondents

40
30
20
10
0

Maintenance measures

Figure 22. Types of maintenance measures

41
4.1.5. Fuel-saving technologies and strategies
The respondents across the board showed high level of awareness about new technologies related to
vehicles and fuels as shown in Figure 23. The main sources of information are through internet and
television followed by newspapers and by word of mouth. Conferences and networking activities with
organisations are at the bottom of the list. Some respondents shared during FGDs that there are not
many locally accessible conferences for the freight sector and that trucking associations need to be
more empowered and exposed to new technologies and strategies for fuel savings.

Internet
source of information

Television
Newspaper
Word of mouth
Conferences and other networking activities
Organization
Others
0 5 10 15 20 25 30 35 40 45
no. of respondents

Figure 23. Source of information on new vehicle and fuel technologies

Results show, as listed in Table 12, that, among the main considerations of companies in making
investment decisions on fuel-saving technologies and operational strategies, are costs in operations
and durability of the technology for the adoption of new technologies. Among the strategies related
to operations, they said that skills needed to adopt fuel-saving technology is equally important,
otherwise, the initiative will be useless. On adoption of technologies, estimated fuel savings is more
important than initial outlay.
Table 12. Considerations in making investment decisions on fuel-saving technologies and operational
strategies

Parameter Number of companies

Irrelevant Not so Somewhat Very
important important Important

Strategies related to operations

Cost 1 1 43
Estimated fuel consumption benefits 3 31
Negative disruptions to overall operations 3 10 21
Time needed for implementing the 1 13 25
strategy
Manpower/skills needed 1 2 10 30
Others (please specify)

Adoption of technologies

Cost 1 4 30

42
 Estimated fuel consumption benefits 8 37
Reliability 6 34
Durability 5 46
After sales service 1 12 22
Maintenance requirements (skills, etc..) 1 5 32
Warranties 1 4 29

About 60% of the respondents said that they calculate the payback period of their investment on fuel-
saving technologies. They said that this helps them monitor if they will need to invest more on this
type of technology. About 20% said that they do not calculate payback period while another 20% did
not provide answers.
Figure 24 shows that those who monitor the payback period found out that it can be as short as 1-2
years for around 12% of them, with the most frequently reported period being 4-5 years. They also
expressed importance in knowing the features of the technology to maximise the benefits, otherwise,
payback period is much longer. About 34% of the companies did not answer because either they do
not calculate this or are unsure of their calculations.
When asked how much they are willing to invest on fuel-saving technologies, 57% of the respondents
said over PHP 200,000 as shown in Figure 25. This is quite a significant amount, indicating an openness
to explore new technologies that eventually will yield them fuel savings. The breakdown of the
responses is shown in Figure 23 with 19% saying up to PHP 50,000, 12% said up to PHP 100,000 and
7% said up to PHP 200,000 in fuel-saving technologies.

12%

34% 11% 1-2 years

^2-3 years
^3-4 years
^4- 5years
more than 5 years
19% no answer

3%

21%

Figure 24. Distribution of respondents based on their calculated payback period of investment

43
 5%
19%

From 10.000 to 50.000

From 50.001 to 100.000
12% From 100.001 to 200.000
from 200,001 and above
no answer
57% 7%

Figure 25. Amount (in PHP) the companies are willing to invest on fuel-saving technologies

4.1.6. Emissions reporting

About half of the companies indicated that they have carbon emissions reporting mechanisms while
27% said they do not and 17% did not provide answers. It is interesting to note that 35% report and
share their carbon emissions data externally while 17% keep it internally as detailed in Figure 26. While
the LTO requires yearly carbon emission reporting to renew the truck registration, compliance and
enforcement is quite weak so it is commendable that almost half of the respondents calculate and
report emissions, while about 48% do not report their emissions data.
One trucking company in Palawan said that they do carbon emissions reporting internally by counting
the fuel consumption of their fleets and computing its equivalent emissions.

Internally
17%
no answer
31%

Externally
35%
Not reported
17%

Figure 26. Carbon emissions reporting

On their awareness on any initiatives (either private or public) on the freight sector that address
environmental issues, 48% of the respondents said that they are aware while 49% said they are not
aware. When asked further, respondents said that the concept of green freight was new to them and
44
has never been discussed or mentioned before. They also added that they usually have local initiatives
through locally-formed trucking associations in different areas in the country and may have promoted
green freight-related measures but were not labelled as such.

4.1.7. Institutional framework and Green Freight Programme

planning
Almost all respondents share the sentiment that better transport infrastructure is important to improve
fuel efficiency and reduce GHG emissions from the freight sector. About 83% of the respondents
also highlighted that closer collaboration between government and private sector would be critical to
improve fuel efficiency and environmental performance of the trucking sector in the country. During
one of the roundtable discussions held in Tuguegarao City in November 2017, it was mentioned that
poor infrastructure affects the quality of goods and turnover of deliveries. Overloading is also
widespread causing cyclic damage to roads in the mountainous areas. The heavy dependence on road
transport since ports in Cagayan are underutilised, poses road safety concerns in traversing the steep
terrain and sharp curves between Nueva Ecija and Nueva Vizcaya.
Another issue that was repeatedly raised in Palawan and Bacolod was the need to transport goods to
the Port of Manila before it can be exported to other countries. While this is a common practice to
consolidate cargo, island province-based exporters are looking for ways to lessen the holding time so
as not to increase transport costs and ensure faster delivery of their cargo exports.
Many deliveries from Manila to the provinces return empty. The clients are charged two-way transport
costs making the rates expensive. Some logistics companies like Air21 are offering discounted rates to
haul back cargo from the provinces to lessen the empty miles. This initiative is beneficial to SMEs in
the province who would normally balk at the high transport costs. A mechanism to consolidate cargo
in the province facilitated by a good freight matching mechanism for supply and demand would be a
win-win solution to help SMEs as well as decrease empty miles and fuel wastage.
Table 13 shows the responses of the companies when asked of their views about various strategies in
improving the efficiency and environmental performance of the trucking sector.
Table 13. Responses of companies regarding improvement of efficiency and environmental performance of
the trucking sector

Parameters Number of companies

Irrelevant Not so Somewhat Very Total No. of
important important important responses respondents
that did not
respond
Closer collaboration 0 0 10 62 72 3
between
government and
private sector
Government 0 0 13 43 56 19
incentives for energy
efficient fleets

45
 Increased access to 0 0 18 30 48 27
reliable information
about available
technologies in the
market
Better matching of 0 1 9 65 75 0
freight supply and
demand
Better transport 0 0 3 71 74 1
infrastructure
Capacity building on 0 0 15 35 50 25
green practices and
technologies
Note: Multiple answers were allowed in this question.
Other critical factors include the provision of government incentives for energy-efficient fleets, which
was suggested to be discussed at future stakeholders’ consultation meetings between relevant
government agencies and the private sector. The respondents also emphasised the need for capacity
building on green practices and technologies which include eco-driving, and the use of technologies,
among others. About 40% of the respondents said that it is ‘very important’ to have increased access
to reliable information on available technologies in the market through expos, exhibits, and
conferences.
Figure 27 shows that most of the respondents (69%) expressed their support to have a mechanism to
monitor fuel consumption and improve their fleet’s fuel efficiency in return for incentives. While 17%
of the respondents did not answer the question, none of the companies said that they are not
supportive of the idea. This is important when seeking support from the government to assist in re-
fleeting old trucks.

No Answer
17%

Not sure I am supportive of

14% the idea
69%

I am not
supportive of the
idea
0%

Figure 27. Opinions regarding having a mechanism to monitor fuel consumption and improve fleet
efficiency

46
 Technical know-how, trainings

Tax incentives

type of assistance needed Low interest loans

Grants

None

no answer

Others

0 5 10 15 20 25 30 35 40 45
No. of respondents

Figure 28. Assistance needed by companies

When asked about the assistance needed, more than half (52%) of the respondents answered that they
need trainings to enhance technical capacity and know-how on different technologies, strategies and
measures for green freight. It is notable that assistance for professional development is a higher priority
than financial assistance. Around 40% of the respondents said that the government should provide tax
incentives to increase the use of fuel-saving technologies. In addition, 38% said that the government
should provide access to low-interest loans for these types of technologies and measures, and 24%
that they should provide grants. Only 2% of the respondents said that they do not need any assistance
from the government.
Overall, the respondents indicated that they are open to adopting green freight measures to increase
fuel efficiency and enhance their environmental performance.

5. Recommendations and conclusion

Greening freight and logistics in the Philippines requires a multitude of efforts and resources among
various stakeholders. As a start, this chapter provides 10 recommendations focused on increasing the
efficiency of road freight transport. The recommended actions and are based on the assessment of
existing institutional and regulatory frameworks within the sector, complemented by on-the-ground
insights gathered from surveys and consultations. These actions aim to have a positive impact on
improving connectivity, ensuring efficient flow of goods and services domestically and internationally,
lowering the cost of production and delivery, and ultimately achieving reduction in GHG emissions
from road freight transport.
While many of these actions need additional government effort to address the identified deficiencies
in infrastructure, incentives, policies and data, some actions are already gaining momentum in the
private sector. For example, a growing number of truckers see the value of using fuel-efficient trucks
as they deem it to be more cost effective in the long run especially with the implementation of the Tax
Reform for Acceleration and Inclusion (TRAIN) starting January 2018. Under this legislation, several
products previously free of excise tax such as diesel fuel are now subject to a new levy – PHP 2.50 per

47
gallon in 2018, PHP 4.50 in 2019 and PHP 6.00 in 2020. The base cost of vehicles also increased,
including that of trucks although they are exempted from excise tax.

5.1. Recommendations for greener freight and logistics in

the Philippines
Improve trucking data collection, monitoring and reporting framework
Trucks account for only about 5% of total vehicle population but their share of GHG emissions is
almost four times higher. Available data is limited and not disaggregated by parameters like truck
purpose, size, or weight. With the government’s plan to introduce a re-fleeting programme for trucks,
an inventory is necessary for coming up with an appropriate programme design. Below are suggested
activities to facilitate this.
– Enhance data collection by the LTO on new and old vehicles. It is important to note that the
current system does not disaggregate the fleet age of the trucks as well as the fuel technology
of the fleet. This data layer can be added in the demographics of vehicles secured in the
registration process. This can also help develop enhanced tax schemes or tax incentives for
trucking companies.
– Create a Logistics Observatory that can consolidate data harvested from different agencies to
serve as repository of a transport and logistics database. A sustainability plan should be
established on how the database can be continuously built between agencies. For example,
this could include enhancing data collection by including relevant data on the existing business
registration system of DTI such as including number of fleets, type of trucks and technologies.
– Establish a feedback loop mechanism utilizing the data from the logistics observatory to
design and establish dynamic green freight policies. This will enable progressive adoption of
relevant and apt policies.
– Use improved freight transport data for monitoring, reporting and verification (MRV) of
transport GHG emissions as an input to the overall GHG accounting framework. This can
also be a tie up with the establishment of a motor vehicle inspection system (MVIS), which
should be the basis for roadworthiness of vehicles before these are allowed for renewal of
registration and franchise.

Professionalise the logistics industry

The logistics industry, including trucking operations, has good growth potential but it needs to
formalise its workforce and operations. Truck drivers are well-compensated but only few companies
have permanent drivers, most hire on a per-delivery basis. There is also a high potential for truck
drivers to work abroad. For other workers in the industry, the skill set needed is less defined. To ensure
a stable and professional workforce, the following steps are necessary:
– Skills mapping is necessary to identify and match appropriate skills to specific job
requirements. This can be a collaborative effort with the Department of Labor and
Employment.
– Partner with the Technical Skills and Education Authority (TESDA) and other institutions to
provide continuing trainings on various topics such as eco-driving, truck maintenance,
troubleshooting for truck mechanics, book keeping, etc.
48
 – Include eco-driving in LTFRB’s Driver Academy curriculum to ensure all drivers gain the
knowledge and know-how to drive efficiently.
– Encourage the private sector to strengthen their associations by offering joint trainings and
seminars to update the skills of their employees as well as sharing of best practices.

Improve truck efficiency

According to NLMP estimates, up to 90% of trucks on the road in the Philippines are at least 15 years
old. There is rampant importation of second-hand trucks since these are cheaper and spare parts are
also readily available. Previous decisions in buying trucks are mainly based on cost. This will have to
change as all vehicles purchased since January 1, 2018 must meet Euro IV emission standards, and
truck operators may need improved access to finance to acquire Euro IV-compliant trucks.
Overloading is another aspect that has to be minimised to improve truck efficiency. The government
should facilitate the transition of modernising truck fleets through the following measures:
– Introduce fleet management mechanisms to institutionalise measures to increase truck
efficiency (e.g. periodic maintenance, efficient vehicle use).
– Study policy measures to stimulate truck fleet renewal (e.g. a government-subsidised loan
scheme with lower interest rates).
– Develop policy assessments in the areas of truck and fuel efficiency, including technology
options (e.g. telematics, low resistance tyres, aerodynamics) as a basis for improved vehicle
standards.
– Develop national standards for logistics that would enhance reliability and credibility of the
trucking sector.
– Leverage financial support to assist in financing truck fleet renewal.
– Apply effective measures against overloading.

Consolidate SMEs in the trucking industry

The trucking industry is dominated by SMEs which are limited in their potential for scaling up
operations. There are a few big players that have resources to operate nationwide, and it is important
to facilitate complementary arrangements with local SMEs. To be efficient and remain competitive
with big companies, consolidating SMEs is a viable option to avoid a fragmented market. Learning
from the lessons of consolidating the public utility vehicle (PUV) operators, the following could be
implemented:
– Develop a policy paper to explore the potential of promoting consolidation and/or forming
trucking cooperatives.
– Improve the licensing system to facilitate consolidation within the industry, e.g. by prescribing
the minimum number of trucks and average truck age.

Reduce empty miles

In the Philippines, truck trips that run empty contribute to high transport costs. Backhaul to Manila
and other logistic centres are often empty, wasting fuel and money while SMEs in the provinces are
not able to afford transport costs for their products to reach the market in urban centres. To reduce
empty miles and fuel wastage, the following steps are recommended:

49
 – Conduct further research and analysis on empty trips, including an analysis of origin-
destination (O-D) survey data and a study of empty trip patterns and the root causes on
selected corridors.
– Create a good freight matching mechanism, which could be in the form of an online platform
for freight exchange, to encourage wider use of available logistics management solutions to
coordinate supply and demand.
– Implement pilot logistics management activities in certain areas and/or with several
companies.

Decongest Manila, improve the efficiency and performance of freight operations in other urban
areas
There is heavy traffic congestion in the roads of Metro Manila and other neighbouring cities. The Port
of Manila and Ninoy Aquino International Airport are operating beyond their capacity while the Ports
of Batangas and Subic as well as Clark International Airport are underutilised. Decision makers often
lack relevant information and knowledge needed to make informed decisions on city logistics, e.g.
setting truck bans in their locality. To remedy the situation, the following should be done:
– Conduct an assessment whether it is necessary to develop logistics centres in other urban
areas. NLMP is also suggesting to use the Ports of Batangas and Subic as well as Clark
International Airport.
– Conduct further assessment on feasibility of developing urban consolidation centres. This is
important not only for efficiency gains but also to reduce empty miles.
– Conduct a study on potential dedicated truck routes.
– Coordinate truck bans and collection of passing through fees of different LGUs.

Enhance multimodal freight transport connectivity

Improving connectivity is a priority item in PDP 2017-2022. It is important since logistics support
services are lacking in ports and airports. Also, upcoming rail projects can contribute in freight
distribution. Increasing impact of transport in climate change would be minimised because of seamless
multimodal freight transport. This recommendation is also included in the NLMP and the Philippine
Multimodal Transportation and Logistics Industry Roadmap.
– Ensure freight transport connectivity is considered in the implementation of infrastructure
projects included in the Build, Build, Build programme.
– Connectivity aspects should be included in the forthcoming National Transport Master Plan
- design policies to address barriers in conjunction with developing a multimodal transport
action plan.
– Conduct a pilot project to implement policies related to multimodal freight transport along
freight corridors between major cities.

Establish public-private-partnerships through Green Freight Programmes

Freight transport companies in the Philippines are interested in environmentally friendly practices but
still waiting for guidance from government. Some activities for cultivating a partnership approach to
reduce logistics costs in an environment-friendly manner are as follows:

50
 – Strengthen the close working relationship between the government and private sector.
– Fast-track the creation of DOTr Office of Multimodal Transport and Logistics Office which
shall serve as the agency that will consolidate operation from all modes of transport.
– Build capacity and offer guidance regarding development of joint programmes to promote
fuel efficiency, and integrate initiatives, actions and measures towards a more comprehensive
and coherent approach to green freight and logistics.
– Establish a voluntary standard and label scheme to give recognition to companies who take
action. Learn from best practices from other countries that can be adopted and localised in
the Philippine context (e.g. green freight labelling and performance recognition programme).

Participate in regional and international initiatives

Many participants in the consultation meetings from the private sector and LGUs asked about
conferences and trainings that they can attend to keep up to date on the technology and policy trends
in the industry. Their participation in such initiatives can increase their knowledge and enhance
competitiveness. Such learning opportunities also provide room for sharing experiences concerning
green freight policies, programmes and activities.
– Involve various stakeholders in developing a Green Freight Action Plan in the Philippines to
ensure that all interests and inputs are incorporated and considered in the process.
– Encourage companies to join green freight initiatives and be exposed to green freight labelling
programmes.
– Join international green freight networks to learn from best practices and be exposed to the
progress made in other countries. This will also increase awareness and understanding on the
experiences in other regions.

Establish an interagency coordination for freight and logistics sector

Currently, there is an existing technical working group on Transport Infrastructure, Trade and
Logistics (TITL). However, a more active partnership between agencies such as DOTr, DTI, DOE
and DENR is imperative as each agency has a different role to play in improving the overall efficiency
of the freight sector.
– Identify and delineate specific roles of each agency and identify activities and initiatives that
require collaborative efforts in improving the overall efficiency of the sector.
– Widen the scope of the NLMP to include the roles of other agencies in improving the overall
efficiency in the freight and logistics sector.

5.2. Conclusion
This assessment presented an overview of the freight and logistics sector in the Philippines and
proposed recommendations to develop a Green Freight Programme in the country. In line with the
Global Green Freight Action Plan, the programme of the Philippine government should be designed
to help freight sector players (carriers and shippers) to modernise and optimise their operations in a
way that saves fuel, cuts costs and reduces negative externalities such as GHG emissions. The
programme should also facilitate collaboration between government agencies, private sector, and key

51
stakeholders. As experienced in other countries15, a Green Freight Programme should include green
freight actions and initiatives such as testing and recognition of technologies to increase efficiency,
freight data collection for policy and industry development, performance benchmarking and reporting
mechanisms from the different modes of freight transportation. An important element for such
programme is to identify a funding mechanism to ensure consistency and sustainability of the
programme. Most importantly, green freight targets should be clear from the onset so that the
programme will set a strategic direction leading to the development of a roadmap for implementation.
Ultimately, the Philippine Green Freight Programme should promote economic growth for
enterprises, while minimizing the negative impact of the industry’s development to the environment
and human well-being.

More information can be found at the Global Green Freight Action Plan: Reducing the Climate and Health Impacts of
15

Goods Transport at http://www.globalgreenfreight.org/GreenFreightActionPlan_May2015.pdf

52
Annex: Freight assessment survey for trucking
companies
FREIGHT ASSESSMENT SURVEY FOR TRUCKING COMPANIES
ESTABLISHING A CASE FOR THE DEVELOPMENT OF GREEN FREIGHT
PROGRAMME IN THE PHILIPPINES

I. COMPANY PROFILE

1. Name of Company: _______________________________________________________

2. Nature of business:
 Trucking
 Freight forwarder
 Third party logistics
 Other

3. Ownership
 Sole proprietorship
 Corporation
 State-owned
4. Number of employees

Drivers

Mechanics

Administrative staff

Other employees

5. Types of goods transported (check all that apply):

 Agriculture
 Construction materials
 Processed agricultural products
 Manufactured items
 Consumer products
 Minerals
 Others, please specify:

6. For companies with constant fixed service routes, what routes do you cover?
Number of trips
From To
per month

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 For companies with constantly varying routes, what areas do you cover? (For example, Metro
Manila to any point of Luzon)

II. FLEET CHARACTERISTICS

1. Please specify the number of units and average gross weight of your fleet
*Please refer to the guide sheet found at the end of the survey

Number of units Average gross weight

Dry, general goods

Rigid
Articulated
Refrigerated goods
Rigid
Articulated
Flatbed transport
Rigid
Articulated
Liquid or bulk goods
Refuse, recycling
Rigid
Refuse, recycling
Specialty
Rigid
Container Chassis
Articulated
Specialty or others
Articulated
Rigid
Light commercial
2. What is the common transmission type in your fleet?
 manual transmission
 automated manual transmission
 automatic torque-converter transmission
3. What is the average age of your fleet?

54
 % Age range

1-3 years

4-6 years

7-10 years

11-15 years

More than 15 years

III. TRUCKING OPERATIONS

1. Do you know the empty miles percentage of your operations? If yes, kindly indicate the
estimate.
Yes
If yes, kindly indicate the %
No

2. In terms of operational expenses, kindly provide the estimated % proportions for the
following items:
%
Fuel costs
Maintenance costs
Salaries
Others
TOTAL
100%
3. What measures do you use to maximise the fuel efficiency of your operations?
 None
 Use of technologies (please check all that apply)
 Truck aerodynamics
 Trailer aerodynamics
 Low rolling resistance tires
 Tire inflation systems
 Idle reduction technology
 Vehicle speed limiters
 Low-viscosity oils and lubrication
 Telematics and fleet management software
 In-cab fuel efficiency coaching software
 Engine efficiency technologies
 Transmission technologies
 Light-weighting via material substitution
 Improved efficiency accessories
 Improved efficiency axle configuration
 Strategies employed (please check all that apply)
55
  Consider fuel efficiency as a key criterion for purchasing vehicles
 Consistent monitoring of fuel efficiencies of vehicles and drivers
 Conduct drivers’ training (eco-driving)
 Enforcement of company policies (e.g. idling regulations, etc…)
 Tire pressure monitoring
 Wheel alignment
 Preventive maintenance
 Route planning and management
 Others
Please specify:

4. Does your company evaluate its fleet’s fuel efficiency?

 Yes
 No
4.1 If yes, why? What are your motivations?

4.2 And, can you tell us more about how your company evaluates the fleet’s efficiency (what
devices, methods are used, how regular, etc)? If no, why not?

5. Do you measure the fuel-saving effectiveness of a new technology or feature?

 Yes
 No
If yes, how? If no, why not?

IV. VEHICLE FLEET MANAGEMENT AND MAINTENANCE

Scale (please check one for each parameter) Parameter Rank in terms
of priority (1-
Irrelevant Not so Somewhat Very
highest priority,
important important important
2, 3…)
Cost
Fuel efficiency
Emission standards
Brand and model
Country of origin
Power
Body Configuration
After sales service
56
 Others (please specify)

Others
Others
1. What factors do you consider when buying a truck?
2. When you are purchasing a vehicle, do you usually:
 Buy a new one
 Buy a second-hand one.
 Combined (brand new and second-hand). Please specify how many % of your fleet
are:
i. Brand new: _______
ii. Locally-sourced: _________
3. How do you value manufacturer’s claims about the fuel efficiency of their products?
 Yes
 No
 Others: Please explain further

4. After how many years do you normally replace your trucks?

 After 3-4 years
 After 5-6 years
 After 7-8 years
 After 9-10 years
 As needed
 Others
5. Do you have a fixed schedule for the maintenance for your vehicles?
 Yes
 No
6. How often are vehicles inspected and serviced?
 Monthly
 Quarterly
 Semi-annually
 Annually
 As needed
 Other
Please specify

7. What types of maintenance do your vehicles normally undergo?

 Oil change
 Coolant change
 Engine maintenance
 Gauges
 Warning lamps
 Signal indicators
 Washers
 Wipers
 Horn

57
  Mirrors
 Seats
 Steering
 Exhaust smoke
 Brakes maintenance
 Lights
 Reflectors/ markers

V. FUEL-SAVING TECHNOLOGIES AND STRATEGIES

1. What are your sources of information for new technologies related to vehicles/fuels?
 Newspaper
 Internet
 Conferences and other networking activities
 Television
 Organisation
 Word of mouth
 Others
2. What are your considerations in making investment decisions on fuel-saving technologies and
operational strategies?

Scale (please check one for each parameter) Parameter

Irrelevant Not so Somewhat Very important
important important
Strategies related to operations
Cost
Estimated fuel consumption benefits
Negative disruptions to overall
operations
Time needed for implementing the
strategy
Manpower/skills needed
Others (please specify)

Adoption of technologies
Cost
Estimated fuel consumption benefits
Reliability
Durability
After sales service

58
 Maintenance requirements (skills,
etc..)
Warranties
Others (please specify)

3. Do you utilise a payback calculation to estimate how long it will take a technology to pay for
itself in terms of fuel savings?
 Yes
 No
4. If so, what are typical upper bounds that you utilise for the payback time?
 1 year
 2 years
 3 years
 5 years
 Others
5. What challenges and obstacles do you envision to encounter in using new technologies?
 Knowledge on using these technologies
 Sustainability (funding and manpower)
 Lack of skills for maintenance
 Others

6. How much additional capital are you willing to spend on upcoming fuel-saving technologies?

7. Are there any technologies that you know of that you’d like to see offered on new vehicles
that are not available or are too expensive in the market?

VI. EMISSIONS REPORTING

1. Does your company have carbon emissions reporting mechanism?

 Yes
 No
2. How are your carbon emissions reported?
 Internally
 Externally
 Not reported
3. Are you aware of any initiatives (either private or public) in your sector on environmental
issues?
 Yes
 No

59
 VII. INSTITUTIONAL FRAMEWORK AND GREEN FREIGHT PROGRAMME
PLANNING

1. How do you feel about the following strategies, in terms of improving the efficiency, and
environmental performance of the trucking sector in Philippines?

Scale (please check one for each parameter)

Irrelevant Not so Somewhat Very important
important important
Closer collaboration between
government and private sector
Government incentives for energy
efficient fleets
Increased access to reliable
information about available
technologies in the market
Better matching of freight supply and
demand
Better transport infrastructure
Capacity building on green practices
and technologies
2. How do you feel about a mechanism where the government partners with private trucking
companies who are willing to monitor their fleet’s fuel consumption, and commit to
improving their fleet’s efficiencies, in return, being provided incentives?
 I am supportive of the idea.
 I am not supportive of the idea.
 Not sure.
3. What support does your company need to increase the use of fuel-saving technologies?
 None
 Tax incentives
 Low interest loans
 Grants
 Technical know-how, trainings
 Others, please specify:

60
Reference for item 2.1 of the survey:

Types of Freight Trucks

Source: Freight Assessment Blueprint. Accessed from:

http://www.ccacoalition.org/sites/default/files/resources/2017_Freight-Assessment-Blueprint_CCAC-ICCT.pdf

61
List of tables
Table 1. Philippine LPI scores 2010-2016 (Source: World Bank, 2016)................................................... 12
Table 2. LPI scores of select ASEAN countries (Source: World Bank, 2016) ........................................ 12
Table 3. Philippine ranking in infrastructure indicators in 2012-2013 and 2016-2017 editions* (Source:
WEF Global Competitiveness Report) .......................................................................................................... 13
Table 4. Logistics cost as percentage of sales, by region (Source: World Bank, 2016)........................... 13
Table 5. Number of registered vehicles (Source: DOTC and LTO, 2007-2013) .................................... 16
Table 6. Average loading by type of truck (in kg) (Source: JICA, 2010) .................................................. 17
Table 7. Percentage empty miles (Source: Castro, n.d.)............................................................................... 17
Table 8. Vehicle types and fuel consumption (Source: Cueto, et al., 2015) ............................................. 18
Table 9. Stakeholders in freight and logistics in the Philippines ................................................................ 19
Table 10. Future policies and plans on freight and logistics ....................................................................... 25
Table 11. Types of trucks used by type of goods ......................................................................................... 33
Table 12. Considerations in making investment decisions on fuel-saving technologies and operational
strategies .............................................................................................................................................................. 41
Table 13. Responses of companies regarding improvement of efficiency and environmental
performance of the trucking sector ................................................................................................................ 44

List of figures
Figure 1. Percentage distribution of establishments by industry group (Source: ASPBI, 2014) ........... 10
Figure 2. Distribution of employment of transport and storage establishments with total employment
of 20 and over by industry group in the Philippines (Source: ASPBI, 2014)........................................... 11
Figure 3. Value added for transportation and storage establishment with employment of 20 and over
by industry group in the Philippines (Source: ASPBI 2014) ....................................................................... 11
Figure 4. GHG emissions from energy sector for 1994 and 2000, in MtCO2e (Source: DENR and
Manila Observatory, 2010) ............................................................................................................................... 15
Figure 5. Projected fuel consumption of the road transport sector (Source: ADB, 2017) .................... 15
Figure 6. Projected emissions of the road transport sector (Source: ADB, 2017) .................................. 16
Figure 7. Demographics of the green freight survey respondents ............................................................. 29
Figure 8. Number of companies by nature of business ............................................................................... 30
Figure 9. Types of goods transported ............................................................................................................ 30
Figure 10. Truck delivery routes...................................................................................................................... 31

62
Figure 11. Number of employees .................................................................................................................... 32
Figure 12. Average age of truck fleet .............................................................................................................. 34
Figure 13. Responses of companies when asked if they monitor empty miles ....................................... 35
Figure 14. Distribution of respondents based on how much they allocate for fuel costs out of the total
operational costs ................................................................................................................................................ 35
Figure 15. Distribution of respondents based on how much they allocate for maintenance costs out of
the total operational costs................................................................................................................................. 36
Figure 16. Distribution of respondents based on how much they allocate for salaries and compensation
out of the total operational costs..................................................................................................................... 36
Figure 17. Measures to maximise fuel efficiency .......................................................................................... 37
Figure 18. Monitoring fleet fuel efficiency .................................................................................................... 38
Figure 19. Average ranking of parameters considered when buying a truck (scale: 1-highest, 8-lowest)
.............................................................................................................................................................................. 39
Figure 20. Number of years considered by companies when re-fleeting/replacing units ..................... 39
Figure 21. Frequency of inspection and maintenance of fleet ................................................................... 40
Figure 22. Types of maintenance measures ................................................................................................... 40
Figure 23. Source of information on new vehicle and fuel technologies ................................................. 41
Figure 24. Distribution of respondents based on their calculated payback period of investment ....... 42
Figure 25. Amount (in PHP) the companies are willing to invest on fuel-saving technologies ........... 43
Figure 26. Carbon emissions reporting .......................................................................................................... 43
Figure 27. Opinions regarding having a mechanism to monitor fuel consumption and improve fleet
efficiency ............................................................................................................................................................. 45
Figure 28. Assistance needed by companies.................................................................................................. 46

63
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Items from named contributors do not necessarily reflect the views of the company/the editors.

Published by
Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH

Registered offices
Bonn and Eschborn, Germany

Lake Rajada Office Complex

(16th floor)
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www.TransportAndClimateChange.org

Partner:
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www.cleanairasia.org

Authors:
Dr. Jane Romero and Ms. Pia May Agatep, EnP

Editors and contributors:

Hannah Ebro, Friedel Sehlleier, Kathleen Dematera, Glynda Bathan, Tali Trigg, Cristina Villaraza, Alan Silayan, and Mark Tacd eras

Picture credits / Sources

Cover photos: Pia Agatep (front); Rauschenberger from Pixabay.com (back)
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