Shipping from the US to the Philippines – Freight and Logistics Overview
United States (US) Exporters and Importers as well as Philippine Exporter or Importer can benefit from reading this blog.
We will focus more on the Philippine market for US Shippers (Transpacific Westbound) in this post since that is the major trade lane between the two countries. The US is Philippines’ 3rd largest trading partner, after China and Japan.
Some basic information about the Philippines:
- 7,107 islands containing 3,144 named islands
- 300,000 square kilometers / 115,830 square miles
- 15 Million population
- 24 yrs old average age
- 120 to 175 dialects Official languages: Filipino, English
- GDP growth has fluctuated between 3.6% – 7% since 2011. In 2018, GDP growth was 6.2%.
The current Philippine administration is focused on a highly ambitious infrastructure development program under the slogan “Build, Build, Build.” Shippers that are exporting non-infrastructure related goods from the US to the Philippines will still benefit because the country loves US products including major US retail chains and food brands.
Top U.S. Exports to the Philippines
The top export categories (2-digit HS) in 2018 were: electrical machinery which include integrated circuits ($2.6 billion), machinery ($768 million), cereals (wheat) ($666 million), miscellaneous grain, seeds, fruit (flour) ($604 million), and food waste, animal feed ($514 million).
U.S. total exports of agricultural products to the Philippines totaled $3.0 billion in 2018, our 11th largest agricultural export market. Leading domestic export categories include: soybean meal ($888 million), wheat ($628 million), dairy products ($248 million), pork & pork products ($116 million), and poultry meat & prods. (ex. eggs) ($110 million).
Most cargo shipped out of the U.S. is on EXWORKS or FOB incoterms, which means the Philippine consignee controls most of the transportation and logistics decisions.
There are opportunities to ship your goods via Ocean Freight (FCL & LCL), Air Freight, as well as using Project Cargo (Out of Gauge and/or Overweight shipments) services utilizing Flatracks Containers, Open Top Containers, RORO or Breakbulk vessels. If in-country transloading, final mile trucking or warehousing and distribution are needed, the exact scope of services must be determined in order to decide the right air or seaport to ship to for final delivery and distribution.
Project Cargo requires more nuanced analysis to ensure all costs are considered, especially if the destination is a smaller island. Top industries for project cargo imports into the Philippines are: food production, renewable energy, infrastructure and power generation.
Below is a list of the Top 10 Philippine Imports from around the world:
Below is a list of the Top 10 Philippine Exports from around the world:
Understanding Logistics in Philippines
Logistics inside the Philippines is extremely localized and requires deep knowledge of the industry, commodity, pickup or destination addresses and their specific shipping nuances and customs regulations.
Road traffic, narrow roads, strict trucking hours in certain cities and security checkpoints become challenges for truckers moving cargo around the country. Low overpasses or low hanging wiring and cables in certain parts of the country won’t allow certain container types such as high cube containers or over height out of gauge cargo to be moved.
Port congestion in Philippine ports can be an issue depending on the time of year, number of vessels, port infrastructure development, or customs/regulatory delays. Know the customs requirements for your goods before shipping to the Philippines.
Nuances of Shipping in the Philippines
Depending on the origin pickup address or final destination address in the Philippines, container detention (also known as per diem) can also be an issue since some locations are far from the main seaport of export or require one or more island hops before getting to a main Philippine seaport. The final destination address is important to know so an optimal door to door solution is created for shippers.
Special Economic Zones (Tariffs and Taxes)
If shippers have goods that require special economic zone treatment to reduce the costs of duties, taxes, manufacturing and/or distribution, consulting with your logistics partner and/or reaching out to PEZA (Philippine Economic Zone Authority) to see if one of the Philippines 74 Manufacturing Economic Zones, 262 IT Parks/Centers, 22 Agro-Industrial Economic Zones, 19 Tourism Economic Zones, or 2 Medical Tourism Parks/Centers is acceptable for your supply chain requirements.
The Importance of Having the Right Logistics Partner
Shippers must use an International Freight Forwarder who has experience in Philippine logistics and has a good reputation, such as our Philippine partner, All Transport Network. AEL is an experienced freight forwarder that handles shipments to the Philippines on a weekly basis. If you are working with a US based freight forwarder, ensure their Philippine partner is experienced and has the resources to get the job done.
Major Philippines Seaports
Manila (North and South Harbours): Bauan and Batangas ports: these two ports are mainly used for RORO and Breakbulk shipments but also handle container vessels. Batangas seaport is a good alternative to Manila port for cargo that is destined to the South of Manila on the island of Luzon.
Subic Bay port: situated in North Luzon, centrally located to Pampanga, Bataan, Clark and Tarlac areas. Located a 4 hour drive away from Manila. Subic Bay seaport is a good alternative to Manila for cargo that is destined to the North of Manila on the island of Luzon.
Cebu port: covers, Central Visayas which includes Cebu, Bohol, Negros Oriental, Siquijor, Iloilo, and Bacolod.
Davao port (Sasa International Seaport): covers Davao Del Sur, Davao Del Norte, Davao Occidental, Davao De Oro (Compostela Valley), Agusan Del Sur, and some parts of Central Mindanao (Bukidnon, Cotabato).
KTC Container Terminal (Bunawan, Davao city): mainly a container terminal handling smaller vessels of 2200-2500 TEUs.
Cagayan de Oro (Mindanao Container Terminal): the main terminal, MCT is a heavy agro- industrial port mainly used for the export of fresh and canned pineapple and other fresh fruits.
Cagayan de Oro (Oroport Cargo Handling): mainly a breakbulk terminal for domestic cargo, handling some international shipments as well.
Major Philippines Airports
Ninoy Aquino – Manila (MNL), Mactan – Cebu (CEB), Francisco Bangoy – Davao (DVO), Clark – Angeles (CRK), Iloilo (ILO), Puerto Princesa (PPS), Laguindingan – Cagayan de Oro (CGY), and Bacolod (BCD)
*The above list of airports includes the airport name followed by the area/island served (if different from airport name)
FAQ for Shipping to the Philippines
- What are the US export requirements for shipping to the Philippines? Answer: A completed Shipper’s Letter of Instruction (SLI), Commercial Invoice, Packing List and Certificate of Origin. Additional documents may be required depending on the commodity. The importer of record in Philippines must have an Import License and Authorizations or Certificates, some of which take 3-12 months to obtain.
- What are the basic requirements for importing into the Philippines? Answer: Import License is the most basic requirement. Other licenses or certificates may be needed depending on HS Code.
- How easy is it to clear customs when importing into the Philippines? Answer: Regulations are complex – there are considerations per HS Code, type of importer (including ownership), outport, amongst others – and volatile because the final assessment is dependent on the Commissioner who is actually examining the goods at the time. Duties are based on the HS code(s) and taxes are based on the value of the goods.
- What are the main differences between Manila North and Manila South Harbour? Answer: Manila North is operated by ICTSI and Manila South by ACI – therefore the costs/regulations and operations differ. The facilities are right next to each other in Metro Manila.
Freight Forwarder for Philippine Imports and Exports