Having spent nearly three decades navigating Philippine logistics, I can say with certainty that our industry will not be defined by who owns the most assets, but by who can build the most intelligent, resilient, and customer-focused supply chains.
For 3PL companies, the challenge ahead is not simply how to grow. It is how to grow profitably while continuing to deliver the reliability, visibility, and flexibility that customers increasingly demand. That is no small challenge, especially as the cost to serve continues to rise.
Cost-to-serve is the true cost of fulfilling customer requirements: transportation, warehousing, manpower, tech investments, and service commitments. It reflects not only what it takes to move goods, but also the realities of operating in a complex economic environment.
Those realities have become more challenging. In the first half of 2026, the Philippines experienced a 4.8% inflation rate, a contracting Purchasing Managers’ Index (PMI) of 48.3, and continued fuel volatility driven by geopolitical tensions.
As a country that imports more than 98% of its oil requirements, the Philippines remains highly exposed to global fuel movements. Fuel prices have fluctuated significantly — from PHP 60+ per liter to more than PHP 120 per liter, before stabilizing around PHP 80 to PHP 90 per liter.
For long-haul transportation connecting Luzon, Visayas, and Mindanao, these fluctuations directly affect profitability. Inflation has also increased costs across labor, utilities, warehousing, and specialized logistics operations.
The challenge for every 3PL provider is clear: how do we continue enabling customer growth while maintaining sustainable profitability amid rising costs and higher service expectations?
The scale vs. profitability paradox
For many years, logistics growth was measured through expansion: more trucks, larger warehouses, wider networks, and greater geographic reach.
However, the industry is now confronting a reality that scale alone does not guarantee profitability.
The traditional asset-driven model — where growth comes from adding physical capacity — can create a situation where costs increase at the same pace as revenue. Think of fuel, manpower, systems, and resources. The result is business expansion without increased margins.
This challenge is particularly evident in B2B logistics. Manufacturers and retailers are becoming more cautious with inventory decisions due to changing market conditions. Instead of maximizing full truckload deliveries, many customers are shifting toward smaller and more frequent shipments.
While this improves flexibility for businesses, it creates a significant cost-to-serve challenge for logistics providers: more delivery points, lower asset utilization, higher transportation frequency, and increased cost per shipment.
The same challenge exists in B2C logistics. While online commerce continues to grow, expanding beyond Metro Manila requires navigating fragmented transportation networks, port constraints, and varying infrastructure conditions across provinces.
Adding to this complexity is the changing expectations of customers.
Businesses today require faster delivery, greater visibility, and higher service reliability while maintaining competitive costs. In B2B logistics, modern trade channels demand strict OTIF (On-Time, In-Full) performance. Meeting these standards requires stronger systems, operational buffers, and contingency capacity.
In B2C logistics, consumers have become accustomed to fast delivery, real-time tracking, and flexible fulfillment options. These expectations often come with limited willingness to pay more. In the Philippines, where cash-on-delivery remains widely used, failed deliveries create additional costs through repeated delivery attempts, return-to-sender processes, and reverse logistics.
This is why volume growth alone does not guarantee profitability.
Sustainable growth requires stronger delivery density, smarter routing, and better network design.
Winning the cost-to-serve battle
The path forward is not simply adding more assets or competing on price. The economics of logistics requires smarter operating models built on collaboration, technology, and sustainability. Here are some solutions that come to mind.
First, logistics providers must embrace shared logistics models, co-loading, and network collaboration.
By combining shipments moving toward similar destinations, providers can improve truck utilization, increase delivery density, and reduce unnecessary transportation costs.
As companies continue to experience fuel volatility and inflationary pressures, demand will for system-guided logistics solutions that unlock structural savings will increase.
Second, logistics companies must invest in technology that transforms data into better decisions.
AI-driven route optimization, real-time visibility platforms, and transportation management systems are profitability engines.
By improving planning accuracy, utilization, and visibility, logistics companies make better decisions on capacity, pricing, and network design.
Third, sustainability must become part of the profitability conversation.
Investments in electric vehicles, renewable energy, solar-powered facilities, and smarter fleet strategies are used to reduce exposure to fuel volatility.
For 2026, we’re optimistic to achieve double-digit revenue growth and making profit across our core business units through higher asset utilization, improved warehouse productivity, optimized transportation networks, and stronger customer service performance.
Logistics providers must become more than service providers. We must become problem solvers that help customers reduce complexity and improve competitiveness.
Manuel L. Onrejas Jr. is the CEO for Logistics of FAST Logistics Group, with nearly 30 years of experience in driving supply chain growth and innovation. He leads FAST in expanding its 3PL capabilities across warehousing, multi-modal transportation, cold chain, cross-docking, and toll manufacturing or value-added services. For inquiries or collaboration opportunities, reach out at marketing@fast.com.ph.
