The Impact of Trade Liberalization and Economic Integration on the Logistics Industry: Maritime Transport and Freight Forwarders

The ASEAN Economic Community (AEC) Blueprint targets an ASEAN single market in 2015. This is an ambitious reform agenda that seeks to ensure the free flow of services, investment, and skilled labor, along with the free flow of goods and the freer flow of capital, in the ASEAN region. For logistics services, the target is supposed to be achieved by 2013. An assessment of whether this has been achieved or not is yet to be done. Liberalization and deregulation efforts in the Philippine maritime transport industry are already heading into the direction of greater participation in ASEAN economic integration even though the AEC measures have not yet been formally sanctioned by all members. This paper examines the current status of the logistics industry in the Philippines and finds out how the opening of the economy to global markets through trade and services liberalization and the ongoing process toward economic integration through AEC 2015 impact on the structure, conduct, and performance of the logistics industry.The industry is responding to the changes in a positive way notwithstanding its characterization as a concentrated industry dominated by a few domestic firms. Firms have become more innovative in offering quality service to consumers such as better passenger accommodation, improved ticketing system, and availability of fast craft ferries. Freight forwarders, at least those surveyed for this study, equip themselves with information on how to adjust to a more liberalized and integrated environment. They are aware of the changes that will be brought about by the full implementation of the AEC measures and they also have a good idea of the challenges they will face, such as differences in commercial practices, legal systems, and contracting procedures, when they decide to locate in an ASEAN member-country. The way forward involves continuing the market-oriented reforms, especially liberalization of trade in services, while ensuring a healthy balancing of domestic industry interests with the requirements of regional economic integration.