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FREEMAN CEBU BUSINESS

The land transport industry

C&C VIEWS - Ed F. Limtingco -
January 14, 2009 | 12:00am

The land transport sector is an important contributor to economic growth. It

provides mobility to businesses and the labor force and is vital in keeping the
country’s trade and commerce by transporting the products of several
industries, particularly those of the agriculture and manufacturing sectors. In
addition to serving the agriculture and industry sectors, land transport also
fuels the development of tourism and helps facilitate the inflow of investments,
according to the Institute for the Development and Econometric Analysis, Inc.
(IDEA).

Furthermore, it reports that “broadly defined, the land transport sector includes
the transport of passengers and freight by land involving any type of vehicle.
Specifically, it involves bus line operations, transport via railways, operation of
freight road transport, operation of smaller vehicles such as public utility cars
and taxicabs, jeepneys and Asian utility vehicles (AUVs), tricycles and
pedicabs, and the operation of chartered buses and cars such as tourist
buses and rent-a-cars. The land transport industry has maintained strong
linkages with other sectors of the economy. The automotive industry accounts
for a considerable bulk of the industry’s initial and fixed costs, while the
energy sector accounts for the largest portion of the industry’s operational and
variable costs.”

Meanwhile, the Land Transportation and Franchising Regulatory Board

(LTFRB) has the authority to intervene in the issuances of franchises to
transport operators. The government boards set certain environmental and
safety standards, as well as other requirements such as gas emission tests
and accident insurance that the operators need to satisfy before they are
allowed to operate.

 According to IDEA, “for more than a decade, the gross value added (GVA) of
the land transport sector has generally increased before the slump
experienced in 2005 (see Fig.1). Before 2005, the land transport sector had
grown at an average rate of 3.5% annually. However, in 2005, the sector’s
output declined by 3.8%, following a year that posted the highest growth in
output of 6.4%. The land transport sector has since recovered: in 2007, the
sector’s GVA grew by 5.6% to Php36.15 billion from Php34.23 billion in the
previous year”.

 Overall, it was said that the land transport sub-sector is the largest contributor
to the output of the Transport and Storage sector. From 64.7% in 1990, the
land transport sector now accounts for 69.5% of the total output of the
Transport and Storage sector.

The top five revenue earners in 2007 for the land transport industry are Fast
Distribution Corporation, Victory Liner, Tri-Solid Movers Services, Inc., CS and
T Subic, Inc., and Pangasinan Five Star Bus Co. Inc. Fast Distribution
Corporation, which rents out trucks for freight transport, posted the highest
revenue in 2007 with Php2.46 billion.

For credit & collection (C&C) questions, comments and rejoinders you want to
share or inquire, you can reach him at 0917-7220521 or
at elimtingco@cibi.net.ph
DEVELOPMENT AND ECONOMETRIC ANALYSISFAST DISTRIBUTION CORPORATIONLANDLAND TRANSPORTATION AND
FRANCHISING REGULATORY BOARDPANGASINAN FIVE STAR BUS COSECTORT SUBICTRANSPORTTRANSPORT AND
STORAGETRI-SOLID MOVERS SERVICESVICTORY LINER

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