DB Schenker keen on Northern Mindanao

Dec 12, 2017

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The Philippine affiliate of German logistics giant DB Schenker is looking south of the country to enhance its corporate growth targets in the medium term.

Schenker Phils Dir Jonathon Kottegoda-Bredan leads the ribbon cutting for the firm's Mindanao office at Gusa, Cagayan de Oro City

Schenker Phils Dir Jonathon Kottegoda-Bredan leads the ribbon cutting for the firm’s Mindanao office at Gusa, Cagayan de Oro City

Schenker Philippines and North East Asia CEO Jonathon Kottegoda-Breden said this was a key factor in locating their first office for Mindanao in Cagayan de Oro.

“DB Schenker has targeted The Philippines as a country with significant growth potential. And we realized in order to meet our customer demands, we couldn’t just do that by focusing on Luzon,” Mr. Kottegoda-Breden said following the recent inauguration of the firm’s Cagayan de Oro office.

 

“Many of our key customers were already in Cagayan de Oro, so we just followed where our key customers were. We decided to invest in a branch office immediately, so our customers have the support structure on the ground and a place to go.”

 

“It was a combination of strategic analysis and gut feel, speaking to our customers here, speaking to locals here, it just felt like Cagayan was the place to invest,” he added.

 

Schenker Phils Office at Gusa, Cagayan de Oro City

Schenker Phils Office at Gusa, Cagayan de Oro City

The local affiliate is already serving many large fashion and retail clients on their shipments from Manila to Cagayan de Oro, as well as international shipments from abroad such as coffee from Indonesia to Cagayan.

 

“In Visayas and Mindanao now we’re doing a huge amount of inbound ocean freight and domestic transportation. Air freight is currently more focused in Manila, Clark and Cebu where most of our customers are technology based companies,” Mr. Kottegoda-Breden said.

 

Medium Term Focus

 

While Schenker Philippines sees Mindanao as a green field for its logistics and supply chain solutions and a major contributor for its medium term revenue targets, it is focusing on servicing specific industries to start with.

 

Schenker Phils Cagayan de Oro office staff with PH Managing Director Jonathon Kottegoda-Bredan and VisMin Manager Vanessa Sumanpan

Schenker Phils Cagayan de Oro office staff with PH Managing Director Jonathon Kottegoda-Bredan and VisMin Manager Vanessa Sumpanpan

“We’re trying to focus on a target number of industries,” Kottegoda-Breden said. “So for Cagayan for example we’re really focusing on the power industry: the importation of coal, spare parts and infrastructure is a key capability Schenker has already aligned with.”

 

“Additionally within the next month we’re opening new warehouses in both Cagayan de Oro and Davao to support one of our petrochemical customers, which already has five distribution centers around the Philippines,” he added.

 

Besides petrochemicals, consumer retail and power plants, other markets that Schenker Philippines expects to grow in the next 3 years are telecommunications and perishables, specifically in Davao and General Santos.

 

“When you look at the export statistics, a significant percentage of exports from the Philippines are now perishables, going to the likes of Japan and Hong Kong,” Kottegoda-Breden noted.

 

One of the upcoming developments that the firm is keeping an eye on is the planned development of Ayala Techno Hub in Laguindingan, Misamis Oriental, which they believe will provide a push for the development of international air freight.

 

“The planned Ayala Technopark could drive a massive increase in air freight for CGY,” Kottegoda-Breden said.

 

Multi-modal Solutions

 

While the Philippine transport industry has inherent challenges that constrain the growth of the logistics industry, Schenker Philippines have been finding ways around them to service their clients, especially those from Southern Philippines.

 

Air Freight is only one of the multi-modal solutions offered by DB Schenker to its clients

Air Freight is only one of the multi-modal solutions offered by DB Schenker to its clients

“Whilst we have a regular shipping schedule out Cebu to Davao, as an alternative solution Schenker also ships to Cagayan then we truck it all the way to Davao. It’s the easiest and fastest way,” said Vanessa Sumanpan, General Manager for Visayas-Mindanao Operations.

 

Mr. Kottegoda-Breden said this multi-modal solution is actually a smaller scale adaptation of the DB Schenker Skybridge.

 

“We do this internationally as well with our product Skybridge, where we ocean freight it to one part of the world, and then air freight it the rest of the way,” he explained. “It has the benefit of reduced freight rates versus airfreight alone, and improved lead time versus ocean freight. So why not introduce it to the Philippines market as well?”

 

Besides shipping by air and sea, the firm also has a fleet of trucks which makes multi-modal solutions like Skybridge possible.

 

“Schenker has on a daily basis up to 1,000 trucks a day in the Philippines serving our customers, whether it be importation of containers or deliveries to consumers in the country,” Mr. Kottegoda-Breden said.

 

Growth constraints

 

While Southern Philippines promises great potential in growing the logistics and supply chain industry in the next three years, Ms. Sumanpan says a more flexible cargo policy especially from domestic airlines could go a long way in further developing the Mindanao economy.

 

“At present, we are limited to 150 kilograms as the maximum allowable per shipment for domestic flights to CGY in all aircraft,” she explained. “We are also not allowed to bring in palletized cargo, only loose cargo. If we have growing business going in and out of Mindanao, most likely we’ll need bigger aircraft.”

 

Hence, the local version of the DB Schenker Skybridge. “With many of our customers we had with us today, usually we airfreight their cargo to Cebu then move it to Cagayan de Oro by sea freight,” she added.

 

“However, we are certainly seeing increased collaboration with the domestic airlines to offer improved services and solutions”.

 

 Today, after ten years of offering integrated logistics and supply chain solutions to local and international customers, Schenker Philippines employs a 1,700 strong workforce in logistics, backed by over 170,000 square meters of combined on-site and off-site office and warehouse space.

 

To further demonstrate its investment in The Philippines, the company also operates an offshore operations center in the Bonifacio Global City for its regional freight clients and in house financial services, and will expand to over 600 personnel by next year as part of its drive to constantly improve the quality of service to its clientele based on its global standards and core values.

 

“We’re hoping for bigger opportunities for Northern Mindanao and with the existing clientele that we have, we expect more to come in the coming days especially now that we’re focused on marketing Cagayan de Oro with our dedicated staff and our own brokerage team who can assist us clearing the cargoes through customs.” Ms. Sumanpan said.

 

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