AS part of expanding its logistics capacity operations in the country, Royal Cargo said on Wednesday it will build a P1.2-billion multipurpose facility along Plaridel Bypass Road in Bulacan.
Michael Raeuber, Group CEO of Royal Cargo Inc., said the specialized logistics company decided to build a facility in Bulacan to complement their existing logistics facility in southern Luzon.
“We have already one in the South for our cold-storage operations. We needed a distribution center in the North because in between, you have the city. You don’t want a cold-storage unit in the city because it will be encountering traffic and the right step is to have distribution facilities outside the city,” Raeuber told the media on the sidelines of the groundbreaking ceremony for the facility.
“Ideally, the way Manila is structured, there should be one facility in the North and one in the South. We will call the Bulacan facility the Cargo City North Hub,” Raeuber added.
The Cargo City North Hub is expected to be completed mid-2018.
He said the building of the Cargo City North Hub was influenced by the growing developments in the economic zones of Clark and Subic, the agricultural activities in Northern Luzon, a huge population and the rising affluence of Filipinos that enables them to purchase more imported goods.
“The Philippines has definitely seen significant growth in export and import activities over the years, translating to rising warehousing and distribution needs. By helping Philippine firms keep up with the increase and further increasing the number of orders, our new warehouse facility will help drive operational sustainability across supply chains,” Raeuber said. “Our strategy is to work very closely with the Manila port, as well as the Subic port. We also want to attract shipping lines to put their empty containers here in our North facility.”
Elmer Sarmiento, president of Royal Cargo, said the business of the Cargo City North Hub is not based on real estate, but in selling the logistic chain both in cold and dry goods. With this facility, he said Royal Cargo can deliver end-to-end solutions delivering products from vendors to customers or from vendors to a hub.
“This is the hub we want our customers to use as a transit point of their products. It includes a gamut of services from trucking, freight, clearance and storage.” Sarmiento said.
In the last three years, Sarmiento said Royal Cargo has been posting a consistent growth averaging over 24 percent. He said there will definitely be additional growth once the Bulacan facility is completed next year.
Raeuber said the added growth can be attributed by replacing its subcontracting facilities. “Before, we were renting a lot of warehouses; we were living on a margin. Now, we construct on our own facilities. Of course, the investment is bigger. But our margins are now bigger not because we are more expensive but because our current model is driven by investment”, Raeuber added.
Overall, Royal Cargo is investing more than $40 million for new projects in 2017. Sarmiento said the other projects are the 3.6-hectare project property with a 9,000-square meter covered warehouse in Cordova, Mactan Island worth $14 million and the acquisition of brand new heavy-lift cranes worth €8 million.
Based in the Philippines, Royal Cargo currently has 12 global offices in the UK, Germany, USA, Singapore, Hong Kong, Vietnam, Cambodia, China, Guam, Palau, Taiwan, Thailand, and soon in Malaysia and Indonesia.