The Philippines’ domestic trade volume plunged 38 percent year on year to 10.57 million tons in the second quarter of 2026, as higher logistics costs amid the Middle East conflict likely weighed on commodity movements.
The contraction came as fuel prices surged following the conflict involving the US, Israel, and Iran, disrupting oil supplies and pushing up crude and refined fuel costs. The shock was reflected in Philippine inflation, with transport prices rising 13 percent year on year in June, 16 percent increase in May, and 21 percent in April, according to the Philippine Statistics Authority.
The transport squeeze provides an important backdrop to the sharp decline in domestic trade, particularly the 57 percent collapse in commodities moved by water. Higher fuel and shipping costs may have encouraged businesses to trim or defer movements of bulk goods, although the PSA data do not establish a direct causal link.
Road transport remained the dominant channel, carrying 6.79 million tons, or 64.3 percent of total domestic trade. Road shipments still fell 18 percent from 8.29 million tons a year earlier. Air cargo bucked the trend, rising 18 percent to 6.91 thousand tons, but remained negligible in overall volume.
Mineral products accounted for the largest share of outflows at 2.73 million tons, followed by prepared foodstuffs, beverages, tobacco, and related products at 2.25 million tons.
CALABARZON led domestic outflows with 2.72 million tons, followed by NCR with 1.70 million tons and Central Luzon with 1.41 million tons. NCR, however, remained the largest destination, absorbing 2.45 million tons.
In value terms, domestic trade fell 22 percent to P745.70 billion. Road shipments bucked the broader decline, with their value rising 10 percent to P542.73 billion, while water-borne trade value plunged 56 percent.
The divergence suggests that while fewer commodities moved through domestic channels, road transport handled a greater share of higher-value trade, underscoring how fuel and logistics costs can reshape not just trade volumes, but the mix and economics of domestic distribution.
