An Imbalance Between Supply And Demand Is The Cause Of High Logistics Costs In Indonesia

Senior Economist Piter Abdullah (left), Group Head of Corporate Transformation of Management of Pelindo Mona Yudika Program (medium), and Director of Operations and Digital Services of PT Pos Indonesia (Persero). (Mery Handayani/VOI)

JAKARTA - Senior Economist Piter Abdullah said that the imbalance between supply and logistics demand was the cause of logistics costs in Indonesia. Currently, there is a supply imbalance and demand between Java and Outside Java.

Pieter said that the delivery of goods from Java is now cheap, but when they return from Outside Java, the price becomes expensive because the load is empty.

Thus, continued Pieter, no matter how good the logistics system was built for efficiency purposes, it still did not meet President Joko Widodo's initial goal (Jokowi) to reduce logistics costs.

"That's what causes our logistics to be expensive," he said at the BUMN Strengthening event Towards a Golden Indonesia entitled Smart Supply Chain: Digitalization of the Indonesian Logistics System, in Sarinah, Jakarta, Wednesday, October 2.

Pieter said that the sea highway that Jokowi continues to echo also has little impact on reducing logistics costs because there are problems with supply and demand imbalances.

"For example, from here we send it to NTT, to Kupang, the ship is full. But from there it is empty, because there is no (economic center). Well, the concept of overcoming this supply-demand imbalance has not been completed," he said.

On the other hand, Pieter acknowledged that the government of the era of President Jokowi was indeed quite successful in terms of infrastructure development and connectivity to support the national logistics sector.

However, continued Pieter, these two things have not been enough to reduce the cost of logistics in the country due to an imbalance between supply and demand.

Referring to data from the National Development Planning Agency (Bappenas), the Coordinating Ministry for Economic Affairs, and the Central Statistics Agency (BPS) published by the Ministry of Transportation, logistics costs in Indonesia throughout 2023 were still at the level of 14.29 percent of Gross Domestic Product (GDP).

"Micro, both at PT Pos Indonesia, and PT Pelindo, including air logistics are in extraordinary reform. But what I mentioned earlier was that in the end our final goal was to reduce logistics costs that could improve competitiveness, encourage economic growth, and create prosperity, that's what hasn't happened yet," he said.

According to Piter, supply and demand imbalances can be overcome by eliminating one door for Indonesian exports. For example, he continued, the door to import electronic goods would be better opened in the Bitung area, North Sulawesi, so that the ship's cargo returning to Java would not be empty.

"The goal is that there is a request for shipping from Manado to Java. So this is domestic shipping, not from outside directly to Jakarta, so it is piled up in Jakarta," he said.