Focus: How to Reform Logistics Cost Reduction Strategy in Indonesia

Sep 22, 2016 | News

Reported recently, the global consulting firm Roland Berger mentioned the cost of logistics Indonesia has reached 26 percent of the total Gross Domestic Product (GDP). This ratio is three times greater than other higher developed countries. It also mentioned the logistics costs to GDP in Malaysia and India are only 14 percent and in China is only 18 percent.

Certain actions such as reform models of port operations and port infrastructure development is needed. The point was reduced to just 9 percent with consistently improvement and innovation in the logistics sector as a whole.

According to Rolland Berger, as the development of eastern Indonesia – Makassar as a logistics center, it has the potential to improve supply chain and logistics infrastructure quality in order to support the growth of regional economies. Therefore, it is highly appreciated for government’s strategic step to take seriously plan launching a new port in Makassar in next 2018. This will be predicted may reduce logistics costs by 40 percent. Even so, other things must also be done, like reducing the burden on businesses and consumers.

The Indonesian government has prioritized improvement in the logistics sector in their agenda. After all, in a survey on Logistics Performance Index that’s conducted by World Bank in 2016, shows Indonesia’s ranking fell 10 points to rank 63rd out of 160 countries surveyed.

Advance in technology and the use of smartphones, opening opportunities for a new logistics management system. A multi-platform cloud-based shipper can be adopted with minimal expense, as well as integrated with mobile applications that can connect to the sender with a trucking logistics operator. During this time, 72 percent of expenditures in the logistics business spent by transportation costs.


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