Boosting logistics performance
This article has been translated by PwC Indonesia as part of our Indonesia Infrastructure News Service. PwC Indonesia has not checked the accuracy of, and accepts no responsibility for the content.
Bisnis Indonesia - Mengunkit kinerja logistik
29 November 2024
By Artha Adventy, Afifah Rahmah Nurdifa and Hendra Wibawa
The logistics sector still faces significant challenges in boosting Indonesia's economic growth, primarily due to the high domestic logistics costs, which remain at 14.2% of the gross domestic product (GDP).
In addition, in 2023, the World Bank ranked Indonesia 61st out of 139 countries in the Logistics Performance Index (LPI).
Indonesia's LPI ranking is significantly lower than in 2018, when it was 46th. It is no surprise that the government, business leaders and other stakeholders are working to improve logistics performance.
Transportation Ministry Secretary General Novie Riyanto believes that Indonesia's LPI ranking, as assessed by the World Bank, indicates that the nation is not competitive compared to other countries.
Indonesia's LPI position is significantly lower than Singapore's, which is ranked first.
"The LPI ranking highlights the challenges Indonesia faces as the largest archipelago in the world," he said while speaking as a key speaker at Bisnis Indonesia Logistics Awards (BILA) 2024 in Jakarta on Thursday (28/11).
However, Novie stated that the Transportation Ministry is working to minimise these challenges and remains committed to improving logistics performance, for instance, through the National Logistics Ecosystem (NLE). The Ministry has successfully implemented 97.6% of the 42 action plans within the NLE, which are being carried out at 46 ports and six airports.
Cost reduction
Meanwhile, PT Pelabuhan Indonesia (Pelindo) President Director Arif Suhartono disclosed that numerous efforts have been made by ports to reduce national logistics costs to 14.2% of the GDP.
For example, he noted that Tanjung Priok Port is now ranked 23rd globally as a container port, a significant improvement from its previous position of 281st. This ranking is based on the Container Port Performance Index (CPPI) 2023, released by the World Bank Group and S&P Global Market Intelligence, which evaluates the performance of 405 container ports worldwide.
Pelindo Transformation Group Head Mona Yudika added that, to date, ports have contributed only 2% to the logistics costs, which account for 14.29% of the GDP. "In the context of port to door and door to port logistics, the role of ports is in the middle. However, this role is crucial as it is connected to the end-to-end supply chain," he explained.
Mona emphasised that the stevedoring process must be expedited to prioritise efficiency without compromising accuracy. This effort has become increasingly effective following the merger of Pelindo in October 2021. The merger enables Pelindo to implement standardisations across all ports.
Indonesian Port Operators Association (ABUPI) Chairperson Aulia Febrial Fatwa commends the merger of the state-owned port enterprise, which has been in place for three years. To further enhance efficiency, he suggests that Indonesia shift its logistics concept from a fragmented approach to one that is centred around ports.
He believes that the port-centric logistics concept, which has evolved spatially, has become a key aspect of trade relations among countries.
Bisnis Indonesia Group Vice President Commissioner Budiarsa Sastrawinata expressed his appreciation for companies involved in the national logistics industry, stating that these companies need support from various stakeholders. The Bisnis Indonesia Logistics Awards 2024 were organised to recognise the best performers in the logistics sector, including state-owned enterprises (SOEs) and their subsidiaries. "We recognise that the logistics sector is one of the pillars supporting the national economy," he stated.
