Logistics Players Must Be Ready with Global Supply Chain Change

Logistics business players in Indonesia need to be prepared to support changes in global supply chains while still paying attention to the domestic economy’s resilience.

Chairman of the DPP Indonesian Logistics and Forwarders Association (ALFI) Yukki Nugrahawan Hanafi reminded logistics players in the land, sea, and air sectors to have a wider perspective to maintain national economic resilience.

“We (logistics players) must support changes in the current smooth supply of the world during various problems that are currently engulfing us. However, our commitment as business actors is also important in maintaining the resilience of the national economy,” said Yukki on Sunday (17/7/2022).

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Chairman of the DPP Indonesian Logistics and Forwarders Association (ALFI) Yukki Nugrahawan Hanafi
Chairman of the DPP Indonesian Logistics and Forwarders Association (ALFI) Yukki Nugrahawan Hanafi

He said, in terms of the logistics business, the impact of the Russia-Ukraine war, which has changed geopolitics in the European region, as well as the current global food issue, has caused a multiplier effect on the fulfillment of global supply chains.

Previously, most countries in the world were bothered with dealing with the Covid-19 Pandemic, which then impacted the increasing freight container difficulties because many ports were still implementing a lockdown.

Yukki revealed that even now, the difficulty of ships is not only on container ships but has spread to bulk ships.

However, he added, the Government of Indonesia’s policies is still appropriate in maintaining the resilience of the national economy so that inflation can be controlled with various programs that have been implemented.

One of them is the industrial downstream, launched several years ago as a strategy to increase the added value of national commodities.

With industrial downstream, the exported commodities are no longer raw materials but semi-finished or finished goods. The purpose of this industrial downstream is to increase the selling value of commodities, strengthen the industrial structure, provide more jobs, and increase business opportunities in the country.

Industrial downstream must be done to minimize the impact of falling commodity prices.

“If Indonesia continues to depend on exports of raw commodities, Indonesia will easily fall when the selling value of these commodities declines,” said Yukki.

On the other hand, if Indonesia exports semi-finished or finished goods, the selling value will be higher. In addition, the prices of semi-finished and finished goods tend to be more stable than those of raw materials. If the selling value of export goods is high, then we have the opportunity to get higher profits for MSME actors, investors, and state revenue.

“Therefore, ALFI supports the Government of Indonesia in encouraging more investment in the country to strengthen industrial downstream in the region,” said Yukki.

Consumption and Investment

Yukki also reminded the importance of maintaining people’s purchasing power (consumption) and maintaining the resilience of national exporters to continue participating in the global arena so that they become engines of national economic growth.

“We also must maintain our exporters’ resistance to pressure and current global conditions during soaring commodity prices and world fuel oil (BBM) price fluctuations. But on the other hand, people’s purchasing power must also be maintained because our economic growth is based on two things: consumption and investment,” said Yukki.

Therefore, Yukki said that logistics business players in the country still need to anticipate and be careful in looking at the current global perspective, even though Indonesia’s current economic position is still relatively safe and inflation can still be controlled.

“The issue of the Russo-Ukrainian War, which has changed the geopolitics of Europe and the potential for rising global food prices at this time, needs to be our common concern,” said Yukki.

Previously, Finance Minister Sri Mulyani said global food prices could increase by up to 20 percent by the end of 2022. The war in Ukraine and worsening export restrictions have exacerbated the impact of the Covid-19 pandemic, which resulted in supply-demand mismatches and supply disruptions that pushed food prices to their highest levels.