• Cost of Supply-Chain Trimmed, Logistics Expense Cuts Down

    JAKARTA – The Indonesian Truck Entrepreneurs Association (Aptrindo) believes that logistics costs in Indonesia can go down periodically if the government provides a cost cutting strategy for each of these business chains.

    Sugi Purnoto, Vice Chairman of Facilities and Infrastructure of Aptrindo, said that truckers recognize the physical system distribution, which is the decrease of logistic cost due to the decrease of distribution cost.

    “It’s about the cost of infrastructure-affected maintenance aspects. The better the road, the lower the maintenance cost of the truck. The better the road, then play down operational costs, “said Sugi to Bisnis Tuesday (15/07/2018).

    According to him, the increased utilization of truck entrepreneurs will have an impact on the reduction of logistics costs. Referring to predictions from the Indonesian Logistics and Forwarders Association (ALFI) that by 2019, logistics costs in Indonesia could reach 19% of gross domestic product (GDP).

    He said logistic costs could indeed be trimmed by infrastructure improvements in Indonesia. This is in line with the World Bank’s benchmark through the Logistic Performance Index (LPI) released last year. But more than that, the government also needs to see the supply-chain made by logistics businessmen.

    “It is necessary to think of processes that support the utilization of not only export and import in the depot, but the whole series to the end, for example, there is no waiting time in the distribution and the manufacturer,” he said.

    He assessed that ALFI’s prediction actually only read a big picture of the logistics process, but has not yet specifically discussed the cutting of each component.

    Earlier Yukki Nugrahawan Hanafi, Chairman of DPP ALFI, said the cost of logistics to GDP ratio from 2013 to 2017 fell 2.2 points from 25.7% to 23.5%. The steps of government deregulation and infrastructure development are the main drivers.

    “So, if there is no improvement in terms of digital-based customs service, Indonesia’s position can be stagnant, because the improvements are only supported from infrastructure alone, so not necessarily 2019 could be 19%,” said Yukki.

    Logistic Performance Index (LPI) last year did show the position of Indonesia slipped from position 53 with a score of 3.08 to rank 63 with a score of 2.98.

    The LPI assessment is based on six aspects namely, the efficiency of customs & border management clearance, the quality of trade and transportation infrastructure, the ease of international delivery arrangements, the competence and quality of logistics services, tracking & tracing ability, and timely delivery frequency.

    Among Asean countries, Indonesia is in fourth position. The highest ranking is Singapore (5), then Malaysia (32) and Thailand (45).

    The decline in Indonesian LPI scores occurred in almost all aspects except international shipment and tracking & tracing. One aspect that needs attention is the infrastructure that has the lowest score of 2.65.

    Sources: http://industri.bisnis.com
    Translated by Aryaputra Pande

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