Doing innovation, building collaboration, and running digital-based supply chain to increase competitiveness are key steps in strengthening the current and future national logistics industry. Indonesia Logistics and Forwarders’ Association (ALFI/ILFA) said it as an epilogue, a final note in relating the country’s logistics sector.
Logistics has always been on corridor talk among business players within the country in view of its significant contribution to Indonesia’s economy on one hand while on the other hand it has become such like a bottleneck in Indonesia’s economy growth. It can be understood since Indonesia’s logistics cost stays high, reaching more than 23% of GDP.
And, in the last year, the pandemic covid-19 outbreak has hit any sectors, including logistics, making it come into a more serious situation. Some even said it as logistics chaos. As the biggest community in this industry, ALFI has actually shouted and initiated some key steps for logistics improvement.
“You can conclude these as our final recall for this year, the epilogue of series of initiatives we have called for logistics improvement. Doing innovation, building collaboration, and running digital-based supply chain are key steps in strengthening national logistics,” said Yukki Nugrahawan Hanafi, ALFI Chairman.
But, amid the Covid-19 outbreak and current dynamic market, building collaboration within the industry, according to Yukki, requires support from various parties, including the Ministry of Transportation, Ministry of Trade, Ministry of Industry, and Ministry of Finance.
“ALFI has continued to encourage and make Indonesian logistics more competitive, dynamic and innovative. We also hope that ALFI members can continue to collaborate with all parties. Collaboration is the key to making Indonesian logistics more competitive and innovative,” Yukki said in a press statement on Tuesday (28/12/2021).
To realize these initiatives, he added, ALFI encourages all parties to collaborate and eliminate sectoral egos to improve the national economy. These are also needed to make economic recovery come faster, after the Covid 19 pandemic hit almost all countries in the world, including Indonesia.
Yukki emphasized that ALFI also appreciates the efforts of the government to continue to strengthen digital economic growth in rural areas. He said, this will further facilitate digital transactions carried out by the community to remote areas in Indonesia. He said, during the Covid-19, people began to switch to using e-commerce platforms to meet their needs.
Therefore, logistics business players need to immediately adapt to changes, if they don’t want to be bullied by trade developments as well as community demands and consumer behaviour which is now transforming very quickly using digitalization.
“Now, business and trade has also changed. Even, the industry has made various changes as they cares not only with logistics but with supply chain,” Yukki, who is also the Chairman of the Asean Federation of Forwarder Association (AFFA), said.
Therefore, he added, the digital transformation carried out by the logistics sector is a must and is considered to be a catalyst to be able to survive, thus being able to carry out various expansions, especially during the pandemic.
“Those who don’t want to adapt with it (change) may not survive any longer. Moreover, the business opportunities for delivery service companies and e-commerce are increasingly bright in line with the rise of people’s online shopping activities during this pandemic,” said Yukki.
Backbone
Amid the pandemic outbreak, the logistics sector has become the backbone for other sectors. “Any sector needs distribution of their goods. So, logistics has become a backbone,” Yukki said.
Changes in business and trade are also influenced by the characteristics of the community change, which starts from the previous generation to the current generation. In fact, said Yukki, trade activities that involve selling goods or offering services directly to final consumers or retailers have also experienced a quite massive shift, from traditional retail to modern retail and then into small retail. Even today it tends to be dominated by online retail.
Yukki gave an example, saying the Covid-19 Pandemic, which is accompanied by the development of digitalization in various sectors at this time, has also tended to have an impact on changes in work, study and play (eSports) activities. In addition, it has an effect on household shopping activities such as online shopping increasing by 37%, reducing activities outside the home (57%), and working from home (WFH) increasing by 41% from the previous year. Besides that, it also has an impact on increasing the use of social media activities.
Yukki said that the estimated value of digital (virtual) transactions in 2025 would grow 5-10% from the pre-Covid-19.
Appreciation to Government
ALFI also appreciates the efforts of the Government of Indonesia through the Ministry of Communication and Informatics (Kominfo) which continues to strengthen digital economic growth in rural areas, through the preparation of digital infrastructure as well as encouraging innovation and partnerships for e-commerce and logistics services.
Based on Kominfo data, since the beginning of the Covid-19 pandemic, there has been an increase in the number of digital consumers by 21 million, 72% of them coming from rural areas.
Yukki affirmed these government’s efforts were in line with the expectation of logistics business players to strengthen the logistics and e-commerce services throughout the country. “The existence of digital infrastructure and platforms opens up opportunities for people, especially from rural areas, to sell products through online markets,” explained Yukki.
Inspector General at Kominfo Doddy Setiadi earlier stated that the partnership between e-commerce and logistics services would have added value and increase an inclusive digital economy. The Ministry also ensures that rural areas are not far behind from urban economic centers in terms of infrastructure and technology readiness.
The government supports any innovations from citizens to continue to be productive in facing the era of adapting new habits after the pandemic. Therefore, the ministry (Kominfo) is preparing to accelerate digital transformation as a strategic effort that must be carried out.
The trend of using e-commerce has spurred the need for reliable logistics services. Therefore, the Government ensures that Indonesia’s postal logistics infrastructure must be integrated to reach remote areas and minimize the infrastructure gap between rural and urban.
“The e-commerce trend will develop well if the products sold online can be delivered to customers at a reasonable price and time. Meanwhile, the postal logistics channel offers delivery around the world within a short distance for online sellers in rural areas,” he explained.
Therefore, partnerships between e-commerce and logistics services, especially in rural areas, are one of the solutions to make the Indonesian e-commerce market continue to grow and open up significant opportunities for the community.
“This partnership will involve collaboration in improving logistics infrastructure, strengthening point-to-point services, and increasing last-mile delivery. It does not only reach all regions of the country but can be a solution for online sellers in rural areas,” he said.