Indonesia needs a multimodal and geostrategic approach to improve logistics efficiency and better integrate into global supply chains, a senior industry official said, as the country seeks to sustain economic growth.
The government reported economic growth of 5.61% in the first quarter of 2026, but inefficiencies in logistics and supply chains remain a constraint, with Indonesia ranking sixth in ASEAN in logistics performance.
Yukki Nugrahawan Hanafi, senior vice president at the International Federation of Freight Forwarders Associations (FIATA) and chairman of the advisory board at the Indonesian Logistics and Forwarders Association (ALFI), said current efforts must go beyond infrastructure development.
“As an archipelagic nation, Indonesia needs to focus on its strategic geographic position in global trade routes,” Yukki said. “The logistics approach should prioritize integration into global trade flows and supply chains through multimodal transportation.”
He said a multimodal approach would strengthen integration between sea, air and land transport, helping improve cost efficiency.
Around 90% of Indonesia’s logistics movement is still dominated by land transport, while sea and air account for about 9% and 1% respectively, contributing to higher costs and inefficiencies, he said.
Challenges include non-standardized road quality, congestion in urban areas and access to ports, as well as weak connectivity between ports and industrial hinterlands, all of which add to logistics costs.
“The concentration of logistics movements on land transportation creates cost pressures and needs to be diversified,” Yukki added.
He also said Indonesia has yet to fully leverage its strategic position along key global trade routes such as the Strait of Malacca and the Indian and Pacific Oceans, where it often acts as a transit point rather than a logistics hub.
“Cargo may pass through Indonesia, but consolidation and value-added activities often take place in other countries,” Yukki said. “With a more effective logistics system, Indonesia has the potential to become a key global supply chain hub.”
To address the issue, Yukki called for policy reforms that emphasize multimodal integration and the country’s geographic advantages.
In the short term, he said, simplifying licensing across ministries, easing customs clearance and accelerating inspections could help increase the use of sea and air transport.
Longer-term measures include developing ports with stronger hinterland connectivity, expanding freight rail networks to reduce land transport bottlenecks, and accelerating digitalization, including the use of artificial intelligence. “These steps are essential to improve efficiency and strengthen Indonesia’s role in global trade,” he said.