Indonesia sees higher logistics costs after fuel price hike

The Indonesian government wanted to reduced logistics costs at the beginning of 2022 but with the announcement of an increase in the price of subsidized fuel on September 3, that plan has to be shelved as logistics costs have since seen a hike.

Entrance to the Tanjung Perak Port. Photo credit: Ibnu Wibowo

At the Tanjung Perak Port where Yudi Hermawan runs a logistics truck service, he told Maritime Fairtrade he had to increase his fee after a week of the government’s announcement.

“The other logistics business owners and me discussed about raising our fees but we tried to hold it off as long as we can as we understand everyone is suffering.  But in the end, it became too much for us and we cannot absorb the increase any more.  We finally increased our fee on September 10,” Yudi said.

“The amount of the increase differed for all of us, depending on our operational costs.  For me, I increased my fee by 20 percent, others by 10 percent, 25 percent and so on.  An increase in the fuel price has a direct impact on all logistics company.”

Cargo trucks waiting to enter Tanjung Perak Port. Photo credit: Ibnu Wibowo

Slamet Riyadi, owner of a logistics transportation service at Tanjung Perak Port, said he increased his fee by 30 percent, one of the highest, but he also increased the salaries of his employees too to help them cushioned the inflationary effects.  In Indonesia, there is no regulation to limit the amount of fee charged by logistics companies.

“Based on the Decree of the Minister of Transportation Number 60 of 2019 Article 61, the transportation rates for non-passenger land transport fleets are adjusted based on an agreement between service providers and users of transportation services. So, there is no limit to logistics transportation fares. A 100 percent tariff increase can also occur as long as business owners and service users agree,” he said.

Container terminal. Photo credit: Pelindo

Both Yudi and Slamet urged the government to ensure availability of fuel supply at petrol stations.  Yudi added: “Diesel fuel is still hard to find and restrictions on purchasing biodiesel are a hassle for us.  Both non-passenger and passenger transportation service providers are facing the same problems.” 

A container cargo ship at port. Photo credit: Pelindo

Bambang Sabekti, a veteran in managing international ports, told Maritime Fairtrade there is a direct relationship between fuel price and logistics costs and an increase in fuel price will definitely lead to an increase in logistics costs, worsened by the global inflation happening right now. He estimated, from a macroeconomic point of view, the logistics costs may go up by half a trillion rupiah per year for one international port in Indonesia. 

Logistics warehouses at Sidoarjo. Photo credit: Ibnu Wibowo

Wisnu Wibowo, economist, Airlangga University Surabaya, said the higher logistics costs are going to have a negative impact on the community, especially the poor, vulnerable and impoverished.  He believed the prices of basic necessities and commodities will increase.  This will be an added burden on the cost of living of the people in the lower strata of society.

Container trucks. Photo credit: Ibnu Wibowo

Top photo credit: iStock/ 1933bkk

Ibnu Wibowo

Ibnu Wibowo

Ibnu Wibowo, Indonesia journalist, is a former political journalist with high dedication and determination to his craft. He is interested in writing about politics and international relations.

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