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View all search resultsF&B producers boost buffer stocks amid Strait of Hormuz blockade
According to the Indonesian Food and Beverage Producers Association (Gapmmi), past disruptions of shipping routes could raise transportation costs by as much as 30 to 40 percent.
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Simple food: A woman takes a look at instant foods on offer in a supermarket on Sept. 3, 2024, in Cikutra, Bandung, West Java. (Antara/Raisan Al Farisi)
F
ood and beverage producers are raising raw material stocks to about a month as the widening United States-Israel war on Iran threatens supply chains and drives up logistics costs.
According to the Indonesian Food and Beverage Producers Association (Gapmmi), manufacturers previously kept inventories covering only several days to about a week of production. However, many firms have now extended reserves as a precaution against prolonged disruptions caused by the closure of the Strait of Hormuz.
The narrow waterway gives passage to one-fifth of the world’s oil supply and is a key route for other types of commodities like aluminum, sugar and fertilizer.
“Many companies have adjusted their buffer stock policies, with some increasing inventories to one month or longer to ensure stability,” said Gapmmi chairman Adhi S. Lukman on Thursday, as quoted by Bisnis.com.
Companies are also diversifying sourcing to reduce reliance on suppliers from a single region, Adhi added.
Read also: Chandra Asri declares force majeure amid Strait of Hormuz disruption
Disruptions of key shipping lanes could directly affect industrial supply chains, particularly the deliveries of raw materials and finished products if vessels are forced to reroute, extending travel times and raising logistics costs.
