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Jakarta Post

Logistics down by more than 50 percent amid COVID-19 outbreak

  • Eisya A. Eloksari

    The Jakarta Post

Jakarta   /   Tue, April 28, 2020   /   03:18 pm
Logistics down by more than 50 percent amid COVID-19 outbreak A cargo plane of Garuda Indonesia (Courtesy of/flyawaysimulation.com)

Logistics companies have experienced more than a 50 percent decline in overall business performance since the COVID-19 outbreak hit Indonesia in early March, the Indonesian Logistics Association (ALI) reported.

The association’s chairman, Zaldy Ilham Masita, said logistics volume has been down 60 to 70 percent across the board since early March due to emergency measures taken by the government to prevent COVID-19 transmission.

Zaldy said business-to-consumer (B2C) and customer-to-customer (C2C) delivery services had experienced growth despite the outbreak but the increase was too small to compensate the sharp drop in the business-to-business (B2B) segment.

In total, the business performance of the association’s members has fallen 50 percent since the first confirmed COVID-19 cases were unveiled on March 2, he said.

 “The B2C and C2C segments recorded growth due to the increase in demand for food, perishables and medical supply deliveries despite large-scale social restrictions [PSBB],” he told The Jakarta Post on Monday, adding that all three categories had seen a 100 percent increase since March.

He went on to say that during Ramadan, shipment volume usually increased by 30 to 50 percent. However, this year he predicted that the volume would be down 40 percent from last year.

“The prediction is based on lower consumer spending because there have been layoffs everywhere and holiday bonus (THR) cuts,” he said.

Zaldy also predicted that the logistics sector would return to normal in the first quarter of 2021. In the meantime, he said, logistics companies could begin digitalizing operations and broaden services, such as catering to more B2C clients to survive the outbreak. 

Supply Chain Indonesia (SCI) chairman Setijadi also said spending on tertiary goods such as automotive, electronics and fashion had declined amid the outbreak, while medical supplies and health products were likely to continue their growth trend. 

“Since expedition will need to continue, it is important that the government set safety procedures for our drivers, such as providing disinfectant for the trucks, masks and hand sanitizer,” he said.

Responding to the expansion of the PSBB, Setijadi said local governments should ensure the availability of basic needs  by preparing adequate storage units and scheduling shipment accordingly.

Previously, the SCI estimated the logistics sector would grow around 12.7 percent this year, with a contribution to GDP of Rp 993.9 trillion (US$63.9 billion). However, Setijadi said the SCI would revise the estimate because COVID-19 had severely affected global trade and logistics activities.

Logistics start-up Kargo also reported a shift in operations as it catered to more medical supply and staple need deliveries, such as cooking oil and rice, while the company had seen a huge fall in import and export deliveries, especially when China was in lockdown.

“We are seeing an uptick in smaller truck deliveries, such as for delivering groceries and food,” Kargo CEO Tiger Fang told the Post on April 24. “I think logistics is more important than ever now that people have to stay home.”

He said that although the start-up was seeing a decline in its delivery volume, its core B2B deliveries, especially in fast-moving consumer goods, would continue to run. The company has been working with top brands such as Coca Cola and Unilever, among others.

Fang said that despite the impact of COVID-19 on the economy, Kargo wanted to explore the possibility of delivering agriculture products and e-commerce, as the latter was a big category that had not been affected by the health crisis. 

He went on to say that the start-up was also looking for partnership opportunities with other trucking companies, banks and agencies, as well as charity programs, to provide relief.

“The most important thing we do right now is remain in business and keep our drivers busy so they can still have an income,” he said, referring to the company’s around 10,000 active drivers.

 Kargo pledged to raise $1 million to protect its drivers’ income through a relief fund initiative. Its employees have been hit with a 75 percent cut in their paychecks across the board and Fang will give up his entire salary for the next 12 months.

The company recently secured $31 million in series A funding led by Tenaya Capital with participation from, among other investors, Coca Cola Amatil and the Indonesia-oriented Intudo Ventures.

“We are lucky to have had funding when we did. I think it can last us for a long time,” Fang said.