The Impact of a Global Recession on Indonesia’s Logistics Sector

Logistics in Indonesia Will be Affected by a Global Recession

The word recession has been mentioned a lot in recent months in the country and worldwide. The word that describes a deteriorating condition of a country's or the world's economy has become a trending topic after several world institutions—such as the International Monetary Fund (IMF) and the World Bank—revealed their outlooks.

In an official statement released recently, the IMF predicted global economic growth in 2023 to be 2.7%. It represents a slowdown compared to this year's prediction of 3.2% or even last year's prediction of 6%.

Meanwhile, the World Bank predicts there will be no recession in 2023. The institution, however, stated that the signs of a world recession had been seen this year.

See Also: Get to Know More about Transportation and Logistics in Indonesia

Signs of a Global Recession

The signs include weakening world economic growth, shrinking demand from developed countries, and decreasing commodity prices on world markets. Another sign is capital reversals or capital withdrawals by foreign investors.

Business people have also seen these signs in Indonesia. Commodity prices and demand from developed countries for Indonesian commodities have declined.

These led to a slump of logistics activities in Indonesia. Export volumes and activities dropped. Import activities were also corrected because the need for raw materials for goods made for export also decreased.

Most of Indonesia's export commodities are currently dominated by primary and semi-finished products, which are vulnerable to world economic conditions. This is also the case with imported goods.

Data from Statistics Indonesia (BPS) show that in September 2022, 75.21% of goods imported by Indonesia were raw and auxiliary materials worth US$19.81 billion, 16.76% capital goods, and 8.03% consumption goods.

See also: The Key Role of Transportation in Logistics

Mitigations Against Global Recession Threat

To anticipate the worst conditions, logistics business players in the country should take alternative measures to ensure that business will continue to exist or even grow. Supply Chain Indonesia (SCI) Chairman, Setijadi, said that among the measures to take was strengthening domestic logistics based on the intensity of domestic demand and supply.

With the supply of domestic raw materials and products for domestic consumption, businesses will continue to run even amid a global recession, because domestic demand has the potential to still grow with a population of 273.87 million.

"Meanwhile, the potential supply of commodities is quite diverse in various regions of Indonesia," said Setijadi.

In addition to strengthening the domestic supply chain, logistic efficiency in the supply chain must also be enhanced. "This is mainly to reduce dependence on global supply chains to a minimum," said Setijadi.

Improving logistical and supply chain efficiency, Setijadi added, had a direct impact on reducing product and commodity prices which were essential in a recession. "In a global perspective, increasing the competitiveness of products and commodities has the potential to increase export volumes," he said.

See also: Transportation and Logistics Stimulate the National Economic Growth

Selectively Choosing a Logistics Company amid a Global Recession

His statement shows that in the current uncertain conditions potentially fueling a crisis, choosing an effective and efficient logistics company that fully understands domestic conditions is crucial. PT Serasi Autoraya (SERA) is the solution.

The subsidiary company of PT Astra International Tbk, SERA, is renowned for its transportation and logistics solutions. Initially established to provide vehicle rental solutions, it has become the largest, industry-leading transportation provider.

With its Astra Fleet Management Solution (AstraFMS), SERA provides businesses in Indonesia with IT-based comprehensive solutions for managing fleet vehicles. The service caters to fleet management needs: passenger and goods vehicles.

See also: Industrial Revolution 4.0 Relies on the Roles Played by Digital Logistics

For 32 years, this Astra Group company has continuously created innovations to improve the quality of its services. SERA consists of transportation and logistics business units, such as mobil88 in used car sales, Balai Lelang Serasi (IBID) in used car auctions, and TRAC in the field of car rental for individuals and corporations. 

SERA also runs a logistics business unit called Serasi Logistik (SELOG). This business unit offers quick, accurate, safe, and always timely logistics services with professional technical support and competent, highly-trained, and reliable human resources in providing services.