Jakarta, May 18, 2026 — High logistics costs have once again become a major concern for both the government and national business players amid ongoing global uncertainty and external economic pressures this year. The situation is believed to not only increase operational costs for businesses, but also weaken the competitiveness of Indonesian export products and hinder national economic growth.
Senior Vice President of the International Federation of Freight Forwarders Associations and Chairman of the Advisory Board of the Indonesian Logistics and Forwarders Association, Yukki Nugrahawan Hanafi, emphasized that the issue of national logistics costs must be viewed comprehensively and should not be solely attributed to the transportation and logistics sectors.
“High logistics costs are actually the result of structural challenges, particularly the uneven distribution of national economic development, despite the many government policies that have been implemented. These structural issues include disparities in infrastructure and interregional connectivity, inefficient regulatory and bureaucratic governance, and the emergence of informal economic costs due to weak law enforcement. The key is to build a more balanced economic structure through industrialization, downstreaming, and the equitable distribution of economic growth centers across the country — not merely through physical infrastructure development,” said Yukki.
Yukki explained that Indonesia’s economic activities remain heavily concentrated in certain regions, particularly Java Island, even though many high-potential sectors such as mining, fisheries, and plantations are located outside Java. This condition creates trade imbalances and inefficient cargo flows, ultimately contributing to high logistics costs as many trucks, vessels, and containers return empty (empty backhaul).
Furthermore, Yukki highlighted that Indonesia’s trade structure is still dominated by CIF (Cost, Insurance & Freight) imports and FOB (Free on Board) exports, causing much of the added value from logistics, shipping, and insurance services to be enjoyed by foreign parties. As a result, Indonesia often acts merely as a supplier of commodities and manufactured goods without controlling its own logistics and international trade value chain.
“Therefore, strengthening the national logistics ecosystem must be carried out gradually, particularly by accelerating national re-industrialization and downstreaming efforts,” he added.
Accelerating Re-Industrialization and Downstreaming Is Essential
Rather than making the logistics sector a scapegoat for high national distribution costs, Indonesia needs a more comprehensive long-term solution, particularly through more balanced regional economic development and strengthening the national industrial base. Indonesia’s core logistics challenge is not merely transportation costs, but rather structural economic imbalances and unequal cargo flows.
Yukki believes that accelerating re-industrialization and downstreaming is a strategic key to structurally reducing logistics costs. Indonesia can achieve a more efficient logistics system if downstreaming is accelerated in leading sectors such as minerals and energy, agriculture and fisheries, as well as plantations. When production, industrial activity, and consumption grow more evenly across Indonesia, logistics efficiency will naturally improve through more balanced cargo flows and higher utilization of the national supply chain.
“Re-industrialization and downstreaming will create new economic growth centers outside Java through the development of industrial estates, manufacturing hubs, cold chain systems, warehousing, and regional distribution networks. When commodity-producing regions begin producing value-added goods, more balanced two-way trade flows (inbound-outbound equilibrium) will emerge. This condition will improve the utilization and volume of logistics services involving ships, trucks, and containers. Without re-industrialization and downstreaming, Indonesia will continue to face logistics imbalances without meaningful value-added manufacturing activity,” Yukki concluded.
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