RECOVERY STRATEGY FOR LOGISTICS SERVICE INDUSTRIES …

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RECOVERY STRATEGY FOR LOGISTICS SERVICE INDUSTRIES

DURING AND AFTER PANDEMIC COVID-19*an Indonesian Case

Dr. Kuncoro Harto WidodoCenter for Transportation and Logistics Studies (PUSTRAL), Universitas Gadjah Mada, Indonesia

Research and Development Compartment, Indonesian Logistics and Forwarders Association (ILFA)

Vice Dean Faculty of Agricultural Technology, Universitas Gadjah Mada, Indonesia

Regional Conference for Logistics Service Providers,

30 June 2021, Virtual Event

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RECOVERY STRATEGY

FOR LOGISTICS SERVICE INDUSTRIES

AFTER PANDEMIC COVID-19*Arif Wismadi, Agus Taufik Mulyono, Sa’duddin, Kuncoro Harto Widodo, Dewi Prathita Rachmi

Center for Transportation and Logistics Studies (PUSTRAL), Universitas Gadjah Mada, Indonesia

Umiyatun Hayati Triastuti, Dedy Cahyadi, Akhmad Rizal A, Yuveline Aurora Sitompul, Reslyana Dwitasari, Herawati, Hasriwan Putra, Suci Susanti, Rita

Center for Inter Moda Transportation, Research and Development Agency, Ministry of Transportation, Republic Indonesia

*Published in Jurnal Transportasi Multimoda, Vol. 18(2)(2020):71-82 (In Bahasa)

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• Introduction

• Methodology• Data Collection

• Data Analysis

• Discussions• Contractions in Logistics Service Industries

• Mapping: Survived & Grew

• Strategy to Survive and Recover

• Challenges and Solution from the Governmental Roles

OUTLINE

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The pandemic Covid-19 give impact directly to the logistics service industry dueto restriction of people mobilization which reduce goods flow using itstransportation modes (inland, ocean, air).

More than 90% of logistics service industry in Indonesia were impacted so thattheir return decreased (ILFA, 2020).

The contribution of logistics service industry to the Gross Domestic Products(GDP) was 5.57% (Indonesian Statistics Agency, 2020). Logistics service industry isthe backbone for other trade and industries.

There is a need to map the impacted dan the survived industries and then toformulate the appropriate strategies for recovering the business after thepandemic Covid-19.

Introduction

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• This study was started by mapping the impacted logistics service industry, tracing response and difficulties of the actors in recovering process.

• Then, searched contradictive factors which detained industry to implement recovery agenda and its strategy.

• Finally, provided recommendation for governmental regulation to support the sustainability of the business.

Introduction

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Methodology

No Data Need Data Analysis

1 Goods flow for each mode, 2019-2020 Descriptive based on share and growth

2 Impacted or survived logistics service

industry from pandemic Covid-19

Descriptive based on goods category

and transaction (Business to Business

(B2B)/Business to Consumer (B2C)

3 Recover strategy for logistics

service industry

Descriptive based on pandemic

situation response.

4 Contractive implemented policy problem TRIZ (Theory of Inventive Problem Solving)

The contradiction was applied to be a general

solution, and then was set as a specific solution (Navas, 2013)

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MethodologyStart

Finish

Covid-19 pandemic

Movement of Goods

In-depth Interview

Logistics Services Industry Strategy

Contradiction in Strategy

TRIZ Analysis

Strategy for Contradiction

Initiative PrincipleBest Practices:

Initiatives that are already ongoing

Challenges and Implementation

Strategies

Decreasing in Goods

Movement

Logistics Service Industry

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Contractions in Logistics Service Industries

Domestics International

In general, the Covid-19 pandemic clearly has an impact on the transportation of goods throughout 2020. The average decline in 2020 compared to 2019 was minus 8% (Statistics Indonesia, 2020)

The biggest decline occurred in May, the decline reached minus 50.79%. Meanwhile, the month with the lowest decline was in September at -8.66%. The average decline in 2020 compared to 2019 reached 28.53%. (Statistics Indonesia, 2020)

-28,53%-8%

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Domestics International

The average decline in 2020 compared to 2019 was minus 16,61% (Goods unloaded at Main Port)

(Statistics Indonesia, 2020)

The average decline in 2020 compared to 2019 was minus 28,72% (Goods unloaded at Main Port)

(Statistics Indonesia, 2020)

-28,72%-16,61%

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Cargo by train has also decreased. The average monthly reduction in cargo in 2020 compared to 2019 was minus 4.97%. (Statistics Indonesia, 2020)

-4,97%

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. Based on logistics service industry category

Mapping: Survived & Grew

Survived & Grew

Negative Impacted

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. Based on Commodities

Mapping: Survived & Grew

Survived & Grew

Negative Impacted

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What support is needed from the Government?

Create customers who can create flow cash continuously.

Create a scheme with an upfront payment.

Create a business environment that creates the logistics

movement.

Create a top-up scheme before it runs out.

BEST PRACTICES: initiatives already on going

How to scale-up this “Best Practices” to restore the national logistics industry? Need government support?

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During the PandemicCASH is the KING

Fiscal Stimulus for securing cash flow that

triggers B2B logistics movement.

Create a B2G contract scheme for cash flow

availability in the business.

The role of the government if the industry is not able to change the

current business model.

CHALLENGE SOLUTION

Challenges and Solution from the Governmental Roles

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• The impact and response of the Logistics Service Industry to therecovery efforts varied widely, in general the recovery strategy sloweddue to the contradiction between “the desire to reach new markets”and “the condition of not being ready to invest in recovery due to thestagnation of cash flow during the pandemic”.

• These contradictions can be resolved with several "Principles ofInnovation" in logistics services, including references to “BestPractices" that were successful during the pandemic (Business toCustomer/B2C and Customer to Customer/C2C) to become thestandard for the National Logistics Service Business Model.

Conclusion

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• Changes in business models that can guarantee cash flow can helpgather the courage to invest, in the spirit of creating new markets andstrengthening service systems so that they can recover and growquickly.

• When the industrial community is unable to change its businessmodel due to limited funding during the pandemic, the Governmentcan come up with a financial stimulus that can trigger and spur themovement of freight transport.

• Changes in the “Budget Mechanism” (APBN/APBD/BUMN)*) areneeded to ensure cash flow in the business, thereby accelerating themovement of goods and the national economy.

Conclusion

*) APBN/APBD: State budget, BUMN: state-owned enterprise

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Thank You for your attention

RECOVERY STRATEGY FOR LOGISTICS SERVICE INDUSTRIES …

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