Cold chain services in Indonesia logistics industry record significant growth in recent years in line with the increasing domestic population of e-commerce users.
Despite the impact of Covid-19 pandemic nowdays, cold chain industry in Indonesia is growing on average 4% - 6% every year.
This growth is driven by the increase in e-commerce users who tend to choose to shop online, including for basic needs such as food, beverages and the like, said Yukki Nugrahawan Hanafi, Chairman of the Indonesian Logistics and Forwarders Association (ALFI).
"Cold chain growth has also been triggered by the increase in the delivery of pharmaceutical products, agricultural commodities and consumer goods," he said at the Seminar and Trade Meeting of Taiwan-Indonesia Cold Chain Brands organized by Taiwan External Trade Development Council (TAITRA) virtually on Thursday (18/9).
The increase in demand for frozen food and beverages and the rise of domestic franchises were other factors that contributed to the development of the cold chain industry in Indonesia.
Yukki revealed that the global cold chain market, especially those projected from consumer needs as well as agriculture and fisheries in 2030, could reach US$ 1,070 billion and US$ 450 billion, respectively.
Even in 2030, Indonesia is projected to become the 7th largest cold chain market in the world, due to its consumer population reaching hundreds of millions (McKinsey study).
Require for SOP
It is undeniable that demand for products through e-commerce also supports the logistics market, since shipping will increase along with the high demand for products.
Therefore, Yukki reminded business people in the cold chain industry to invest and expand the market, one of which is by opening branch or representative offices in line with the increasing activity of the industry in this country.
“Increasing demand for perishable products and fast delivery has also contributed to the express and cold chain logistics activities leading to the high demand for warehousing facilities in Indonesia,” he added.
Cold chain market in Indonesia is now dominate by several leading companies, such as Diamond Cold Storage, Kiat Ananda Cold Storage, MGM Bosco, Dua Putera Perkasa, GAC Samudera, and Adib Cold Logistics.
"In fact, for the next five years, the Indonesian cold chain market is estimated to grow 8-10 percent along with emerging new demands," Yukki said.
Based on the cold chain characteristics, market growth is in line with the increasing demand for perishable goods such as frozen food, pharmaceuticals, meat, seafood and dairy products.
"The character of cold chain logistics in Indonesia is mostly business to business (B2B), although the demand for business to customer (B2C) is quite a lot lately," he explained.
Yukki assessed that a well-systemized standard operating procedure (SOP) and its supporting tools are needed, especially for agricultural and fishery commodities through quality storage and delivery.
Behind the potential of the cold chain business, Yukki said that there are various challenges, such as technology for delivery systems and insurance for service providers, as well as the limited e-commerce platform that informs cold chain capabilities.
"Moreover, the number of logistical failures in storage and distribution remains high, namely 10% and 20%, respectively," he revealed.
Therefore, Yukki said, collaboration and political will from Government, Industry, and Educational Institutions are needed to promote and increase the excellence of the cold chain industry in Indonesia.
As a solution, ALFI proposes the Indonesian government to develop a cold chain through improving facilities and infrastructure to accommodate agricultural and fishery products, setting up connected hubs and spokes in transportation and distribution to maintain product quality and efficiency.
Another issues is to prepare a stronger IT-based education platform, and regulations that regulate the market and industry towards the growth of agricultural products.
In the global playing field, Taiwan has been recognized as a successful producer of quality agriculture and fisheries with a wealth of experience and reliable technology."We hope the Indonesian cold chain industry can learn and replicate this success. Through this seminar, it is hoped that both parties can increase cooperation," Yukki expected. (hlz/hlz)