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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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Contractions in Logistics Service Industries
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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Contractions in Logistics Service Industries
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