Despite Fuel Price Hike, government plans to built and use railway to cut logistics costs

12/12/2018

The government plans to use railway transportation services for the distribution of essential goods to cut logistical costs.

Logistical costs have been the main factor behind the prices of essential goods soaring high in the consumer market, Trade Minister Rachmat Gobel said in Jakarta on Friday.

Rachmat said logistical costs in Indonesia are among the highest in ASEAN, representing 20 to 30 percent of the country's gross domestic product.

Based on the World Bank's 2014 logistics performance index, Indonesia's logistics performance was ranked 53th in the world as compared to Singapore, which was ranked fifth, Malaysia, ranked 25th, Thailand, ranked 35th, and Vietnam, which was in 48th place, he said.

He said he would discuss the matter with the transport minister to determine how best to utilize railway transportation, which would be faster and more cost efficient.

He said the plan would certainly need supporting facilities, such as warehouses for storage in railway stations.

"The plan has to be running in 2015," Rahmat said, as quoted by Antara news agency.

He said currently the cost of distribution of essential goods is too high, representing 17 to 20 percent of prices.

Therefore, the trade ministry would seriously study the possibility of utilizing railway transportation to move farm products to market, he said.

"Transportation costs are too high, around 17 to 20 percent -- not to mention delays in transport because of traffic jams that would add extra costs," he said.

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Despite Fuel Price Hike, government plans to built and use railway to cut logistics costs