Opportunities in Indonesia Cold Chain Logistics Market

As one of the biggest Archipelago country in the world, Indonesia has faced expensive logistics cost for many years. Naturally, due to geographical location of islands which scattered across the nation, it is plausible that the logistic cost is higher compared to country within a big continent alone. However, after many years, Indonesia still left behind and in the need of catalyst in improving logistics infrastructure particularly in Cold Chain for perishable goods. Data from Indonesian Cold Chain Association Report in 2019 below, showed that cold chain in Indonesia still underdeveloped whereas vegetables and fruits are the major driver in food loss across the supply chain.

The result of which food losses in Indonesia is staggering. Data from FAO in 2017 estimates that 13 Million Tons of food are loss in the supply chain with composition 10% in production due to quality issues, and another 6-7% in distribution or logistics due to insufficient cold chain environment. Let's convert the numbers, 13 million tons of food losses can feed 11% of populations, reduce malnutrition and hunger problems. In terms of, environmental impacts from food loss is astonishingly high where data from Food Sustainability (The Economist, 2018) shows that Methane produced from dumping food is 21x higher and more damaging than CO2.

Thus, how to tackle the issues?

Cold chain logistics is one of the answer to reduce food loss. In current condition, Indonesia still lagging behind to peer countries. Most of cold storages are located far away in industrial areas and focused on serving export and import market. However, the percentage of food losses are located in the movement of products from farmers area (usually rural or villages) to urban densely populated areas such as cities and suburbs.

Therefore, opportunities lies due to the rising of online groceries and e-commerces which requires faster deliveries and shorter lifespan. Based on the data from Indonesia cold chain association, the growth in this industry is projected around 8-10% annually in the futures and spread towards all goods and the majority is driven by horticultures, frozen food, sea food, poultry and dairy products. However, not only in urban areas the opportunities also lies in first mile deliveries where farmers in rural areas are facing higher shipping or transporting cost due to unconsolidated demand from end users.

Eventually, cold chain logistics in Indonesia is one of the key issues that influence food losses. Thus, the idea of improving these issues ultimately contribute to Second Goal in SDGs of Zero Hunger and definitely create a better impact to the social and environment. I personally believes that in the future, price of foods can be dropped down by 8-10% and of course contribute to higher qualities and safety of the products. In addition, improving cold chain logistics will benefit for the economy because people have rooms in their daily expenditure to take better education for the kids and health treatments which results to resilient societies.