Impact of Increasing Air Cargo Rates, 4 Asperindo Members Bankrupt

The Association of Indonesian Express, Post and Logistics Services (Asperindo) companies stated that the impact of the decline in the market due to the increase in shipping rates as a result of soaring tariffs on air cargo (SMU) or air cargo has caused as many as four companies to go bankrupt.

This, said Deputy Chairperson of Asperindo Budi Paryanta, occurred in just one month after the increase in shipping costs imposed by Asperindo to its customers around 15-25 percent from the previous, as a consequence of skyrocketing air cargo rates.

“So in addition to shipments from our customers who dropped dramatically to 40%. Four of our members even already went bankrupt because they did not want to survive,” he told Bisnis on Monday (2/18/2019).

Budi explained that as many as four Asperindo member companies that had gone bankrupt were scattered in a number of regions, namely two companies in Riau, one in Palembang, and one in Jakarta.

“This is what we detected, which has closed down four reports, namely in Riau there are two, Palembang has one, and Jakarta has one. Hopefully there are no more reports even though the number could be more than that because there could be some embarrassed to report, “he said.

He was also worried that there would be another change that would go bankrupt if this problem was not resolved. In fact, the increase in shipping costs, as the impact of skyrocketing air cargo rates, only lasted a month.

It is known that in response to the skyrocketing air cargo rates, Asperindo was finally forced to respond to this by raising the shipping costs charged to their customers by 15-25%.

Asperindo claimed to have tried to survive as much as possible to survive by not raising shipping costs for almost the last 6 months after the first increase in air cargo rates in June last year.

However, he continued, business people would eventually like it or not, starting in mid-January 2019 it increases shipping costs and is borne by customers to the effect of reducing shipments from their customers by up to 40%.

“As a result of the increase in air cargo mail rates, we were forced to increase shipping costs too. Well, because shipping costs went up, service users also felt heavy. Well they finally reduced production because of the high increase in shipping costs, they finally couldn’t send much,” he explained.

Budi said that the increase in air cargo letter rates had been taking place starting in June 2018, and occurred many times. Exemplified for Garuda Indonesia airlines, it has started to rise from once in June, October twice, November once, once in December, and January 2019 twice.

“We are just starting to raise shipping costs in mid-January 2019. So at the plenary session on January 14, 2019, all members agreed to increase rates in the range of 15-25% which is effective as of January 15, 2019,” he said.

Therefore, it is very hopeful that there will be a solution for support from the government to increase the tariff for air cargo.

Because, Asperindo also feels that it is part of the economic contributors in the country.

“Because we are not only confirming goods from end to end, but also facilitating business flow as well. For example, if there are many SMEs who cannot sell their products because of the high cost of shipping, it will ultimately affect the economy,” he explained.

Earlier it was known that, at the beginning of last month, news had spread about a discourse to boycott the use of air cargo by Asperindo due to an increase in air cargo rates from airlines which were considered very burdensome for the logistics service business.

Asperindo complained of cargo rates which rose up to 6 times since July 2018 and even for certain flight routes the increase reached around 300%.

He even wanted to meet the President to advocate for the objection. However, after a closed meeting facilitated by the Ministry of Transportation on February 8, 2019, both of them agreed to “make peace” over the chaos.

“The government facilitates so that there is no noise, and we have agreed, there is no problem,” said Asperindo Secretary General Amir Syarifuddin recently.

At that time, after the meeting, Garuda Indonesia VP Corporate Secretary Ikhsan Rosan explained the background of the cargo tariff increase. He said, the previous price was considered too low, and it could not cover the costs.

According to him, among others, there was an increase in avtur fuel prices in January-December 2018 by 39% and the weakening of the rupiah against the US dollar (US) on an annual basis near 13%.

Meanwhile, payment for aircraft rentals and maintenance includes parts using US dolas. In addition, the airline is faced with an increase in airport and navigation costs between 10% – 13%.

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