Business Insight | PT Cakraindo Mitra Internasional

In 2024, the global logistics industry will face a critical situation as container shortages become a global emergency. The scarcity of accessible shipping containers, along with continued geopolitical tensions, environmental problems, and growing demand for commodities, has resulted in a serious bottleneck in the global supply chain. This dilemma has far-reaching consequences for industries ranging from manufacturing to retail, with businesses rushing to find answers.

Causes of the Container Shortage Crisis

Supply Chain Disruptions: The container scarcity began with the COVID-19 epidemic, which seriously impacted global supply networks. In 2024, these disruptions have been exacerbated by increased demand for goods as economies recover and consumer spending rises. Ports remain congested, which causes delays in returning containers to circulation, worsening the scarcity.

Imbalanced Trade Flows: One of the key causes of the container scarcity is an imbalance in trade flows. A large number of containers are trapped in areas such as North America and Europe, where imports dominate exports. This imbalance means that containers are not being returned to important Asian industrial hubs on time, resulting in further shortages.

Environmental and Infrastructure Challenges: Droughts and other disasters have affected vital maritime routes, such as the Panama Canal, slowing down the flow of cargo. The situation is being made worse by infrastructural limitations in key ports, including equipment problems and labour shortages.

Geopolitical Tensions: Prolonged geopolitical disputes, such as trade disputes between the United States and China, as well as unrest in vital shipping channels like the Suez Canal, are resulting in further container ship delays and rerouting. Longer transportation durations are the outcome, which raises the need for containers.

Impact on Global Trade

The shortage of containers affects international trade in general. As businesses fight for dwindling container space, shipping rates have surged. Prices have gone up as a result, especially in sectors where just-in-time supply chains are prone to delays, like consumer products, electronics, and automobiles. Stock shortages are affecting retailers, and manufacturers are stopping production because they cannot get certain raw materials.

The ongoing conflict between Israel and Palestine has had profound repercussions on global logistics and supply chains. With increased hostilities in the region, the Eastern Mediterranean has become a volatile area for shipping. Key ports such as Ashdod and Haifa in Israel have faced temporary closures and heightened security, causing significant delays and rerouting of shipments. This has disrupted the flow of goods, increased transit times, and elevated shipping costs due to higher insurance premiums and operational challenges.

Disruption of Shipping Routes

The conflict has led to rerouting vessels away from traditional routes near Israel and Palestine, resulting in congestion in alternative routes, such as the Suez Canal. This has caused delays and uncertainty in the supply chain, particularly for industries relying on timely deliveries. Moreover, some shipping companies have suspended services to and from the region, further straining global trade.
Case Example: During the August 2024 conflict between Israel and Palestine, a major disruption occurred in shipping routes through the Eastern Mediterranean, particularly impacting vessels passing near Israel’s ports of Ashdod and Haifa. Several shipping lines were forced to reroute their vessels to avoid potential risks, leading to significant delays. For instance, container ships en route from Asia to Europe that typically passed through the Suez Canal were diverted around the Cape of Good Hope, adding extra transit time and increasing fuel costs significantly.

Supply Chain Delays and Increased Costs

Shipping through the Eastern Mediterranean has become more expensive due to increased war-risk insurance premiums. These costs are passed on to consumers, affecting the prices of goods globally. Additionally, fuel costs have risen as ships take longer, less direct routes to avoid conflict zones.

Increased Transit Times:

Rerouting: Ships may need to take longer routes to avoid conflict zones. If a typical route is extended by 20%, for instance, this could add 2-3 days to shipping times depending on the distance.
Port Delays: Increased security checks at ports near the conflict zone can also add several hours to days in delays.

Increased Costs:

Insurance Premiums: War risk surcharges can increase by up to 50-100%, depending on the perceived risk.
Fuel Costs: Longer routes increase fuel consumption, raising costs by an estimated 10-20% depending on the detour length.
Security Measures: Hiring additional security for cargo could increase operational costs by up to 10%.

Opportunity Costs:

Inventory Holding Costs: Delays mean longer storage times, increasing inventory costs by 1-2% per week.
Loss of Market Share: Extended delays can lead to lost sales, especially for time-sensitive goods, potentially costing businesses 5-10% in lost revenue.

Impact on Regional and Global Supply Chains

The disruption in logistics has impacted various industries, particularly those dependent on just-in-time manufacturing and delivery. The uncertainty in supply chains has led to shortages of critical goods, such as raw materials and components, affecting production timelines. The situation has also highlighted the vulnerability of global supply chains to regional conflicts, prompting businesses to reconsider their logistics strategies and seek more resilient supply chain solutions.

As the conflict continues, the logistics industry faces ongoing challenges. Companies may need to invest in more flexible and adaptive logistics solutions to mitigate risks associated with geopolitical instability. Additionally, the conflict underscores the importance of diversifying supply chains and exploring alternative shipping routes to reduce dependency on any single region.

In conclusion, the Israel-Palestine conflict has underscored the fragile nature of global logistics in the face of geopolitical turmoil. The impact on shipping routes, costs, and supply chains will likely continue to be felt for the foreseeable future, prompting a reevaluation of logistics strategies on a global scale.

Indonesia enforces customs and export control regulations through a combination of national laws to oversee and supervise the flow of goods in and out of the country. These measures play a crucial role in upholding international trade standards, safeguarding national security, and preserving the nation’s economic stability. The Directorate General of Customs and Excise (DGCE) in Indonesia, operating under the Ministry of Finance, takes charge of overseeing and regulating the movement of goods across the national borders. Its responsibilities include enforcing customs laws, collecting duties and taxes, implementing trade regulations, and ensuring adherence to import and export controls.

Furthermore, the DGCE collaborates with various governmental bodies like the Ministry of Trade, the Ministry of Industry, and the National Agency of Drug and Food Control (BPOM) to oversee and supervise specific commodities, especially those under prohibitions and restrictions (Lartas). These entities are also responsible for granting permits, licenses, and certifications essential for the lawful transportation of goods through Indonesian borders.

1. Customs Control in Indonesia

Directorate General of Customs and Excise (DGCE): The primary authority responsible for customs control in Indonesia, overseeing the enforcement of customs laws, duty and tax collection, and trade regulation implementation.

Import and Export Procedures: Businesses are required to adhere to customs protocols, including goods declaration, duty payment, and submission of necessary documentation like invoices, packing lists, and certificates of origin.

Customs Valuation and Classification: Goods are categorized using Harmonized System (HS) codes and valued based on international standards to determine applicable duties and taxes.

Inspections: Customs inspections are carried out to prevent smuggling, enforce restrictions, and ensure compliance with health, safety, and environmental regulations.

2. Export Control in Indonesia

Prohibitions and Restrictions (Lartas): Indonesia enforces Lartas to manage the export of certain goods. Items falling under Lartas may necessitate special licenses or permits, while some may be completely prohibited from export. These measures are in place to safeguard national security, the environment, and cultural heritage.

Export Licensing: Specific goods require an export license, particularly those that are sensitive or of strategic importance. These licenses are issued by the Ministry of Trade and other relevant authorities.

Strategic Goods: Indonesia regulates the export of strategic goods, such as military equipment, dual-use items, and technology with both civilian and military applications. Exporters of these goods must adhere to stringent regulations and may need specific permits.

Customs Clearance: Prior to export, goods must pass through customs, where documentation is examined, and goods may undergo inspection to ensure compliance with export controls.

Trade Sanctions and Embargoes: Indonesia follows international trade sanctions and embargoes imposed by organizations like the United Nations, meaning certain goods cannot be exported to specific countries or entities.

3. Key Challenges

Compliance: To avoid penalties, companies need to navigate intricate regulations and meet all customs and export control requirements.

Documentation: Smooth customs clearance and export processing rely on precise and comprehensive documentation.

International Standards: Staying updated on local and international trade regulations is essential for businesses, as non-compliance can lead to delays or financial penalties.

Logistics has undergone profound transformations over time, continually adapting to societal shifts and technological advancements.

Antiquity: The origins of logistics trace back to ancient civilizations such as Mesopotamia, Egypt, China, and Rome. Early logistics focused on developing transportation and storage systems to support armies, cities, and trade. This era saw the use of carts, ships, and pack animals, alongside the establishment of key routes and warehouses.
Middle Ages: During this period, guilds and trade routes were crucial in facilitating the exchange of goods. Storage and distribution practices began to take shape in marketplaces, laying the groundwork for more organized logistics systems.
Industrial Revolution: The 18th century marked a significant turning point in logistics with the advent of machinery, railways, and steamships. These innovations revolutionized transportation systems, enabling the faster and more efficient movement of goods.
20th Century: Logistics became a more formalized discipline, driven by mass production, globalization, and technological innovations like the telephone, radio, and later, the internet. This era introduced new management methods such as just-in-time and supply chain management, fundamentally altering logistics practices.
Digital Era: The rise of digital technology and the information age brought about radical changes in logistics. Innovations like warehouse and transport management software, barcodes, RFID technology, and real-time tracking systems transformed how goods were managed and moved.
Logistics 4.0: The modern logistics landscape, known as Logistics 4.0, is characterized by digitalization, artificial intelligence (AI), the Internet of Things (IoT), and robotic process automation (RPA). This era is marked by advancements such as route optimization, autonomous vehicles, and automated warehouses.
Logistics 5.0: In line with Industry 5.0, a concept introduced by the European Commission, the logistics industry is now focusing on additional values crucial for its future, including human well-being, sustainability, and resilience. This stage also emphasizes the importance of resilience strategies to protect the sector from disruptions, such as those experienced during the coronavirus pandemic.

The evolution of logistics reflects humanity’s continuous adaptation to changing needs and technological advancements, transitioning from basic transportation systems in ancient times to the sophisticated, technology-driven networks of today. Each stage—marked by innovations in mechanization, globalization, digitalization, and sustainability—has progressively enhanced the efficiency, complexity, and resilience of logistics, underscoring its critical role in global trade and economic development.

2024: Container Shortages Become a Worldwide Emergency