Soetta’s Warehouse Rent Tariff Increase Causes Logistics Cost Sky Rocketing: ALFI

Soetta’s Warehouse Rent Tariff Increase Causes Logistics Cost Sky Rocketing: ALFI

Indonesia Logistics and Forwarders’ Association (ALFI/ILFA) is urging the State-Owned Airport Operator, PT Angkasa Pura 2 (AP 2) not to raise up the rent tariff of warehouse at Soekarno-Hatta International Airport (Soetta) amid the pandemic Covid-19 outbreak. According to ALFI, the pandemic has hit the business players, including those who run business in the airport.

This is in response to the AP2’s plan to increase the rent tariff of warehouse at this Indonesia’s biggest airport. “Some of our members have reported and complained this AP2’s plan,” ALFI Chairman Yukki Nugrahawan Hanafi said in a press statement this morning (24/01).

According to Yukki, this AP 2’s plan is so ironic in view of this airport performance. He said in view of a fast service, this airport’s performance had not been efficient, while its lower volume proved that this port has not played significant role in supporting the trade activities.

Soetta’s air cargo service facilities remain a supporting service only. The existing warehousing facilities which are less competitive compared to airports of our neighbouring countries proved it. However, amid the pandemic, the cargo service has become a main source of income for the airport operator,” Yukki said.

Following the drop of passengers amid the pandemic, the airport operator income has dropped significantly. “But, it is unfair that AP 2 will raise the rent tariff of warehouse to cover its income drop,” he said.

Amid the pandemic Covid-19, digitalization, innovation, smooth flow of goods, and efficiency are the keywords in doing business, according to Yukki. “Raising prices as a strategy is very inappropriate. This will burden the consumer and community, including as many as 298 forwarding companies’ member of ALFI doing business in Soetta,” he said.

AP 2 should understand that our members doing business there are now facing many difficulties. They are not able to create profit at this moment, just trying to survive. So, it is so unfair if AP 2 raises the tariff under these circumstances,” Yukki noted.

In view of this plan, many participants in the cargo warehousing tender held by AP 2 preferred to resign, as they would be unable to meet the requirements in the tender, including an increase in warehouse rental costs which is up to 80%, Yukki said.

It is natural to for a cooperation to do that in a bid to increase income. But, is it wise to do it now under this situation and condition,” Yukki questioned.

“If we want to be a dominant regional player, we have to change our business strategy, from raising the tariff to increasing the volume,” Yukki, who is also chairman of AFFA (Asean Federation of Forwarders’ Association), said.


Dialogue Needed

ALFI also reminds that though AP 2 plays as a landlord, but it does not mean that it can raise the warehousing tariff without discussion and dialogue with the users and business players.

Dialogue and discussion is very crucial and important in building a competitive business and logistics ecosystem, he said.

Furthermore, the pandemic has hit the forwarding business in which the business turnover was down by 40%.

Unfortunately, AP 2 has never considered to the volume growth and service improvement, but just taking a short step by raising the tariff.

On the other hand, Yukki explained, if there is an operator or tender participant who wins the auction, then the new operator will carry out all the investment costs for the level of service that has been targeted by AP 2, which is likely to reach hundreds of billions, even though the cooperation period only lasts 4 year.

This is so hard for operators or partners to justify their investment since their cooperation period is only effective for four years without any guarantee for extension, said Yukki.

He emphasized that for whatever reason, it is hard for business players to accept this warehousing tariff increase.

“As entrepreneurs, we have a business calculation, of course, before making an investment. We think that the increase of warehouse rent tariff at Soetta is taken without any added values to end-users of exporters and importers who finally will to pay for this warehouse rental fee.”

“This absolutely triggers logistics costs be sky rocketing. Even, further, it will create multiplier effects, making the national economy growth worsen,” said Yukki.

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