• Ramadan and its impact on Indonesia’s supply chain

    20 May 2018

    Indonesia, with the largest Muslim population in the world, started Ramadan on May 17 which will last until June 14. Hari Raya Puasa, a celebration to mark the end of the fasting month, will be held on June 15 and 16. During this month, Muslims refrain from eating, drinking and smoking in daylight hours and break their fast after sunset. Due to a combination of exhaustion and hunger from fasting, productivity level of employees are likely to be reduced as fatigue during day time are common, particularly for work that requires physical strength. In Indonesia, business hours will be slightly altered by 30 minutes. The current official office time of 08:00 to 17:00 (local time) will be changed to 07:30 to 16:30 with 30 minutes resting time.

    However, local sources suggest that businesses are expected to operate normally in Indonesia for the first two weeks of Ramadan with no major disruptions. All ports, including major ports like Jakarta, Surabaya and Semarang will be operational with rotation of shifts. However, low productivity at the ports are likely due to high yard occupancy ratio in the lead up to Hari Raya, with dwell time at all ports being around 1.5 days until the end of June. Once it is cleared, the goods will then be stored as there is normally a backlog in the cargo terminal. According to local sources, capacity constraint at the cargo terminal is expected in the last week of May, as logistics operators rush to store or dispatch cargo accordingly.

    Reports show that Soekarno–Hatta International Airport (CGK) and Juanda International Airport (SUB), which serve Jakarta and Surabaya, are likely to operate with normal schedules for airfreight. Capacity constraints at CGK cargo terminal are common even under normal circumstances due to limited infrastructures for cargo trucks, and having a few dock stations and gates which makes cargo handling challenging. Backlog on airfreight cargo regularly occurs as customers reportedly rely on one dominant ground handler which makes it difficult to offload cargo on time. This creates a higher probability for shipments to miss other connecting flights. With labor shortages and shortened working hours during the fasting month, a backlog in airfreight is highly likely.

    The most significant impact on transportation is expected to be on inland freight movement as the government has declared extra public holidays before and after of Hari Raya (June 11 – 20). This is the peak period where employees travel to their hometowns. Factories normally shut down at least one week before and after Hari Raya, i.e. from June 8 or 9 at least until June 25 to allow workers travel time. Highway congestions are possible as precedents indicate that from June 4 to 8, cargo trucks are likely to be prohibited on the road, which will have an impact on logistics and transportation. This indicates that June 3 may be the last day for cargo trucks to operate until the restriction is lifted. An odd-even traffic license policy is already in place for smaller vehicles entering most areas of Jakarta. For movement within Jakarta, traffic will be heavily congested an hour before 18:00 during Ramadan as people rush home for the evening meals.

    Customers with interest in shipments to Indonesia during and after Ramadan should book cargo capacity in advance to ensure that their freight shipments arrive in Indonesia at least 2 weeks before June 4 as it takes approximately 2 weeks to clear customs during Ramadan. To mitigate delays for inland freight movement as well as keeping in mind the likelihood of traffic policy changes during the holiday period, customers should liaise with their logistics partners for cargo and pickup delivery services.

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