In an era defined by global uncertainties and escalating trade tensions, Indonesia’s national shipping industry finds itself at a critical juncture. The “tariff war,” a term frequently heard in international trade discussions, presents both opportunities and challenges for the sector. We recently gained valuable insights into this dynamic landscape from Mr. Sofwan, a speaker on CNBC Indonesia’s “Perang Tarif, Industri Pelayaran Nasional Hadapi Dampak Ganda” segment.
The Dual Impact of Tariff Wars According to Mr. Sofwan, the tariff war has a dual impact, potentially being both positive and negative for the national shipping industry. He noted that, so far, the impact has leaned towards the positive. A significant advantage is the potential for countries like Indonesia to benefit from other nations, particularly those facing high taxes on goods from China, by facilitating transhipment. However, he also acknowledged that countries like America are becoming more cautious, scrutinizing if goods genuinely originate from Indonesia or if it’s merely a relabeling strategy.
Addressing Logistics Costs and the Imperative for Collaboration While the tariff war offers some strategic advantages, Mr. Sofwan highlighted that the overall logistics costs in Indonesia still present many challenges. These include fuel costs, taxes, and loading/unloading fees, which are considerable homework for the industry.
When discussing strategies to maintain competitiveness amidst global pressures, Mr. Sofwan emphasized the absolute necessity of consolidation and cooperation with foreign companies. He stated that without such collaborations, competing on an international scale would be impossible. For instance, when an Indonesian-flagged ship departs from Indonesia, it requires a partner in the destination country to handle the vessel, as they possess local expertise. Logistical processes for international shipments extend beyond the port, involving multiple stages like land transport to reach the client or customer. Therefore, coordination and cooperation with foreign companies are crucial, as it’s rare for companies to manage international exports or goods shipments entirely on their own.
Indonesia’s Global Shipping Position and the Game-Changing IMO Carbon Tax Regarding Indonesia’s position in the global shipping sector, Mr. Sofwan pointed out a significant limitation: currently, only coal and palm oil exports are mandated to use Indonesian vessels. For other industries, Indonesian companies face numerous foreign regulations.
A truly “game-changing” development on the horizon is the International Maritime Organization (IMO)’s plan to implement a carbon tax. Mr. Sofwan revealed that this policy is set to be enforced sooner rather than later, with discussions possibly leading to a veto in October or November, determining the start date. He explained that if vetoed this year, the implementation could begin in two years.
The IMO carbon tax will directly affect large vessels above 5,000 GT, which are typically used for intercontinental shipping. Smaller vessels are not yet included. This initiative aims to push for a transition to renewable energy. Mr. Sofwan noted that the potential revenue for the IMO from fines and other mechanisms could be as high as $40 billion per year, creating a new dynamic in the world of renewable energy and carbon trading.
The critical question for Indonesia, as posed by Mr. Sofwan, is: “Are our Indonesian ships ready?”. He mentioned that members of the association in Indonesia are currently in a transition phase, moving from conventional marine fuel oil to LNG (Liquefied Natural Gas) as an alternative energy source.