Global Cooperation to Mitigate Supply Chain Disruption*
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The capacity shortages of port labors, shipmen, truck driver and others to deliver products have further deteriorated as containers keep piling up across major ports, especially in United States. Moreover, the Ukraine-Russia geopolitical tension has caused shortages in several commodities, pushing the prices to increase substantially. This bottleneck of global supply chain, gradually, starts to induce domestic
headline inflation (consumer price index).
Indonesia’s domestic trade face the price pressure through two channels of transmission, namely import price and shortage of fleet as domestic shipping shifts their fleet to foreign routes with higher fees. The need to increase shipping fleets is urgent to mitigate the shortage problem, especially amidst oligopolistic structure of shipping industry (MLO). Purchasing additional fleets, however, is costly due to the high price volatility of cargo vessel. Shipping companies need third party support, both for the financing purpose and also for bearing the implied risk in obtaining a new fleet.
This Economic Bulletin highlights both the cyclical and structural challenges facing the shipping industry, and proposes potential solutions to address the headwinds
*/THE ORIGINAL VERSION OF THE DRAFT HAS BEEN SUBMITTED AND ACCEPTED AS A POLICY BRIEF FOR THE T-20 (THINK-TANK FOR G-20 MEETING) OF 2022