In recent years, Indonesia has become a magnet for the manufacturing and construction industries. Large projects require supplies of high-tech machinery and factory equipment from abroad. However, behind this surge lies a drastically increasing fundamental risk, namely the surge in global steel and aluminum prices. This situation not only puts pressure on machine manufacturers’ margins but also automatically increases the value of imported machinery.
As insurance brokers on the front lines of logistics risk, we at L&G Insurance Broker see machinery importers as particularly vulnerable. A single incident during transit—damaged, lost, or sunken machinery—now means significantly greater financial losses. Therefore, ensuring your cargo insurance is comprehensive and updated is no longer an option, but an absolute necessity.
Rising Steel & Aluminum Prices Strangle the Machinery Industry
The rise in metal prices is not a seasonal phenomenon, but rather a structural trend exacerbated by global dynamics in 2024–2025. Steel and aluminum, two of the most strategic commodities for the machinery industry, experienced significant price spikes due to tightening global supplies, geopolitical instability, and extraordinary demand from emerging sectors such as data centers and artificial intelligence (AI).
The Association of Indonesian Metalworking and Machine-Making Industries (GAMMA) reported that the increase in raw materials has eroded operating margins by 10–15% for local and global machine manufacturers. GAMMA Chairman Dadang Asikin revealed that many machine-making industry players are delaying expansion because steel and aluminum prices have reached multi-year highs.
Facts that make the situation even more difficult:
- Global aluminum prices hit an all-time high (source: Bloomberg, 2025).
- Global demand for aluminum is increasing sharply due to the construction of data centers & AI.
- Import tariffs and supply instability make the machinery production chain fragile.
As a result, each machine produced, regardless of location, has a significantly higher material value. This is what increases the risk for machine importers.
Delayed Expansion, Machine Imports Soar
Despite the domestic machinery industry being pressured by steel and aluminum prices, data shows that machinery imports into Indonesia actually increased significantly in the second and third quarters of 2025. This phenomenon creates a dangerous market irony. This occurs because:
- Efficiency Needs: Indonesian manufacturing companies need new machines for production efficiency and to reduce operational costs, especially energy consumption.
- Replacement of Old Equipment: Old equipment in factories must be replaced to maintain productivity amidst fierce global competition.
- Import Price Stability: Although global steel and aluminum prices are rising, imported machinery prices are sometimes more stable or foreign manufacturers provide incentives to maintain the Indonesian market.
- Infrastructure Projects: Large construction projects (e.g., the construction of the IKN, smelters, and battery factories) continue to progress, requiring the import of heavy industrial machinery and precision CNC machines.
In conclusion: The machinery industry is not undergoing significant expansion, but machinery importers continue to import to survive and increase efficiency. The value of imported machinery automatically increases, creating new risks for factory machinery shipping insurance.
The Impact of Rising Metal Prices on the Value and Risk of Imported Machinery
As insurance brokers, we see that rising metal prices have a direct domino effect on the financial risk of machinery importers:
- Increased Machine Value: Rising steel and aluminum prices cause the overall value of machines to increase by 10–30%. This means losses in the event of damage during transit are greater.
- Higher Spare Parts Costs: If there is even a minor damage to a precision machined component during shipping, the cost of replacing the spare part—which is mostly made of metal—can skyrocket.
- Exchange Rate Volatility: Machinery importers have to deal with the rising value of insured goods, which is exacerbated by fluctuations in the rupiah exchange rate.
- Logistics Risks Increase: High metal prices and surging demand are creating bottlenecks at ports. Machinery is produced in large batches and shipped in high volumes, increasing the risk of mishandling and inadequate container stuffing.
For machinery importers, this situation presents a perfect combination of risks: As goods become more expensive, travel risks increase, and potential losses increase. In such circumstances, relying on standard cargo insurance is extremely risky. Insurance coverage for factory machinery shipments should be re-audited.
Key Risks of Imported Machinery Shipments Amid Global Uncertainty
L&G Insurance Broker notes 5 logistics risks that have increased significantly and must be covered by your cargo insurance:
a. Damage due to Shock & Rough Handling (Mishandling)
Heavy machinery and precision components are susceptible to structural damage (bending, cracking, and misalignment). This damage often occurs during loading/unloading at ports or container stuffing. Appropriate cargo insurance should cover these risks.
b. Rust & Corrosion (Moisture Damage)
This is especially true for sensitive aluminum and steel machinery. Long sea voyages, extreme temperature differences, and humidity inside containers can cause internal corrosion. Standard policies (ICC B or C) do not cover this risk. Machinery importers are required to have factory machinery shipping insurance with extended corrosion endorsement.
c. Ship Accidents & General Average
Amidst global weather volatility, ship accidents (such as fires or groundings) are common. General Average is a risk where the importer is required to share salvage costs (e.g., towing the ship) even if the goods are undamaged. All Risks Cargo Insurance (ICC A) is the only protection against General Average liability.
d. Theft and Loss
Machinery and spare parts worth billions of rupiah are the primary targets of syndicates at transit ports. Comprehensive cargo insurance guarantees reimbursement in the event of theft or partial loss of cargo.
e. Documentation Errors and Demurrage
Incorrect HS codes, invoices, or packing lists can result in machinery being held at customs. While this isn’t a physical risk, the resulting demurrage costs can reach tens of millions of rupiah. Appropriate insurance can cover this risk.
Without proper safeguards, a single incident can be enough to derail a project worth hundreds of billions.
Choosing the Best Protection Amidst Steel and Aluminum Price Volatility
To protect your increasingly valuable machinery import investment, L&G Insurance Broker recommends the following coverage:
A. Asuransi Cargo (Marine Cargo Insurance) ICC A
All Risks Coverage (ICC A): This is the gold standard for high-value machinery. It covers all physical and loss risks, except those explicitly excluded (e.g., war and strike). Mandatory Coverage Extensions:
- Rust, Oxidation, & Corrosion Clause: Protects the engine from damage due to increased sea humidity.
- Mechanical Derangement: Important for precision machines that can be damaged by internal shocks.
- Loading & Unloading Risk: Covers the risk of forklift accidents or damage during loading and unloading at the port.
B. Warehouse and Property Insurance
- Warehouse to Warehouse Insurance: Make sure your cargo insurance policy covers damage from the original warehouse (shipper) to the importer’s warehouse (consignee).
- Property All Risks (PAR): If the imported machinery is for your factory, protect the asset once it is installed from the risk of fire, flood, or property damage.
The Role of L&G Insurance Brokers in Securing Machinery Imports
L&G Insurance Broker, an insurance broker located in South Tangerang, specializes in factory machinery shipping insurance. We help machinery importers secure their valuable assets by:
- Asset Value Audit: Ensures that the sum insured is always updated according to increases in steel and aluminum prices and exchange rate fluctuations.
- Special Wording Negotiation: Drafting a policy with special wording for precision machinery and components that covers the risks of corrosion and mechanical damage that are prone to occur during shipping.
- Total Claims Assistance: Manages the entire claims process from initial survey to final payment. Machinery importers don’t need to worry about dealing with insurance or shipping bureaucracy alone.
We ensure you get efficient and competitive cargo insurance in the midst of uncertain market conditions.
Conclusion
Rising steel and aluminum prices have changed the logistical risk landscape for machinery importers in Indonesia. Imported machinery now carries a much greater potential loss than in previous years. Risk factors such as rough handling at ports, corrosion due to humidity, and even ship accidents (General Average) increasingly threaten billions of rupiah in investments. The mistaken assumption that shipping companies or forwarders bear all the risk is a fatal mistake that can leave machinery importers facing total losses.
This is the most critical moment for every machinery importer to ensure their factory machinery shipping insurance is ICC A (All Risks) and has coverage limits that align with current market values. L&G Insurance Broker is ready to be your strategic partner. We not only help keep cargo insurance premiums competitive, but most importantly, we ensure your policy specifically covers the risks of corrosion and precision damage, which are the main threats to your high-tech machinery.
Don’t let rising global metal prices turn into a financial disaster for your warehouse. Proactive action now is the only best protection. If you’re a machinery importer, factory owner, or heavy equipment distributor, don’t delay. Contact L&G Insurance Broker now on 08118507773 For a free consultation regarding your cargo insurance, our team of experts is ready to assist you from risk analysis to claim settlement, ensuring the safe, efficient, and timely delivery of your factory machinery.protected.
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