The national steel industry is currently facing serious pressure due to its reliance on imported products. According to Deputy Minister of Industry Faisol Riza, 55% of national steel demand is met by imports, primarily from China, while domestic factory utilization is only around 50%. Many local steel mills are idle, unavailable to the market, potentially losing growth momentum. This situation is a wake-up call for businesses and the government: risk mitigation strategies cannot be postponed.
On the other hand, the need to modernize factory machinery presents a strategic opportunity. Importing modern industrial machinery allows factories to increase production capacity and quality, particularly in high-value sectors such as automotive, shipping, and heavy equipment. However, shipping imported machinery carries high risks, ranging from physical damage and delays to lost cargo. This is the time to utilize cargo insurance as a logistical risk protection instrument to ensure investment security.
As a professional insurance broker in South Tangerang, L&G Insurance Broker emphasizes the importance of integrating risk management and insurance in every shipment of factory machinery. With the right insurance protection, industrialists can focus on productivity without worrying about the risk of costly shipments. Contact L&G Insurance Broker at 0811-850-7773 for a free consultation and find the best risk protection solution before your machine import investment is realized.
Challenges to the National Steel Industry: Import Pressure and Low Utilization
The Ministry of Industry has highlighted serious challenges facing the domestic steel industry. Local production remains concentrated in the construction and infrastructure sectors, while high-value markets such as automotive, shipping, and heavy equipment require specialized steels like alloy and special steels.
Statistics Indonesia (BPS) data from 2021 shows there are 562 companies in the basic metals sector and 1,592 metal goods manufacturers. However, most factory machinery is outdated and environmentally unfriendly, reducing the competitiveness of domestic products. Without a modernization strategy and logistical protection, machinery importers face both opportunities and risks, particularly related to cross-border shipping.
Surge in Machinery Imports: Opportunities and Risks
Imports of factory machinery have increased significantly compared to finished steel. This is because the national steel industry requires machinery modernization for:
- Increase productivity.
- Producing globally competitive specialist steel products.
- Meeting the needs of the automotive, shipping and heavy equipment sectors.
- However, shipping imported machines is prone to risks such as:
- Damage during sea or land transportation.
- Delays that hamper production.
- Loss or theft of cargo.
This is where cargo insurance becomes crucial. A shipping insurance policy protects investments, ensuring companies don’t suffer financial losses due to unforeseen risks.
The Role of Cargo Insurance in Securing Machinery Imports
As a broker, we emphasize several important points:
- Machine value protection: Guarantees full compensation in case of damage or loss.
- Measured risk management: Ensuring each shipment has its key risks identified.
- Financial certainty: Minimizing cash flow disruptions due to claims or losses.
L&G Insurance Broker provides suitable policy recommendations, including:
- Marine Cargo Insurance for marine shipping risks.
- Warehouse insurance for machines before installation.
- Additional insurance for land transit if required.
With this protection, the steel industry can capitalize on the surge in machinery imports as a momentum for modernization without worrying about detrimental logistical risks.
Operational Risks and Mitigation in Machinery Imports
1. Physical Risks and Machine Damage
Factory machinery is a high-value asset and is highly sensitive to shock, humidity, vibration, and improper handling during shipping. Failure of key components such as motors, gearboxes, or electronic sensors can result in significant production downtime.
According to the World Steel Association’s 2024 report, machinery failure during transportation is a major factor in production delays in the global metals and manufacturing sectors. Risk Recommendation: Choose a shipping company that meets international standards, use special packaging and support, and take advantage of cargo insurance that covers physical damage, including total loss and partial damage.
2. Risk of Delayed Delivery
Every day of delays in imported machinery can hinder production processes, disrupt contract schedules, and reduce productivity. According to data from the International Chamber of Shipping, 30% of global shipping delays are caused by internal logistics factors and inadequate route management.
Risk Recommendation: Use a real-time tracking system, choose a shipping route that has an accurate time estimate, and choose an insurance policy that provides compensation for delivery delays (delay in transit coverage).
3. Risk of Loss or Theft
Industrial machinery is often worth billions of rupiah per unit, making it vulnerable to theft during transit at ports or temporary warehouses. Data from the Bureau of Industrial Security (BOS) in 2023 recorded a 7% increase in industrial asset theft during the import process annually.
Risk Recommendation: Choose marine cargo insurance with total loss coverage, coordinate with your broker for security mitigation, including escorts during loading and unloading.
4. Environmental Risks and Force Majeure
Extreme weather, storms, fires, and shipwrecks are unavoidable natural risk factors. A 2022 UNCTAD study found that 12% of industrial machinery failures during global shipping were caused by natural disasters.
Risk Recommendation: Marine insurance policies should cover both natural and force majeure risks to ensure maximum compensation in the event of an unforeseen incident.
Case Study: Failure Without Protection
In 2024, a steel mill in Central Java ordered imported machinery from China. The machinery was damaged due to the cargo being shaken during shipping. Without insurance, the company faced billions of rupiah in replacement costs, and production was halted for two weeks.
With marine cargo insurance, claims can be processed quickly, losses reimbursed, and factory operations can return to normal without disrupting cash flow. This underscores the importance of protection for every imported machinery shipment.
The Role of Insurance Brokers in Industrial Modernization and the Surge in Machinery Imports
Indonesia’s manufacturing industry now faces a significant opportunity: a surge in imported factory machinery. This modern machinery can increase production capacity, upgrade technology, and improve product quality. However, every shipment carries risks that must be managed appropriately.
Here are the roles of insurance brokers such as L&G Insurance Broker in helping industry players face these risks:
Mapping the Risks of Every Shipment
- Factory machines are sensitive and easily damaged if mishandled.
- Risks include shock, humidity, loading and unloading errors, or accidents during transportation.
- Brokers help identify key risk points so they can be anticipated early.
Determining the Right Type of Insurance
- Marine cargo insurance is very important to protect investments.
- The policy can cover physical damage, loss, and delays in delivery.
- The type of policy is adjusted to the value of the machine and the mode of transportation (sea, air, or land).
Handle the Claims Process Quickly and Transparently
- Brokers accompany the entire claims process so that replacement funds are received without any obstacles.
- Fast claims processing ensures the factory remains operational and cash flow is not disrupted.
Providing Risk Recommendations for Loss Mitigation
- Practical recommendations, such as extra packaging, temperature checks, and choosing an internationally certified shipping company.
- Helping companies reduce additional risks such as theft or damage due to extreme weather.
With broker support, industry players can focus on improving product competitiveness while ensuring that investments in modern machinery are protected from logistical risks. The surge in machinery imports is now a strategic opportunity, not a threat, when supported by professional marine cargo insurance and risk management.
Conclusion
The national steel industry is currently facing significant pressure due to high imports. Data from the Ministry of Industry shows that approximately 55% of Indonesia’s steel needs are met through imports, primarily from China. Furthermore, much of the steel mill machinery is aging, reducing productivity, production quality, and operational efficiency. This puts the national steel industry at risk of losing its competitiveness, particularly in meeting demand in the construction, automotive, shipping, and heavy equipment sectors, which require specialized steels such as alloy or special steel.
However, the surge in imports of modern machinery can be a strategic opportunity for industry to modernize production facilities. This modernization will increase capacity, product quality, and global competitiveness. This is where machinery shipping risks become critical: shocks during transportation, damage from extreme weather, loss or theft at ports, and even delays in delivery can all result in significant financial losses.
For this reason, marine cargo insurance is a vital instrument. This policy covers physical risks, loss, and delays in shipment, allowing companies to continue modernization without being disrupted by unforeseen risks. With this protection, steel mills can maintain production continuity, protect investments in high-value machinery, and ensure production schedules remain on track.
As an independent insurance broker, L&G Insurance Broker is ready to assist the Indonesian steel industry with every shipment of imported machinery. We help select the appropriate marine cargo insurance policy, arrange risk mitigation, and ensure a fast and transparent claims process. With this support, operational risks can be minimized, machinery investments protected, and factories can operate efficiently.
Don’t wait for a risk to occur before acting. Contact L&G Insurance Broker at 0811-850-7773 for a free consultation, and optimize your factory machine investment with maximum protection through marine cargo insurance.
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DON’T WASTE YOUR TIME AND SECURE YOUR FINANCIAL AND BUSINESS WITH THE RIGHT INSURANCE.
HOTLINE L&G 24 JAM: 0811-8507-773 (CALL – WHATSAPP – SMS)
Website: lngrisk.co.id
Email: halo@lngrisk.co.id
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