InfoSAWIT, JAKARTA – Indonesia’s mandatory B50 biodiesel program is helping reshape demand across the palm oil supply chain, with state railway operator PT Kereta Api Indonesia (KAI) reporting an 18% increase in plantation commodity freight during the first seven months of 2026.
KAI transported 374,098 tons of plantation commodities between January 1 and July 31, 2026, up from 317,026 tons during the same period last year. The increase represents an additional 57,072 tons of freight.
The growth accelerated in July. KAI transported 51,741 tons of plantation commodities during the month, up 24.52% from 41,551 tons in July 2025.
Most of the plantation commodities transported by rail were crude palm oil (CPO), highlighting the growing role of rail-based logistics in supporting Indonesia’s palm oil and bioenergy industries.
KAI Vice President of Corporate Communication Anne Purba said the increase demonstrated stronger demand for rail-based plantation logistics. Rail transport offers large carrying capacity, regular schedules and operational efficiency, making it suitable for moving palm oil commodities from production centers to processing facilities.
The increase in CPO demand is closely linked to Indonesia’s mandatory B50 biodiesel policy, which came into effect on July 1, 2026 and was officially launched by President Prabowo Subianto on July 9 as part of the government’s strategy to strengthen national energy self-sufficiency.
Under the B50 program, fuel contains 50% palm-based biodiesel, or fatty acid methyl ester (FAME), blended with 50% conventional diesel.
The Ministry of Energy and Mineral Resources estimates that the program will require approximately 16.7–18 million kiloliters of biodiesel, translating into CPO demand of around 15.2–16.3 million tons.
The government projects that B50 could save up to Rp170 trillion in foreign exchange, create approximately 2.1 million jobs and reduce carbon dioxide emissions by as much as 44.46 million tons.
For the palm oil industry, the policy creates a larger domestic market for CPO. It also places greater emphasis on the logistics infrastructure needed to move feedstock efficiently from plantations and collection points to processing facilities.
Rail transport is therefore becoming an increasingly important component of the B50 ecosystem.
KAI itself is also becoming part of that ecosystem as it gradually adopts B50 in diesel-powered operations. Since July 1, the company has begun implementing B50 in locomotives and generator cars following a series of technical tests.
The tests covered engine performance, fuel consumption, combustion stability, emissions, filters, lubricants and fuel-system performance.
Anne said KAI consequently has two important roles within the B50 supply chain: transporting palm oil commodities while also using B50 in its own diesel-based operations.
The development comes as Indonesia’s growing use of palm oil for biodiesel attracts increasing attention in the global vegetable oil market.
In its July 2026 Oilseeds: World Markets and Trade report, the United States Department of Agriculture (USDA) projected global palm oil production for the 2026/2027 marketing year at 81.44 million tons.
Indonesia is expected to account for 47.5 million tons, or approximately 58.3% of global production.
The USDA report identified several factors that could influence the palm oil market, including Indonesia’s B50 implementation, the potential impact of El Niño and fluctuations in crude oil prices.
KAI said it plans to further expand plantation commodity freight capacity by strengthening rolling-stock readiness, optimizing loading and unloading facilities and improving coordination with customers and other stakeholders.
The company sees the growth in plantation freight as an opportunity to strengthen the role of rail logistics in palm oil downstreaming and Indonesia’s energy security agenda.
As B50 changes the balance between domestic and export demand for palm oil, the performance of the logistics sector will become increasingly important.
From plantations and mills to biodiesel refineries and fuel distribution networks, the ability to move CPO efficiently could become a critical factor in ensuring that Indonesia’s ambitious biodiesel policy translates into a stronger and more integrated palm oil value chain. (T2)
Source: InfoSAWIT
