Indonesia Freight and Logistics Market SIZE & SHARE ANALYSIS - GROWTH TRENDS & FORECASTS UP TO 2030

Indonesia Freight and Logistics Market Analysis

The Indonesia Freight and Logistics Market size is estimated at 131.2 billion USD in 2025, and is expected to reach 178.1 billion USD by 2030, growing at a CAGR of 6.29% during the forecast period (2025-2030).

Indonesia's logistics market is experiencing significant transformation driven by substantial infrastructure investments and development initiatives. The government has demonstrated its commitment to infrastructure development by completing 190 national strategic projects between 2016 and 2023, with 37 projects finalized in 2023 alone, requiring an investment of USD 30.58 billion. These projects encompass a diverse range of infrastructure developments, including ports, toll roads, railways, airports, and cross-border facilities. For the fiscal year 2025, the Highways Directorate General has been allocated a substantial budget ceiling of USD 2.10 billion, highlighting the government's continued focus on infrastructure enhancement.

The maritime freight logistics landscape is undergoing notable evolution with strategic initiatives to enhance port connectivity and efficiency. In March 2024, Batam Island authorities launched direct shipping services from Batuampar Port to Guangzhou and Shenzhen in China, a development expected to reduce transportation costs by up to USD 600 per shipment compared to traditional routes via Singapore. This initiative represents a significant step in optimizing maritime logistics operations and strengthening international trade connections. The government's sea toll programs are targeting the modernization of 24 seaports, aligning with Indonesia Vision 2045's ambitious goal of positioning the maritime industry to contribute approximately 12.5% to Indonesia's GDP.

The logistics industry is witnessing significant technological advancement and service enhancement through strategic corporate initiatives. In October 2024, FedEx inaugurated a new gateway facility in Denpasar, Bali, introducing direct routing from Denpasar to Singapore and bypassing the previous Jakarta route, thereby optimizing delivery times and shipping processes. The Public Works and Housing Ministry's 2025 Draft State Budget proposes a comprehensive allocation of USD 4.91 billion, with specific designations of USD 0.66 billion for road infrastructure and USD 0.34 billion for bridge infrastructure, demonstrating a balanced approach to infrastructure development.

The industry is increasingly embracing sustainable practices and innovative solutions to address operational challenges. Indonesia's Ministry of Finance has introduced new tax incentives to promote electric vehicle adoption in the logistics sector, including luxury tax exemptions for EVs in 2024 and import tax waivers until 2025. The government has set ambitious targets to become the world's third-largest producer of electric vehicle batteries by 2027, with plans to achieve an annual EV battery capacity of 140 GWh by 2030. These initiatives are complemented by the development of smart logistics solutions, with companies implementing advanced tracking systems and automated warehouse management solutions to enhance operational efficiency.

Indonesia Freight and Logistics Market Trends

The transportation and storage sector expected to witness boost in GDP contributions, fueled by rising infrastructure projects

• In May 2024, the Japanese government extended a loan of approximately JPY140.7 billion (USD 900 million) for the construction of a high-speed rail line in Jakarta, Indonesia. Spanning 84.1 km, the East-West rail project will be executed in two phases, commencing in 2026 and concluding by 2031. The rail line will incorporate advanced Japanese technology for both trains and signaling systems. These initiatives are poised to enhance the GDP contribution from the transport and storage sector.
• Transportation is at the forefront of the nation's infrastructure expansion efforts. In this domain, ongoing and upcoming initiatives allocate 29% of their overall value to road projects, 22% to rail, and 23% to port infrastructure. These projects are crucial for enhancing connectivity and boosting economic growth. A significant undertaking in Indonesia is the Lhokseumawe to Langsa Toll Road, spanning 135 km. Commencing in early 2024, this ambitious project is slated for completion by late 2027, with the goal of alleviating traffic congestion and shortening travel times. This toll road will be instrumental in optimizing logistics and boosting the transport and storage sector's contribution to GDP.

Indonesia faced fiscal challenges amid surging crude oil prices and subsidy pressures in 2022, however the rates remained unchanged till 2024

• In November 2024, Indonesia reformed its fuel subsidy system. The new president is targeting a reduction in subsidies, which constituted roughly 16% of government spending in 2023. While the subsidy for LPG will stay the same, the government is still determining adjustments for fuel and electricity subsidies. Indonesia’s energy subsidies help keep inflation low but expose the nation to global oil price swings. The government plans to replace these subsidies with cash transfers for needy families, aiming to save about USD 12.99 billion through more targeted support.
• As of June 2024, the Indonesian Ministry of Energy and Mineral Resources (ESDM) was drafting regulations to provide incentives and tax relief for green hydrogen developers to boost the industry's growth. ESDM aimed to produce 9.9 million tons of hydrogen per year by 2060 to meet the needs of industry (3.9 Mtpa), transportation (1.1 Mtpa), electricity (4.6 Mtpa), and household gas networks (0.28 Mtpa). These sectors could also become export commodities.

OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT

• Indonesia's population is set to grow to 324 million by 2045, up from 277 million in 2023
• Under Vision 2045, Indonesia aims to become a leading global economy by bolstering its manufacturing sector
• Indonesia's oil and gas industry attracted investments totaling USD 13.7 billion in 2023, marking a 13% YoY growth
• Supply and worker shortages and the government's planned VAT rate hike in 2025 expected to increase inflation rate
• Driven by the launch of BNPL in the country, e-commerce is set to achieve a CAGR of 10.41% from 2023 to 2027
• The Indonesian government targets the production of 600,000 electric vehicles by 2030
• Indonesia is positioning itself as a global supplier of batteries and electric vehicles (EVs) by advancing its nickel-based industries
• Indonesia plans to eliminate LPG and fuel imports by 2030, focusing on harnessing its domestic resources
• Fuel economy standards, paired with rapid electrification, are projected to reduce fuel costs in the trucking industry
• Indonesia's booming mining industry is fueling a surge in demand for rigid trucks
• Rising focus since past 10 years by Indonesian Government aimed at infrastructure development in remote areas
• The Indonesian government is promoting the country as a production hub for EV batteries and offering consumer subsidies to boost demand
• Government focusing on development of road & sea infrastructure to facilitate international freight services
• Capacity expansion initiatives, coupled with increasing oil exports and wheat imports, are driving growth
• Indonesia initiated direct shipments from Batuampar Port to China, aiming for an annual target of 2 million TEUs
• Increasing port freight volumes, coupled with the growing adoption of port digitalization, are fueling economic growth
• Rising initiatives to promote environment friendly mode of freight transport with a focus on reducing freight costs
• The preference for road and sea freight transport is growing due to rising investments and initiatives in Indonesia
• Indonesia invested USD 400 billion in infrastructure development to enhance global connectivity and economic growth

Segment Analysis: End User Industry

Wholesale and Retail Trade Segment in Indonesia Freight and Logistics Market

The wholesale and retail trade segment dominates the Indonesia freight and logistics market, accounting for approximately 35% of the market share in 2024. This segment's prominence is driven by Indonesia's sizable population and expanding middle-income demographic with increased purchasing power. The country's retail industry has emerged as one of Asia's most promising markets, with retail sales showing strong momentum in Q4 2023 with a 1.6% uptick, building on a 1.4% growth in Q3. The e-commerce sector has been a significant catalyst, experiencing a 4.5% year-over-year growth in 2023. Major e-commerce platforms like Tokopedia, Lazada, and Blibli have enhanced their capabilities to facilitate cross-border transactions, enabling vendors to tap into international markets while providing customers access to a wider range of products.

Manufacturing Segment in Indonesia Freight and Logistics Market

The manufacturing segment is projected to exhibit the strongest growth in the Indonesia freight and logistics market from 2024 to 2029, with an estimated CAGR of around 7%. This robust growth is supported by significant developments in the sector, including the manufacturing industry's 4.07% year-over-year expansion in the fourth quarter of 2023 and 4.64% growth throughout 2023. The sector has been bolstered by strong domestic and global demand for Indonesia's export products, with manufacturing exports reaching USD 186.98 billion in 2023, representing 72.24% of the nation's total exports. The government's commitment to implementing Industry 4.0, as outlined in the Ministry of Industry's "Making Indonesia 4.0" roadmap, along with various initiatives under the G20 Indonesia Presidency, is expected to further accelerate the segment's growth.

Remaining Segments in End User Industry

The other significant segments in the Indonesia freight and logistics market include construction, agriculture, fishing and forestry, and oil and gas logistics market, mining, and quarrying sectors. The construction segment has been particularly dynamic with the government's ambitious infrastructure development plans and the ongoing relocation of the capital city to Nusantara. The agriculture, fishing, and forestry sector continues to play a vital role in the logistics landscape, especially with increasing agricultural imports and the government's focus on food security. The oil and gas, mining, and quarrying segment maintains its strategic importance, supported by various ongoing projects and the government's push toward sustainable energy solutions. These segments collectively contribute to the diverse and evolving nature of Indonesia's freight and logistics market.

Segment Analysis: Logistics Function

Freight Transport Segment in Indonesia Freight and Logistics Market

The freight transport segment dominates the Indonesia freight and logistics market, commanding approximately 42% of the market share in 2024. This significant market position is supported by Indonesia's extensive infrastructure development initiatives, including the construction of new airports, seaports, and road networks. The government's commitment to completing 190 national strategic projects has created substantial opportunities for freight logistics services across various modes, including road, rail, air, and maritime transport. The segment's growth is further bolstered by increasing trade activities, with Indonesia's strategic location facilitating both domestic and international freight movement across the archipelago's 17,000 islands.

Air Freight Segment in Indonesia Freight and Logistics Market

The air freight segment is emerging as the fastest-growing category in Indonesia's freight and logistics landscape, with a projected growth rate of approximately 8% during 2024-2029. This remarkable growth trajectory is driven by several factors, including the government's ambitious plans to construct six new airports by 2024, encompassing Banggai Laut, Pahuwato, Bolmong, Sobaham, Singkawang, and Mandailing Natal airports. The expansion of air cargo capacity is further supported by the entry of new carriers and fleet expansions, such as BBN Airlines Indonesia's addition of Boeing freighters to serve the growing air cargo market. The segment's growth is also propelled by the rising demand for time-sensitive deliveries and the expansion of e-commerce activities across Indonesia's vast archipelagic geography.

Remaining Segments in Logistics Function

The other significant segments in Indonesia's freight and logistics market include freight forwarding, warehousing and storage, CEP (Courier, Express, Parcel), and other services. The freight forwarding segment plays a crucial role in facilitating international trade and managing complex supply chains across Indonesia's diverse geography. The warehousing and storage segment continues to evolve with the introduction of modern facilities and advanced management systems, particularly supporting the growing e-commerce sector. The CEP segment has become increasingly important with the digital transformation of retail and the rise of online shopping, while other services encompass various value-added activities such as customs clearance, packaging, and supply chain consulting services. This logistics market segmentation ensures a comprehensive approach to addressing the diverse needs of the market.