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INDONESIA FREIGHT AND LOGISTICS MARKET - GROWTH, TRENDS, AND FORECAST (2019 - 2024)

The Indonesian Freight and Logistics Market is segmented by function (freight transport, freight forwarding, warehousing, courier, express, and parcel (CEP), value-added services, and other emerging areas, such as cold chain logistics, etc.) and by end user.

Market Snapshot

Market size
Study Period:

2015-2024

Base Year:

2018

CAGR:

13-15%

Key Players:

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Market Overview

The Indonesian freight and logistics market is currently trading at an inflection point. Being the world’s fourth-largest populated country with an excellent potential for growth, Indonesia is a key market in the global scenario. Given the scope of household consumption in a densely populated country and its strategic location on geographical terms, Indonesia, an archipelago of around 17,500 islands, is currently a center of attraction for global investment. However, logistics is a key pain point for doing business in Indonesia. Logistics cost varies between 25%-30% of the GDP in Indonesia, as compared to developed economies, where it is below 5% of the GDP. Even neighboring countries, like Malaysia, incur half the cost as a percentage of GDP for logistics expenditure. Given that Indonesia has the world’s 16th largest economy and is the fourth most populous country in the world, there is a display of momentum in the economy, with steady prospects for higher growth, in the more ideal economic scenarios.

Scope of the Report

A complete background analysis of the Indonesian freight and logistics market, which includes an assessment of the economy and contribution of sectors in the economy, market overview, market size estimation for key segments, emerging trends in the market segments, market dynamics, and logistics spending by the end-user industries, is covered in the report

BY FUNCTION
Freight Transport
Road Freight
Rail Freight
Ocean Freight
Air Freight
Warehousing
Freight Forwarding and Freight Management Services
Courier, Express, and Parcel
Value-added Services (3PL, Integrated Logistics, Value-added Warehousing and Distribution, and ICT-based Solutions)
Cold Chain Logistics, Last Mile Logistics, Return Logistics, and Other Emerging Areas
BY END USER
Construction
Oil and Gas, Mining, and Quarrying
Agriculture, Fishing, and Forestry
Manufacturing (Including Automotive)
Distributive Trade
Telecommunications and Information Technology
Other End Users (Pharmaceutical and Medical, Food and Beverage Industry, and Others)

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Key Market Trends

Rail Freight Transport - To Witness High Growth

Currently, rail transport infrastructure is present only on the islands of Sumatra and Java. Rail transport by goods volume only makes around 1% of the total volume of goods transported in and out of Indonesia. However, this volume is larger than the volume handled via air freight within the country. One of the reasons attributed to this is that rail transport is mostly used for wholesale high volume bulk commodities, such as coal, while air transport is used for less space occupying high-value goods. There is an immediate need for the deployment of mass urban rail networks to shift the transport of goods and passengers away from overburdened roads. This shift will require double tracks on major trunk rail lines, the revival of dormant tracks (some 2,500 km unused, mainly on Java), and the extension of other rail lines, in addition to new station developments with improved accessibility and multimodal integration.

Indonesia’s railways are operated under the state-owned enterprise (SOE) PT Kereta Api Indonesia (PT KAI), which held the monopoly over the sector until 2007. Law No. 23/2007 signaled a shift in attitude toward the nation’s railways to include them in national development by equipping the sector with more competitive strategies in terms of service and pricing. The railroad network in Java and Sumatra has a strategic role in serving the coal transportation distribution. The railway line that directly connects the mining plant location to port access and the availability of adequate locomotives and carriages make it an attractive choice for mining companies and expeditions to establish coal transportation cooperation with trains. In terms of time, the transportation of coal by train is far more certain in time, fast to the destination, free of traffic, safe and efficient in costs, and environment-friendly as mass transportation. The country is planning to reduce the logistics costs by improving railway infrastructure with the development of new tracks in Java, Sumatra, (BRT) in 29 cities, Sulawesi, and Kalimantan – which comprises 2159 km of inter-urban railways and 1099 km of urban railways.

Trend 1

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The Rising Manufacturing Sector of the Country Presents an Opportunity for the Logistics Sector

Indonesia, whose economy accounts for two-third of the ASEAN economy, is growing at a rate of around 5%. The development of its stagnant manufacturing sector may ignite a structurally high economic growth for a sustained period of time. A flourishing manufacturing industry exporting the domestically manufactured products will accelerate economic growth and generate plenty of employment opportunities. According to industry sources, the key strategies to boost the development of Indonesia's manufacturing industry include diversifying the range of products that are manufactured in the country and increasing the focus on the further development of the existing manufacturing industries in Indonesia (such as the electronics, chemicals, automotive, and food industries). However, the sector would have to deal with certain challenges, such as a shortage of qualified workers and improvement in the investment climate needed to attract investment.

The rise in commodity prices, government-led infrastructure projects, and growth in consumer confidence can boost the manufacturing sector.  The country also encourages investment in the manufacturing sector by allowing a wider range of imports/exports, by reducing dwelling times, as well as by revising and improving tax allowances and tax holidays that are offered to investors (who meet specific criteria). According to the United Nations Conference on Trade and Development (UNCTAD), Indonesia is one of the most lucrative nations for investment. In the UNCTAD's June 2017 survey, Indonesia was ranked 4th in terms of the most prospective investment destinations (after the United States, China, and India). The country has also drawn up a road map for upgrading five manufacturing sectors, to make it one of the world’s 10 biggest economies. The plan, titled “Making Indonesia 4.0”, released by the ministry of industry in April 2018 includes development plans for the food and beverage, textile and garment, automotive, chemical, and electronics industries.

Trend 2

Competitive Landscape

The Indonesian freight and logistics industry does not have a high level of industry concentration, especially with regard to the international players. International players are responsible for approximately 30% of the market size. The remaining 70% is made up of local players. Within the 70%, the concentration is medium, and even the 10 largest players do not make up for more than 30% of the local market. This can be attributed to the fact that the large players are more focused on freight transport and logistics infrastructure, and hence, are more than just logistics infrastructure providers.

Major Players

  1. Deutsche Post DHL Group
  2. CEVA Logistics
  3. PT Samudera
  4. PT Siba Surya
  5. PT Bhanda Ghara Reksa

* Complete list of players covered available in the table of contents below

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Table of Contents

  1. 1. INTRODUCTION

    1. 1.1 Executive Summary

    2. 1.2 Research Methodology

      1. 1.2.1 Study Deliverables

      2. 1.2.2 Study Assumptions

      3. 1.2.3 Analysis Methodology

      4. 1.2.4 Research Phases

  2. 2. MARKET INSIGHTS

    1. 2.1 Indonesian Economic Activity and the Freight and Logistics Market

    2. 2.2 Porter's Five Forces Analysis

      1. 2.2.1 Bargaining Power of Suppliers

      2. 2.2.2 Bargaining Power of Buyers

      3. 2.2.3 Threat of New Entrants

      4. 2.2.4 Threat of Substitute Products

      5. 2.2.5 Degree of Competition

    3. 2.3 PESTLE Analysis

    4. 2.4 Industry Value Chain and Cost Structure Analysis

    5. 2.5 Indonesia Domestic Rules and Regulations Relevant to the Logistics and Transport Sectoral Services

    6. 2.6 Insights on E-commerce Fulfilment

  3. 3. MARKET DYNAMICS - (DRIVERS, RESTRAINTS, AND OPPORTUNITIES)

    1. 3.1 Drivers

      1. 3.1.1 World's Fourth-most Populated Country, with Increasing Consumer Confidence

      2. 3.1.2 Government Support Toward Upgradation of the Transport and Logistics Infrastructure

      3. 3.1.3 Trade-friendly Policies Toward Foreign Investment in the Country's Logistics Sector

      4. 3.1.4 Strategic Location in the ASEAN and World, to Act as a Global Trade Hub and Compete with Other Regional Trade Hubs

      5. 3.1.5 Strong Trends and Expected Growth in the E-commerce Segment

      6. 3.1.6 Technological Developments (Internet of Things, Mobile, Big Data, GIS, ERP, WMS, TMS, Routing, Analytics, and Artificial Intelligence)

    2. 3.2 Restraints

      1. 3.2.1 Historically Poor Logistics Infrastructure and High Logistics Costs

      2. 3.2.2 Regulatory Hurdles

    3. 3.3 Opportunities

      1. 3.3.1 E-commerce Logistics In Indonesia

      2. 3.3.2 The AEC (ASEAN Economic Community) Initiative

  4. 4. MARKET SEGMENTATION

    1. 4.1 BY FUNCTION

      1. 4.1.1 Freight Transport

        1. 4.1.1.1 Road Freight

        2. 4.1.1.2 Rail Freight

        3. 4.1.1.3 Ocean Freight

        4. 4.1.1.4 Air Freight

      2. 4.1.2 Warehousing

      3. 4.1.3 Freight Forwarding and Freight Management Services

      4. 4.1.4 Courier, Express, and Parcel

      5. 4.1.5 Value-added Services (3PL, Integrated Logistics, Value-added Warehousing and Distribution, and ICT-based Solutions)

      6. 4.1.6 Cold Chain Logistics, Last Mile Logistics, Return Logistics, and Other Emerging Areas

    2. 4.2 BY END USER

      1. 4.2.1 Construction

      2. 4.2.2 Oil and Gas, Mining, and Quarrying

      3. 4.2.3 Agriculture, Fishing, and Forestry

      4. 4.2.4 Manufacturing (Including Automotive)

      5. 4.2.5 Distributive Trade

      6. 4.2.6 Telecommunications and Information Technology

      7. 4.2.7 Other End Users (Pharmaceutical and Medical, Food and Beverage Industry, and Others)

  5. 5. COMPANY PROFILES

    1. 5.1 PT. Samudera

    2. 5.2 PT. Siba Surya

    3. 5.3 PT. Kamadjaja Logistics

    4. 5.4 PT. POS Indonesia

    5. 5.5 PT Tiki Jalur Nugraha Ekakurir (JNE)

    6. 5.6 PT Bhanda Ghara Reksa

    7. 5.7 PT. Puninar Jaya

    8. 5.8 PT Indika Logisitc & Support Services

    9. 5.9 PT. Cardig Logistics Indonesia

    10. 5.10 CKB Logistics

    11. 5.11 Pancaran Group

    12. 5.12 PT. Dunia Express Transindo

    13. 5.13 PT. Bina Sinar Amity (BSA Logistics)

    14. 5.14 Linc Group - PT. Cipta Mapan Logistic

    15. 5.15 Ceva Holdings LLC

    16. 5.16 Yusen Logistics Co. Ltd

    17. 5.17 Kerry Logistics Network Limited

    18. 5.18 Sinotrans Ltd

    19. 5.19 DB Schenker

    20. 5.20 Kuehne + Nagel

    21. 5.21 Pt. Agility International

    22. 5.22 Panalpina World Transport Ltd

    23. 5.23 Nippon Express Co. Ltd

    24. 5.24 Expeditors International Of Washington Inc.

    25. 5.25 Deutsche Post DHL Group

    26. 5.26 DSV Solutions Company Limited*

  6. *List Not Exhaustive
  7. 6. COMPETITIVE LANDSCAPE

    1. 6.1 Industry Concentration

    2. 6.2 Industry Predictability and Malleability

    3. 6.3 Other Relevant Local Players

  8. 7. INSIGHTS ON PROSPECTIVE CLIENTS FOR LOGISTICS SERVICE PROVIDERS (LSPs)

  9. 8. APPENDIX

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