Indonesia Freight and Logistics Market - Growth, Trends, Covid-19 Impact, and Forecasts (2021-2026)

Market Overview

The Indonesian freight and logistics market (henceforth, referred to as the market studied) was valued at USD 81.30 billion in 2020, and it is expected to reach USD 138.04 billion by 2026, registering a growth rate of 9.22% during the forecast period.

Indonesia has been severely affected by the COVID-19 crisis. The lack of a centralized and adequate government response has led to uncoordinated responses, including a lockdown on Jakarta and business-as-usual in mines and the agricultural sector. According to the Indonesian Logistics Association (ALI), logistics companies have experienced an approximately 50% decline in overall business performance since the COVID-19 outbreak hit Indonesia in early March 2020. It is reported that logistics volume has been down by 60-70% across the board due to emergency measures taken by the government to prevent COVID-19 transmission. Business-to-consumer (B2C) and customer-to-customer (C2C) delivery services had experienced growth despite the outbreak, but the increase was too small to compensate for the sharp drop in the business-to-business (B2B) segment. The B2C and C2C segments recorded growth due to the increase in demand for food, perishables, and medical supply deliveries despite large-scale social restrictions.

Post COVID-19, as the industry positions itself for recovery and growth, technology will increasingly play a major role to enable all stakeholders, including shippers, transporters, warehouse owners, and vendors, to become more efficient in responding to changing market realities. Although logistics is the heart of domestic and international trade, uncertainty remains a huge problem in Indonesia’s supply chain, exacerbated by the country’s unique archipelagic makeup of 17,000 islands, which means goods cannot be transported using trucks on land alone. A multimodal system, using land and sea transportation as well as warehouses, is needed to reach remote areas of each island.

Logistics using land transportation services are still the mainstay of the transportation services industry. Road transport accounts for 70-80% of the total freight volume that is handled annually within Indonesia’s borders. In value/currency terms, the share of the road freight market has stayed between 40-50% of the total logistics market size.

The shipping industry holds a major role in Indonesia’s trade since 90% of Indonesia’s export commodities are delivered via water transportation. Shipping lines face operational issues, such as port inefficiencies, causing increased waiting and turnaround time, and risks of labor disputes.

Scope of the Report

Freight refers to any type of goods, items, or commodities that are transported in bulk via air transport, surface transport, or sea/ocean transport. Logistics refers to the overall process of managing how resources are acquired, stored, and transported to their final destination.

The Indonesia Freight and Logistics Market is segmented by Function (Freight Transport (Road, Shipping, Air, Rail), Freight Forwarding, Warehousing, Value-added Services, and Other Functions), by End User (Manufacturing and Automotive, Oil and Gas, Mining, and Quarrying, Agriculture, Fishing, and Forestry, Construction, Distributive Trade, Other End Users). The report offers market size and forecasts for the Indonesian freight and logistics market in value (USD billion) for all the above segments.

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Key Market Trends

Growing E-commerce in the Country

Indonesia is a promising e-commerce market in Asia-Pacific, with several local and global players competing in the market. Rising internet penetration, increasing digitalization, and the proliferation of websites have been driving e-commerce growth. The COVID-19 pandemic has further accelerated e-commerce sales in Indonesia.

E-commerce is expected to expand in the high double digits in the future in Indonesia. Although the market is not as mature as e-commerce in Malaysia or Singapore, the Indonesian population of more than 260 million makes the absolute numbers of growth in the country high, with millions of new online shoppers every year.

According to Industry reports, Indonesia is the largest and fastest-growing internet economy in Southeast Asia. It is expected to account for 50% of all e-commerce transactions in Southeast Asia by 2025.

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