Indonesia Logistics Industry Outlook:
2012: An Executive Insight
Presented by:
Gopal R
Vice President, Asia Pacific
Transportation & Logistics Practice
January 17, 2012
1 Indonesian Logistics Market
2 Market Projection, Drivers and Restraints
4 Key Industry Trends
5 Strategic Roadmap
3 Freight Movement in Indonesia
Agenda
2
Indonesia's Service Sector Offers Growth Opportunity
Growth of GDP and Service Segment, 2007 - 2012
Growth of Service Segment, 2007 - 2012
Years
Gro
wth
(%
) G
row
th (
%)
Years
Source: Indonesian Statistical Agency, World Bank, Analysis by Frost & Sullivan
• With dynamic industrial activities, Indonesia’s
real GDP in 2012 is estimated to witness an
increase of 6.6 percent from 2011
• Services segment will follow the pace of the
economy, as industries such as financial
sector, hotels, hospitals, retail,
telecommunications and airline are
experiencing continuous expansion
• The rise in Indonesia’s middle class will result
in profound changes, including growth
opportunity for transportation & logistics
industry
• Transportation, storage and courier segment is
expected to expand 11.5 percent this year,
aided by the growth in exports and
manufacturing sector as well
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0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
2007 2008 2009 2010 2011(e) 2012(f )
Nominal GDP Services Real GDP
0.0%
5.0%
10.0%
15.0%
20.0%
2007 2008 2009 2010 2011(e) 2012(f )
Services Transportation, storage and courier
Railways Transport
1.0%
Road Transport
56.1%
Sea Transport
7.6%
River, Lake and Ferry Transport
3.3%
Air Transport16.1%
Services Allied to
Transport
15.9%
Transport and Storage segment contributes 3.3 percent
to country GDP
Source: Indonesian Statistical Agency, analysis by Frost & Sullivan
Indonesia Economy, 2011 Indonesian Transportation and Storage Segment
Distribution, 2011(e) (IDR 235.70 trillion)
Transportation makes up 84.1 percent of the total
transportation, storage and courier market
4
Agriculture. forestry & f ishing
15.3%
Mining & quarrying
11.1%Manufacturing
24.8%
Construction10.3%
Transportation & storage3.3%
Communication3.4%
Services 31.9%
Total transportation & logistics market in Indonesia
estimated at IDR 1232.92 trillion in 2011
Potential market for the outsourced / contract
logistics service providers in Indonesia
Transportation,
storage and
courier
(IDR 235.70
trillion)
Logistics Expenditure is hidden in:
Tra
ns
po
rta
tio
n &
Lo
gis
tic
s
Ma
rket
Ma
rket
Va
lue
IDR 235.70 trillion IDR 997.22 trillion
Source: Indonesian Statistical Agency, analysis by Frost & Sullivan
Other services
(IDR 218.40trillion)
Mining & quarrying
(IDR 114.04trillion)
Manufacturing
(IDR 254.79trillion)
Agriculture, forestry
and fishing
(IDR 156.81trillion)
Construction
(IDR 105.21trillion)
Trade
(IDR 115.23trillion)
Communication
(IDR 32.74trillion)
5
Transportation & Logistics market in Indonesia: The
Evolution
Transportation & Logistics Market Size, 2006 - 2011
Growth (%)
IDR
, T
rill
ion
s
Years
Source: Indonesian Statistical Agency and other sources, analysis by Frost & Sullivan
Transportation & Logistics market in Indonesia has grown by a Compound Annual Growth Rate (CAGR) of
13.5 percent between 2006 to 2011
20.8 27.8 (5.8) 14.3 13.4
6
511
640
839770
876997
143 150 171 182 212 236
654
790
1,010951
1,087
1,233
0
200
400
600
800
1,000
1,200
1,400
2006 2007 2008 2009 2010 2011(e)
Hidden Logistics Cost Transport, storage and courier T&L Market Size
1 Indonesian Logistics Market
2 Market Projection, Drivers and Restraints
4 Key Industry Trends
5 Strategic Roadmap
3 Freight Movement in Indonesia
Agenda
7
Key drivers and restraints for Indonesia transportation
& logistics market
Strong economic growth fuelled by high domestic consumption
Relocation and strong flows of capital drive manufacturing
activities and boost logistics demand DR
IV
ER
S
RE
ST
RA
IN
TS
Underdeveloped logistics infrastructure and slow pace in addressing infrastructure
bottlenecks
Geographically dispersed market increases logistics cost
Availability of qualified logistics industry professionals
Source: Frost & Sullivan
8
Government’s initiatives in economic transformation and development
of logistics industry
The result of poor connectivity, process and weak infrastructure is
evident in many price differentials and transport problems
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Market Reality...
Some 10 percent of Indonesian
exports leave ports too late and
consequently do not reach the
regional transshipment ports on time.
Ships destined for local destinations
are frequently delayed
Gasoline prices in Di Kisar Island
are three times higher in rainy
season than in dry season
1. Shrimps from eastern Indonesia,
cannot be commercially
processed in Java.
2. Commodities like pineapples are
canned abroad because it is
cheaper to transport them to
Malaysia than to ship them to
Java Trucks transport approximately
70 percent of freight in Indonesia
but majority of the trucks on the
road in Indonesia are old and
poorly maintained
The costs of bringing a container
from Jakarta’s main industrial sites
to the port are double that in
Malaysia and Thailand
1. The price of a bag of cement in certain parts
of Papua is 20 times that in Java.
2. The price of a gallon of water in Medan is
double that in Jakarta.
3. Oranges from China are cheaper than
oranges from Pontianak (Kalimatan)
A truck making a round-trip from
Bandung to Jakarta may spend
up to 75 percent of its time
parked due to customs
processes, warehouse delays,
and lift-on and lift-off Queues
Trade and transport logistics are
still mainly ‘paper-based
systems’, which increases
logistics costs in addition to other
charges
Source: World Bank, Frost & Sullivan Analysis
1 Indonesian Logistics Market
2 Market Projection, Drivers and Restraints
4 Key Industry Trends
5 Strategic Roadmap
3 Freight Movement in Indonesia
Agenda
10
1 Indonesian Logistics Market
2 Market Projection, Drivers and Restraints
Key Industry Trends
5 Strategic Roadmap
3 Freight Movement in Indonesia
Agenda
4
11
Transportation & Logistics Market: Key Trends
12
Service Trend
• Higher inclination toward outsourcing variety of value added services
• Logistics service providers need to work toward more value-added services
while strengthening the intermediate services
Customer Trend
• Service quality and reliability are top priorities when selecting logistics service
providers
• End users are moving toward integrated supply chains with professional service
providers
Economic Trend
• Growth of Indonesian logistics market fuelled by strong growth of external trade and substantial inflow of FDI
• Rising intra-Asia trade favors the transportation & logistics industry
Business Trend
• Retail / FMCG Logistics
• Service Parts Logistics
1 Indonesian Logistics Market
2 Market Projection, Drivers and Restraints
4 Key Industry Trends
5 Strategic Roadmap
3 Freight Movement in Indonesia
Agenda
13
Moving forward…
14
Next
Step
• Specialized logistics solutions for specific industries (e.g
FMCG, construction, mining)
• Develop a logistics network of industrial centers on the
outskirts of Jakarta for improved access to the Port of
Tanjung Priok
• Integrate transportation hubs (seaports, airports, terminals,
distribution centers) with the transport network and develop
state-of-the-art logistics infrastructure for efficient distribution
• Strengthen human resource capability with professional and
experienced logistics personnel along with the market
expansion
• Improve cross sector regulations and streamlining permit
applications
• Focus on basic logistics services with common value-
added services
• High traffic congestion in Jakarta results in longer lead
time, shipment delay and inefficient supply chain
• Underdeveloped infrastructure and poor connectivity lead
to increased logistics costs
• Growth of logistics market is not supported by the growth of
professional human resources
• Overlapping regulations at the central and local
government levels as well as among sectors and
institutions cause hassle and inefficiency
Logistics industry in Indonesia
M o v i n g t o w a r d Current
Any
Questions?
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