Growth of 3PL logistics, increasing investment in warehouse construction, ease in regulatory policies and growth of middle age population were the key factors driving growth of Indonesia Logistics Market.
Indonesia ranked 63rd globally, by the 2016 logistics performance index rising from 75th rank during 2010. Despite challenges of underdeveloped infrastructure, lack of qualified manpower and geographical dispersion, the logistics industry has benefitted from strong capital inflows, initiatives for accelerated economic growth and higher domestic consumption driving manufacturing and logistics sector of the country. The logistics industries’ customers are increasingly demanding better value-added services more than just movement & storage of goods and paper processing. The customers have been demanding additional services including reverse logistics, packaging, vendor management, fleet management, information management, billing, customer service, demand forecasting, and sales promotion as logistics providers are in touch with the last point of sale on a routine basis. As logistics companies have been largely focusing on filling these service gaps, the logistic sector in Indonesia is booming at a double digit growth rate.
Indonesia has been witnessing rising demand for modern warehousing and this demand has been majorly witnessed from logistics, e-commerce, 3PL and other distribution firms. The use of more advanced technology in warehouse management such as automation, robotics, bar-coding, ASRS, cross-docking, internet-enabled warehouse management systems have gained prominence in the market. Additionally, increasing urbanization and growth in FMCG and retail sectors backed with robust growth of manufacturing sector in Indonesia have aided the overall logistics industry of the country. Moreover, Indonesian population has huge online presence with internet and mobile penetration increased significantly in recent years. The logistics sector in the country will flourish in upcoming years as demands of the modern world of e-commerce and FMCGs takes hold of the consumers.
The report titled “Indonesia Logistics and Warehousing Market by Sector (Freight Forwarding, Warehousing, VAS), by Domestic and International Services – Outlook to 2021” by Ken Research suggested that increasing government initiatives and growing e-commerce industry will majorly contribute to the overall revenue growth of Indonesia logistics market in next 5 years till 2022.
Ankur Gupta, Head Marketing