March 7th 2015 – Investment in infrastructure could see the growth of Indonesia’s logistics and forwarding markets rapidly accelerate over the next five years, says new Ti report
Indonesia’s new government needs to remove obstacles to investment in its transport and trading infrastructure to realise its enormous economic and logistics potential, according to a new report by Transport Intelligence.
By most rankings Indonesia lags behind its regional competitors in South East Asia terms of logistics performance. However, Ti’s latest report – Indonesia Transport & Logistics 2015 – A New Dawn? – argues this could soon change if the new government of President Joko ‘Jokowi’ Widodo follows through on its promises to fund new transport and infrastructure investments and attract private investors and operators.
“Ti believes that if the country’s logistics performance could be improved by boosting investment, Indonesia’s low land and labour costs, huge domestic market and easy access to neighbouring ASEAN markets could make it a highly attractive location for manufacturers seeking alternatives to China,” said Michael King, Ti’s Head of Operations in Asia. “This would have huge benefits for all sectors of the logistics and forwarding business.
“However, if the new government does not follow through on its pledges to push through business-friendly reforms, then Indonesia’s economic and trade growth is likely to underwhelm.”
Ti’s market sizing analysis looks at each key logistics sector using three growth scenarios over 2013-19. The realisation of a scenario (low, medium or high) is dependent on Indonesia’s Logistics Performance Indicator reaching a certain threshold. Vast differences in growth rates are predicted when LPI scores differ.
At the upper range of LPI improvement, TI’s analysis found that the total forwarding market in Indonesia could increase by a CAGR of 14.7% over 2013-19. Also under the ‘high’ scenario, the contract logistics market in South East Asia’s biggest economy could increase by 14.7% over the study period, while the combined domestic and international express market could be worth €9,236m by 2019, up from just €2,923m now.
Indonesia’s air and ocean forwarding markets in the report’s ‘moderate’ (expected) forecasts are expected to grow by CAGRs over 2013-19 of 9.2% and 13.5%, respectively. However, under Ti’s ‘high’ forecast, this could rise to 11.5% for air forwarding and 16.9% for ocean forwarding.
“Low hanging fruit for the new President in terms of trade facilitation and logistics performance includes customs reform, encouraging adoption of a national single window and easing the process of setting up a business in Indonesia,” said King. “Land acquisition also urgently needs examining.
“But the key differentiator between our ‘low’ and ‘high’ forecasts is infrastructure development. For much of the last decade Indonesia’s ports, railways, airports and roads have been neglected. The privatisation of transport has stalled, starving the sector of investment and leaving inefficient state-owned enterprises in monopolistic positions that further discourage private operators from entering the market.
“If ‘Jokowi’ can address these failings then domestic and international trade and logistics demand across all verticals will rapidly accelerate.”
Notes to Editors
About ‘Indonesia Transport & Logistics 2015 – A New Dawn?’
Ti’s latest report offers unprecedented insight into the competitive environment for forwarders and logistics service providers operating in South East Asia’s largest economy, including analysis of which companies are already major players and what barriers market entrants face. In addition, the report features in-depth analysis of the road, rail, sea and air sectors including Ti’s exclusive market sizing and demand forecasts.
About Transport Intelligence
Transport Intelligence (Ti) is one of the world’s leading providers of expert research and analysis dedicated to the global logistics industry. Utilising the expertise of professionals with decades of experience in the mail, express and logistics industry, Ti has developed a range of market leading web-based products, reports, profiles and services used by all the world’s leading logistics suppliers, consultancies and banks as well as many users of logistics services.
Key Contacts
Sophie Brady, Head of Sales, Asia
+61 (0)2 8003 7208 or email: [email protected].
Michael King: [email protected]
Head of Operations & Senior Analyst, Asia
