Indonesia Logistics Industry: The Way Forward

(1)

Indonesia Logistics Industry

The Way Forward

Presented by:

Gopal R

Global Vice President

Transportation & Logistics Practice

June 11, 2014

(2)

Growth of GDP and Service Segment, 2009 - 2014

Growth of Service Segment, 2009- 2014

Years Gro w th (% ) Gro w th (% ) Years

Source: Indonesian Statistical Agency, Analysis by Frost & Sullivan

• GDP Growth between 5.7 to 6%

in 2014

• Services sector has been

growing at 10 percent during the

past years

• Service sector is estimated to

contribute 36.9 percent of GDP

• The trade sectors remains the

driver for the growth in service

sector

Economic Growth and Logistics Market

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0%

2009 2010 2011 2012 2013(e) 2014(f) Nominal GDP Services Real GDP

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

2009 2010 2011 2012 2013(e) 2014(f) Services Transportation, storage and courier

(3)

Source: Indonesian Statistical Agency, Analysis by Frost & Sullivan Agriculture. forestry & fishing 15.0% Mining & quarrying 10.4% Manufacturing 23.8% Construction 10.3% Transportation & storage 3.6% Communication 3.3% Other Services 33.6%

Indonesia GDP by Key Sectors in 2013 Railways Transport 0.86% Road Transport 53.09% Sea Transport 6.84% River, Lake and Ferry Transport 3.05% Air Transport 21.65% Services Allied to Transport 14.51%

Contribution to GDP

Transportation makes up 85.6 percent of the total transportation, storage and courier market

Indonesian Transportation and Storage Segment Distribution in 2013

(4)

Potential market for LSPs in Indonesia

Transportation,

storage and

courier

(IDR 328.8

trillion)

Logistics Expenditurr is hidden in:

T ransportation & Logistics Market 2013 Market V a lue 2013

IDR 328.8 trillion

IDR 1,254.5

trillion

Source: Indonesian Statistical Agency, analysis by Frost & Sullivan

Other services (IDR 290.5

trillion) Mining & quarrying

(IDR 134.6 trillion) Manufacturing (IDR 306.6 trillion) Agriculture, forestry and fishing (IDR 193.2 trillion) Construction (IDR 133.2 trillion)

Trade (IDR 154.2 trillion) Communication (IDR 42.2 trillion)

IDR 1,583.3

trillion

(5)

Source: Indonesian Statistical Agency, Analysis by Frost & Sullivan

Transportation and Logistics Market Size

839

770 876

1,014

1,140

1,255

171 182 212 236 287 329

1,010 ₉₅₁ 1,087

1,249

1,427

1,583

0 200 400 600 800 1,000 1,200 1,400 1,600 1,800

2008 2009 2010 2011 2012 2013(e)

Hidden Logistics Cost Transport, storage and courier T&L Market Size

Growth (%)

(5.8) 14.3 13.4 14.2 14.5

IDR Trillion

Transportation & Logistics market in Indonesia has grown by 14.9 percent Compound Annual Growth Rate (CAGR) between 2008 to 2013

Transportion & Logistics Market Projection ( 2013-2018)

(6)

Growth in private consumption that increase trade volume and value , thus favoring freight distribution

Growth in International trade stimulate regional integration, removal of trade barriers, coupled with

the rise in containerization levels

A rise in the middle class and disposable income drive up the demand for goods

Interconnectedness of economic development and good infrastructure development drive

demand for goods to be transported in connected region or province

Key Market Drivers and Restraints

Drivers

Restraints

_{Higher fuel cost and increasing labor wages} _{impact service providers through higher transportation}

cost and wages

Logistics infrastructure hamper the distribution time for cargo distribution

(7)

Source: Consolidated, Analysis by Frost & Sullivan

776.0 845.3

891.5 943.1

1,000.6 1,043.7

18.9 _0.89 19.1 _0.83 20.4 _0.87 23.6 _0.97 26.8 _1.16 29.0 _1.34

0 200 400 600 800 1000 1200

2009 2010 2011 2012 2013(e) 2014(f)

Sea freight Rail freight Air freight

Freight Movement in Indonesia

(2009 – 2014)

Note:

e : estimated f : forecasted

• Growth in cargo volumes

• Trade and domestic consumption to drive future volumes

Volume (m ton)

(8)

11.00 16.21 24.10 21.50 22.50 25.88 0.0 5.0 10.0 15.0 20.0 25.0 30.0

2009 2010 2011 2012 2013 2014 (f) Total Indonesia Foreign Direct Investment (FDI)

Realization, 2009 - 2014

Bn USD

• FDI is set to grow around 15% • Inflows focussed on automotive,

pharmaceutical and mining industry • FDI in transportation, warehouse and

storage sectors is around 1.1 % of FDI in 2013

• 20.7 % is into mining sector.

• Sustainable trade growth over years

• Potential for positive trade balance with exports likely to gain

Economic Trend

Positive outlook on capital inflows and trade

Source: Central Statistics Beuarau, Analysis by Frost & Sullivan

213.3

293.4

380.9 382.1 _369.2 387.66

0 50 100 150 200 250 300 350 400 450

2009 2010 2011 2012 2013 2014(f) Total Indonesia External Trade Value,

2009 - 2014

(9)

Source: ASEAN Secretariat, Analysis by Frost & Sullivan

Countries/Year 2010 2011 2016 Average 2003-2007

Average 2012- 2016

Indonesia 6.10 6.30 6.90 5.50 6.60 Malaysia 7.20 4.60 5.60 6.00 5.30 Philipines 7.30 4.50 5.10 5.70 4.90 Singapore 14.50 5.60 4.80 7.50 4.60 Thailand 7.80 2.50 4.90 5.60 4.50 Vietnam 6.80 5.90 6.70 8.10 6.30 Average of 6

Countries 7.60 5.00 5.90 6.10 5.60

Indonesia Singapore

Malaysia Thailand

Cambodia Vietnam

Brunei

Philippines Laos

Myanmar

Real GDP Growth ( %)

Growing Economies…

ASEAN offers a big opportunity - Region’s significance on efficient logistics

(10)

Road map of Indonesian Logistics Industry Blue Print

2014 2015 2020 2025

Synchronization, coordination and interconnection with the ASEAN logistics networks Creation of

ASEAN Economic Community

Strengthening capacity of LSPs, Integrate National Logistics & Supply

Chain

Indonesian Logistics will be connected to the global logistics

network.

Source: Frost & Sullivan Analysis

• 2014-2015

Infrastructure development among ASEAN countries are expanded to support the transportation & logistics service in the region

• 2015-2020

ASEAN Logistics Network Integration

• 2020-2025

Integrated Global Logistics Network. Indonesia will be connected to the regional (ASEAN) and global logistics systems via International

(11)

Location Advantage…

Indonesia

Strategically located along key shipping routes

Source: Frost & Sullivan Anlaysis

Major Shipping Lane

(12)

1. Coordination and cooperation among all relevant institutional agencies to facilitate transportation between neighboring

countries in ASEAN

2. Enhance transport security and safety in the regional Transportation and Logistics networks

3. Development of approaches and

mechanisms to strengthen ASEAN’s role as “hub” in the East Asia integration

Well-connected

with ASEAN

logistics Network

Domestic Logistics

Network

1. Satisfactory logistics service offerings 2. Growing technology implementation in

logistics operations

3. Infrastructure and connectivity issues 4. Distribution point to South East Asia from

shipping stand point

Moving Forward…

(13)

Thank You

(1)