Indonesian Logistics Overview Yukki Nugrahawan Hanafi

Indonesian Logistics Overview

YUKKI NUGRAHAWAN HANAFI
Chairman
Member of :

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15 Packages of Economic Policies
9 Sept 2015
Package 1
Improvement of industrial
competition level

7 Oct 2015
Package 3
Expanding access to financing
and reducing production costs

29 Sept 2015

Package 2
Investment promotion and
foreign exchange

27 Jan 2016
Package 9
Electricity and
logistics infrastructure

15 Oct 2015
Package 4
Wage system guarantees and
securing work termination

29 Mar 2016
Package 11
Financing access, Dwelling Time,
and pharmaceutical industry

11 Feb 2016

Package 10
Openness of investment

15 Jun 2017
Package 15
Development of national
logistic industry

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22 Oct 2015
Package 5
Asset revaluation and
access to sharia financing
5 Nov 2015
Package 6

2015


Drive economies in the periphery
and the smoothness of raw
material of medicine

24 Aug 2016
Package 13
House provision for
low income communities

28 Apr 2016
Package 12
Ranking enhancement of
Ease of Doing Business

7 Dec 2015
Package 7
Industry tax incentives and
land certification

10 Nov 2016

Package 14

21 Dec 2015
Package 8
Business certainty and
investment of aircraft and
oil maintenance services

2016

Drive economies in the periphery
and the smoothness of raw
material of medicine

2017
2

Understanding Logistics
“Logistics is that PART of the SUPPLY
CHAIN PROCESS that plans,

implements, and controls the efficient,
effective flow and storage of goods,
services, and related information from
the point-of-origin to the point-ofconsumption in order to meet customers’
requirements” (Council of Logistics
Management)…

Logistics and Supply Chain
Management
Effective organizing activities on the flow
of raw materials, inventories of
manufactured goods, finished goods, and
related information from the point of origin
to the point of consumption to meet
customer needs.

Lambert, 4th Edition
Suppliers
Food Processing,
Factory


Distribution
Center

Wholesaler

The flow of goods, information, and costs

Retailer
Consumer

: Logistic activities

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3

The Importance of Logistic and Transportation


Part of building nation's competitiveness
Supporting the creation of national efficiency
Logistics

Encourage National Economic Integration

Ensure availability, access, price stabilization, and
quality of goods

Enabler for Trading
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4

Network of National Logistics System
Maritime Shaft
Village

InterIsland

Village

International
Hub Port
EROPA

District

Village

Village
District

Village

International
Hub Port
AFRIKA

InterIsland


Indonesia
International
Port

International
Hub Port
ASIA

Village

District

Village
Village

InterIsland

Village


International
Hub Port
AUSTRALIA

International
Hub Port
AMERIKA

Indonesia
Integration of Local and National Networks
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Global Networks Connectivity

5

Internet
Banking


SMS
Banking

Cash
Basis

T/T

Means of Transportation

Security

Data
Physical Network
Information
Storage Facilities
Means of Transportation

Transport Node

Port

Modes of Transportation

Sea

Provider
Distributor
Infrastructure

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Typical Application

Delivery Channel

Messaging Hub
Telecommunication Network
W/H, CY, CFS, Container, Pallet, Depot
Ships, Airplane, Trucks, Railways, Pipes
River Port
Airport
Land Port
Station

Depot

River
Air
Road
Railway
Pipe
Manufacturer, Importer, Exporter
Trader, Distributor, Wholesaler, Agent, Retailer
Agro Terminal, Central Market, Traditional Market, Stall, Store,
Hyper/Super/Mini Market

Data

Documents
Applications

Message
Application

Logistics Infrastructure

ATM

Freight

Tools

Banking, Insurance, LKBB

Money

Service Actors

Trade

Distribution
Network

Transportation
Network

Information
Network

Financial
Network

Matrix of Logistics Infrastructure

6

Logistics Service Provider

1PL : Shipper / Consignee (Sender / Receiver)
2PL : Actual Carriers (airline, shipping line or truck operator)

3PL : A company that provides multiple logistics services, including
transportation, warehousing, cross-docking, inventory management,
packaging, and freight forwarding.
4PL : Consulting firm specializing in logistics, transportation and supply
chain management. Sometimes described as non-asset service providers,
their role is to provide a wider scope of management throughout the supply
chain.
5PL : Logistics service providers who plan, organize and implement
logistics solutions on behalf of the contractor (especially information
systems) by utilizing appropriate technology, extend further scope for ebusiness.

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7

Supply Chain Management
Supply chains are complex interdependent systems and involve:
Whole of Chain Thinking
Labour
Oil and alternative energy
Transport
Logistics
Finance
Business Processes
Transaction Systems

Supply

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Information Technology
Procurement
Supply Chain Management
Commercial Power
Legal and Regulatory Systems
People and Relationships
Strategic Asset Investment
Geo-Political Economy

Demand

8

Sector Overview – Logistics Sector


The growth of each logistics service in ASEAN has continued to achieve double-digit growth. In particular, express &
small parcel (last mile delivery) and cold chain (low temperature logistics & refrigerated warehousing) are expected to
grow the most rapidly.

Logistics Market Size by Country

Logistics Service

Contract Logistics*
(incl. land transportation and warehousing)

Express & Small
Parcel

Air & Sea Freight Forwarding

* Contract Logistics/ Third-Party Logistics (3PLs) normally providing long-term
contract carriage and warehousing services supplying tractors, drivers and management.

Country
(US$ billion)

2013

2017

CAGR
13-17

2013

2017

CAGR
13-17

2013

2017

CAGR
13-17

Singapore

1.0

1.3

7.3%

3.7

5.0

7.7%

0.7

0.9

9.8%

Malaysia

1.2

1.8

10.2%

1.9

2.6

8.8%

1.4

2.7

23.0%

Thailand

1.5

2.2

9.7%

2.1

2.8

8.0%

1.7

2.9

17.1%

Indonesia

2.4

3.7

11.7%

1.9

3.0

11.8%

4.0

7.6

21.7%

Vietnam

0.6

0.9

10.9%

0.9

1.4

12.5%

0.6

1.0

20.9%

Philippines

0.7

1.0

11.3%

0.6

0.9

12.3%

1.2

2.4

24.1%

Japan

21.5

23.5

2.3%

7.2

7.8

1.9%

23.8

25.8

2.8%

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9

Pros) Strong Growth in Logistics Market (3PL)



3PL revenue expects to grow at CAGR (Compound Annual Growth Rate) of 11.7% for the forecast period of 2013 to 2017
due to the increment of 3PL outsourcing needs in Indonesia.
The growth rate would be the highest percentage among ASEAN6.

Indonesian Contract Logistics Market Forecast
(2013-2017F)

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Contract Logistics Market Size
By Country
Growth
13-17(%)

Country

2013

2017

Indonesia

2,402

3,747

11.7

Thailand

1,543

2,233

9.7

Malaysia

1,244

1,837

10.2

Singapore

961

1,276

7.3

Philippines

659

1,011

11.3

Vietnam

603

910

10.9

10

Pros) Strong Growth in Sea Freight Forwarding and
Domestic Express and Small Parcel Market



Freight forwarding revenue expects to grow at CAGR of 11.8% for the forecast period of 2013 to 2017.
The growth of sea freight would be larger than air freight for the next few years.
Domestic express and small parcel market in 2017 expects to be twice larger than the market size in 2013

Freight Forwarding Market Forecast
(2013-2017F)

(USD million)

(USD million)

8,000

3,500
3,000

Sea
Air

2013-2017

3,043

CAGR
11.8%

International

7,000

1,845

1,948
Sea freight (CAGR 13.6%)

1,107

2,000
841

CAGR
11.8%

806

4,031
470

International (CAGR 14.5%)

6,758

3,000

1,000
500

7,564

5,000

4,000
1,500

domestic

2013-2017

6,000

2,500
2,000

Express and Small Parcel Market Forecast
(2013-2017F)

Air freight (CAGR 9.3%)

1,198

3,561

Domestic (CAGR 17.4%)

1,000
-

2013

2015F

2016F

ASOSIASI LOGISTIK DAN FORWARDER INDONESIA
INDONESIAN LOGISTICS AND FORWARDERS ASSOCIATION

2017F

2013

2015F

2016F

2017F

11

Expanding Middle Class

Pros) Rising Middle Class in Indonesia
Forecast of Household Disposable Income
(2014-2030F)
Household 80
in Millions

Affluent Class : Yearly Disposable Income of > US$ 35,000

70

Middle Income Class : Yearly Disposable Income of US$ 5,000 - 35,000

60

Lower Income Class : Yearly Disposable Income of < US$ 5,000

50
806

40
30
1,845

20
470

6,758

10
1,107
0
Affluent + 841
Middle Class
Households
Change

2014

2030

2014

20301,198
2014

2030

2014

2030

3,561

2014

2030

2014

2030

Indonesia

Vietnam

Philippines

Thailand

Malaysia

Singapore

+59%

+120%

+83%

+43%

+44%

+28%

ASOSIASI LOGISTIK DAN FORWARDER INDONESIA
INDONESIAN LOGISTICS AND FORWARDERS ASSOCIATION

2014

2030

Japan

4%

12

Pros) Rapid Growth on Modern Trade in Indonesia
Modern Trade vs. Traditional Trade in ASEAN
100%

7(MT) : 3 (TT)

806

5:5

50%

4:6
72

70

74

3:7

1,845

38

1,107

43

47

45

40

51

2:8

12

17

470

19

6,758
23

29

32

1:9

3,561
4

1,198

0%

10841 15
Singapore

20

10

15
Malaysia

20

10

15
Thailand
Modern Trade

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20

10

15
Indonesia

20

10

15
Philippines

20

10

5

6

15

20

Vietnam

Traditional Trade

13

Pros) By the rising middle classes in Indonesia and the increasing popularity
of mobile devices, Indonesia is the fastest growing and the largest market in ASEAN.
Country

2015
EC Market Size
(USD million)

CAGR
2011-2015

CAGR
2016-2020

Indonesia

1,682

44.4%

37.0%

Thailand

1,441

21.7%

12.0%

980

12.4%

10.0%

Singapore

806

Vietnam
Malaysia

1,845

698

44.0%

22.7%

519

15.9%

10.7%

470

354

Philippines
1,107
China

1,198

293,045

14.4%
3,561

6,758

6.7%

65.4%

11.7%

13.5%

9.9%

841

Japan

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INDONESIAN LOGISTICS AND FORWARDERS ASSOCIATION

69,074

14

Cons) The Cost of Logistics Remains High
Logistics Cost per GDP, Indonesia (Indonesia, 2013-19F)
Logistics costs
(Trillion IDR)

Logistics Costs (ASEAN, 2014)

Logistics costs to GDP

30.0%

30.0%

4,000
25.7%

25.7%

3,500

25.0%

25.7

25.0

25.0%
24.0%

25.0%

23.5%
22.1%
21.0%

3,000

20.0%
20.0%

806

2,500

15.0%

13.2

15.0%

2,000

1,845

3,67
3,18

1,500

10.0%

2,76

1,107

13.0

10.0%
470

6,758
8.1

8.1

2,40
2,08

1,000

1,81

1,62

5.0%

5.0%
3,561

0.0%

0.0%

1,198

500

841

0

2013

2014

2015F

2016F

ASOSIASI LOGISTIK DAN FORWARDER INDONESIA
INDONESIAN LOGISTICS AND FORWARDERS ASSOCIATION

2017F

2018F

2019F

ID

VN

TH

MY

SG

(Reference)
JP

15

Cons)
Require to bridge a gap between Indonesia’s infrastructure budget and actual


I do esia’s i f ast u tu e spe di g to GDP atio is o e of the lo est a o g othe A“EAN ou t ies
The new government show its commitment to increase its budget for infrastructure. The planned government
i f ast u tu e spe d i ease 9% i the
6 udget o the p e ious ea ’s pla ed spe d. Ho e e , the e has ee a
huge gap between the revised state budget and the actual over the past four years.



Share of Infrastructure Spending to GDP, ASEAN (2014)

Government Spending on Infrastructure (2012-17)
(Trillion IDR)
450

9.0%

Revised State Budget
7.7%

8.0%

400

806

Actual

350

7.0%

300

6.0%
1,845

250

5.0%
4.0%

3.2%

1,107

3.0%

2.4%

2.0%

200

3.6%

100

1,198
841

Singapore Philippines

3,561

50

0.0%
Indonesia

6,758

150

2.5%

2.0%
1.0%

470

Malaysia

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INDONESIAN LOGISTICS AND FORWARDERS ASSOCIATION

Thailand

Vietnam

0
2012

2013

2014

2015

2016

2017

16

Cons) Indonesia ranks 63rd in LPI /2016

Need to improve in each logistics indicator
Logistics Performance Indicators: LPI Results (2016)
Country

LPI
Rank

LPI
Score

Customs
Rank

Infrastructure
Rank

International
Shipments
Rank
8
1
4
66
5
3
9
11
2
19
14
13
21
12
32
39
470
38
71
50
62
60
3,561
52
144
148

Logistics Quality
and Competence
Rank
1
10
2
3
5
6
4
7
11
8
14
12
17
27
35
32
49
55
62
93
77
89
119
144

1
4.23
2
1
Germany
2
4.22
9
4
Luxembourg
3
4.20
8
3
Sweden
4
4.19
3
2
Netherlands
5
4.14
1
6
Singapore
6
4.11
13
14
Belgium
7
4.10
15
12
Austria
8
4.07
5
5
UK
9
4.07
7
10
Hon Kong
10
3.99
16
8
US
11
3.99
10
7
Switzerland
12
3.97
11
11
Japan
19
3.79
22
18
Australia
27
3.66
31
23
China
1,845
32
3.43
40
33
Malaysia
35
3.42
38
36
India
45
3.26
46
46
Thailand
63
2.98
69
73
Indonesia
1,107
64
2.98
64
70
Vietnam
70
2.87
57
66
Bunei
71
2.86
78
82
Philippines
73
2.80
99
Cambodia
1,198 77
113
2.46
96
105
Myanmar
841
152
2.07
155
155
Lao PDR
The international LPI analyzes countries in six components :
• The effi ie
of usto s a d o de lea a e Custo s
• The ualit of t ade a d t a spo t i f ast u tu e I f ast u tu e
• The ease of a a gi g o petiti el p i ed ship e ts I te atio al ship e ts, Ease of a a gi g ship e ts
• The competence and quality of logistics services-t u ki g, fo a di g, a d usto s oke age “e i e ualit , Qualit of logisti s se i es
• The a ilit to t a k a d t a e o sig
e ts T a ki g a d t a i g
• The f e ue
ith hi h ship e ts ea h o sig ees ithi s heduled o e pe ted deli e ti es Ti eli ess

ASOSIASI LOGISTIK DAN FORWARDER INDONESIA
INDONESIAN LOGISTICS AND FORWARDERS ASSOCIATION

Tracking and
Tracing
Rank
3
6
1
6
10
4
2
7
14
806
5
12
13
19
28
36
33
50 6,758
51
75
68
73
81
94
156

Timeliness
Rank
2
1
3
5
6
4
7
8
9
11
14
15
21
31
47
42
52
62
56
84
70
73
112
133

17

(Reference)

Lack of Road Network Connectivity




The result of poor connectivity in Indonesia causes a longer lead time and an insufficient supply chain.
The density of road network has been staying at around 0.3 kilometers per km2 of land over the past 5 years.

Density of Road Network
(2011-2015)
(kilometers per km2 of land)
6.0

4.9

4.8

5.0

4.9

5.0

4.9

806
4.0
1,845
3.0
470

6,758

1,107

2.0

3,561
1.0

841
0.3

1,198

0.7 0.7

0.4

0.6

0.5

0.1

0.3

0.7 0.7

0.6

0.4

0.1

0.3

0.7 0.7

0.6

0.4

0.3

0.1

0.7 0.7

0.7 0.7 0.7

0.4

0.3

0.1

0.4

0.1

0.0
2011

2012
Myanmar

Indonesia

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2013
Thailand

Malaysia

2014
Vietnam

Philippines

2015
Singapore

18

(Reference)

Undeveloped Infrastructure (Unpaved Roads)




The weak infrastructure and unpaved road will slow down the growth of logistics industry.
The proportion of paved roads has been staying at around 57% of total road network in Indonesia over the past 5 years.

Proportion of Paved Roads
(2011-2015)
(kilometers per km2 of land)
98.5 100.0

100.0

98.5 100.0

98.5 100.0

98.5 100.0

98.5 100.0

90.0
80.9

78.1

80.0

77.2

76.9

76.6
806

70.0
57.0

60.0

56.8

52.7
46.6

50.0

56.7

52.2
45.7

56.6

52.0

45.4

51.9

45.0

44.8

470

40.0

30.0

56.7

52.1

31.4

30.8

30.1

29.3

28.4

20.0
10.0
0.0
2011

2012
Philippines

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Myanmar

2013
Vietnam

Indonesia

2014
Malaysia

Thailand

2015
Singapore

19

Member of :

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