The land transportation service industry in Indonesia may continue to develop gradually. Furthermore, this development is likely to be attributed to the ever-increasing demand, as the price of logistics is rapidly accelerating, which accounts for 29% of the burden on Indonesia’s GDP.
New York, Feb. 09, 2021 (GLOBE NEWSWIRE) -- Reportlinker.com announces the release of the report "Indonesia Freight and Logistics Market - Growth, Trends, COVID-19 Impact, and Forecasts (2020 - 2025)" - https://www.reportlinker.com/p06020210/?utm_source=GNW
Logistics using land transportation services are still the mainstay of the transportation services industry, with around 90% of logistics in Indonesia involving land transportation. The limited number of vehicles becomes an obstacle, which can be overcome by the overload in the transportation of goods (Over Dimension and Overload - ODOL).
Road transport accounts for 70-80% of the total freight volume handled annually within the Indonesian borders. In value/currency terms, the share of the road freight market stayed between 40% and 50% of the total logistics market size.
Road transport is the lifeline for the movement of goods for such a large population. Areas, such as Java and Bali, depend mostly on road transport. In case of Bali, majority of freight movement is connected to the development of the hospitality industry’s projects and tourist consumption. Movement of goods within the small islands is more expensive than receiving the goods by sea from other islands and countries.
Key Market Trends
Growing E-commerce in the country
Indonesia has the largest population in Southeast Asia by far, and its e-commerce penetration is still very low, making it one of the hottest e-commerce markets in the world. Attracting both global and local companies’ interests, Indonesia now has a fast-growing e-commerce scene and is poised to become a global powerhouse.
E-commerce is expected to expand in high double digits in the future in Indonesia. Although the market is not as mature as e-commerce in Malaysia or Singapore, the Indonesian population of more than 260 million makes the absolute numbers of growth in the country high, with millions of new online shoppers every year.
The gross merchandise volume (GMV) for online transactions is predicted to reach USD 130 billion by the end of 2020. This growth of e-commerce is a major driver for the cross-border and domestic road freight logistics market growth.
Increasing Trucks to support increasing demand for road freight transport
The population of freight trucks is expected to grow to 50% every year in the next few years. The growth was due to the support of the improvement of toll road infrastructure and the expansion of factories of large companies.
The performance of these business services will be even greater if inter-modal synergies, namely cooperation between trucking service companies and ship and railroad transportation companies, also occur, because the process of shipping goods will reach a wider area between regions and islands.
However, government policy support is needed to facilitate truck transport mobility, so that the intensity and volume of trips also increase. Among the policies needed is monitoring the weighbridge, which is placed directly at the entrance and exit of the industrial area, given the flow of traffic in and out of trucks in places.
The Indonesian freight and logistics industry does not have a high level of industry concentration, especially with regard to the international players. International players are responsible for approximately 30% of the market size. The remaining 70% is made up of local players. Within the 70%, the concentration is medium, and even the 10 largest players do not make up for more than 30% of the local market. This can be attributed to the fact that the large players are more focused on freight transport and logistics infrastructure, and hence, are more than just logistics infrastructure providers.
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