Indonesian Logistics Overview
ASOSIASI LOGISTIK DAN FORWARDER INDONESIA
INDONESIAN LOGISTICS AND FORWARDERS ASSOCIATION
YUKKI NUGRAHAWAN HANAFI
Chairman
Member of :
15 Packages of Economic Policies
20159 Sept 2015
Package 1
Improvement of industrial
competition level
29 Sept 2015
Package 2
Investment promotion and
foreign exchange
7 Oct 2015
Package 3
Expanding access to financing
and reducing production costs
15 Oct 2015
Package 4
Wage system guarantees and
securing work termination
22 Oct 2015
Package 5
Asset revaluation and
access to sharia financing
5 Nov 2015
Package 6Drive economies in the periphery
and the smoothness of raw
material of medicine
7 Dec 2015
Package 7
Industry tax incentives and
land certification
21 Dec 2015
Package 8
Business certainty and
investment of aircraft and
oil maintenance services
201627 Jan 2016
Package 9
Electricity and
logistics infrastructure
11 Feb 2016
Package 10
Openness of investment
29 Mar 2016
Package 11Financing access, Dwelling Time,
and pharmaceutical industry
28 Apr 2016
Package 12
Ranking enhancement of
Ease of Doing Business
24 Aug 2016
Package 13
House provision for
low income communities
10 Nov 2016
Package 14Drive economies in the periphery
and the smoothness of raw
material of medicine
201715 Jun 2017
Package 15
Development of national
logistic industry
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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-of-consumption in order to meet customers’ requirements” (Council of Logistics Management)…
Lambert, 4th Edition
ASOSIASI LOGISTIK DAN FORWARDER INDONESIA
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Suppliers
Food Processing,
Factory
Distribution
CenterWholesaler Retailer
ConsumerThe flow of goods, information, and costs
: Logistic activities
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.
The Importance of Logistic and Transportation
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Logistics
Enabler for Trading
Part of building nation's competitiveness
Supporting the creation of national efficiency
Encourage National Economic Integration
Ensure availability, access, price stabilization, and
quality of goods
Network of National Logistics System
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Village
Village
Village
Integration of Local and National Networks Global Networks Connectivity
InternationalHub PortEROPA
Inter-Island
District
InternationalHub Port
ASIA
InternationalHub PortAMERIKA
Indonesia International
Port
Inter-Island
Inter-Island
Village
Village
Village
Village
Village
District
District
InternationalHub PortAFRIKA
InternationalHub Port
AUSTRALIA
Village
Indonesia
Maritime Shaft
Matrix of Logistics Infrastructure
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Fin
anci
al
Net
wo
rk Service Actors Banking, Insurance, LKBB
Mo
ney
Logi
stic
s In
fras
tru
ctu
re
Tools ATMInternet Banking
SMS Banking
T/TCashBasis
Info
rmat
ion
Net
wo
rk
Message
Application
Means of Transportation
Data
Physical Network
Information
Documents
Dat
a
Applications
Security Typical Application Delivery Channel
Messaging Hub
Telecommunication Network
Tra
nsp
ort
atio
n
Net
wo
rk
Storage Facilities
Means of Transportation
Transport Node
Modes of Transportation
W/H, CY, CFS, Container, Pallet, Depot
Frei
ght
Ships, Airplane, Trucks, Railways, Pipes
Port River Port Airport Land Port Station Depot
Sea River Air Road Railway Pipe
Dis
trib
uti
on
Net
wo
rk
Provider Manufacturer, Importer, Exporter
Trad
e
Distributor Trader, Distributor, Wholesaler, Agent, Retailer
InfrastructureAgro Terminal, Central Market, Traditional Market, Stall, Store,
Hyper/Super/Mini Market
Logistics Service Provider
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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 e-business.
Supply Chain Management
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Supply chains are complex interdependent systems and involve:
Supply Demand
Oil and alternative energy
Transaction Systems
Commercial Power
Strategic Asset Investment
Procurement Information Technology
Supply Chain Management
Business Processes
Legal and Regulatory Systems
People and RelationshipsLogisticsTransport
Geo-Political Economy
Labour
Finance
Whole of Chain Thinking
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 ServiceContract Logistics*
Air & Sea Freight ForwardingExpress & Small
(incl. land transportation and warehousing) Parcel
* Contract Logistics/ Third-Party Logistics (3PLs) normally providing long-term
contract carriage and warehousing services supplying tractors, drivers and management.
2013 2017 2013 2017 2013 2017Country CAGR CAGR CAGR
(US$ billion) 13-17 13-17 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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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 2017due 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)
Contract Logistics Market SizeBy Country
Country 2013 2017Growth
13-17(%)
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
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Pros) Strong Growth in Sea Freight Forwarding andDomestic 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)
Express and Small Parcel Market Forecast(2013-2017F)
-
500
1,000
1,500
2,000
2,500
3,000
3,500
2013 2015F 2016F 2017F
Sea
Air
1,948
3,043
1,107
841
1,845
1,198
CAGR
11.8%
2013-2017
(USD million)
Sea freight (CAGR 13.6%)
Air freight (CAGR 9.3%)
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2013 2015F 2016F 2017F
International
domesticCAGR
11.8%
2013-2017
(USD million)
International (CAGR 14.5%)
Domestic (CAGR 17.4%)
470
3,561
6,758
806
4,031
7,564
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Expanding Middle Class
Pros) Rising Middle Class in Indonesia
Forecast of Household Disposable Income(2014-2030F)
1,107
841
1,845
1,198
470
3,561
6,758
806
0
10
20
30
40
50
60
70
80
2014 2030 2014 2030 2014 2030 2014 2030 2014 2030 2014 2030 2014 2030
Indonesia Vietnam Philippines Thailand Malaysia Singapore Japan
Affluent Class : Yearly Disposable Income of > US$ 35,000
Middle Income Class : Yearly Disposable Income of US$ 5,000 - 35,000
Lower Income Class : Yearly Disposable Income of < US$ 5,000
Household
in Millions
Affluent +
Middle Class
Households
Change+59% +120% +83% +43% +44% +28% 4%
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Pros) Rapid Growth on Modern Trade in Indonesia
Modern Trade vs. Traditional Trade in ASEAN
1,107
841
1,845
1,198
470
3,561
6,758
806
70 72 74
3843
4740
4551
1217 19
2329 32
4 5 60%
50%
100%
10 15 20 10 15 20 10 15 20 10 15 20 10 15 20 10 15 20
Singapore Malaysia Thailand Indonesia Philippines Vietnam
Modern Trade Traditional Trade
7(MT) : 3 (TT)
4 : 6
5 : 5
2 : 8
3 : 7
1 : 9
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Pros) By the rising middle classes in Indonesia and the increasing popularityof mobile devices, Indonesia is the fastest growing and the largest market in ASEAN.
1,107
841
1,845
1,198
470
3,561
6,758
806
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%
Singapore 980 12.4% 10.0%
Vietnam 698 44.0% 22.7%
Malaysia 519 15.9% 10.7%
Philippines 354 14.4% 6.7%
China 293,045 65.4% 11.7%
Japan 69,074 13.5% 9.9%
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Cons) The Cost of Logistics Remains High
1,107
841
1,845
1,198
470
3,561
6,758
806
Logistics Cost per GDP, Indonesia (Indonesia, 2013-19F) Logistics Costs (ASEAN, 2014)
1,621,81
2,08
2,40
2,76
3,18
3,67
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2013 2014 2015F 2016F 2017F 2018F 2019F
25.7% 25.7%25.0%
24.0%23.5%
22.1%21.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Logistics costs
(Trillion IDR) Logistics costs to GDP
25.725.0
13.2 13.0
8.1 8.1
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
ID VN TH MY SG (Reference)JP
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Cons)Require to bridge a gap between Indonesia’s infrastructure budget and actual
1,107
841
1,845
1,198
470
3,561
6,758
806
Share of Infrastructure Spending to GDP, ASEAN (2014) Government Spending on Infrastructure (2012-17)
Indonesia’s infrastructure spending to GDP ratio is one of the lowest among other ASEAN countries
The new government show its commitment to increase its budget for infrastructure. The planned government infrastructure spend increase by 9% in the 2016 budget on the precious year’s planned spend. However, there has been a huge gap between the revised state budget and the actual over the past four years.
2.0%2.4% 2.5%
3.2%3.6%
7.7%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
Indonesia Singapore Philippines Malaysia Thailand Vietnam0
50
100
150
200
250
300
350
400
450
2012 2013 2014 2015 2016 2017
Revised State Budget
Actual
(Trillion IDR)
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Cons) Indonesia ranks 63rd in LPI /2016
Need to improve in each logistics indicator
1,107
841
1,845
1,198
470
3,561
6,758
806
Logistics Performance Indicators: LPI Results (2016)
The international LPI analyzes countries in six components :• The efficiency of customs and border clearance (“Customs”)• The quality of trade and transport infrastructure (“Infrastructure”)• The ease of arranging competitively priced shipments(“International shipments, Ease of arranging shipments”)• The competence and quality of logistics services-trucking, forwarding, and customs brokerage(“Service quality, Quality of logistics services”)• The ability to track and trace consignments(“Tracking and tracing”)• The frequency with which shipments reach consignees within scheduled or expected delivery times(“Timeliness”)
CountryLPI
Rank
LPI
Score
Customs
Rank
Infrastructure
Rank
International
Shipments
Rank
Logistics Quality
and Competence
Rank
Tracking and
Tracing
Rank
Timeliness
Rank
Germany 1 4.23 2 1 8 1 3 2
Luxembourg 2 4.22 9 4 1 10 6 1
Sweden 3 4.20 8 3 4 2 1 3
Netherlands 4 4.19 3 2 66 3 6 5
Singapore 5 4.14 1 6 5 5 10 6
Belgium 6 4.11 13 14 3 6 4 4
Austria 7 4.10 15 12 9 4 2 7
UK 8 4.07 5 5 11 7 7 8
Hon Kong 9 4.07 7 10 2 11 14 9
US 10 3.99 16 8 19 8 5 11
Switzerland 11 3.99 10 7 14 14 12 14
Japan 12 3.97 11 11 13 12 13 15
Australia 19 3.79 22 18 21 17 19 21
China 27 3.66 31 23 12 27 28 31
Malaysia 32 3.43 40 33 32 35 36 47
India 35 3.42 38 36 39 32 33 42
Thailand 45 3.26 46 46 38 49 50 52
Indonesia 63 2.98 69 73 71 55 51 62
Vietnam 64 2.98 64 70 50 62 75 56
Bunei 70 2.87 57 66 62 93 68 84
Philippines 71 2.86 78 82 60 77 73 70
Cambodia 73 2.80 77 99 52 89 81 73
Myanmar 113 2.46 96 105 144 119 94 112
Lao PDR 152 2.07 155 155 148 144 156 133
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(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)
1,107
841
1,845
1,198
470
3,561
6,758
806
0.1 0.1 0.1 0.1 0.10.3 0.3 0.3 0.3 0.3
0.4 0.4 0.4 0.4 0.40.5
0.6 0.6 0.60.70.7 0.7 0.7 0.7 0.70.7 0.7 0.7 0.7 0.7
4.84.9 4.9 4.9
5.0
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2011 2012 2013 2014 2015
Myanmar Indonesia Thailand Malaysia Vietnam Philippines Singapore
(kilometers per km2 of land)
18
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28.4 29.3 30.1 30.8 31.4
46.6 45.7 45.4 45.0 44.8
52.7 52.2 52.1 52.0 51.9
57.0 56.8 56.7 56.7 56.6
80.978.1 77.2 76.9 76.6
98.5 98.5 98.5 98.5 98.5100.0 100.0 100.0 100.0 100.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
80.0
90.0
100.0
2011 2012 2013 2014 2015
Philippines Myanmar Vietnam Indonesia Malaysia Thailand Singapore
(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)
470
806
(kilometers per km2 of land)
19
ASOSIASI LOGISTIK DAN FORWARDER INDONESIA
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INDONESIAN LOGISTICS AND FORWARDERS ASSOCIATION
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