Freight Transportation Services Company Success in Indonesia

by | Dec 7, 2021 | Market Research, slider | 0 comments

The Indonesian market for the freight transportation services industry

Source: Unsplash

As housebound populations buy more stuff, the big parcel networks have pounced on the golden opportunity. Most businesses have imposed surcharges on customers to reflect the difficulty of delivering during a pandemic.

Express delivery networks make more money when more packages flow through them. 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. Shipping lines face operational issues, such as port inefficiencies, causing increased waiting and turnaround time, and risks of labor disputes. The population of freight trucks is expected to grow over the forecast period driven by the support of the improvement of toll road infrastructure and the expansion of factories of large companies.

Which outside Freight Transportation services brands has successfully expanded their market in Indonesia? What is the outlook for the Freight Transportation industry in Indonesia? Read this article to know more!

The Overview of Freight Transportation Services Development in Indonesia 

Based on data from Mordor Intelligence, The Indonesian freight and logistics market henceforth, referred to as the market studied was valued at USD 81,30 billion in 2020, and it is expected to reach USD 138,04 billion by 2026, registering a growth rate of 9,22% during the forecast period. Indonesia has been severely affected by the Covid-19 crisis.

The lack of a centralized and adequate government response has led to uncoordinated responses, including a lockdown on Jakarta and business-as-usual in mines and the agricultural sector. According to the Indonesian Logistics Association (ALI), logistics companies have experienced an approximately 50% decline in overall business performance since the Covid-19 outbreak hit Indonesia in early March 2020. 

It is reported that logistics volume has been down by 60-70% across the board due to emergency measures taken by the government to prevent Covid-19 transmission. Business to Consumer (B2C) and Customer to Customer (C2C) delivery services had experienced growth despite the outbreak, but the increase was too small to compensate for the sharp drop in the Business to Business (B2B) segment.

The B2C and C2C segments recorded growth due to the increase in demand for food, perishables, and medical supply deliveries despite large-scale social restrictions. Post Covid-19, as the industry positions itself for recovery and growth, technology will increasingly play a major role to enable all stakeholders, including shippers, transporters, warehouse owners, and vendors, to become more efficient in responding to changing market realities.

Although logistics is the heart of domestic and international trade, uncertainty remains a huge problem in Indonesia’s supply chain, exacerbated by the country’s unique archipelagic makeup of 17,000 islands, which means goods cannot be transported using trucks on land alone. There are more than 50 freight transportation services that provide streaming.

Some are from abroad, some are from within Indonesia itself. However, of all the freight transportation services, there are 3 famous freight transportation services brands in Indonesia. The 3 brands are DHL, FedEx, and Kuehne + Nagel. 3 of the freight transportation services are from abroad which will be discussed further below:

  1. DHL

DHL is an American-founded company that is now part of Deutsche Post. It is headquartered in Bonn, Germany. Today, Deutsche Post DHL is known to be the world’s largest logistics company. Its international game is by far the strongest among the three, and it is the only carrier that delivers to sanctioned nations like North Korea.

It delivers over USD 24 billion parcels per year. The revenue growth of DHL global in 2020 amounted to USD 24 billion. Dr. Frank Appel is the current Chief Executive Officer of Global Business Services and Ken Allen is Head of eCommerce Solutions at DHL. The carrier employs 550,000 employees including trainees. The revenue growth of DHL Indonesia in 2019 amounted to USD 21,504 million.

2. FedEx

An American multinational corporation founded in 1971, FedEx is headquartered in Memphis, Tennessee. This shipping carrier holds the distinction of having the most planes on its fleet 670, well ahead of UPS and DHL.

In its early days, FedEx was the pioneer that introduced an overnight shipping services as well as a system capable of tracking packages and providing real-time location updates. Today, it operates services in over 220 countries and territories.

The revenue growth of FedEx global in 2020 amounted to USD 69.22 billion. Within the US, it’s possible to pick up, drop off, or ship at more than 50,000 FedEx locations. Frederick W. Smith is the founder, Chairman, & CEO of FedEx. The revenue growth of FedEx Indonesia in 2019 amounted to USD 66,56 million.

3. Kuehne + Nagel

Kuehne + Nagel’s placement of its logistics offices at strategic points around the world allows it to take advantage of the global desire for goods from around the world. Their customers come from industries ranging from oil and gas to marine logistics.

Named as the number one ocean freight forwarder by Transportation Logic magazine. Made USD 22,216 billion in revenue worldwide in 2020. Listed by Forbes as one of the U.S.’s top employers in 2017. A number of employees in 2020 as many as 83,160 employees. The revenue growth of Kuehne + Nagel Indonesia in 2019 amounted to USD 19,702 million.

The Future Prospects of Freight Transportation Services in Indonesia 

According to research conducted by ReportLinker, The Indonesia freight and logistics market is expected to witness a CAGR of 10.27% during the forecast period 2020 – 2025. The land transportation services 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. A multimodal system, using land and sea transportation as well as warehouses, is needed to reach remote areas of each island.

Logistics using land transportation services are still the mainstay of the transportation services industry. The shipping industry holds a major role in Indonesia’s trade since 90% of Indonesia’s export commodities are delivered via water transportation.

Road transport accounts for 70-80% of the total freight volume that is handled annually within Indonesia’s borders. In value/currency terms, the share of the road freight market has stayed between 40-50% of the total logistics market size.

Enter The Indonesian Freight Transportation Services Market with BRIGHT Indonesia

Due to the impact of Freight Transportation services users in Indonesia, Indonesia certainly has a large Freight Transportation market potential. So, to enter the Indonesian market, you need the right local partner to assist you.

BRIGHT Indonesia is an ideal business partner for you. We will assist you on the ground, including virtual assistants during the mission, logistical planning, and detailed communication. It can cause your company to focus on developing partnership cooperation rather than the hassles of the business trip.

BRIGHT Indonesia provides several services such as Market Insight Research, Business Partnership Engagement, Management and Strategy Consulting, and Foreign Direct Investment. The services will help your business to:

  1. Assist you in expanding and developing your business by identification of potential partners.
  2. Secure the agreement between client companies and future Indonesian business partners by providing a list of potentially suitable partners, arranging business meetings, and acting as a liaison.
  3. Supporting our foreign client companies from the private sector with developing corporate or business unit strategies or helping your company from public sector organizations with public policy.
  4. Link client companies both from the private and public sectors in global foreign direct investment (FDI) through training and assisting your company in entering FDI source countries to gather investment for your company’s local markets.

For more information, email info@brightindonesia.net.

*This article is written by Syarifah

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