Indonesian Logistics Overview

YUKKI NUGRAHAWAN HANAFI

Chairman

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 15 Packages of Economic Policies
9 Sept 2015 7 Oct 2015 22 Oct 2015 7 Dec 2015
Package 1 Package 3 Package 5 Package 7
Improvement of industrial Expanding access to financing Asset revaluation and Industry tax incentives and

2015
competition level and reducing production costs access to sharia financing land certification

29 Sept 2015 15 Oct 2015 5 Nov 2015 21 Dec 2015

Package 2 Package 4 Package 6 Package 8
Investment promotion and Wage system guarantees and Drive economies in the periphery Business certainty and
foreign exchange securing work termination and the smoothness of raw investment of aircraft and
material of medicine oil maintenance services
27 Jan 2016 29 Mar 2016 24 Aug 2016
Package 9 Package 11 Package 13
Electricity and Financing access, Dwelling Time, House provision for

2016
logistics infrastructure and pharmaceutical industry low income communities

11 Feb 2016 28 Apr 2016 10 Nov 2016

Package 10 Package 12 Package 14
Openness of investment Ranking enhancement of Drive economies in the periphery
Ease of Doing Business and the smoothness of raw
material of medicine

15 Jun 2017

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)…
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, Distribution

Wholesaler Retailer
Factory Center

Consumer
The flow of goods, information, and costs

: Logistic activities

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The Importance of Logistic and Transportation

Bagian dari membangun daya saing bangsa

Menunjang terciptanya efisiensi nasional

Logistik
Mendorong National Economic Integration

Menjamin ketersediaan, akses, stabilisasi harga,

dan kualitas barang

Enabler bagi perdagangan

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Network of National Logistics System

Poros Maritim
Hub
Desa Pelabuhan
Internasional Hub
Antar Pelabuhan
AFRIKA
Pulau Internasional
Desa Kota/ EROPA
Desa Kab

Desa
Pelabuhan Hub
Kota/ Antar Pelabuhan
Desa Kab
Pulau Internasional
Internasional
Indonesia ASIA
Desa

Desa Kota/
Kab
Desa Antar Hub
Pulau Pelabuhan
Hub Internasional
Pelabuhan AMERIKA
Desa Internasional

Indonesia
AUSTRALIA

Integrasi Jaringan Lokal dan Nasional Koneksi Jaringan Global

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Matrix of Logistics Infrastructure
Keuangana
Jaringan

Pelaku Jasa Perbankan, Asuransi, LKBB

Money
Internet SMS Cash
Sarana ATM T/T
Banking Banking Basis
Pesan Dokumen
Jaringan Informasi

Applikasi Aplikasi

Data
Sarana Transportasi
Keamanan Aplikasi Khusus Saluran Pengiriman

Infrastruktur Logistik
Data
Jaringan Fisiak Messaging Hub
Informasi Jaringan Telekomunikasi
Fasilitas Penyimpanan W/H, CY, CFS, Container, Pallet, Depot
Sarana Transportasi
Kapal Laut, Kapal Udara, Truk, Kereta Api, Pipa
Transportasi

Dermaga Dermaga Terminal Terminal Terminal Terminal

Freight
Jaringan

Intermodal
Transportasi Pelabuhan Pelabuhan Bandar Pelabuhan
Stasiun Depot
Simpul Transportasi Laut Sungai Udara Daratan

Moda Transportasi Laut Sungai Udara Jalan Rel Pipa

Penyedia Produsen, Importir, Eksportir
Distribusi
Jaringan

Trade
Penyalur Pedagang, Distributor, Grosir, Agen, Peritel
Terminal Agri, pasar Induk, Pasar Tradisional, Kios, Warung,
Prasarana
Hyper/Super/Mini Market

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Logistics Service Provider

1PL : Shipper / Consignee (Pengirim / penerima barang)

2PL : Actual Carriers (airline, shipping line atau operator truk)

3PL : Sebuah perusahaan yang menyediakan beberapa layanan logistik,

termasuk transportasi, pergudangan, cross-docking, manajemen
persediaan, pengemasan, dan freight forwarding.

4PL : Perusahaan konsultan yang mengkhususkan diri dalam bidang

logistik, transportasi dan manajemen rantai pasok. Terkadang digambarkan
sebagai penyedia layanan non-aset, peran mereka adalah untuk
memberikan ruang lingkup yang lebih luas pengelolaan seluruh rantai
pasokan.

5PL : Penyedia layanan logistik yang melakukan rencana, mengatur dan

melaksanakan solusi logistik atas nama pihak kontraktor (terutama sistem
informasi) dengan memanfaatkan teknologi tepat guna, memperluas ruang
lingkup lebih lanjut untuk e-bisnis.

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Supply Chain Management

Supply chains are complex interdependent systems and involve:

Whole of Chain Thinking Information Technology

Labour Procurement
Oil and alternative energy Supply Chain Management
Transport Commercial Power
Logistics Legal and Regulatory Systems
Finance People and Relationships
Business Processes Strategic Asset Investment
Transaction Systems Geo-Political Economy

Supply Demand

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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

Contract Logistics* Express & Small

Logistics Service Air & Sea Freight Forwarding
(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.

Country CAGR CAGR CAGR

2013 2017 2013 2017 2013 2017
(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 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 Contract Logistics Market Size

(2013-2017F) By Country

Growth
Country 2013 2017
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 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 Express and Small Parcel Market Forecast
(2013-2017F) (2013-2017F)
(USD million) (USD million)
3,500 8,000 7,564
2013-2017
2013-2017 3,043 International
Sea 7,000 CAGR 806
3,000 CAGR domestic
Air 11.8%
11.8%
6,000
2,500
1,948 1,845 5,000
2,000 4,031
4,000 470 International (CAGR 14.5%)
Sea freight (CAGR 13.6%) 6,758
1,500
1,107 3,000
1,000
2,000 3,561
1,198 Domestic (CAGR 17.4%)
500 Air freight (CAGR 9.3%)
841 1,000

- -
2013 2015F 2016F 2017F 2013 2015F 2016F 2017F

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

Household 80 Affluent Class : Yearly Disposable Income of > US$ 35,000

in Millions
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 3,561
2014 2030 2014 20301,198
2014 2030 2014 2030 2014 2030 2014 2030 2014 2030
Affluent + 841
Middle Class Indonesia Vietnam Philippines Thailand Malaysia Singapore Japan
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
100%

7(MT) : 3 (TT)

5:5 806
50%
4:6

72 74
70
1,845 3:7
51
47 45 470
43 40 2:8 6,758
38
1,107 29 32
23
17 19 1:9
12 3,561
4 5 6
0% 1,198
10841 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

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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.
2015
CAGR CAGR
Country EC Market Size
2011-2015 2016-2020
(USD million)

Indonesia 1,682 44.4% 37.0%

Thailand 1,441 21.7% 12.0%

Singapore 980 12.4% 10.0%

806
Vietnam 698 44.0% 22.7%

Malaysia 1,845 519 15.9% 10.7%

470 6,758
Philippines
1,107 354 14.4% 6.7%

3,561
China 1,198
293,045 65.4% 11.7%
841
Japan 69,074 13.5% 9.9%

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Cons) The Cost of Logistics Remains High
Logistics Cost per GDP, Indonesia (Indonesia, 2013-19F) Logistics Costs (ASEAN, 2014)

Logistics costs 30.0%

(Trillion IDR) Logistics costs to GDP
30.0%
4,000 25.7
25.0
25.7% 25.7% 25.0%
25.0%
3,500 24.0% 25.0%
23.5%
22.1%
21.0%
3,000 20.0%
20.0% 806
2,500
15.0%
15.0% 13.2 13.0
2,000
1,845 3,67

3,18
1,500 10.0%
470
2,76 10.0% 6,758
8.1 8.1
1,107 2,40
1,000 2,08
1,81
1,62 5.0%
3,561
5.0%
500 1,198
841

0 0.0% 0.0%
ID VN TH MY SG (Reference)
2013 2014 2015F 2016F 2017F 2018F 2019F JP

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 Cons)
Require to bridge a gap between Indonesia’s infrastructure budget and actual
 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.
Share of Infrastructure Spending to GDP, ASEAN (2014) Government Spending on Infrastructure (2012-17)

(Trillion IDR)
450
9.0%
Revised State Budget
7.7% 400
8.0% Actual 806

7.0% 350

6.0% 300
1,845
5.0% 250
470 6,758
4.0% 3.6% 200
1,107 3.2%
3.0% 2.4% 2.5% 150
2.0% 3,561
2.0% 1,198 100
841
1.0% 50

0.0% 0
Indonesia Singapore Philippines Malaysia Thailand Vietnam 2012 2013 2014 2015 2016 2017

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 Cons) Indonesia ranks 63rd in LPI /2016
Need to improve in each logistics indicator
Logistics Performance Indicators: LPI Results (2016)
International Logistics Quality Tracking and
LPI LPI Customs Infrastructure Timeliness
Country Shipments and Competence Tracing
Rank Score Rank Rank Rank
Rank Rank 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 5 806 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
1,845
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 46 470
38 49 50 6,758 52
Indonesia 63 2.98 69 73 71 55 51 62
1,107
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 3,561
60 77 73 70
Cambodia 73 2.80 1,198 77 99 52 89 81 73
Myanmar 841 113 2.46 96 105 144 119 94 112
Lao PDR 152 2.07 155 155 148 144 156 133
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”)

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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)
(kilometers per km2 of land)
6.0

5.0
4.9 4.9 4.9
5.0 4.8

806

4.0

1,845
3.0
470 6,758
1,107
2.0

3,561
1.0 1,198
0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7
841 0.6 0.6 0.6
0.5
0.4 0.4 0.4 0.4 0.4
0.3 0.3 0.3 0.3 0.3
0.1 0.1 0.1 0.1 0.1
0.0
2011 2012 2013 2014 2015

Myanmar Indonesia Thailand Malaysia Vietnam Philippines Singapore

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(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)
100.0 98.5 100.0 98.5 100.0 98.5 100.0 98.5 100.0 98.5 100.0

90.0
80.9
78.1 77.2 76.9 76.6
80.0 806

70.0

60.0 57.0 56.8 56.7 56.7 56.6

52.7 52.2 52.1 52.0 51.9
50.0 46.6 45.7 45.4 45.0 44.8
470
40.0
30.1 30.8 31.4
28.4 29.3
30.0

20.0

10.0

0.0
2011 2012 2013 2014 2015

Philippines Myanmar Vietnam Indonesia Malaysia Thailand Singapore

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