3 Prominent Startups Logistics Companies
An overview of the Logistics market in Indonesia.
Indonesian territory, with 17,000 islands and a population of 260 million, encompasses the world’s largest archipelago. This makes the development of logistics, particularly in terms of connectivity between land, sea and air transport, a crucial factor in efforts to boost international competitiveness and support economic growth.
The Freight and Logistics Market
The Indonesian market for freight and logistics is currently operating at a tipping point. As the fourth-largest populated country in the world with excellent growth potential, Indonesia is a key market in the global scenario. Given the scope of household consumption in a densely populated country and its geographically strategic location, Indonesia is currently a global investment attraction.
Logistics is, however, a crucially low point in the country for doing business. In Indonesia, the cost of logistics ranges from 25% to 30% of GDP, compared to developed economies where it is below 5% of GDP. Even neighboring countries, like Malaysia, incur half the cost as a percentage of GDP for logistics expenditure. Given that Indonesia is the fourth most populous country in the world, there is a display of momentum in the economy, with steady prospects for higher industrial growth, in the more ideal economic scenarios. Indonesia ranks as number 46 in the Logistics Performance Index by the World Bank.
As shown in the image below, the Indonesian logistic market is expected to have a notable CAGR of 7.9% in revenue, reaching $300.3 billion by 2024. This includes freight transport, freight forwarding, warehousing, courier, express and parcel, value-added services, and cold chain logistics segments:
The Indonesian demand for road freight transport is projected to expand at a CAGR of over 9% during the 2020–2025 forecast period. The country’s demand for trucking services is expected to increase, mainly due to the rising international movement of freight and ocean freight, which is the primary driver of demand for Indonesia’s domestic trucking industry. Indonesian trucking companies are currently focused on incorporating technological innovations, such as an online tracking platform that helps businesses locate customers and eliminate empty shipments.
Indonesia’s trucking costs are comparatively higher than those of other ASEAN countries largely due to the country’s topography. Road transport accounts for 70–80% of the total amount of freight handled annually within the borders of Indonesia. In terms of volume, the market share of road freight has remained between 40–50% of the overall size of the logistics market.
Factors Affecting Growth
The logistics sector’s growth in the first quarter of 2020 was mainly driven by the manufacturing sector, which grew by 2.06% year-on-year; food and beverage accommodation, which grew by 1.95%; and trade (1.60%). Agriculture, forestry, and fisheries only increased by 0.02% during the quarter. There was a drop in growth in the manufacturing sectors relative to the previous quarter (-1.79%); food and drink accommodation (-3.92%); commerce (-3.61%); and agriculture, forestry, and fisheries (-1.80%).
Amid the COVID-19 pandemic, Indonesia’s logistics industry still grew in the first quarter of 2020, but compared to the growth in the same period last year, it was much lower, according to Supply Chain Indonesia (SCI). SCI explained that cargo volumes in the logistics sector, including transportation and warehousing, in the first quarter of 2020 grew by only 1.27% year on year, a decrease from 5.45% growth in 2019. The reason is attributed to the drop in demand for goods and commodities, as well as industrial activities. The Central Statistics Agency (BPS) showed that slow logistic growth was in parallel with the slow economic growth during the period. According to BPS, the economic growth in the first quarter of 2020 was at 2.97% year-on-year. Compared to the fourth quarter of 2019, economic growth declined by 2.41%.
Industry Players
Indonesia’s road freight transport market specifically is fragmented with more than 75% of the trucking companies having less than 20 trucks. The growth of the freight transport industry in Indonesia has been seriously impeded by the state of the road infrastructure. It restricts small business owners’ ability to reach a successful target market. Companies operating in the Indonesian trucking industry are currently focusing on integrating technology such as the online tracking platform, which helps companies in finding clients and reducing empty hauls. Siba Surya, Puninar Jaya, CKB Logistics, Nippon Yusen, and Ceva Logistics are the main players in the industry.
In terms of logistics, most Indonesian businesses spend approximately 30% of the sales price on logistics. Of that 30%, about 70% is spent on road transport which relies on a conventional trucking network consisting partly of in-house fleets, but mainly of hundreds of thousands of small trucking vendors and individual owner-operators nationwide. Companies in the OECD, in comparison, spend an average of 8 to 10% of the sales price on logistics with a significantly higher share of their expenditure on warehousing over road transport.
Below are the 3 prominent startup logistics companies in Indonesia:
Deliveree
Through a combination of their high customer booking volumes, high fleet, multiple service lines, a roster of blue-chip customers, and a following among SMEs that constitute the bulk of Indonesia’s economy, Deliveree, and its famous truck booking platform have achieved front runner status among logistics startups in Indonesia. Customers download and use their web application on their website via their smartphone app from the Play Store or Apple Apps Store. Choose your truck and book a match within a few minutes with a local driver for a spot reservation or scheduled pickup several days in advance.
Deliveree provides both long-haul services and shorter distance intracity deliveries over a coverage area covering all of Java, Bali, Lombok, and parts of Sumatra, with its choice of 10 different types of trucks. Also, comparing their prices to other platforms and a few quotes, Deliveree was consistently quite cheap in comparison.
Kargo Technologies
When they came out of stealth in March 2019 with financing from Travis Kalanick’s venture fund as well as Sequoia India, Kargo Technologies gained fame among logistics startups. Tiger Fang, its co-founder, was previously an Uber executive in Southeast Asia, and Yodi Aditya, their other co-founder, is a respected entrepreneur in the Indonesian business landscape.
Kargo was a surprise for nearly everyone in the logistics startup Indonesia industry. Their flagship product is a user-friendly load board that operates under the brand Kargo. Customers can post freight loads and accept bids from trucking vendors. Kargo’s load board is free to use, user-friendly, and they have responsive vendors who are keen to do deals.
GoBox
Though not in the same group as the other logistics start-ups previously mentioned, GoBox, a wholly-owned subsidiary of GoJek, is a ubiquitous household name that has changed Indonesia’s consumer habits from motorbike transportation to food and now to payments. GoJek is part of Indonesian everyday life in Jakarta and the major urban centers of Indonesia and is thus commonly considered to be invincible and undefeatable. However, GoBox has not reached the same huge success as GoJek’s more popular service lines such as GoJek, GoCar, GoFood, and GoPay. Nevertheless, GoBox continues to run strong and is widely known for low-cost DIY home moves and small businesses as a “go-to” option.
Customers can download GoBox’s mobile app from the Play Store or Apples Apps Store. You can select from a variety of trucks and book an on-demand reservation for a match with a nearby driver within a few minutes. They provide short to long-distance trucking and almost all of Indonesia is their pickup service area.
It is estimated that the company’s fleet is very large with approximately 50,000–100,000 commercial trucks and other smaller vehicles such as vans and pickups. The active number, however, is probably a significantly smaller figure. Volumes are estimated to be similar to Deliveree at about 3,000–4,000 truck bookings per day. Deliveree is generally considered to have more market share in Greater Jakarta while GoBox is more dominant in secondary cities and rural areas.
Enter Indonesia’s Logistic Industry With BRIGHT Indonesia
With Indonesia currently ranking at number 46 worldwide in its Logistics Performance Index by the World Bank, there are a lot of improvements that can be made in the industry. The three prominent startups in the country can potentially help improve this index with their friendly platform and tracking system. They are also leading the trend of having more commercial trucks in smaller volumes. In the future, these logistics companies can hopefully help lower the average spend of Indonesian businesses on logistics, similar to the percentage in OECD countries. Other Indonesian and foreign players in the industry can also contribute to this by creating more integrated technology that helps companies in finding clients and reducing empty hauls.
BRIGHT Indonesia will help your businesses to enter Indonesia’s market through services such as Business Partnership Engagement, Management and Strategy Consulting, Business Registration and Establishment, and Foreign Direct Investment Promotion. The services will help your business to:
- Secure the agreement between client companies and future Indonesian business partners by providing a list of potentially suitable partners, arrange business meetings, and act as a liaison.
- Supporting client companies from the private sector with the development of corporate or business unit strategies or helping your company from public sector organizations with public policy.
- Help client companies obtain the work and stay permit for your foreign employee in the Indonesian office: expatriates utilization plan (RPTKA), expatriates utilization permit (IMTA), and limited stay permit (KITAS).
- 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.
