Though well-positioned for AEC, logistics players should eye ecommerce sector closely

The fast-emerging e-commerce industry in Indonesia also spells boom for logistics services providers, especially those engaged in land transportation. The transportation and logistics market in Indonesia, in general, is expected to grow at a CAGR of 15.2% in 2015, according to F&S. Amidst the big opportunities and growth potential, the ASEAN Economic Community (AEC) is set to present domestic players with greater competition as it implements free flow of goods and services.

Even though e-commerce companies currently account for a small portion of business for logistics providers, especially compared to offline retailing, the contribution is expected to grow significantly as more and more online buyers come on-board in Indonesia. According to MarkPlus Insight survey done in 2014, when asked by respondents which courier services were most used by e-commerce companies they bought goods from, JNE achieved top spot with an average of 56% respondents saying their parcels were delivered by JNE. Tiki was at the second spot with almost 40%, while POS Indonesia was at the third spot, with about 15% respondents. The country wide survey included 3,728 respondents, aged between 15 and 55 years old.

JNE, a prominent courier service provider, doesn’t view AEC as a threat but an opportunity to widen operations, not only in ASEAN but on a global scale, according to Muhammad Ferries, President Director of JNE. The company expects overall trade volumes to expand as a result of AEC implementation, creating greater opportunities for logistics providers. Local players, having achieved competence based on experience in delivering logistics services across an archipelago like Indonesia, are well positioned to benefit from the integration followed by AEC, not only in being strong locally but also being strong regional players in supply chain management.

In terms of e-commerce however, logistics players in Indonesia should strive to build greater efficiency, especially in the last-mile delivery, the hassles with which have forced some online sellers such as Zalora and to set up their own delivery services. For e-commerce players, the customer experience hinges a great deal on timely delivery, bringing greater onus to logistics services.

JNE, while aiming to leverage more on ecommerce growth, is also looking to pioneer as a local player into air fleet logistics, eventually becoming a full-fledged provider offering land, air and sea transportation services. Meanwhile, POS Indonesia, the state-owned enterprise is not only targeting delivery services for ecommerce but has even started its own ecommerce operations in the form of GaleriPos.

Popular Topics

Latest Article & News