Indonesia’s logistics sector, known to have been sluggish to digitalize in the last few years, is now being pushed to transform amidst the COVID-19 pandemic.
The archipelago, which has the highest logistics costs in Asia at around 25%-30% of GDP, has been struggling with weak infrastructure and a lack of innovation, among many other challenges.
Eric Dharma, vice president of start-up trucking and warehousing platform Waresix, says that in Indonesia, the logistics process is heavily manual–contracts are usually handwritten, and communication is done ad hoc through WhatsApp.
As e-commerce in the country booms amidst the pandemic, hopes for the supply chain are being renewed. The local courier, express, and parcel (CEP) sector is forecast to grow above 8% CAGR from 2020-2025.
In another recent development, the World Bank’s International Finance Corporation (IFC) announced an injection of $31 million or 452 billion rupiah in logistics firm, ASSA. IFC’s investment will be made over two years through convertible bonds via a rights offering. ASSA owns logistics platform AnterAja, which has emerged in the country’s logistics space and provides tech-based door-to-door deliveries across Indonesia.
J&T Express, one of the biggest logistics companies in the country, is also growing rapidly. The company is rumoured to be planning a P1 billion IPO via a US listing. J&T Express has also fast become a logistics leader in the region, having expanded its footprint to Malaysia, Vietnam, Indonesia, Thailand, Singapore, Cambodia, the Philippines and China.
Global logistics company DHL Express has also found promise in Indonesia, confirming this with a $19 million investment in the country to build its Jakarta Distribution Center (JDC) to step up its activities in the archipelago.