Market Overview The market for courier, express, and parcel business in Indonesia is expected to reach USD 9.76 billion by 2024, witnessing a CAGR of 12.28%.
With the world’s fourth largest population and excellent potential for growth, Indonesia is a key market in the global scenario. The Indonesian CEP market is at an infant stage with a lot of opportunities for the industry. With rapid regional as well as global economic integration, the local businesses are continually seeking logistics and courier services that can provide direct access to local and international markets.
- The courier, express, and parcel (CEP) market in Indonesia is growing rapidly in line with the e-commerce sector of the country. E-commerce is the major growth driver of the CEP market, generating significant revenues for the industry. - The rise in e-commerce business in recent years is increasing the business opportunities for shipping goods. The explosive growth of the country’s e-commerce is presenting opportunities, as well as challenges for online retailers and logistics players. - While the growth of e-commerce is the major driver of the CEP business, the rising demand of perishables and the growth of the life sciences sector of the country also support the growth of the express delivery in the future. - The high logistics cost remains to be one of the challenges for the logistics sector as well as for the CEP market. Lack of proper infrastructure makes it difficult for delivering the parcels, especially for remote areas outside Java. - Additionally, Indonesia being an archipelago makes it difficult for companies to deliver packages throughout the country.
Scope of the Report A complete background analysis of Indonesia CEP Market, market overview, market size estimation for key segments and emerging trends by segments, and market dynamics are covered in the report.
Key Market Trends CEP Market is Growing In-line with Growing E-commerce
The growth of e-commerce has opened up opportunities for many logistics companies for providing delivery services. E-commerce is rapidly growing in the country driven by the growth of information and communication technology, rising middle-class population and smartphone penetration. For instance, JNE express, one of the leading courier companies in the country has captured the big opportunity in e-commerce business which accounts for almost 60-70% of its shipments.
Digitization is also enabling the consumers to reach the global markets promoting cross-border e-commerce and driving the international CEP market. Some brands are looking at cross-border e-commerce operating model instead of setting a local business owing to the hassle involved in importing and customs clearance which makes it costly, time consuming, and effort intensive.
• Pos Indonesia plans to make significant investment, especially in processing centers and storage capacity. Its storage capacity was around 40,000 square meter in November 2016, and the company is considering expanding to 500,000 square meters, by 2019-2020. • For one of the most-established local companies in the logistics industry, around 60% of about 600,000 daily deliveries are from the retail e-commerce market. Companies are currently optimistic about the government’s commitment toward improving infrastructure. Therefore, significant investments are being made across the value chain. Lazada occupies a key market in Indonesia. It is one of the most significant e-commerce companies in the ASEAN region, along with companies, like Shopee, and it currently operates a 30,000 square meter warehouse in Indonesia. Lazada began its operations with a 2,000 square meter warehouse in 2012, and was acquired by Alibaba (83% stake). Lazada was valued at over USD 3 billion, as of June 2017, and its revenue crossed USD 1 billion in the third year of its operation.
Presence of large number of SMEs and their Digitization presents an Opportunity for CEP Market
Indonesia has a large number of small and medium-sized enterprises (SMEs). SMEs play an important role in economic growth and they account for nearly 97% of domestic employment and for 56% of total business investment in Indonesia. The macroeconomic conditions of the country are supportive of the development of SMEs. Also, the young and increasing population, sizeable domestic market, and abundant natural resources also support their growth. The growth in SMEs coupled with rise in trade activities help the courier and express industry to grow.
Many micro small and medium enterprises are also expanding in the form of e-commerce trading. According to industrial sources, only 18% of Indonesian SMEs are currently engaged in e-commerce through the use of a website or social media, and only 9% adopt more sophisticated e-commerce strategies. This scenario represents the potential for SMEs to expand their businesses in the future and significant opportunities present for the courier companies. The turnover of SMEs can double if they go digital by adopting software to increase operational efficiency and applying different marketing techniques for selling goods.
In 2018, PT Citra Van Titipan Kilat (TIKI) expanded its business in the market of Micro, Small, and Medium Enterprises (MSMEs), by participating as the only official shipping partner of International Handicraft Trade Fair (Inacraft). Also, in 2017, the e-commerce platform Bukalapak and TIKI teamed up to facilitate SMEs in delivering their products.
Competitive Landscape The Indonesian CEP market is dominated by long-established players, such as JNE Express, Pos Indonesia, and DHL. Other significant players in the market include TIKI, Pandu Logistics, Pahala Express, SAP Express, etc. Technology has become important for companies to increase their efficiency and to attract customers in this era of Industrial Revolution 4.0. For example, Pos Indonesia is conducting trials with robots to chat, that has no voice support. J&T Express is another example of a company that has expanded rapidly in the past three years. A lot of delivery companies that are online based or employing high technology are entering the market offering faster delivery services and presenting strong competition to conventional players as well.
DHL Express, one of the leading global companies has invested EUR 16 million in Indonesia to build the Jakarta Distribution Center (JDC), and is expected to be opened in April 2019. JDC is one of the biggest investments of the company in Asia-Pacific and is also one of the largest shipping centers. The service center is equipped with advanced equipment, such as motorized conveyor systems and weighing and re-measuring systems.
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