Logistics Industry: A New Way of Delivery

The Indonesian logistics industry has experienced an increase in its popularity. Based on momentum works, the logistics business is a multi-billion dollar industry worth USD 81.30bn in 2020 and is predicted to grow to USD 138.04bn by 2026, representing a 9.22 percent CAGR. Promising, isn’t it? Now let’s take a look at how the industry is growing and evolving with the current trends. 

E-commerce Leading The Charge

Since the pandemic, technological advancement and internet penetration becomes more apparent in the global scene and Indonesia is no different. We see society’s buying behavior experiencing a shift towards online shopping and an increase in online transactions will ramp up the demand for logistics services. The E-commerce marketplace GMV in Indonesia was estimated at USD 30bn in 2020 and is expected to reach USD 83bn by 2025. With a forecasted growth of over 2x in a span of 5 years, this industry stands to be the main drivers which imprints a significant effect on the logistics landscape.

The Newcomers In Town

When we take a look at the industry, we can see how the industry has evolved. Previously there were only traditional third party logistics as outsourced providers, but it has since developed into more modern delivery processes such as on demand/same-day delivery services with some of the main players being GrabExpress, Grabfood, Gofood and Paxel. On the other hand, we have the In-house delivery service which enables companies to own their own delivery distribution channel which lower costs for them. For example Shopee, as one of the biggest marketplace, offers Shopee Express as their delivery channel. These new types of delivery services emerged due to online delivery  purchase for foods, groceries and daily needs, etc.

Supporting The Local Players

In the E-Commerce marketplaces, it is obvious that the sellers are dominated by SMEs and home businesses. To accommodate the needs of these locals, especially in the logistics sector, there exists enablers and aggregators. Enablers are present as channel partners or distribution providers which aid end-to-end solutions for brand and producers, Enablers scene is joined by regional (aCommerce, Anchanto, Intrepid) and domestic (SIRCLO, 8Commerce) players. No player is dominating and no player probably ever will. As for Aggregators as the companies which are integrated with multiple carrier agents with an organized streamlined platform that e-commerce business can tie up with. 

The logistics industry has tremendous rooms for improvements and evolution in the future, more players are expected to join the fray and the emergence of logistics support is anticipated. This brings us to question whether e-commerce will continue to dominate the logistics ecosystem as its main driver? Or there will be other factors which replace the logistics landscape.