JAKARTA, Indonesia, March 3, 2016 /PRNewswire/ -- Frost & Sullivan is forecasting the Indonesian logistics industry to grow 15.4 percent in 2020. Gopal R, Global Vice President of Transportation & Logistics Practice, Frost & Sullivan, said the growing economy is due to high domestic consumption, growth in export of manufactured products, and improvement in infrastructure investment coupled with regional trade integration to drive growth.
He added that growth drivers of logistics industry are also derived from improved maritime trade connectivity due to its geographical location on global key trade and increase in e-commerce trade.
Gopal R also said that the ASEAN Economic Community (AEC) unlocks untapped opportunities for Logistics Service Providers (LSP) through business expansion in the region. He said currently Indonesia has limited logistics infrastructure, average productivity at ports, and above average carrying cost.
However, there are several growths through the ASEAN Economic Community (AEC) logistics network, such as network with cutting-edge facilities, infrastructure investments, value proposition to meet customers' needs, high quality cargo handling, and training for logistics professionals.
Key Industry Trends
Gopal R said that the Indonesia transportation and logistics industry continued economic growth momentum supports transport infrastructure investment and development. He said that government spending in public infrastructure along with the private sector is expected to reach around 15 percent of growth domestic product (GDP).
Gopal R also said that the manufacturing industry is to grow around 6.4 percent in 2016. He said that labor intensive segments such as palm oil, cacao, wood, rubber, fishery and mineral will become a strong growth engine for the manufacturing industry in 2016.
He said that higher consumer spending on consumer electronics which estimated around USD 1.9 billion with potential annual growth around 12 -13 percent annually would be potential domestic and export segment in 2016.
The Way Forward
Facing the current logistics trends, Logistics Service Providers (LSP) must move forward to a new business model to stay profitable. Gopal R said the potential industries to focus in 2016 include Infrastructure, Manufacturing, Automotive and Electronics.
Meanwhile, he said the potential services to focus on in 2016 include air cargo, warehousing, multi-modal movement, and E-commerce.
Further he said that the key to moving forward through integrated SEA logistics network include competitive international gateway, development of an effective transport network and systems, improved national regulatory framework, efficient freight movement and planning, and increased skilled manpower for logistics industry.
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SOURCE Frost & Sullivan