Double digit growth to continue this year

Date Posted: 2012-01-20

The Jakarta Post

Indonesia’s logistics industry is predicted to grow by 14.2 percent, to Rp 1.4 trillion (US$153 billion) this year from Rp 1.2 trillion in 2011, thanks to the country’s strong economic growth, research and consulting firm Frost & Sullivan said. 

The firm’s Asia Pacific vice president for transportation and logistics, Gopal R, said Indonesia’s economic growth would remain high despite the economic slowdown in the world, which would in turn further benefit the logistics industry. 

“With more than 230 million people and a vast geographical area, demand for fast moving consumer goods’ [FMCG] distribution across the country offers a huge market for the logistics sector,” he told a media briefing in Jakarta. 

He added that the projected 32.5 percent growth in the country’s external trade to $514.2 billion this year would also contribute to the growth of the national logistics industry. “The import and export forwarding, shipping and air freight-related business will remain strong,” Gopal said. 

Frost & Sullivan data shows that Indonesia’s total sea cargo volume will increase 5.8 percent this year to 943.1 million tons from 891.5 million tons in 2011, while in 2010 it was 845.3 million tons. 

“Sea cargo is expected to maintain steady growth driven by the demand from intra-ASEAN trade,” he said. 

The data also reveals that cargo volume by rail will be up by 3.3 percent this year to 20.4 million tons from 19.7 million tons last year, while in 2010 it was 19.1 million tons. 

“Freight transported on the Java railroads consists mostly of petroleum fuel, fertilizer, cement and coal. The South and West Sumatra-dominant traffic is coal, while North Sumatra’s main traffic is crude palm oil [CPO],” Gopal said. 

He added that the volumes of rail freight rose by 3.6 percent during the first ten months of 2011 compared with the previous year. 

Air cargo volume will also increase, up by 5.7 percent this year to 920,000 tons from 870,000 tons last year, while in 2010 it was 830,000 tons. 

Gopal noted that the four main airports in the country — Soekarno-Hatta, Juanda, Ngurah Rai and Polonia — accounted for 47.2 percent of the total air cargo throughout 2011, with 36 percent going via Soekarno-Hatta International Airport. 

Although the logistics industry would grow, Gopal highlighted the country’s poor infrastructure as a major constraint hindering full development of Indonesia’s logistics industry.