The Boom in Online Shopping Fuels Growth in the Logistics Sector

The rise of online shopping has driven the logistics sector in Indonesia. Data from the Central Statistics Agency shows that the Gross Domestic Product (GDP) of the logistics sector (warehousing and transportation support; post and courier) has grown above 6 percent since the third quarter of 2015. Furthermore, the growth of the logistics sector has consistently outpaced national GDP growth, which has remained around 5 percent.

The GDP of the logistics sector in the first quarter of 2015 reached only Rp 12.8 trillion, but by the second quarter of 2017, it had reached Rp 15.6 trillion, an increase of more than 21 percent. In the two quarters of 2017, the GDP of the warehousing, post, and courier sector grew by over 7 percent, while national GDP grew by only 5.01 percent.

The online shopping craze among Indonesians, coupled with the growth of the middle class and the emergence of digitally native millennials, has opened up significant business opportunities in the country's logistics sector. For information, the Indonesian e-commerce market reached US$ 1.68 billion (equivalent to Rp 21 trillion), or about 1.2 percent of total retail sales of US$ 145.8 billion in 2015, and is projected to reach US$ 46 billion by 2025.