Markets in the Indonesian Automotive Sector
This Frost & Sullivan research service titled Strategic Analysis of 3PL Markets in the Indonesian Automotive Sector provides an overview of the 3PL market in the Indonesian automotive sector, analysis of the various segments of the sector and their logistical needs, and the analysis of key market drivers, restraints, and trends impacting the 3PL market in the automotive sector. In this research service, Frost & Sullivan’s research analyst Keow Soon Hiong thoroughly examines the following segments in the automotive sector: multinational 3PL service providers, domestic major 3PL service providers, and domestic small 3PL service providers.
Booming Indonesian Economy and Increasing Realization of 3PL Benefits by Automakers Drive Market Expansion
The growing economy and increased purchasing power of consumers is intensifying competition in the Indonesian automotive sector, prompting automakers to utilize third party logistics (3PL) to lower their production costs. The lack of proper logistics infrastructure and knowledge of efficient logistics practices are making it difficult for major automotive companies to reach domestic markets or exploiting the growing overseas market. “As a result, more automakers are gearing up to rely on 3PL companies for professional logistics solutions and innovative ideas to manage their supply chain, accelerating market progress,” says Keow Soon Hiong, Research Analyst at Frost & Sullivan. “Overseas automakers in Indonesia are already effectively using 3PL services to gain higher profits, setting the trend for domestic companies.”
To optimize this encouraging market scenario, key 3PL service providers will need to tackle the challenge posed by the relatively smaller companies who quote comparatively low prices and compromise on the service quality. “Providing consistent quality and customized solutions to clients can allay such challenges,” notes Keow Soon Hiong, the analyst of this research service. “By expanding their services basket to include specifically designed options for the automotive sector – more efficient transportation, freight forwarding operations and more variety of value added services – 3PL providers can create further avenues for 3PL adoption.”
Improving Logistics-related Infrastructure in Indonesia Enables Growth in 3PL Market
The Indonesian Government’s measures to promote infrastructural development in the country is encouraging heavy investments from private and foreign enterprisers (toll road concept) in the transportation sector to develop an integrated network of highways, railways, and airports. The resulting efficiencies in the transportation sector are likely to favor the progress of 3PL market. At present, a major share of the rail transportation segment is owned by the domestic 3PL providers and, the road, air, and sea transportation segments are dominated by international logistics service providers.