We believe Indonesia’s logistics market is a potentially lucrative segment that is still underpenetrated. We categorize Indonesia’s logistics to include transportation, inventory carrying, and warehousing. This report discusses the size of FMCG logistics. We expect the FMCG logistics market to reach IDR80tn in 2024F, driven by the fast-growing FMCG business, which we expect to reach IDR1,040tn. We believe more players are opting for third-party logistics (3PL) to support their logistics activities, thus supporting the growth of the industry. Stocks within this segment include ASSA IJ (Buy), EPMT IJ (Not rated), TGKA IJ (Not rated), and PEVE IJ (Not rated).
Logistics: Spinal FMCG operations
In FMCG, logistics consists of three major components: transportation, inventory carrying, and warehousing. According to our analysis, transportation makes up 5% of sales, comprising activities that deal with the distribution of goods across the Indonesian archipelago. Warehousing, at 1.9% of sales, covers the costs of holding goods in storage, including storage depreciation and financing costs. Administration, 1.2% of sales, enables the efficient storage and handling of high-volume products. Together, these components make up the operational backbone that keeps the FMCG supply chain running smoothly.
FMCG and logistics market size and growth
Indonesia’s FMCG market has grown from IDR540tn in 2015 to IDR1,040tn in 2024F, at a CAGR of 7.6%, we estimate. As demand has increased, growth has trickled down to the logistics sector and has trended in tandem with FMCG growth. The logistics addressable market has similarly grown from IDR44tn in 2015 to IDR85tn in 2024 with a similar CAGR of 7.7%, we estimate. Transportation remains the key cost driver, underlining operational intensity in FMCG distribution.
Key players and sector dynamics
Several listed companies are, in our view, well positioned to benefit from the growth of Indonesia's FMCG logistics market. Adi Sarana Armada (ASSA IJ, Buy) is well positioned to benefit from the growth of Indonesia's FMCG logistics market, given the company is providing integrated logistics services with FMCG-specific needs for fleet management, warehousing, and fulfillment. BIRD (BIRD IJ, Buy) – albeit at an early stage, is leveraging its ability to manage its fleet. Penta Valent (PEVE IJ, Not rated) focuses on scalable and efficient warehousing infrastructure, according to management. Moreover, Enseval Putera Megatrading (EPMT IJ, Not rated), a subsidiary of Kalbe Farma (KLBF IJ, Buy), uses its logistics network of up to 46 warehouses to support FMCG distribution in addition to the pharmaceuticals business. Enseval Putera Megatrading (TGKA IJ, Not rated) has a specialty in consumer goods distribution with a nationwide network that provides scalable logistics services such as warehousing and transportation.
While the market still offers great opportunities, increasing fuel costs, wage inflation, and fragmented competition place pressure on margins. We believe companies such as ASSA IJ could benefit, given the company possesses end-to-end ecosystem in the logistics space, up to the used car market.
Fig. 1: FMCG sales and logistics cost breakdown (2015-2024F)
IDR tn
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024F
Total Sales (FMCG)
540
581
625
672
723
777
836
899
967
1,040
IDR tn
% as of sales
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024F
Transportation
5.0%
27
29
31
34
36
39
42
45
48
52
Warehousing
1.9%
10
11
12
13
14
15
16
17
19
20
Administration
1.2%
6
7
7
8
9
9
10
11
12
12
Total
8.1%
44
47
51
55
59
63
68
73
79
85
Source: Nielsen, Verdhana estimates
Fig. 2: FMCG sales and logistics addressable market growth (2015-2024F)
Source: Nielsen, Verdhana estimates
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