A brief guide to key 3PL players in Indonesia

With the booming ecommerce business in  Indonesia, ecommerce logistics is never far behind. We had previously talked about the ecommerce logistics partners in our blog here.

With the upcoming Chinese New Year holidays, let’s have an update of the key players in Indonesia.

Some are familiar names, some are unique to Indonesia.

 

6: JNE (Jalur Nugraha Ekakurir)

Origin: Indonesia

Background: As a popular domestic company, it had first mover advantage. It had expanded quickly to seize market share. In 2015, JNE reportedly told the Jakarta Post that it strived to maintain its top position in the courier and logistics market.

Model: Uses independent agents. This saves the company money and can achieve greater efficiency gains by covering a few more remote locations without having to set up a network here. Challenge is that the quality and reliability of agents will differ. This will directly affect the delivery speed and user experience of the goods.

Key advantages: Their domestic business reach, speed of delivery and already established infrastructure are their big growth drivers.

Key Risks: As its costs were relatively high, after 2015, new entrants (e.g. Go-jek) with lower costs brought a significant challenge to JNE market expansion.

Where is it today: JNE claims it is the leading e-commerce logistics service provider with customers such as Tokopedia, Bukalapak, and Blibli.com in 2017 – with 18 million deliveries per month.  In 2017, JNE chose to grow organically through debt capital, instead of getting foreign investors.

Interesting facts: The name “Jalur Nugraha Ekakurir” is sanskrit for “blessed lane courier”.

 

5. J&T Express

Origin: Indonesia

Background:  To overcome the main difficulties in experiences, geography, management and COD, J&T express even huddled SF Express’s（a listed logistics company in China that operates on a large scale) management team to make it more efficient.

Model: Uses independent agents (same as JNE)

Key advantages: J&T has made full use of the established agent network built through the the distribution of Oppo phones 2011-2015

Key Risks: Founders did not have logistic experience before starting the company (but it did not stop them).

Where is it today:  J&T express now delivers through a network of more than 8,000 delivery people and 1,000 delivery/collection points, has OPPO, ilike, tokopedia, Shopee, bukalapak and other 8 main Electronic business platforms as their customers and rapidly growing

Interesting facts: Jet Lee, CEO of J&T Express, was the CEO of Indonesia’s Oppo (mobile phone) electronics company when he arrived in Indonesia in 2011

 

 

4. Lion Parcel

Origin: Indonesia

Background:  Lion Air Group is one of the key carriers in Indonesia – owning airlines such as Malindo Air, Lion Air and Batik. It’s domestic air traffic market share is about 50% in 2015-17. Given it naturally has cargo space, Lion Air ventured into the logistic business recently.

Model: Use independent agents.

Key advantages: Lion Parcel has its own aircraft – which provides (i) very high network coverage in Indonesia and (ii) priority boarding for Lion Cargo on its aircraft, and (iii) control over cost of packages.

Key Risks: Lion Air did not have logistic experience before starting the logistic branch. Whilst they have control over the airspace, they have limited experience in the last mile delivery space.

Where is it today:  Momentum Works understands that  Lion Parcel intends to be a serious contender in the ecommerce logistic arena. They understand that they have dominance over local air logistic, custom clearance, as well as the warehouse services, and will need to play catch up very quickly in the last mile delivery area. We will be watching Lion Air very closely.

Interesting facts: One of the founders of Lion Air started as a travel intermediary – matching travellers with airlines, before they decided to start their own airlines.

 

3. Ninja Van

Origin: Singapore

Background:  Ninja Van originated from Singapore as an alternative to the Singapore incumbents (e.g. Singapore Post, DHL) and have showcased itself to be a force to be reckoned with. In early 2018, Ninja Van has raised a serious Series C funding of US$87mil (one of the largest in the history of Southeast Asia). The primary strength of Ninja Van’s technology is its ability to identify and leverage available capacity within vehicle fleets — whether its own or others — to cater to the varying demands of merchants (or clients).

Model: Run their own network. In short term, a large amount of costs and labor will have to be invested to build the network, and the last mile logistics costs (especially in countries with infrastructure like Indonesia), are under huge pressure. In the long run, running its own network is a good defense strategy to improve user experience and raise the bar in the industry.

Advantage:  US$87mil! It has also built up technology and advanced algorithms in last mile delivery.

Key Risks: Diluted ownership may lead to changes in strategy given that the Company is now mostly owned by outside investors (and not the founders). Momentum Works recently did a detailed write up on this here. The company’s business model is also asset-heavy, requiring hefty upfront investments to build out its logistics network and fleet. In 2016, it made US$9.1mil in revenue and US$8.7mil in loss.

Interesting facts: Their name ‘Ninja Van’ came into existence through their CTO, Shaun Chong. Ninja Van almost called themselves “Bobo the Postman”.

 

 

2. Lazada Express

Origin: Singapore

Background: Started in 2015, Lazada Express, is Lazada Group’s in-house logistics business and one of the strategic pillars of Lazada. It handles a large percentage of Lazada’s deliveries and provides end-to-end delivery services, covering the first to the last mile. It aims to build the infrastructure to enable e-commerce growth and work with external logistics partners to revolutionise the B2C logistics industry across Southeast Asia. In this way, it is easier for Lazada Group to control the whole logistics chain, the transport quality, and it is conducive to the integration of information flow and logistics.

Model: Run their own network (same as Ninja-Van)

Advantage: Lazada Group (with Alibaba as an investor) has money  and users.

Key Risks: Its link to Lazada allows it to capture a significant percentage of Lazada’s orders; however, the link also makes it harder (i.e. impossible) for Lazada Express to work with competitors of Lazada. Besides, the team might not be sufficiently motivated due to the legacy Rocket Internet shareholding structure.

 

1. Go-Jek Go-Send and Go-Box

Origin: Indonesia

Background: Started of as a motorcycling hailing company in 2010, it has expanded into shopping, services and last mile delivery.  

Model: Run their own network.

Advantage: Very strong last mile delivery. They claim to have over 300,000 drivers. Just go to Jakarta, and you will see a sea of green Go-Jek helmets wherever you go. In 2018, Go-Jek received US$1.2bil of funding from Google, Singapore state investor Temasek and Chinese online platform Meituan-Dianping.

Key Risks: Go-jek is currently only big in major cities, but not so much in smaller Tier 2 cities where e-commerce activities are higher (demand vs supply). Their strategies in big cities will be very different from cities further away from Jakarta.

However, Momentum Works’ view is that with the massive US$1.2bil funding, we are bound to see development in this space.

 

Conclusion

Overall, there are many competitors and the competition is fierce in Indonesia’s logistics market. The entire industry is in a stage of rapid development and it’s an exciting space to monitor.

Key players should play their strength to the advantage, and bear in mind that lack of experience is not necessarily a weakness.

As with the many tales Momentum Works has shared, the key threats may not be existing players but someone or some new technology lurking just beyond the horizon!