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Indonesia Logistic Start-Ups Focus on Assisting MSMEs Embrace Digitisation

Logistics costs in Indonesia are the highest in Asia, accounting for 24%, compared to less than 5% in more developed markets. However, due to the country’s unique geography, adapting a supply chain model from other countries such as China or neighbouring Thailand and Malaysia is impractical, simply because goods cannot be transported by truck on land alone. To reach remote areas on each island, a multimodal system that includes land, sea, and warehousing should be used.

Andree Susanto, the CEO and Co-Founder of Waresix has written extensively about the developments in this sector in various articles. In his piece on innovating and digitalising the logistics sector, Andree speaks of the silver lining the pandemic has brought – serving as a catalyst for innovation in the industry. The rapid increase in demand is pushing logistics players to explore digital innovation to increase efficiencies and lower costs in a bid to meet needs profitably. Nonetheless, he juxtaposes this with the caveat that the sudden growth of the e-commerce market has added pressure on the already strained supply chain.

There is also significant sectoral fragmentation, which is characterised by a lack of transparency and real-time information. Now, 90% of orders and matching are done offline, and 80% of deliveries are done manually, with slow verification and a lack of instructions. Many tasks are also carried out informally. Contracts, for example, are typically handwritten, and communication is ad hoc and through informal channels. Drivers may also be paid months after making a delivery. As a result, key resources such as trucks and warehouses are underutilised, resulting in long wait times for drivers and, ultimately, the consumer.

As the industry positions itself for recovery and growth in the post-pandemic environment, technology must play a bigger role in enabling key stakeholders to quickly respond to evolving market realities and consumer demands.

With this, several Indonesian start-ups, such as the leading logistics start-up and the import-export e-commerce site platform, have been presented to assist Indonesian MSMEs in gaining access to the export market. They recently collaborated to increase the export market penetration of Indonesian MSMEs. The import-export e-commerce platform offers exporters and importers one-stop services such as banking, export insurance, logistics companies, and verification and certification services.

A leading logistics start-up, on the other hand, had strengthened end-to-end logistics and warehousing services to increase global expansion and trade opportunities for Indonesian businesses, particularly MSMEs, abroad. The shipper will manage and operate the platform warehouse specifically for export purposes as part of the cooperation agreement. It is hoped that with this warehouse management, the product distribution process available on the import-export e-commerce platform will be better and faster.

The founder and COO of the leading logistics start-up hope that this collaboration can support the platform in supporting logistics needs. The shipper is designed to provide wider and more equitable access to quality logistics services throughout Indonesia, especially for SMEs. “We hope that this collaboration can further strengthen the business of both parties and can increase the volume of Indonesia’s exports,” said the import-export e-commerce site platform founder and CEO.

According to the founder and COO of the leading logistics start-up, his company is designed to provide wider and more equitable access to logistics services throughout Indonesia, especially for MSMEs. “Our company provide fulfilment and delivery services through a network of centres, delivery partners and digitally managed retail points,” he said.

The leading logistics start-up manages its warehousing in more than 200 locations across Indonesia, with a total area of nearly 600,000 m2. The warehousing operations of this company have received ISO 9001:2015 Quality Management System Certification. In addition, the company has formed alliances with over 40 freight forwarders to ship goods both domestically and internationally. If this collaboration is successful, it will benefit local MSMEs in the logistics sector and encourage exports.

There is room for growth and development in the country’s logistics sector, and one thing is certain: as the founder of a logistics company pointed out, digital transformation is critical for the logistics sector in Indonesia to evolve. While start-ups like the logistic company are leading the charge, the logistics sector is set to mature, but the transformation will take time.

To propel emerging, middle-income countries like Indonesia’s economic growth, logistics must be made safer, more reliable, and more efficient. Last year was a litmus test for logistics, and after surviving an unprecedented period, we are optimistic about its prospects and eager to contribute to its long-term technological development.

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