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Tue 1 May 2007 03:02 PM

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Indonesian automotive boom

Indonesia's market for automotive logistics is expected to increase from US$86.5 million in 2006 to $256.3 million in 2013, according to Frost & Sullivan.

Indonesia's market for automotive logistics is expected to increase from US$86.5 million in 2006 to $256.3 million in 2013, according to Frost & Sullivan.

The boom has resulted from increased awareness within the automotive industry about the benefits of outsourcing tasks such as warehousing and distribution to third party logistics (3PL) companies.

"More automakers are starting to understand that 3PL companies can provide them with professional logistics solutions and increase their competitive advantage in the market," said Keow Soon Hiong, research analyst at Frost & Sullivan.

The Indonesian government has traditionally placed high importance on developing its logistics sector, especially in terms of improving the country's multi-modal transport infrastructure. However, a number

of challenges could still hamper these predictions for future growth, including a local skills shortage of logisticians, complex regulations for foreign companies, and the uncertain political situation across the islands of Indonesia.

"3PL service providers can allay such challenges by introducing customers solutions at relatively lower prices. This will help the Indonesian automotive sector to effectively tap the potential markets in the rural and low-economic regions," said Hiong.

"To enable this, 3PL providers are likely to build a national infrastructure by investing heavily in transportation and warehousing to offer a complete logistics solution," he added.

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