Heavy lifters: the key players powering ecommerce in Indonesia

This is the latest version of the article that was previously updated on November 29, 2023. Since then, we’ve added several startups and new funding rounds to the list.

Indonesia’s logistics industry still lags behind its neighbors’. It got a lower logistics performance score than Singapore, Malaysia, Thailand, the Philippines, and Vietnam despite the boost provided by ecommerce’s significant growth in recent years.

Overall, Indonesia placed 61st among 139 countries, down 15 places from its rank in 2018, according to the World Bank’s 2023 Logistics Performance Index.

This comes as a surprise, given how crowded the Indonesian market is. The presence of many companies makes for an intensely competitive environment, which should raise the quality of overall services. Third-party logistics (3PL) players like Ninja Van and J&T Express, for instance, jostle alongside the in-house logistics arms of major ecommerce firms like Shopee and Lazada.

This year, Shopee is committed to doubling down on its logistics services. More than half of its orders in Asia are fulfilled by in-house fleet SPX Express, said Tony Hou, chief financial officer of Shopee parent Sea Group in its Q1 2024 earnings call.

He added that 3PL companies charge a profit margin to their customers, which means that with in-house logistics, Shopee can retain that margin. This makes it likely that 3PL players will increasingly lose parcel volume from the ecommerce platforms.

However, 3PL firms are not completely out of luck.

Earlier this year, Shopee faced scrutiny from Indonesia’s antitrust agency for allegedly directing users automatically to affiliated shipping companies for deliveries, particularly SPX Express.

The case was resolved after Shopee displayed a courier selection option on its checkout page. This is good news for 3PL companies, as this change could increase their deliveries from the ecommerce platform.

See also: Shopee’s latest trump card is bearing fruit

TikTok Shop, the rising social commerce platform, also has its own delivery unit after GoTo divested its logistics arm and returned it to Tokopedia. TikTok acquired Tokopedia at the end of last year. However, TikTok Shop still relies on 3PL partners for most of its deliveries.

3PLs fight back

Competition from in-house logistics players aside, 2024 seems to have been a promising one for 3PL firms like J&T and Anteraja.

EV logistics emerge