Indonesia Freight Transport Industry Update Quarter 3 2012

  • July 2014
  • -
  • Business Monitor International
  • -
  • 88 pages



BMI View:
Growth Slows But Freight Segment Still Positive We have trimmed back our growth projection for the Indonesian economy this year, as global and Asian regional growth rates come down, reducing demand for the country's exports. We still believe that the country has solid domestic fundamentals which, to some extent, protect it from the gloomier outside climate. These include strong consumer spending and growing investment in infrastructure. Rising living standards and a growing middle class help support the freight transport market . BMI now projections 2012 Gross Domestic Product growth of 5.4% (down from our earlier 5.8% projection ). Our outlook for 2013 is for growth to accelerate again to 6.3%. In the five years to 2016 we expect growth to average 6.2% per year, confirming the country as a regional outperformer. As far as freight and mode specific factors are concerned, there is something of a mixed picture. Cargo volumes will continue to grow across all modes. But we have trimmed back our airfreight projections because of the slower Gross Domestic Product growth rate. As far as Indonesia's ports are concerned, we have actually raised gross tonnage numbers a little at Tanjung Priok, while cutting back container traffic, a reflection of slightly lower import demand. Rail freight growth figures for the first quarter were very strong, on the other hand, leading us to raise the full-year projection .

Headline Market Data
- Air freight volumes are projection to grow by 5.6% in 2012, with average annual growth of 6.2% during our projection period to 2016. - Rail freight volumes are estimated to rise by 8.0% in 2012, with average growth of 3.2% during our projection period. - Tanjung Priok total tonnage growth projection for 2012 is 5.6% to 49.735mn tonnes, with average growth of 5.7% expected over our projection period to 2016. - Tonnage at the Port of Palembang is set to grow by 3.6% in 2012 to reach 10.595mn tonnes; average growth to 2016 will come in at 4.1% per year . - We expect the total value of Indonesian trade to grow by 7.9% in real terms in 2012, down from an estimated 13.8% in 2011. Key Market Trends Big Boost For Soekarno-Hatta Airport Work on grow ing capacity at Jakarta's main airport was due to start in July. The first phase of the project will include the expansion of the third terminal and the construction of an access road, a cargo terminal and a new integrated building linking the three terminals. The airport was originally designed to cater for up to 22mn passengers per year, but was used by 44mn in 2010. The current upgrade project is expected to run until 2014 and take total annual passenger capacity up to 62mn, trebling cargo handling capacity to 1.5mn tonnes per year . Logistics Costs Are Still Too Large Lukman Hakim, head of the Indonesian Institute of Sciences, said in May that the country spent a disproportionate amount of its gross domestic product on logistics operations. Indonesia spends between 25% and 30% of its Gross Domestic Product on logistics; however, Hakim believes a country should ideally invest no more than 15%. In particular, the country must address its regional imbalances, with prices significantly higher outside the island of Java, and a major discrepancy between prices in eastern and western Indonesia. At Last! Investment Commitment For 'New Priok' After years of delays Indonesia's main port is finally in line for investment to update its facilities and grow its capacity, allowing it to keep up with, and contribute to, the country's economic growth.

Indonesia Port Corporation II (IPC) announced that it will invest US Dollar 2.47bn to develop an extension of the Tanjung Priok port in North Jakarta. US Dollar 1.38bn will be invested in container terminal infrastructure with the aim of more than tripling annual capacity from 5mn twenty-foot equivalent units (TEUs) to 18mn TEUs upon completion in 2023. A further US Dollar 730mn will be spent on construction of a new petroleum product terminal and US Dollar 305mn on toll roads, a power station and an industrial area. The project is being carried out under the Master Plan for the Acceleration and Expansion of Indonesian Economic Growth (MP3EI), a 10-year initiative intended to realise high, sustainable economic growth over the next decade. Key Risks To Outlook The main downside risk is a sharper-than-anticipated slowdown in global growth, with Indonesia particularly influenced by the Chinese economy, which is having a slower year than usual. If the global economy fares worse than expected, the Indonesian freight segment will feel the pinch through reduced trade levels.

However, it has to be stressed that this is a smaller risk than in many other countries; based on a strong domestic economy, Indonesia was able to remain on a growth path throughout the 2009 recession. If anything, we see the economy as remaining resilient in 2012. A second downside risk to our outlook is the possibility that some of the current projects to grow port capacity might suffer a high-profile setback, such as a legal dispute or allegations of corruption. Any such development might damage the gradual improvement in investor perceptions of Indonesia that has taken place over the last few years. More specifically, it would lead to delays in the much-needed drive for modernisation, with knock-on effects on other freight modes that link to the ports.

Table Of Contents

BMI Market View ... 5
Industry SWOT Analysis 7
Indonesia Freight Transport Industry Environment and Risk Analysis 7
Indonesia Political Environment and Risk Analysis . 8
Indonesia Economic Environment and Risk Analysis .. 9
Indonesia Business Environment SWOT . 10
Industry Trends And Developments 11
Multimodal/Logistics ... 11
Rail .. 11
Air 12
Maritime .. 13

Industry Analysis 16

Market Projection .. 19
Data : Air Freight, 2008 - 2016 .. 19
Data : Maritime Freight, 2008 - 2016 20
Data : Rail Freight, 2008 - 2016 21
Trade ... 21
Data : Trade Overview, 2008 - 2016 .. 21
Data : Key Trade Indicators, from 2008 to 2016 22
Data : Indonesia's Main Import Partners (US$mn) 23
Data : Indonesia's Main Export Partners (US$mn) 23
World Oil Products Price Outlook ... 24
Data : BMI's Refined Products Projections, from 2010 to 2016 24
Political Outlook 32
Domestic Politics . 32
Data : Indonesia Political Overview ... 33
Long-Term Political Outlook ... 35

Macroeconomic Data ... 38
Data : Indonesia - Economic Activity,2011-2016 ... 40
Company Profiles .. 41
Garuda Indonesia (Cargo) . 41
Samudera Shipping Line . 43
Trada Maritime (TRAM) . 45
Country Snapshot . 47
Data : Indonesia's Population By Age Group, 1990-2020 ('000) . 48
Data : Indonesia's Population By Age Group, 1990-2020 (% of total) ... 49
Data : Indonesia's Key Population Ratios, 1990-2020 .. 50
Data : Indonesia's Rural And Urban Population, 1990-2020 .. 50
BMI Methodology .. 51
How We Generate Our Market Projections . 51
Transport Market .. 51
Sources ... 52

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