Indonesia Warehousing Market Outlook to 2028

Indonesia Warehousing Market Overview

The Indonesia warehousing market was valued at USD 2.85 billion in 2023. This growth is primarily fueled by the rising demand for efficient storage and distribution services, particularly in urban areas where consumption rates are highest. The logistics sector's expansion, supported by improvements in infrastructure and government initiatives, has also played a crucial role in driving market growth.

Several key players dominate the Indonesia warehousing market, including LOGOS, DHL Supply Chain, Cainiao Network, PT Mega Manunggal Property (MMP), and BGR Logistik. These companies are prominent due to their extensive networks, advanced technology integration, and strategic partnerships that enable them to meet the growing demand for warehousing services.

In September 2022, Yogyakarta began developing a warehouse zone in Kulonprogo Regency with an investment of IDR 274.06 billion. The project boasts an internal rate of return (IRR) of 12.64%, with a net present value (NPV) of IDR 76.6 billion and a payback period of 13.6 years, reflecting its significant potential in boosting local logistics capacity.

Java dominates the Indonesian warehousing market because of the population density and access to trade some of the major ports and routes. This facilitates efficient distribution and logistics for both domestic and international markets. Additionally, Java's dense population and industrial base create high demand for warehousing services, particularly in major cities like Jakarta and Surabaya, enhancing its market dominance.

Indonesia Warehousing Market Segmentation

By Business Model: The Indonesia warehousing market is segmented by business model into industrial freight, ICDs/CFS, Cold Storage, Custom Warehouse, Others. Industrial Freight dominates the market in 2023, due to high demand for retail goods and perishables, driven by e-commerce growth and the need for efficient supply chains in Indonesia's expanding market.

By End-User: The indonesia warehousing market is segmented by end user into food and beverage, retail, industrial & construction, automotive & engineering, pharma and others. The Food & Beverage sector leads due to the constant demand for fresh and packaged food products, requiring extensive storage facilities. Additionally, the growing e-commerce industry boosts the retail segment, enhancing its share in the market.

By Region: The Indonesia Warehousing market is segmented by Region into Java, Sumatra, Kalimantan, Sulawesi, Riau Islands and Others. Java dominates the Indonesian warehousing market due to its central location, which provides strategic access to major trade routes and ports. This facilitates efficient distribution and logistics for both domestic and international markets. Java's dense population and industrial base create high demand for warehousing services.

Indonesia Warehousing Market Competitive Landscape

Company

Headquarter

Establishment Year

Mega Manunggal Property

Jakarta, Indonesia

2010

Genesis

Jakarta, Indonesia

2016

Logos

Jakarta, Indonesia

2015

Linc Group

Jakarta, Indonesia

2001

Mega Manunggal Property (MMP): In 2023, the company succeeded in obtaining ISO 9001 and 14001 certifications and completed the Pondok Ungu Extension project, covering an area of 5,616 sqm. In the same year, through its subsidiary PT Mega Tridaya Properti, MMP acquired a 45% share in PT Mega Khatulistiwa Properti (MKP) for IDR 1.7 trillion.

LOGOS: Astra, Hongkong Land, and LOGOS establish a joint venture to manage and develop modern logistics warehouses. They also partnered with IFC to develop Green Logistics Hub, which will deliver modern and high-quality logistics warehousing in Indonesias rapidly growing e-commerce market.

Indonesia Warehousing Industry Analysis

Indonesia Warehousing Market Growth Drivers

Multi-Storey Warehouse Development: In Indonesia, especially in densely populated areas like Greater Jakarta, the trend of multi-storey warehouses is gaining momentum due to land scarcity and high costs. By 2023, 2% of modern warehouses were multi-storey, and this number is expected to rise to 56% in 2024. By 2025, 8 out of 19 new logistics projects in Greater Jakarta will be multi-storey warehouses, significantly increasing storage capacity.

Booming Food and Beverage Industry: Indonesia's Food and Beverage (F&B) industry continues to grow, driven by a population of 275.7 million and a rising middle class. By the end of 2023, the Ministry of Industry plans to enable at least 80 F&B business owners to receive competency certificates, preparing them for Indonesia 4.0. This growth creates a significant demand for warehouse space, particularly in Jakarta, where several large FMCG warehouse facilities are being developed.

Growing Presence of SMEs and E-Commerce: Indonesia is home to over 62 million SMEs, with the e-commerce market projected to reach USD 44.8 billion in 2023. The rapid expansion of e-commerce is driving the demand for reliable warehousing solutions. The e-commerce market is expected to grow at a CAGR of 10.4%, reaching USD 66.7 billion by 2027, highlighting the need for enhanced warehousing capabilities.

Indonesia Warehousing Market Challenges:

Warehouse Space and Efficiency: The current inefficiency in warehouse utilization is a significant challenge in Indonesia. Typically, only 10%-20% of the total building capacity is used, leading to underutilized spaces. As demand for warehousing increases, especially in densely populated and expensive regions like Greater Jakarta, overcoming these inefficiencies becomes crucial for meeting market needs.

High Cost and Limited Availability of Land: In regions like Greater Jakarta, where land is limited and expensive, developing new warehouse facilities is becoming increasingly challenging. This situation pushes companies to innovate, such as adopting multi-storey warehouses to maximize the use of available land. However, the high cost and limited availability of land remain a significant barrier to expanding warehouse infrastructure in these key regions.

Indonesia Warehousing Market Government Initiatives:

Regulatory Framework on Bonded Logistic Centers: The introduction of Bonded Logistic Centers in 2015 aimed to enhance the manufacturing sector and improve logistics efficiency in Indonesia. Entrepreneurs managing Bonded Storage Places are required to use a computer-based information system to record goods' entry and release. This regulation established a new type of storage facility, the Bonded Logistic Center.

Provision for Customs Warehouses to Self-Govern: In 2020, the Indonesian customs authority granted 119 of the 1,372 bonded warehouses in the country the right to self-govern under the Kawasan Berikat Mandiri initiative. According to the Indonesian Customs Roadmap, 500 self-administered customs warehouses are expected to operate by 2022, with no physical checks required.

Indonesia Warehousing Market Future Outlook

The Indonesia warehousing market is poised for further growth, with expectations to reach approximately USD 4.25 billion by 2028, driven by continued e-commerce expansion, foreign direct investments, and advancements in logistics technology. The market is expected to diversify with increased participation from international players and the adoption of smart warehousing solutions.

Future Market Trends

Adoption of Smart Warehousing Technologies: The future of the Indonesia warehousing market will see increased adoption of smart technologies such as AI-driven warehouse management systems, IoT-enabled tracking, and automation. These innovations will improve efficiency, reduce operational costs, and enhance inventory accuracy, making warehousing operations more streamlined and responsive to market demands.

Growth of Regional Warehousing Hubs: As Indonesia's infrastructure continues to improve, there will be a shift towards the development of regional warehousing hubs outside of Jakarta. Regions like Surabaya and Medan are expected to become key logistics centers, driven by strategic investments in transportation networks and the decentralization of industrial activities across the country.