How Do You Manage Logistics for 17,000 Islands?

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Home to 273.3 million people, Indonesia is the largest country in Southeast Asia. With foreign investments over $7 billion (USD) pouring into the country, Indonesia has seen a sudden boom in many of its industries, putting pressure on its logistics.

With its improving infrastructural networks and logistical processes, warehousing, and shipping industries are expected to hold a market value of $383 billion by 2023.

There are lots of factors contributing to Indonesia’s sudden boom in its shipping industry.

E-Commerce accounts for over 8% of all retail sales in Indonesia, a sector projected to be doubled by 2023. An industry worth over $28 million dollars, a viable network of shipping logistics is needed to get products into the hands of the consumer. 

 

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New Infrastructure developing throughout Jakarta, Indonesia


Indonesia has a very unique geography that makes it challenging in creating efficient logistical networks. With over 17,000 unique islands, Indonesia is the largest archipelago in the world. This makes Indonesia one of the least efficient countries in the logistics industry in South-East Asia.

In addition, it has the highest cost of shipping which accounts for 30% of the country’s GDP

Because of its unique geography, Indonesia has over 2,500 different logistical shipping companies, with each operating independently and serving a small region within the country. The unorganized structure of each company, causes the E-commerce industry to struggle to get products to their consumers.

This makes logistics very expensive with one shipment often involving the use of boats, trains, and trucks. 

 

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Island Chains of Indonesia


To overcome many of the challenges that the shipping industry faces in Indonesia, new logistical companies have emerged to decrease costs and increase efficiency.

Shipper, a company started in 2017, has increased logistical efficiency in Indonesia. With a recent investment of $14.9 million an increase of 298% from its last investment of $5 million, the company aims to expand the e-commerce industry in the region.

Shipper helps large retailers and independent sellers reduce shipping costs by creating new logistical networks throughout each island in Indonesia. They are one of the first companies that use technology to their advantage.

Shipper has created an algorithm using machine learning to predict the best shipping routes across the country. Their algorithm uses past logistical data to predict the most efficient and low costing route for each package.

It finds the most efficient local, and national shipping routes, and bundle shipping packages together to reduce costs. To create bundles, Shipper has partnered with many independent shipping companies, adding 10-30 each week, within each region of Indonesia to maximize their reach.

With their program, Shipper is able to unite many of the independently owned shipping companies throughout Indonesia in order to improve logistics as a whole.

Shipping through Shipper has decreased the cost of logistics in Indonesia. With the growth of e-commerce in this region, people will ship through the most reliable, low costing and most efficient company to ensure that their packages get to its destination. 

“Time is money in the shipping Business” – Ander Crenshaw

Cost and Efficiency are Important Topics for Logistics. Companies like Shipper are changing the processes of shipping logistics in Indonesia. With its growing economy and investments, Indonesia is bound to be noticed in the next decade. Its large population and rapid growth will help Indonesia become a major hub in South East Asia.

This growth will impact shipping logistics throughout this region with Indonesia’s increase in demand for e-commerce and international trade. With new companies like Shipper, logistics will rapidly become more and more efficient throughout the nation. 

 

 

Andrew Chu

Andrew is a third year student pursuing Cognition in Computing Systems at the University of British Columbia. Trading from a young age has sparked his interest in searching for value in the financial markets. Working at the largest private equity firm in Taipei, he conducted many industrial research including telecommunication, semiconductor, and aviation in Asia. With his experiences, he looks to explore how the future of computer systems can add value into finance.

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