Cargo business on the move in Yogyakarta

Cargo business on the move in Yogyakarta

By R. Kristiawan and Anis Suryani

YOGYAKARTA (JP): On a small street in the southern part of the
city, a group of men worked like a perfectly coordinated
orchestra to load neatly packaged boxes into a container truck.

From the appearance of the boxes, it was clear the goods were
furniture and handicrafts, sourced from the many small industries
and home businesses in the area. As soon as they were loaded, the
trucks set off to their destinations both within the country and
for far distant ports.

It is a scene repeated day in and day out in the city, where
cargo has become big business.

The first businesses were set up in the 1990s, with most of
them originally branches or representatives of cargo companies in
other cities. For example, PT Satuan Harapan, under the name PT
Samudera Indonesia, first entered Yogyakarta in 1990 after
operating for several years in Semarang and Surakarta. It was one
of the first firms to realize the potential for exports from
Yogyakarta, one of the cultural hubs of the country.

When the economic crisis struck three years ago, companies
attempted to export in a desperate survival tactic to earn
foreign currency -- and cargo services skyrocketed.

Despite the emergence of new firms in the past few years, the
older, established ones continue to be relied upon. Head of
Satuan Harapan's Yogyakarta branch Budi Prasetyo said it was
because the firms already had the necessary contacts abroad and
were also well acquainted with the various bureaucratic
procedures.

Ritra Cargo, like Satuan Harapan, is one of the older firms;
it began operating in 1990 as a branch of Ritra Cargo Jakarta.
The branch was opened because of the promise of Yogyakarta's
growth in furniture production in the wake of producers from
Jepara moving to the city because their own market had reached
saturation point.

Budi said the catalyst for the companies' booming business was
the furniture business.

Furniture and handicrafts are Yogyakarta's two mainstay
products for exports, and have been for the last five years. Wood
furniture exports, according to the local trade and industry
office, increased from more than US$7 million (from total
national exports in the sector of more than $83 million) to $20.5
million in 2000, from the national exports totaling almost $97
million.

Rattan and bamboo furniture are also exported; 10 types of
handicrafts were joint second on the list of exports, followed by
textiles (the once promising leather industry is now effectively
moribund, as leather tanning industries in Manding, Bandul,
prefer to export their products than supply to local craftsmen).

Competition

With companies increasing their exports during the crisis, the
turnover of Ritra and Satuan Harapan increased five-fold, but the
firms also dealt with more competition from five new firms.

There was also the emergence of small firms -- what Budi terms
"local" -- with few contacts abroad but which turned up the heat
in the small industry by slashing fees. The latter remains an
issue because there is no industry agency to regulate the fees.

Satuan Harapan fixes an average fee of Rp 1 million per a
small container (of 20 feet) plus $150, and Rp 1.25 million for a
big container (40 feet) plus $220. The fee does not include
shipment to the destination, which varies according to the
country.

According to Ritra branch manager Aryono Simohartono, on
average cargo companies took a 20 percent margin. Ritra Cargo
handled 30 to 40 containers in one month, for an average fee of
$400.

Aryono and Budi acknowledged the industry may soon face
problems if there was a downturn in exports by furniture makers.
They said Chinese and Vietnamese manufacturers had obtained
copies of furniture catalogs from Jepara and were able to produce
furniture of an equal quality to that produced in Yogyakarta.

Aryono said the flow of tourism also influenced the cargo
business, as the demand to export goods such as handicrafts and
furniture usually began with them. The current hotel occupancy
rate of 30 percent was a sign that an effort was needed to lift
the tourism industry out of its doldrums.