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.