Courier giants upbeat in Indonesian market

Courier giants upbeat in Indonesian market

Hendarsyah Tarmizi, The Jakarta Post/Jakarta

The world's major express and logistics companies remain
confident about the long-term prospects of the Indonesian courier
market despite uncertainties in the country's foreign trade.

Big players such as DHL, Fedex, TNT and RPX believe the long-
term prospects for the Indonesian courier market remain bright,
although many problems still hamper Indonesia's international
trade.

"There have definitely been improvements in the business,
especially in the area of heavyweight shipments," Edi Parayitno,
the communications and e-commerce manager of DHL Express in
Indonesia.

Edi said that DHL Express, which operates through its
Indonesian partner, PT Birotika Semesta, had recently launched an
air service between Jakarta and Singapore in response to the high
volume of inbound and outbound shipments.

The volume of Indonesian foreign trade has showed a slight
increase over the past several months, indicating some recovery
in the country's exports and imports, which suffered major
declines over the past several years.

During the first semester of this year, cumulative exports
rose by 3.14 percent to about US$31.41 billion over the same
period last year. Meanwhile, imports grew by 27.2 percent to
$20.38 billion in the January-June period compared to $16.02
billion in the first six months of last year.

Many analysts, however, fear that the terrorist threat and the
removal of the textile quota set by the U.S. government could
reverse the promising trend if the government did not pay
attention to addressing these problems.

Like DHL, other major express courier companies say that the
terrorist threat could undermine the recovery of the country's
economy.

They hope the new government, which will be formed by the
newly elected president, will be able to deal with the problem.
"If the elected president does what he promised during the
campaign, the business climate will improve," Harsha E. Joesoef,
the chief executive officer of RPX Group, which provides express,
air freight and logistics services.

"If Indonesia is safe, then the economy will also be stable.
With economic stability, I believe the courier and cargo business
will also flourish," he added.

Provisional results from the second round of the country's
first direct presidential election last week show former general
Susilo Bambang Yudhoyono is on track for a landslide victory over
the incumbent, Megawati Sukarnoputri.

With about two thirds of the votes counted, Yudhoyono has
garnered 61 percent of the vote, against 39 percent for Megawati.

Yudhoyono, who has promised economic reform and pledged to
stamp out graft and terrorism, is a popular choice among many in
the business community, which has become frustrated by the lack
of change under Megawati despite relative stability.

The confidence of international courier companies in the
Indonesian market is apparent in the increase in their investment
programs.

For example, in addition to the upgrading of its flight
capacity, DHL, through its subsidiary DHL Danzas Air and Cargo,
recently opened a new logistics center at Sepingan Airport in
Balikapapan, East Kalimantan. The new facility reflects the
company's commitment to meeting the needs of a growing customer
base in Indonesia.

As with DHL, TNT Indonesia is also set to spend more money on
the improvement of transportation facilities, technology, and
networks to anticipate future growth.

"We will purchase some 20 to 30 new vehicles next year, and
open some more branches in the greater Jakarta area. Major
investments are necessary to keep the business going," according
to TNT Indonesia president Colin Moran.

Moran said the Indonesian courier market, with an estimated
annual turnover of between $90 million and $100 million, or only
about one-third the size of the Malaysian or Singaporean market,
was still relatively very small. But with its big population and
vast economic potential, Indonesia could become one of the major
courier markets in Asia.

Moran recalled that before the financial crisis hit Indonesia
in late 1997, the Indonesian market was one of the major
contributors to TNT's Asia and Pacific operation.

The period between 1990 and early 1997 were boom years for the
Indonesian courier industry. Like Moran, other executives of
international courier companies hope the signs of recovery as
indicated by the increases in inbound and outbound freight
services during the first six months of this year will mark a
turning point for the industry.

"This year, we are optimistic that we will be able to book 15
percent growth," he said, adding that in comparison to the last
two years, the company's business was quite healthy. Prior to
this year, TNT had suffered a 3 percent drop in sales, partly due
to the Iraq war and the deadly SARS virus.

Similar optimism was also expressed by other international
courier companies, which also expect higher growth in their sales
this year thanks to an increase in their inbound and outbound
shipment services.

Improvements in the courier business have also been felt in
other Asian countries, which were the driving force behind the
increase of global express and air freight shipments during the
first seven months of this year.

According to data issued by the International Air Transport
Association (IATA), international cargo traffic continued to
exceed expectations during the January-July period thanks to the
sharp increase in cargo traffic in Asia.

Asia, according to IATA, continued to rebound strongly from
the trauma caused by SARS in 2003, with year-on-year freight
traffic volume rising by 14.1 percent in the first seven months
of this year.

"Fedex is very positive about our business in Indonesia, and
we have confidence in the nation as a vibrant and exciting place
to do business," said Ramesh Kumar Singam, the managing director
of Fedex Singapore and Indonesia.

Based on such optimism, Fedex has instituted a number of
improvements across Indonesia, including an education and support
program for local exporters. "We recently launched a number of
new stations and service centers in Surabaya, Denpasar and Batam,
and will provide an upgraded facility in Balikpapan later this
year," Singam said.

Fedex, through its Indonesian partner, PT Refex Perdana
International, operates 45 service centers across Indonesia and
32 authorized ship centers where customers are able to drop off
or pick up packages.

The competition in the country's courier business is getting
fiercer despite the improvements that have been taking place in
the market. No wonder, then, that most courier companies will try
to do their best to fulfill the specific needs of customers.

Almost all of the major players offer integrated courier
services ranging from express delivery of documents, small and
large parcels to cargo shipments and logistics services. They
also all use the latest advances in information technology in
tracking shipments, and have extensive global networks. But each
of them offers specialized services that differentiate them from
their competitors.

RPX, for example, says the company's innovative move to
provide a full range of services under one roof had successfully
attracted more customers. Besides express services, the company
also offers a one-stop logistics service and chain management
solutions.