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.