Gaining foothold in regional forwarding and delivery markets
Sudibyo M. Wiradji, Contributor, Jakarta
Despite the lingering economic crisis in several member countries of the Association of Southeast Asian Nations (ASEAN), providers of freight forwarding and delivery-related services are racing to strengthen their presence in the region.
International and domestic players are optimistic the free trade agreement within ASEAN will bring in new impetus in accelerating trade activities between the 10 member-countries.
With at least half of the world's trade expected to come from Asia over the next ten years, players believe that the trade accord, officially known as the ASEAN Free Trade Area (AFTA), will turn the region into one of the world's important export hubs.
PT Danzas Saranaperkasa, a subsidiary of Switzerland-based Danzas Group, for instance, will undertake more investment to expand its network in Indonesia, which is now struggling to escape its worst-ever economic crisis.
"Indonesia now has improved. We don't have to wait too long. There are still lots of opportunities," said PT Danzas Saranaperkasa's Technical Adviser Chris Remund.
Several others, such as Federal Express (FedEx) and United Parcel Service (UPS) have started their delivery-related businesses ahead of others. They have spent millions and even billions of US dollars on building infrastructure, facilities and networks in the region.
FedEx has established Logistics Distribution Centers (LDCs) in eight countries across Asia, four in Japan, two each in South Korea and Singapore, and one each in China, Hong Kong, Taiwan, Malaysia and the Philippines. Its LDC in Subic Bay, the Philippines, started operations in 1996. Each LDC handles inventory management and distribution services for high turnover, fast-moving, smaller volume and high-value items.
"LDCs provide solutions and meet the needs of many types of companies, particularly high-value electronics manufacturers and distributors," said FedEx Managing Director for Singapore and Indonesia Clifton Chua.
Earlier this year United Parcel Service (UPS) invested in excess of US$300 million in facilities and infrastructure in the Philippines to make the company's operation in the country its intra-Asia hub.
"The services and capabilities provided for Southeast Asia are already assisting businesses in this part of the world to become more export-competitive, get goods faster to market and compete in the global market place," said PT UPS Cardig International Technical Advisor for Sales Neil Bond.
He said that UPS spent in excess of US$1 billion each year on technology and providing world leading-edge IT solutions. "Being fast is important, but customers want information and simplicity, not just speed," he said.
DHL has been servicing all these countries (ASEAN) for many years and "already has a comprehensive service. What we do in most ASEAN countries is quite closely aligned," said DHL Indonesia's Technical Adviser Alan Cassels.
According to Cassels, the major advantage will come if or when the ASEAN area becomes truly duty-free (like the European Union) and thus "the 10 countries become one big 'domestic' market."
TNT is also expanding its logistics networks in the Asian region, particularly Indonesia and Thailand, where the company has established an integrated program for serving clients in the two countries.
"TNT, for example, helps Procter & Gamble in Thailand to procure raw material and send the final products to Indonesia," said PT TNT Logistics Indonesia's Marketing Service Manager Safitri Damayanti.
The tasks handled by delivery and distribution companies include inventory, packaging, warehousing and distribution.
Danzas has provided customers with sea- and air-freight services, targeting companies engaged in export and import activities. As in other countries, Danzas's experts offer logistics solutions that best suit customers' needs. Its Solution Business Unit optimizes the entire supply chain by ideally aligning inbound logistics.
PT Repex Perdana International is in the middle of building an integrated one-stop logistics solution. "This means that customers really only have to stop at RPX One-Stop Logistics for whatever their delivery needs," said RPX Group's Marketing Manager Desy A. Wibowo.
To anticipate tighter competition in the delivery and distribution business in the near future, PT Repex Perdana International is currently in the middle of conducting "RPX 100 network" projects throughout Indonesia, expected to be completed by the end of this year. "On top of that, we are also upgrading our services and infrastructure as well as upgrading our IT System to be more effective and user-friendly," Desy said.
The international delivery and express business providers also are making extra efforts to gain a foothold in the regional express market.
DHL said it would continue to provide the best service and show flexibility to meet customers' requirements. "For instance, we are not restricted to using one craft per day. By using commercial flights, we can move packages more rapidly to and from all parts of Indonesia to or from 229 countries around the world," said Cassels of DHL.
Like DHL, TNT is also improving delivery times to the rest of the world. "We are now delivering to 24 major European cities next day, which no one else is doing in the market," TNT Indonesia's Country General Manager Colin Moran said.