Investment rises despite low demand
Sudibyo M. Wiradji, The Jakarta Post, Jakarta
The fall in overall business as a result of the downturn in the global economy has also affected courier and cargo businesses in Indonesia.
But the lower demand does not mean the companies have to reduce their activities. Most of the big players have invested more money in the business either by establishing new branches or putting in place new technology.
TNT Indonesia's President Director Colin Moran acknowledged the tough times currently faced by the international courier industry, saying that the international courtier business which boomed between 1992 and 1998 remained weak.
He said that Indonesia, one of the largest economies in Asia still offered a promising future for courier companies and other related business sectors, despite the fall in the demand.
The improvement in the economy in recent months have even encouraged more major courier companies to invest both in infrastructure and technology to strengthen their foothold in the Indonesian market.
The United Parcel Service (UPS), the U.S.-based express courier and package delivery company, has spent a large amount of funds on technology to provide better services to global customers, including Indonesian exporters and importers.
In Indonesia, UPS operates a joint venture company with PT Cardig Air, and plans to invest more money to establish more branch offices across Indonesia.
Even though UPS' focus is on the international courier market instead of domestic market, building branch offices in major cities in Indonesia is seen as necessary to provide customers with easy access to their services, according to Country Manager of PT UPS Cardig International Dave Metcalf.
PT TNT Indonesia, an express courier and logistics provider has committed to investing in excess of US$4 million in constructing an express distribution center measuring some 3,000 sqm at Soekarno-Hatta International Airport in Jakarta, and has also started building a warehouse in Medan, North Sumatra.
"We do have quite a firm investment schedule, including investment in technology," Moran said.
The companies pay attention to detail and to their customers, without whom their business would not thrive. No less important is maintaining the loyalty and trust of their existing customers.
Therefore, the companies always strive to improve their services, and each has its own reason behind their dedication to their customers.
TNT Indonesia, for instance, emphasized the need to cut costs. "In a market where cost is a major deciding factor for most customers, it is still very important to be focused on providing the fastest and most reliable services to your customers. This commitment does help to drive customer retention and to reduce (the number of) lost business," Moran said.
TNT has a dedicated team of "Face-to-Face" sale executives that services its customers, as well as a team of telephone sales people to maintain smaller accounts. "This relationship development helps to improve our customers' loyalty," he added.
DHL, an express courier service and logistics solution provider, maintains its customers' growing trust by offering a portfolio of products customers might want -- from their Express "Door-to-Door" delivery to and from most countries in the world, and tailoring these services to specific requirements where possible.
"Thus, we offer reliability and flexibility, backed up by professional, friendly and efficient customer services and couriers," said DHL's Technical Advisor Alan Cassels.
Federal Express (FedEx) Singapore Indonesia's Managing Director Clifton Hua said, "we are always investing in technology and in training our staff to improve our customer service. FedEx is here in Indonesia for the long haul and no matter where we do business, we are always seeking to raise our service standards," he said.
"Our own aircraft and our own facility at the airport allow us to provide just-in-time express delivery for time-sensitive shipments from door to door," he said.
The move taken by many companies to ban their employees from traveling through Asia, following the outbreak of the SARS virus, is a blessing in disguise for express courier companies.
TNT Indonesia, for instance, has seen an increase in the use of its Next Day Time Definite Services for 9 a.m. and 12 noon. "These services enable businesses to move products and documents around Asia and Europe, with guaranteed next-day delivery. So, this has helped some businessmen as currently, they are stuck in their home-base countries," Moran said.
Cassels of DHL expressed the hope that, with the Iraq war now over, business confidence would improve.
Most international courrier services providers said that international passenger airlines' move to either delay flights or reduce flight frequencies following the Iraq war and the SARS outbreak has not affected operations in the flows of goods or documents because most of them use "prime time" flights, which are not subject to the changes made by the airlines.
As for those courier services that have their own fleet of aircraft, such issues do not arise, because they are not dependent on passenger aircraft for their shipments. Express courier providers that operate their own aircraft include UPS and FedEx.
UPS operates a Boeing-737 aircraft that departs from Halim Perdana Kusuma Airport in Jakarta to Singapore six days a week, and for global use, it has 262 jet planes and 319 chartered planes. FedEx flies an Airbus A310 to and from Jakarta five days a week, and has a fleet of 647 aircraft.
"The benefit of having dedicated aircraft is that we can control our own flight schedules, and the war and SARS do not affect our operations because we do not rely on commercial flights," said a UPS representative.
Several major express courier providers that operate in Indonesia, including DHL, TNT, UPS and FedEx's licensed partner RPX Group, have also been gradually shifting to logistics services to cash in on the great market opportunity in this sector. Several of these providers have focused on targeting the domestic market.
Logistics services range from inbound receipt services to verification of inbound goods, from storage to inventory management, from packing services to preparing shipping documents, as well as processing warehouse management orders.
Established in 1979, TNT Indonesia opened its logistics division in 1995 under the name PT TNT Logistics Indonesia. TNT now manages vital supporting facilities, such as warehouse capacity measuring over 110,000 in 15 key locations and more than 18 branch offices throughout Java, Sumatra and Kalimantan.
DHL, which began operating in Indonesia in 1973, has evolved into a logistics service provider in response to the growing demand from customers. Its operations are carried out through PT Birotika Semesta/DHL Worldwide Express, with logistics solution services spanning planned production support, spare parts, direct distribution, repair exchange, goods samples, financial services, strategic inventory management and direct express inventory services.
RPX Group's subsidiary PT Repex Perdana International was established in 1985 as the licensed partner of FedEx Indonesia. RPX Group was incorporated in 2001 as the first Indonesian company providing transportation and logistics services including customs brokerage, air forwarding, warehouse services, sea forwarding and moving, domestic express services, international priority service, and aircraft, all under one roof.
"We handle all of these activities by ourselves under a single company," said Chief Executive Officer of RPX Group Harsha E. Joesoep.