Investment rises despite low demand

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.