Keeping commerce in motion

The courier and air cargo industry, with their massive networks around the world, has substantially affected global and domestic economies.

The services provided by air express and air cargo companies have become an important engine of economic growth for most countries. With their express services, the companies have managed to constantly keep the global and inter-island trade in motion.

For local export-oriented companies, their services have become an integral part of their activities.

"We use a courier service from the start of export activities, such as from the sending of export samples to foreign buyers until the shipment of export orders," said Doddy Soepardi, the director of exports at publicly listed PT Great River International.

PT Great River, one of the country's major garment exporters, uses an air courier to send export documents and export samples to foreign buyers and to deliver important raw materials from foreign producers.

Doddy said that the company's garment exports, destined for the United States, Canada, Australia, Germany, Singapore, Malaysia, Hong Kong, Japan, Britain, Taiwan and New Zealand, were still mostly delivered by sea transportation.

"But for goods urgently required by buyers, we usually use an air cargo company," he said.

Like other export companies, PT Great River generally hires foreign air courier companies, such as DHL, United Parcel Services (UPS), Fedex, TNT, Green Star and Hong Kong Courier to deliver their export documents, export samples and other urgently needed materials.

Air express and air cargo services from Indonesia to other countries and vice versa are still dominated by foreign companies.

For corporate customers, these foreign companies offer them more services. Most of the world's major courier companies have integrated their air courier and cargo services with distribution, logistics and warehousing management services.

Some of them even offer exporters a payment settlement service. This explains why the country's international air courier and cargo services are still dominated by these foreign giants.

The chairman of the Association of Indonesian Express Companies (Asperindo), Johari Zein, acknowledged the dominance of foreign couriers in the country's international trade.

"They are stronger not only in capital but also in technology. That's why local couriers still focus most of their services on the delivery of documents or goods between cities in the country," he told The Jakarta Post in a recent interview.

For local couriers, business potential in the domestic market is more than enough. "With a growth rate of between 15 percent and 17 percent a year, the local market looks quite promising," he said.

Solid growth in the domestic courier business can be seen from the sharp increase in the number of companies getting involved in the service over the past three years.

The association's members, which also include subsidiaries of foreign express companies, reached 634 companies. In Jakarta alone, that number has reached 110 companies, reflecting a steady rise in membership from only 72 in 2000.

"The actual number of companies involved in express services has far exceeded 634. Many companies have not yet joined the association," he said.

Although the local companies are still mostly involved in the handling of documents or packages, some serve international markets. Some others have also combined their services with logistics and warehousing management services.

TIKI, for example, has opened representative offices in the United Arab Emirates, Saudi Arabia, Hong Kong, Taiwan and Singapore to take advantage of the growing number of Indonesian workers in these countries.

"The international courier market is tight with the presence of many courier giants in almost every country, but our market segment is different," said one of TIKI's executives.

Pandu Siwi Santosa, a local major player, also offers integrated services, including air express delivery, logistics and warehousing management.

"We received an ISO 2000 certificate for our logistics service," the company's corporate secretary, Budi Paryanta, said.

Pandu Siwi, whose clients include local and multinational companies involved in oil exploration and production, insurance and banking, has a service network covering almost all major cities in the country.

He said rapid growth within the courier business in the domestic market would continue in the coming years with an increase in business activities outside Java.

An increase in business activities in provinces, such as Kalimantan and Sumatra, will undoubtedly stimulate interisland trade. "This will in turn create more business for courier companies," he said.

The association's chairman, Johari, acknowledged the great potential for couriers in the domestic market. But he said that local companies could not fully benefit from the growing business due to uncertainties in the government regulations in this sector.

He said the law regulating the courier business was out-of- date and needed to be revised in order to cope with rapid changes in modern courier services.

The existing law, which was issued mainly to protect state- owned postal company PT Pos Indonesia, does not clearly state what kind of services should be solely handled by the state-owned postal company and what services can be handled by private firms.

At present, PT Pos holds the exclusive rights to delivering letters and other postal products, such as aerograms.

"However, the definition of a letter in the law is ambiguous. It seems simple but it can create a big problem. If the document is categorized as a letter than we cannot have its business," Johari said.

The association has been fighting for years for the revision of the current law in order to provide a strong legal base for local couriers, which would allow them to grow. Attempts made to revise the law had all failed until the House of Representatives (DPR) proposed a new bill on courier businesses late last year to replace the current law.

"House members have formally proposed the new draft law and we hope the bill will enter the deliberation process by the end of this year," he said.

Important points in the bill include the removal of PT Post's monopoly in the delivery of letters and the protection of local courier companies against foreign players, he said.

-- The Jakarta Post