Keeping commerce in motion

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