Logistic giants enjoying high growth

Logistic giants enjoying high growth

Rendi A. Witular, The Jakarta Post, Jakarta

Foreign giant distribution companies are enjoying high revenue
growth here as more companies have started to outsource their
warehousing and distribution affairs to these firms.

Industry experts said that the outsourcing trend started in
the late 1990s as many companies wanted to concentrate more on
their core activities.

"Since the Asian crisis in 1997 there has been an increase in
the number of companies looking to outsource their distribution
and supply management for efficiency," said Colin Moran, country
general manager of PT TNT Logistik Indonesia, which, last year,
enjoyed a 90 percent growth in revenue.

He expected TNT to enjoy a further hefty growth of around 50
percent this year.

TNT Logistik Indonesia, which is the local subsidiary of
Holland-based TNT Group Post N.V., currently provides
distribution services such as import clearance, inventory and
warehouse management, export dispatch, provision and management
of materials and transport system design.

The company started its distribution business in 1995.

Currently, the company has over 4,000 active customers in the
country and 11 major distribution contracts. Several of its major
customers are PT Tigaraksa, P&G, BASF, Shell, Nestle and PENI.

Another giant distribution company enjoying a boom in business
here is DHL, with its local partner PT Birotika Semesta.

Company senior technical advisor Alan Cassels said, during a
recent media conference, that revenue growth this year was
projected to grow at 70 percent to 80 percent.

DHL entered the country in 1976. One of its major customers is
CISCO.

Industry players said Indonesian manufacturing companies still
lagged behind their regional peers in outsourcing their
warehousing and distribution management to distribution
specialists.

But they acknowledged that the growth potential in the
distribution business here was huge.

According to Moran, only 1 percent to 2 percent of
manufacturing firms here already use distribution companies to
handle their warehousing and distribution affairs.

"Many companies here are too scared to let go of the
distribution side of their business as they don't think anyone
else could manage it better than they do. But in the majority of
cases they are mistaken, as we have proved to many customers,"
said Moran.

Despite the huge market opportunity, distribution companies
said that competition was already getting stiff, as four
international giants had already entered the country.

The other two are U.S.-based United Parcel Service (UPS), and
Federal Express (FedEx).

UPS entered the country in 1988, with its local partner PT
Cardig Air, and Fedex in 1985, with its local partner PT Repex
Perdana International.

Cassels said that the tough competition had prompted DHL to
focus on a specific market segment.

"We are concentrating on value-added distribution, usually
vital spare parts with a high impact on business, typically for
hi-tech clients. Other players mostly focus on delivering
consumer goods," said Cassels.

TNT is also targeting a specific market segment, focusing more
on fast-moving consumer goods, petrochemicals, automotive items,
plus electronic and pharmaceutical goods.