Not simply dispatching goods

Not simply dispatching goods

Burhanuddin Abe, Contributor, Jakarta

The domestic courier and logistics industry has shown rapid
growth during the past several years, as evident in the
mushrooming of new express companies and the increase in the
presence of foreign players in the sector.

In a world now marked by rapid technological progress and an
increasingly more intense global competition, courier and
logistics services have assumed an increasingly more important
role in supporting, pushing and even driving the country's
business activities.

Compared with other businesses in the service sectors, courier
businesses have shown great expansion. According to the
Association of Indonesian Express Companies (Asperindo), there
are at least 634 courier companies at present, 89 of which are
operating in Jakarta.

In addition, there are more than 20 foreign companies
providing express and logistics services in partnership with
local firms.

In fact, the number of express companies in Indonesia could be
greater as many companies such as moving firms also provide
express and logistics services.

The competition in the industry is certainly becoming keener
because each company is trying to improve its services in order
to meet customers' expectations and to catch up with the more
sophisticated distribution technology.

PT CV Titipan Kilat (Tiki), a local express company that has
been in existence for over three decades, is no exception. With
service centers in almost all of the country's major cities,
Tiki's main business mission is always to give the best to its
customers.

As part of the mission, Tiki recently launched several new
services to ensure on-time delivery. Among the services are Over-
Night Service (dispatched today and arriving the next day),
Express Service (consignments will arrive in one to two days),
Money Remittance (with a network covering nearly all major cities
in Indonesia), International Service (dispatching goods
overseas), and a Cargo Service (dispatching cargo goods to
domestic and overseas destinations overland or by sea).

"Although many international major express and logistics
companies provide similar services, we still have much room to
grow. They are not our competitors because we have different
market segments," said one of the company's managers.

Tiki, despite its recent penetration of the international
market, still concentrates on the growing domestic market.

In the local market, the competition is also growing as major
international courier giants such DHL, UPS, TNT and FedEx have
begun to tap the country's inter-island express delivery market,
in addition to their growing international express and logistics
services.

DHL Express, which operates in Indonesia in partnership with
PT Birotika Semesta, is among the biggest players in the country,
controlling nearly half of Indonesia's international air express
market.

DHL's Indonesian business activities are supported by 88
outlets, more than 900 employees and 200 vehicles all supplied
with radio communications gadgets. At the international level,
the DHL network, fully owned by Germany's Deutsche Post World
Net, covers over 220 countries and regions, with about 170,000
employees.

Alan Cassels, senior technical advisor of PT Birotika Semesta,
said that DHL was always committed to fulfilling the needs of its
customers in the Asia-Pacific region.

The company has been improving the quality of its services and
products, for example, increasing the frequency of flights of DHL
cargo planes between Jakarta and Singapore from four times to six
times a week, Monday through Saturday. This routes uses special
Boeing 727-200 freighter planes with a transport capacity of 23
tons.

"We are doing this because trade in Asia-Pacific countries has
been progressing rapidly," Cassels said.

DHL has grown into an integrated logistics solution provider
capable of handling everything from the sending of documents to
the transportation of containers.

The expansion of its business in Indonesia is part of its
aggressive expansion plan in Asia and the Pacific. As part of the
plan, DHL plans to open a new facility at Central Japan
International Airport, in addition to the planned opening of 12
new service centers in the Chubu area.

"The new facility with customs clearance and bonded
warehousing will cover more than 5,000 square meters. The opening
of the facility and new service centers will further consolidate
DHL's position as Japan's top express delivery company," said
Scott Price, chief executive of DHL Express Asia-Pacific.

Amid the rapid growth in information technology, some people
believe the need for courier services has lessened because
letters and documents can be sent through the Internet.

This belief, however, is not fully correct because there is
always a need to send goods. It is in this context that companies
providing international express courier services such as DHL,
FedEx, TNT and UPS still play an important role, particularly in
import and export activities. No wonder then if logistics
services have become their most important business.

These companies' logistics centers usually offer a series of
comprehensive logistics and warehousing services. By operating a
strategic spare parts center in Jakarta, located at Soekarno-
Hatta airport, for example, United Parcel Service (UPS) can
immediately dispatch spare parts to its customers. These spare
parts may be delivered on the same day or at a particular time
already agreed to by the customer.

Like other similar companies, UPS does not just provide
courier services. It also provides quite comprehensive
warehousing and logistics solutions. In its effort to expand its
logistics service to its intra-Asian customers and accommodate
the increasing demand for cargo services, last April UPS built a
distribution and logistics center at the Airport Logistics Park
of Singapore (ALPS).

According to the company, the facility will start operation in
early 2006 and will be one of the largest UPS operational centers
in Asia.

Obviously, UPS has made various efforts to stay ahead of the
competition. Even its logo, which had already been used for four
decades, was changed in 2003. In the first quarter of 2005, UPS
increased its net profit by 6 percent, from US$759 million in
2004 to $759 million. Its consolidated earnings in the first
quarter of this year rose 10.8 percent to $9.89 billion.

This increase in earnings is the result of its recent
acquisition of Menlo Worldwide Forwarding. In addition, the
company's income from international packages rose 13 percent
while revenue from is US packages went up 2.8 percent. The
company's operational profit was $1.39 billion, or a rise of 13.8
percent over the $1.22 in the same period last year.