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.