Renting warehouses to reduce operating costs

Debbie A. Lubis, Contributor, Jakarta

"Wanted: a warehouse for rent with 1,200 sq meters of floor- space and 10-m ceiling height. Preferably in secured, tranquil location in Greater Jakarta, complete with spacious parking lot, electricity and telephone utilities. Contact: Mr. Z at xxx," reads a classified advertisement.

Warehouses are much sought after by companies in Jakarta. Besides keeping goods in safe condition, warehouses also offer relief to companies that have a lack of space and a limited budget.

Paternus, a marketer at property consultant Era Prima, said that with only Rp 150 million per year, a company can rent a 2,000-square-meter warehouse in a good location in the western part of Jakarta.

"Renting warehouses is a flourishing business, especially in the free trade era, because there is always a lot of goods coming here. It is also a good option for companies that have just started their business, rather than building their own warehouse," he said.

Most of the warehouses are located in areas of Greater Jakarta such as Bekasi, Tangerang and Cikarang.

Paternus said warehouses with floor-space of between 500 square meters were very much in demand.

"The price varies because it depends on the building's design and width. The rental period usually lasts between two and five years," he said.

Meanwhile, Rivan Alexander Munansa, associate director of property consultant Koll IPAC, said most companies preferred renting warehouses that were situated in industrial areas for security reasons. "The companies don't have to spend extra money for security fees because it is usually included in the package," he said.

Rivan said that companies usually rented warehouses for up to Rp 25,000 per square meter. They usually select a warehouse based on some building standard. "Sometimes they prefer warehouses with a ceiling height of nine meters or 12 meters," he said.

According to Rivan, logistics, packaging and electronic were the top three industries when it came to benefiting from rental warehouses. "Regional autonomy has opened new markets for logistics companies to develop their businesses," he said.

One logistics company that has grabbed this opportunity is the State Logistics Agency (Bulog), which has numerous warehouses across the county in which it stores food supplies. The agency has leased its warehouses since 2001, when then president Abdurrahman Wahid issued government regulation No. 18/2001 on Bulog.

That regulation allows Bulog to lease its idle warehouses to private companies to generate income for the agency.

There are five types of Bulog warehouses that available for leasing. The first is the Modern Warehouse (GBM), which is made of steel and has between 2,800 square meters and 4,140 square meters of floor space. Another type is the New Warehouse (GBB), which is constructed of iron and has between 480 square meters and 1,440 square meters of floor-space.

The Semi-Permanent Warehouse (GSP) is made of steel and wood. Its floor-space is between 276 square meters and 960 square meters. The Old Warehouse (GBL) is made of steel and wood and is built by or acquired from a third party.

The last type is the Remote Warehouse (GDT), which is constructed in remote areas and made of wood. Its floor-space is between 100 square meters and 480 square meters.

The warehouses usually include loading and unloading facilities.

The Bulog regulation also establishes a list of rental fees in accordance with the location and type of warehouse. The cheapest monthly rental fee is for a GDT in Irian Jaya (Papua), which goes for Rp 1,300 per square meters. The most expensive is for a GBB in Jakarta, which goes for Rp 15,000 per square meter.

Tenants can rent the warehouses on a weekly basis, and they can rent the warehouses for a maximum of three years.

"The warehouses, however, cannot be used for goods such as cement, fertilizers or other products that can contaminate our stocks of rice. The warehouses are only available for food- friendly products," Ahmad Supanto of Bulog's public affairs division said.

Meanwhile, the Jakarta Convention Center (JCC) offers temporary storage for exhibition and convention goods through its licensed Bonded Warehouses.

The JCC charges US$0.50 plus 10 percent value added tax per cubic meter per day if the goods are kept for more than 15 days before the opening date of an exhibition. There is no charge if the goods are only stored beginning seven days prior to the exhibition.

Also, the JCC will not charge any money if the goods are stored for seven days after the end of an exhibition. But if goods are stored for longer than that, there will be a charge.

To ensure the smooth flow of goods from foreign countries for exhibition purposes, the JCC has appointed four customs clearance agents to handle all the necessary documentation for such exhibition goods.

For major companies, renting a warehouse is not enough in cutting their operating costs. They usually turn to professional integrated logistics services providers such as PT Birotika Semesta/DHL Worldwide, TNT Express and Logistics or PT Davids Distribusi Indonesia to handle their supply chain management.

Such companies do not only provide warehousing of their raw materials or finished products but also offer transportation, delivery and distribution services.