Renting warehouses to reduce operating costs

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.