According to the annual spending, covering transportation services, warehousing, warehousing management and efficiency in the flow of products from producers to consumer, the experience of advanced countries shows that logistic spending (the dispatch of goods) may reach 10 percent of a country's gross domestic product (GDP). If Indonesia's GDP stands at Rp 2.761 trillion, the turnover in the logistics business at home may reach Rp 376trillion. This is indeed a lucrative figure!
The domination of express and logistics services is found in nearly every country with vast potential in this respect, with Indonesia being no exception. Indeed, in terms of potential, the logistic market in Indonesia is quite big. As a result, world-class logistic players are eyeing Indonesia, with five global logistic playing having developed networks in Indonesia, namely DHL, CEVA, FedEx, Evergreen and UPS. According to the Indonesian Association of Express Courier Service Companies (Asperindo), there are 800 domestic logistics companies, and the number keeps rising. There are 123 companies operating in Jakarta, Bogor, Tangerang, and Bekasi.
Every year, the turnover of these business players grows by an average of 10 percent. As a result, competition among operators has become increasingly keener.
There are also other companies that are not members of Asperindo. As a result, it was only a matter of time before a war of rates erupted. These days, some companies charge a mere Rp 1,500 per document, where as the average rate is Rp 4,000 to Rp 5,000 per document.
For this reason, many courier companies have expanded their businesses to the package dispatch sector. Compared with the dispatch of letters and documents, the package dispatch business is more stimulating. And what's more, it is still wide open.
Although this segment sees some foreign operators supported by strong capital, the package business is indeed a better choice than the cargo business. If you take up the cargo business, you must be prepared to handle dispatches of goods in large quantities. Certainly, this requires quite a big infrastructure. Newly established courier and logistics companies dare not come close to this particular area. The cargo business has become a grave yard for domestic players. In the past year alone, many domestic cargo companies have gone bankrupt.
Competition in the business lane of express and logistic services is quite tight. Just take a look at PT CEVA (an Indonesian Logistic Company previously known as TNT International Express), which has five gateways in Indonesia:Jakarta, Surabaya, Denpasar, Balikpapan and Batam. Ceva has also invested a lot in the business. It has built a depot with all the necessary facilities and other supporting equipment.
CEVA is an experienced company that provides business-to- business express dispatches. In addition, CEVA provides time-guaranteed services and door-to-door services for the dispatch of documents, parcel and large packets. Globally, CEVA is supported by 40,000 personnel and 43 aircraft, 1,000 depots and an overland transportation fleet of some 20,000 vehicles.
In the same way, DHL also shows strong domination in the local andinternational scenes. DHL has five specialized divisions, namely DHL Express, DHL Freight, DHL Global Forwarding, DHL Exel Supply Chain and DHL Global Mail.
Just take a Look at the Sunter Spare Parts Center for Indonesia's Ford motor, which is under the management of the Customer Service Operation (CSO). This spare parts center is located on a plot of land measuring 6,000 m2. The CSO team is in charge of two divisions, namely the Parts Supply and Logistics (PSL) and Service Operation Development. PSL handles the supply and logistics of spare parts as well as their distribution domestically and overseas in cooperation with DHL
Meanwhile, FedEx is also eyeing the market in amore prudent and careful manner. The reason is that many new players have sprung up with equally lucrative offers. However, the position of FedEx is indeed very difficult to shake as the company has many years of flying experience. At present, it possesses close to 650 aircraft and 80,000 vans. The fact that FedEx Group is close to its vendors makes this group capable of quickly responding to changes.
According to M.Kadrial, the secretary-general ofAsperindo, as quoted by SWA magazine, there are four categories of logistic companies. First, Port to Port, which is at the lowest level of the pyramid. This type of company uses no information technology as this business offers only shipping services. Second, Door to Door, in which there is a basic mastery of IT skills (information on the position of goods). This type of business usually handles distribution services (tracking). Third, Logistic, which uses an integrated IT system and handles a number of logistic services, such as warehousing, distribution and clearance. Fourth, Supply Chain Management (SCM), in which an integrated IT system allows planning, supply and distribution to end customers.
According to Asperindo data, some 80 percent of Indonesian Companies are still at the door-to-door level. The remaining 15 percent are found at the logistic level and only 1 percent has reached the SCM level. Why? Agains, it is technological backwardness that has placed domestic companies in the lower positions.The reason is that huge capital is required for the application of sophisticated and integrated IT systems.
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