Thursday, May 20, 2010

Discovering the potential of the logistics business

... the era of one-stop-shopping logistics soon arrived to overtake much of the express courier business.

THE express courier business is really on the rise as hundreds of companies, both local and foreign, are involved in this business, while a few focus on logistics and warehousing.

However, foreign companies dominate the logistics business sector here. A small number of domestic companies are involved in logistics, such as PT Segar Sakti Jaya and PT Cipta Krida Bahari (CKB Logistics). CKB Logistics promotes itself an integrated logistics service provider with the most flexible service, including various modes of transportation, export-import customs clearance, warehouse management, special project logistics and the most integrated logistics with a nationwide network.

The lure of the logistics business has also attracted the Blue Bird group, the core business of which is transportation or taxis. Now with a contribution from the logistics sector it has set a revenue target of Rp 2 trillion for this year. “To achieve that target we aim to strengthen the logistics sector by investing US$15 million this year,” said Blue Bird vice president of business development Noni Purnomo.

The huge investment has been allocated for various supporting logistics facilities. Currently, Blue Bird has a five-hectare container site, warehousing at Narogong and Cakung and a subsidiary to focus on forwarding as well as logistics with 250 trucks.

Over the next five years, Blue Bird plans to add an additional 1,000 trucks. “Blue Bird will integrate all these facilities for domestic and foreign distribution,” said Noni.

It is undeniable that global logistics are still dominated by global players who offer integrated services and solutions, such as FedEx, TNT, DHL and UPS. These companies provide logistics services as required by each industry sector. DHL has vast experience and its customers enjoy the benefits of being served by professionals specializing in certain sectors and market segments.

So a long-term partnership and cooperation is built with customers and its management teams. “We combine our knowledge with the most advanced solutions resulting in a competitive advantage for our customers,” states DHL’s official website.

DHL, which is a part of the world’s leading logistics group Deutsche Post DHL, works every day to serve its customers and find solutions for them in timely deliveries as well as delivery of consignments that have particular requirements, such as chemicals and automotive parts.

The logistics business in Indonesia developed from express courier companies, with some of them delivering consignments to customers much like in the distribution business.

In supply chain management this activity is also known as physical distribution of out-bond logistics. The logistics business enjoyed rapid growth when many companies decided to focused on their core business so the era of one-stop-shopping logistics soon arrived to overtake much of the express courier business.

Many companies prefer to outsource this activity as they do not want to be occupied with delivery, warehousing, customs clearance or with sending consignments to remote areas.

In most parts of the world, including in Indonesia, logistics companies provide an integrated one-stop service that covers warehousing, transporting and freight forwarding. Currently there are about 100 companies that are considering outsourcing their logistics needs, which include trucking and warehousing. It is not a very big number but it will help the logistics business progress in Indonesia.

Some obstacles in the logistics business are the unsafe road network and difficulties in acquiring warehouses that conform to international standards, mobile communications and price increases for fuel, electricity and telephone calls plus the fluctuating exchange rate of the rupiah against the US dollar.

The roads are unsafe for trucks traveling at night as drivers are sometimes made to pay to pass particular streets or sometimes robbery occurs. The roads in Sumatra are also in bad condition. All this is a challenge for both foreign and local logistics companies. (Burhanuddin Abe)

The Jakarta Post, May 20, 2010

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