"This line of business has considerable potential as the
transport and delivery method of choice in Indonesia, especially for perishable
goods, but requires a shift in political will away from trucking." Budi
Noviantoro, President Director of KALOG
Kereta
Api Logistics (KALOG), a subsidiary of the well-known state
owned enterprise Kereta Api Indonesia, was
established in 2009 and offers total logistics solutions ranging
from railway container transport to courier services. Please present the
company’s background to the GBG Indonesia audience as well as elucidate upon
your strategies going forward.
KALOG is still a young company, having only been founded
three (shud read : five, ed) years ago. We recently achieved our first
profit, and expect to build upon our growth by setting a target income of 360 billion IDR for 2014 – a figure
that should see profit rise to 39 billion IDR.
Our company makes available a range of logistics services
that includes container transport, cement transport, couriers, and loading and
unloading coal. We are currently focused on developing the capabilities of our
coal loading and unloading services, particularly in South Sumatera, as this is an area of huge demand. Our strategy has
therefore been to invest in new facilities for this arm of our company, such as
gantry cranes and conveyor systems.
By 2016, we
plan to be able to increase our capacity from the current level of 1.5 million tonnes of coal per year to 8
million tonnes per year. The subcontractors for this project have already
been selected, and we expect that construction will begin next month (June
2014).
In addition to the potential for coal-related logistics in South
Sumatra, what trends and developments are you seeing in Indonesia’s logistics
industry and how does this shape your outlook?
In Java, the market for container transport services will
continue to expand. The rate of this growth, however, depends upon whether
Indonesia will be able to put in place the necessary infrastructure. The
responsibility is on both SOEs like ourselves and the government to ensure that
this is the case, and we have already begun developing terminals to load and
unload containers.
The government at the same time should soon be completing
the construction of a double track mainline from Jakarta to Surabaya, though
land acquisition is still an issue for the remaining 10km that needs to be
built. Theoretically, once these infrastructure projects are finished we should
be able to add forty trains every day that we can transport cargo on, which
totals an extra 40,000 tonnes per day.
With all this said, we continue to face challenges in
being able to compete head to head with trucks. Despite the fact that a trip
between Jakarta and Surabaya would take a truck 3 days to complete compared to
only 18 hours for a train, there is still a lack of action on the part of the
government to prevent overloads for trucks and make the most out of railway
logistics. For example, transport via railways is subject to 10% value added
tax, whereas trucking transport services are not.
More also needs to be done to lessen double-handling.
Right now, our railway stations/terminals have difficulty in setting up
directly within ports and instead must use trucks to move goods from vessel to
train, even if the total distance between them is only a kilometre or two.
As opposed to having to locate our facilities outside
state owned ports, it would be more efficient to move containers directly from
vessels to our trains and the government must therefore encourage cooperation
between its SOEs.
What can you tell us about your plans for working with the
private sector?
We carry out joint operations with both local and
international private sector players in the logistics industry. Our company has
already initiated cooperation with multiple firms, including Global Putra
International, with whom we have signed an MOU to work together in the field of
courier services and container transport. These agreements with private sector
companies often involve discussions on standardisation and tariffs within the
logistics sector. Our company is also interested in more technical forms of
cooperation, such as working with partners who can offer access to their
network in international markets.
Are there any new services that KALOG intends to introduce in
the future?
From a more long term perspective, it is important to
keep in mind that KALOG was established to create door-to-door logistics
services, moving beyond the limitations of station-to-station transport to
become a total logistics solutions provider. Because of this, through
partnerships we hope to continue to develop our courier service and broaden the
extent of its reach to include cities in other countries. We currently have 44
courier outlets, but plan in the future to make this service available at all
of our train stations.
How is your company positioned towards further cooperation with
foreign partners and international investors?
We are very much interested in working with multinational
businesses, having already collaborated with international logistics firms such
as CMA CGM based out of France. Working with potential foreign partners is not
limited to logistics companies; we have also been subject to interest from
conglomerates such as Danone and Unilever.
In addition to the aforementioned cooperation to expand
our courier services, gaining expertise in cold storage technology is one of
the areas that we are interested in working with foreign partners. This would
open up opportunities to transport beef, corn and chicken, and enable us to
offer other more specialised logistics services. To better understand how we
can initiate this type of partnership and set about constructing railways in
close proximity to factories, we have reached out to Indonesia’s beef
associations as well as private groups involved in agribusiness and food
including Charoen Pokphand.
As a final message, what would you like our readers to remember
about Indonesia and Kereta Api Logistics?
We welcome international parties interested in entering
the market through partnerships with local logistics companies. It is my hope
that the entry of these foreign companies will encourage the government to
enact the changes needed to fully support the railway logistics sector in
Indonesia. This line of business has considerable potential as the transport
and delivery method of choice in Indonesia, especially for perishable goods,
but requires a shift in political will away from trucking.
Source: Global Business Guide Indonesia.
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