While USPS is plagued by its issue with terminal dues and losses due to falling letters volumes and higher cost of pension and health, Pos Indonesia faces an awkward situation of increasing ecommerce parcel volume, higher cost and fixed regulatory pricing.
Market Volume of Indonesia
McKinsey reported that Indonesia daily online parcel volume is estimated grow six times more (4.4 million) than current volume. This amount to a gross merchandise value of USD 65 billion by 2022.
Pos Indonesia challenges
According to Pos Indonesia president, Gilarsi Wahyu Setijono, Pos Indonesia is financially stable however the burden of shipping packages is bleeding the bottom line each passing quarter. Profit fell 18 percent last year.
Higher operating cost due to inadequate infrastructure (roads and bridges), and national obligation on Pos Indonesia to deliver (over 18,000 island) and operate post offices (4,800 offices) at commercially nonviable locations.
Delivery pricing is fixed due to government regulations that places Pos Indonesia in a disadvantage to private shipping competitors. While regulators are sympathetic to Pos Indonesia situation, the reason of price fixing is for the masses. “Strictly speaking, rates are only fixed for personal deliveries. The idea is to make sure that regular people can afford to send packages to family and friends.”, said Rudiantara, Minister of Communications.
While there is no direct way of solving the problem faced, Setijono is restructuring Pos Indonesia. He’s spinning off a logistics unit, building a new business to handle digital payments, and planning the company’s first-ever bond sale, a 1 trillion rupiah issuance ($60 million).
Commentary by Maverick Chung