Failure is Not an Option
Category: Companies & People By : Putri Kadarmanto Read : 1352 Date : Tuesday, March 01, 2017 - 12:58:47




Asok Kumar became president director of DB Schenker Indonesia in April 2014.  He had a big task ahead of him—the previous two years had been subpar. “In 2012 we unfortunately hit a speed bump and had a terrible year. Profit and revenue declined substantially. We saw some recovery in 2013 but it was not spectacular. Being assigned this role in 2014, my mission was to bring Schenker Indonesia back into a strong growth momentum, with a compounded annual growth rate [CAGR] of 10%,” says Asok.

Asok rolled up his sleeves and got to work. Last year he surpassed his 10% goal—in 2016, the firm’s profits rose 14% to $7 million on revenues that grew 18% to about $100 million last year. His target for this year? It remains 10% CAGR, at a minimum. The results are concrete proof of his favorite saying: “Failure is not an option.”

While Asok may make his job look easy, it is anything but. The firm specializes in logistics in Indonesia, and it is known formally at PT Schenker Petrolog Utama. It is the Indonesian subsidiary of German logistics giant DB Schenker (which in turn is part of the Deutsche Bahn group, hence the DB in the name). Being in logistics, Indonesia’s poor infrastructure remains one of the firm’s biggest issues in delivering its services.

“One of the biggest challenges the company faces in Indonesia is the lack of adequate infrastructure support. This, coupled with excessive government regulations, as well as inadequate policies to facilitate the efficient movement of goods, makes the Indonesian logistics landscape a truly complicated one,” says Asok. “For example, regulations about sprinklers in warehouses. That may sound like a simple issue but unfortunately adds 35% to the cost of warehouses. In conclusion, there is still work to be done to make Indonesia a key logistics hub in Southeast Asia.”

Statistics support Asok’s view. Poor infrastructure is the key reason why 27% of GDP is absorbed by logistics costs, according to Kadin, while in Singapore, it is only 10%. On the Logistics Performance Index (LPI), Indonesia actually fell to 63 out of the 160 countries surveyed by the World Bank, down from 53  in 2015. Other ASEAN countries did better, with Singapore in fifth position, Malaysia at 22 and Thailand at 55.

However, Asok sees things moving in the right direction. “We appreciate the actions taken by the current government in relation to creating more business friendly regulations for logistics. Simplifying regulations to reduce the dwelling time [at Tanjung Priok port] has been taken seriously by President Joko Widodo, who has already expressed his target to cut the dwelling time further to 2.5 days, which will make Tanjung Priok port able to compete better with the likes of Singapore [1.5 days] and Hong Kong port [two days],” he says.

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