Ports in Indonesia

Its Relationship and Impact

towards Logistics Cost

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Content

 The Problem : Quality of Infrastructure and the Logistics

Bottleneck
 Marine Transport & Logistics : Links and Nodes
Connectivity
 Accessibility : The Issues
 Problem in Indonesia Port
 Connectivity Cycle : Improve Connectivity and Decrease
Logistics Cost by Improving “Links & Nodes” Performance
 Palaran Container Terminal Samarinda Project Case : How
to Reduce Logistics Cost by Improving Port Performance
Quality of Infrastructure
Global Competitiveness Report 2013-2014

Country Port Quality Road Quality

Singapore 6.8 6.2
Malaysia 5.4 5.4
Thailand 4.5 4.9
Indonesia 3.9 3.7
Vietnam 3.7 3.1
Philippines 3.4 3.6
Remarks : 1 = extremely under-developed, 7 = efficient by international standards
• Even though they are key infrastructure for the archipelagic country,
Indonesian seaports are relatively small and outdated compared to other main
countries in South East Asia.
• Connectivity to the hinterland : constrained with bad road condition and high
traffic density.
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Road, Port & Logistics Flow

ROAD PORT
Bottleneck Bottleneck
VESSEL

HINTERLAND LOGISTICS FLOW

RESULT :
Indonesia logistics cost is
27% from GDP,

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Logistics Cost Component
30.00%
ADMINISTRATION COST
25.00%
CIQP (Customs, Immigration,
5% Quarantine, Port) activities.

20.00%
INVENTORY COST
• 49% Holding Cost
10%
15.00% • 25% Risk & Damage Cost
• 26% Storage

10.00%
TRANSPORTATION COST
12% • 72% Land
5.00% • 20% Water
• 1.5% Air
• 0.5% Rail
0.00%

Total Logistics Cost di Indonesia 2011 : Rp. 1,829,669 Milyar

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Marine Transport & Logistics
Links and Nodes Connectivity

ORIGIN Connectivity DESTINATION

LINKS NODES LINKS NODES LINKS

• Core concept of connectivity : How accessible is an area?

How easy to ship cargoes? How easy to move?
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Accessibility Index per Province
“Connectivity Report on Domestic Shipping”, Worldbank & ITS, 2012
Aceh

Sumatra
Sulawesi
Utara
Kalimantan Utara
Kep Gorontalo
Timur
Riau

Riau Kalimantan Sulawesi Papua

Barat Maluku Barat
Barat
Kalimantan Sulawesi Utara
Sumatra Tengah Sulawesi Tengah Papua
Barat Jambi Barat
Kep
Belitung
Maluku Papua
Sumatra
Bengkulu Sulawesi
Selatan
Kalimantan Selatan
Selatan
Lampung Sulawesi
DKI Tenggara
Jakarta

Banten Jawa
Barat
Jawa Bali
Jawa
Tengah
Timur
Nusa
Map Legend:
Tenggara
Timur
Nusa
Tenggara
Barat

Accessibility Index : Volume of seaborne trade compare to distance between point to

point. Impact of accessibility is highest logistics cost in the lowest accessibility index
area.
Accessibility Index per Province

VERY HIGH HIGH MEDIUM LOW

300.00

250.00

200.00

150.00

100.00

50.00

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Domestic Container Throughput
Volume in TEU/Month

• Surabaya and Jakarta handle most of container boxes from and to many
destination. Disparity of throughput in JKT and SUB compare to other port
due to the center of production and industry still in JKT and SUB.

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Frequency of Sailing

Source : ITS & World Bank, 2012

Surabaya have the main role as the center of logistics connection to distribute
the cargo to eastern part of Indonesia and Jakarta is the center of logistics of
western part of Indonesia.
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Impact of Low Accessibility in the Sea Freight

Source: Quotes from domestic logistic company, 2012

Impact of low accessibility index in Indonesia is higher sea freight from

Jakarta-Padang (1000 km) compare to Jakarta-Hamburg (10,000 km).

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Imbalance Trade

Surabaya Eastern Indonesia Ports

Shipping Line space utilization : Headhaul vs Backhaul in Percent

Higher of freight to eastern of Indonesia due to imbalance trade between

headhaul and backhaul.

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Infrastructure of Indonesian Ports
Port Draft (m) Problem Development Plan
Batam 6-8 Under-developed • Development of new container wharf
Belawan 7-9 Congestion • Additional wharf, dredging and terminal
equipment.
• Development of New Port at Kuala Tanjung
Palembang 3.5-8 Saturated and channel • Develop new port in upstream of Musi
sedimentation River
Pontianak 4-6 Congestion and Channel • Develop new port in Temajo, additional
Sedimentation equipment in existing terminal
Banjarmasin 4-9 Saturated and Channel • Additional wharf and dredging
Sedimentation
Samarinda 6-7 Saturated and channel • Channel dredging program and
sedimentation Development of MultipurposeTerminal in
Palaran.
Makassar 3-12 Saturated • Develop Makassar New Port.
Kendari 7-9 Saturated • New Terminal development in
Bungkutoko.
Sorong 10-12 Limitation of Wharf and Yard • Additional Wharf and Container Yard

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Demand on Deep Draft

• Main problem of Indonesian port is the draft of the wharf still insufficient compare to
main port requirements (draft 15.2 m) and ASEAN Port requirement (draft 12.5 m).
• With the low draft, port can only serve small vessel with low economic of scale. It will
impact in high sea freight level.
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Port Development Challenges
• Labor regulation creates high
cost but low productivity
• Concession Regulation still not
clear.
• Low vertical & horizontal
coordination between
Government and DPRD LEGAL
• Land acquisition problem ASPECT &
REGULATION
• Limited Long Term Project FINANCIAL
Financing : Long term Project ASPECT
(50-75 years) financed by
short term loan (8 years)
• Port tariff require approval
from Associations (INSA,
APBMI, ILFA) Ideally should
be decided by Regulator
• Poor road connection to
hinterland creates high cost
• Limited Navigation Aid
(provided by MOT) unable to
support 24/7 activity
SUPPORTING • Limited Channel depth
INFRA- (provided by MOT)
STRUCTURE
SOCIAL • Reluctance from existing
ASPECT terminal stakeholders
(Stevedoring, Forwarding &
Trucking Company)
• Reluctance from ORMAS / NGO
supported by Political Party using
Environmental & Social Issues
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Connectivity Cycle
Improve connectivity and decrease logistics cost by improve
the “Links & Nodes” performance.

Vessel Port Stay

shorter Sea Transport
Port
Vessel Operation
Productivity Capacity
Cost Decrease
and Efficiency Turn Round Increase
Voyage
decreases

Investment in Sea Freight (FIO)

Port Increases cost decreases

Cargo Volume Demand Goods price Logistics Cost

Increases Increases declined decreases

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Project Case :
Palaran Container Terminal in Samarinda

• New container terminal in Samarinda,

developed by BOT scheme and PPP
Project.
• Captive market 170,000 teus in 2009
with 15% pa growth rate
• Developed and operates by Private
Company, PT Samudera Indonesia Tbk.
• Local government support for Access
Road and supporting facilities
• Port authority support in access
channel maintenance
• Exclusiveness to operate terminal

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Project Case : Public Private Partnership
Palaran Container Terminal - Samarinda

OLD PORT NEW PORT

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Access Road Development

PREVIOUS CONDITION
2011
2010

Port highway access to hinterland

development

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Reduce Administration Cost : E-Payment

• Sophisticated terminal operation IT

System (ETOS), developed in-house
by Samudera Indonesia
• Host-to-host Billing system in co-
operation with Bank Mandiri
• Benefits :
• Minimize face-to-face payment
services and queues
• Able to perform payment
transactions anywhere &
anytime by Electronic Payment
and/or ATM
• Safer & more secure transaction
• Bank reconciliation can be done
easily
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Palaran: Reduced Logistics Cost
Samarinda Port Palaran Port
Variable
(Old Port) (New Port)
Waiting Time 48 hours 4 hour
Port Service Time 12 hour per day 24 / 7
Gross Crane Productivity 6 24
Port Stay 5-6 days 1-2 days
Dwelling Time 10 days 4 days
Around Trip Voyage (JKT-
19 days 11 days
SMD-JKT)
Potential call per vessel
18 call 30 call
per year
Freight Rate JKT-SMD Rp. 9 Juta/teus Rp. 4.5 Juta/teus

TPK Palaran can significantly improve productivity, reducing vessel operational cost
and resulting in decrease of shipping rates that will also reduce logistics costs, and
impact to the price of basic needs (penurunan harga kebutuhan pokok). 21
Impact of Port Productivity

• Based on TPK Palaran experience,

the New Port Facilities impact :
– Improve 66% Sea Transport Capacity
by improving Turn Round Vessel

LOGISTICS COST
(TRV).
– Reduce 50% Transportation/Freight
Cost by improving productivity
– Reduce Administration Cost by IT
System implementation.
– Reduce 60% Dwelling Time by
improving flow of goods.

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“Sea-Toll” Connectivity : Jokowi’s Proposal

ORIGIN “TOLL LAUT” Connectivity DESTINATION

Improving Ports Improving Increasing Sea National

connectivity Port’s Transport Logistics
infrastructure Infrastructure Capacity Efficiency
THANK YOU

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