Pelindo II Aims to Raise its Competitiveness in the Logistics Industry
The Director of PT Pelabuhan Indonesia II (Persero), R.J. Lino, recently issued a warning about the impact that the slow handling of goods and low productivity in loading and unloading at the nation’s ports is having on national logistics competitiveness.
"Slow handling and low productivity causes logistics costs to increase and ultimately negatively affects national logistic resources," he said.
For example, tariffs on delivery containers from Tanjung Priok to many ports in Papua stand at between Rp19 million to Rp20 million per teu.
"This needs to be significantly lower," he said.
It is no wonder that many businesses are assessing their logistics costs, which are still very high. In fact, the cost of logistics in Indonesia is now estimated to range between 25% -30% of the nation’s total gross domestic product (GDP).
This statistic comes from the Logistic Performance Index Report (LPI) published by the World Bank in 2010. The report ranks Indonesia’s logistics competitiveness at 75 out of 155 countries, significantly lower compared to 2007 when Indonesia was ranked 43 of 150 countries.
Indonesia’s logistics competitiveness ranking went down because many of its components continue to deteriorate. For instance, customs services ranked 72, while the ranking of infrastructure and international shipments, respectively, were 69 and 80.
As for quality and competence in logistics management, Indonesia ranked 92 in the world, while tracking and tracing services and timelines, respectively, ranked 80 and 69. If the competitiveness of these components can be increased, the position of Indonesia will surely improve.
As of 2010, the condition of operating ports owned by PT Pelindo II (Persero) has steadily decreased, becoming more and more unable to compete as the productivity of loading and unloading continues to decline. According to data from PT Pelindo II, the total time of service at the ports managed by the company was 4950 hours, with 1.18 billion tons of goods loaded and unloaded.
Compared with the same period in 2009, that is a significant decline. Time of service decline as much as 12.52%, while the amount of goods loaded and unloaded fell 28.06%. The main cause is poor maintenance of loading and unloading equipment at the port.
This condition adds significant pressure to the overall income of the company. Records show that business income from concession services during 2010 reached Rp 25.94 billion, a decrease of 17.08%, compared with 2009 at Rp 31.28 billion.
Overall, service levels at the container terminals during 2010 were not too different, compared to 2009, although there was a decrease. Both ship production and field operations each decreased, 6.37% and 6.05%, respectively.
The level of service productivity, in regards to stacking, stripping and stuffing has increased, but by very little. Overall revenues at service container terminals in 2010 reached Rp 256.41 billion, only a slight increase compared with 2009 at Rp 250.25 billion.
Even in this period of decreased ability to load and unload, due to poor equipment, the traffic of goods flowing through the public pier, the pier for own (DUKS) and special ports and loading point did increase by 9.83% to 117 million tons, compared with 2009, while container flows increased by 18.64% to 3.8 million boxes, a 19.75% increase, to 5.1 million TEUs.
In 2010, at the Tanjung Priok port, container flows increased by 4.5 million teus with estimates based on previous years pointing to future increases of 15%-20% a year, on average. During 2011, container flows at the Tanjung Priok port are projected to reach 6 million teus after reaching the 5 million teus mark on November 2011.
Thus, there is a great imbalance between goods flows which tend to increase and the ability of loading and unloading equipment to handle the increases. So, as port productivity continues to decline, Indonesia faces the potential of losing the chance to accelerate its national development.
An increase in the productivity of loading and unloading goods at the nation’s ports is mandatory if Indonesia wants to lower its national logistics costs and have a chance to successfully compete in global trade.
"Ports are one of the country’s main assets to accelerate the development of the national economy," he said.
Looking at the steps undertaken by PT Pelindo II and the investments attained to modernize the ports, particularly in increasing the productivity of loading and unloading, businesses and governments can breathe a sigh of relief because the competitiveness of national logistics will likely increase significantly in the next few years.
Although it will require many more logistics infrastructure improvements, national logistics costs could potentially move towards 10%, the equivalent to the United States and Japan, although this might not be possible until 2014. PT Pelindo II maintains its goal of getting Indonesia ranked at 50 or above in national logistics competitiveness by that time.
(SAILINGS/BI/NT/ERIC)
