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Distribution costs remain high as port conditions worsen
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Distribution costs remain high as port conditions worsen
Tuesday, 09 April 2013 | 00:00

Healthy economic growth has allowed for the logistics industry to enjoy a 14.5 percent growth to Rp 1,634 trillion (US$168.3 billion) this year, creating strong flow of capital and driving manufacturing.
According to a recent survey by Frost&Sullivan, total ocean cargo volume is expected to increase by 6.1 percent to 1 billion tons in 2013, compared to 943.1 million tons in 2012. Seaports handle more than 90 percent of total non-road freight traffic.
However, weak infrastructure and poor connectivity will slow down growth.
"A lot of ports in Indonesia are underdeveloped; some are even facing problems such as the tidal floods experienced at Semarang Port. This will increase logistics costs in addition to reducing efficiency," Indonesian National Shipowners Association (INSA) deputy chairman Asmari Herry told The Jakarta Post.
Many ports are operating overcapacity and most of them do not have areas for loading and unloading activities or warehouses to store containers, he said.
The country's main gateway, Tanjung Priok Port, for instance, handled almost 6.3 million 20-foot equivalent units (TEUs) containers last year while it was originally designed to accommodate only 5 million TEUs.
The figure is expected to reach 7 million TEUs by the end of this year.
State-run port firm Pelindo II, also known as the Indonesian Port Corporation (IPC), is developing Kalibaru Port or New Priok to help ease loads at Priok. Kalibaru's first terminal is expected to commence operations in early 2015 with a total capacity of 1.5 million TEUs.
He also said that the ports' silted-up turning basins and access channels limited ship traffic to the ports, not only in ports operated by the Transportation Ministry but also in those operated by state-run operators Pelindo I to IV.
"After that, the goods face poor access when they are transported to the industry center. Again, it increases logistics costs, particularly trucking costs," he went on.
As a result, logistics costs were now 27 percent of gross domestic product (GDP) and account for 14.08 percent of the price of goods.
This ranks the country in 59th place on the World Bank's 2012 logistics performance index, out of 155 developing and high-income economies, lagging behind neighbors Malaysia (29th), Thailand (38th), the Philippines (52nd) and Vietnam (53rd).
Separately, Transportation Minister E.E. Mangindaan said that the government was accelerating sea transportation infrastructure to anticipate logistics demand in the future.
"We are preparing the infrastructure, not only for the ports themselves but for access from and to ports as stated in the National Transportation Development Plan 2010-2015. We want to make the logistics chain more smooth," Mangindaan said recently.
The ministry spent more than Rp 6 trillion in 2012 and 2013 to develop 131 ports; expansion projects in 53 ports and construction of 78 new ports, especially in the eastern provinces.
Moreover, Public Works Ministry's director general for highways, Djoko Murjanto, said that the ministry had set aside Rp 5 trillion to maintain national roads, including access to ports.

Source: Jakarta Post

Mr N.N. Kumar, Chairman In-Incharge, JNPT shall address the Keynote for the Knowledge Series on 10th July 2013, Nehru Centre
"Outlook & Emerging Challenges - PORTS & SHIPPING"

Meet prominent speakers and industry professionals. Right platform for networking with the industry stalwarts.

Mr. N N Kumar,
Chairman-In-Charge, Jawaharlal Nehru Port Trust


Capt. Arun Karkare,
Marine Consultant, Sai Techno Consultants

Mr. Ajay Singh,
Chief Executive Officer, DP World Nhava Sheva

Mr. Rajiv Agarwal,

Mr G. Kannan, Head Logistics,
Larsen & Toubro

Mr. Michael Pinto, (Retd.) Secretary,
Government of India

Mr. T S Balasubramanian, Member Finance & Chairman-In-Charge,
Tariff Authority of Major Ports

Mr. Rajeev Gupta, Chairman,
Mumbai Port Trust

Capt. Dinesh Gautama,
Advisor, President, Navkar Corporation Ltd &
Advisor to Narottam Morarjee Institute of Shipping

Cdr. (Retd.) Sudhir Kumar,
Vice President Strategic Planning,

Geekay Security Services Pvt. Ltd.
Senior Commandant Shri. Amit Sharan,

Col. Deepankar Chaudhary,
Lead Consultant,
Mahindra Special Services Company

Shri. Vijay Arora, IAS,
Indian Register of Shipping - IR CLASS
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