Cutting port handling costs<\/p>\n
The government should deal firmly with foreign liners and
\ntheir local agents that refuse to abide by Minister of
\nTransportation Hatta Rajasa's ruling early this month, which
\nslashed the terminal handling charges (THC) of containers and the
\ncosts of processing bills of lading.<\/p>\n
Cutting the THC on 20-foot containers from US$150 to $95 per
\nbox and 40-foot containers from $230 to $145 was indeed a
\nsignificant move that will go a long way in helping businesses
\ncut their costs amid the high inflation-environment due to the
\nOctober increase in fuel prices.<\/p>\n
The ruling that was adopted at a meeting of the Coordinating
\nTeam for Facilitating Exports and Imports also cut the processing
\nfee of bills of lading from $30-40 per document to only around
\n$10.<\/p>\n
However, the government should also thoroughly look into the
\ngrievances raised by foreign shipping companies regarding the
\nunusually high costs they have to bear at Indonesian seaports.
\nForeign liners have always set the THC rates for Indonesia much
\nhigher than those in other seaports in Southeast Asia because of
\nwhat they claim to be extra operational costs at Indonesian
\nports. And surcharges are a significant part of the THCs slapped
\non Indonesian importers or exporters.<\/p>\n
Foreign liners have argued that the surcharges reflect the
\ngross inefficiency and rampant corruption at seaports, pointing
\nout that from the first gate of entry into the port, to docks and
\neven in the waters of the harbor itself, illegal levies seem to
\narise anywhere. No wonder, port-handling costs in Indonesia are
\noften almost twice as high as those in other ASEAN countries.<\/p>\n
The fact that the new THC rates still include surcharges
\namounting to $25 for 20-foot containers and $40 for 40-foot
\ncontainers reflects an official recognition of the high costs and
\nhigh risks faced at Indonesian seaports.<\/p>\n
Even though foreign freighters control the shipment of almost
\n80 percent of Indonesian exports and imports, and that it is the
\nconferences of foreign shipping companies (shipowners) that
\nusually have the final say in determining THCs for containers at
\nIndonesian seaports, the government should act firmly to enforce
\nthe new ruling.<\/p>\n
In fact, the reform measures should not stop at the THC but
\nshould go further in removing other sources of high costs at
\nseaports such as the arduous bureaucratic procedures that often
\nrequire more than 20 signatures from officials in various
\ngovernment agencies involved in port operations to clear the
\nrelease of an imported consignment. And illegal fees are levied
\nat almost every stage of this process.<\/p>\n
A recent study of 75 large export-oriented industrial
\ncompanies at four of Indonesia's largest seaports by University
\nof Indonesia's Institute for Social and Economic Research
\nconcluded that logistics services accounted for an average 14
\npercent of total production costs, and inefficiency, illegal
\nlevies and arduous bureaucratic procedures at seaports account
\nfor a significant portion of these high costs.<\/p>\n
Low costs of logistics -- meaning low transport costs, short
\ntransit times, reliable delivery schedules, careful handling of
\ngoods in cold storage chains -- are vital for trade and smooth
\ndistribution of goods.<\/p>\n
Industrial companies cannot manufacture goods without the
\ninputs they need, and, in the case of Indonesia, most
\nmanufacturers still rely on imported materials. Hence, if
\ndelivery times are expedient and reliable, manufacturers would
\nnot need to hold large inventories of inputs, thereby cutting
\ntheir inventory costs.<\/p>\n
Cutting the gross inefficiency, corruption and uncertainties
\nin cargo-handling and customs clearance procedures that have
\ncaused Indonesian seaports to be classified as high-risk harbors
\nwill greatly facilitate smoother foreign and inter-island trade.
\nThis, in turn, will strengthen the competitiveness of Indonesian
\ncommodities as almost 80 percent of domestic and foreign trade is
\ndone through sea transportation.<\/p>\n
Since efficient port handling is the key to efficient
\nlogistics, the government therefore should treat seaports
\nprimarily as basic infrastructure, not as a facility that is
\ntasked with earning as much profit as possible. Though a seaport
\nshould run as a self-financing entity, its biggest contribution
\nto the economy should be a smoother, more efficient flow of
\ngoods, not the amount of dividends state-owned port management
\ncompanies pay annually to the government.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/cutting-port-handling-costs-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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