Selling to Australia more quickly and cheaply<\/p>\n
Duncan Graham, Contributor, Surabaya<\/p>\n
Is the shortest distance between two points always a straight
\nline? Not in the world of international shipping.<\/p>\n
What comes first -- port or freight? It's a question much
\nlike the chicken and the egg.<\/p>\n
These and other conundrums have been plaguing the mind of
\nAustralian transport engineer John Hile for several years as he
\nhas pondered the biggest question of all: How can trade between
\nIndonesia and Australia be boosted and made more efficient?<\/p>\n
In mid-September a ship carrying 55 containers of paper
\nproducts from East Java quietly sailed directly from Surabaya to
\nDarwin as a trial run for what may become a new regular service.<\/p>\n
The big boxes were then put on a train and trucks destined for
\nshops in the capital cities of the southern states.<\/p>\n
From go to whoa the journey took about eight days, around one-
\nthird of the time it normally takes on the traditional sea route
\nSurabaya-Singapore-Melbourne.<\/p>\n
To the lay person the logistics look clear enough: Why send
\ngoods north to Singapore before sending them south to Australia?<\/p>\n
But of course it is not that simple, as Hile, the landbridging
\nmanager for Australian freight company Toll North, explained:
\n"Surabaya has traditionally been a feeder port for the hub of
\nSingapore. Containers are offloaded there and then mixed with
\nothers destined for Australia," he said.<\/p>\n
"Australia's major population centers are on the southeast
\ncorner of the continent. Darwin may be a lot closer to
\nIndonesia, but it's a tiny city and hasn't been a calling port
\nfor ships from Singapore."<\/p>\n
It's not just Hile who is trying to alter the shape of
\ninternational trade. In late September a team from the Northern
\nTerritory Government, Australian freight carriers and train
\noperators were in Surabaya trying to persuade shippers to change
\ntheir routes.<\/p>\n
Last year more than one million TEUs left Surabaya's container
\nterminal. (A TEU is the unpronounceable industry term for a
\n"twenty-foot-equivalent unit".) The port at Tanjung Perak could
\nhandle double this load.<\/p>\n
Economies of scale are pushing the shipping industry toward
\neven bigger vessels. The monsters now carrying 8,000 TEUs will
\nsoon be dwarfed by ships with a capacity of 12,500. And, of
\ncourse, they'll need deeper harbors, more cranes and larger ports
\nto unload.<\/p>\n
To make a Surabaya-Darwin connection viable exporters need to
\nknow that a scheduled freight service would be departing
\nIndonesia's second-largest port every week.<\/p>\n
But without subsidies or guaranteed loadings a shipping
\ncompany would be reluctant to initiate a regular sailing in the
\nhope that freight will magically appear.<\/p>\n
So the Australians spent time trying to stitch deals with
\nshippers and lobbying local manufacturers. Many were among the
\n230 delegates from more than 25 nations at the ASEAN Ports and
\nShipping Conference in Surabaya.<\/p>\n
The Aussie's arguments were based on savings through the
\nopening last year of the new rail line. This links Darwin to
\nAdelaide 3,000 kilometers to the south, and the east-west network
\nto all state capitals.<\/p>\n
There is also an all-weather highway between Darwin and
\nAdelaide open to road trains, and the port of Darwin is being
\nmassively upgraded.<\/p>\n
"We're not trying to take over existing shipping lines to
\neastern Australia," said John Parkes, general manager for
\ninternational marketing of Freightlink, the operators of the
\nnorth-south rail line. "We're offering an alternative route."<\/p>\n
But his attempted appeasement of the big-time freight shifters
\nwho snap their fingers at trade movements worth millions was
\nundermined when he revealed ambitions to shift more than 350
\ncontainers out of Darwin on every train.<\/p>\n
If successful, the ports in Sydney, Melbourne, Adelaide,
\nBrisbane and Fremantle would see a significant downturn in
\nbusiness. Clearly some noses would be put out of joint.<\/p>\n
Already, the Australian media has carried stories of the high
\ncost of the rail link and importers preferring to use trucks.
\nConstruction faults at Darwin wharf have also made the industry
\nedgy about shifting from the tried and trusted ways of taking
\ngoods the long way round.<\/p>\n
But the Australian hustlers in East Java flicked away such
\nnaysaying as "politics", and pushed on with their sales pitch.<\/p>\n
There may not be much romance in a long steel box that looks
\nthe same in Antwerp or Zanzibar but the enthusiastic Australians
\nmade the business of picking up and plonking down lots of TEUs
\nsound like one great adventure.<\/p>\n
"Change is always difficult but this new route through Darwin
\nwill happen because the commercial realities will make it
\nhappen," said Hile.<\/p>\n
"At the moment Indonesia is no better off than China or India
\nin getting its products into Australia through the current trade
\nroutes.<\/p>\n
"East Java has a huge industrial capacity -- much of it
\nunderutilized -- with a low-cost skilled labor force. In the
\ncountry next door is a major market. Australia has a tiny
\nmanufacturing industry and not enough workers. The potential for
\nSurabaya is huge (see adjacent story).<\/p>\n
"There's a huge push to have this going within six months --
\nand we will be successful."<\/p>",
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