Anchored in paperwork

Anchored in paperwork

The recent wave of complaints about the long demurrage time
and high handling costs at Jakarta's Tanjung Priok seaport, the
country's largest ocean gateway, should cause great concern for
an obvious reason. Seaports play a very crucial role in
determining the competitive edge of our products because most
export merchandise and imports of industrial materials and
capital goods flow through the ports.

It was therefore quite rational that when the government
embarked on a massive reform of the high-cost economy in the mid-
1980s, the seaports got the top priority. A series of regulations
were issued in April, 1983, regarding the general guidelines for
port management and the realignment of all the major ports under
the management of four state-owned port corporations. Each
corporation was assigned to manage several ports. Since port
services require the involvement of many government agencies and
private firms, each port is assigned an administrator as
coordinator.

However, since the realignment of the port management turned
out to be ineffective in substantially reducing delays and
surcharges, the government came up with a much bolder reform
measure in April, 1985. The corruption-ridden and rule-bound
customs service was stripped of its customs inspection authority
and a pre-shipment inspection system was introduced. The measure
seemed to have been effective in facilitating smooth flows of
exports and imports.

But now, 10 years later, the old problems of delays and red
tape seem to be recurring, especially at Tanjung Priok. One of
the main reasons, we think, is the overlapping of authority at
the port between that of the port administrator and that of the
port corporation. Another reason is the slow expansion of the
port's handling capacity in sharp contrast with the steady
increase in the volume of cargo traffic.

Since Jakarta and its surrounding areas remain the favorite
sites for new industrial plants, the rate of increase in the
cargo traffic through Tanjung Priok has been much higher than
through other ports. Last year, for example, international cargo
traffic totaled almost 21 million tons, of which 16.5 million
tons were imports. The total did not include inter-island cargo
flow.

Nonetheless, we share the observations of most importers that
the main reason behind the delays is poor management. The Port
Corporation II which manages Tanjung Priok did make a
breakthrough in 1985 when it instituted a one-stop service center
for the processing of berthing permits and other documents and
for controlling tugs, pilotage, water supply and stevedoring
services. But the center seemed unable to work properly. Worse
still, while the load work (paperwork) has been increasing
steadily along with the rise in cargo traffic, the port
corporation has not improved its information management and data
processing system.

Because port operations involve so many government agencies
and require a wide variety of services, such as equipment
handling, trailers, water and bunker oil provision, provided by
different private suppliers, as well as the processing of
documents, a centralized command, control and communication
center is crucial. Port users, notably freighters, should have
electronic links (electronic data interfacing) with the center
for on-line submission and declaration of their plans, manifests,
requests for services, customs, immigration and quarantine
documents well in advance of their berthings.

Such a centralized information system would enable the port
company to mobilize all the back-up equipment, such as trailers,
transtrainers and straddle carriers, in a timely manner to
efficiently manage the movement and stacking of containers and to
alert the suppliers of all other services required by the ships.

We don't think simply increasing the amount of handling
equipment will solve the problem of delays. Neither will it
increase the port throughput (productivity) as long as all the
players or suppliers involved in the port services are not yet
electronically linked with a centralized operation command
center.

Port operations involve both the physical movement of goods
and the processing of documents by relevant government agencies.
As long as the bulk of document processing is still done manually
through personal contacts, delays will continue to occur and the
costs of exporting and importing through Tanjung Priok will
remain much higher than at other ports like Singapore. And
Tanjung Priok will become notorious as the window on Indonesia's
high-cost economy.