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.