Port infrastructure deficiencies must be quickly addressed before cabotage, a revision to cargo shipping procedures, is implemented.
Congestion continues to mar Tanjung Priok Port, Indonesia's largest international trade port, in northeast Jakarta. The port's yard occupancy ratio (YOR) reached 100 percent last week.
The cause of the congestion appears to be an imbalance between the flow of imported containers and the pace at which those containers are delivered to their final destinations. However, the problem is more complex.
So far, the port authority has accelerated the container-moving process (overbrengen) from two days to one day. They also agreed to lower the overbrengen tariff by around 64 percent to reduce costs paid by importers. These efforts are expected to reduce the YOR at Tanjung Priok from 100 percent to 80 percent, but more needs to be done.
While the congestions issue has yet to be resolved, the number of containers is expected to surge in the near future following the government's plan to reduce the numbers of ports open to foreign vessels from 141 to only 25 in February.
This was in anticipation of the cabotage law which is due for implementation in 2010.
Upon implementation, domestic vessels will deliver cargo and containers from local ports to international ports, such as Tanjung Priok, before they are transferred to foreign or larger vessels.
The government must prepare for this change by providing adequate infrastructure.
Wile growth in trade and cargo traffic will increase demand for additional port infrastructure, congestion at Tanjung Priok Port shows facilities there are ill-equipped even for present demand.
The government, together with the port authority, has been struggling to solve such problems for some time, but few plausible proposals have emerged from the partnership.
There are several issues contributing to the congestion problem.
First, the most serious congestion occurs on the lead up to weekends, usually Thursday and Friday. This is mainly due to Tanjung Priok's dependence on PSA as a hub port. Vessels departing for Singapore must adapt to the Singapore schedule.
Second, poor accessibility to Tanjung Priok Port causes bottlenecks in freight transport. On some days, there is serious congestion along Cakung-Cilincing and Yos Sudarso, the two main access roads to the port. Time wasted in congestion causes costs to rise.
For example, trucks could actually make three round trips per day to the port; but congestion only permits them to make one.
The latter problem could be more easily addressed than the former. Congestion is caused by insufficient road capacity and quality. Most of the roads are in poor condition, especially during the rainy season.
Furthermore, cargo transportation depends solely on land transportation.
So it is clear that the government needs to improve access roads to support smooth freight flow. While Indonesia should continue efforts to capitalize on its geographical advantages, the country's track record for completing major infrastructure projects on schedule -- if at all -- is not impressive.
For example, the government once planned to build a port railway to overcome the Tanjung Priok Port congestion. However, the project has yet to be realized owing to excessive red tape.
Given current port congestion issues and rising freight and fuel charges on trucking companies, it seems feasible domestic shippers should choose rail to move their goods.
The government also planned to construct the Tanjung Priok Access Road connecting the northeast section of the Jakarta Outer Ring Road to the Jakarta Harbor Road (inner city toll road). There has been no apparent progress to date.
In light of these issues, the planned implementation of the cabotage decree, which is aimed at accelerating the development of the domestic shipping industry, might become more challenging. Indonesia still lacks the required infrastructure.
With only two years left before the decree is passed, the government should immediately improve road infrastructure within and toward Jakarta's Tanjung Priok Port.
Bureaucracy problems, vested interests and mismanagement of environmental concerns must be resolved if the domestic shipping industry is to develop further.
The writer is a research analyst at PT Bahana Securities
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