Seaport efficiency
Minister of Transportation Haryanto Dhanutirto's plan to stop the ship-side trucking service for imports through the Jakarta seaport of Tanjung Priok has raised a fundamental question about the basic function of physical infrastructure. Dhanutirto reaffirmed Monday he would gradually stop freighter-side trucking services to increase the port's revenue from its warehouses. This means imports, which can now be unloaded directly to waiting trucks for immediate hauling to shippers, are to be held up at port warehouses for a few days simply to raise the utilization rate of transit sheds.
Judging from macro-economic efficiency, the plan is not wise as it is bound to increase the costs of importing. Since about 70 percent of Indonesian imports consist of industrial raw materials and 22 percent of capital goods with the remaining 8 percent taken up by consumer items, Dhanutirto's intention will adversely affect manufacturing costs and the implementation of investment projects.
It is no surprise that the Indonesian Importers Association have strongly opposed the plan, saying it is entirely irrational. After all, a seaport is a basic infrastructure for the economy. It functions mainly as a transit point for imports, exports and merchandise between the islands. A port functions well when it facilitates the flow of goods and passengers as fast as possible at the least cost. True, a port should make income to finance its operations and investment but this should not be made at the expense of macro-economic efficiency.
Seaports, like airports, roads, electricity and telecommunications, are basic infrastructure which facilitate economic activities. It would be an anomaly if, for example, Tanjung Priok port posted a high profit while most users of the port service complained about high costs. The ultimate end is not a highly profitable seaport but an efficient and competitive economy.
An efficient port is one of the primary factors considered by investors in locating their projects and an efficient port is not one which makes a lot of profits but guarantees a smooth flow of goods. Ports all over the world have been competing to attract more trade because the larger the volume and the value of trade it can attract the lower the tariffs it can charge on its services.
It is true, as Dhanutirto argued, that problems could arise if the number of trucks available was not adequate to take in all the freight being unloaded from a ship and this could prolong the unloading process and could exact demurrage costs on the freighter. However, such problems are not a strong enough reason to justify a blanket ban on the ship-side trucking service.
The port management should continue giving importers an option either to use the transit sheds or transport their imports directly to their own warehouses through freighter-side trucking services. The port management needs to ensure that shippers make all the preparations necessary to guarantee the smooth unloading from ships and immediate hauling out of the port area and if they are not fully prepared they should be ordered to move their cargo to the port warehouses. The timing of ship-side trucking service should also consider the problem of traffic congestion in Jakarta. With modern communications such as electronic data interface both shippers and port management can be fully informed in advance of the kinds of cargo to be unloaded, the handling equipment and number of trucks needed by the incoming freighter.