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Operators need to improve efficiency
A business leader has warned that Indonesia needs to urgently improve efficiency at its major ports in the face of increased competition in the shipping and logistics industry in Southeast Asia
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business leader has warned that Indonesia needs to urgently improve efficiency at its major ports in the face of increased competition in the shipping and logistics industry in Southeast Asia.
Accenture Indonesia managing director for products Soo-ho Choi said on Tuesday that the trend in the shipping and logistics business was now shifting from a buyer-oriented to a customer-oriented market, making competition in Southeast Asia's ports tougher.
In the past, shipping companies looked to ports that were easier to access rather than ports with better services.
'Now, these companies just don't care [about location]. They will anchor in ports with the most efficient system, including quick service, specialized warehouses, transportation as well as logistics services,' he said, presenting his analysis.
Citing an example, Choi said many shipping companies were reluctant to use Indonesian ports due to the length of time it took, leading to higher costs. 'From what we have heard, it is cheaper to ship cargo from Jakarta to Hamburg than from Jakarta to Padang [West Sumatra]. That's why many shippers choose to berth in other ports in Southeast Asia rather than Indonesia,' he said.
Meanwhile, managing director for ASEAN Business Process Services Julianto Sidarto said the many alternative ports in Southeast Asia gave customers many options. 'Ships can choose whether to berth in Indonesian ports, Singapore, Malaysian ports or in Vietnam,' he said.
He said that Singapore was the most advanced among ports in Southeast Asia. While Indonesia, as well as Malaysia, had become established ports, leaving Vietnam as an emerging country in the business.
He added, however, that Indonesian ports were evolving from emerging and dependent players to more sophisticated operators.
According to data from the World Bank, Indonesian ports could handle 3.8 million twenty-foot equivalent units (TEUs) nationwide in 2000 and the number had grown to 12.6 million TEUs nationwide in 2012.
Nonetheless he said Indonesian ports still lagged behind their neighboring ports in Southeast Asia due to their limited capacity to handle more ships. 'In the future Indonesian ports are expected to handle more than 40 million TEUs,' he said.
Sooho said that to achieve the goal, Indonesia needed to quickly ramp up its logistics infrastructure to match those of nearby countries in Southeast Asia. 'This includes overcoming human resource limitations by standardizing processes using IT systems,' he said.
Standardized IT systems could reduce the dependence on qualified managerial staff, which would be useful in improving the port flow systems, he added.
Meanwhile in the longer term, Indonesian ports needed to cater for larger vessels, to seize the business opportunities provided by that sector, he said. 'We want to make shipping companies berth in our ports because they want to not because they have to,' he said. (tam)
