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State railway firm KAI seeks bigger slice of freight cake

State railway operator Kereta Api Indonesia (KAI) is aiming to persuade more businesses to use railway instead of road transportation to ship commodities in a bid to boost revenues from its cargo service

Farida Susanty (The Jakarta Post)
Jakarta
Wed, September 28, 2016

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State railway firm KAI seeks bigger slice of freight cake

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tate railway operator Kereta Api Indonesia (KAI) is aiming to persuade more businesses to use railway instead of road transportation to ship commodities in a bid to boost revenues from its cargo service.

The company expects its freight service to account for 60 percent of its total revenue in the next two years, from less than 50 percent currently. It aims to earn Rp 6.1 trillion (US$471.3 million) in cargo revenue next year, from Rp 5.1 trillion this year, of the Rp 20 trillion total revenue target.

KAI commercial and IT director Kuncoro Wibowo expected the increase to be backed up by information technology advancements as well as greater connectivity to bonded warehouses and ports.

“I want the IT advancement in our cargo service to match that of our passenger ticketing transformation,” he said recently, referring to the company’s effort since 2010 to digitalize tickets to be available online for railway users, from manual counters previously.

The features envisioned by the company include cargo management, where businesses will be able to track the location of their goods during the transporting process in real time online. This year, the effort will be focused on the development of a web-based application to ease customers’ access to the service.

KAI already has the digital facilities to calculate the demand for cars and locomotives needed in certain stations at certain times.

“If they need more [to transport the commodities], we can allocate more cars and locomotives to that area,” he said.

It is also mulling cooperation in IT with US-based technology company General Electric for the technology advancement, as the company boasts RailConnect 360 technology, a set of solutions to optimize train performance and operations.

“We are still looking at what we can do. We need to look at their operation pattern,” GE Transportation Indonesia sales director Detri Triyadi said. KAI also aims to connect with bonded logistics centers (PLB), which act as warehouses for imported and exported items such as those in Gresik, East Java and Karawang, West Java, to help business players transport their goods straight to the major ports nearby.

The PLBs, introduced by the government in March as part of its economic stimulus packages, are expected to serve as alternatives to ports for storing shipped goods, such as oil, gas, textile-related materials and chemicals.

He cited the recent reactivation of Indro station in Gresik for cargo railway services heading to Sungai Lagowa Station in Jakarta, as part of the effort.

“Gresik also has big a port. But so far there is a lot of housing blocking the way,” he said.

KAI, through its subsidiary Kereta Api Logistik, provides railway services connecting the country’s busiest Tanjung Priok Port in Jakarta and Cikarang Dry Port. The train is able to carry 60 6-meter equivalent container units (TEUs).

The company provides freight services for corporate and retail companies, carrying various commodities such as cement, coal and crude palm oil (CPO).

It has also has started transporting individual corpses for burial, especially for long haul trips, Kuncoro said.

KAI carried a total of 29.7 million tons of goods last year, with this figure expected to more than double to 62.9 million tons this year. The government’s railway projects, such as the construction of a double-track railway in southern Java and the trans-Sumatra expansion, will back up the plan, the company said.

The government plans to build more than 3,200 kilometers of railway tracks over the course of five years. Railway construction has not previously seen any significant progress in the country, with a decrease in active railway track from 8,157 km in the 1930s to a mere 5,196 km in 2015.

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