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Indonesia faces challenge to improve nationwide freight services
Indonesia, an archipelago consisting of thousands of islands, faces challenges establishing an integrated logistics system to improve connectivity, as many businesses still prefer land transportation to other modes
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span>Indonesia, an archipelago consisting of thousands of islands, faces challenges establishing an integrated logistics system to improve connectivity, as many businesses still prefer land transportation to other modes.
Better connectivity in the logistics sector means better integration of multi-modal transportation on land, rail, sea and in the air.
However, the director general of land transportation at the Transportation Ministry, Budi Setyadi, said that until today Indonesia still highly relied on land transportation for freight services.
“As much as 90 percent of logistics still rely on land transportation and only the rest use other modes of transportation,” Budi said on Monday during a seminar held by the Indonesian Employers Association (Apindo).
The high dependency on land transportation showed how Indonesia still lacks an integrated multi-modal freight system.
The ministry’s public transportation and multi-mode director, Ahmad Yani, said the government had tried to provide transportation options for the logistics sector to shift from roads to rail or sea. However, businesses were less interested in the two alternatives, he said.
“For example, in early January we prepared a long-distance ferry [LDF] for freight, but it did not attract interest from business players. We have offered it five times, but there’s still not much interest from businesses to use LDF,” he said.
Yani said that the government still needed input from business players on the kinds of regulations that could attract them to shift from road to sea transportation.
In terms of rail, businesses sometimes faced hurdles in the form of regional bylaws.
For example, Sulistyo Wimbo Hardjito, a member of the Indonesia Chamber of Commerce and Industry (Kadin) and a former president director of state-owned airport operator Angkasa Pura AP I, revealed that Jebres Station in Surakarta, Central Java, halted the unloading of freight from trains as the local administration prohibits the activity.
Another example is a regional bylaw that orders the Merak train station in Banten be moved out of the Merak Seaport area, where it is currently located.
“These kinds of regulations are a form of discouragement and are counterproductive when the [central] government is pushing for integrated inter-modal freight transportation,” said Sulistyo.
Responding to the report, director general Budi said the government would study the cases and would later coordinate and communicate with the regional administrations and state-owned railway operator, KAI.
Although Indonesia’s position in the World Bank’s latest Logistics Performance Index showed improvement — from 63rd in 2016 to 46th in 2017 — the archipelago still lost to fellow Southeast Asian economy Vietnam, which ranked 39th in 2017.
In addition to pushing more businesses to use rail and sea for freight transportation, the government is also attempting to improve efficiency by establishing more goods terminals as logistics hubs. With the establishment of goods terminals in strategic areas, the movement of freight across countries, provinces and cities is expected to be more efficient.
“One goods terminal that will soon be inaugurated is the Entikong Terminal [in Sanggau, West Kalimantan]. We are also in the process of establishing six more goods terminals in different locations,” said Budi Setyadi.
The international goods terminal in Entikong, which is located in the border area of Indonesia and Malaysia, is to open in January. The six other terminals are also to be established in border areas, such as in Nanga Badau in West Kalimantan, Motamain in East Nusa Tenggara and Skouw in Papua.
The goods terminals located in border areas are intended to be hubs for cross-country logistics.
Indonesia Truck Business Association (Aptrindo) vice chairman Kyatmaja Lookman, who is also a committee member at Kadin, said goods terminals are crucial for efficiency.
“We can no longer only rely on point-to-point delivery logistics as it is too costly. Going forward, there should be a focus on hub-to-hub logistics similar to Europe,” he said.
