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Jakarta Post

Indonesia inches closer to realizing port hub dream

  • Stefani Ribka

    The Jakarta Post

Jakarta   /   Tue, April 25, 2017   /   08:58 am
Indonesia inches closer to realizing port hub dream Faster lane: President Joko "Jokowi" Widodo (center), Public Works and Public Housing Minister Basuki Hadimuljono (left) and Transportation Minister Budi Karya Sumadi (right) inspect the Tanjung Priok toll road on the sidelines of the toll road's operational inauguration on April 15, 2017. (Antara/Puspa Perwitasari)

Indonesia is inching closer to realizing its dream of making Tanjung Priok Port a major international transshipment hub and taking a slice of Singapore’s business pie.

The government, along with French container shipping firm CMA CGM Group, launched Sunday the first Jakarta-Los Angeles direct route, which promises faster shipping and lower costs.

For state port operator PT Pelabuhan Indonesia (Pelindo) II, which manages Tanjung Priok, the route is also a testament to infrastructure as the country’s largest seaport has improved and is now suitable to accommodate large ships for transshipment purposes.

“The launch of the maiden Jakarta-Los Angeles direct route signals that [Tanjung Priok is] ready to be a transshipment port that is more cost friendly for clients,” Pelindo II president director Elvyn G. Masassya said during a ceremony to welcome CMA CGM Otello container ship at the port.

(Read also: French shipping company CMA CGM aims to increase RI market share to 20 percent)

The Jakarta-Los Angeles weekly direct service boasts a maximum of 23 days of shipping, faster than the normal 30 days, with 20 to 30 percent cost reduction as clients do not need to transfer in Singapore.

The freight rate for the route currently stands at about US$1,700 per forty-foot equivalent unit. Meanwhile, the container handling charge is set at $83 per twenty-foot equivalent unit (TEU) and the transshipment cost is $28 per TEU, half the price of normal transshipment costs.

CMA CGM, a major global player, deployes 17 vessels to serve the Jakarta-Los Angeles route. Among them was CMA CGM Otello with a full capacity of 8,238 TEUs or over 100,000 gross tons, making it the biggest container ship that has ever berthed in Indonesia. The 334-meter-long ship is scheduled to carry 2,811 TEUs of furniture, textile and fish on April 24.

Pelindo II subsidiary development director Riry Syeried Jetta said the port’s berthing areas must be at least 16 meters deep to be able to accommodate large ships of more than 8,000 TEUs.

The firm allocates Rp 2 trillion (US$150.15 million) for the maintenance of some berthing areas that are already 16 meters deep and for transforming the remaining areas from their current depths of 12 meters to 14 meters. The transformation is expected to be complete in August.

Indonesia National Shipowners Association (INSA) chairwoman Carmelita Hartoto touted the Jakarta-Los Angeles route as a milestone for Tanjung Priok, but said bigger tasks awaited ahead to make the port be more competitive against nearby ports, especially in Singapore.

“They need to give more discounts and better service than PSA [the Port of Singapore Authority], as well,” she said on Monday.

Data from Pelindo II shows that Tanjung Priok loaded and unloaded 6.2 million TEUs of cargo, out of a total capacity of about 8 million TEUs, in 2016. It aims to be able to accommodate 12 million TEUs by 2019.

Port of Singapore handled 30.59 million TEUs of cargo in 2016, almost one-seventh of total global container transshipment.