S

tate-owned port operator Pelindo III has expressed its interest in becoming the first local firm to operate a port abroad, with a possible tie-up with Dubai-based port and logistics firm DP World.

The two companies are set to end their cooperation contract for the Surabaya Container Terminal by April 2019, on account of the mismatched contract renewal terms between DP World and Indonesian authorities.

Located on the northern shore of East Java, the terminal is partially owned by DP World with a 49 percent stake and Pelindo III as the majority owner with 51 percent.

Pelindo III president director I Gusti Ngurah Askhara Danadiputra said the contract termination, which would cost Rp 1 trillion (US$69.4 million), did not mean that its cooperation with DP World would end.

It might instead open up possibility for the two companies to conduct a share swap between a terminal that Pelindo III operates and another terminal DP World operates, allowing both to trade ownership percentage of one port for another.

“If we have a similar [type] of management, next year we can have operations abroad. So it can be the first time ever for an Indonesian operator to operate in the Strait of Malacca, Vietnam or Thailand,” he said recently.

He added that Pelindo III was mainly eyeing ports in Southeast Asian countries.

Similar discussions have also been held with the Malaysian operator of the neighboring country’s busiest trade port, Port Klang, which also offered a share swap.

Askhara said DP World itself had offered the Laem Chabang International Terminal (LCIT) in Thailand it currently managed to trade for a port managed by Pelindo III.

Laem Chabang is one Thailand’s busiest ports, as much of the international shipping reaching Thailand passes through the port. It is also a port of call for a number of cruises.

Pelindo III, meanwhile, has put forward its Teluk Lamong Terminal in Surabaya, East Java, to be offered to both companies.

The Indonesian port operator is ready to trade up to 30 percent of its shares in Teluk Lamong to obtain a similar amount of shares in a port abroad.

Askhara said that while such a concept was relatively new for Pelindo III, the companies were interested in operating in Indonesia on account of the higher margin of profit between terminal operations in the archipelagic country compared to other countries such as Thailand and Malaysia.

He went on to say that while Malaysian and Thailand operations had seen a bigger market and volume, the margin only spanned 15 to 25 percent, while Indonesian operations could reap a profit margin of 40 to 46 percent despite lower volume.

As of July this year, Pelindo III has recorded 6 percent year-on-year (yoy) growth to 2.92 million twenty-foot equivalent units (TEUs).

“The margin here is bigger than overseas, because Indonesia is an end-market. Meanwhile in Singapore, Thailand and Malaysia, most [goods in port] are there for transshipment,” he said.

The company recorded Rp 1.8 trillion profit throughout the first half of the year, a 60 percent increase yoy from Rp 1.1 trillion. Its revenue has also increased by 10 percent to Rp 5.4 trillion, compared to its recorded Rp 4.9 trillion last year.

Akshara said the container service had contributed to 60 percent of revenue thus far.

Pelindo III operational and commercial director Mohammad Iqbal said that even though ship visits only recorded a slight 1 percent increase yoy to 23,307 units as of July, the weight of the vessels had increased by 14 percent yoy to 98.3 million gross tons as of July this year, on account of a trend of using larger vessels.

Iqbal also stated that the company had rolled out its newest innovation, the MiniCon, short for mini container, which split the content of twenty-foot containers to fit the exact demand of each individual recipient.

The MiniCon will enable content owners to skip warehousing as the content can be placed straight onto the trucks with the mini containers.

“They can buy [the MiniCon] or rent one, its up to the [distributors],” he said.