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Indonesian FCL imports experiencing delays. JOC reporting on the issue. See below

Congestion at Tanjung Priok Dampens Indonesia’s Economic Growth

Indonesia’s economic growth continues to be undermined by its poor logistics performance and congestion at the key gateway port of Tanjung Priok located near the capital Jakarta, which handles more than half of national containerized imports and exports.

Jakob Sorensen, President Director, Maersk Line Indonesia, said there had been a lack of coordinated development at Tanjung Priok for some years. This has resulted in “space being clogged with empty depots, shops and warehouses” and on-dock container yards congested with full import containers.

Indonesia’s finance minister Agus Martowardojo said that shipments at the port spend an average of 6.7 days in storage due to the poor layout of holding areas which slowed the processing of cargo. He called for a redesign of the port to ensure the focus is on service and valuable space is not wasted on non-core activities.

In November, Maersk extended its Daily Maersk service to include six more routes, including Jakarta. “With gate-in any day of the week and two weekly cut-offs, Maersk Line promises to transport goods on these routes in 31 days and this product is running as per normal despite congestion at Tanjung Priok port,” Sorensen said.

To circumvent delays, Maersk Line and intra-Asia sister company MCC Transport have now started a service for imports via Cikarang Dry Port, an inland port about 60 km southeast of Tanjung Priok, which the company uses to process full containers. “Customs formalities can be done there and the empty boxes can also be dropped there, which helps to reduce the traffic in and out of Tanjung Priok,” Sorensen said.

State controlled Pelindo II operates Tanjung Priok, and efforts are being made to automate the gate system and reduce and speed up physical examinations of cargo by customs.

Sorensen said additional initiatives were in the pipeline to ease congestion, such as an electronic ticket system for trucks and elevated toll roads, which are now under construction. “Despite this, it is not enough to keep catering for the growth in volumes at the port which increased 26 percent in 2012,” he added. “A major step forward will be the New Priok port expansion, which will start construction soon.”

Pelindo II is building New Priok Port, also known as Kalibaru Port, seven kilometers west of Tanjung Priok to help ease the shortage of container terminal space. This will be opened in three phases from 2014 to 2022 and will eventually house three container terminals. Next year, 4.5 million 20-foot-equivalent units of capacity will be added in the first phase, and a second phase due to open in 2018 will add an additional 8 million TEUs of capacity.

Although the lack of infrastructure is holding Indonesia back and driving up costs — Indonesia was ranked 59th out of 155 countries in the World Bank’s Logistics Performance Index in 2012 — its status as the most populous country with the biggest GDP in Southeast Asia continues to prove attractive to manufacturers and investors.

Foreign direct investment increased by 22 percent year-on-year in the third quarter of 2012, while GDP grew by 6.3 percent, driven by a strong domestic market and limited exposure to the economic travails of Europe and slow growth of China and the U.S. GDP growth of some 6.5 percent is anticipated this year.

Estimates by the Indonesian government suggest the country’s logistics expenditure will be the equivalent of 27 percent of GDP this year, with a value of over $200 billion. Market value growth of 13 to 15 percent is expected in 2013 as a growing consumer market and the complex logistics solutions required to serve the thousands of islands that make up the country push up spending as the economy and FDI increase.

Contact Mike King at michael@borderline.eu.com.

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