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ITE Transport and Logistics

Ports in Indonesia ready to expand

You’d expect an archipelago nation like Indonesia to be outfitted with world class maritime facilities. Over 17,500 islands make up the nation, which is flanked by the Indian and Pacific Oceans. Many maritime corridors pass Indonesia too.
What’s more, over 90% of freight entering and exiting the country is carried via ships.
You’re getting the picture. Sea-based transport is the lifeblood of Indonesia’s international and domestic trade networks.
Historically, however, Indonesian ports have underperformed – mainly due to poor infrastructure.
Things are changing. With the implementation of the “Sea Toll Road” system in 2014, Indonesia, under the watch of President Joko Widodo, is undertaking a major overhaul of its current port network.

Indonesia invests heavily in port upgrades

In total 24 sites across Indonesia are currently receiving cargo handling enhancements and expansion work. Tanjung Priok in Jakarta, currently Indonesia’s biggest port by some margin, is also gearing up to receive mass modernisation.

Updating Indonesia’s ports has been a key part of the Widodo administration’s transport policy. The government’s end goal is to turn the nation into a regional and global axis of maritime trade.
Part of this will be covered by Indonesia’s membership of the Association of Southeast Asian Nations (ASEAN), which will encourage higher levels of trade between partner states.
Crucially, the upgrading and modernisation of sites nationwide is expected to foster increased international trade, and make transhipment of goods an easier prospect. Most cargoes requiring transhipment is often processed at sites in Singapore and Malaysia right now.

Domestically, the Sea Toll Road plan will aid in the creation of top flight marine infrastructure. Of the 24 chosen seaports, 6 of the biggest have been selected as Indonesia’s main centres for maritime trade.
These are:

•  Belawan in Medan on the island of Sumatra
•  Batam near the Singapore border
• Tanjung Priok in Jakarta on the island of Java
• Tanjung Perak in Surabaya on Java
• Makassar in South Sulawesi on the island of Sulawesi
• Sorong in West Papua on the island of Papua

The remaining smaller centres will receive enhancements to their cargo handling facilities.

New Priok project to create megaport in Jakarta

One of the most ambitious projects underway right now is the extension of the Tanjung Priok port. Also known as the Kalibaru port, New Priok promises to add a lot of benefits to Indonesia’s existent supply networks once it opens in 2023.

Tanjung Priok’s current capacity is expected to triple upon New Priok’s completion. Once phase three is finished, the new seaport’s annual capacity would rise from 5 million TEUs annually to 18 million. New Priok would also be able to facilitate Maersk Triple-E class container ships – amongst the largest in the world with 18,000 TEU capacities – in a 300 metre two-way sea lane.

Phase one, which is presently underway, is being overseen by Japan’s Mitsui Group, with supervision from Dutch contractors Van Oord. Initial construction efforts are expected to cost $1.38 billion. A new container terminal, petroleum terminal, and associated equipment is being installed there across 195 hectares of land.

Total investment in New Priok is expected to top out at $2.5 billion.

Tanjung Priok accounts for 50% of Indonesia’s maritime traffic, so it was only natural for it to receive major attention under the Sea Toll Road initiative.

Gridlocks: the catalyst behind Indonesia’s port expansion programme

Congestion is the biggest issue facing Indonesia’s ports. Shippers are often frustrated by delays, usually caused by Indonesia’s abnormally long dwell times.

Part of the problem is congestion caused by a rise in shipping growth throughout Indonesia and the ASEAN. For example, Tanjung Priok has been operating above its 5 million TEU capacity since at least 2012. Now, it handles 7.2 million containers annually, which plays into significant delays.

Dwell times have risen too. In 2010, containers waited an average of 4.8 days before being handled. This leapt up to 6.4 days in 2013. According to the Tanking Priok Port Authority, its dwell times  dropped to 4.7 days in 2016 – but this is still very high by regional standards.

Long waits for cargo have also been spotted as hiking up transportation costs, which amount to around 23% of Indonesia’s $923 billion GDP.
It is hoped improving sea-based infrastructure across Indonesia will drop costs to 19.2% of total GDP.

Port construction makes waves for international business in Indonesia

From project cargo services, port operation, and more, Indonesia’s spate of port-related activity points towards high opportunities for international transport and logistics operators.

Where can you uncover these? At one of ITE Transport & Logistics Southeast Asian trade shows. Head over to our events page today to learn more.

If you can’t find what you’re looking for contact our team today.

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