A shortage of port capacity is preventing lines from offering mainline U.S. and Europe services to Indonesia, one of Asia’s fastest growing economies, said the head of Maersk Line Indonesia.
Despite Indonesia being the largest economy in Southeast Asia and one of the fastest growing, Indonesia is struggling to attract mainline calls due to port service shortfalls, Jakob Friis Sorenson, president director of Maersk Line Indonesia, told JOC.
“Besides regional and intra-Asia services, very few long haul mainline services call directly at Indonesian ports,” he said. “Allocation of resources to infrastructure has not been sufficient, and with demand growing ahead of supply, the ports are operating at maximum capacity.”
Sorenson said lines would boost service if investment in ports was prioritised. One recent estimate suggested that five of Indonesia’s six major container ports, which together handle 90 percent of the country’s annual box traffic, were currently operating above their rated capacity.
“For Indonesia, both due to capacity and productivity issues, Singapore is the preferred transshipment hub,” said Jason Wong, APL vice president for intra-Asia and Australia. “Apart from Jakarta, all the other Indonesia ports have draught restrictions.”
Indonesia’s port liberalisation process has halted as legislators have failed to clarify investment criteria for tenders or new terminal construction opportunities. If the process was speeded up investors would be quick to emerge, say operators and analysts.
Paul Slater, chairman of shipping finance company First International, said Indonesia’s rapid emergence as a major trading nation made it ideal for port investmentsl, which would allow medium-sized container ships to offer long haul services via its ports.
“[These] are the ones that used to be the big ones,” he explained. “The new giants are being built for the Far East-Europe runs so they won’t be able to get into the U.S.. The new Panama Canal is also important for these medium sized ships that could run from Southeast Asia to the East Coast of the U.S.”
Sorensen said port privatisation would boost competition, which, in turn, would contribute to higher service levels and lower costs. This would help attract shipping companies.
“As an archipelago country, the manufacturing sector in Indonesia is concentrated in Java Island and the majority of the goods are exported via Jakarta and Surabaya. So apart from Jakarta we also see potential in Surabaya port, which has a geographical advantage to serve as a hub port for cargo movement to and from Eastern Indonesia," he said.
-- Contact Mike King at email@example.com