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02 January 2017

Govt sinks teeth into dwell time at major seaports

The Transportation Ministry has pledged to step up efforts to slash the dwell time at major ports, such as East Java’s Tanjung Perak and North Sumatra’s Belawan, in response to President Joko “Jokowi” Widodo’s recent criticism on the performance of the two seaports.

Last week, the President expressed his disappointment after learning that ongoing reforms in the logistics sector only showed positive results at Jakarta’s Tanjung Priok port, where the average dwell time has come down to 3.7 days from 4.7 days. The dwell time at many other ports, including Belawan and Tanjung Perak, meanwhile, ranges from six to eight days.

Dwell time refers to the time elapsing from when cargo arrives at the port until the goods leave the port after all permits and clearances have been obtained.

Transportation Minister Budi Karya Sumadi held weekend meetings with state-owned port operators Pelindo I and Pelindo III, which oversee Belawan and Tanjung Perak, respectively, as well as the Finance Ministry’s customs and excise director general, to improve the performance of major ports and get them on par with Tanjung Priok.

“We expect the major ports to operate 24 hours a day with more competitive fees. There should also be a more effective and efficient tracking mechanism,” he demanded.

President Jokowi has intensified efforts to bring down Indonesia’s stubbornly high logistics costs by issuing a series of policy packages aimed at reducing port dwell times.

Logistics costs account for 26 percent of Indonesia’s gross domestic product (GDP), twice as much as in Singapore and Malaysia. The country slipped 10 places in the World Bank’s Logistics Performance Index (LPI) this year to 63rd of 160 countries surveyed.

The effort to cut the dwell time has mainly focused on Tanjung Priok, and Jokowi said last Tuesday that he aimed for the port, which shoulders more than 70 percent of incoming and outgoing goods, to further slash the dwell time to 2.2 to 2.5 days.

Speaking to reporters after a meeting with Minister Budi on Sunday, customs and excise director general Heru Pambudi said his side planned to speed up the implementation of a hub-and-spoke model, in which several Indonesian large ports would act as hubs, strategic centers of the networks, and the spokes would radiate out to connect remote points throughout the country.

Therefore, the government is preparing to increase the number of bonded logistics centers (PLB) to 50 from current 22 by the end of this year to ease the flow of basic materials in and out of the country.

According to a 2015 Finance Ministry regulation, a PLB can be used to store goods for up to three years and will be temporarily exempted from import duty and import-related taxes during that period.

“By diluting the cumulation at the major ports and switching it into the spokes at the PLB, we hope to cut the dwell time,” Heru said.

Contacted separately, Pelindo III president director Orias P. Moedak said the company had prepared additional land at the Mirah and Nilam port terminals near Tanjung Perak to move containers from the inner ring of the port.

“Since we just control the flow of goods, our role is probably just to move out the goods,” he said.

He added that the Tanjung Perak container stacking fee was still low, starting at Rp 24,000 (US$1.82) per 20 feet container per day for the first three days, and only increased by 200 percent on the fourth day. However, he was waiting for a ministry decree on the container stacking fee change.

Indonesian Logistics and Forwarders Association (ALFI) head Yukki Nugrahawan Hanafi, meanwhile, lambasted Pelindo III’s strategy to merely move the goods out of the port’s inner ring.

“If they just move the goods from the first ring to the second ring of the port, that does not reduce the dwell time. It merely reduces the YOR [Yard Occupancy Ratio],” he said.

He urged the ministry to ensure that the customs office and banks were also open 24 hours at the port to facilitate the importers.


Source: http://www.thejakartapost.com/news/2016/09/19/govt-sinks-teeth-into-dwell-time-at-major-seaports.html