Delft University of Technology
Faculty Mechanical, Maritime and Materials Engineering
Transport Technology

A. Kusumaningtyas Indonesia Short Sea Shipping in Inter-island Trade and Distribution
Literature survey, Report 2005.TL.6892, Transport Engineering and Logistics.

As an archipelago with more than 17,508 islands, out of which around 6,000 are inhabited, seaborne transportation becomes an inseparable aspect in Indonesia's inter-island connection. This can be seen by the large number of fleets, shipping companies, and ports in Indonesia, which experienced a vast growth after the issuing of the Deregulation Policy in 1988.

The development of short sea shipping in Indonesia, now consisting of not just inter-island but also coastal shipping, is heavily dependent on the state of the fleets and shipping companies in one side, along with the ports in another. Both must be in a same level of condition to support the advancement of short sea shipping. Since 1988, fleets and shipping companies have been competitive and responsive to the increasing demand in sea transportation, but they are still lacking adequate quantity and quality of national flag vessels. As a result, almost half of Indonesia's inter-island cargo is accommodated by foreign flag vessels. This is a very concerning situation for the Indonesian government because the country has a large annual foreign exchange outflow representing net payments for shipping services. Unfortunately, the case for ports in Indonesia is not any better. Most ports in Indonesia operate inefficiently, resulting in a long waiting and turnaround time for vessels, and late deliveries of cargos. This inefficiency is caused by lack of sufficient port infrastructure and poor management, including the manner of using labor which institutionalizes underutilization of port facilities. Limited involvement of private sectors also hampers the creation of competitive and effective operations at ports.

The government of Indonesia and ports authorities made plans to develop and improve the facilities and infrastructure of Indonesian ports, emphasizing on extension of berths, addition of loading/unloading equipments, and construction of container terminals. Connection to the hinterland is also a great concern. Some of these development projects are now on the go. Nonetheless, improvement towards the management of ports must also be done in order to establish more efficient and competitive operations, leading to a better port performance. To enhance better economic integration of all areas in Indonesia, it is suggested to increase utilization of Ro-Ro vessels. Ro-Ro shipping plays a critical role in facilitating domestic trade, particularly for those areas and islands cut off from the main areas of economic activity. It is also suggested to introduce the use of landing vessels for transportation of cargo to and from islands in the outer region of Indonesia, where the berthing facilities are not yet adequate. This will support more economic interaction of these regions with other areas of economy in Indonesia. Unfortunately, the effort to increase transport capacity by expanding Indonesian flag fleets remains unfeasible. The cost of buying a new or second hand vessel or building a new one in Indonesia's own shipyard is still higher than chartering foreign flag vessels, influencing Indonesia shipping agency to choose the later.

In the end, in spite the complex condition of short sea shipping sector in Indonesia, a bright future is waiting ahead. Road and rail transport of cargo are starting to saturate from traffic congestion and excessive pollution, in addition to increasing operational cost. With a healthy shipping and port sector û thus offering better logistics organization, service level, frequency, regularity, networking, and one-stop shops for the management and pricing of the whole transport chain from door-to-door û short sea shipping will grow to be an attractive complement to road and rail transport.

Reports on Transport Engineering and Logistics (in Dutch)
Modified: 2005.02.14; , TU Delft / 3mE / TT / LT.