Chaos in Maritime Highway Shipping

KOMPAS/LASTI KURNIA

The Kendhaga Nusantara 12 marine highway vessel departs on Sunday (8/3/2020) from Tanjung Priok Port, Jakarta. At a closed-door meeting on Thursday (5/3/2020), President Joko Widodo expressed disappointment that the marine highway program had not succeeded in cutting logistics costs across the regions.

The presence of the tol laut (maritime highway) program will ideally resolve interregional prices disparity in Indonesia. After five years, the program has yet to achieve this goal.

People in the frontier and remote and disadvantaged (3T) regions have on the so-called tol laut (maritime highway) program that remains unfulfilled. Many still have to reach deep into their pockets in order to fulfill their daily staple needs. In several 3T regions, prices of goods remain high and fluctuating.

Price disparities are still commonly found in provincial capitals across Indonesia. The average retail price for cooking oil in Jayapura, for instance, was Rp 14,277 (US 97 cents) per liter in December 2019 according to Statistics Indonesia (BPS). The price is Rp 12,726 per liter in Kendari and Rp 12,200 per liter in Kupang. These prices are higher than the Trade Ministry’s reference price of Rp 10,500 per liter.

Also read : Maritime Highway’s Ineffectiveness Affects Interconnectivity

A similar phenomenon is also found in transit ports along maritime highway routes. An example is the Towo’e Market in Tahuna district, Sangihe Islands. Between when the maritime highway program first reached Tahuna in 2016 and early 2020, the price of premium rice has been constant at between Rp 12,500 and Rp 13,000 per kg. This is close to Sulawesi’s ceiling price (HET) for rice, which is Rp 12,800 per kg (Kompas, 11/1/2020).

This is despite cooking oil and rice’s inclusion in the list of goods transportable in the maritime highway program. Presidential Regulation (Perpres) No. 71/2015 cited both in the group of staple needs, comprising agriculture goods, industrial goods and farming/fishery goods. Furthermore, there are also the groups of important goods and other goods.

Nevertheless, these examples must not be used to conclude that the maritime highway program has failed, as quite the opposite is happening in other 3T regions. A survey by the Social and Economic Research Institution of the University of Indonesia’s Economic and Business School (LPEM FEB UI) cites that the program has given a positive impact on the decrease of staple needs’ prices. However, the decrease is quite insignificant, namely only between 3.7 percent and 7.3 percent.

KOMPAS/EMANUEL EDI SAPUTRA

PT Steadfast Marine launches the 1,200 gross ton Sabuk Nusantara on its maiden voyage on Tuesday (17/10/2016) in Pontianak, West Kalimantan. The vessel belongs to the Transportation Ministry and is part of the President’s flagship marine highway program.

Root of the problem

The insignificant price decrease in the maritime highway era is not in line with the government’s consistency in improving the service. This year alone, the Transportation Ministry has allocated a subsidy of Rp 439.84 billion aimed at all maritime highway service users, including for container deliveries between ports and loading and unloading fees in origin and destination ports.

Furthermore, new routes are continuously being added. As of this year, the maritime highway program comprises 26 routes serving three hub ports, six trans-shipment ports and 90 transit ports. Some 26 ships are in use, including 14 state-owned ships, five ships belonging to state shipping company PT Pelni Persero, five ships belonging to state ferry operator PT ASDP Indonesia Ferry and two private boats.

Considering the vast port network the maritime highway comprises and the subsidies, a huge question is: why has the huge disparity of prices between regions across Indonesia remained? In several studies on the maritime highway program, several causes behind this odd phenomenon can be discerned.

Also read : Public Hopes for Improvements to Maritime Highway Program

First is a study of the Impact of Implementation of Cabotage Principle and the Maritime Highway Program on Regional Resilience (Armaidy Armawi et al, 2019). The study held in Anambas Islands shows that routine and scheduled maritime highway shipments have led to supplies being maintained, especially in extreme weathers. However, the program still has yet to decrease prices of goods.

This is caused by the reluctance of Anambas-based business players to use maritime highway services. Since its establishment on 22 January 2016, the T-2 route serving Jakarta to Anambas has always used KM Cakra III 4 motorboat without containers. This leads to the risk of damaged or lost goods without any record on who is responsible, as the goods are uninsured.

Despite the switch to KM Logistik Nusantara 4 motorboat with containers in 2019, heavy traffic in Tampera Port remains an obstacle. The port serves not only cargo ships but also passenger ships. Meanwhile, the piers are not long and no warehouse is available.

Kompas/Abdullah Fikri Ashri

The Sabuk Nusantara ship docks on Monday (11/12/2017) at Cirebon Port, West Java. The first ship of the marine highway was built by PT Dok Bahari Nusantara on commission from the Transportation Ministry.

Oftentimes, PT Pelni ships must be moved aside when the loading and unloading process is still ongoing, as KM Bukit Raya and other passenger ferries must dock. The port’s entry road is also narrow and surrounded by houses. Consequently, only small vehicles with a maximum capacity of 500 kg can enter the port area.

Furthermore, the port’s loading and unloading manpower (TKBM) system remains inefficient. Consequently, maritime highway ships often run behind schedule and this, in turn, leads to few businesses using the service. Meanwhile, prices are persistently high, caused by the domination of some business players in Tampera Market that abuse maritime highway subsidies to obtain a higher profit margin.

Another cause found is the 2020 study by Moh. Hari, titled Analysis of Implementation of Maritime Highway Policy in the Intelligence Perspective. The study cites that no one in the maritime highway program has a clear authority to check directly the contents of containers. This can be a gap for fraudulent business players to fill the containers with goods outside what is allowed in the maritime highway program.

Also read : The Face of Copra in Miangas and Morotai

Information technology (IT) implementation in ports is also a problem. The government has allocated a budget to purchase IT equipment but no budget is available for regular maintenance. This includes a budget to anticipate the effects of limited electricity network in 3T ports. If electricity goes out and the IT system is disrupted, activities in ports will cease.

The next problem is minimal load in the return journey, caused by the absence of potential industries in 3T regions, lack of development on natural resources, the absence of collectors for superior local products and the inefficient use of refrigerated containers or refrigerated warehouse in ports.

This is also what makes maritime product business players in Sabu Raijua, East Nusa Tenggara, reluctant to use the maritime highway service. Using the maritime highway ships in the T-13 route will take 29 days. Before arriving in Surabaya, the ships must stop over at several transit ports with considerable docking time, which can lead to fresh goods, such as fish and seaweed, going bad (Kompas, 25/8/2020).

KOMPAS/LASTI KURNIA

Inter-island ships arrive and dock on Sunday (8/3/2020) at the Tanjung Priok container terminal in Jakarta.

Solution

In order to maximize the positive impacts of the maritime highway program, these problems can be improved by involving many parties, including the Transportation Ministry as taskmaster and provider of infrastructures; the Trade Ministry as executor, cargo verifier and issuer of cargo permit; and PT Pelni, PT ASDP and private entities as boat operators.

All three must coordinate and work in line with their duties. Furthermore, a cooperation with 3T regional administrations around the maritime highway transit ports is also needed. They have an important role in regional policymaking linked to many things.

One, strengthen the roles of region-owned enterprises or companies to prevent monopolies of maritime highway program users. They can balance prices so that the retail prices of goods are not determined by certain business players. This can also anticipate negative public sentiments against certain business players like what is happening in Tampera.

All three must coordinate and work in line with their duties.

Second, regional administrations and local business players, including region-owned and village-owned enterprises can optimize superior local products, such as rice in Buru regency, spices in Maluku and fish in almost all 3T regions. In the long run, processing industries can be established to improve return load and local economy.

Meanwhile, at higher levels, the Transportation Ministry and the Trade Ministry must ensure more stringent supervision on the Ship Space and Load Information (IMRK) application. The application, made by Pelni Logistics and issued in 2018, comprises data of types of goods, senders and receivers. This can prevent monopolies of ship goods.

Nevertheless, illegal practices are still found in the field. A handful business players can dominate ship loads under different names. Therefore, the IMRK must be designed to be able to select based on company ownership. Strict limitation of container quota for senders and receivers must also be imposed.

In order to accelerate loading and unloading process, port infrastructure, especially in 3T regions, must be improved, if slowly. However, before this, improvement on TKBM management is more crucial as, oftentimes, ports in regions have only one TKBM cooperative. Consequently, there is no competition in fees and in work quality.

Essentially, the maritime highway program is a brilliant plan. As a maritime nation, this program should be great in expanding interregional access in Indonesia. Through studying the problems in the maritime highway program, hopefully certain directions could be discerned in the attempt to improve it. (KOMPAS R&D)