Catching Up With Singapore Port
Singapore. It’s 12 p.m. on Friday, and a truck is approaching the gateway of Pasir Panjang cargo terminal in Singapore. The driver registers his fingerprint, while the people from the control room make sure everything is checked out, and after 25 seconds he receives clearance without the use of any paper document.
Welcome to Singapore Port, considered as one of the best and most efficient in the world. And one that Indonesia, its largest neighbor, hopes to imitate.
“We want to learn from the best, and the Singapore Port is the best in the world,” said Richard Joost Lino, the president director of Pelindo II, during a visit there last week by the Jakarta Globe that was sponsored by the company.
Pelindo II is Indonesia’s state-owned port operator. It also manages several ports in the country, including Jakarta’s Tanjung Priok Port, which is the country’s largest.
Richard, though, admitted that, while Tanjung Priok Port is certainly Indonesia’s best, it is still years behind Singapore. “We still do not possess the capacity to operate a world-class facility like Singapore’s port,” he said.
In terms of annual capacity alone, Singapore’s is five times larger than that of Tanjung Priok Port, which can handle 7.2 million twenty-foot equivalent units (TEUs).
And Singapore Port is still expanding. It plans to spend S$3.5 billion ($2.8 billion) to build more terminals, boosting its total capacity to 50 million TEUs from 31.3 million TEUs currently, with the main purpose of serving the next generation of container ships. The size of ships is getting larger, driven by competition among shiping lines and the need to reduce cost.
The Singapore port can serve the world’s largest container ship, CMA CGM Marco Polo, which is 396 meters long and can carry up to 16,020 TEUs.
“We are a much more long-term thinker,” said Tan Chong Meng, the chief executive of PSA International, which operates the port.
By comparsion, Tanjung’s priok most advanced terminal, JICT, can only harbor ships of up to 5,000 TEUs.
Still, comparing the Singapore Port and Tanjung Priok port is like comparing apples and oranges as the two ports have different characteristics.
Singapore’s is a trans-shipment port, meaning that ships dock there to offload cargo such as electronics including mobile phones and personal computers that will be shipped elsewhere in the world. Tanjung Priok is a destination port, and its utilization is mainly driven by domestic demand from the Southeast Asia’s largest economy for imported goods such as cars and heavy machinery. Both ports are separated by about 900 kilometers of land and water in the South China and Java Seas.
Bagat said that a destination port like Tanjung Priok generates valuable economic benefit than a trans-shipment port.
“There is a substantial difference in the value created between trans-shipment and origin-destination. As a result Pelindo II stands to benefit much more than trans-shipment oriented ports,” he added.
Tan of PSA said that the different characteristics between both ports have created the opportunity for collaboration. Singapore Port, he went on, has access to more ports in different parts of the world than Tanjung Priok.
“We are not concerned about competition,” he added.
Competition or collboration aside, ports in the region have plenty of room to grow, particulary because of the increasing connectivitiy between the 10-member nations that make up the Association of Southeast Asian Nations. Trade will further open up, when the Asean Economic Community starts in 2015.
“The outlook for Asean trade is currently a positive one. It’s probably one of the bright spots accross the world,” Tan said.
McKinsey’s Bagat voiced a similar view, saying that growth in the shipping business in Southeast Asia is two or three times higher than the rate of that for economic growth.
“The supply-demand gap is growing in Southeast Asia. So there’s no need to be worried about demand or competition in Southeast Asia,” he said.
For Tanjung Priok, expansion is underway. Three terminals will be added to the facility that will boost yearly capacity by 4.5 million TEUs and be able to accommodate vessels carrying up to 18,000 TEUs.
However, port business isn’t just a matter of increasing capacity but also constant improvement in efficiency, Bagat says. That could mean handling cargo in a shorter period of time and reducing man-hours. “With efficiency improvement the Tanjung Priok port may become a port of choice for shippers.”
Richard says that efficiency has been the main focus of Pelindo II in the past couple of years, as shown by its financial results. Net income rose by 76 percent in the first quarter, even as revenue climbed by only 10 percent, he said.
“This is due to improvements in efficiency and our work performance,” said Richard.
Dani Rusli Utama, president director of Pelindo II subsidiary Pengembangan Pelabuhan Indonesia, said that all related stakeholders must be in concerted efforts in the effiency drive. Port effieciency can be boosted easily as it needs “only a significant investment in machines and human capital,” Dani says.
“However, there are also warehouse-owners, exporters and government agencies. We can implement the same system as the one in Singapore but it will take time for all stakeholders to commit under one system,” he said.
Source: http://www.thejakartaglobe.com/
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