Shipping Industry Increasingly Depressed
JAKARTA – The shipping industry that grew sluggishly this year is predicted to be more burdened by rupiah depreciation which has made its lowest position in the last five years. On Tuesday (12/17), the spot market was closed at IDR12,125 per US dollar.
“Rupiah depreciation has clearly affected the industry since shipping sector requires a stable currency,” said Chairman of Indonesian National Shipowners’ Association (INSA) Carmelita Hartoto, Tuesday (12/17).
She said normally ship financing loan uses dollar as the freight or cargo services fee uses rupiah. As a result, the shipping companies’ expenses over ship procurement financing becomes increasing whereas majority of ships in Indonesia is financed by US dollar.
“Another effect is the increase on maintenance cost due to the rise of spare part cost,” she said. By consequence, business players need to make efficiency on this condition.
She said the shipping condition this year has gone sluggishly, especially on tankers, containers, and oceangoing dry bulk sectors.
In domestic market, the sectors have actually grown quite well yet in a sluggish way due to global crisis impact or domestic economy macro.
Thereby, INSA fully expects the presence of currency stability for it becomes a crucial key to the improvement of shipping industry as well as other industries.
Based on Bloomberg data, rupiah exchange rate continued to weaken that even fell to IDR12,138 per US dollar on Tuesday (12/17), the lowest level since March 2008. PT
Bank Rakyat Indonesia fixed-income dealer analyst Fahrudin Haris Prastowo said the weakening happened since market were awaiting for Federal Reserve (the Fed) decision.
A number of analysts got surveyed by Bloomberg were convinced the Fed will reduce stimulus in January or March 2014. According to the Chairman, the ship growth may continue to increase by next year.
Along October 2012 up to October 2013, there was an additional of over 1,000 ship units. “The growth will remain increasing in 2014 yet it will be difficult to achieve the realization in 2013, unless the beyond cabotage program is started or the fiscal and monetary incentives are made equally as other countries would make to their shipping industries.”
Tariff Increase
The pressure comes from operational expense is also perceived by traditional shipping business or public transportation and commodity which uses traditional fleet for inter-island tracks.
“The operational cost increases by about 15%, however we could not promptly raise services tariff,” said a traditional shipping businessman Rahim Paita.
According to him, the service tariff increase could only be made gradually while the operational expense rises everyday in line with dollar increasing.
He expected the government to take immediate action for overcoming the problem. Other than operational cost pressure, the traditional shipping also has a difficulty in developing the fleet due to fund restriction.
In relation with the possibility of shipping service tariff increase, INSA considers it as a non precise alternative to overcome exchange rate pressure. According to Carmelita, the transportation tariff is flexible depends on the demand.
“The tariff will be automatically declining as the demand decreases and vice versa. Therefore, the tariff increase is actually not an option,” she said.
In fact, she urged the government to seriously eliminate unnecessary tariffs in seas transportation sector as well as hold the port tariff increase trend.
Source: http://business.bisnis.com/
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