By: Bambang Sabekti, Professional in Maritime Industry
It is interesting to look at throughput data in Tanjung Priok, the largest and busiest port in Indonesia. Until July 2021, this port international containers throughput reached 2.65 million teus. Its imported containers amounted to 1.4 million teus, higher than export of 1.25 million teus.
And what is also more interesting is that there is a repositioning of empty containers to the outside country (repo-out) of 182 thousand teus until July. This can be understood because there is an imbalance trade in the size of the container.
Until now, some Main Line Operators (MLOs) did repositioning empty containers of d20 and reefer containers out from Jakarta. This can be explained because imports to Jakarta are mostly heavy goods such as raw materials, waste paper and others. While our export is light cargoes such as footwear, electronics, apparel, furniture and others that will be more efficient if fit in containers size 40HC and d45 (for Nike).
So, the issue or problem of container shortage in Jakarta actually refers only to the containers of 40/40HC/d45. The ones of d20 and Reefer Container (note: reefer importer larger than export reefer for all sizes) are actually still surplus. This situation actually has taken place for a very long time. And, since demand is now strengthening, the issue of container shortage has been amplified, event until the President Palace, to President Joko Widodo.
Strong imports, which bring raw materials and auxiliary materials for manufacturing purposes, make MLO prioritize loading laden containers rather than loading empty containers (repo in) to Jakarta so that there is a “time gap” between the availability of empty containers with the need for empty containers for export, especially for d40/40hc due to delays in MLO providing empty containers of d40 / HC.
This is probably one of the causes of international volume in Tanjung Priok in 2021 still lower compared to the pre-pandemic volume in 2019, in which the import and export reached 1,422,536 and 1,296,000 teus, respectively.
What about container situation in other ports like Tanjung Perak (Surabaya) and Tanjung Emas (Semarang), the two other leading ports in export import after Tanjung Priok?
My colleague, MLO’s Regional Manager in Surabaya and Semarang, told me that they’re not only running out of 40/40HC but also for d20. The question why MLO do not send the d20 from JKT (surplus location) to Surabaya and Semarang but repo out to Singapore? The answer is to repo empty container from JKT to Semarang and Surabaya using truck or domestic vessel is very costly and it will be cheaper to send empty container from Singapore to Surabaya or Semarang using international vessel.
In general, demand is much more than supply, and the occurrence of supply chain disruption i.e dislocation on container and port congestions in the US and China due to lock down results in irregular ship schedules. The combination of these various factors is that ocean freight is still high.
In additions, shippers in Indonesia must compete with shippers in Thailand, Malaysia, China, Vietnam to get ship space to America or Europe in transhipment ports in Singapore/Malaysia. Moreover, Jakarta has no more direct mother vessel calls to the United Stated and Europe. A few years ago CMA-CGM had direct calls to the US and Erope but had to stop and pull out of Jakarta because of cost reason. MLO will give a larger space allocation of ships to countries that can generate greater revenue.
Externally, China recovered faster from the Covid 19 pandemic and the U.S. and European economies are recovering. We see the Premier League Cup, Italian League and Spanish League, stadiums full of football fans without masks. This indicates that they have been able to overcome Covid 19 with the success of vaccination for their citizens.
In September, China will export approximately 900,000 container to the U.S. for Christmas commodities and naturally Ocean freight from China to the U.S. is still higher than from JKT to the United States.
For that Shipper in Indonesia will again experience the misfortune to get export space to the US. Ocean carriers are reported to be planning a new round of blank sailings from Asia around China’s Golden Week holiday, in the first week of October, to support their massive rate gains of the past year.
This supply chain disruption situation will continue. My colleague in Singapore, former President of one of MLO told me that shipyards are full, so additional ship will come in end of 2023 or Q1 2024. Hence freight rates likely to remain high in 2022/23 unless global economy is in recession in which case freight rates will weaken. With report about Covid cases in Ningbo causing shutdown of terminal and port congestion in US West Coast, etc, it will further compound the problem. IKEA plans to buy ships and containers to moves their cargoes.
Indonesia shippers may have to do the same or more Indonesian Businesses should consider going into shipping. If there are container ships or shipyard available in Indonesia should consider buying. What about our MOT (Minister of Transportation) plan to help our exporter? And how fast they can implement the program of Indonesia Shipping Enterprise Alliance (Indonesia SEA)?