By: Bambang Sabekti, Professional in Maritime Industry
Our colleagues who work at line operators (MLO), seemed to be very happy, despite having to follow health protocols to reduce the spread of COVID 19 and most of them had to keep working from home. I’m sure they’ve just gotten a sizable global bonus and a significant annual pay rise. For information, for MLO, bonuses are usually paid in April and raises are also starting in April.
The last two years have been a harvest period for MLO that has never happened in previous times. Their discipline in managing container space capacity and scarcity globally changed the business model from buyer market to seller market and MLO in control of the business, so ocean freight skyrocketed / very high compared to previous years and such conditions will continue until 2022 as predicted by observers.
According to Alphaliner’s report, Operating Margin for the container industry reached an all-time record of 38.2% for the 10 largest operators in the first quarter of 2021. COSCO Shipholding, number fifth of the top 10 operators, which a few years ago acquired OOCL, HMM, Yang Ming, Wan Hai Lines, and Evergreen Marine Corp. – earned more revenue in the first quarter of 2021 than in 2020. Taiwanese operators Evergreen, Yang Ming and Wan Hai regained the lead, recording operating margins of more than 45%.
As CMA CGM in 2016 acquired APL (American President Line) recorded a net profit of USD 2.1 billion during the first quarter of 2021. up from just USD 48 million a year earlier.
Continued demand for freight transport is expected to continue throughout the year amid “congestion” at some ports and pressures on the global supply chain. Financial results in the second quarter of 2021are projected to be as good as thefirst quarter of 2021, due to “Ocean freight” which will still be quite high throughout the year.
Ocean freight from Jakarta to the American West Coast (US-West coast) is currently in the range of US$ 10,000- US$ 11,000/40HC and from Jakarta to America east coast (US-East coast) for premium service in the range of USD 13,000/40HC. Similarly, ocean freight from Indonesia to Europe is still in the range of US$ 10,000-US$ 12,000/40HC. This is because the ingenuity and discipline of MLOs in managing space, in order to avoid over capacity.
The performance of Tanjung Priok Port in the first quarter of 2021 also showed an increase. For the first quarter of this year, Tanjong priok port volume increased by 7.18% compared to last year for the same period.
Domestic throughput of YTD increased by 15.69%, while for International throughput increased by 3.47%. The author is somewhat surprised, after the integration of Pelindo, which is planned to happen in September this year, why container clusters / containers will be centered in Surabaya, while more than 60% of container / container activity is in Tanjung Priok.
Meanwhile, the decision makers of the Main Line Operator and other service users are based in Jakarta. The success of other container shipping industries and container terminals, not felt by our colleagues who running business in TPS line 2 . They must compete closely with each other.
In Tanjung Priok, there are 13 (thirteen) TPS Line 2 companies that conduct activities to do overbrengen (container storage relocation /PLP). Meanwhile, the last three years of PLP activities have been shrinking. Customs offices, terminals and service users are increasingly efficiently supported by technological advances and digitization.
About 80% of the total imported cargo less than 4 (four) days have been distributed by the owner of the goods (importers), while the rest even though it has been more than 3 (three) days still piled up at the Port but already get SPPB so there is no need to do PLP and transferred to TPS Line 2. It would be good , for “sustainable business” friends who running the business in TPS Lini 2 to merge horizontal integration, as done by Main Line Opeator (MLO) in the past decade.