Capacity Crunch At Jakarta
We are expecting slower growth at Tanjung Priok in 2014 as Indonesia's economic expansion rate dips a little. In recent years the facility has been benefiting from rapid growth on the back of the country's strong macroeconomic picture. While this growth has been positive for the port in terms of driving up throughput, demand has outpaced development and Tanjung Priok is already operating at above its installed capacity level. Plans for a new port are in the pipeline, with the first phase due to be launched in 2014, which will aid in reducing the pressure on Tanjung Priok and will also enable Indonesia to offer more developed and modern port facilities to meet its shippers' demands.
Activity levels at Tanjung Priok will expand at a slightly slower rate in 2014 than in 2013. BMI expects that gross bulk tonnage will grow by 5.8% in 2014, down from 6.0% in 2013. The port will handle 56.17mn tonnes of cargo, compared to 53.09mn in the preceding year. On the usually more dynamic box handling side of the business, the port will see growth of 7.7% in 2014, down from our estimated 10.4 % expansion in 2013. The total number of containers handled in 2014 will be 7.37mn TEUs, up from an estimated 6.844mn TEUs in 2013.
BMI believes that the slowdown in growth is only partly due to the slowing in Indonesia's economic expansion. The capacity of Tanjung Priok is also impacting the facility's growth outlook. The port was only designed to handle 5mn TEUs, a level it surpassed in 2011, which is placing pressure on the port's operations and limits the facility's ability to handle more cargo.
The key ongoing risk to our 2014 throughput forecast for the port of Tanjung Priok remains the problem of inadequate infrastructure, with growth outpacing development. The problem for the shipping industry is most obviously felt at port level, with the World Economic Forum ranking Indonesia's maritime infrastructure 12th out of 14 Asian peers in its Comparison Index. The issue of congestion is one that shipping lines most complain about and is in BMI's opinion the main factor behind Indonesia being so poorly connected to liner services, with the country ranked second to last, just before the Philippines, in terms of liner connectivity.
|Problems At Port Level...|
|LHC: World Economic Forum Maritime Comparison (Asia). RHC: UNCTADstat Liner Connectivity Index|
While investment is now being made at port level BMI highlights that this will only solve part of the country's supply chain problems. The transport of goods to and from the ports suffers from an underdeveloped internal transport network. The country's road network is ranked 12th out of 14 Asian states by the World Economic Forum, with its railway network performing only slightly better, ranked ninth out of 14 Asian peers.
|... And Further Up The Supply Chain|
|LHC: World Economic Forum Road Comparison (Asia). RHC: World Economic Forum Rail Comparison (Asia)|