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Indonesia Shipping Report Q4 2011
Business Monitor International, Sep 2011, Pages: 97
Business Monitor International's Indonesia Shipping Report provides industry professionals and strategists, corporate analysts, shipping associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Indonesia's shipping industry.
BMI View: Strong Economic Growth The Indonesian economy has been supportive of the ports and shipping sector this year, and BMI expects that to continue in 2012. Based on strong domestic consumption and investment, and a positive contribution from net exports, BMI sees the overall economy outperforming, and generating strong demand for freight transport. It is necessary to sound a note of caution, however, over the overstretched state of the country's infrastructure. BMI now forecasts 2011 GDP growth of 5.9% (following the 46.1% expansion experienced in 2010). BMI's outlook for 2012 is for growth to ease fractionally to 5.8%. In the five years to 2015 BMI expects growth to average 6.1% per annum.
Industry specific factors are also broadly positive. Granted, Indonesia is affected by overcapacity and low rates on transpacific and Asia-Europe long-haul routes, but on the other hand it is in a position to cash in on the strength of intra-Asian trade. A key factor, as mentioned above, is whether the government can clear out red tape and reduce political risk, to attract new investment in freight transport infrastructure.
Headline Industry Data
- 2011 Tanjung Priok total tonnage forecast is +5.5%, average growth of 5.2% over BMI's forecast period.
- 2011 Palembang total tonnage forecast is +5.6%, average growth of 5.6% over BMI's forecast period.
- 2011 Tanjung Priok container forecast is +2.6%, average growth of 7.7% over BMI's forecast period.
- 2011 Palembang container forecast is +5.7%, average growth of 6.1% over BMI's forecast period.
Key Industry Trends
Pertamina And PLN Plan Joint LNG Tanker Fleet - PT Pertamina, the state-owned oil and gas company, and PT PLN, the state electricity company, are planning to develop a network of liquid natural gas terminals, together with an LNG tanker fleet to serve them. Both companies are studying how many vessels they would need to cover the needs of eight planned terminals. Last year, it was estimated that Indonesia was responsible for 7.5% of Asia Pacific gas consumption, and 18.9% of regional gas production.
Pelindo II To Develop Terminal In Sorong, West Papua - State-owned port operator Pelabuhan Indonesia II plans to lead a consortium to build a new US$118mn container terminal at Sorong, West Papua, starting in 2012. The facility, to be known as the West Pacific Port could lower transport costs in the region, and is expected to halve distribution costs heading to the island of Papua. The port could serve as a transshipment hub for domestic Indonesian cargo, taking advantage of the country's new cabotage law, which stipulates that vessels operating in Indonesian waters must be domestically owned. This would allow foreign vessels to avoid Indonesia's main port of Tanjung Priok, which suffers from congestion at times of high demand.
Samudera Shipping Boosts Q2 Revenue - Indonesia's Samudera Shipping Line boosted Q2 revenues despite the tough operating environment for box shipping lines. Company revenue increased from US$89.96mn in Q210 to US$116.59mn in Q211. Profit after tax reached US$1.6mn, up from the US$642,000 that the line posted in Q210. The company was able to stay in the black in Q211 as a result of the line's domestic operations. The carrier's intra-Indonesia trade increased by 38.8%, with revenues for the company's Indonesia Domestic Container Shipping up 99.6%. The increase came on the back of 'improved freight rates, higher load factors, shorter vessel turnaround time and a series of service expansion and market penetration'.
Key Risks To Outlook
BMI continues to highlight a downside risk to BMI's outlook in the possibility that the country's ports will not be able to handle the increasing levels of traffic if sufficient investments are not made. Indonesia's main ports suffer from congestion and low efficiency levels, raising the fear that lines could avoid some of the country's key terminals, calling at more competitive neighbouring facilities. On the plus side the government has announced a range of new port projects, but much will depend on the speed at which they move forward to completion. The global economic climate has to count as another downside risk, given the range of concerns over sovereign debt levels in both Europe and the United States. Closer to home the giant Chinese economy may also experience a sharper slowdown than expected, with an impact on Indonesia's trade values. While BMI has highlighted the strength of Indonesia's internal demand, which insulates it from these adverse external headwinds, it cannot of course decouple entirely from external influences.
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