CHAPTER I INTRODUCTION CHAPTER I. INTRODUCTIONetd.repository.ugm.ac.id/downloadfile/68431/potongan/S2-2014-323486...contrary, as ruled in the new law, Indonesia Port Corporation (IPC)

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CHAPTER I

INTRODUCTION

CHAPTER I. INTRODUCTION

A. Background

Tanjung Priok Port is the busiest port in Indonesia which located in North Jakarta,

the Island of Java. The port has facilities to handle all kind of cargo which

currently there are 4 terminal facilities for each type of cargo to be handled, i.e:

a. Conventional/Multi-purpose Terminal. The terminal is under management of

Indonesia Port Corporation II (IPC II) Tanjung Priok Branch to serve for

loading and unloading of general cargoes.

b. Container Terminal. There are 3 terminal operators that serve for loading and

unloading container cargoes, they are Jakarta International Container Terminal

(JICT), Koja Container Terminal, and Multi Terminal Indonesia (MTI).

c. Liquid Bulk Terminal. There are 2 terminal facilities for handling liquid bulk

cargoes, they are: DKP Terminal that under management of IPC II Tanjung

Priok Branch and PT. Darma Karya Perdana (DKP), and dedicated terminal of

PT. Pertamina (State Oil Company).

d. Dry Bulk Terminal. There are 2 terminal facilities for dry bulk cargoes which

are dedicated terminal facilities for cement and coal, and dedicated terminal

facilities for flour. Dedicated terminal facilities for cement and coal are

operated under management of IPC II Tanjung Priok Branch and in

cooperation with PT. MTI and PT. Semen Padang, dedicated terminal facilities

RESTRUCTURING OF PORT MANAGEMENT IN INDONESIA POST-IMPLEMENTATION OF NATIONALSHIPPING ACT (ACT NO.17/2008): A CASE STUDY ON EVALUATION OF PORT RESTRUCTURING BY ANALYSING SERVICEPERFORMANCE ONTANJUNG PRIOK PORTMUHAMAD IRFAN RAMADHIANTOUniversitas Gadjah Mada, 2014 | Diunduh dari http://etd.repository.ugm.ac.id/

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for flour which operated under management of IPC II Tanjung Priok Branch

and in cooperation with PT. Bogasari and PT. Sarpindo.

e. Passenger Terminal. This terminal facility is operated and managed by IPC II

Tanjung Priok Branch for passengers.

The management of Tanjung Priok Port previously was done by IPC II as

mandated by the National Shipping Act 1992 (Act No. 21/1992). But then, as the

regulation change as well as the policy in port management. In 2008 Indonesia has

issued new national legislation regarding shipping and port, which is National

Shipping Act No. 17/2008.

According to the previous Act No. 21/1992, the state owned company Indonesia

Port Corporation (IPC) functioned as both port regulator and port operator and

governmental function in the port was hold by Port Administration in which

Harbour Master was also one division part of Port Administration. On the

contrary, as ruled in the new law, Indonesia Port Corporation (IPC) monopoly in

managing ports will be ended and as mandated in this new act there will only be

one agency that functions as authority which is Port Authority.

As implementation of the new law, Port Administration of all port in Indonesia

transform into Port Authority and Harbour Master in separate organization to

carry out the mandate of the new law. Currently there are 4 Main Port Authority

in Indonesia as stated in Minister of Transportation Decree No. 63/2010 regarding


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Organization and Work Procedure of Port Authority which then replaced by

Minister of Transportation Decree No. 35/2012 regarding Organization and Work

Procedure of Main Port Authority as follow:

1. Belawan Port Authority, Medan-South Sumatera.

2. Tanjung Priok Port Authority, Jakarta.

3. Tanjung Perak Port Authority, Surabaya-East Java.

4. Makassar Port Authority, South Sulawesi.

In principle, based on the new law there are three separate role of port

management in Indonesia. Those roles can be explained briefly as follow:

1. Port Authority which basically performs function as government

representative and commercial and operational of port.

2. Harbour Master which performs technical function.

3. Port Business Entities which performs the function as terminal operator or

facilities operator.

Because of this separation function, currently the role of IPC is only as Port

Business Entities together with other terminal or facilities operators. Port

Authority which previously called Port Administrator basically only has function

as government representative. But as implementation of the new act, several

functions that previously manage by IPC are now taken by Port Authority such as

commercial and operational function which under these functions there are several

service activities. To run these functions definitely there would be some changes,


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whether it is better under the new Port Authority or under IPC as previous port

authority. To make it more focus it will discussed further on services under

operational function.

Source: Tanjung Priok Port Master Plan

Figure 1.1 Tanjung Priok Port Layout

Tanjung Priok Port is selected to be the place for conducted this research because

the port is the largest port in Indonesia whereby any development on the port will

be followed by other ports in Indonesia. Moreover, foreign investment in Tanjung

Priok Port is very significant where there are two largest container terminals

which are Jakarta International Container Terminal (JICT) that operated by

Hutchison Port Holdings (HPH), which holds 51 percent of its shares, and IPC II,

which holds 49 percent of the shares, and Koja Container Terminal that operated

by IPC II, which holds 52 percent of its shares, and Hutchison Port Holdings

(HPH), which holds 48 percent of the shares.


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Furthermore, the planning for Tanjung Priok Port development will make the

research more significant to be conducted there compare to other ports in

Indonesia. One of significant project in the port is to expand the Tanjung Priok

port by building the Kalibaru Port, also known as the “New Priok Port,” which

located 7 kilometers west of Tanjung Priok. The total investment needed for the

two-part project is $4 billion. The first phase would cost $2.5 billion, with the

second costing $1.5 billion. Construction of the first phase is expected to be

completed in 2014, while the second phase is set to commence in 2018 and be

completed in 2022. The first phase will be the construction of three container

terminals with a combined capacity of 4.5 million 20-foot equivalent units

(TEUs), two fuel oil terminals and a gas terminal with a combined capacity of 9

million tons per year. In the second phase, it will add four more terminals,

bringing the total container handling capacity of the Tanjung Priok Priok Port to

12.5 million TEUs.

By doing the research it can be seen on how well the Port Authority managing the

port and which services that should perform best by Port Authority in order to

make Tanjung Priok Port still become the most significant and largest port in

Indonesia.

B. Problem Statement and Research Question

It has been 2 years since Tanjung Priok Port Authority established in 2010

following the Minister of Transportation Decree No. 63/2010 regarding


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Organization and Work Procedure of Port Authority, and several functions of IPC

II is now taken by the Port Authority whereby one of the functions is operational

function. So based on that the problem statement of this research is how is the

performance of the port authority on level of services under operational function

to maintain the management of Tanjung Priok Port after the restructuring and

how should the matrix of services and its execution be altered in such a way to

better reflect the intentions of the National Shipping Act (Act No. 17/2008) and to

improve performance?

To have a thorough analysis upon the performance of Tanjung Priok Port

Authority, there are several related questions that need to be answer as follow:

1. What is the impact of restructuring to the Tanjung Priok Port Authority?

2. What services do Port Authority conducted based on the additional function in

Tanjung Priok Port?

3. What is the market share of Tanjung Priok Port before and after restructuring?

4. What is the level of services from Port Authority related to the performance on

port management?

C. Research Objective

In general the objective of this research is to give analysis and recommendation on

services that should be the responsibility of Port Authority under operational

function for better performance of Tanjung Priok Port. In a more specific way, the

objectives of this research are:


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1. To analyse the performance of Port Authority as the new Port Operator in

Tanjung Priok Port replacing Indonesia Port Corporation II.

2. To see if there are any changes on the market share of Tanjung Priok Port after

restructuring compare to the condition before the restructuring.

3. To find out the level of services from Port Authority related to the

performance on port management in Tanjung Priok Port.

D. Theoretical Framework

This research looked deeply into Tanjung Priok Port Authority as the port

operator in Tanjung Priok Port. A port authority can be defined as the entity

which, whether or not in conjunction with other activities, has as its objective

under national law or regulation the administration and management of the port

infrastructures, and the co-ordination and control of the activities of the different

operators present in the port (European Commission, 2001). Port authority is the

agency responsible for ensuring that the port is provided with the services,

facilities and equipment to enable goods and passengers to be transferred through

the ports in the most efficient and cost effective manner to meet the needs of the

port's users at a commercially acceptable rate of return (Van Maanen, 2013).

As explained previously that this research looked into the performance of Tanjung

Priok Port Authority which will seen from the level of services of Port Authority.

In this case, level of service can be defined as the service quality for a given

activity. Levels of Service are often documented as a commitment to carry out a

given action or actions within a specified time frame in response to an event or

asset condition data (http://www.lgam.info/level-of-service).


http://www.lgam.info/level-of-service

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In this research the service levels that tried to see is the performance which may

relate to reliability and efficiency of service. Reliability means the ability to

perform the promised service dependably and accurately (Wiegmans et al, 2003).

It closely related to the quality of the service and determines the level of a service.

Whereas efficiency can be defined as amount of resources which required and well

used to perform a given task in a given time.

Therefore, related to the port performance some of the indicators that use in this

research related to berthing service and cargo handling service according to Director

General of Sea Transportation Decree No UM.002/38/18//DJPL.11 Year 2011

regarding Performance Standard for Port Operations Service and other literature are

as follows:

1. Waiting Time (WT) is the amount of time since submission the request for

berthing after the ship arrives at the mooring location until the ship moved to the

berth.

2. Berth Occupancy Ratio (BOR) is the ratio between time for using the berth and the

available time (berth ready for operation) on a certain period of time.

3. Yard Occupancy Ratio (YOR) is the ratio between the total use of the yard and the

available space (ready for operation).

4. Box/Crane/Hour is the number of containers moved per crane per hour.

5. Container throughput is the total number of container handled in boxes or in

TEUs.


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Furthermore, this research also have much get in touch with port management

which is the management of port that basically differentiate into 4 models of port

management, i.e.: Landlord Port, Tool Port, Public Service Port, and Private

Service Port (Van Maanen, 2013). In addition, these models of port management

will determine the governance structure of the port itself. Because the Port

environment may be seen as system encompassing policies, processes and people,

which serves the needs of shareholders and other stakeholders, by directing and

controlling management activities with good business savvy, objectivity and

integrity (Van Maanen, 2013).

This restructuring of Tanjung Priok Port management can be consider as a way of

port reform, which in principle is to set out a better way to deliver public services

and economic prosperity via private sector involvement and market de-regulation.

Port reform itself is based on three key instruments, i.e: decentralization;

privatization; and introduction of competition in the port system (Van Maanen,

2013). Because of the main role of a port are as point to move goods or person to

other points and as centre for distribution and consolidation of goods, so it needs

services to ensure the smooth movement. Therefore, to run its role a port provides

services, such as (Asit, 2010):

1. Berth and navigation channels;

2. Pilotage and traffic services;

3. Mooring and cargo handling;

4. Warehousing, stacking and stevedoring;


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5. Land;

6. Infrastructure such as roads, bridges, parking, electrical installation, bunker,

etc;

7. Terminal services for container, dry-bulk, liquid-bulk, break-bulk, and Ro-Ro

as well as passenger;

Related to service, one aspect that a port needs to have is service management

which basically a provision of infrastructure, marine services, and forming

business relationship with all stakeholders in the port. In principle it focus on the

commercial side of the ports sustainability, efficiency and turnaround times as

well as port database community system, road and rail networks. Moreover, it

looks at all transport corridors to process cargo and project innovations.

In order to make the research more specific, it focused on two types of services in

Tanjung Priok Port i.e. berthing service and cargo handling service. By analysing

on those two services, it can be find out the fluctuation on growth of Tanjung

Priok Port performance nowadays under management of Port Authority which

may be compared with the previous years of Tanjung Priok Port before Tanjung

Priok Port Authority was established.

Simple diagram on how the research flow from the problem that needs to analyse

until the solution for the problem can be seen below.


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Figure 1.2 Research Flow

Validation

Matrix of Services

Analysis

Quantitative Data Collection

Recommendation

Reliability

Level of Services

Eficiency

Cargo Handling Service

Berthing Service

National Shipping Act

17/2008

Ministry of Transportation

Decree 63/2010

Port Authority

Tanjung Priok Port

Performance

Start

End


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E. Research Limitation

To make the research more focus, the limitation that took in the process of writing

this thesis are as follows:

1. Berthing service and cargo handling service which discussed in this research

are services in container terminals of Tanjung Priok Port.

2. The performance of Tanjung Priok Port Authority that analysed is seen by the

level of service from the operational of the port.


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CHAPTER I INTRODUCTION CHAPTER I. INTRODUCTIONetd.repository.ugm.ac.id/downloadfile/68431/potongan/S2-2014-323486...contrary, as ruled in the new law, Indonesia Port Corporation (IPC)