148 The Company, as a national company that has been engaged in the shipping industry for more than 30 years,
made the most of this momentum by investing in foreign-flagged large vessels. Moreover, following the world economic crisis in 2008, the prices of second-hand vessels were exceptionally low. For example, the Company
managed to purchase the largest Indonesian-flagged vessel, with a capacity of 300,00 ton to cater crude oil transportation from Arab Saudi to refineries in Indonesia. The aforementioned vessel is chartered based on a
long-term contract of 10 years. Other than the oil and gas sector, Indonesia is also the largest CPO producer in the world, which quantity
continues to grow from year to year. This growing sector takes part in supporting the shipping industry, since CPO requires liquid carrier vessels tankers for inter-island distribution.
In the future, the national shipping industry will continue to grow with the growth in Indonesian economy, as each increase in demand for energy or cargo will always be followed by the increase in demand for ships. Furthermore,
the implementation of cabotage principle indirectly maintains the balance of supply and demand for domestic ships tonnage.
Introduction to Tanker Types
In general, the difference between each type of tanker lies in the capacity and dimension of the
ship length. 1. Coastal tanker
Coastal tankers are vessels with dead weight tonnage DWT below 10,000 tons
that are used for distributing fuel and gas directly from refineries or depots to areas all
over Indonesia. The vessel, with length less than 205 m can easily enter shallow rivers,
therefore fuels can be directly distributed to ground storage depots to be further
distributed to gas station by trucks.
2. Handysize General Purpose tanker This type of vessel has a dead weight tonnage ranging from 10,000 – 20,000 tons and is generally used to
transport chemicals and fuels from refineries to petrochemical factories or other smaller refineries. 3. Medium Range MR
This type of vessel generally has a dead weight tonnage ranging from 30,000 - 50,000 tons, which are the common sizes used for distribution of crude and fuel.
- Crude = From Oil FiedsFSOs to Refineries
- Fuel = Imported from overseas from refinery to large storage depots.
This type of vessel has good flexibility as it allows for unloading through direct mooring points in jetty as well as offshore unloading through Single Point Mooring SPM. Its capacity excellently suite crude sales parcels
as well as medium range fuel, which generally range between 200,000 - 350,000 barrels.
4. Aframax tanker The main role of this vessel is to distribute crude oil from Oil Fields to Refineries. With dead weight tonnage of
approximately 100,000 ton, the vessel normally holds between 600,000 – 700,000 barrels of crude oil, both the light type and the heavy type, which requires heating. Due to its large size and deep draft, the vessel
normally does not moor in jetty, the loading and unloading are carried out offshore through SPM.
149 5. Very Large Crude Carrier VLCC
This type of vessel is used for long range crude transportation. Generally, the routes taken are Arabian Gulf AG and West Africa with Asia or Europe or America as the destinations. This type of vessel is able to hold up
to 1,000,000 – 2,300,000 barrels 300,000 tons of crude oil per trip. The vessel has a very large size, with a total length up to 330 m, beam of 60 m and draft of 30 m, therefore
loadingunloading operations are nearly always conducted offshore through SPM.
6. Suezmax tanker In accordance with its name, tankers with suezmax specification are built to pass the Suez Canal in the
Middle East area. This type of tanker has a lengthbeamdraft dimension of 285m34m23m and is capable of carrying a load of 125,000 up to 180,000 DWT.
7. ULCC Ultra Large Crude Carrier ULCC is the largest tanker in vessel class, with a dimension that can reach up to 415m63m25m
lengthbeamdraft and a dead weight tonnage of more than 320,000 DWT. This size is highly inflexible and is no longer produced.
2.2. Shipyard Industry Development
In shipyard sector, the Government of Indonesia has long realized the huge potential of domestic maritime industry, however the Government has not implemented the right policies and the effective means to develop
the shipyard industry. The Government focus tends to lean towards the ground transportation sector, causing the motor vehicle industry to become the main focus in the country development plan.
After the independence, the Government of Indonesia nationalized all Dutch Companies in 1960, converting five Dutch shipyards in Jakarta, Surabaya and Palembang to State Owned Enterprises SOEs. Subsequently in
1960s and 1970s, at least live additional state-owned shipyards and six privately-owned shipyard were established, the most prominent of which was the establishment of PT Pabrik Kapal Indonesia PAL Shipyard
Indonesia in Surabaya in 1980. PT Pabrik Kapal Indonesia is currently the shipyard company with the largest capacity in Indonesia. In 1990 and 1991, the government merged state owned shipyards in western Indonesia
into a single entity, Dok and Perkapalan Kodja Bahari DKI Shipyard.
Several important milestones in the shipyard industry in Indonesia are portrayed below:
The shipyard industry in Indonesia has existed and is continuously growing, however the growth rate is still lower than other countries such as China, Vietnam and Philippines, even India with smaller territorial waters, has
managed to surpass the growth of shipyard industry in Indonesia. The relatively slow growth is partially contributed by the difficulties in importing goods and services from overseas
complicated tax and custom excise policies, while the shipyard industry is highly dependent on raw materials such as steel plates, machineries and other components that are manufactured overseas, as well as foreign
contractors service. Therefore, domestic shipyards such as Dock Kodja Bahari in Jakarta often experience delays while waiting for custom clearance for imported spare parts.
150 Realizing this limitation, the government recently implemented the free trade zone FTZ policy for Batam island
and Karimun in Riau island province. The FTZ regulation allows imported goods and services entering and coming out of the FTZ to be processed quickly without being subjected to any tax or custom. This regulation is
warmly welcomed by foreign and domestic shipyard companies, who invested in establishing shipyards in Batam, among others, PT ASL, Drydock World and others. Given this opportunity, the Company also established a
shipyard in Karimun with a total area of 216 hectares, which was relatively deep draft 12 m compared to Batam 5 – 7 m.
As discussed in Chapter IX, Business Prospects in this Prospectus, the tremendous growth in national fleet during the period of 2005 – 2012 following the implementation of cabotage principle was not followed by the
growth in shipyard facilities, therefore vessels requiring drydocking had to spend significant amount of time queuing, some of the vessels even had to sail to China for drydocking. This surge in demand is used by national
shipyards to charge high fee for drydocking services. In addition, there is a market for new shipbuilding, as the Government is actively promoting domestic shipbuilding.
The shipyard industry is currently entering the development stage to catch up with the increasing number of Indonesian fleets, and in the future, this industry will continue to grow in keeping with the increasing number of
vessels in Indonesia.
151
146
3. Statistical Data of National Shipping and Shipyard Industries Shipping Industry
The number of shipping companies has increased by approximately 43 during the five years period since 2007 up to 2012, from 2,326 companies to 3,328 companies. The said companies provide commercial shipping
services in particular cargo transportation, but also passenger, small scale shipping and special shipping shipping of internal needs, such as CPO producers who ship their own CPO. The largest increase of 57.5 is
contributed by the registered commercial shipping companies.
Source: Ministry of Transportation Statistics, year 2012
The growth trend of number of vessels is even more impressive, the number of commercial vessels has doubled during the period from 2007 – 2012, from 3,950 vessels to 8,738 vessels.
Number of Vessels 2007
2012 Growth
Commercial Shipping 3,950
8,738 121.2
Small Scale Shipping 1,279
1,323 3.4
Pioneer Shipping 53
67 26.4
Special Shipping 1,872
1,657 -11.5
Total Vessels 7,154
11,791 64.8
Source: Prepared based on Ministry of Transportation Statistics, year 2012
The following table clearly demonstrates the rapid growth of cargo transportation market in Indonesia, in keeping with Indonesia’s economic growth. In 2007, total domestic transportation increased from 227 million tons to 355
million tons in 2012. The increase represents a 56 growth, or an average growth of 10 per year. In addition, the following table also explains the transformation of marine transportation as a result of the cabotage principle
policy in Indonesia. National shipping companies previously controlled a mere 65.2 of the domestic cargo transportation in 2007 55.5 in 2005, by 2012, these companies have managed to control substantially all
market share. National ship owners have also gained a solid position in the export import market, with their market share increasing from 5 in 2005 to 10 in 2012.
Tonnage of Marine Shipping
in Tons
2007 2008
2009 2010
2011 2012
Market Share 2012
National Companies Domestic Shipping
148,740,629 192,763,874
258,359,686 303,119,578
316,489,377 350,930,184
98.8 Export-Import
31,381,870 38,196,693
49,293,953 51,162,187
55,183,410 59,766,537
9.99
Total 180,122,499
230,960,567 307,653,639
354,281,765 371,672,787
410,696,721 Foreign Companies
Domestic Shipping 79,214,358
50,126,180 28,007,688
5,870,818 3,779,169
4,093,544 1.2
Export-Import 500,514,225
498,273,709 501,661,150
516,046,091 525,694,587
537,898,834 90.01
Total 579,728,583
548,399,889 529,668,838
521,916,909 529,473,756
541,992,378 Grand Total
Domestic Shipping 227,954,987
242,890,054 286,367,374
308,990,396 320,268,546
355,023,728 100.0
Export-Import 531,896,095
536,470,402 550,955,103
567,208,278 580,877,997
597,665,371 100.0
Source: Prepared based on Ministry of Transportation Statistics, year 2012
The following diagrams will clearly demonstrate that local players have managed to play a dominant role in domestic transportation before and after the implementation of Cabotage principle. In terms of economy, the
continuous increase of shipping industry total expenditure managed to provide distinctive contribution to the national gross domestic product, i.e., RP 181,353 billion compared to total national gross domestic product of Rp
2,480,807 billion by the end of the first semester 2014.
Number of Shipping Companies 2007
2012 Growth
Commercial Shipping 1,432
2,256 57.5
Small Scale Shipping 560
664 18.6
SpecialPrivate Shipping 334
408 22.2
Total Companies 2,326
3,328 43.1
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Comparison of Domestic Transportation Market Share in Indonesia Year 2007 – 2012
Source: Global Business Guide Report March 2014, prepared based on Ministry of Transportation Statistics, year 2012
Presented below is the comparison of Marine Transportation Market Share for Export-Import activities, where local players represent a mere 10 of the total market share. This condition create future opportunities for
national companies to enter the export import market following the beyond cabotage program that is continuously being proposed by the Indonesian National Shipping Association INSA
Comparison of International Transportation Market Share Year 2007 – 2012
Source: Global Business Guide Report March 2014, prepared based on Ministry of Transportation Statistics, year 2012
