Seamless Chain Logistics between the Netherlands and Indonesia

Transcription

1 1 Seamless Chain Logistics between the Netherlands and Indonesia 1. Introduction 2. The concept explained 3. The triple helix construction 4. Next steps 1. Introduction Trade between Indonesia and Europe has increased over the last 5 years with more than 25% to a value of 28 billion dollars each year. The growth in trade volume between Indonesia and Europe is expected to continue and even further increase as a result of the effectuation of the ASEAN free trade zone from 31 December 2015 onwards. With a market of over 250 million people Indonesia is the largest economy in Southeast-Asia and strategically positioned to develop into the industrial and logistics powerhouse of the region. Trade between the Netherlands and Indonesia has been substantial over the years and exceeds already more than 2.5 billion dollars on an annual basis. The most important industrial and service industries within Indonesia have already strong connections with the so-called top sectors of industry in the Netherlands as shown below. Several private parties and regional authorities have taken the initiative to strengthen these intense relationships with the concept of Seamless Chain Logistics (SLC), using inland logistics hubs (dry ports) within an integrated logistics system. The aim is to enlarge the current amount of shipments (as detailed further on in this document), but more important to strengthen the relationships between individual companies, groups of companies gathered within an integrated business community. Important is to involve knowledge institutions

2 2 also as well as governmental bodies in a so called triple helix in this case within an international context. 2. The concept explained Introduction More and more logistic chains of companies and groups of companies within a chain operate in a worldwide environment in which the companies involved occupy several strategic positions. Below we describe the key elements of this concept. As world trade is growing faster and faster, the distances manufactured goods have to accomplish are increasing. Thus, logistics service providers will have to create a more reliable supply chain and transportation network by integrating it as much as possible.. Integrating different transport modes (shortsea shipping, inland shipping, rail, highways) by combining the cargo flows in a seamless operating system run by a (or several) virtual control tower(s), enables logistic service providers to improve reliability, increase efficiency and reduce costs. Because this will enable their costumers to avoid the relative high transport costs (handling charges, but also stock keeping costs) of seaports, where congestion is slowing down the whole logistics process.. In practise the business concept of Seamless Chain Logistics is to extend the sea terminal gate into the hinterland by connecting inland ports directly with each other. This will lead to substantial benefits in terms of modal shift, logistics performances and economic regional development (employment, new business). The graph below shows first how the current supply chain works and which elements increase the relative costs of the supply chain: 1. Transport to the business sites surrounding the inland terminal 2. Terminal handling charges 3. Transport to the deep-sea port 4. Terminal Handling charges within the seaport 5. Transportation from for example Asia towards Europe 6. Terminal handling charges in the seaport 7. Stocking in the port 8. Transport to the inland region 9. Terminal handling charges and end distribution In the concept of Seamless Chain Logistics, which was invented already years ago but is now being implemented worldwide, we reduce at least 4 steps (1, 4, 6, 7). This will reduce cost on the other steps, as business sites in the inland ports are less expensive and situated closer to the costumer and consumer markets. At the same time, inland ports can offer a broader range of services related to the business.

3 3 Advantages of Seamless Chain Logistics Some of the advantages of Seamless Chain Logistics for inland ports and their surrounding area s are: free trade zones with clear and fast customs services o Experienced, specialized, proactive and flexible o VAT deferment and bonded warehouse possibilities o Beneficial regime: to obtain customs licences o Ruling policy: to obtain ruling system forma from customs Less congestion in large seaports, respectively Jakarta and Rotterdam Using the inland ports as point of entry to and from the EU Contract manufacturing region (in the case of Cikarang) for contract manufacturing activities, but also for the export of high end consumer market products to the EU Expected regional impact Based on several calculations and expected investments over the first five years the intention of these communities is to boost the economy with: container handlings 800 additional workforce (and indirect another 350)

4 4 3. The triple helix construction Below the intended co-operation is described Logistics Valley (based in The Netherlands) Logistics Valley is a triple helix conglomerate of tree logistics hot spots in the southern part of the province of Gelderland. It involves : Regional authorities, the Province of Gelderland Private business partners o Logistics Valley (representing several Logistics Hot Spots within The Netherlands where over 1000 companies are situated). o Several ambassadors of Logistics Valley will be part of the delegation of the Province of Gelderland visiting Indonesia in November 2016 during the mission of PM Mark Rutte of The Netherlands Knowledge institutes: HAN institute of applied science and several ROC s This Region aims to be the logistics port to the huge European market. It was studied that this region is the best situated for the organization of European distribution activities. In order to enlarge this function, the region builds international connections with highly valued business partners. Below find a graph of Logistics Valley and some of its international operating companies. Cikarang Dry Port (CDP, based in Indonesia) Indonesia wants to reduce the relative independence of import of goods by attracting foreign investors (for instance within the automotive, manufacturing and food processing industries). The Cikarang Dry Port and its investors are creating a broad spectrum of industry and logistics in Kota Jababeka, an industrial development of over 5000 hectares. Below is a graph of the current situation in West Java and the strategic position of CDP.

5 5 Source: Jababeka (2016) Several important business partners have aligned their activities in order to build this unique international system. The main parties involved are: Indonesia Regional authorities: Province of West Java Private Business partners o Cikarang Dry Port o Jababeka Knowledge institutes, President University 4. Next steps In November 2016 a LoI (Letter of Intent) will be signed by representatives of the parties and organizations involved. It will be the starting point in the intended co-operation. The LoI will focus on: Clarify the concept Bringing market parties together in match making events How to do business together Afterwards several actions will be carried out such as cost calculations, estimating the capacity of warehouses needed on both sides and planning schedules for realization.