CHAPTER I INTRODUCTION

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 1

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 2

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, 3

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. 4

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 5

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: 6

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). 7

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. 8

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; 9

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. 10

National Shipping Act 17/2008 Ministry of Transportation Decree 63/2010 Start Port Authority Performance Tanjung Priok Port Berthing Service Cargo Handling Service Level of Services Reliability Eficiency Quantitative Data Collection Analysis Matrix of Services Validation Recommendation End Figure 1.2 Research Flow 11

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. 12