Dec 19, 2014

NYK to participate in new CT operation in Jakarta

Tanjung Priok Port

Nippon Yusen Kaisha (NYK) will take part in the management of a New Priok Container Terminal One (NPCT1) currently under construction off Tanjung Priok Port, North Jakarta, Indonesia. NPCT1 is one of three CTs in Phase 1 of the New Priok Port (Kalibaru North Port) Development Project to be carried out in three stages on a man-made island offshore north of Tanjung Priok Port. The new CT will have a water depth of 16 meters and two berths with a total pier length of 850 meters and eight gantry cranes. It will be capable of accommodating a containership of up to 18,000 TEUs with a yearly box processing capacity of 1.5 million TEUs. Indonesia Port Corporation (Pelindo II or commonly known as IPC) is developing the project via its subsidiary. The first berth with a pier length of 450 meters is scheduled to open business between fall and winter of 2015 before the two berths become fully operational in mi-2016.

The new CT operating company NPCT One, set up in June this year, is owned 51% by Pelindo II (via its subsidiary), and 49% between Mitsui & Co., Port of Singapore Authority (PSA) and the special-purpose company (SPC) NYK established in Singapore. It seems that NYK has a 20% equity stake in the SPC, translating into a 10% investment in NPCT One.
Beginning in its business results for the year ended in March 2014, NYK incorporated its terminal business segment into its containership division with maximization of profit from the integration of the once different segments identified as one of its biggest propositions. NYK's terminal group said that "In light of Indonesia's bureaucracy tending to have a strong say in the terminal usage fee pricing process leaving relatively small room for such fees to fluctuate in response to supply and demand, this puts terminal operating business in Indonesia in an advantageous position as a profit-making business. The group also said that "If we can obtain a certain amount of dividends from investing in cutting-edge CTs in areas like Indonesia and make profit via efficient management, we can take it as representing a reduction in handling cost in our liner division."

NYK took over intra-Asia specialist Tokyo Senpaku Kaisha, which had offered Indonesian service since early on, in October 2010, and since has cultivated its own customer base as well. On the back of old and new customer bases, NYK currently handles about 250,000 TEUs of container cargo at Tanjung Priok port, the 10th largest container port in the world and the third in Southeast Asia after Singapore and Laem Chabang.

From here on as well, investing in operation/management of CTs in liner division as it has done this time around to gain a certain fixed amount of profit from dividend receipts constantly will likely become NYK's basic terminal operation strategy overseas. The terminal group is also interested in doing terminal business as a pure profit center anew if opportunities present themselves, but for the time being it gives preference to taking the method overseas as it has employed in Indonesia, that's, a CT operation-integrated with liner business formula.

Located near the Indonesian capital of Jakarta, Tanjung Priok port handled 6,239,000 TEUs of box cargo in 2013, almost double the volume of 3,187,000 TEUs posted in 2004. In the past 10 years, the port's container cargo handling volume has been growing at an annual pace of 8% on average. On the other hand, its maximum handling capacity is estimated at 5-6 million TEUs a year, and in parallel with the growing volume of cargo handlings in recent years, chronic congestion at existing oceangoing CTs centering at JICT (Jakarta International Container Terminal) and Koja Terminal has developed into a big challenge to address.

Meanwhile, NPCT1 will have cutting-edge stevedoring equipment introduced and hopes are being pinned on much higher work efficiency than at existing CTs. An NYK official noted that the new CT is high in productivity and is conducive to shortening anchoring times for customers' ships and contraction in bunker consumption. Amid the congestion for the whole of the port assuming critical proportions, NYK will attempt to lure operators to the CTs it co-operates on the strength of its competitive edge. The company plans to commence calling at the new CT during the second half of next year, when it kicks off partial operation. Since opening the new CT paves the way for receiving large ships, Tanjung Priok port sources pin hopes on securing not only an easing of congestion but also an improvement to the logistics environment in/around the port.

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