Shipping sector outlook cover

Shipping Sector Outlook

Favorable regulations reinforces domestic cargos growth prospects

Indonesia’s domestic shipping industry has a bright future going forward under the cabotage principle and the liberalization of port management. The Indonesian shipping law introduced in 2008 (and the earlier Inpres 5/2005) includes a very significant strengthening of cabotage requirements, formally requiring that all foreign-flag vessels operating in the Indonesian domestic trades be replaced by Indonesian-flag vessels and use Indonesian crews. It has led to a very significant increase in the volume of cargo carried on domestic routes by Indonesian ship.

More efficient operation going forward

Shipping companies can enter fixed windows contract with several ports authorities which are partly positive impact from bureaucracy reform. Fixed berthing windows system basically provides vessel a specific time window to load/unload cargos. This has reduced vessels waiting time from around 3 days to only 1 day. A system of penalties applies to both the port terminal operator and the shipping line if they cannot meet the schedule.