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Transforming ports to world-class standards; Pelindo's path to excellence in port operations
Drewry regularly provides expert advice to financial institutions, port authorities and port operators. Recently, Drewry, along with Skha Consulting, was appointed by PT Pelindo to assess the effect of the merger of Pelindo I, II, III, and IV. The key findings of the study have been presented below.
Introduction
The port sector in Indonesia is crucial for economic growth, and the merger of Pelindo I, II, III, and IV into a single entity named PT Pelindo on 1 October 2021, marked a strategic shift. This consolidation aimed to streamline operations, enhance service quality and reduce costs, positioning Pelindo as a leader in maritime logistics. The merger of Pelindo and the integration of services made it the second-largest container terminal operator in Southeast Asia. According to Drewry’s 2022 Regional Port Ranking of terminals operating in Southeast Asia, PSA is the leader with 40.5 mteu, followed by Pelindo in second place with 17.3 mteu.
The Integrated Port Network (IPN) initiative focuses on improving port connectivity and balancing trade flows, reducing disparities between Western and Eastern Indonesia. The results of Pelindo’s efforts can be seen in the contribution to the reduction of national logistics costs, with notable reductions in transportation, inventory and administrative costs.
Pelindo port transformation
The development of end-to-end integrated logistics service is one of the main goals of the Pelindo merger. This end-to-end integrated logistics service includes container and non-container services, maritime services, logistics and hinterland services. Customer orientation is at the heart of Pelindo's transformation as the company focuses on a client-oriented culture to meet the diverse needs of customers.
Before the merger, port services operated by four state-owned port enterprises (Pelindo I, II, III and IV) in Indonesia faced various challenges that needed to be addressed , such as non-standardised port operations with different business processes, IT system standards and branch classifications across ports; limited port infrastructure, with inconsistent standards across facilities, inadequate capacity for large vessels, and a shortage of essential equipment such as pilot boats and tugboats; lack of synergy among customer-focused state-owned ports with minimal coordination in customer service management and limited attractive service offerings; limited financial capability and synergy, declining financial strength, insufficient capital investment, and limited ability to support government projects; and varying HR capabilities and quality with different productivity levels and lack of coordination in sharing skills, resources, and knowledge among ports.
Pelindo port’s operational standardisation
The standardisation initiative aims to improve Pelindo's core port services through several key strategies. These include HR development and competency building via standardised business processes and advanced training programmes to enhance operational performance. The initiative also focuses on restructuring the organisation based on planning and control (P&C) principles, creating clear, accountability-driven structures that align teams with organisational goals. Additionally, optimising existing crane and yard infrastructure with standardised designs enhances compatibility and efficiency. The implementation of P&C functions, supported by applications like TOS Nusantara and PTOS-M, streamlines planning and control operations, from vessel scheduling to cargo management, enabling real-time monitoring, data analysis, and quicker, more accurate decision-making. Furthermore, digitalising port services with platforms such as Praya and Phinnisi improves data inventory and accuracy, ensuring better decision-making. Finally, the initiative also encourages safety awareness through comprehensive safety protocols, including routine training, inspections, and compliance with international standards, ensuring the well-being of employees and customers.
Pelindo port’s operational systematisation
The systematisation initiative aims to elevate Pelindo’s port services to world-class standards through the development of advanced digital tools. These include TOS Nusantara for planning and control, PTOS-M for managing various types of cargo, Praya for billing and e-payment, and Phinnisi for ship services. As part of this initiative, Pelindo offers specialised training focused on the Terminal Operating System (TOS), ensuring that personnel have a deep understanding of all TOS features, including vessel planning, dock planning and tower control. The single container TOS integrates all operational aspects, from vessel planning to yard management and tower control, enabling real-time tracking and improved coordination among departments.
The initiative also involves the modernisation of the port's gate system, where advanced technology such as sensors, cameras, and automated devices are used to streamline identity and cargo verification during entry and exit. A standardised billing system, Praya, is implemented to manage service requests, payments, and invoicing, with real-time tracking capabilities that enhance transparency and customer satisfaction. Additionally, a customer portal is provided, offering end-to-end service request and payment submission features, allowing customers to monitor the status of their requests in real-time.
To support these digital advancements, Pelindo is modernising its equipment, including cranes and transport vehicles, with the latest technology to increase operational capacity and reduce downtime. Infrastructure upgrades are also being carried out, focusing on optimised design and layout based on standard operational models. These upgrades, incorporating the latest technology, ensure efficiency, compatibility, and Pelindo’s competitiveness in the global market.
Achievements in Pelindo port service standardisation and systematisation
Standardisation and systemisation have improved Pelindo’s services. Key improvements include enhancing HR skills, refining Planning & Control (P&C) processes, and adopting digital systems. In the short term, standardisation has not markedly improved cost efficiency for most samples (measured by cost/teu, cost/ton, or BOPO) due to its limited focus on cost and external factors affecting economies of scale. Long-term efficiency gains are expected with better commercial performance.
The operational transformation has benefitted Pelindo, its customers, and the maritime ecosystem. Pelindo gained cost efficiency, increased traffic potential, and enhanced competencies. Customers enjoyed reduced port and cargo stay times, optimised berthing, and lower ship rental costs, while the maritime ecosystem saw lower logistics costs and improved connectivity.
Impact on container terminal performance
In 2023 after the merger, Pelindo reduced the average container port stay time by 27.2 hours (a 63% improvement) and increased Box/Ship/Hour (BSH) productivity by 80% from 17.9 to 32.3 BSH. Box/Crane/Hour (BCH) productivity also improved by 14% from 22.9 to 26.0 BCH. The transformation has been carried out in several terminals with the following results:
As shown in the above table, the merger had a positive impact on the performance of container terminals, such as the Belawan terminal, which increased productivity from 20 BSH to 38 BSH, and even reached 61 BSH at optimum performance. Additionally, the vessel port stay hour decreased post-merger, as seen at the Belawan terminal, where it fell from 55 hours before the merger to 32 hours post-merger.
Impact on non-container terminal performance
In 2023 after the merger, average dry bulk port stay time decreased by 13 hours (from 62 to 49 hours) and liquid bulk by 14 hours (from 78 to 64 hours). Meanwhile, productivity increased 38% for dry bulk (from 3,392 to 4,682 tonnes per ship per day) and 10% for liquid bulk (from 1,063 to 1,171 tonnes per ship per day). The transformation has been carried out in several terminals with the following results:
As shown in the table above, the merger had a positive impact on the performance of non-container terminals, such as the Janirah terminal, which saw an increase in TSD from 1003 BSH to 1702 BSH. Additionally, the vessel port stay day decreased post-merger, as seen at the Janirah terminal, wherein it went from six days before the merger to three days post-merger.
Customers view on Pelindo port transformation achievements
The improvements in operational performance, efficiency and service at Pelindo post-merger have garnered positive customer feedback, reflecting the company's success in enhancing service quality. An international shipping line noted:
"Overall, there has been an improvement in service performance, with roughly a 10% increase in BSH at several ports and reduced port stay times, leading to savings on berthing fees and fuel. Additionally, infrastructure quality and human resources have improved."
Meanwhile, a domestic shipping line highlighted, "Since the merger, Pelindo's operations have continuously improved. Berthing times have been reduced, saving fuel costs due to shorter port stays. New services have been introduced, customer service has become more responsive with clear contact points, and ground staff now have a better understanding of operations. Digitalisation has also boosted efficiency."
Customer responses to Pelindo's port transformation through standardisation and systematisation initiatives can be understood through four key aspects. From a commercial perspective, customers have responded positively to the development of new services and ad-hoc services. However, freight forwarders not included in Pelindo’s Key Account Management (KAM) programme have expressed concerns. On the operational front, improvements such as higher BSH, shorter port stay times, and better infrastructure have been well-received, though issues like equipment breakdowns, system problems, limited equipment and inconsistent berthing schedule policies, and the need for better coordination at the sub-holding level persist.
Financially, customers have noted the cost savings from more efficient operations and reduced fuel use, along with the benefits of digital transformation. Despite this, there are still concerns about poorly timed port tariff increases. Finally, in terms of human resources and general aspects, customer service has improved post-merger, with staff demonstrating better knowledge and problem-resolution capabilities. However, challenges persist, including unclear points of contact, the continued need for physical documents, unclear tariffs, and inconsistent service definitions.
Conclusions and recommendations
Pelindo's standardisation and systematisation efforts have significantly enhanced operations and customer satisfaction. The merger of Pelindo I, II, III, and IV on 1 October 2021 has streamlined operations, improved service quality, and reduced costs, delivering significant benefits to customers. The IPN has improved connectivity and balanced trade flows between Western and Eastern Indonesia. While customer satisfaction has increased due to these initiatives, challenges remain in internal coordination and tariff adjustments.
Recommendations
Pelindo should prioritise advancing technology and digitalisation by implementing better digital systems, including mobile apps for real-time tracking and integrating with banking systems for efficient billing. Improving human resources through regular training and workshops is also crucial. Optimising infrastructure and equipment and expanding international partnerships, particularly with neighbouring countries, will enhance operational efficiency and service offerings. Additionally, Pelindo must focus on customer satisfaction by promptly addressing feedback and using data analysis to tailor services, while also prioritising cost and energy efficiency, including carefully considering port tariff increases.
Pelindo's next step
Pelindo has demonstrated various achievements in its efforts to transform port services through the standardisation and systematisation of port operations as part of its ongoing strategic initiatives. Pelindo must continue to enhance its services in a dynamic global environment to strengthen its position as a competitive and efficient port operator and strive to be world-class. This will not only increase customer satisfaction but also contribute to the creation of an integrated national port ecosystem, ultimately delivering a positive impact on the national economy and international trade.
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