SEA: Indonesia : PT Indonesia Ferry (Persero)

PT Indonesia Ferry (Persero) is a shipping company which manages the shipyard for passengers, vehicles and goods. The main role of the company is to provide public transportation access to connect islands and to unite bigger islands, as well as to provide public transportation access to the remote areas to accelerate the development (pioneering ferry).

Short history

1973. Organizing the river, lake and ferry crossing transport implemented by the River, Lake and Ferry Transport Project (PASDF)

1980. PASDF changed into River, Lake and Maritime Crossing Project which is abbreviated into (PASDP)

1986. PASDP changed status and became River and Maritime Crossing Public Company (Perum ASDP)

1992. Perum PT. ASDP changed into River, Lake and Maritime Crossing Transportation (Persero) (PT. ASDP (Persero)

2004. Corporate Identity changed from PT. ASDP (Persero) to PT. ASDP Ferry Indonesia (Persero)

2008. Business transformation marked with changes in corporate identity to PT. Indonesia Ferry (Persero), accompanied by redefining of vision, mission and company logo and also operational modernization towards international standards.

Vision

To become a world-class inter-island transportation and shipping services company, Indonesia’s largest and best company as well as in the Southeast Asia and Pacific region, and to bring added value to the stake holders.

Mission

To bring superior services to the customers with the highest safety standard, to control and dominate commercial and pioneering routes in Indonesia, to best manage the business in order to achieve excellent financial performance through the implementation of good corporate governance and international standards, and to become the national development agent by providing inter-island transportation and shipping services.

Role

1. STATE CORPORATION
Offers benefits and share through ports and ferry transportation services for all kinds of customers (peoples, goods and vehicles).

2. STATE INFRASTRUCTURE
Provides public transportation access to connect all islands in Indonesia.

3. AGENT OF TRANSFORMATION
Provides public transport access to remote areas in order to speed up the national development.

Business scope

PT. Indonesia Ferry (Persero) operates all over Indonesia, string up from Sabang into Merauke, from Rote into Talaud. Serves in 125 commercial and pioneer lines, supported by 89 ships in 34 ports that manage 31 branches all over Indonesia.

The company serves on 113 lines with seven main commercial lines:

1. Merak – Bakauheni
2. Ujung – Kamal
3. Ketapang – Gilimanuk
4. Bajo’e – Kolaka
5. Palembang – Muntok
6. Padang Bai – Lembar
7. Kayangan - Potontano

Our commitment

- Safety, Security and Service is Priority
- National and International Regulation Compliance
- Zero Accident
- Zero % tolerance to overload
- Operational Modernization

PT. Indonesia Ferry Business Transformation

Two months were all Mr. Bambang Soerjanto needed to get the overall figure of PT. Indonesia Ferry, from the time he was named president director of the state-owned company on May 2008. He used numerous approaches to collect all the information he needed, including performed an undercover investigation behind the disguise of a truck driver.

The results? Bambang identified several problems that required comprehensive changes to solve them, which he manifested in the Indonesia Ferry Business Transformation. Bambang categorized those problems as the internal and external problems.

What are the problems?

In terms of internal problems, firstly is from the managerial side. This is related to the perception gap caused by the indication of any personal interests in doing the job, weak and indifference leadership pattern, simple mindset with no long term goal and instead stuck on the annual performance results, and the lack-of-spirit human resources being worsened by the bad bureaucracy pattern.

Secondly, business or operational-linked problems for instance, company’s small market share in the commercial market, which was less than 20 percent, and was ranked five from seven in the main line of Indonesian ferry business. This was very ironic, especially when we remember that Indonesia Ferry was once the ranked top position. No assured fleet plan hindered Indonesia Ferry’s performance, which was continued degrading in the middle of the fierce competition with its private competitors. Leakages in the earnings tanks happened due to fraud practices committed by persons in the company, causing 30 percents of the earning vanished.

Thirdly, technical problems that impeded business operational, for example, the poor condition of the production tools and equipments and the prolonged and unscheduled docking. No database was available to support the planned system.

Fourthly, internal problems related to the human resources’ relatively low moral quality. This condition is worsened by uncertain career pattern and low productivity among the employees, shown by the inversed relation between work and quantities and qualities.

Fifthly, financial problems such as mark-up practices in procurement or financing process for operational and safety supporting-equipments and machines, maintenance costs reduction in order to uphold profits with service quality at the stake.

Regarding the external problems, tighter and more complex competition in the business became the main problem. That was the first. Secondly, changes in the ferry service users and business environment. Third were the constructions of bridges that connect islands. Fourthly, regional autonomy and Shipping Regulation that allowed private companies to manage ports and thus increasing competition tension in each region. The fifth problem was the drugs distribution and terrorism lines that often crosses ports, which spoiled the security stability in the port environment.

There were also pressures from certain parties who want Indonesia Ferry to separate its two roles as operator and regulator. Actually, double role is fine, as long as it is committed to public importance and is handled by competent individuals. Alternative is by splitting these roles to a different entity, yet still related to the company, for instance, one role is carried out by Indonesia Ferry and the other one by its subsidiary.

However, spinning off without thorough planning would mean bringing back the old habit to fashion. Ports would probably be filthy again and loose its cosiness, illegal fees sprouting, used up or unofficial tickets will be back on sale. In short, services would be delivered as they used to be, unwillingly.

As to Indonesia Ferry, its role as the regulator in the transportation ports is an extension to the government authority considering that ports are strategic national assets as is ruled in the Transportation Ministerial Decree No 11/2002. The management of such strategic ports should be carried out by a competent sate-owned company, to protect the public, especially related to the pioneering routes and routes potentially used for drugs distribution and terrorism.

Now this role has been carried out properly on the right track. Indonesia Ferry is also appointed to serve the pioneering route, in which subsidy is much lower than the operational costs. This is where its double role as operator and regulator works to enable cross subsidy.

To what direction we are moving?

Based on the findings, Indonesia Ferry management signed the Integrity Pact on August 5, 2008, which marked the structural changes in the company. These changes were started by changing company name and logo, from PT. ASDP Indonesia Ferry (Persero) to PT Indonesia Ferry (Persero). Management then redefined company vision and mission, reconfirmed its core business, created supporting businesses, revitalized and invested for production facilities, performed total restructuring and constructed a strategic business plan. All were done to reposition Indonesia Ferry as a state-owned company that brings maximum contribution to the country.

Goals of this transformation are: (1) as a state-owned company, Indonesia Ferry must produce maximum profits as the share holder through port and inter-land transportation services; (2) as a state infrastructure, this company plays a role to connect big and small islands stretched out from Sabang to Merauke; (3) as a development agent, Indonesia Ferry aims at providing pioneering transportation services to open access to and drive economic developments in remote areas.

What are the change moves?

• Redefining vision: To become a world-class inter-island transportation and shipping services company, Indonesia’s largest and best company as well as in the Southeast Asia and Pacific region, and to bring added value to the stake holders.

• Redefining mission: To bring superior services to the customers with the highest safety standard, to control and dominate commercial and pioneering routes in Indonesia, to best manage the business in order to achieve excellent financial performance through the implementation of good corporate governance and international standards, and to become the national development agent by providing inter-island transportation and shipping services.

• Running transportation business with the function as the operator and port manager and responsibilities to manage, control and monitor port activities to comply with the Ministerial Decree No 11/2002.

• Revitalizing and investments for production facilities in order to improve safety, supported by maximum and effective supporting facilities. Service improvements by adding and restoring the physical condition, placing more ship attendants and security officers to ensure service users’ convenience and safety.

• Total restructuring on the sectors where problems initiated, such as the business/operational sector, technical sector, human resources, financial and organizational.

What efforts have been done so far?

• Organizational changes and human resources re-organizing, including employees’ salary/subsidy increase by 24-68 percent, which was done in the first three months of the new management.

• Total make over on the company operational on IT base. Command Centre is operated 24-hours to monitor ship positions, real-time and continuous, to allow maximum ships traffic management, combined with the application of remote CCTV system on both ships and ports. E-ticketing system has been implemented in Merak Port since October 2008 and will soon be available in other ports. Besides its effectiveness, e-ticketing minimizes revenues loss due to ticket manipulation practices, which will eventually impact Indonesia Ferry’s quality of services.

• Dynamically rearrange traffic management to support the optimization of traffic along transportation route through the Merak Port. This is done by synergizing the number of vehicles to be transported with the available transporting fleet, to minimize bottlenecks in the port mouth. Next, Indonesia Ferry will improve its ports and ship facilities in large routes, such as Merak-Bakauheni, Ujung-Kamal, and Ketapang-Glimanuk. Around 17 ports will be immediately restored in the South Belt, such as the Merak, Bakauheni, Ketapang, Gilimanuk, Padang Bai, Lebar, Pototano, Kayangan, Kupang, Sape, Labuan Bajo, Ambon, and Balikpapan ports. Indonesia Ferry applied the same system as is applied in Merak, which has been proven to build up Merak port as a clean, well-organized port with no illegal fees practices. Indeed, a strong system takes time to be developed, but once it is achieved, the company will be run by the system.

• Along with the Transportation Ministry, Indonesia Ferry is guarding the front line of national ferry industry modernization. Indonesia Ferry builds national infrastructures with IT-based instruments.

The results of these transformations?

Business transformation has brought significant improvements on the Indonesia Ferry’s service quality, on both ships and ports, as more secure and convenient services are delivered in accordance to the mission of the highest safety standards. The logic consequence of this is growing trust among public to use Indonesia Ferry’s ships and transportation ports. Moreover, the changes have brought significant impact on the revenues, which were increased from Rp 642 billion in 2007 to Rp 806 billion in 2008. The applied operational system has successfully closed leakages, corrected profits from Rp 54.81 billion in 2007 to Rp 103.26 billion in 2008. Profits to revenues ratio was also increased, from 9.5% in 2007 to 20% in 2008. It should be noted that if this business transformation is to be stopped, efforts to provide premium quality services with highest safety standards will be meaningless and Indonesia Ferry will return to the zero point.

Human Resources

Total employees: 3328
55% land employees
45% nautical employees

Ground Staff by Education
2 Doctoral
22 Master
212 Graduate
1331 High School
115 Junior High School
75 Elementary

Nautical Staff composed by Education

763 Nautician, ANT D to ANT I Level
678 Technician, ATT D to ATT 1 Level
47 Marchonist, ORU to PRE II Level

Education and Training

- Technical
- Managerial
- Safety

Production

Description 2005 2006 2007 2008*
Passengers (People) 5,644,769 5,674,261 5,619,478 5,048,433
2 Wheel Vehicles (Unit) 1,812,974 2,135,694 1,811,699 1,826,476
4 Wheel Vehicles (Unit) 970,111 1,036,720 1,183,185 1,269,376
Goods (Tons) 809,063 617,793 495,689 454,685

Financial Performance

Description 2005 2006 2007 2008*
Revenue 414,280 551,747 625,288 805,260
Profit 19,629 28,042 68,581 93,484
Net Profit 13,203 20,644 32,485 103,262