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SeamlessChainLogisticsbetweentheNetherlandsandIndonesia

1. Introduction

2. Theconceptexplained3. Thetriplehelixconstruction4. Nextsteps

1. Introduction

TradebetweenIndonesiaandEuropehasincreasedoverthelast5yearswithmorethan25%toavalueof28billiondollarseachyear.ThegrowthintradevolumebetweenIndonesiaandEuropeis

expectedtocontinueandevenfurtherincreaseasaresultoftheeffectuationoftheASEANfreetradezonefrom31December2015onwards.Withamarketofover250millionpeopleIndonesiaisthelargesteconomyinSoutheast-Asiaandstrategicallypositionedtodevelopintothe‘industrialand

logisticspowerhouse’oftheregion.TradebetweentheNetherlandsandIndonesiahasbeensubstantialovertheyearsandexceedsalreadymorethan2.5billiondollarsonanannualbasis.ThemostimportantindustrialandserviceindustrieswithinIndonesiahavealreadystrongconnections

withtheso-called‘topsectorsofindustry’intheNetherlandsasshownbelow.

Source:BuckConsultantsInt.

Severalprivatepartiesandregionalauthoritieshavetakentheinitiativetostrengthentheseintense

relationshipswiththeconceptofSeamlessChainLogistics(SLC),usinginlandlogisticshubs(dryports)withinanintegratedlogisticssystem.

Theaimistoenlargethecurrentamountofshipments(asdetailedfurtheroninthisdocument),butmoreimportanttostrengthentherelationshipsbetweenindividualcompanies,groupsofcompanies

gatheredwithinanintegratedbusinesscommunity.Importantistoinvolveknowledgeinstitutions

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alsoaswellasgovernmentalbodiesinasocalled‘triplehelix’inthiscasewithinaninternational

context.

2. Theconceptexplained

Introduction

Moreandmorelogisticchainsofcompaniesandgroupsofcompanieswithinachainoperateinaworldwideenvironmentinwhichthecompaniesinvolvedoccupyseveralstrategicpositions.Below

wedescribethekeyelementsofthisconcept.

Asworldtradeisgrowingfasterandfaster,thedistancesmanufacturedgoodshavetoaccomplishareincreasing.Thus,logisticsserviceproviderswillhavetocreateamorereliablesupplychainandtransportationnetworkbyintegratingitasmuchaspossible..

Integratingdifferenttransportmodes(shortseashipping,inlandshipping,rail,highways)by

combiningthecargoflowsina‘seamlessoperatingsystem’runbya(orseveral)virtualcontroltower(s),enableslogisticserviceproviderstoimprovereliability,increaseefficiencyandreducecosts.Becausethiswillenabletheircostumerstoavoidtherelativehightransportcosts(handling

charges,butalsostockkeepingcosts)ofseaports,wherecongestionisslowingdownthewholelogisticsprocess..

Inpractisethebusinessconceptof‘SeamlessChainLogistics’istoextendtheseaterminalgateintothehinterlandbyconnectinginlandportsdirectlywitheachother.Thiswillleadtosubstantial

benefitsintermsofmodalshift,logisticsperformancesandeconomicregionaldevelopment(employment,newbusiness).Thegraphbelowshowsfirsthowthecurrentsupplychainworksandwhichelementsincreasetherelativecostsofthesupplychain:

1. Transporttothebusinesssitessurroundingtheinlandterminal

2. Terminalhandlingcharges3. Transporttothedeep-seaport4. TerminalHandlingchargeswithintheseaport

5. TransportationfromforexampleAsiatowardsEurope6. Terminalhandlingchargesintheseaport7. Stockingintheport

8. Transporttotheinlandregion9. Terminalhandlingchargesandenddistribution

Intheconceptof‘SeamlessChainLogistics’,whichwasinventedalreadyyearsagobutisnowbeing

implementedworldwide,wereduceatleast4steps(1,4,6,7).Thiswillreducecostontheothersteps,asbusinesssitesintheinlandportsarelessexpensiveandsituatedclosertothecostumerandconsumermarkets.Atthesametime,inlandportscanofferabroaderrangeofservicesrelatedto

thebusiness.

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Source:BuckConsultantsInt.

AdvantagesofSeamlessChainLogistics

Someoftheadvantagesof‘SeamlessChainLogistics’forinlandportsandtheirsurroundingarea’sare:

• ‘freetradezones’withclearandfastcustomsserviceso Experienced,specialized,proactiveandflexible

o VATdefermentandbondedwarehousepossibilitieso Beneficialregime:toobtaincustomslicenceso Rulingpolicy:toobtainrulingsystemformafromcustoms

• Lesscongestioninlargeseaports,respectivelyJakartaandRotterdam• UsingtheinlandportsaspointofentrytoandfromtheEU• Contractmanufacturingregion(inthecaseofCikarang)forcontractmanufacturing

activities,butalsofortheexportofhighendconsumermarketproductstotheEU

Expectedregionalimpact

Basedonseveralcalculationsandexpectedinvestmentsoverthefirstfiveyearstheintentionofthesecommunitiesistoboosttheeconomywith:

• 350.000containerhandlings• 800additionalworkforce(andindirectanother350)

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3. Thetriplehelixconstruction

Belowtheintendedco-operationisdescribed

LogisticsValley(basedinTheNetherlands)

LogisticsValleyisatriplehelixconglomerateoftreelogisticshotspotsinthesouthernpartoftheprovinceofGelderland.Itinvolves:

• Regionalauthorities,theProvinceofGelderland• Privatebusinesspartners

o LogisticsValley(representingseveralLogisticsHotSpotswithinTheNetherlandswhereover1000companiesaresituated).

o SeveralambassadorsofLogisticsValleywillbepartofthedelegationoftheProvince

ofGelderlandvisitingIndonesiainNovember2016duringthemissionofPMMarkRutteofTheNetherlands

• Knowledgeinstitutes:HANinstituteofappliedscienceandseveralROC’s

ThisRegionaimstobethelogisticsporttothehugeEuropeanmarket.Itwasstudiedthatthisregion

isthebestsituatedfortheorganizationofEuropeandistributionactivities.Inordertoenlargethisfunction,theregionbuildsinternationalconnectionswithhighlyvaluedbusinesspartners.BelowfindagraphofLogisticsValleyandsomeofitsinternationaloperatingcompanies.

Source:BuckConsultantsInt.

CikarangDryPort(CDP,basedinIndonesia)

Indonesiawantstoreducetherelativeindependenceofimportofgoodsbyattractingforeigninvestors(forinstancewithintheautomotive,manufacturingandfoodprocessingindustries).TheCikarangDryPortanditsinvestorsarecreatingabroadspectrumofindustryandlogisticsinKota

Jababeka,anindustrialdevelopmentofover5000hectares.BelowisagraphofthecurrentsituationinWestJavaandthestrategicpositionofCDP.

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Source:Jababeka(2016)

Severalimportantbusinesspartnershavealignedtheiractivitiesinordertobuildthisuniqueinternationalsystem.Themainpartiesinvolvedare:

Indonesia

• Regionalauthorities:ProvinceofWestJava• PrivateBusinesspartners

o CikarangDryPorto Jababeka

• Knowledgeinstitutes,PresidentUniversity

4. Nextsteps

InNovember2016aLoI(LetterofIntent)willbesignedbyrepresentativesofthepartiesandorganizationsinvolved.Itwillbethestartingpointintheintendedco-operation.

TheLoIwillfocuson:

• Clarifytheconcept

• Bringingmarketpartiestogetherinmatchmakingevents• Howtodobusinesstogether

Afterwardsseveralactionswillbecarriedoutsuchascostcalculations,estimatingthecapacityof

warehousesneededonbothsidesandplanningschedulesforrealization.