Dear Valued Shareholders,
Time flies and we have passed through the year 2016. Therefore, we are grateful to God the Almighty that even under uneasy conditions, the Company could successfully move on with all the existing challenges.
Our journey in 2016 was not easy, particularly in shipping industry. Global shipping industry underwent a challenging period due to slowdown in global economic growth at only 2.3% according to the World Bank. Decrease of global mining and offshore production created an impact on transportation industry in general, and shipping industry in particular. As the result, many of the world’s shipping companes experienced downsizing capacity. In fact, some world’s giant shipping companies suffered losses, or even bankruptcy.
Slowdown in global economic growthand crisis in world’s shipping industry also influenced national shipping industry as well. However, the Company’s Board of Directors remained confident with Indonesia’s economic growth and development. Many infrastructure projects are currently in progress to support the Government’s Sea Toll Program. Furthermore, Indonesia’s Central Bureau of Statistics recorded that economic growth in Indonesia reached to 5.02%, while the economic growth in Maluku and Papua recorded at 13%. In this case, the Board of Directors could see the potential development, coupled with huge Indonesian population that mostly is within the category of young population. Thus, there is an opportunity for increased demand towards daily consumption needs, which requires thorough distribution lines, since Indonesia is an archipelago country connected by the sea.
The integrated and continuous improvement in infrastructure development by the Government is expected to facilitate the distribution flows of products and services nationwide, which in turn could reduce logistics cost from Sabang to Merauke. Realization of the Government Program for equal development in all regions of Indonesia becomes the driver for the Board of Directors to contribute for the developmet of the nation.
Company’s Performance in 2016
The Company has implemented some strategic actions in order to participate supporting the Sea Toll Program initiated by the Government. The establishment of National Network is our initial strategic step in 2016, by opening 7 new ports of Timika, Merauke, Serui, Kumai, Sampit, Malahayati, and Tual. The opening of the ports certainly needs a fleet to provide route services, and therefore the Company has made investment by using its capital expenditures to add a number of fleets and other supporting equipment. The additional 3 large ships with capacity of 2,700 TEUs and 4 ships with capacity of 360 TEUs –as continued building project of 6 new ships in 2015– were prepared to support market penetration. Thus, the number of Company’s owned vessels increased to 31 units with total capacity of 22,363 TEUs compared to 2015 with 22 units with total capacity of 12,838 TEUs. The number of ports served also increased from 20 ports in 2015 to 27 ports in 2016. Other supporting facilities were also added, including containers, stevedoring equipment, and land for container depot. With the additional supporting facilities, the operational activities would be effectively and efficiently conducted.
By 2016, the Pendulum Service initiated in 2013 has been developed to become S4 Service and A3 Service. S4 Service with the route of Belawan-Jakarta-Surabaya-Makassar-Bitung-Palu, is served with 4 units of ships, and A3 Service with the route of Belawan-Jakarta-Surabaya-Makassar-Ambon, is served with 3 units of ships in the first quarter of 2017. Meanwhile, small-sized ships will serve as feeder service/loop service to smaller ports.
From financial side, compared to 2015 the Company’s Service revenue increased 3.15% at the end of 2016, from Rp1,621 billion to Rp1,672 billion. While Income attributable to the Owner of Parent Entity declined 27.01%, from Rp316.9 billion in 2015 to Rp231.3 billion in 2016. The decline of Company’s Income was due to market penetration for some new ports’ service, where the price experienced a significant decline. New acquired ships were not also able to generate revenue in such a short time. The Company’s total assets reached Rp1,782 billion in 2015 to become Rp2,525.6 billion or increased 41.73% in 2016.
To provide timely shipping schedule, we have always cooperated with Pelindo and Port Operator to improve stevedoring performance in all ports. Accordingly, the Company has signed a Memorandum of Understanding (MOU) of Pendulum Service with five Port Operators of Terminal Petikemas Domestik Belawan (TPKDB), Pelabuhan Tanjung Priok (PTP), Terminal Petikemas Surabaya (TPS), Terminal Petikemas Makassar (TPM) and Terminal Petikemas Bitung (TPB). With this collaboration of the Company and five Port Operators, it is expected that the customers have an assurance regarding the service schedules provided by the Company, to help them making better planning for their business activities.
With the implementation of Pendulum Service S4 and A3 that connects all Port Hubs with consistently scheduled ships, interisland goods distribution in the entire regions of Indonesia will be better, coupled with future developed routes that will realize an integrated Sea Toll and quicker transit time of delivery. Goods distribution from economic centres will reach out to remote areas so that logistics cost could really be reduced and price disparity between the center and the regions, western and eastern regions of Indonesia, can be decreased. The wheels of economy will spin faster and prosperity can be equally realized.
Backed by 31 fleets of vessel with total capacity of 22,363 TEUs serving 27 ports throughout Indonesia, the Company can offer more alternatives to customers, so that demand for services to remote areas and small ports can be fulfilled properly. The Company’s National Network that is in progress and will continue to be carried out, is our contribution to realize more varied limitless connectivity for marine cargo transportation of Indonesia’s Sea Toll. The Company will continue to innovate and create solutions for logistics industry and distribution of economic goods.
With the new investment, TEMAS Line will stand strong to realize Fixed Schedule and On-Time Delivery throughout Indonesia, in which it has been the long expectation in the National Logistics Industry. Therefore, we invite all relevant parties, from customers, port operators, regulators, employees and ship crews, to build a synergized cooperation in realizing Indonesia as the strong maritime country.
In closing, the Board of Directors would like to convey deepest gratitude to all Stakeholders, Directorate General of Sea Transportation, Pelindo, INSA, Bureau of Classification, Customers and Suppliers for the support and cooperation over the time. Our high esteem is also provided to all Employees, Crews and the Big Family of Temasian for the contribution and hard work through this time. May God the Almighty always bless each of our efforts and works.
On behalf of the Board of Directors