PT Adaro Logistics
The Adaro Group has been expanding tremendously by adding a lot of companies along its integrated supply chain. To achieve operational excellence, its complex operations must be streamlined by eliminating waste (unnecessary or redundant activities) in work processes and the processes must be synergized to produce better quality with a lower cost and higher productivity. PT Adaro Logistics (AL) was established to be the parent company under the group’s logistics pillar, with a number of subsidiaries operating along the group’s pit-to-power supply chain to ensure cost effective operations and operational excellence in the process of transporting coal from the loading port to the discharging port. AL’s main role is to support Adaro Indonesia and AMC, two of its companies within the Adaro Group, by delivering coal to customers’ locations according to the agreed schedule, specifications and quality.
After eight years of operations, AL has secured a stronger foothold in the logistics sector, running an extensive range of activities from coal barging and ship loading, channel dredging and maintenance, stevedoring to dockyard. Similar to other non-coal mining businesses within the group, the logistics business offers good potential for AE to generate income that can buffer the volatility of the coal market. Therefore, AL pursues more opportunities to generate income from third-party businesses while keeping its sister companies as its priority. However, the COVID-19 pandemic affecting most of the world’s economic activities in 2020 had put a lot of pressure on both the price and demand for coal, which subsequently negatively impacted on AL’s revenue. The management responded by making necessary adjustments on certain budgets and targets, reducing indirect operational costs such as office supplies, travel costs, training costs, maintenance costs, and crew bonus, as well as cutting down fuel consumption by reducing bunker volume and sealing empty tanks at each tugboat for all business units within the logistics pillar. These measures managed to cut costs by US$5.9 million or 13% above the amount targeted to be achieved in the cost reduction program, while fuel consumption reduced by 0.64 liter per ton or 15% lower than the budget of 2020.
The following are the core subsidiaries co-ordinated by Adaro Logistics in our coal supply chain.
PT Maritim Barito Perkasa (MBP)
MBP operates by barging coal from client’s ports of loading at Kelanis, Muara Tuhup, and Teluk Timbau to the mother vessels’ transshipment points at Taboneo and IBT or customers’ ports of discharge all around Indonesia. As at the end of 2020, MBP had a fleet of 36 barge sets (tug and barge) and three self-propelled barges (SPBs) with around 494,000 tons of carrying capacity and six transshipment facilities comprising four floating cranes and two floating transfer units (FTU) with 166,808 tons per day throughput rate.
Updating on MBP’s investment in 2019 to expand its barge fleet by ordering five barges of 15,000 dwt, three tug boats of 3,200 hp and one tug boat of 1,200 hp, in 2020, two barges and one tugboat were delivered while the rest is expected to be delivered in April 2021. The new barges will replace the use of barges chartered from third parties and thus increase operational cost efficiency.
In 2020, MBP served its sister companies AI by barging 47 million tons and transshipping 33 million tons of its coal. MBP also continued to serve AMC in 2020, where it had to face major obstacles of unpredictable water level, long queue at Teluk Timbau, and operational constraints in the forms of load and time limits when passing bridges. To overcome these obstacles, AL created a barge-to-barge (B2B) transfer system by transshipping coal from small barges to big barges at Taboneo before being delivered to IBT. Up to the end of 2020, the B2B system had been used to deliver around 560 million tons or 31% of total AMC barging volume and is expected to grow significantly along with the increase of AMC sales target for 2021. In 2021, MBP will execute the B2B system at Teluk Timbau instead of at Taboneo for more efficient operations, by modifying one of the company’s floating cranes before moving it to Teluk Timbau. Meanwhile, to overcome the operational constraint of load and time limit, MBP’s External Relations team and other transporters have been discussing the matter with the local government to find a win-win solution on the most effective use of the bridges. These measures are expected to allow higher capacity for AMC coal barging.
MBP will keep expanding its fleet to both accommodate its captive market from the Adaro Group with higher level of cost efficiency and build more third-party relationships by offering the extensive experience it has accumulated from serving a large-scale of coal operations and stronger barging equipment that can better withstand rough weather conditions. In 2020, MBP barged 0.9 million tons of third-party coal, or 52% lower than 2019, due to the slowdown in economic activities resulting from the COVID-19 pandemic.
PT Sarana Daya Mandiri (SDM)
SDM’s operations started with a capital dredging project at the Barito River channel in 2008, which has made the channel navigable for two-way traffic on a 24-hour basis from January 1st, 2009. Since then, SDM has maintained the width and depth of the 15-km channel through regular dredging to keep it safe for navigation. For proper monitoring and control of the traffic and navigational safety, SDM ensures that its surveillance equipment is at operable condition at all times.
The Barito channel has recorded a steady increase in traffic over the years. The cargo volume passing through the channel in 2020 totaled 104 million tons, or 11% lower than 117 million tons in 2019 and 1% lower than the target of 106 million tons for 2020. This decrease was attributable to the decrease in the cargo of both the Adaro Group and third parties due to the COVID-19 pandemic. With the capacity of accommodating up to 200 million tons of coal per year, the channel still has ample room to accommodate higher volumes.
In 2020, SDM continued to carry out two notable operations: supervising dredging activities and conducting bathymetry surveys. Dredging supervision was rendered in Kelanis and Ujung Rumput under the appointment of HBI and MBP, respectively. Meanwhile, bathymetry surveys were performed in South, East, and Central Kalimantan to examine channel navigability and the requirements for dredging.
PT Indonesia Bulk Terminal (IBT)
IBT’s hub at Pulau Laut terminal at the southeastern coast of South Kalimantan offers two main services: coal handling and fuel handling. The coal handling services consist of activities like coal ship-loading, temporary stockpiling, and coal blending services. IBT’s coal blending facilities enable the customers to purchase coals from various sources where they find most economical and get IBT to blend the coals according to their requirements and thus reduce the production costs. IBT also provides facilities that can load vessels of up to 80,000 dwt in less than two days and an annual throughput capacity of 12 million tons, added with a feature that can help to detect and separate metal contaminants in coal before it is loaded to vessels. For fuel handling services, IBT is equipped with four fuel tanks of 80,000-kiloliter total storage capacity and two jetties with loading capacity of 1.4 million kiloliters/year. In 2020, IBT continued the project for building fuel and FAME (fatty acid methyl ester) in-line blending facility which had been started in 2019, to improve the quality and increase the speed of blending activities to result in more homogenously blended biofuel and higher loading capacity, i.e. up to 1.8 million kiloliters/year.
IBT plays an important role for the Adaro Group by standing by as a high capacity back up to Taboneo transshipment operations and a location for sourcing fuel, an important component of the group’s pit-to-power integrated operations.
Although it still mainly serves the Adaro Group, IBT will pursue more relationships with third parties, especially the coal miners of the central, south and southeast regions of Kalimantan Island, for whom IBT’s location and its comprehensive facilities are most strategic. Since 2015, IBT has been working in a strategic alliance with Pertamina, a prominent state oil company, who has approved the port as a location for blending biodiesel, making it one of the only two ports on the island that have obtained such approval.
PT Indonesia Multi-Purpose Terminal (IMPT)
IMPT manages the Taboneo floating terminal under a port business entity license awarded by the Ministry of Transportation. All offshore loading operations are managed and monitored from a floating command center equipped with adequate satellite communications and GPS tracking systems, where an officer guides vessel calling to the transshipment area to achieve a quick turnaround time from arrival to departure.
After obtaining the concession from the Port Authority of Banjarmasin on September 15, 2018 for the right to carry out commercial operations at Taboneo, on May 10, 2019 IMPT officially commenced operations. The operations included port control and vessel placements in coal transshipment area by separating vessels based on sizes, such as Handymax, Panamax, and Capesize. IMPT’s officer places vessels at well-defined vessel loading points and monitors all activities performed on the vessels, including stevedoring activities. In carrying out these activities, IMPT prioritizes the port’s safety and security as guided by the environmental impact license and a certificate of compliance with the International Ship and Port Facility Security (ISPS) Code it has maintained since 2015. As a result, these activities have significantly enhanced the safety of vessel navigation into and out of Taboneo and the transshipment process at the port.
In 2020, IMPT contributed Rp2.29 billion to the government in the form of non-tax revenue from its business of vessel placements at Taboneo.
PT Puradika Bongkar Muat Makmur (PBMM)
PBMM offers cargo stevedoring services to ensure safe loading activities using proper procedure and equipment. It started operating at Taboneo in July 2013 and Kelanis in the 3rd quarter of 2017. In 2020, PBMM recorded 40 million tons stevedoring tonnages.
PBMM has a captive market from the extensive shipping operations of the Adaro Group in addition to benefitting from the transshipment activities at Taboneo organized by its sister company IMPT. Although in 2020 PBMM did not increase its market share from third parties, the economic recovery after the COVID-19 pandemic is expected to bring more market potential from growing transshipment activities for PBMM to use its existing capacity to expand the thirdparty businesses.
PT Harapan Bahtera Internusa (HBI)
Ship Administration and Management Services (SAMS).
HBI serves AI at Kelanis by carrying out various shipping administration tasks such as scheduling the in-and-out movements of barges, coal-loading activities and berthingand-unberthing of barges and assist-tug services. In 2020, HBI’s SAMS volume totaled 4,031 calls, or 12% lower than that of 2019 due to lower sales volume and the use of larger barges. HBI still continued the dredging activities in Kelanis to ensure that the port can accommodate the size of its barges.
HBI also transports fuel from IBT’s Pulau Laut terminal to Kelanis. In 2020, HBI optimized the use of its three oil barges and coordinated with AL’s Integrated Fuel Supply Chain team to deliver 408 million liters of fuel. This collaboration was a part of AL’s strategic procurement program, which has contributed to AE with Rp96 billion in cost saving.
Barito Galangan Nusantara (BGN)
MBP’s growing barge fleet must be supported with reliable maintenance facilities that can readily provide the service by fitting into the barges’ schedules and requirements to ensure smooth operations and avoid costly logistics disruptions due to barge breakdowns. Therefore, in 2018, AL purchased an operational dockyard in Barito Kuala district on the Barito River and established PT Barito Galangan Nusantara (BGN). AL has made considerable investment to develop BGN to meet AL’s quality standards and accommodate the company’s larger barges and scale of operations.
In 2020, BGN under its new management recorded tremendous operational improvement, which has reduced docking duration to 27 days for tugboats or improved by 14% from 2019, and to 26 days for barges, or improved by 41%, compared to those of 2019.