Gearing up for Indonesia coal transport changes

The future is in end-to-end management of dry bulk cargoes, especially coal, and Indonesian company Asian Bulk Logistics (ABL) is positioning itself to be ahead of the curve in terms of meeting the requirements of clients as a potential cabotage ruling on certain bulk cargoes from Indonesia looms.

While ABL, along with other ship owners in Indonesia will benefit from the ruling when it is implemented, deputy ceo Pappu Sastry told Seatrade Maritime News that several factors set it apart.

“We stand on a pedestal compared to many of the Indonesian ship owners in the dry bulk sector not only because of our strong financial background but also because of the experience and expertise to be able to structure and run an export dry cargo business,” Sastry said.

He noted that ABL is BBB-rated by Fitch Indonesia and its expansion plans will be readily supported by local banks, who have already extended credit after the group’s recent purchase of barges to support its integrated services model. Sastry sees ABL’s domestic tonnage under ownership to increase through more purchases.

On financing requirements further out, he said: “The foreign capital markets will be considered especially for asset based diversification into ocean going vessels and exports. We are considering Singapore, Hong Kong and Japan. We are having new offers from London which we will still have to study before we decide on which one is most suitable.”

“We have taken the step of diversifying into the coal export shipments business to have the first mover advantage by defining structures that suit the regulations and commercial considerations of the miners,” he added.

While he noted that that authorities have not provided technical details of any implementation, the general legal opinion suggests that the mining and shipping as well as insurance industries are structurally not ready for compliance. However the implementation of the order is a certainty, he reiterated. “We think the ministerial order will be implemented – it is not a question of if but a question of when,” Sastry emphasised.

Laying out the steps ABL is taking to work towards facilitating implementation and adherence for the coal mining, trading and other stakeholders influenced by this new order, Sastry said: “We have worked on the freight structures to ensure reliability and consistency with as little dependence on worldwide indices as practically possible. We are working with insurance companies to structure cargo insurance that is acceptable and reliable. We are increasing resources to adhere to the reporting requirements of the regulation.”

In line with this, ABL is broadening its range of services. The current floating crane business is being expanded into integrated barging plus floating cranes with the aim of diversifying the customer base. “The business plan for the future stems on strong principles of growth by reducing reliance on single customer, single service, single commodity and single country. We are expanding the existing business of integrated services into other mines than our key clients,” said Sastry.

The end goal would be to go into full logistics management for the commodities supply chain. “We have made significant relationships due to which the diversification into ocean going vessels has become a reality. The capability of end-to-end services for Indonesian coal mines is existing with us now,” he said.

Looking ahead, Sastry said ABL will grow capabilities and resources to be able to diversify into other commodities and trades as well as expand into the ocean going transport sector. “For the growth into ocean going vessels, the foundation was laid so that we can acquire and develop the internal capabilities in line with the business plan approved by the board,” he said.

“The next step is the actual diversification into chartering ocean going tonnage mainly for coal movement. The advantage we have is that there are existing as well as new reliable coal mining/ trading customers that are willing to rely on the background and expertise we have in-house,” Sastry noted.

In terms of future business, he said: “The volumes will depend primarily on how many of them can have the contracts reviewed with buyers and how many buyers are ready to work with us by recommendation. The existing volumes in hand are about 4-5m MT with most of the leg work still pending to ensure 100% growth year-on-year when new contracts will be reviewed and new regulations will be implemented.”

Source: SEATRADE MARITIME NEWS