Int. J. Logistics Systems and Management, Vol. 26, No.

3, 2017 379

Evaluating import cargo performance through

Tanjung Priok sea port vs. Cikarang dry port –
a case study in a FMCG company in Indonesia

Elia Oey* and Vanessa Setiawan

International Business and Management,
School of Business and Management,
Bina Nusantara (Binus) University,
Jl. KH Syahdan No. 9 Palmerah, Jakarta Barat, Indonesia
Email: eliaoey@binus.ac.id
Email: Vanessa_setiawan@live.com
*Corresponding author

Abstract: In the era of globalisation, inter-market cargo movement is common

in industry. Monitoring and improving inter-market transit time for cargo and
choosing which port of entry is then essential for products and company.
This research is based on a case study in a fast moving consumer good
company operating its two facilities in West Java, Indonesia. Currently, it uses
Tanjung Priok as port of entry, but with continuous volume increase and
congestion in Tanjung Priok, the company is evaluating Cikarang dry port
(CDP) as alternative port of entry. The study concludes that cost saving is
possible when using CDP for its cargo from Malaysia (MY). It also suggests
monitoring the time component of in-transit time using statistical process
control X-chart to cater prevalent variability and be flexible for future
possibility.

Keywords: Cikarang dry port; CDP; inter-market transit time; Tanjung Priok;
TP; Indonesia.

Reference to this paper should be made as follows: Oey, E. and Setiawan, V.

(2017) ‘Evaluating import cargo performance through Tanjung Priok sea port
vs. Cikarang dry port – a case study in a FMCG company in Indonesia’,
Int. J. Logistics Systems and Management, Vol. 26, No. 3, pp.379–401.

Biographical notes: Elia Oey is a faculty member at International Business

and Management, Bina Nusantara (Binus) University. She was a supply chain
practitioner prior to joining Binus University. Her research areas are
operation management, (global) supply chain management, and cross cultural
management.

Vanessa Setiawan is an Undergraduate student at the International Business and

Management, Bina Nusantara University. She is in her final year and currently
doing her thesis for Bachelor degree.

Copyright © 2017 Inderscience Enterprises Ltd.

380 E. Oey and V. Setiawan

1 Introduction

With the global nature of supply chain, cargo movement across countries depends on sea
port, in term of efficiency and effectiveness. Sea port, which mostly located in country
biggest cities, reflects country competitiveness to investors. For emerging countries,
increasing port effectiveness and efficiency is crucial in order to attract foreign investors.
Several studies have been done in sea port of emerging countries, such as those in
Colombo by Rathnayake et al. (2015); in Sub Saharan Africa (Raballand et al., 2012a);
and in Southeast Asia (Peerapol Boontaveeyuwat, 2010).
Diagnostic study by Ali (2010) on Indonesia indicated inadequate and poor quality of
infrastructure, including those in transportation networks, as critical constraints that are
hampering the country efforts to achieve its development goals. The new Indonesian
government elected in 2014 announced more commitment to develop a modern transport
system, known as ‘maritime highways’, and some progress is on the way. With the new
plan, Indonesia LPI score shows increasing trend from 2010–2014, although still behind
some ASEAN countries, such as Vietnam, Thailand and Malaysia as indicated in
Figure 1 (World Bank, 2015).

Figure 1 Indonesia LPI 2014 scores (see online version for colours)

Source: World Bank (2015)

One of the key challenges in Indonesia port performance lies in the country biggest port,
i.e. Tanjung Priok (TP) port, which has an increasing throughput every year. A study by
World Bank (2013) addresses how to improve TP dwell time, as it influences Indonesia
in three ways: reducing competitiveness of exported Indonesia products, high cost for
domestic businesses and consumers, and influence to the already dysfunctional traffic of
the Jakarta city. With the improvement project on TP, its dwell time performance is
getting better, but still behind other ports in the neighbouring country as indicated in
Figure 2.
TP port dwell time influences not only Indonesia as a country, but also multinational
companies using it as node in transporting their goods. With the effect of globalisation,
many multinationals cannot escape from import practice to support its operation. To
remain competitive, multinational companies must manage the product flow of their
imported cargo well. Selection of which port to choose as entering gate for imported
cargoes is essential and must address both time and cost perspective.
 Evaluating import cargo performance through TP sea port vs. CDP 381

Figure 2 TP dwell time performance (see online version for colours)

Source: World Bank (2013) and Sandee (2013)

The study is based on a case faced by a fast moving consumer good (FMCG) company in
Indonesia, using TP as one of the entry port for its imported cargo. The company sends
its imported cargos through TP port to two facilities (i.e. Facility 1 and Facility 2) in
West Java Area, either as finish goods or raw materials. Cargoes come from several
countries with different transport and document lead time. Cargoes involve ambient as
well cold chain covering varied product category leading to different import
documentation needs and lead time.
In order to improve its overall inter-market transit time in term of cost and response
time, the company under study explores the possibility to use CDP compared to its
current practice of using TP sea port.
In summary, the study aims to analyse whether CDP is more beneficial than TP port
in term of cost and time for the company in importing cargoes to its two facilities. It
evaluates different scenarios based on different variables, such as type of chain, product
category, and country of origin. It evaluates the condition using historical data from first
semester of 2015 in order to give better option for current operation (static analysis). It
proposes to use process control chart to get range value time monitoring and anticipate
future possibility.

2 Literature review

2.1 Importance of transit time in inter-market movement

Inter-market sourcing is nowadays common for multinational companies. It gives several
benefits such as providing framework for greater product harmonisation and common
quality standards. However, there are some challenges in sourcing from other countries,
such as longer time on supply lead time and unreliable transit times (Bowersox et al.,
2010). Other reasons are because of financial requirements, need for special packaging,
ocean freight scheduling and customs clearance. This is why for cargo owners, the transit
time needs to be controlled and analysed in order to minimise cost.
In higher or country perspective inter-market transit time plays a more important role.
Blonigen and Wilson (2008) estimated that improved port efficiency will significantly
increases trade volumes, while Hummels (2001) demonstrates empirically that increased
transport time dramatically reduces trade.
382 E. Oey and V. Setiawan

Several factors can influence inter-market transit time. Wilmsmeier et al. (2006)
provides empirical study that indicators of port characteristics, such as port efficiency,
port infrastructure, private sector participation, and inter-port connectivity, have strong
impact on international maritime transport costs. Increasing the indicator for port
efficiency by 1% reduces freight charges by 0.38%.
Several optimisation approaches are possible in addressing port efficiency. Lam
(2013) explore a normative model and propose hypotheses for managing container
shipping supply chains, in order to better synchronise the processes and the partners
involved in practice. Cheng et al. (2011) addressed how to improve daily operation and
strategic capacity planning for container terminal operators using system dynamic
simulation. Pino et al. (2011) used genetic algorithm (GA) to optimise cargo volume
during container-loading process by balancing between the loading restrictions and
number of freight to be hired. Lattila (2011) model how seaport cope with its demand
using while comparing two simulation models: system dynamics (SD) and agent-based
modelling.
Raballand et al. (2012b) argued that poor port infrastructure and inefficient border
control are not the only major cause of long dwell time, based on study in sub-Saharan
Africa (SSA) countries. Instead, other factors influence cargo dwell time and create a
vicious circle as shown in Figure 3.

Figure 3 Vicious circle of cargo dwell time (see online version for colours)

Source: Adapted from Raballand et al. (2012b)

Reducing inter market transit time requires coordination between all the parties involved
throughout the transit time. However, attention to end-to-end supply chain often is too
little or not the main focus (Fransoo and Lee, 2013). Shipping operations more concern
on optimising assets and how to cut port fees and tariffs, instead on cost related to service
time and reliability, since their impact are easier to be measured (Notteboom, 2006).
Freight forwarders mostly aims for lower price instead of service, while shippers value
service since it can give potential cost savings to the whole supply chain and not only
 Evaluating import cargo performance through TP sea port vs. CDP 383

transport cost (De Langen, 2007). There is also empirical evidence that shipping lines
prefer to optimise port charges and service range (Tongzon and Sawant, 2007).
Harrison and Fichtinger (2013) indicate that customers mostly interested in
door-to-door (D2D) transit time and variability, instead of port-to-port timings. D2D
timings can be broken down into five stages as in Figure 4. Measurement should focus on
D2D as it consists of number of hands-offs and therefore accurate measurement of time
spent in each segments are rather difficult. Even in a simplified process, the five stages
could have a minimum of seven modals handoffs, leading to value adding and dwell time.

Figure 4 Component of D2D transit time (see online version for colours)

Source: Adapted from Harrison and Fichtinger (2013)

Raballand et al. (2012b) elaborate time elements a container spends in the port into three
segments as follow:
1 unloaded from vessel and transferred to the storage yard, T1
2 waiting in the container yard, T2
3 processing out of the port, T3.
T1 and T3 are influenced by the efficiency of the terminal operator, while T2 is affected
by the time spent for completing a variety of procedure for custom clearance, completing
intermodal transfer and arrangement of inland transfer. Custom clearance formalities
performed by importers can be divided to three phases of port dwell time, namely:
• operational dwell time: refers to the activity of physical operations
• transactional dwell time: refers to the performance of clearance formalities
• storage dwell time: refers to the voluntary storage of container in the container yard
as part of strategic inventory management.
To summarise, port performance does influences the cost, which eventually must be
borne by its customer. However, it involves a lot of factors due to involvement of
multiple stakeholders each with their own interest. From customer point of view, a more
holistic approach is needed by addressing its D2D time in order to be more responsive
and cost competitive.
384 E. Oey and V. Setiawan

2.2 (Cikarang) dry port as an option

A ‘dry port’ is defined as inland terminal which have direct link to the seaport(s) or, in
the case of international land movements, are in contact with importing sources and
exporting destination. Dry ports may be used whether a country has seaports or is
land-locked, but only surface modes of transport are involved in giving access to them
(UNCTAD, 1991). Dry port can also be viewed as extension of the sea port in order to
extent the life cycle of the sea port as the port reach its maturity stage and requires
expansion (Cullinane et al., 2012).
Dry port gives several benefits, such as increased trade flows, expanding existing
seaport capacity, lower D2D freight rates, reducing total transport expenses, optimal use
of road and rail transport, better utilisation of capacity, greater use of containers, benefits
of shuttle trains, and reducing environmental problems and air pollution (UNCTAD,
1991).
According to Dadvar (2011), the following functions are considered essential and
must be presented in a dry port:

• freight distributing

• container storing

• custom clearance.

The case study analyses the possible benefit of the company under study to use CDP in
lieu of its current practice using TP sea port. Similar study has been done by World Bank
(2013) about CDP but in a more generic sense. This study is more specific since it
analyses based on perspective of one of possible user, a multinational company with its
own import portfolio, needs and supply network. Nevertheless, the study can serve as
bench mark to others while serving as decision making analysis for the company itself.

Figure 5 Cikarang dry port (see online version for colours)

Source: World Bank (2013) based on Cikarang Dry Port in 2011

 Evaluating import cargo performance through TP sea port vs. CDP 385

CDP is an integrated facilities serving as one of the spokes from TP hub. It is located at
the west direction of TP as per Figure 5. It started to operate in 2010, and it took more
than five years until it become fully operational. Industrial areas in the surroundings
Jakarta area can be grouped into West, East and South spokes as extension to TP as a
hub. The west part plays a bigger portion, as many industrial estates are located in the
area and equipped with direct yet high traffic highway. CDP is located in the west area
and aims to become major spokes to TP port. The two facilities of the case under study
are located in the west part from TP, and therefore it is worth to consider using CDP as
their port of entry.
Besides reducing dwell time, there are some advantages of dry port. It has the ability
to improve supply chain performance because it has the ability to reconfigure inland
transport networks which will increase local competitiveness (Acciaro and Mckinnon,
2013)

3 Methodology

3.1 Methods and tool

The proposed steps performed for the case study is summarised in Figure 6.

Figure 6 Proposed steps

Step 1: Process
mapping
Step 4: Step 5:
Determine Calculate and
compare time Step 6: Step 7:
Step 2: Analyse variables
and cost for Sensitivity Conclusion and
historical data and influencing
Tanjung Priok analysis recommendation
search for pattern inter-market
transit time vs Cikarang
and cost dry port
Step 3: Root cause
analysis

Source: Researchers, 2015

Steps 1–3 are used together in order to determine which variables influence the time and
cost of using TP or CDP. Below is the brief summary of each step:
Step 1 Process mapping
Process mapping is done by the following sub-steps:
• break down the time component of inter-market transit time to get clarity
• understand relationship between activities (e.g. some activity can start after
departure, while others can only be done after physical material arrivals at
the port of destination)
• translate time component to something that matter for the stakeholder,
i.e.: cost.
386 E. Oey and V. Setiawan

Step 2 Analyse historical data

To quantify and understand the underlying cause better, historical data from first
semester 2015 was analysed by:
• slice and group the data in order to look for similarity and trend of
variability
• afterwards, equilibrium range for natural variations was determined using
statistical control chart.
Step 3 Root cause analysis
Root cause analysis was done by getting insights from those who are familiar
with the system on the cause and effect between variables and source of possible
exceptions and outliers. The cause and effect is presented as relationship
diagram. The insights can later be used for continuous improvement of
eliminating possible outliers and make the control chart more reliable.
Step 4 Based on the above, possible influencing variables that can affect time and cost
is then determined and used for evaluation.
Step 5 Performing static analysis to look for best scenario in term of cost and time
(i.e. which variables better use which port)
Step 6 Conduct sensitivity analysis to explore whether the cost comparison based on
the current state is absolute or not, and how and when the result can change.

3.2 Variables and scenarios

The case under study involves varied imported cargo; therefore four possible variables
are explored as following:
• Country of origin
Different country of origin leads to different material lead time and/or document lead
time, and hence can generate a different cost implication.
• Type of material (finish good or raw material)
Finish good (FG) and raw material (RM) may require different documentation,
leading to different document flow time and cost implication.
• Material type by product category
Some product category, such as those related to veterinary department requires
additional documents and steps (i.e. application of veterinary certificate and
quarantine), hence different cost implication.
• Material type by type of chain
Imported material can also be classified based on shipment condition, i.e.: ambient
chain or cold chain. Cold chain requires different storing facility at port and different
allowable free time, and consequently different cost.
The above possible variables lead to possible different scenario as summarised in
Table 1.
 Evaluating import cargo performance through TP sea port vs. CDP 387

Table 1 Possible scenarios and decision variables

Scenario Description Diagram

1 As-is condition: All material Country 1
(regardless of type and origin) RM Fac.
via TP port Country 2
. TP

. FG
Country n Fac. 2

2 All material (regardless type Country 1

and origin) via CDP RM
Fac.

Country 2
TP CDP
.
FG
.
Country n Fac. 2

3 Combination of 1 and 2: Certain

variables are via TP, while others RM
from CDP. Grouping of variables Group 1
TP Fac.

are by:
• by country of origin
• by FG or RM FG
Group 2 TP CDP Fac. 2
• by product category
• by chain type
Source: Researchers, 2015
For each combination of the scenarios, the following costs will be calculated:

• Transport cost from exporter’s port to importer’s door

The transport cost used the latest rates for TP and quotation from transporter for
CDP.

• Storage cost at port, if any, if exceeding from allowable free time

TP and CDP gives different free storage time and rates, although both adopt
nonlinear rates.

• Demurrage cost, if any, if exceeding from allowable free time

Demurrage cost is calculated if time elapse between arrival date and the time
container return to port depot, exceed the port authority’s norm. TP and CDP give
different progressive demurrage rate.

• Working capital cost

Working capital is calculated by multiplying the total time from exporting
port-to-importing door with value of cargo and cost of money.
388 E. Oey and V. Setiawan

4 Analysis and discussion

4.1 Process mapping

Process mapping for import products in the case study can be described as in Figure 7.
The check-out of the cargo at the destination port is determined by the maximum time
between physical material arrival and completion of the overall documentation. Certain
product category requires application of import permit (SKI). Most of the document
process can start upon actual time of departure, except for product related to veterinary
department which requires quarantine inspection upon arrival. For veterinary-related
products, documentation, to some extent, depends on the product arrival.
From process mapping, total time from exporting port to importing door can then be
broken down into several time elements as indicated in the bottom part of Figure 7.
Variation occurs for each time elements and hence magnifies overall variation of the
in-transit time.

Figure 7 Import process mapping and its time elements (see online version for colours)

Source: Researchers, 2015

4.2 Translating time to cost

When evaluating the two options, i.e. TP vs. CDP, the time elements are translated into
cost. Figure 8 describes the relationship diagram between the time elements and related
cost. The figure also highlights possible underlying cause of each factor, derived from
 Evaluating import cargo performance through TP sea port vs. CDP 389

brainstorming with operation personnel. It gives insights on possible cause of exceptions,

which later help in the process of eliminating outliers from past data when determining
equilibrium range using statistical process control.

Figure 8 Relationship diagram amongst time and cost elements (see online version for colours)

Source: Researchers, 2015

4.3 Variability in in-transit time component

Looking at the data and insights from the relationship diagram, the time variability is
prevalent. Figure 9 shows the overall variability of time for each combination. The
graphs shown as candle stick chart to give a feel on variability and trend for period of
Jan–June 2015.
Looking at variability of its past data, it is proposed to look for the acceptable range
that contain only natural variation, and hence represent equilibrium stage. Statistical
process control chart can be used to monitor a process to make sure only natural variation
is acceptable to the system and to provide a statistical signal when assignable causes of
variation are present (Heizer and Render, 2014). As monitored time components are
variable, it is proposed to apply mean chart limit (x-charts) with the following formula:

Upper Control Limit (UCL) = x + zσ x

Lower Control Limit (LCL) = x − zσ x

z use value of 2 in order to give 95.45% confidence interval.

390 E. Oey and V. Setiawan

Figure 9 Variability of time component by variables (see online version for colours)

ATD2DocCompl : ATD to document completion

ATD2SKI : ATD to SKI (import permit)
ATD2QRT : ATD to quarantine (KH7 finish)
ATD2SPPB : ATD to SPPB (document clearance finish)
ATD2RecByWhs : ATD to cargo receive by user warehouse
ATD2RecByWhs: : ATD to container return to depo
ATD2ATA : Actual sailing time
 Table 2

TP port CDP TP port CDP

Combination Time components Combination Time components
LL Ave UL LL Ave UL LL Ave UL LL Ave UL
FR/Amblent ATD-to-ATA 31 35 44 33 37 46 NZ/Amblent ATD-to-ATA 19 26 32 21 28 34
ATA-to-RecByWhs 2 5 8 0 3 6 ATA-to-RecByWhs 1 9 20 1 9 17
ATA-to-RecByDepo 2 5 9 0 3 6 ATA-to-RecByDepo 3 11 21 1 10 20
Export Port-to-lmport Door 33 40 52 33 40 52 Export Port-to-lmport Door 20 35 52 22 37 51
MY/Amblent/ ATD-to-ATA 1 6 12 3 8 14 PH/Amblent ATD-to-ATA 9 12 27 11 14 29
FinishGood ATA-to-RecByWhs 5 12 20 3 10 10 ATA-to-RecByWhs 5 9 14 3 7 12
ATA-to-RecByDepo 5 13 23 3 11 21 ATA-to-RecByDepo 5 9 14 3 7 12
Export Port-to-lmport Door 6 18 32 6 18 24 Export Port-to-lmport Door 14 21 41 14 21 41
MY/Ambient/ ATD-to-ATA 2 6 12 4 8 14 SG/Amblent ATD-to-ATA 1 2 4 3 4 6
RawMaterial ATA-to-RecByWhs 7 16 23 5 14 14 ATA-to-RecByWhs 5 25 39 3 23 37
Calculated time component by variables

ATA-to-RecByDepo 8 17 24 6 15 22 ATA-to-RecByDepo 5 26 39 3 24 37
Export Port-to-lmport Door 9 22 35 9 22 29 Export Port-to-lmport Door 6 28 43 6 28 43
MY/Cold ATD-to-ATA 2 8 16 4 10 18 TH/Amblent ATD-to-ATA 3 5 6 5 7 8
ATA-to-RecByWhs 3 11 22 1 9 20 ATA-to-RecByWhs 5 9 15 3 8 14
ATA-to-RecByDepo 5 12 23 3 10 21 ATA-to-RecByDepo 5 9 15 3 8 14
Export Port-to-lmport Door 5 19 38 5 19 38 Export Port-to-lmport Door 8 14 21 8 15 22
NL/Ambient ATD-to-ATA 29 35 38 31 37 40 US/Ambient ATD-to-ATA 26 35 44 28 37 46
ATA-to-RecByWhs 1 9 20 1 8 17 ATA-to-RecByWhs 3 9 18 1 7 16
ATA-to-RecByDepo 2 9 20 1 8 17 ATA-to-RecByDepo 3 9 18 1 7 17
Export Port-to-lmport Door 30 45 58 32 45 57 Export Port-to-lmport Door 29 44 62 29 44 62
Evaluating import cargo performance through TP sea port vs. CDP

Source: Researchers, 2015

391
392 E. Oey and V. Setiawan

Heizer and Render (2014) stated that there are three types of process outputs, as
following
• Type 1 – Out of control: It is when the process having assignable causes of variation
and no pattern detected.
• Type 2 – In statistical control but not capable of operating within control limits: It is
when the process is in control, with only natural variations contained, but not capable
of operating within the specified control limit
• Type 3 – In statistical control and capable of operating within control limits: It is
when a process contains only natural variation and capable of operating under the
specified control limits.
Variability is definitely embedded in the time element of the inter-market transit time.
The challenge is to group them first at least into type 2 of process output as described
above. With continuous monitoring and improvement, the process can then be improved
to type 3.
To start creating type 2 process output, few outliers are excluded when calculating the
standard deviation in order to give more reasonable range. It must be noted however, that
some groups of data only have few frequencies which may influence the standard
deviation. Which outliers excluded is confirmed by discussion with operational personnel
and reflected in relationship diagram. Result of calculated time component range by
variables can be seen in Table 2.
From all the time elements, special attention is given to the following, as they
influence cost:
• ATD-ATA: sailing time. It influences working capital cost.
• ATA-RecByWhs: Extra time at the port after arrived. It influences storage cost at
port and working capital.
• ATA-RecByDepo: Extra time of borrowing the container to shipping line. It
influences demurrage and working capital cost.
Important notes and insights from the result in Table 2:
• Only country of origin Malaysia (MY) show that material type (RM or FG) as
influencing variables. For other country of origin, there is no complete combination
to be evaluated or the data is too few.
• From process mapping it is recognised that physical inspection upon ATA is
required for product category with veterinary certificate requirement, resulting
clearance documents depend on ATA instead of ATD. However, looking at the
historical scattered plot data there was no significant difference or trend identified.
• As expected, for short distance countries, such as Malaysia (MY), Singapore (SG),
Thailand (TH) variation in ‘ATA-RecByWhs’ time element can be wider than sailing
time variation, since for those countries the critical path will be in document time
instead of sailing time. But it is interesting to see that for long distance countries,
such as New Zealand (NZ), USA (US), The Netherlands (NL), variation in
‘ATA-Rec By Whs’ still a lot wider than ‘ATA-ATD’. For long distance countries,
documentation time should be able to be minimised both in absolute number and
variation, so that the total export port-to-import door time variance should only come
from sailing time.
 Table 3

2015 using data as it is 2015 using ranged time variables

Combination Cost TP CDP
TP CDP
LL Average UL LL Average UL
FR/Ambient Storage cost 59 11 - 20 56 - - 3
Transport cost 586 663 586 586 586 663 663 663
Demurrage cost - - - - - - - -
WC cost 384 386 288 356 460 295 358 458
Total cost 1.028 1.060 874 962 1.102 958 1.020 1.124
MY/Amtaient/ Storage cost 478 107 89 446 987 - 85 86
FinishGood Transport cost 1.902 2.289 1.902 1.902 1.902 2.289 2.289 2.289
Demurrage cost 26 23 - - 131 - - -
WC cost 332 333 110 324 580 110 324 433
Overall cost comparison TP vs. CDP

Total cost 2.738 2.752 2.100 2.672 3.600 2.399 2.699 2.808
MY/Ambient/ Storage cost 380 104 93 356 591 1 93 98
RawMaterial Transport cost 783 951 783 783 783 951 951 951
Demurrage cost 30 18 - - 119 - - 40
WC cost 216 216 88 210 342 88 210 279
Total cost 1.409 1.290 965 1.349 1.836 1.041 1.254 1.368
MY/Cold Storage cost 361 101 - 243 695 47 223
Transport cost 731 1.062 731 731 731 1.062 1.062 1.062
Demurrage cost 397 312 - 108 969 1 796
WC cost 93 93 21 83 163 21 83 163
Evaluating import cargo performance through TP sea port vs. CDP

Total cost 1.582 1.568 752 1.165 2.558 1.084 1.193 2.245
Source: Researchers, 2015
393
 394

Table 3

2015 using data as it is 2015 using ranged time variables

Combination Cost TP CDP
TP CDP
LL Average UL LL Average UL
NL/Ambient Storage cost 285 94 - 51 182 8 50
Transport cost 496 561 496 496 496 561 561 561
Demurrage cost 319 285 - - - - - -
WC cost 448 449 205 302 393 219 306 389
E. Oey and V. Setiawan

Total cost 1.548 1.389 702 849 1.072 780 874 1.000
NZ/Ambient Storage cost 369 116 - 131 362 - 28 104
Transport cost 1.377 1.635 1.377 1.377 1.377 1.635 1.635 1.635
Demurrage cost 406 353 - - 5 - - -
WC cost 785 797 396 642 906 396 659 906
Total cost 2.936 2.901 1.772 2.149 2.650 2.030 2.322 2.645
PH/Ambient Storage cost 12 - 4 12 27 - 2 6
Transport cost 121 142 121 121 121 142 142 142
Overall cost comparison TP vs. CDP (continued)

Demurrage cost - - - - - - - -
WC cost 7 7 6 9 17 6 9 17
Total cost 140 150 131 142 164 148 153 165
SG/Ambient Storage cost 181 172 35 171 332 - 167 303
Transport cost 930 1.164 930 930 930 1.164 1.164 1.164
Demurrage cost 469 368 - 189 1.200 - 106 1.023
WC cost 213 486 106 213 334 106 486 757
Total cost 1.794 2.190 1.071 1.504 2.795 1.270 1.923 3.247
Source: Researchers, 2015
 Table 3

2015 using data as it is 2015 using ranged time variables

Combination Cost TP CDP
TP CDP
LL Average UL LL Average UL
TH/Ambient Storage cost 34 7 10 29 71 - 5 20
Transport cost 249 297 249 249 249 297 297 297
Demurrage cost 1 3 - - - - - -
WC cost 42 44 22 39 59 22 41 61
Total cost 326 351 281 317 379 319 342 377
US/Ambient Storage cost 199 48 - 116 369 - 14 104
Transport cost 1.816 1.980 1.816 1.816 1.816 1.980 1.980 1.980
Demurrage cost 31 20 - - - - - -
WC cost 743 746 481 723 1.022 481 724 1.025
Total cost 2.790 2.793 2.297 2.655 3.208 2.461 2.719 3.110
VN/Ambient Storage cost 3 - 3 3 3 - - -
Transport cost 45 55 - 45 45 55 55 55
Overall cost comparison TP vs. CDP (continued)

Demurrage cost - - - - - - - -
WC cost 5 5 5 5 5 5 5 5
Total cost 53 59 53 53 53 59 59 59
Total Storage cost 2.361 762 234 1.578 3.676 1 449 999
Transport cost 9.036 10.799 9.036 9.036 9.036 10.799 10.799 10.799
Demurrage cost 1.679 1.380 - 297 2.425 - 107 1.859
WC cost 3.269 3.563 1.728 2.905 4.281 1.748 3.204 4.491
Evaluating import cargo performance through TP sea port vs. CDP

Total cost 16.345 16.505 10.998 13.817 19.417 12.548 14.559 18.148
Source: Researchers, 2015
395
396 E. Oey and V. Setiawan

4.4 Cost comparison

Using data from Jan–June 2015, time component using CDP can be simulated and
respected cost can be calculated. Complete cost comparison between TP vs. CDP using
data as it is can be seen in Table 3. Two types of cost comparisons were done, they are:
• Using historical time data as it is, which mean past outliers were included. The result
was in the left part of Table 3.
• Using calculated time range described in previous section. As a result, cost was
reflected as range which represent equilibrium and where outliers were excluded.
The result was in the right part of Table 3.
In Table 3, the grey areas represent the less preferred cost compare to the white areas
(e.g. Using data as it is, for FR/Ambient TP is preferable than CDP). It is worth to notice
that the result can be different between the left and right part of Table 3. For example, for
MY/Ambient/FG, using data as it is TP is slightly cheaper than CDP. However, if using
range calculation, the later can be cheaper in average to UCL range. It implies that the
comparison can be quite sensitive and decision can change by few outliers.
Some key observations from the cost comparison result are as follow:
• CDP can give some savings in storage and demurrage cost, especially for short
distance countries where the bottle neck is more in waiting for documents rather than
sailing time. Nevertheless, the cost saving is trivial, unless huge variation occur and
hence get the high end of progressive storage and demurrage rate.
• Opportunity to reduce working capital cost exists in general. However, the cost
saving is not significant because working capital cost is inferior to transport cost for
the case under study. However, reducing total in-transit time is still beneficial in
order to increase response time and reduce out-of-stock possibility at imported
country.
• Transport cost is a dominant cost element for the case. Therefore, having a
competitive transport rate is essential. Because of that it is quite difficult for CDP to
be more competitive than TP for the case under study.

4.5 Expected cost comparison and sensitivity analysis

To better compare cost in range, expected cost value for CDP and TP cost must be
calculated which was done using the following formula:
Expected Cost = (Cost of LCL × Probability LCL)
+ (Cost of Ave. × Probability Ave.)
+ (Cost of UCL × Probability UCL)
 Table 4

TP CDP Cost saving if

Combination Key figures Recommendation
LL Average UL LL Average UL using CDP

FRAmbient Cost 274 962 1.105 953 1.020 1.124 TP –5%

Probability 8% 50% 42% 8% 50% 42%
Expected cost 1.013 1.058
MY/Ambient/ Cost 2.100 2.672 3.600 2.399 2.699 2.808 CDP 3%
FinishGood Probability 22% 53% 20% 22% 58% 20%
Expected cost 2.737 2.656
MY/Ambient/ Cost 965 1.349 1.836 1.041 1.254 1.368 CDP 10%
RawMaterial Probability 29% 48% 23% 29% 48% 23%
Overall cost comparison TP vs. CDP

Expected cost 1.348 1.218

MYColdChain Cost 752 1.165 2.558 1.084 1.193 2.245 TP –4%
Probability 24% 62% 15% 24% 62% 15%
Expected cost 1.273 1.322
NLAmbient Cost 702 1.072 730 8/4 1.000 TP –5%
Probability 67% 11% 22% 67% 11% 22%
Expected cost 800 839
NZAmbient Cost 1.772 2.149 2.650 2.030 2.322 2.645 TP –6%
Probability 28% 33% 39% 28% 33% 39%
Expected cost 2.239 2.367
Evaluating import cargo performance through TP sea port vs. CDP

Source: Researchers, 2015

397
 398

Table 4

TP CDP Cost saving if

Combination Key figures Recommendation
LL Average UL LL Average UL using CDP

PhAmbient Cost 131 142 164 148 153 165 TP –8%

Probability 25% 63% 13% 25% 63% 13%
Expected cost 142 153
E. Oey and V. Setiawan

SGAmbient Cost 1.071 1.504 2./93 1.570 1.923 3.24/ TP –20%

Probability 29% 33% 33% 29% 38% 33%
Expected cost 1.811 2.178
THAmbient Cost 281 317 379 319 342 377 TP –7%
Probability 26% 53% 21% 26% 53% 21%
Expected cost 321 343
USAmbient Cost 5.557 2.655 3.208 2.451 2.719 3.110 TP –3–%
Overall cost comparison TP vs. CDP (continued)

Probability 42% 33% 19% 42% 38% 19%

Expected cost 2.610 2.685
VNAmbient Cost 53 53 53 59 59 39 TP –13%
Probability 0% 100% 0% 0% 100% 0%
Expected cost 53 59
Source: Researchers, 2015
 Evaluating import cargo performance through TP sea port vs. CDP 399

The probability is calculated from historical data (but this time including outliers), as
follows:
• probability of LCL = frequency of less than (Ave – LCL)
• probability of Ave = frequency of between (Ave – LCL) and (Ave – UCL)
• probability of UCL = frequency of more than (Ave + UCL)
The result can also be used as sensitivity analysis, to gain insights at what probability
value can give change of preference between TP and CDP and presented in Table 4.

5 Conclusions and Limitation

The study concludes and recommends the following to the company under study:
• Overall, cost saving is possible if the company uses CDP for import cargo from
Malaysia (MY) with ambient chain, both for finish good (FG), as well as raw
material (RM).
• As time variability is inevitable, it is suggested to set the LCL and UCL as
continuous monitoring mechanism. The implemented range control mechanism can
then evolve by reducing occurrence of outliers/exception and narrowing the range. A
continuous monitoring system hep managers and decision makers to get clarity on
the process, early warning system when the process get out of control, and faster
decision making when external environment such as storage or transport rates
changed.
• The current recommendation is unique for the company under study at its current
state. Different company under different set of operation context may get different
recommendation, although the same methodology can be applied. Recommendation
may also alter if operation condition for the company under study change, for
example if they reorganise their overall supply network which may drastically
change the cargo movement to their facility in West Java area. As the solution can be
dynamic, it is prudent to make both CDP and TP as ready-to-be-used route for the
company, in order to increase flexibility, contingency, and to anticipate for future
congestion in TP.
• The main objective should not only to avoid extra cost such as demurrage or storage
cost by matching documentation time and material time. Instead, it should focus on
decreasing the total end-to-end transport time in order to increase responsiveness and
other benefit, such as reduced out-of-stock or better product freshness.
This study has the following limitation, but hence can be treated as possibility for future
calculation:
• The calculation is static analysis where it is based on current condition. The study
can be expanded further by performing dynamic analysis to cater future growth in
volume, possible inflated storage and transport rate, and see whether the preference
between TP vs. CDP change.
400 E. Oey and V. Setiawan

• Due to limitation of the data, the study concentrate only exporting port-to-importing
warehouse time frame. Further analysis can be done to include ‘exporting
warehouse-to-exporting port’ time elements, to gain insight what can be improved or
bench mark amongst the exporting countries.

Acknowledgements

The authors would like to thank the anonymous reviewers and the editor for their
insightful comments and suggestions.

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