Reducing Dwelling Time and Logistics Cost by

Implementing Dry Port

Hafizha N. Absari, Mohamad F. Hanif, Vivian P. Tjakra, Wahyu A. Prathama

Undergraduate Student, Department of Mechanical and Industrial Engineering
Faculty of Engineering, Universitas Gadjah Mada
Yogyakarta, Indonesia
hafizha.nabila.a@mail.ugm.ac.id

Abstract---Indonesia is an archipelago with large
number of population. It delivers this country to use inter-
trade island system. This status quo and centralization
system of economic cause the imbalance distribution of
logistic between west and east region of Indonesia. One of
the proposed solution by government to the problem is
Pendulum Nusantara. Pendulum Nusantara is intended to
increase the shipping flow of logistics from Western
Region to Eastern Region, and vice versa. Tanjung Perak
Port, as the most influential port, still owns overcapacity
problem and high dwelling time. One of the main solution
is by building a dry port. The objectives of this paper are
to prove that implementation of dry port can reduce
dwelling time and to manifest its saving by calculate the
logistics cost and total reduction of dwelling time. Firstly,
this paper examine the location of dry port by using
center-of-gravity method. By obtaining dry port’s location,
distance of every links can be measured and used to
calculate the logistics cost. Afterwards, regression analysis
with least square method is used to estimate the effect on
assigning a number of container from Tanjung Perak Port
to dry port. The result shows that by assigning
overcapacity containers in Tanjung Perak Port to dry
port, saves for about 463 billion rupiah on logistics cost
each year. In addition the assignment will also reduce the
dwelling time in Tanjung Perak Port. if the dry port
operates on its maximum capacity, the dwelling time in
Tanjung Perak Port will be reduced from five days to two
days. In summary, this paper has successfully proved that
dwelling time and logistic cost will be decreased by
implementing dry port.
Pendulum Nusantara is intended to increase the shipping
flow of logistics from Western Region to Eastern Region, and
vice versa. By performing this program, logistics demand of
the East Indonesia can be better fulfilled and the logistics
operation can be obtained with the lowest cost. The pendulum
contains many nodes, which is linked one another. One of the
most influential link connects Tanjung Priok Port in Jakarta
with Tanjung Perak Port in Surabaya [1]. This statement is
supported by previous research of determining the importance
of link between Tanjung Perak Port and Tanjung Priok Port on
the first rank with value of importance 49.2% [1]. The fact that
Tanjung Perak Port is the main node of logistics operation
shows that Tanjung Perak Port contributes much value in
logistics-trading. Therefore, many supply chain transaction will
depend on the situation of this node.
However, the importance of Tanjung Perak Port is not
supported with proper facilities. This lack of facilities caused
high dwelling time in Tanjung Perak Port. It takes a long time
to load and unload the container, as well as to group the
logistics and the transportation initiation. 5 days of dwelling
time in Tanjung Perak Port is considerably high in comparison
with the dwelling time in other countries such as Singapore (1
day), Malaysia (2 days), and Thailand (3 days). Some efforts
can be made in order to eliminate high dwelling time, such as
upgrading cargo storage capacity, upgrading berth
specialization, and improving average speed in cargo transfer
[2].
Aside from the dwelling time, overcapacity often occurs in
Tanjung Perak port. The overcapacity of the containers often
occurs in some types of cargo as shown on Figure 1 [3].

Keywords—dry port; dwelling time; logistics cost

I. INTRODUCTION
Indonesia, as a country with large market of many products,
has imbalance level of prices between two main regions, East
Indonesia (Papua, Maluku, Sulawesi, Nusa Tenggara, and Bali)
and West Indonesia (Borneo, Java, Sumatera). The main causes
of the imbalance is inter-trade island system and the
centralization of economic activities in Java [1]. Therefore, the
Pendulum Nusantara is being developed to resolve this
problem.
Fig. 1. Overcapacity Container based on Types. b. container’s capacity (related to modes of distributing the
supplies)
Overcapacity directly results in high dwelling time and c. the area and facilities (roadway, public facilities) reserved
lead to high logistics cost as the effect of high overnight fee of for the dry port
the containers. To support the Pendulum Nusantara program d. the number of industrial parks in East Java.
which is arranged by the government, building a dry port can
be an alternative. The aim of center-of-gravity method is to minimize the
distance between customers (industrial parks) and planned dry
Dry port is an inland freight terminals that directly port, so the transportation cost will also be reduced. Thus,
connected to one or more seaports with high-capacity equation (3) and (4) is formulated to determine the gravity
transport means, where customers can drop and pick up their center that formulated as
standardized units as if directly at a seaport [4]. Building dry
port can also be combined with other government’s program
(3)
which is also being conducted, Greater Surabaya Metropolitan
Ports. This program offers a technology in which a container
can be carried from a harbor into the land with an automatic (4)
rail transportation, Automatic Container Transporter (ATC).
Hence, the logistics cost can be managed. The logistics cost
itself consists of transportation cost and container overnight where :
fee. By implementing dry port, transportation cost will be : x-axis distance of gravity center
decreased because of the implementation of ATC and the fast : y-axis distance of gravity center
flow of product’s dwell, container overnight fee can also be : capacity of container of each industrial park
decreased. The objectives of this paper are to prove that Xi : x-axis distance of each industrial park
implementation of dry port can reduce dwelling time and to Yi : y-axis distance of each industrial park
manifest its saving by calculate the logistics cost and total
reduction of dwelling time. C. Regression Analysis for Dwelling Time
Calculation of the dwelling time is obtained by estimating
II. METHODS the regression model of assigned container to dry port versus
dwelling time in Tanjung Perak Port. Thus, equation (5) is
A. Logistics Cost Analysis formulated to determine the regression model that formulated
The analysis starts with evaluating the overall logistics as
cost, which consists of transportation cost and overnight cost, (5)
of current distribution from Tanjung Perak Port to each
industrial park in East Java. Thus, equation (1) and (2) is where:
formulated to calculate transportation cost and overnight fee Y : Dependent Variable, defined as Dwelling Time
that formulated as (days)
: Intercept
TC = D . V . Ct (1) : Regression Coefficient
: Regressor, defined as number of container assigned
OC = Cv . T (2) to dry port

where : The method of least squares is used for estimating the

TC : Total Cost of Transportation intercept and regression coefficient by criterion to minimize
D : Distance from Port to Industrial Park the sum of squares of deviation [7].
V : Volume (Number) of Container
Ct : Cost of Transportation
III. DATA COLLECTION
OC : Total Container Overnight Fee
Cv : Container Overnight Fee To discover the number of containers that would be
T : Period of Overnight assigned to dry port, this paper uses data from Government of
East Java website according to total number of factories in
every industrial parks. It also uses data on Tanjung Perak
B. Center-of-Gravity Method Port’s overcapacity, which was retrieved from PT Pelindo III
As the dry port needs to be built, the first consideration is press release. The data is also used to determine the demand of
placing the dry port on the best location. The selection of port usage for every industrial parks.
facility’s location is based on center-of-gravity (COG) This paper uses some data to calculate the logistics cost. It
method, applied on several nodes according to these criteria consists of distance from industrial parks to Tanjung Perak
[6]: Port, distance from industrial parks to dry port, and distance
a. the distance of facilities to the main port (Tanjung Perak from dry port to Tanjung Perak Port data. Those were
Port, Surabaya) collected from assigning those links on Google Maps. It also
consists of trucking fee data and container overnight fee data TABLE II. DISTANCE COMPARISON
from expedition service staff and port authorized Industrial Park Dry Port Tj. Perak Port
administration.
Surabaya Industrial Estate Rungkut 25.5 km 26 km

Pasuruan Industrial Estate Rembang 30.5 km 60.3 km

IV. DATA ANALYSIS
Kawasan Industri Gresik 47.4 km 21.7 km
To find out the reduction in logistics cost and dwelling
time by implementing dry port, firstly the exact location of dry Ngoro Industrial Park 20.3 km 54.7 km
port has to be revealed. As explained previously, to estimate Maspion Industrial Estate 42.5 km 16.5 km
the location of the dry port, this paper uses center-of-gravity
method. The weight for every industrial parks is obtained by Sidoarjo Industrial Estate Berbek 24 km 24.9 km
proportioning the number of overcapacity containers in
Tanjung Perak Port to the number of companies in every The distance on Table II is used to calculate the logistics
industrial parks. Table I shows the weight and location in x- cost of implementing dry port and not implementing dry port
axis and y-axis for every industrial parks which are considered (only use Tanjung Perak Port). Table III shows the estimated
in calculating center-of-gravity. With scale 1:220884.7, logistics cost comparison for both alternatives. On the
location of dry port is on 61.5509 for the x-axis and 115.3632 calculation, the trucking fee is Rp 28,300 / km for each
for the y-axis. container and the container overnight fee in Tanjung Perak
Port is Rp 87,500 / night.
TABLE I. DISTANCE FOR CENTER-OF-GRAVITY METHOD Table III shows that implementation of dry port can
Industrial Park X Y Weight reduces total logistics cost each year for about 463 billion
rupiah with condition number of overcapacity containers are
Surabaya Industrial Estate Rungkut 0 30.74 0.1
assigned to dry port rather than stacking them on Tanjung
Pasuruan Industrial Estate Rembang 99.69 0 0.18 Perak Port. It also indicates that dry port implementation can
save current logistics cost on Tanjung Perak Port, which is Rp
Kawasan Industri Gresik 9.81 277.39 0.05
4.5 trillion, for about 20%. Moreover, it also overcomes the
Ngoro Industrial Park 12.54 207.61 0.05 overcapacity containers in Tanjung Perak Port. With dry port’s
Maspion Industrial Estate 68.18 143.94 0.45 maximum capacity of 600,000 twenty feet equivalent units
(TEUs) per year, implementation of dry port also reduces the
Sidoarjo Industrial Estate Berbek 69.46 136.86 0.17 dwelling time at Tanjung Perak Port from five days to two
days corresponds with the regression equation (6) as

Y = 0.0000051 - 17.13186769 X (6)

TABLE III. ESTIMATED LOGISTICS COST COMPARISON OF

IMPLEMENTING DRY PORT & NOT IMPLEMENTING DRY PORT
Implementing Dry Not Implementing Dry
Port Port
Number of Capacity
1,010,632 1,010,632
(Containers)
Trucking Fee from
Industrial Park to Tj. Rp - Rp 978,947,730,580
Perak
Trucking Fee from
Industrial Park to Dry Rp 786,912,406,430 Rp -
Port
Transportation Cost
Rp 170,596,298,611 Rp -
Dry Port to Tj. Perak
Container Overnight
Rp - Rp 442,151,500,000
Fee
Fig. 2. The Map of Location of Dry Port in East Java (Google Maps)
Total Logistics Cost Rp 957,509,715,673 Rp 1,421,100,241,212
Figure 2 shows the location of Tanjung Perak Port (mark
as “pinned star”), Dry Port (mark as “star”), and Industrial
Parks as follows: 1) Kawasan Industri Gresik, 2) Maspion
Industrial Estate, 3) Surabaya Industrial Estate Rungkut, 4)
Sidoarjo Industrial Estate Berbek, 5) Ngoro Industrial Park,
and 6) Pasuruan Industrial Estate Rembang. After the location
of dry port was determined, logistics cost calculation which
consists of transportation cost and container overnight fee can
be calculated. Table II shows distance comparison between
dry port and Tanjung Perak Port from every industrial parks.

Fig. 3. Impact of Dry Port to Dwelling Time
Figure 3 shows the correlation between amount of TEUs
assigned to dry port and dwelling time. The higher amount of
TEUs assigned to dry port, the lower the dwelling time in
Tanjung Perak Port will be. This reduction of dwelling time
happens because assigning a number of containers to dry port,
overcapacity containers in Tanjung Perak Port can be reduced
till its normal capacity. By operating dry port to its maximum
capacity, dwelling time in Tanjung Perak Port will be reduced
until reaching the number of two days. If there is a
requirement to lower the dwelling time less than two days, this
alternative might not be satisfying, unless the productivity
and/or the capacity of the dry port is increased.
V. CONCLUSION
From the analysis, it can be concluded that
implementation of dry port can overcome the overcapacity
containers problem in Tanjung Perak Port for about 1,010,632
containers each year. By assigning that number of containers
to dry port, it gives savings on logistics cost for about 463
billion rupiah each year. Moreover, by assigning number of
containers from Tanjung Perak Port to dry port till it’s
maximum capacity, the dwelling time in Tanjung Perak Port
will be reduced from five days to two days. Therefore,
implementation of dry port can reduce dwelling time and
logistics cost.
VI. FURTHER RECOMMENDATION
The findings of dwelling time and logistics cost
reduction is a positive sign of the dry port implementtion.
However, more detailed study is needed to:
1. consider other elements on logistics cost, such as handling
fee and overbrengen related fee, to have detailed picture
of logistics cost reduction
2. calculate the efficiency of Pendulum Nusantara which
supported by this alternative.
REFERENCES
[1] World Bank, et al., “State of Logistics Indonesia 2015”, Asosiasi
Logistik Indonesia, 2015.
[2] U. Gidado, “Consequences of Port Congestion on Logistics and Supply
Chain in African Ports,” Developing Country Studies, vol.5, pp. 160-
167, 2015.
[3] PT PELABUHAN INDONESIA III (PERSERO), (2015, November
10th). PRESS RELEASE Bahas Strategi Pengembangan Transportasi
Laut, MTI Jatim Bedah Kasus "Pelabuhan Tanjung Perak" [website].
Availabe: http://www2.pelindo.co.id/press-release-bahas-strategi-
pengembangan-transportasi-laut-mti-jatim-bedah-kasus-pelabuhan-
tanjung-perak
[4] V. Roso, J. Woxenius, K. Lumsden, “The Dry Port Concept: Connecting
Container Seaports with the Hinterland”. J. Transp. Geograph., vol.17,
pp. 338–345, 2008.
[5] D. Gonzales, E. M. Searcy, S. D. Eksioglu, "Cost analysis for high-
volume and long-haul transportation of densified biomass feedstock",
Transportation Research Part A49, pp. 48-61, 2013.
[6] V. Henttu, L. Lattila, and O. P. Hilmola, “Optimization of relative
transport costs of a hypothetical Dry Port structure”, Transport and
Telecommunication, vol. 12, pp. 12-19, 2011.
[7] D. C. Montgmomery, G. C. Runger, Applied Statistics and Probability
for Engineers (5th Ed.). John Wiley & Sons:US, 2011.
[8] Biro Pusat Statistik, “National Statistics Yearbook 2011.” Biro Pusat
Statistik, Jakarta. 2011
[9] Ministry For Economic Affairs, “Masterplan for Acceleration and
Expansion of Indonesia Economic Development,” unpublished.
[10] Expert Team of National Logistics System, “Blueprint of National
Logistics System Development, Coordinating Ministry for Economic
Affairs of Republic of Indonesia,” unpublised.
[11] Ernst and Young, “Rapid growth market development,” 2012.
[12] Indonesia Port Corporation II, “Annual Report of Indonesia Port
Corporation II 2011,” Indonesia Port Corporation II, 2011.
[13] International Monetary Fund (IMF), “Annual Report of the Executive
Board for the Financial Year Ended,” IMF, 2012.
[14] E. Jenelius, Petersen, T., and Mattson, L.G., “Road Network
Vulnerability: Identifying Important Links and Exposed Regions”,
Transportation Research A, vol.40, pp. 537-560. 2006.
[15] A. Jugovic, A. Hess, and T. P. Jugovic, “Traffic Demand for Port
Service,” 2006.
[16] V. Latora, and M. Marchiori, “Efficient Behaviour Of Small-World
Networks,” Physical Review Letters, vol.87, Article No. 198701, 2001.
[17] A. Nagurney and Q. Qiang, “A Transportation Network Efficiency
Measure that Captures Flows, Behavior, and Costs with Applications to
Network Component Importance Identification and Vulnerability,”
Proceedings of the POMS 18th Annual Conference, pp. 261-275, 2007.
[18] V. Roso, K. Lumsden, “Review of Dry Ports”, Marit. Econom. Logist.,
vol.12, pp. 196–213, 2010.
[19] J. F. Arvis, et al., “Connecting to Compete, Trade Logistics in the
Global Economy: The Logistics Performance Index and its Indicators,”,
World Bank, 2007.
[20] J. F. Arvis, et al., “Connecting to Compete, Trade Logistics in the
Global Economy: The Logistics Performance Index and its Indicators,”,
World Bank, 2010.
[21] J. F. Arvis, et al., “Connecting to Compete, Trade Logistics in the
Global Economy: The Logistics Performance Index and its Indicators,”,
World Bank, 2012.
[22] R.H. Ballou, Business Logistics Management, Prentice Hall: USA,
1999.
[23] M. Pishvaee, et al., “Supply Chain and Logistics in National,
International and Governmental Environment Concepts and Models,”
Springer - Verlag Berlin Heidelberg. 2009
[24] K. Wajszczuk, “Logistics Costs Analysis as an Assisting Tool to
Achieve Competitive Advantage for Agricultural Enterprises,” in The
XIth International Congress of the EAAE. 2005.
[25] A. Z. Zeng, dan C. Rossetti, “Developing a Framework for Evaluating
the Logistics Costs in Global Sourcing Processes,” International Journal
Physical Distribution Logistics Management, vol.33, pp. 785–803, 2003
[26] Presiden RI, “Cetak Biru Pengembangan Sistem Logistik Nasional,”
unpublised.
[27] World Bank, (November, 2013). Indonesia [website]. Availabe:
http://www.worldbank.org/en/country/Indonesia.
[28] World Bank, et al., “State of Logistics Indonesia 2013”, Asosiasi
Logistik Indonesia, 2013.