Adaptive policy decision pathways for robust shipping network investment planning in Indonesia

Abstract

Due to its archipelagic nature, Indonesia enforces to make substantial investments in its maritime sector, especially port infrastructure, in order to promote trade, economic growth, and ease disparity among Indonesia’s island regions. The challenge, of course, is that Indonesia has many ports to invest in and a limited budget; it must prioritize among various port development projects. The government, therefore, needs to choose wisely in order to avoid wasting money by constructing shipping network plans. One of the most important aspects in shipping network planning in Indonesia is designating which ports are to become international container gateways as these ports will play an important role in connecting Indonesia with foreign markets and therefore have a strong impact on its economy. To improve the current state of policy decision-making for the Indonesian shipping network, we hereby develop adaptive policy decision pathways focused on Indonesian containerized exports. The objective of this study is to build adaptive policy decision pathways that can cope with dynamic future uncertainties and results to help the government develop a robust network investment plan that helps the Indonesian government achieve its objective of improving connectivity and value-added exports through lower logistics costs. The main general finding is that flow pattern is very sensitive to demand volumes. Moreover, Minimum Cost-Flow (MCF) model used in this study is able to identify the flow pattern so that is very useful to analyze the potential of gateways. By applying this approach, we can analyze how the flow pattern changes from period to period and therefore may lead to different policy decisions. Having this approach in shipping network planning will help policymaker to have several predictive pathways and thus can support policy decision-making.