Asian Bulk Logistics: Betting on Indonesian coal

Asian Bulk Logistics: Betting on Indonesian coal

As Indonesian authorities continue to mull forcing exports of commodities such as coal and palm oil to be carried on local ships, one Jakarta transport firm is gearing up for massive expansion to help fill the gap.

Asian Bulk Logistics (ABL), a Jakarta-based integrated logistics and transportation service provider for the mining and commodities industry, has launched a program to expand its network of operations in the Indonesian dry bulk shipping sector.

The company is initially investing in cargo transfer ships and barges to increase its service offering in the Indonesian coal sector, and it has a larger plan to develop a global dry bulk shipping fleet.

According to Captain Pappu Sastry, deputy CEO of ABL and a veteran of the Indonesian mines and shipping scene, the plan ahead is to take a combination of chartered and owned tonnage.

ABL is scheduled to handle 20m tonnes in 2018 with the assets it presently owns in Indonesia. Sastry estimates that the company will end the year with 50-60 ships on charter and five owned with the main ship sizes focusing on supramaxes and panamaxes.

“The target is to build a strong foundation and then to scale up to grow 100% year-on-year,” Sastry says.

The Indonesian government’s plans to force coal and rice to be shipped on Indonesian vessels and to be insured locally too has created a storm of protest from shipowners overseas. While the authorities have postponed implementing the order, Sastry reckons it will eventually be promulgated.

“I believe the order will be implemented sooner or later. It is therefore easier to accept and work towards compliance than ignore the implications of non-compliance,” he tells Maritime CEO.

Sastry was headhunted to spearhead ABL’s coal shipping drive. His knowledge of the sector is immense having provided a range of commercial shipping services to a conglomerate of 27 Indonesian coal mines for a number of years via a company he used to control in Hong Kong.

On the markets, the dry bulk expert is disparaging about many of shipping’s top analysts these days.

“Most weather predictions seem more accurate than the predictions by shipping gurus,” Sastry quips.

He goes on to look at the disparity between the Atlantic and Pacific basins, saying: “In spite of India and China having the trade volumes that help Pacific markets, there is a constant disparity between Atlantic and Pacific rates – this disparity ensures no one earns close to index levels in the spot market; there are either big winners and big losers.”

As a charterer of tonnage the Pacific “curse” of sub-index earnings for ships will be an advantage for Sastry’s company. For the coming 18 months, Sastry, who started out as a cadet with Wilhelmsen in 1991, is predicting the Baltic Panamax Index should sustain levels of around 1,500, while the supramax index should hover around 1,000 points.

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