The Sea – Toll Agenda is one of the most ambitious initiatives of the Indonesian government to reduce the economic disparity between eastern and western regions in Indonesia. This program provides integrated logistics network for maritime sector in the form of subsidized liner shipping operation. However, after four years of implementation, this network is still underperforming, which concerns some operation issues, such as a high Round-Trip-Voyage (averagely 30 days per voyage). In addition, the budget for Sea – Toll operation is increasing around 45% each year because the government attempts to target more ports for this program. This paper intends to offer a proposed network for the Sea – Toll Agenda to improve its performance in terms of vessel operation and total shipping cost. The methodological approach is built based on the LSND (Liner Shipping Network Design) model to unravel the complex problem of establishing network into three decision levels, i.e., strategic, tactical, and operational. The k-means clustering algorithm accommodated our idea to group the set of port involved in the Sea – Toll Agenda into several clusters based on their distance. Then, a TSP (Travelling Salesman Problem) method is performed to yield the most efficient path to connect all ports and generate the Clustering Network. Some network options (Port Aggregation & Butterfly Hub) and scenarios (additional and backflow cargo) are developed from the Clustering Network to obtain the best-proposed network by comparing them with the current Sea – Toll Network in terms of operation planning and shipping cost performance. Our paper finds that the k-means clustering algorithm and the TSP model can generate a Clustering Network that has a lowest total distance (10,776 nm). However, the Butterfly Hub option offers the lowest total cost among others. This option can reduce about 50% of the total cost and save around 60% of the subsidy compared with the current Sea – Toll Network. Moreover, the proposed network can provide a better regularity (14 days round-trip-voyage) using half of the number of vessels operating on the Sea – Toll option. The finding, obtained from the additional and backflow cargo scenarios, suggests that the government should consider to revoke the policy of goods limitation in Sea – Toll Agenda. Both scenarios are capable of improving the network by providing more subsidy saving (10% lower than proposed network) and a competitive unit cost per TEU (770 USD/TEU) compared to the cost from initial Sea – Toll Network (1,830 USD/TEU).

@inproceedings{oscm-2019-510,
  title={LINER SHIPPING NETWORK DESIGN IN INDONESIA “SEA-TOLL” AGENDA: TANJUNG PERAK CORRIDOR},
  year={2019},
  author={Muchammad Arya Zamal and Rommert Dekker},
  booktitle={Proceedings of the 9th International Conference on Operations and Supply Chain Management, Vietnam, 2019},
  doi={10.31387/oscm410222}
}

Muchammad Arya Zamal, Rommert Dekker (2019). LINER SHIPPING NETWORK DESIGN IN INDONESIA “SEA-TOLL” AGENDA: TANJUNG PERAK CORRIDOR. In Proceedings of the 9th International Conference on Operations and Supply Chain Management, Vietnam, 2019. https://doi.org/10.31387/oscm410222