PDSU_case_lead

Permata Dunia Sukses Utama

A Sweet Move

Indonesia’s double-refined sugar industry has expanded rapidly in the past several years, as a result of the government’s target of self sufficiency in 2009. Currently the country’s sugar requirement totals 4.8 million tons, including 2.6 million tons of white sugar for direct consumption and 2.2 million tons of double-refined sugar for food, beverage and pharmaceutical industries. Double-refined sugar, which is used widely by the food and beverage processing industry in the country, is whiter in color and contains fewer impurities.

One of Indonesia’s major refiners is PT Permata Dunia Sukses Utama (PDSU), a world-class sugar refinery which produces refined sugar for domestic industrial consumption by using imported raw sugar as its feedstock. The company is located in Cilegon, a major coastal industrial city located in Banten province. PDSU together with its sister companies, which also use the services of BDP International, import more than 3.5 million MT in agricultural commodities annually.

Challenge

To meet its increasing production goals, PDSU purchased a refinery and warehouse in Singapore that had closed down. PDSU wanted a logistics provider that could move the entire plant from Singapore to Cilegon.

Mr. Eddy Wong, Director of Sales and Marketing for PDSU, was the company’s Project Manager during the refinery move. His goal in identifying a logistics resource to handle the move was clear: “I wanted a company with experience and local knowledge,” he said.

BDP Project Logistics was selected and although the company had worked with a few shipments, it had not handled anything on the scale of this particular move for PDSU.

“However, for moving plants such as the refinery, BDP Project Logistics had a very good track record,” Mr. Wong said. “Plus, local knowledge, here in Indonesia, is very important and goes a long way…you must have a provider that can solve problems on the ground. Overseas companies may not understand local conditions in order to resolve issues. It is important to know the local people, port authorities, etc. BDP Project Logistics has a very strong local team here in Indonesia; they are very good.”

Solution

Before the structures, machinery and equipment were dismantled, Aaron Chen, Regional Director, Asia Pacific, for BDP Project Logistics, had developed a plan for the move. Based in Jakarta and Singapore, Chen managed all aspects of the refinery move once the cargo arrived in Indonesia, as well as some of the major materials from Singapore.

“For project moves, preplanning is very important,” Chen said. “We never leave anything to chance.”

For the major materials that came from Singapore, for which BDP Project Logistics handled the shipping, barges were used for the three-day voyage to Cigading Port for transportation to the jobsite. This greatly shortened the transport distance. In addition, other cargo arriving from overseas had to be trucked from the port of Jakarta to the jobsite, a three-to-five-hour journey, where traffic issues had to be accounted for.

“BDP Project Logistics ensured there were no transportation hurdles once the equipment was unloaded,” Chen said. Chen and his colleagues provided complete coordination to ensure the local transportation companies used the correct equipment for the various types of cargo. This was also done for the cargo where BDP Project Logistics did not handle the shipment from overseas. “Local transportation required heavy-lift as well as over-dimensional cargo (ODC) cargo capabilities,” Chen pointed out. “We ensured the necessary permits were obtained well in advance.”

BDP Project Logistics also handled all customs brokerage services at the ports.

The relocated material from Singapore was to serve as a skeletal structure to build around, although a large number of pieces needed to be refurbished. Mr. Wong pointed out that deciding what material and equipment to retain was a challenge. “We were running on a tight budget,” he said.

“Generally, new equipment is easier to move because it is already packaged. A dismantled plant or warehouse is different,” Chen said. “Some of the more sensitive pieces had to be packed a certain way. The used equipment was not put in crates—the customer did not require us to do so because they were going to be refurbished in Indonesia.”

The country has been recycling for many years and is very good at refurbishing and recycling material that other countries discard. In Indonesia, skilled labor is plentiful and costs are low, Chen added.

Eliminating problems
Some of the pieces were large refining equipment, such as centrifugals, sugar dryers and vacuum pans, tubulars, structural steel, conveyors and other machinery. Many of these presented transportation challenges and required special handling, due to constraints of the Cigading Port. Because Cigading caters to the steel industry, there are conveyors all over the area, which posed height obstacles.

One of the larger pieces of equipment could not be moved under the conveyor, due to insufficient clearance.

“BDP Project Logistics had to be very inventive in order to get the particularly large piece under the conveyor. They brought in a crane so we could finally get the equipment over the conveyor and back on the flatbed truck,” Mr. Wong said. “BDP Project Logistics was onsite during all discharging operations, working with the local authorities, which was a valuable service we really appreciated.”

BDP Project Logistics’ experience in Indonesia helped Customs clearance, too. Project cargo in some countries is looked on as new investment and the government allows reduced or zero tax and duty for various items. A master list, similar to a packing list, is developed for the entire project, as it was for the PDSU cargo. Importing under a master list means the importer receives preferential rates on certain import taxes and duties, depending on the item being imported. “Every item must match the list in order to qualify for the tax or duty break,” Chen emphasized, “down to quantity, capacity or power rating in order to achieve this.  If there are match problems, the import process is delayed.”

New equipment was purchased from Malaysia, Thailand, Japan and China in order to complete the refinery.

BDP Project Logistics guided PDSU in terms of documentation provided by the customer’s vendors and suppliers, to ensure the equipment matched the master list to avoid unnecessary delays in Jakarta. “Even for the new equipment, we handled all the CHB and local services on the Indonesian side,” Chen said. “Additionally, on emergency airfreight spares from China, PDSU asked their supplier to use BDP Project Logistics at origin. Our experience with Customs regulations around the world is a plus and helped us here.”

“BDP Project Logistics was very ‘hands on and was there to provide advice and alternatives for any problems that we faced. I prefer to work with a provider that eliminates or reduces problems,” Mr. Wong said. “BDP Project Logistics was efficient and cooperative throughout the process.

“BDP Project Logistics personnel were on the ground and if there was a problem, they would look at alternatives and it would be resolved immediately,” he said.

The completion of the sugar refinery area in Cilegon, of which PDSU was an important part, was such a high-profile project that the president of Indonesia and other dignitaries attended the grand opening of the refinery. It was particularly significant because of all the refineries in that area, PDSU was selected as the location for the special recognition of the refinery industry’s contribution to the country’s economy.

Once PDSU was up and running, there were still many shipments of spare parts, replacement components coming in by ocean and airfreight which BDP Project Logistics handled and continues to handle.

“Although PDSU is one of four refineries in the Cilegon area, it was the fastest to start production from ground-breaking date,” Wong proudly said. “Overall, we were very pleased with BDP Project Logistics’ services.”