Proceedings of the Eastern Asia Society for Transportation Studies, Vol.

7, 2009

Policy Evaluation of Multimodal Transportation Network, The Case of

Inter Island Freight Transportation in Indonesia

Ade SJAFRUDDIN Harun Al-Rasyid S. LUBIS

Associate Professor Associate Professor
Transportation Research Group Transportation Research Group
Institut Teknologi Bandung (ITB) Institut Teknologi Bandung (ITB)
Jl. Ganesha 10 Bandung – 40132 Jl. Ganesha 10 Bandung – 40132
Indonesia Indonesia
Tel./Fax +62 –22-250 23 50 Tel./Fax +62 –22-250 23 50
Email. ades@trans.si.itb.ac.id Email. halubis@si.itb.ac.id

Russ Bona FRAZILA Dimas B. DHARMOWIJOYO

Assistant Professor Research Assistant
Transportation Research Group Transportation Research Group
Institut Teknologi Bandung (ITB) Institut Teknologi Bandung (ITB)
Jl. Ganesha 10 Bandung – 40132 Jl. Ganesha 10 Bandung – 40132
Indonesia Indonesia
Tel./Fax +62 –22-250 23 50 Tel./Fax +62 –22-250 23 50
Email. frazila@si.itb.ac.id Email. dimas@trans.si.itb.ac.id

Abstract: This paper outlines a research on the development of an analytical model of multi-
mode multi-commodity freight transportation in Indonesia. The model is intended to evaluate
strategic planning of inter island freight transportation. The demand for inter island freight
transportation is estimated by econometric demand models taking into account socio-
economic characteristics of the regions and commodity types. The supply side concerns with
the inter island transportation network, including land access network connecting to transfer
points, especially with respect to modelling links, transfer points, and generalized cost
function. System optimization is obtained by minimizing the total generalized transport cost
consisting of cost on links and transfers. The model is applied to evaluate impacts of several
policy scenarios which contribute to the improvement of inter island freight transportation
network and has shown its capability of estimating system costs of transportation network that
can be utilized to assess the policy implications.

Key Words: freight transportation, multimodal, system optimum, regional network

1. INTRODUCTION

Sea freight transportation network plays a vital role in Indonesian economy since the country
covers over 5 millions km2 area with over 17,000 islands. Since 1980s the annual growth of
freight transportation reached 10-20% by railways, 5-10% by air, 10-15% by sea.
Connectivity and efficiency of the existing inter island transportation network, however,
especially of freight transportation, have been felt to face serious problems. This leads to the
high cost of transportation that in turn affects the competitiveness of the economy.

With respect to inter island freight transportation network, the situation is more problematic
as transportation of commodities normally involves two or more different modes. At the
Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009

transfer points, problems of loading-unloading, scheduling, warehousing, different

destination, and so forth are of significant interests.

This research is aimed at developing methodological approach to evaluate optimum freight

transportation network in terms of generalized transport cost. The model is to represent the
network explicitly in such a way that the network and the demand are interrelated to each
other. The intention is that the model will be capable of evaluating transport policy changes.
The modeling approach employs multi-mode system and the cost model of each mode is
developed based on its respective characteristics. A software, STAN (Strategic
Transportation ANalysis, INRO Consultants, 1997), is used in this research. This software
can be used to model multi-mode transportation network comprehensively and carry out a
strategic planning model.

In more details, the research objectives are as follows:

• to develop inter-island freight transportation demand model by commodity types;
• to develop the generalized cost model for the inter-modal freight transportation;
• to develop a method to analyze freight transportation network based on the optimum
costs;
• to carry out some policy analysis of alternative strategic development of freight
transportation network in Indonesia.

Previous researches on freight transportation in Indonesia have been conducted. Sjafruddin

et.al. (1997, 1999) developed regional freight transportation demand models of various
transportation modes. The developed models estimate the demand for intercity freight
transportation with region’s social economic factors and transport systems attributes. Factors
identified significant as variables in generating freight transport include population, GRDP,
GRDP per capita, proportion of industrial sector product, production surplus, and deficit. The
calibration of the models, however, was based upon total commodities without commodity
classification that therefore limits its use for a policy evaluation. Prasetyo (1999) developed
an approach to analyze multi-mode multi-commodity freight transportation network for Java
Island with an emphasis on modelling of transfer points. He specified an appropriate way to
represent a multimodal network and to model a transfer point in the network model. Further,
Prasetyo tested the methodology to evaluate some land transportation network development
in the Java Island. The findings, however, were limited as the model only represents total
commodity flow. Hermawan (1999) developed mode choice models of intercity freight
transportation in the Java Island. The model choice model was calibrated for two modes,
namely truck and train, based on a binary logit model using stated preference data. The
resulting models were regarded reasonable enough to be applied for evaluating policy
scenario, but the methodology did not model the transfer point explicitly. Lubis et.al. (2002,
2003) conducted a research on the optimization of national freight transportation network
based on a multi-mode multi-commodity approach and utilized the STAN software. A
specific region of Indonesia, namely Eastern Indonesia, was studied with respects to its
transportation development plans including port system improvement and a new regional
railway network in the Kalimantan Island. The demand was estimated based on the available
inter district O-D data and expanded for the future by a growth factor. This research has
drawn some results about the preferable development scenario based on network
performances and benefit-cost analysis. Frazila (2005) developed regional freight
transportation network modeling with the case in Indonesia utilizing a genetic algorithm
approach. He derived detailed cost parameters for the link cost functions and transfer time
estimation which is assumed consisting of loading-unloading time and affected by capacity at
Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009

transfer point. Furthermore, a genetic algorithm procedure was developed to model

optimization of flows in the network. Crainic et.al. (1990) reported findings of a
comprehensive research related to the application of STAN for strategic transportation
analysis in Brazil. This research has developed a methodology to establish the cost function
and the assignment procedure for the regional commodity flow and shown the capability of
the model to evaluate strategic planning of multi-mode multi-commodity freight
transportation network.

2. RESEARCH OUTLINE

This research deals with demand and supply side. The demand side is related to socio-
economic characteristics of the regions in question. The supply side is related to the
performance of the system, especially with respect to links, transfer points, mode attributes,
and generalized cost function.

The scope of analysis in principle covers following aspects:

• the pattern of the demand for regional freight transportation in Indonesia;
• the existing system of freight transportation network consisting of inland links, transfer
points, inter-island links;
• the system development to cope with the growth of demand for inter island freight
transportation.

Figure 1 describes the general outline of the steps and aspects of the research.

Land Use System National Transport

System

Socio-Ec.
Condition Freight Transport
System

Network System Network Dbase

Freight Transport STAN

Pattern

Freight Transport
Demand Model Alternative
Policy Scenario

Evaluation of
Network Performance

Simulation
Figure 1 Research outline
Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009

3. MODELING APPROACH

3.1 Demand Model

The modelling approach employed is an econometric model utilizing variables of
characteristics of the freight and/or regional conditions. The resulting models are therefore
sensitive to social-economic changes that are represented by the variables.

The demand for freight transport is considered to be mostly of economic motivation. The use
of econometric approach to explain the relationship between the demand for freight transport
and other economic variables forms the basic method of analysis.

The total amount of commodity movement between a pair of cities is assumed to be a function
of certain social economic characteristics of these cities. The general form of the demand model
is specified as follows:
Model 1: Tijk = α ( Xi. Xj) β (Yi.Yj) γ (1)
Model 2: Tijk = α ( Xi. Xj ) β (2)
γ
Model 3: Tijk = α (Yi.Yj) (3)
where:
Tijk = volume of commodity k produced in zone i and transported to zone j, in
tons/year;
Xi, Xj = number of population of zone i and zone j, in 1,000 people;
Yi, Yj = GRDP (Gross Regional Domestic Product), total or industrial sector, of
zone i and zone j, in 109 Rupiah ;
α , β , γ = model parameters.

Network
Demand
Mode
Zone
Zone Centroid
Node Platoon Product
Matrix
Link
Transfer
Connector
Route

Function
Unit cost function

Multi mode, multi commodity

assignment
System optimum
Flow and cost prediction

Figure 2 Main model components, STAN (Strategic Transportation ANalysis)

(Source: INRO Consultants, 1997)
Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009

Considering that the industrial sector induces a very significant impact to the flow of
commodities from and to a region, GRDP of industrial sector was also utilized as an
alternative variable in spite of total GRDP. The usefulness of this model, which is an
aggregate model and utilizes aggregated data, is considered rather to be the tool to evaluate
impacts of policy changes to the existing system than to generate absolute estimates of freight
tonnage.

3.2 Network Model

The basic components of the modeling framework and related data requirement are illustrated
in Figure 2. Network represents the infrastructure and services that form the supply side,
mode represents how activities are carried out, node and link represent the spatial structure of
the transport system, and transfer shows operational characteristics of interchange between
modes. The demand side is identified as products or groups of products, production and
consumption rate per unit area of analysis, and the demand for respective commodities
transported from one place to another.

Centroid & Node Mode Product

Standard Attribute Standard Attribute Standard Attribute
Additional Attribute Additional Attribute Additional Attribute

Link Vehicle
Standard Attribute Standard Attribute
Additional Attribute Additional Attribute
Results :

Volume

Unit cost

Marginal cost

Function Set
Link set function
Transfer
Transfer set function
Standard Attribute
Additional Attribute
Results :

Volume

Unit cost

Marginal cost

Figure 3 Network elements in STAN, hierarchy and attributes

(Source: INRO Consultants, 1997)

The simulated network consists of a number of elements. Details of the elements are shown
in Figure 3. The main elements consist of mode, node and link, vehicle, transfer, and
Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009

function that follow a particular structure and are defined hierarchically. Every element is
specified by certain attributes that determine how they interact to each other.

A simple illustration of a network is shown in Figure 4. In this figure two modes are
indicated, namely road and rail. City A to B is served by all modes, whilst A to C and B to C
are served by road only. In the simplified representation all cities are connected each other by
direct links and modes are allocated as attributes of links.

B Rail
Road
A

C
Real Network

B B
Jl,Rl
Road
Jl,Rl
Jl
A A Rail

Jl
C C
(a) (b)
Simplified Network
Figure 4 Real and simplified network representation
(a) Combined representation
(b) Parallel representation

The transfer deserves special attention. Transfers are defined as a process from a node and
mode where interchanges begin, through transfer points, and move to the node and mode of
destination. Figure 5 shows a mode interchange and its development at the node.

1 3
1 3

2 4
4
2

Transfers (1.3) (1.4)

Road (2.3) (2.4)
Rail

Figure 5 Node development to accommodate transfers between modes

Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009

3.3 Cost Function and Assignment Procedure

The network optimization model that is used to simulate network flows in STAN is a
nonlinear multiproduct multimode assignment formulation that minimizes the total
generalized system cost of shipping the products considered, from origins to destinations, via
the permitted modes, while satisfying the ususal flow conservation and non-negativity
constraints. Capacity constraints and congestion phenomena on various transportation modes
are specifically considered by using volume/delay and penalti functions.

The total generalized system cost to be minimized is :

total generalized system cost = total cost on links + total cost on transfers (4)
where the total costs of a product on a link (or transfer ) are :
total link costs = link total unit product cost x product volume (5)
total transfer costs = transfer total unit product cost x product volume (6)

The link (transfer) unit cost for a given product is a user-defined combination of up to three
function :

spa(v) = a x link “operating” cost (v) (1st cost function)

+ b x link “delay” cost (v) (2nd cost function)
+ c x link “other” cost (v) (3rd cost function) (7)
where other costs may be energy consumption, potential hazards, environmental impacts, or
others, and v denotes the flow of all products on the multimodal network.

The total cost of the flow on arc a, a Є A (a set of arcs), for the product p, p Є P (a set of all
products considered), is the product spa(v) vpa , while the total cost of the flow on transfer t, t
Є T (a set of transfers), is spt(v) vpt . We then have :

s a (v ) = ∑ s ap (v)v ap (8)
p∈P
and
st ( v ) = ∑ stp (v)vtp (9)
p∈ P
The the link (transfer ) function set indicates the functions associated with each product on
each link (transfer), where :
sa(v) : total cost of the flow on the link
st(v) : total cost of the flow on the transfer point
spa(v) : unit cost of product p on the link
spt(v) : unit cost of product p on the transfer point
p p
v a,vt : the flow of product p on the link, or on the transfer point

The total generalized system cost, that is the total cost of the flows of all products over the
multi-modal network, is the function F that is to minimize :
 
F= ∑  ∑ sap (v )vap + ∑ stp (v )vtp  (10)
p∈ P  a∈ A t ∈T 
and the multiproduct, multimode assignment model is carried out by minimizing equation
(10).
Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009

4. DATA AND MODEL PARAMETERS

4.1 Data
Data of inter island commodity flows through ports were obtained from a domestic sea
transportation study (JICA, 2003). The JICA study specifies the commodities into 13
categories (Petroleum, CPO, Other Liquid, Coal, Other Mines, Rice, Agri Grains, Fertilizer,
Cement, Other Grains, Fresh Products, Forestry Products, and Others (General Cargo) with
four packaging types, namely container, break bulk, dry bulk, and liquid bulk. The JICA
study estimates the annual origin-destination of commodity flows by ports.

Data on existing transportation networks were obtained from Ministry of Communication and
various transport operators. The data include networks condition, services attributes, and
fares. These data were used to derive parameters for the cost functions and variables of the
link and transfer services of the networks under consideration.

Indications of potential policies for transportation network development were obtained from
varying previous studies and plans. These include development plans of port system,
highway, toll roads, and railways in the relevant areas under study.

4.2 Resulted Demand Model

The demand models for this research were developed for 5 commodity types, namely
CPO+Other Liquid, Rice+Agri Grains, Other Grains+Fresh Product, Forestry Product, and
Others (General Cargo) for the reason that these commodities are practically common and in
association with general consumption of communities in the regions, and can be
accommodated by most general ports in Indonesia. Other commodities such as petroleum,
coal, other mines, fertilizer, and cement were not modeled as these are related to specific
areas or industries and normally handled by special ports. O-D tables were built based on
these data employing 42 zones for the entire area of Indonesia. Each zone represents a port
hinterland covering the area of one or more districts. The resulted O-D table by each
commodity is then used to calibrate the freight transportation demand model.

A number of combinations of explanatory variables are tested in the demand model

calibration. Based on some statistical tests and reasonableness of parameters Table 1 presents
the best resulted demand models by commodity type. These demand models are used to
estimate the inter island freight transportation in the baseline time period 2006.

4.3 Cost Functions

Unit generalized cost is assumed as a function unit link cost, unit transfer cost, and the travel
time value of commodity, and specified as follows:

Cp = αlp + αtp + βp (tl + tt) (11)

where:
Cp = unit generalized cost (Rp/ton)
αlp = link unit cost (Rp/ton)
αlp = transfer unit cost (Rp/ton)
βp = value of time of product p (Rp/hr/ton)
tl = travel time at link (hr)
tt = transfer time at node (hr)
Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009

Table 1 Inter island freight demand model by commodity type

No Commodity Model R2 Variable
-3 0,51 0,69
1 CPO + Other Tij = 0.01 x 10 (Xi Xj) (Yi Yj) 0,66 Population,
Liquid GRDP Industry
2 Rice + Agri Tij = 0.10 x 10-3 (Xi Xj)0,45(Yi Yj)0,74 0,46 Population,
Grains GRDP Industry
3 Other Grains + Tij = 2.40 x 10-3 (Xi Xj)0,15(Yi Yj)0,63 0,64 Population,
Fresh Product GRDP Industry
-3 0,45 0,30
4 Forestry Tij = 123 x 10 (Xi Xj) (Yi Yj) 0,58 Population,
Product GRDP Industry
-3 0,28 0,38
5 Others (General Tij = 1,106 x 10 (Xi Xj) (Yi Yj) 0,60 Population,
Cargo) GRDP Industry
Note : X denotes number of population (in 1,000), Y denotes GRDP (in 109 Rp)

By assuming that a node/transfer point can be considered as a link (transfer link), the cost
function at a transfer link can be specified as follows:
cap = αp la + βp ta (12)
where:
cap : generalized cost (Rp/ton) at link a
αp : fare (Rp/ton/km) at a transfer link
βp : value of time (Rp/ton/hr)
ta : travel time at link (hr)
la : length of link a (km), la = 1 for transfer link

Based on the data obtained from transport operators, Frazila (2005) derived following cost
parameters for the link cost function (which were used in this study) :
1. Link parameters of roads: αp = 0, βp = Rp 7 /hr/ton;
2. Link parameters of toll roads: αp = Rp 200/ton/km, βp = Rp 8 /hr/ton;
3. Link parameters of sea : αp = Rp 43.9 /ton/km,
βp = Rp 5/hr/ton for container cargo,
βp = Rp 5/hr/ton for dry bulk cargo,
βp = Rp 6/hr/ton for break bulk / general cargo,
βp = Rp 5 hr/ton for liquid bulk;
Transfers identified in this study are transfer:
• between land transportation and sea transportation; and
• between ferry and sea transportation.

Transfer time is assumed consisting of loading-unloading time and affected by capacity at

transfer point which depends on the number of berths and delay during process. Following
equation is used to estimate transfer time at a port (Frazila, 2005):
tbm
t = to +
vol
1−
cd .n (13)
where:
t : time at port
Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009

to : delay at port for inspection, administration, berthing, etc which is assumed 6 –

48 hr
tbm : loading-unloading time (hr)
vol : total loading-unloading flow (ton/hr)
cd : capacity of loading-unloading (ton/hr/berth)
n : number of berth (unit)

Value of time at transfer points is assumed equal to link value of time for all packaging. Cost
parameters for transfer points at ports are obtained based on the available data as presented in
Table 2.

Table 2 Cost at transfer point (port)

Desciption Fare / αp (Rp./ton)
Unloading at major ports 2,023
Loading at major ports 1,025
Unloading at other ports 2,492
Loading at other ports 862.5

5. POLICY SIMULATION

Simulations are carried to test the effect of a number of strategic transportation policy
scenarios on the total transportation cost and the simulated time is the year of 2006. The
focus is on the simulation of inter island commodity movement in Indonesia utilizing ports as
the inter island transfer points. Roads and railways are treated as access means of
transportation to ports. Policy scenarios include:
a. development of land transportation consisting of roads and railways, especially in
Java and Sumatera Islands, that will improve the access networks to ports ; and
b. development of the inter island port system to improve the performance of commodity
movement in general.

5.1 Simulated Policy Scenario

Policy scenarios of network development in Java Island consist of:
A1. Existing condition, where the road network condition is much better than other modes
condition. The existing railway network connects most main cities and regions in Java,
but most links are single tracks and the services are considerably low.
A2. Trans Java Toll Roads Development (Figure 6) that fully connect all provincial cities in
Java and improve road capacity network especially in the northern part of Java. This
includes the existing toll roads plus 6 new links (Jakarta-Semarang, Semarang-Demak,
Demak-Solo, Solo- Surabaya, Surabaya-Malang, Gempol-Banyuwangi).
A3. Java Railway Development, a capacity expansion by building double tracks railways in
Java including access links to ports, especially in the busy northern part and several links
in southern area where majority of cities and districts are connected by railways, and
improvement of services as to meet the demand.

Policy scenarios of network development in Sumatera Island consist of:

B1. Existing condition, where the road network is much more used by traffic. The existing
railways in Sumatera are situated at three regions where railway networks are
unconnected each other and the services are very limited.
Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009

B2. Improvement of Trans Sumatera Highway Network especially in the west, east, and
middle routes.
B3. Development of Fully Connected Trans Sumatera Railways (Figure 7), consisting of
improvement and building new links, to fully connect all provinces in Sumatera and
improvement of services as to meet the demand. The existing railways in Sumatera are
situated at 3 areas and unconnected each other; and this development adds 13 new links
of railways.

Figure 6 Trans Java toll roads development

BANDA ACEH
Lhokseumawe

0 50km

SKALA
Langsa

Besitang Belawan

MEDAN
Binjai
Tebingtinggi

Kisaran
P.Siantar Tjg.Balai

Rantauprapat

Sibolga
Dumai
Pdg.Sidempuan
Duri

PEKANBARU

Rengat
Pdg. Panjang Muaralembu
Muaro
Pariaman Telukkuantan Kuala Enok
Solok
Muarasabak
PADANG

Sengeti
SAMUDERA HINDIA Muarabungo JAMBI
Muarabulian

Bangko Tanjung Api-api

Betung
Sekayu
PALEMBANG
LEGENDA:
Lbk.Linggau Blimbing
Ibukota Propinsi Tebingtinggi
Kota-kota lainnya Muaraenim
BENGKULU Lahat
Jalan kereta api yang ada (eksisting) Tanjungenim
Koridor jalan kereta api baru skema awal Baturaja

Kotabumi

BANDAR LAMPUNG

Figure 7 Trans Sumatera railways development

Policy scenarios of inter island network development consist of:

C1. Existing condition, where the land transportation in the existing condition and the port
system does not implement the hierarchy of hub-spoke system.
C2. Implementation of Hub-Spoke Ports with 15 hubs (Figure 8), namely Medan, Batam,
Palembang, Padang, Bengkulu, Jakarta, Surabaya, Cilacap, Pontianak, Banjarmasin,
Balikpapan, Bitung, Makassar, Ambon, and Sorong. This is to represent the policy to
Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009

assign a number of ports as hub that services longer distance inter island movement and
every hub connects to several spokes as feeder.
C3. Implementation of Hub-Spoke Ports with 9 hubs (part of Figure 8), namely Medan,
Batam, Palembang, Jakarta, Surabaya, Banjarmasin, Makassar, Ambon, and Sorong.
C4. Development of Trans Java Toll Roads as in A2.
C5. Development of Fully Connected Trans Sumatera Railways as in B3.

Figure 8 Implementation of hub-spoke ports with 15 hubs

5.2 Simulation Results

The simulation was carried out to reach optimum condition of the modeled policy scenario
based on the total (link plus transfer) multimodal transportation cost.

Figure 9 shows that the development of double tracks of the Java Railway Network reduces
significantly the system cost and this is much more superior to the development of Trans Java
Toll Roads. This is mainly induced by the more cost efficiency of the railways. As the
double-track railways are available most bottlenecks of inland transportation as access to
ports in Java will be relieved and a substantial portion of existing road freight traffic divert to
railways. The railway network is also covering most area of production centers in Java and
the railway development will certainly provide better direct access to inter island ports. And,
the railway benefit will increase on the longer travel distance. The Trans Java Toll Roads
development will also improve the inland transportation network, but its impact is not as
substantial as the railways development since the toll roads are less cost effective than
railways and mainly improve capacity in the northern area.
Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009

Figure 9 Intra-Java commodity transportation,

optimum system cost by policy scenario

Figure 10 Intra-Sumatera commodity transportation,

optimum system cost by policy scenario

Figure 11 Inter island Indonesia commodity transportation,

optimum system cost by policy scenario
Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009

As seen in Figure 10 the Trans Sumatera Railway development will reduce substantially the
total system cost of inland freight transportation. This is mainly due to the highly cost
efficiency of railways and the policy will divert a substantial portion of inter island road
freight traffic to railways especially for the longer distance traffic. The system improvement
is also obtained from the better intermodal transfer as the simulated railway network provides
direct access to inter island ports from main production centers in Sumatera.

The performance of inter island network will be improved by the implementation of hub ports
together with designated spokes as feeder to the hubs. The implementation of 9-hub system
as seen in Figure 11 induces lower system costs than 15-hub system does which suggests that
more hubs do not necessarily mean more efficient inter island port system. The
implementation of hub-spoke ports represents an improvement to the system hierarchy of
inter island port system and this increases the efficiency of freight transportation system by
better inter-modal or intra-modal transfer at ports. This policy also reduces inefficient direct
links between inter island ports which therefore affects better economy of scale of services in
both main and feeder links. The improvement of inland transportation network simulated
here, both Trans Java Toll Roads and Trans Sumatera Railways Development, will also
induce some benefit to the inter island transportation as these provide better accesses to the
ports.

6. CONCLUSIONS

Several remarks could be drawn from this research as follows:

• Demand models by commodity type (CPO+Other Liquid, Rice+Agri Grains, Other
Grains+Fresh Product, Forestry Product, and Others/General Cargo) for inter island freight
transportation in Indonesia have been developed that can be utilized to estimate the volume
of commodity in a certain time.
• The development of railway network will reduce substantially the inland transportation cost
and also induce some benefit to the inter island transportation network. The potential system
improvement by railways development is much higher than by road development.
• The implementation of hub-spoke ports representing an improvement to the system
hierarchy of inter island port system increases the efficiency of freight transfer at ports and
reduces inefficient direct links between inter island ports which therefore affects better
economy of scale of services in both main and feeder links.
• The simulated policies in this research, however, cannot be interpreted as final for the
purpose of actual implementation in which further analysis of economic and financial
feasibility of the plan need to be conducted.

ACKNOWLEDGEMENTS

This research was supported by the Competitive Research Grant Program (Hibah Bersaing)
Batch XIV 2007 of the Directorate of Research and Community Services, Directorate
General of Higher Education, Ministry of National Education
Proceedings of the Eastern Asia Society for Transportation Studies, Vol.7, 2009

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