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The Real Street Smart

Martin Jörss, Daniel E. Powell, and Christoph Wolff wrote on McKinsey Quarterly:
Bus and train systems habitually run at a loss. But public-transit agencies could lower costs and raise the quality of service by emulating best practices from around the world.

PPD, a state owned Transportation Company, running at Loss (as always, no surprise). ORGANDA (Transporter Association) was reluctant to drop fare due to gasoline dropping price at local Gas Station. They are just a few examples of our street car low productivity but by all means reflecting all of transportation provider in Indonesia.

So much in disguise if we think about transportation problem, especially in Jakarta the Metropolis City How did PT KA (State owned Train Railway Company)running at lost too every semester by watching people always in heavy packed in the train? Once my Lecturer said that,” If the Government allowed me to build my own train company, I will surely grab it! It must be profitable!” Competition is the Key. PTKA run the company aims without sense of competitiveness. They did not make subtle improvement. Just because they are no competitor at all. The existence of Competitor should be the catalyst for PTKA to be a profitable company.

Jorss,Powell, and wolff clearly stated that bus and train operators habitually run at loss. From Paris Metro to Manhattan, all share some characteristics of lack productivity and running in deficits. Deficits are all over caused by from route design, fare structure to labor related management.

For a railway transport there should be development of new privateers to make this route competitive and profitable. Bus and microbus(angkot) will be an implementation of short term strategy from each provider. It means that depreciation of vehicle is very fast, a four year depreciation, if I am not mistaken regarding to tax regulation. So every transport provider should make strategy based on that ,therefore they can well-maintained their fleets that always the voice of complaint for them to raise current fare. Whenever fleets are broken, it did not aligned with in-date company risk, strategy and operations.There is no strategy and risk management but doing efficiency by cannibalizing components from one vehicle to another without buying a new one. If it's the nature of the business, I would agree in a point to Blue Bird that being strategic focus on the image to prevent them from energy and economic crisis.

2 comments:

Unknown said...

so the title would be "transportation business: make some profit!"

public transportation must be seen more than just profit. they moved millions of people quickly (that is why they called Mass Rapid Transport). they lowered polution, emission, fuel consumption, and traffic congestion. they must preferable in cost. that is why they need subsidy. without subsidy, people will find better and cheaper transportation no matter how will affect traffic, emission, energy consumption.

UK have privatized their railway company. but mostly failed to enhance service. railway service gone worst. almost the same as Indonesia.

With subsidy, Perumka (before changed into PTKA) could focus their business on better service delivery, rather than railway facility maintenance. maintenance are government responsibility. they introduce Argo series rapid train on popular destination. Now PTKA is busy to balance their book by overcharging train service and lowering maintenance.

imagine a train service between Bogor-Sukabumi that will be reopened on Dec 15, 2008. it offers business class coach (more expensive ticket) than economy class on its predecessor. it leaves for Sukabumi on low occupany and back for Bogor still on low occupany. rather than it leaves for Sukabumi on early morning and back to Bogor with high occupancy accomodating Sukabumi-based passenger to catch peak hours Jabotabek service for Jakarta.

It should be a feeder for morning & evening Jabotabek service. But most likely PTKA will choose to serve Bogor-Sukabumi on low occupancy as it lowers operational cost. Late morning operation means no overcharge fee for Bogor-based train crews, compared to early morning. Lower occupancy means lower risk of train vandalism.

Iboy said...

well thought Jim. But I prefer to comment about market but not on internal bookkeeping of PTKA.They got busy on streamlining that it is good.And I feel that in the market so much talking about new business on rail transportation.Recently I heard on news which PTKA launch new intradomestic routes between Bandung to nearest stations.And I still hoping some market mechanism for competition in the rail transportation in near future.