Strategies For Increasing South Korea Port Competitiveness

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  • South Korean ports, particularly Busan, face challenges of low productivity and volumes.
  • The leading major shipping companies like Gemini Cooperation, MSC, and Maersk Line prefer other ports like Shanghai, Ningbo, and Singapore.
  • Gemini prioritizes ports with high container volumes, explaining their choice of hubs.
  • A focus on fewer key import and export ports is expected to improve schedule reliability for shipping companies like Hapag-Lloyd.

Executives from South Korean ports have disclosed that due to low productivity and volumes, major shipping companies like Gemini Cooperation, MSC, and Maersk Line have opted for Shanghai, Ningbo, and Singapore over Busan, the busiest container port in South Korea, for their hub ports.Gemini’s service maps are being finalized and will be announced soon, providing more details on their operational plans.

Improving Competitiveness in South Korean Port

During a recent conference, executives from Busan and Gwangyang, South Korea’s second-busiest container port, emphasized the need for government intervention to enhance handling rates and cost competitiveness, rather than relying solely on terminal operators .Kwon Ki-hyun, CEO of Pusan Newport, noted that shipping companies are compelled to withdraw ships during periods of low volume. He pointed out a disparity in port productivity, citing that in South Korea, three to four cranes are typically assigned to a ship, whereas overseas, eight to nine cranes are utilized.

Strategies for Boosting Busan’s Port Competitiveness

To enhance container volumes, we must consider specializing in specific cargo types or increasing transshipments in Busan to achieve economies of scale and enhance cost competitiveness. It is imperative to involve the government in these efforts, as seen in Shanghai where the port bureau operates terminals and offers incentives to liner operators, underscoring the need for government-level intervention rather than solely relying on terminal operators.

Gemini Cooperation’s Transshipment Port Selection

The Gemini Cooperation, a partnership between Maersk Line and Hapag-Lloyd set to be formed in February, announced that containers from South Korea to Europe will be transhipped in Shanghai. Yeosu Gwangyang Port Authority’s marketing manager, Lee Kyung-ha, explained Gemini’s choice of Shanghai, Ningbo, Singapore, and Tanjung Pelepas as transshipment hubs, noting their prioritization of container volumes. While Shanghai and Ningbo handle over 40 million and 30 million TEUs annually, respectively, Busan’s 2023 imports and exports totaled just 10.74 million TEUs, excluding transshipments.

Port Productivity  of Container Shipping

During a conversation at MSC’s headquarters in Geneva, Mr. Lee highlighted concerns about poor productivity in Busan. He noted that Singapore outperformed Busan last year, with a processing speed of 114 containers per hour compared to Busan’s 88 per hour.

Focus on Cost Competitiveness and Reliability 

Cost competitiveness is also a significant factor, especially considering that APM Terminals, a Maersk affiliate, holds a 30% stake in Tanjung Pelepas. Mr. Lee mentioned that although Maersk Line has lost its dominance to MSC, it has chosen Tanjung Pelepas as a transshipment port due to its efficient cargo processing capabilities. In a statement to The Loadstar, a spokesperson from Hapag-Lloyd mentioned that having fewer port pairs is expected to improve schedule reliability in the industry.

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Source: The Loadstar