For the first time in more than 100 years, South Korea's Busan and Incheon ports will be able to hire workers directly on their quays, in a Government move to ensure uninterrupted operation at the country's two biggest harbours.
The concession is part of South Korean President Roh Moo Hyun's
strategy to attract Neptune Orient Lines and other global shipping companies to call at Busan's US$9.4 billion terminals. The first three of Busan's New port's 30 container berths start operating today on the country's southeast coast.
"Korea needs to set up an efficient logistics network to remain competitive," said Han Sang Soo, of Tong Yang Investment Trust Management. "The expansion of Busan plays the key role in achieving that goal."
Busan is competing with Hong Kong, Shanghai, Taiwan's Kaohsiung and southern China's Shenzhen as the harbour of call in northeast Asia for large container vessels operating between the US, Europe and Asia.
The port, designed to triple its container handling capacity to 30 million boxes by 2011, has to cut fees and accelerate loading and unloading to attract so-called main line shipping companies.
In 2004, thirteen of the world's 20 busiest container ports were in Asia, and five of the top six were in the northeast Asia region - Korea, China, Taiwan and Hong Kong.
Busan handled 11.5 million containers at its 22 berths in 2004, about 90 per cent of the installed capacity. The port was overtaken in 2003 as the world's third-busiest container port by Shanghai and Shenzhen.
South Korea's Government is spending 32.4 trillion won ($47.76 billion) to expand the country's air, land and sea transport infrastructure, including 10.5 trillion won to expand Incheon airport, 12.7 trillion won to build a high-speed train and the remainder to expand Busan.
"Busan has the potential to become a centre for logistics because it is located on a busy shipping route and is near major markets such as China and Japan," said Maritime Affairs Minister Oh Keo Don.
"That is why the Government has been trying to advocate the port's expansion since the mid-1980s."
The first three new berths at Busan will have a shoreline of 1.2km, with a depth of 16m, capable of handling three 50,000-tonne vessels at the same time.
Pusan Newport, the harbour's manager, is 25 per cent owned by South Korea's largest industrial company Samsung. DP World, a closely held investment company based in the United Arab Emirates, also owns 25 per cent.
The remaining shareholders include Hanjin Group, Hyundai Engineering and Construction, Korea Container Terminal Authority, Daewoo Engineering and Construction and Singapore's PSA International.
PSA International, the world's second-largest manager of container ports, paid 33.06 billion won in February last year for almost 7 per cent of Pusan Newport.
Busan has to contend with Chinese ports to hang on to shipping lines.
China has earmarked 400 billion yuan ($72 billion) to expand and upgrade its coastal ports to ship more toys, textiles, appliances and furniture to Asia, North America and Europe. The first phase of China's new US$16 billion Yangshan port outside Shanghai opened last month, offering cheaper rates and a comparable handling speed with Busan - about 90 boxes an hour.
Yangshan, designed to handle 15 million boxes by 2010, is aiming to surpass Singapore and Hong Kong as the world's largest container port.
A. P. Moeller-Maersk, Hutchison Whampoa and three other companies will invest 4 billion yuan in the second phase of Yangshan. Hutchison, controlled by Hong Kong billionaire Li Ka-shing and the world's biggest port operator, already owns terminals in Busan and Gwangyang. Busan port has been lowering cargo handling and other fees to remain competitive against Chinese ports.
It has also been trying to improve relations with truck drivers and port workers, after major strikes in 2003 held up about US$420 million of exports.
World's top 10 Port Containers
* Hong Kong 21,932,000
* Singapore 20,600,000
* Shanghai 14,557,200
* Shenzhen, China 13,650,000
* Busan, S. Korea 11,430,000
* Kaohsiung, Taiwan 9,710,000
* Rotterdam 8,300,000
* Los Angeles 7,321,440
* Hamburg 7,003,479
* Dubai 6,428,883
- BLOOMBERG
For the first time in more than 100 years, South Korea's Busan and Incheon ports will be able to hire workers directly on their quays, in a Government move to ensure uninterrupted operation at the country's two biggest harbours.
The concession is part of South Korean President Roh Moo Hyun's
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