WASHINGTON: Busan Port Authority, the operator of the port of Busan, the world’s sixth-largest container port, is planning to invest in overseas port and logistics facilities as a key strategy that will help define the future of the South Korean port.
BPA is now collecting and analyzing global market information with a view to investing in port and logistics infrastructure and operations in developing economies, CEO Woo Ye Jong told JOC.com in an interview.
“BPA is beginning to make efforts towards fortifying the foundation of overseas business in the long term. We want to pass on our know-how in the operation and development of Busan Port to developing countries that need port infrastructure for their economic growth,” said Woo, the former deputy minister for Planning and Coordination at South Korea’s Ministry of Oceans and Fisheries who took command of the port in the middle of last year.
Busan Port Authority CEO Woo Ye Jong. Woo listed overseas expansion as one of his three main priorities for the future development of Busan. The other two are to build transshipment business to make Busan the world’s second-largest transshipment hub, and to realize the successful completion of the North Port Redevelopment Project.
Set for completion in 2019, the $8 billion North Port Redevelopment Project involves the redevelopment of general cargo and multi-purpose pier areas into an integrated waterfront complex for citizens.
Busan handled more than 10 million transshipment containers for the first time in its history last year. According to Woo, the port will continue to focus on developing transshipment volumes, in part to offset negative macroeconomic elements impacting business such as China’s slowdown.
“There is no doubt that China’s slowdown has negative effects on the global shipping market as well as the world economy. We seek to hedge against the downturn in container throughput of Busan Port, which is driven by import and export between Korea and China, by attracting more transshipment containers, and so offset the predicted decrease in trade cargo with China.”
Infrastructure improvement projects and pricing incentives are being implemented to support the building of transshipment volumes. Dredging works to increase the port’s draft and works to remove a small island at the entrance to the port are underway in order to better facilitate mega-ships
BPA is also providing cash incentives to shipping companies that put high volumes of transshipment cargo through the port. Busan is targeting throughput of 20 million TEUs in 2016, a figure Woo believes is very achievable as the port continues its strategic marketing efforts with the alliances, and as logistics companies offer more value-added services at the port’s distribution centers.
“This is not an infeasible target when we consider that 19.5 million TEUs was handled in Busan Port last year.” One of the main challenges faced by Busan at the moment is to facilitate the successful balancing of business between two different port systems, Busan New Port, and the old port known as Busan North Port.
The ports are located around 25 kilometers (15.5 miles) apart from one another and in 2015 around 360,000 TEUs of containers had to be transported between the two. BPA introduced an Inter-Terminal Transportation incentive scheme that provides cash to container lines to help offset additional costs resulting from the transfer of boxes between different terminals.
The functions of the two ports are to be differentiated, with North Port gradually becoming a feeder port primarily serving intra-Asia trades and the New Port becoming a specialized hub for mega-ships operated by global lines.
The ongoing integration of terminal operators at Busan is designed to improve efficiency in the operations of the two port systems. Last year BPA announced that the companies operating the four terminals in North Port — Dongbu Pusan Container Terminal Co. Ltd., Busan International Container Terminal Co. Ltd., CJ Korea Express Busan Container Terminal Co. Ltd., and Hutchison Korea Terminals — would be merged by July.
Going forward, Woo said there would be a strong focus on improving productivity at the terminals with a view to reducing dwell times and costs for customers. Productivity assessments to encourage terminal operators to better service customers are being undertaken and the port is reviewing regulations that may be impeding more efficient cargo handling.