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Rolling With The Punches
South Korea’s ports have been hit with a trucking strike, lockdowns in their largest trading partner market of China and the COVID-19 pandemic. AJ Keyes assesses the impact and what lies ahead
With a number of turbulent recent events, container ports in South Korea have faced a range of diff erent challenges, while having to maintain long-term growth requirements. Their ability to adapt to these developments will continue to infl uence competitiveness.
Busan, Incheon and Gwangyang collectively handle almost 94 per cent of all container traffic in South Korea. Busan is dominant with a share of around 75 per cent of the total country market – with this being a stable situation over the past few years.
Busan is also handling sizeable transshipment volumes and it is an activity that continues to increase. In 2017, transshipment accounted for an estimated 49.1 per cent of total port volumes but by the end of 2021 this figure had reached 54.1 per cent. Busan has benefitted from both the increased importance of secondary Chinese ports (with linked feedering) and from the progressive establishment of feedering to/from smaller ports on Japan’s west coast.
For Busan, China remains its largest trading country partner, with around 28 per cent of container traffic handled, followed by North America (15 per cent) and Japan (14 per cent). Leading port connections, based on volumes, are in China, unsurprisingly, with Qingdao (1.3 million TEU), Shanghai (1.1 million TEU) and Tianjin (1.0 million TEU).
TRUCKING STRIKE CHALLENGES
However, while recent volume growth has been good in Busan, 2022 has brought challenges. At the time of writing (mid-June 2022) unionised truck drivers implemented a week-long strike that impacted all major ports. Busan reported that daily container road activity was down by 75 per cent, while Incheon (the primary gateway for Seoul) said it operated at “about 20 per cent of normal capacity.”
The true depth of the strike is unclear, with official government Transport Ministry estimates stating that no more than six per cent of the 400,000 unionised drivers took part, whereas other sources supporting the truckers say as many as 20,000 drivers participated.
Although a resolution was reached, there are knock-on effects. Local reports stated the strike will eventually cost more than US$1.2 billion in lost production and unfulfilled deliveries, while the Cargo Truckers Solidarity union stated that Hyundai’s largest factory complex saw production drop by 50 per cent due to component shortages.
Truckers chose to strike over ever-increasing fuel prices, but extension of the truckers’ minimum freight rates and continued talks over expanding minimum pay guarantees brought a tentative peace – for now.
BIG PLANS AT BUSAN
Aside from the short-term impact of the strikes, the need to maintain sufficient terminal infrastructure is paramount and Busan is investing to keep pace with growth and alleviate congestion while, it claims, “targeting transshipment traffic” at regional ports. This represents a continuation of the successful development initiated with the commissioning of the first berths at Busan New Port in 2009.
The Busan Port Authority (BPA) has stated plans to raise annual port capacity to 31 million TEU by 2030, a substantial rise on the existing figure of around 21 million TEU per annum. Already in 2022, a new semi-automated terminal, Busan Container Terminal (BCT), supported by Hyundai Merchant Marine (HMM) opened. It can handle ships up to 23,000 TEU capacity, has 11 quay cranes and 44 automated rail mounted gantries (RMGs) and will eventually offer a capacity of three million TEU per annum.
“THE Alliance, 2M, and Ocean Alliance carriers want to handle more transshipment cargo at Busan…..they simply cannot do it currently because berth and yard density are very high at all the Busan terminals,” Lee Seung-mi, Commercial Director, BCT recently stated, adding that the terminal commenced with feeder services but is due to accommodate intra-Asian and deep-sea services during 2022.
BPA has also awarded a new concession to develop and operate a 1850m quay, deep-water facility to a consortium led by Korea’s Dongwon group at Busan New Port. Operations are scheduled to commence in mid-2023.
INCHEON STRUGGLES
The Port of Incheon is South Korea’s second largest volume container port. Throughput has grown by 2.8 per cent since 2017 and the port increased volumes in 2020 and 2021.
However, there are ongoing challenges, with the port’s latest volumes (April 2022) reflecting a drop of 20 per cent over April 2021. The port authority states that ships have been heading directly to China and missing calls at its facilities. “Shipping companies are passing through the Korean port without stopping to save time,” explains a port spokesperson, adding that volumes between Incheon and China had fallen by almost seven per cent recently.
GWANGYANG VALUE-ADDED FOCUS
Gwangyang completed its third masterplan between 2011 and 2020, and it confirms a container capacity of 3.84 million TEU per annum. Even allowing for the highest recent volume throughput of just over 2.4 million TEU (in 2018), there is substantial space still available. This is endorsed by the port’s stated short-term aims, which are focussed on attracting new “value added industries” and developing a port logistics cluster.
8 South Korean
