South Korea’s Busan Port expects rising transshipment volumes to help preserve its status as one of the world’s leading container hubs in the years ahead.
Last year the port handled 17.02 million 20-foot-equivalent units, up 5 percent year-on-year and a new record for one of Asia’s top five “super ports” handling more than 15 million TEUs per annum.
The success came despite a sluggish Korean economy, with domestic import and exports providing growth of just 1.1 percent in 2012, compared to international transshipment throughput expansion of 10.5 percent year-on-year.
Mr Eung-hyuk Lee, manager of Busan Port Authority’s international cooperation team, said South Korea’s trade with China and Japan, key markets both, had seen only single-digit growth in 2012 compared to a year earlier. Volumes to and from the U.S (-3.3 percent) and Europe (-1.4 percent) fared even worse, due to the slow recovery of the former and the eurozone crises. Trade with Russia did grow, up 5 percent year-on-year in 2012, while other Asian markets also proved more profitable for the country’s industrial giants.
Last year’s truck strike affected volumes for a period without really hurting overall figures, as shipments were delayed and then loaded once terminals were reopened, rather than canceled.
Transshipment represents some 47 percent of Busan’s annual throughput, and BPA expects it to represent over half of throughput in the coming years. With Busan a key transshipment centre for trans-Pacific traffic, especially exports from China eastbound, most transshipment trades recorded double-digit growth, with the key exceptions of China and the U.S. “The slower growth was mostly because of economic slowdowns in the U.S. and China,” Lee added.
A free trade agreement between South Korea and the U.S. signed last year is, however, now starting to boost trans-Pacific volumes. “It helps, last year saw some recovery, but it’s still not back to pre-global financial crisis levels,” Lee said. “US trade is growing little by little thanks to the FTA. Without the agreement, the recovery speed would be much slower.”
For 2013, he said the port authority was not expecting major growth in domestic-driven throughput, with South Korea and other key economies predicted to see bearish rates of economic expansion. “This affects local cargo and we don’t have much control over this,” Lee said. “But shipping lines seem to have a strong preference for using Busan Port for transshipment and I believe that will continue.”
“This year we are targeting throughput of 17.6 million TEU with most of that growth coming from more transshipment cargo.”
“Transshipment volume between the U.S., Russia and Japan has good prospects. In Japan, trucking and inland costs are expensive, so shippers prefer shipments to arrive through Busan on smaller ships when they import from the U.S.”
This trade sees Japanese shippers using Japanese west coast ports, such as Niigata, Akita, Toyama, Kanazawa, Hakata and Kitakyushu, with direct links to Busan, rather than paying to truck cargo into and out of hub ports such as Kobe or Tokyo. “This method cuts logistics costs by 10 to 30 percent,” Lee said.
Likewise Russia, with Busan a key staging post for shipments via Russia’s east coast ports of Vladivostok and Vostonchnyy. “With Russia we expect double digit transshipment growth this year,” Lee said.
Contact Mike King at email@example.com.