ASIA • KOREA Busan and Incheon ports eye growing container volumes
South Korea’s Busan and Incheon ports expect increases in container throughput this year despite sluggish world trade growth as they continue to push through with development projects.
Busan port, located on the south of Korea, moved 19.5m teu of containers in 2016, making it the sixth busiest container port globally. This year, the port is
‘For instance, shipping lines that provide liner service calling at ports of emerging economies and bringing transhipment cargoes to Busan can expect port due exemption benefits and cash incentives in accordance with the cargo throughput contribution,’ he says. A growing number of distribution centres operated by multinational logistics companies at North Distripark behind Busan New Port will also help grow volumes.
Woo Ye-jong
aiming for a modest improvement in throughput to 20m teu.
Woo Ye-jong, president of Busan Port Authority (BPA), says the port authority has in place strategies to ‘hedge’ against a potential drop in container throughput, having rolled out various incentives for clients in order to help the port achieve the container volume target.
Busan New Port has already added 21 container berths of 9.2m teu capacity, and this is expected to grow to 45 berths of 15.8m teu capacity by 2020.
Smaller Incheon port to the north of Korea achieved container throughput of 2.68m teu in 2016. This year,
the port is aiming to handle volumes of 3m teu, an increase of 11.9%.
Nam Bong-hyun, president of Incheon Port Authority (IPA), says: ‘Although the (shipping) recession is expected to continue this year, total container volume of Incheon port is expected to increase due to the boost in facility supply such as the opening of the entire Incheon New Port phase 1’ – including the SunKwang New Port Container Terminal in 2015 and Hanjin Incheon Container Terminal in 2016.
Subsequent development phases will add six and then 13 more container berths, their exact timing dependent on traffic evolution.
Nam Bong-hyun Big Three’s survival rests on government aid
South Korea’s three major but beleaguered shipbuilders – Hyundai Heavy Industries (HHI), Samsung Heavy Industries (SHI) and Daewoo Shipbuilding & Marine Engineering (DSME) – are continuing to push through their painful restructurings, as their survival rests on the resolve of the government to keep them afloat.
HHI, SHI and DSME, dubbed the Big Three, have implemented self-rescue restructuring plans encompassing austerity measures such as massive job cuts, executive pay cuts, and disposing of non-core assets and subsidiary businesses, as urged by their respective creditors.
In 2016, the three yard groups made redundant a total of approximately 40,000 jobs in direct workforce and subcontract workers. This year, they will further cut their workforce by 14,000. Orders for Korean yards’ main areas of specialisation, large offshore-related vessels and containerships, have been hit by low oil process and growing competition from yards in China and Japan respectively.
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Their survival now rests on a whopping KRW11trn ($9.5bn) fund being set up by the Korean government from now until 2020. The fund would go towards creating work for the shipbuilders through the order of more than 250 ships, including commercial and military ships, as well as providing KRW6.5trn in financing support.
The government projects that orders this year are likely to increase 84% over 2016 to 20.5m compensated gross tonnes (cgt) – but this would still be less than half (49%) of the average 42m cgt annual figure from 2011 to 2015.
HHI’s restructuring process included
splitting its operations into six independent businesses, namely the shipbuilding and offshore engineering, robotics, electric systems, construction machinery, green energy and global services.
SHI is continuing with its KRW1.5trn self-restructuring plan involving cutting jobs, getting executives to return part of their salaries, selling of shares, suspending part of its yard facilities, and disposing of assets.
DSME is working with main creditors to carry out a recapitalisation plan worth KRW2.8trn, paving the way for the shipbuilder to avoid court receivership.
By 2020, the port authority also expects to complete construction of a Ah-am Logistics Complex 2, and hinterland areas for New Port and North Port.
Seatrade Maritime Review • Quarterly Issue 2 • June 2017 69
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