Business | Shipping
Busan's cranes see too few ships to keep them busy
At Busan's new port on the southern tip of the Korean peninsula, huge blue cranes capable of efficiently offloading even the longest ships tower over the water's edge.
- By Anna Fifield, Financial Times
- Published: 22:48 October 14, 2007
At Busan's new port on the southern tip of the Korean peninsula, huge blue cranes capable of efficiently offloading even the longest ships tower over the water's edge.
Bright yellow rail-mounted gantry cranes sit ready to stack the containers on the fresh gravel. It is a model high-tech port. There is just one problem - very few ships are calling here.
The spacious new terminal - a $9.2 billion project that will have 30 berths by 2015 - is at the centre of the government's efforts to promote South Korea as a logistics centre in north-east Asia, capitalising on its geography as the first port of call on the way across the Pacific to China, and the last on the way to the US.
Busan's old terminal, the world's fifth-largest container port, is a major transhipping base, where large, international ships offload their containers on to smaller, regional feeder ships.
Transhipment comprises about 45 per cent of its business. But the congested port has been operating far beyond its capacity. Shipments in the first eight months of the year totalled 8.8m teu - up 11.6 per cent on 2006 compared with annual capacity of 8 million TEUs.
Business was supposed to be gradually transferred to the new port, in which Dubai Ports World and Korea's Samsung each have a 25 per cent stake.
DP World is already operating six berths and will add an extra three next year, while Korean shipping lines Hanjin and Hyundai Merchant Marine will start operating four berths each at the end of 2008.
More than 20 logistics companies are set to begin providing assembly, packaging and processing in the distribution centre next year.
Yet the number of ships calling at the new berths has been well below expectations - the new port handled only 235,000 TEUs out of a projected 800,000 last year, and this year's goal has been scaled back to 600,000. Some shipping companies such as MSC even switched back to the old terminal.
Lee Gap-sook, president of the state-run Busan Port Authority, is resolutely upbeat.
"The Busan New Port is a world-class port with state-of-the-art facilities, as well as a huge amount of space for a distribution centre," Lee said.
Neil Davidson, a ports specialist at Drewry Shipping Consultants in London, agrees that the port is a "fantastic facility with state-of-the-art technology" but says political decisions and direct services to China have cast a shadow over the port.
"Some of the cargo facilities in the old port were supposed to be shut down as capacity was moved to the new port, but that did not happen," Davidson said.
Transhipping activity also looks to be on the decline. Many ships had previously offloaded onto smaller vessels in Busan as foreign ships are not allowed to transport cargo between Chinese ports. But the new Yangshan port on an island off Shanghai has been designated outside China, meaning many ships can bypass Korea.
Nonetheless, Busan's fortunes look set to change from next month, when Maersk, the shipping line, will begin using the new port, bringing an expected 700,000 TEUs in business as well as a vote of confidence in the port.
"I think they're starting to turn the corner," says Davidson of Drewry.
Share this article
Popular in Business
-
General
Precious jump
Gold prices at new high as India's central bank buys $6.7b worth of gold
Business Editor's choice
-
Sweet life in the Middle East
A sweet look at the confectionary industry in the UAE and Middle East
-
Passion for pets can be expensive
Responsibility and time spent add to costs for furry friends
-
Facebook farm game under cloud
Mobile phone contracts can be used to buy virtual money
