SOUTH Korea's busan Port - once the fifth-largest port in the world - handling over three-quarters of the nation's imports and exports - is currently experiencing a crisis, according to South Korea's Chosun Daily.
This is due to the decision made by the new shipping alliance Gemini, which is set to be formed in February by Denmark's Maersk and Germany's Hapag-Lloyd, to drop Busan and Taiwan's Kaohsiung on their Asia-Europe route.
Busan will only be used for cargo transfers to hub ports in Singapore and Malaysia and no longer serve mega ships.
It is bad news for South Korean import and export businesses worried about growing logistics costs, as well as for Busan port, which fell to seventh place due to a dip in container traffic.
South Korea's shipping industry has shrunk as a result of the 2017 bankruptcy of Hanjin Shipping, previously the nation's top shipping business and the seventh largest in the world.
This has increased logistical costs and weakened export competitiveness. Currently, there are fears that the same thing may happen again.
In marine logistics, cargo is gathered at strategically placed hub ports to be transshipped onto huge long-distance boats, just like delivery trucks do not travel directly from the origin to the final destination but rather congregate at intermediary logistics hubs.
Over half, or 12.41 million TEU, of the roughly 23.15 million TEU, processed by Busan port last year were transshipment cargo. Taking care of transshipment volumes from nations like China and Japan is one of the main competitive advantages of the shipping industry in South Korea.
This downgrade is unavoidable for Busan, which generates 73 per cent (or roughly KRW44 trillion, (US$32.2 billion) of the KRW60 trillion of South Korea's shipping and port sector's yearly revenue.
The industry notes that changes in the shipping sector are inevitable as manufacturing bases move from East Asia to Southeast Asia, requiring steps to maintain Busan port's competitiveness.
'The shipping industry follows the manufacturing industry's production volumes,' said Korea International Freight Forwarders Association (KIFFA) chairman Koo Gyo-hoon.
'The volume of cargo passing through Busan, particularly on routes to the Americas, will decline as Southeast Asian manufacturing keeps growing and the United States increases domestic output through reshoring programmes.'
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This is due to the decision made by the new shipping alliance Gemini, which is set to be formed in February by Denmark's Maersk and Germany's Hapag-Lloyd, to drop Busan and Taiwan's Kaohsiung on their Asia-Europe route.
Busan will only be used for cargo transfers to hub ports in Singapore and Malaysia and no longer serve mega ships.
It is bad news for South Korean import and export businesses worried about growing logistics costs, as well as for Busan port, which fell to seventh place due to a dip in container traffic.
South Korea's shipping industry has shrunk as a result of the 2017 bankruptcy of Hanjin Shipping, previously the nation's top shipping business and the seventh largest in the world.
This has increased logistical costs and weakened export competitiveness. Currently, there are fears that the same thing may happen again.
In marine logistics, cargo is gathered at strategically placed hub ports to be transshipped onto huge long-distance boats, just like delivery trucks do not travel directly from the origin to the final destination but rather congregate at intermediary logistics hubs.
Over half, or 12.41 million TEU, of the roughly 23.15 million TEU, processed by Busan port last year were transshipment cargo. Taking care of transshipment volumes from nations like China and Japan is one of the main competitive advantages of the shipping industry in South Korea.
This downgrade is unavoidable for Busan, which generates 73 per cent (or roughly KRW44 trillion, (US$32.2 billion) of the KRW60 trillion of South Korea's shipping and port sector's yearly revenue.
The industry notes that changes in the shipping sector are inevitable as manufacturing bases move from East Asia to Southeast Asia, requiring steps to maintain Busan port's competitiveness.
'The shipping industry follows the manufacturing industry's production volumes,' said Korea International Freight Forwarders Association (KIFFA) chairman Koo Gyo-hoon.
'The volume of cargo passing through Busan, particularly on routes to the Americas, will decline as Southeast Asian manufacturing keeps growing and the United States increases domestic output through reshoring programmes.'
SeaNews Turkey
