Busan port executive bemoans government inaction, expects 2008 growth

Busan port executive bemoans government inaction, expects 2008 growth A Dubai Ports World official who heads the terminal operator’s joint venture facility in the Busan New Port said Thursday it has been difficult for the terminal to reach its throughput potential thus far because of two unkept pledges by the Korean government.
   In a meeting with journalists in Busan, Patrick Bol, managing director of the Pusan Newport Co. — Dubai-based DP World’s joint venture with the Korean government — said that container volume has lagged behind expectations because a rail line connecting the port to Korea’s hinterland meant to be finished in 2007 will now be completed in 2010.
   But even more problematic has been the government's failure to shut down off-dock container yards near Busan’s old port, which preserves the status quo and prevents cargo from shifting to the new port, as the Busan Port Authority envisions. Additionally, the government has not provided incentives for truck drivers to service the new port, which is about 30 kilometers away from downtown Busan and the existing port.
   Bol, however, is exceedingly optimistic about the future of the new port, particularly when Hanjin and Hyundai Merchant Marine shift into their own dedicated terminals in January and June 2009, respectively. Between those dates, PNC will open the second phase of its terminal.
   Those three developments has Bol projecting throughput of 6.7 million TEUs by 2010 at the new port, which was designed to alleviate pressure in Busan’s existing port by shifting container activity to the more remote new port.
   Bol said the new port is a more natural fit for Busan’s increasingly important feeder activity because its long straight quays allow for feeder vessels and mainline vessels to dock at the same berths. It could particularly lead to more “hot transshipment,” where feeder and mother ships berth next to one another and exchange cargo.
   The Korean government has made new pledges to begin shutting down the off-dock container yards near the existing port sometime next year. In the meantime, Bol said DP World is seeking some restitution for revenue lost, but he wouldn’t specify how much.
   Bol said PNC opened some 18 months ahead of schedule (in January 2006) to accommodate the request of the Korean government to begin operations at its gleaming new port.
   Yet volume was well below expected in 2006.
   “We struggled in 2006 because trucking companies preventing the closing of the off-dock container yards,” he said. “The (PNC) agreement states that the government will do everything possible to close down the off-dock yards around the old port by 2006. But the truckers in that area are vocal. Politically it was difficult.”
   More volume will soon arrive at the new port via a shuttle barge service between the old and new ports. The service, started last week, carries up to 150 TEUs daily back and forth.
   In 2007, Bol is projecting PNC will handle around 500,000 TEUs, but said that number will jump to 1.9 million TEUs in 2008 with agreements already in place with shipping lines.
   Of the 1.9 million, Maersk will provide about 800,000 when it shifts all eight of its Busan services to PNC in November. Zim, a current customer, will provide another 350,000 next year, ramping up as it migrates all its services to Busan to the new port.
   United Arab Shipping Co. will provide another 260,000 TEUs and Hanjin, CSAV and RCL will make up the rest.
   Bol also said PNC is in talks with another carrier to bring services to the new port in 2008, but wouldn’t divulge the name or volume expected.