South Korea plans to transform Busan into the world’s No. 2 transshipment cargo port by 2020 by building up infrastructure and streamlining operations, the government said Tuesday.
The move could enable the country’s largest sea port to outstrip Hong Kong for the second place slot among the world’s transshipment harbors and place it below Singapore, the Ministry of Ocean and Fisheries said.
Transshipment refers to the handling of containers and cargo at an intermediate destination before they are shipped somewhere else.
As of last year, Busan’s transshipment volume hit 9.43 million twenty-foot equivalent units, with numbers to rise to 13 million TEUs by the target year. This can generate an economic impact of some 1.5 trillion won ($1.3 billion), the ministry said.
Located on South Korea’s southeastern tip, Busan currently handles cargo moving to and from China, Japan, Russia, North and South America and Australia.
To reach the goal, the ministry said measures will be taken to gradually move all container operations, which make up the bulk of transshipment cargo from Busan’s North Port, to its New Port in order to streamline operations.
This can enhance efficiency and permit economy of scale at the New Port sector, which can boost overall competitiveness vis-a-vis rivals.
“In the first half of 2016, a Global Terminal Operator, or GTO, comprised of five companies including Busan Port Authority, will be launched to better manage various operations,” the ministry said.
The establishment of a GTO can allow a local operator to make inroads into the international terminal business area that has been dominated by foreign companies such as Hutchison Port Holdings and PSA International, it added.
A GTO uses cargo handling capabilities at its home port as leverage to expand cargo handling operations abroad. Hutchison operates out of Hong Kong while PSA is anchored in Singapore.
The latest plan also calls for transforming Busan’s North Port into an industrial zone that can build or assemble marine industrial plants.
Under this plan, related laws will be changed to make it possible for the port to expand into non-logistics industries, which can create new growth opportunities. The country’s current law bans ports being used for anything other than handling cargo and people.