Korea Port Governance System

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ICHCA Conference
Korea Port Governance System And New Challenge
Issues
Prof. Hee Seok Bang Assistant. Jung Ho Na
Dong Joon Kang Chung Ang University
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Table of Contents
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Review of World Economy Korea Port Throughput
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Factors to be considered for Port Policy
Management
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Classification of Korean Port Governing Body
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Container Port Development in Korea
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Developing FEZ FTZ linked with Port
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Issues to be Discussed
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?. Review of World Economy Korea Port Throughput
1
Review of World Economy
Trade Scale in Korea
(100million , )
2001 2002 2003 2004 2005 2006 2007
Export 1504.4 1624.7 1938.2 2538.5 2844.2 3254.7 3714.9
Import 1411 1521.3 1788.3 2244.6 2612.4 3093.8 3568.5
Trade Cargo Volume in Korea
100millionR/T 100millionR/T
Year 2000 2001 2002 2003 2004 2005 2006
Total 704 751 776 812 849 874 927
4
World Shipbuilding
(100million CGT, )
Country 2005 2006
KOREA JAPAN CHINA 9.3 8.0 3.6 35.5 30.5 13.7 10.6 9.1 4.5 34.6 29.7 14.7
ASIA 21.9 83.6 25.4 83.0
EUROPE 4.0 15.3 4.9 16.0
Total 26.2 100.0 30.6 100.0
Resource Clarkson, World Shipyard Monitor, 2007
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Economic Indicator of N. E. Asia
Section Population (million) Dimension (ml.sq.km GDP (billion ) GDP per head () Export (billion ) Import (billion ) Foreign Exchange Holding (billion )
Korea 47.7 99,585 6,807 14,122 257.7 219.5 198.1
Japan 128 378,000 46,639 36,522 540.3 407.3 824.2
China 1,304 9,561,000 16,007 1,217 593.3 538.9 609.9
Hong Kong 7 1,098 1,646 23,349 267.5 279.2 123.5
Taiwan 23 36,000 3,053 13,569 173.1 156.6 241.7
Sub-total 1,510 10,075 7,415 17,755 1,831 1,602 1,997
Total 6,446 133,567 55,500 8,800 8.880 9,215 -
() 23.4 7.5 13.3 - 21 17.4 -
Source WTO, World Trade Report(2005), CIA, The
World Factbook(2005)
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2
Korea Port Throughput
Unit R/T
2003 2004 2005 2006 2007
Total 951,133,773 956,149,803 984,534,280 1,036,843,244 1,093,479,551
Busan 187,184,537 215,032,399 217,217,227 229,938,598 243,564,954
Incheon 127,071,396 113,654,061 123,453,366 129,566,335 138,139,357
Pyeongtaek 43,978,940 40,808,436 42,514,023 44,234,861 48,092,932
Donghae 19,948,173 19,897,081 19,923,307 21,353,215 22,168,219
Daesan 41,410,793 41,163,769 44,720,057 52,649,401 53,515,961
Gunsan 15,690,899 16,560,763 17,077,882 17,502,072 17,685,782
Mokpo 6,944,923 6,262,041 7,594,153 8,978,754 14,202,826
Yeosu 3,780,714 1,676,578 2,587,211 2,788,767 8,344,082
Gwangyang 165,027,006 170,486,999 177,482,959 195,069,156 198,189,085
Pohang 54,123,508 56,297,352 54,691,880 54,970,612 61,875,145
Masan 11,484,938 12,490,080 12,997,990 11,907,024 13,193,314
Ulsan 146,141,817 160,214,236 162,413,761 165,717,395 168,651,699
Jeju 2,788,145 2,304,668 2,245,345 2,214,292 2,071,360
Others 125,557,984 99,301,340 99,615,119 99,952,762 103,784,835
Source http//www.index.go.kr
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Traffic Forecast
Unit 000 R/T
2007 2011 2015 2020 Annual growth rate Annual growth rate Annual growth rate
2007 2011 2015 2020 07-11 11-15 15-20
Import 308,558 371,465 423,499 492,427 4.7 3.3 3.1
Export 168,062 200,359 260,359 332,097 4.5 6.8 5.0
Coastal 148,195 166,873 175,355 184,234 3.0 1.2 1.0
T/S 120,648 159,589 205,929 275,361 7.2 6.6 6.0
Total 745,462 898,287 1,065,142 1,284,119 4.8 4.4 3.8
Source KMI 2008, Crude Oil Traffic is excluded.
Traffic Forecast of Container
Unit 000 TEU
2003 2011 2015 2020
Import Export 8,182 14,933 19,232 24,161
T/S 4,599 11,214 15,090 21,344
Coastal 405 952 1,342 1,906
Total 13,186 27,099 35,664 47,411
Source MOLTMA, Ocean Shipping Consultant
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?. Factors to be Considered for Port Policy
Management
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Changes in Container Shipping

• Main Line / Feeder Service
• Changing Client Demands
• Alliance, MA
• Increasing Concentration
• Emergence of BIG SHIP

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Proposed Size of Big Ships
Ship Type Capacity (TEU) Length (m) Draft (m) Beam (m) Rows on Beam
8,800TEU Class 8,800 347 14.0 45.3 17
12,000TEU Class 12,000 350 14.5 57 17
Suez-Max 12,000 400 17.04 50 25
15,000 TEU Class 15,000 400 14-15 69 28
Malacca-Max 18,154 400 21.0 60 -
Source Lloyd List
Note Han-Jin Shipping Line ordered 13,000TEU
Ship (5 Ships operation in 2010, 4
Ships operation in 2011)
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Order and Delivery of Super Container Ships Emma
Maersk
Delivery Date
Row
Width(m)
Length(m)
Capacity(TEU)
Name of Vessel
2006
22
56
395
11,000
Emma Maersk
2006
42.5
349
9,449
Cosco Ningbo
2006
42.5
348
9,415
CMA CGM Fidelio
2006
45.3
335
9,600
Xin Los Angeles
2008
45.6
349
10,000
Hanjin Shipping
2008
52
383
12,000
Samsung Shipbuilding
Pyeongtaek University
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2
Changing Client Demands

• Diversification/Enhancement of services
• Intermodal services
• Supply Chain Management
• Warehousing and Distribution
• Tailored pricing packages
• Global service agreements
• Advanced cargo care technologies
• Container tracking facilities
• E-commerce initiatives

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3
Integration of the Logistics Providers
1) Expend 3PL Business(Lead Logistics Providers
LLPs)
2) 4PLs Structure
4PL
3PL
3PL
3PL
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3) 4PLs Functions
- supply-chain engineering - business process
re-engineering - IT services and systems capable
of connecting to customers and other supply-chain
partners(including design of an open systems
framework, build, implementation and run
activities) - sales and operations planning -
call centres - distribution management -
procurement - customer support - invoice
management - other back office services such as
administration, human resource management,
finance and legal support
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4) Four key components of 4PL

• Supply-chain visionary
• -Multiple customer relationship
• -Supply chain re-engineering
• -Project management
• -Service integrator
• -Continuous innovation

Architect/ integrator
F I N A N C E

• Experienced logisticians
• -Optimization engines
• -Decision support
• -Neutral positioning
• -Continuous improvement

Control Room (intelligence)
4PL

• IT system integration
• -IT infrastructure provision
• -Real-time data tracking
• -Convert data to information
• -Provide info to point of need
• -Technical support

Supply-Chain Info-mediary

• Transportation
• -Warehousing
• -Manufacturing(Outsourcing)
• -Procurement Service

Resource Providers
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5) Suggested 4PL Model
Responsibilities Responsibilities
4PL Model Traditional Model Supply-chain management layers Key components
4PL Consultants/ Business Strategy setting planning Direction, business model, objectives
4PL Business Tactical planning Demand, supply inventory planning
4PL Business Operational scheduling Customer order mgnt, distribution scheduling
4PL 3PL Execution Inbound, warehousing transportation, shipping
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4
Increasing Concentration
Source CI Yearbook
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• As of August 2007,
• Maersk Lines controls 16.1 of the worlds active
  container fleet
• Top 3 carriers(Maersk Lines, MSC, CMA CGM)
  control 33.5
• Top 5 carriers control 43.3
• Top 10 carriers control 60.5
• Top 20 carriers control 82.5

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5
Changes in Container Port
- Competitive Transshipment - Carrier-driven
Port Development - Privatization
Commercialization - Mega hub Port - Emergence
of Asian Ports - International Port Operators
HPH, PSA, DP world - Environmental pressure -
New Port Governance Body
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Port Logistics Concept - Treat Port as a
Logistics System ( Cuts Costs, Better Service
to Global Client, Wider Global Coverage,
Shorter Transit Time ) - Port Roles Changes in
the FEZ, FTZ - Value-Added activities increasing
in Port Area - Linkage with Global Logistics
Provider ( Global Carriers Terminal
Operators, Freight Forwarder ) - Port
Logistics Hub Strategies Launched in the Asia
Europe
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?. Classification of Korean Ports Governing Body
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Classification of Ports in Korea
Fifty one Ports and Harbor exist in Korea
under the Jurisdiction of the Port Act as
Following Trade.
ltTablegt Classification of Ports in Korea
International trade Ports Coastal Ports
Western Coast Incheon, Pyeongtaek, Daesan, Taean, Boryeong, Janghang, Gunsan, Mokpo (8) Yonggipo, Yeonpyungdo, Daecheon, Bi-in, Deaheuksando, Hongdo, Pengmok (7)
Southern Coast Wando, Yeosu, Gwangyang, Jeju, Seoguipo, Samcheonpo, Tongyung, Gohyun, Okpo, Jangseungpo, Masan, Jinhae, Busan (13) Shinma, Nokdongshin, Narodo, Geomundo, Hallim, Whasun, Sungsanpo, Aewol, Chuja, South Busan, Whaheungpo (11)
Eastern Coast Ulsan, Pohang, Samcheok, Doughae, Mukho, Okgae, Sokcho (7) Guryongpo, Wolpo, Hupo, Ulreung, Jumunjin (5)
Total 28 23
The MOLTMA is responsible for the planning,
construction, maintenance and management of
ports
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2
Major Ports in Korea
1) Port of Busan The port of Busan
is situated on the southeast coast of the Korean
peninsula approximately 400km by
expressway from the capital, Seoul.
Located in a highly industrialized area of Korea,
Busan, the 2nd largest city in Korea
with a population of 5 million, is the center for
the export of manufactured goods and
is a top ranked port in Korea in terms of traffic
volume and value.
ltTablegt General Cargo Container
Traffic


Unit 000 Ton, 000 TEU
2004 2005 2006 2007
General Cargo 215,032 217,217 229,939 230,304
Container 11,491 11,843 12,038 13,261
Source http//www.mltm.go.kr
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2) Port of Incheon The port of
Incheon, located on the mid-west coast of Korea,
is the third largest port next to
Gwangyang. It serves as the gateway to
the metropolitan area of Seoul which is only
32km to the east along a highway.
The inner harbor of the port is controlled by a
lock gate because of its location
within 9m tidal wave range. ltTablegt
General Cargo Container Traffic



Unit 1,000 Ton1,000 TEU
2004 2005 2006 2007
General Cargo 113,654 123,453 129,566 136,475
Container 934 1,148 1,373 1,664
Source http//www.mltm.go.kr
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3) Port of Ulsan The port of Ulsan,
located in the South-eastern coast Korea
peninsula at about 40km to the north of
Busan, was developed as an industrial
port in the 1960s and 1970s. Large
scale petrochemical industries, a gigantic
shipbuilding yard and an auto mobile
factory of the Hyundai Industrial Group Were
installed in this area.
ltTablegt General Cargo Container Traffic



Unit
000 Ton, 000 TEU
2004 2005 2006 2007
General Cargo 160,214 162,414 165,717 168,272
Container 302,870 316,432 331,330 380
Source http//www.mltm.go.kr
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4) Port of Gwangyang The port of
Gwangyang, located on the mid-southern coast, is
a new industrial port developed in the
1980s. It has become the gateway to
the bay area housing the Yeocheon Industrial
Complex of a large oil refinery,
petrochemical factories, a gigantic Gwangyang
steel mill (POSCO) and related
industries. The port of Gwangyang has
the distinct advantage of not being surrounded
by the agglomeration area of big cities,
thus affording plenty of space for
further expansion. ltTablegt General
Cargo Container Traffic



Unit 000 Ton, 000 TEU
2004 2005 2006 2007
General Cargo 170,487 177,483 195,069 196,433
Container 1,321 1,441 1,751 1,756
Source http//www.mltm.go.kr
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5) Port of Pohang The port of
Pohang, located at the southeastern coast of the
Korean peninsula, has been one of the
leading industrial ports. It serves the
POSCO (Pohang steel Mill Co.) and its related
industrial complex in the hinterland of
the port ltTablegt General Cargo
Container Traffic



Unit 000 Ton, 000 TEU
2004 2005 2006
General Cargo 160,214 162,414 165,717
Container 302,870 316,432 331,330
Source http//www.mltm.go.kr
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3
Port Planning and Developing Body
In accordance with the restructuring of
the government, the Ministry of Maritime
Affairs and Fisheries (MOMAF) was inaugurated on
August 8 1996, incorporating all the
maritime related affairs into one super-agency
including the Korea Maritime and Port
Administration (KMPA), the Maritime Accidents
Inquiry Agency and Hydro graphic Bureau
previously under the Ministry of Construction and
Transportation (MOCT), Fisheries
Administration previously under the Ministry of
Agriculture and Fisheries, Maritime Police
Administration under the Ministry of Home
Affairs and Marine Resources Development
previously under the Ministry of Science
and Technology At present,
MOLTMA(Ministry of Land, Transport Maritime
Affairs) is the Federal Government to
control port plan development since New
Government was inaugurated in the early of
2008.
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MOLTMA is the government Body to serve
following port development management. -
long term and medium term port policy for future
development - establishment of port master
plan - establishment of technical
standards for port planning, design and
construction - supervision of feasibility
studies, surveys and detail design work for port
development - control of capital
investment - overall
planning of port operations -
construction and maintenance of infrastructure
(breakwater, seawall, quay-wall, lock gate)
- construction of transportation facilities
connecting ports and hinterland - planning
construction of logistics facilities and ICD
- formulation of basic plan on private
investment on port facility project -
construction and installation of superstructure
(pavements, operation, building, shed, gantry
cranes) - dredging and maintenance of
access channels - port tariffs
- installation and maintenance of navigation
aids facilities (lighthouses, beacons) -
control of public water space within the port
limits - licensing port operation related
companies (stevedore, tugboat, ship-supply etc)
- compilation, analysis and provision of
port statistics
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Summary of Port Related Organization in Korea
MOLTMA
KL-Net
11 Branches
Port EDI
Invest
Lease
Yeosu, Masan Donghae Gunsan, Daesan Mokpo,
Pohang Pyeongtaek
BPA IPA UPA
Busan Incheon Ulsan
KCTA
Borrow Lease Terminal
Terminal Management Lease
Port Management Terminal Lease
Public Water Management
TOC
Terminal Operator
TOC
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Preview of Korean Port Administration in History
Year Organization Main Content
1976 Korea Maritime and Port Administration(KMPA) Renamed from the Korea Port Authority Under Central Government Port Management and Development
1989 Korea Container Terminal Authority(KCTA) Operating and Managing Container Ports Under Central Government Management Development of Container ports for KMPA
1996 Ministry of Maritime Affair and Fisheries(MOMAF) Port Management and Development Central Government Expanded to the Ministry Level(From KMPA to MOMAF)
2003 Busan Port Authority(BPA) Management Development of Busans Entire Port Facilities Independent Corporation under the Port Authority Law Current Busan and New Container Ports
2005 Incheon Port Authority(IPA) Management Development of Incheons Entire Port Facilities Independent Corporation under the Port Authority Law Current Incheon and Songdo New Ports
2007 Ulsan Port Authority(UPA) Management Development of Ulsans Entire Port Facilities Independent Corporation under the Port Authority Law
2008 MOLTMA Function is same as MOMAF
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Port Legislation and Administrators
Classification Contents Administrator
Harbour Act Designation, Development Management/Operation of Ports Port Policy Division of MOLTMA
New Port Construction Promotion Law Formulation of Basic Plan on New Port Construction Designation Management of the Area Determined for New Port Construction Port Development Division of MOLTMA
Law of Private Participation in Infrastructure Formulation of Basic Plan on Private Investment Facility Project Conclusion of Concession Agreement Designation of Concessionaire Private Investment Division of MOLTMA
Act on Korea Container Terminal Authority Establishment Operation of Korea Container Terminal Authority Except for Busan Incheon Development Operation of Container Terminals Financing of Development Funds, etc. Korea Container Terminal Authority(KCTA)
Act on Busan Port Authority Management Development of Container Port, Facilities Areas(e.g. distripark, Inland depot) related to Busan Port Management Development of Overseas Container Ports Busan Port Authority(BPA)
Act on Incheon Port Authority Management Development of Container Port, Facilities Areas(e.g. distripark, Inland depot) related to Incheon Port Incheon Port Authority(BPA)
Act on Ulsan Port Authority Management Development of Container Port, Facilities Areas(e.g. distripark, Inland depot) related to Ulsan Port Ulsan Port Authority(BPA)
Source Complied from MOLTMA Materials
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?. Container Port Developing in Korea
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Location Map of the Korea Ports
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Layout of the Port Busan Container Terminal
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2
New Port Development Plan

• Major Port Development Plan
• Designated nine Ports as a New Port Development
  Project
• Three National Big Projects
• Six New Port Projects

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Three National Big Projects - Busan New Port
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Three National Big Projects - Busan New Port
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Three National Big Projects - Gwangyang New
Port
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Three National Big Projects - Gwangyang New
Port
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Three National Big Projects - Gwangyang New
Port
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Three National Big Projects - Pyeongtaek New
Port
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Six New Port Projects - Gunsan New Port
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Six New Port Projects - Mokpo New Port
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Six New Port Projects - Ulsan New Port
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Six New Port Projects - Pohang New Port
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?. Developing FEZ FTZ linked with Port
1
Existing FEZ
Free Economic Zones
Spearhead Infrastructure
Strategic Location
Ideal Business Environment
Other Regions
Differentiation
Support Incentives
Upscale Living Conditions
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Global competition
Market competition
Business- friendly environment
21st Century Leader
FreeEconomic Zones
Corporate mobility
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Why Free Economic Zones in Korea?
Northeast Asian Business Hub
Free Economic Zones
Geographic advantage
Sustainable economic growth
Facilitating foreign investment
47
Northeast Asian Business Hub Strategy
ForeignInvestment
Openness
Regional EconomicCooperation
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Koreas FEZs
Why Incheon, Busan-Jinhae and Gwangyang?

• Logistical advantage
• Excellent infrastructure

Incheon FEZ
Busan-Jinhae FEZ
Gwangyang FEZ
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FEZ Benefits
Optimal Business Environment
Superb Living Conditions
One-Stop Administrative Services
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Optimal Business Environment
Tax reductions
Deregulation
Labor flexibility
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Superb Living Conditions

Internationalschools
Theme parks
Parks and golf courses
World-class medical care
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One-Stop Administrative Services
Free Economic Zone Authorities
One-Stop Administrative Services
Foreign Investment Ombudsmans Office
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2
New FEZ
Three New Projects in Korea Yellow Sea FEZ
Daegu-Gyeongbuk FEZ Saemangeum-Gunsan FEZ
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Three New Projects Yellow Sea FEZ
- Location Chung-Nam Gyeong-Gi nearby
PyeongTaekDangJin Port - Dimension
16836.48acre - Development Period 2008-2025
1st Phase 2008-2013, 2nd Phase 2014-2019,
3rd Phase 2020-2025
- Development Plans - To constitute world class
High-Tech industry cluster - To establish the
Northeast Asian trade value-added logistics base
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Three New Projects Daegu-Gyeongbuk FEZ
- Location Dauge, Gyeongsan, Yeongcheon, Gumi
etc - Dimension 8584.78acre - Development
Period 2008-2020 1st Phase 2008-2013,
2nd Phase 2014-2020
- Development Plans - To develop the Northeast
Asian knowledge-based industry center - To
Establish global industry cluster with fostering
regionally specialized knowledge-based industry
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Three New Projects Saemangeum-Gunsan FEZ
- Location Gunsan, Buan, Saemangeum reclaimed
land, etc - Dimension 23795.83acre -
Development Period 2008-2030 1st Phase
2008-2020, 2nd Phase 2021-2030
- Development Plans - To develop the core
manufacturing base of future new industry - To
foster the best international tourist leisure
industry hub in East Asian
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?. Issues to be Discussed

• Reducing Public Functions
• Encouraging Active Privatization
• Port Co-opetition Strategies among the regions
  will be needed
• Deregulation will be improved
• Observing Liners Centralization
• Accurate Traffic Technology Forecasting
• T/S Cargo pattern will be Changed
• Over Capacity Issues
• Governance Bodies of FEZ
• Improved Foreign Investment Fund
• Chinas Economic and Traffic Growth
• Improved Port Governance System
• Observing Ships Size to be called

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Thank you for your attention!