Considering that South Korea is very intent on strengthening its logistics infrastructure so as to be a high-value supply chain hub in Northeast Asia, the following article from Cargo News Asia shows this effort will face unrelenting competition:
China is dominating the maritime logistics business in East Asia and endangering Korean ports, officials at the Maritime Ministry and Korea Institute of Maritime and Fisheries Technology warned.
The officials noted that in Busan, 1 million TEUs were processed in April, a drop of over 3 percent from the same figure last year. The aggregate amount of containers processed at Busan Port in the first quarter of this year was 3.9 million TEU, a 1 percent increase from the same period last year.
The three new berths at Busan New Port were almost empty. The new port opened almost two months ago, but only 37,000 TEUs have visited the port, far less than was predicted.
In China, however, the Port of Shanghai, processed 1.8 million 20-foot containers in May, a 19.6 percent increase over that of the same month last year. The new Yangshan Port, which has five berths for ships and is only six months old, processed 230,000 TEUs creating an aggregate of 8.2 million TEUs just this year. It was a 17.1 percent increase over the previous winter.
The winners and losers of this battle will be determined by which hubs provide the greatest customer value:
"As Shanghai's port improves in terms of service and business processes, it is 'stealing' freight from Busan," an institute official said.
The last sentence in the article refers back to the announcment I posted on previously:
The official said the situation is serious, and that they would think of ways to make Busan more competitive in terms of infrastructure or high value-added logistics, not scale of freight.
What would be interesting is a survey specifically identifying why port users switch business from Pusan to Shanghai. Is it more location-driven? Is it more of a services-driven decision? Is it based more on port users' customer requirements? If there is a strong correlation to location-based factors, then there isn't too much South Korea can do. But if it is truly operating a sophisticated logistics hub, it will have "feeler surveys" in place periodically to not only identify reasons port users have switched, but also help catch and resolve current customer concerns that could lead to additional defections.