Reefer cargoes leave Pusan

Because of illogical stevedoring system and rates, and indifference from concerned government parties, high value-added reefer cargoes are moving away from Pusan.

Medium- and small- ship repair yards as well as cold storage facilities were negatively affected by the move, creating an urgent need for reforms.

Pusan metropolitan city revealed on May 24 that the actual amount in storage among 110 cold stores was 326,754 tons as of the end of April, filling only 46% of the real storage capacity of 700,000 tons. This figure went far below the 60% estimated as the break-even point.

This is the lowest level since April 1999 when fear of imports following the economic stagnation of the Asian currency crisis left cold storage facilities filled to only 40% capacity.

This number was down by 24,317 tons compared to March's results when capacity sat at 50%. This drop follows levels of 60% in January and 55% in February.

These dips in reefer cargoes accounted for expensive loading and unloading costs compared to storage costs.

Shippers are now moving into warehouses in Metropolitan areas where the storage costs are relatively less expensive than in Pusan, with no stevedoring costs.

Especially, the Port of Pusan stevedoring costs are much more expensive than competitive Chinese ports. Worse yet, stevedoring conditions at the Port of Pusan are considered by many to be substandard. Foreign shippers are moving their transit reefer cargoes into Qingdao in China. Pusan levied an extra 50% surcharge on all night work, an extra 50% during the daytime on Sunday, and a whopping 200% for night work on Sundays, even though Qingdao applies no extra charges. In addition, Qingdao applied a 35% discount for packed cargoes, while there is no discount in Pusan.

As a further aggravation to the situation, Pusan charges the same rates on cargoes below 250 tons, the minimum working amount, while taking twice as much time to process them as it takes in Qingdao.

Under these less than favorable circumstances, it is estimated that roughly 200,000 - 300,000 tons of transit reefer cargoes have gone to Qingdao.

These decreases in cargoes are connected to a 20 - 30% drop in work for small and medium shipyards in Pusan.

"Even though transit reefer cargoes have huge added value, such as from processing costs, transportation fees, storage fees in warehousing and repair fees for vessels in Pusan, the city of Pusan overlooked these facts," a concerned worker pointed out.

There are no statistics for transit reefer cargoes from the Korea Customs Service or the Ministry of Maritime Affairs and Fisheries. Experts insisted, "It will be in vain to make the Port of Pusan the logistic center for international sea products with such nonsensical systems and unrevised rates".