＂Container terminal must be secured＂

All container terminals in Korea are confronting difficulties in the wake of the global recession.

Most experts expect the global economy to recover in the second half of 2002, though only at a modest 2% increase. Developing countries are more likely to see a 1 - 2% increase.

The domestic economy may show a 3% increase. Though low-level increases are expected, there is widespread confidence that container cargoes will improve. As vessel over-supply continues with more new vessel deliveries, sea transportation rates are still unstable and dropping.

As for what is happening to the container-dedicated terminal that would require container vessels to be its best customer, drawing container vessels and forming marketing strategies has focused on productivity increases and service improvements for the last 2 - 3 months.

But, it is a different story now. Neither productivity nor service are regarded as important factors. Only cost lowering is regarded as key. Cost lowering strategies have to be clearly articulated by terminal operating companies. This is a substitute marketing strategy and is differentiated from other terminals.

What is the main reason for it? Shipping companies usually blame their difficulties on “the global recession”. Also, rash dumping between terminal operating companies has been regarded as a chronic practice.

Though shipping companies attribute their difficulties to the global recession, vessel oversupply is more likely responsible. Under the circumstances, shipping companies have tried to get over their financial difficulties through lowered terminal usage fees. The major problem here is excessive competition between terminal operating companies, instead of shipping companies delivering new vessels.

Terminal operating rates in the Port of Pusan are the lowest amongst competitive ports in East Asia. The Korea Maritime Institute (KMI) revealed that the main container-dedicated terminals in South East Asia, such as Hong Kong, Singapore, and Kaohsiung, charge three to seven times that in Pusan. Shanghai, a port starting later than Pusan, is twice as expensive as Pusan.

Stevedoring rates in the Port of Pusan are usually 20 ? 40% lower than its posted fee schedule. This is also embarrassing. The vessel entry ratio in the Port of Pusan is 7:3, foreign vessels to domestic vessels. Falling terminal usage is likely to forfeit opportunities to acquire foreign currencies. Terminal usage fees must be kept over costs. Competition with each other has to be healthy, and served productively.