After months of prevarication the South Korean government is preparing to intervene in operations at the nation’s key port of Pusan in an effort to avert the financial collapse of private operators after a long-running price war has driven most of them into the red.
The Busan Regional Maritime Affairs and Port Office and Busan Port Authority said Monday they will team up to try to return the port to an even keel through an increase in the port’s operational efficiency.
Ju Sung Ho, a BRMAP administrator told local press that his organisation alongside the BPA would re-examine the operation schemes of Busan North Port and Newport to maximize operational efficiency. He added that he would be discussing the matter with the newly formed Ministry of Land, Transport and Maritime Affairs for guidance in setting out a long-term port operation plan.
“A long time has now passed since the establishment of Newport’s construction and operation plans. We need to re-examine its operation plan and cargo volume forecast, as well as looking at ways to increase operational efficiency of Northport and Pusan New Port in conjunction with the Northport redevelopment."
It would appear that the government bodies may not stop short of enforcing a restructuring of operations with all the consequent retrenching that may ensue. BPA president Lee Gap-sook said, “BPA will act as a mediator in the restructuring of the terminal operating companies and their labour force. It will be an arduous task, but if every party concerned makes some concessions in this difficult time to achieve a common goal, Busan may become more competitive in the future.”
According to one source BPA wants Hutchison Port Holdings to integrate its operations at the old port and move them to the Pusan New Port. The authority also wants to see a dominant shareholder at Pusan East Container Terminal.
Trouble at Busan Port has been brewing since the establishment of the New Port in 2006. The port, which currently has a capacity in excess of 3.5m, succeeded in only handling 535,000 teu during 2007. Despite poaching the Maersk services from Northport (700,000 teu annually) PNC is reported to have notched up a won40bn loss in 2007, making an accumulated loss of won100bn. PNC’s managing director Patrick Bol was asked to verify the figure but merely offered a “no comment”.
At Busan Northport terminal operator Pusan East Container Terminal said it will make a loss of at least won10bn as a direct result of losing the Maersk account and slashing tariffs to hold on to what remains.
Meanwhile, the remaining operators including HPH, Korea Express, Busan International Container Terminal and Dongbu Container Terminal are all forecast to make losses of Won5bn to Won10bn this year as thy have cut container handling charges from 20% to 30%.
The BPA’s marketing director T Park conceded that the situation had become extremely serious but admitted that a call for help from the terminal operators at the end of last year, by way of a rent reduction, had been rejected by the port authority.
The most immediate fear for the authorities and the operators is a confrontation with the unions who will fight hard to protect the livelihoods of their members.
The Busan Regional Maritime Affairs and Port Office and Busan Port Authority said Monday they will team up to try to return the port to an even keel through an increase in the port’s operational efficiency.
Ju Sung Ho, a BRMAP administrator told local press that his organisation alongside the BPA would re-examine the operation schemes of Busan North Port and Newport to maximize operational efficiency. He added that he would be discussing the matter with the newly formed Ministry of Land, Transport and Maritime Affairs for guidance in setting out a long-term port operation plan.
“A long time has now passed since the establishment of Newport’s construction and operation plans. We need to re-examine its operation plan and cargo volume forecast, as well as looking at ways to increase operational efficiency of Northport and Pusan New Port in conjunction with the Northport redevelopment."
It would appear that the government bodies may not stop short of enforcing a restructuring of operations with all the consequent retrenching that may ensue. BPA president Lee Gap-sook said, “BPA will act as a mediator in the restructuring of the terminal operating companies and their labour force. It will be an arduous task, but if every party concerned makes some concessions in this difficult time to achieve a common goal, Busan may become more competitive in the future.”
According to one source BPA wants Hutchison Port Holdings to integrate its operations at the old port and move them to the Pusan New Port. The authority also wants to see a dominant shareholder at Pusan East Container Terminal.
Trouble at Busan Port has been brewing since the establishment of the New Port in 2006. The port, which currently has a capacity in excess of 3.5m, succeeded in only handling 535,000 teu during 2007. Despite poaching the Maersk services from Northport (700,000 teu annually) PNC is reported to have notched up a won40bn loss in 2007, making an accumulated loss of won100bn. PNC’s managing director Patrick Bol was asked to verify the figure but merely offered a “no comment”.
At Busan Northport terminal operator Pusan East Container Terminal said it will make a loss of at least won10bn as a direct result of losing the Maersk account and slashing tariffs to hold on to what remains.
Meanwhile, the remaining operators including HPH, Korea Express, Busan International Container Terminal and Dongbu Container Terminal are all forecast to make losses of Won5bn to Won10bn this year as thy have cut container handling charges from 20% to 30%.
The BPA’s marketing director T Park conceded that the situation had become extremely serious but admitted that a call for help from the terminal operators at the end of last year, by way of a rent reduction, had been rejected by the port authority.
The most immediate fear for the authorities and the operators is a confrontation with the unions who will fight hard to protect the livelihoods of their members.