Port of Busan handled over 17 million TEUs ranking after Shanghai, Singapore, Shenzhen, and Hong Kong. Busan port’s facility is controlled and managed by Korea Container Terminal Authority (KCTA), this is a non-profit organization authorized by the Ministry of Maritime Affair and Fisheries. From the 1970s to 2004, four container terminals were built to resolve the congestion and get ready for increase demand due to the economic development of China. To scope the trend of variation in vessel size, the Korean government encouraged private companies to participate in new Busan port development project which eventually attracts more transshipment cargo and extends port’s berth to 30 berths and can serve the world’s largest super post-Panamax vessels.
In 2010, Busan port also ran into a great dispute related to water front development (WFD); this forced the port to develop its WFD plan with local government and community to enhance access to the waterfront.
Through this plan, the Busan port facility is extended with a cruise terminal which can serve 335 ships and 356,593 passengers in the period of 2007 – 2012.
Busan port facility is heavily invested to increase its infrastructure. According to the research of Rom Kim (2016), the Busan port facility is ranks number one among top ten big container port. Port Busan created a space of 6,704 million square meter for developing hinterland infrastructure which consisted 4,039 million square meters for the comprehensive logistic facility . The old Busan north port is located in residential area which caused high traffic jam, air pollution and noise in area this means Busan port is built close to city which also strengthen the port hinterland connection to city.
In March 2010, New Busan port is completed; along with completion of new port 2 hinterland roads, 1 hinterland railway and 1 port hinterland road were constructed.
The 2 hinterland roads which are 23 km and 17.1 km respectively connect port of Busan with Chojeong interchange and Jillye interchange which also connected to Seoul-Busan expressway and Namhae expressway. The hinterland railway with 38.8 km from Busan port to Samrangjin and connect to Seoul-Busan and Namhae expressway. These hinterland road and railway do not run through residential area which enhance smoother and continuous flow for transportation. For enhancing all hinterland infrastructure potential, port hinterland road was constructed with length of 25 km and design to avoid all residential area by building a bridge over the seas to connect Busan north port and new port. Ungdong hinterland complex is a free trade zone for Busan port which presents excellent conditions for operating a logistics centres, including simplified process requires for logistics, indefinite storage for bonded cargo and areas for sorting, other logistics operation and value-added services.
Busan port is located at Northeast Asia which included 7 countries. With location between China, Japan and Russia, Busan port obtained a great opportunity to enhance its ability to capture transhipment cargoes from other parts of the world to and from North America, Europe and feeder for cargo shipped to and from Russia port; the transshipment covers 42.3 to 47.8% of total container throughput handled at the port. Northeast Asia area served 61 international shipping lines with over 358 container liner service per week (BPA,2013). Due to this ideal location, a Korean government plan to develop Busan port into a mega-hub for Northeast Asia, comparable to the role of Singapore in Southeast Asia. The port also located inside Busan city, the second busiest city after Seoul. Busan city is considered as the 9th busiest city in the world. The port also located near to Fukuoka and Hiroshima in Japan, Beijing and Shanghai in China, and Taipei in Taiwan.
However, with limited inland transportation from China and Russia through North Korea which could reduce Busan port competitiveness; with signed peace covenant between North and South Korea, Busan port competitiveness will be enhance due to higher connection to Russia and China through North Korea. This is reason why Busan is not high referable port location compare to Shanghai, Hong Kong and Shenzhen port Chinese ports in recent years is becoming more competitive compare to Busan port in term of transshipment cargoes capture from north china and Japan. This caused Busan port to redesign its pricing policy and incentives. During the time of financial crisis, Busan port change its port pricing and incentive to enhance port competitiveness.
Unfortunately, port cost or pricing is not main focus for the government through low autonomous decision-making power for port authority which leads to negative financial incentives, low attractiveness to shipping liners and forwarders. According to table 3.1, Busan is used as a base for cost comparison to other major container ports in Northeast Asia. Through the table, Shanghai and Gwanyang port implemented better pricing strategy compared to Busan in terms of terminal services cost for Gwanyang, terminal facility cost and terminal handling cost/warehousing for Shanghai; both ports in China impose free tax for container tax. In other hand, Japanese ports are not price competitive compared to Busan.
Busan port is an international seaport that is listed in the top ten largest port in Asia. However, the Korean government doesn’t provide any tax incentives to foreign shipowners and maritime-related businesses. The local authority has limited power for implementing and providing tax incentive policy not authority to use port land; all activities related to port must request for permission from the government. However, Korean customs improved its process through Electronic Data Interchange (EDI) system which reduce paperwork for import clearance and frequency of visits to custom house. For transshipment cargoes, cargoes are not compulsory to be inspected by custom authority and cargoes can be laid outside custom area.