Page 28 - Sphere No.7 (Oct 2002)

SPHERE
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C O V E R S T O R Y
the first half of this year to 1,841,000 TEUs, whilst import-
export cargo posted a more modest rise of 6.1% to 3,391,000
TEUs. Pusan in particular posted 23% transhipment growth to
1,714,000 TEUs, which accounted for 40.1% of its total cargo.
But it is Kwangyang that appears to have the most potential.
In the first half, it posted a 204% rise in transhipments to
130,867 TEUs, mostly from north-eastern China. Adds KIT’s
Paul Ho:“There’s lots of cargo in northern China, but unfortu-
nately, although they have nice ports, places like Dalian and
Qingdao are not on major trunk routes, so that’s why Korean
ports have the advantage.”
U NCHARTED WATERS
Still, operating in South Korea is not always smooth sailing.
While the fundamentals are in place (the country is the
world’s largest ship-builder, possesses a solid export industry
based on steel, automotives, semiconductors, information
technology and textiles, and has a rapidly growing domestic
market) it is steeped in tradition.To the outside observer the
nation may appear to be on the cutting edge of industrial and
technological advancement, but it comes as a surprise to
many to learn it still has a decidedly traditional way of doing
business.
“Business is built on relationships, and these relationships
take time to build. Once trust is established, business can be
very rewarding,” says HPH Korea Finance Manager Alex Choi.
“I think language is a particular challenge,” says KIT
Terminal Manager Robert Poon.“Outside of Seoul, English is
not widely spoken. Learning to speak the local language is not
a matter of choice but a necessary mandate.”
KIT Project Manager Neil Proud agrees. “Having lived in
Burma, Vietnam and many other locations, I would rate this
posting the most challenging I’ve experienced. In developing
countries you quickly find people who speak English and then
you have some level of communication. Here it is difficult to
find English-speaking staff outside of the capital Seoul and it
then takes some effort to persuade these English speakers to
relocate to Pusan and Kwangyang.”
SETTING A COURSE
But times change. And so do perspectives. Over the next 10
years, Northeast Asia’s role in the global logistics market will
rival that of North America and Europe. China is increasingly
attracting investment from manufacturers across the world, and
is emerging as a global production base.The combined GDP of
Japan, China and South Korea has almost doubled over the past
decade, accounting for 20.6% of total global GDP. The three
countries fuel 12.8% of total world trade.
Finally, there remains the unresolved issue of North Korea.
Political considerations aside, many outside observers believed
South Korea would never be a natural gateway to Asia because
it lacked a hinterland connection to the continent. However,
recent developments between the two sides could see that
dream realised by early next year to the economic benefit of
both.While direct access to the Trans China Railroad andTrans
Siberia Railroad may affect some shipping routes in the short
term, ultimately it may further advance South Korea’s claim to
be the region’s logistics base.
And then, of course, there are its people. “Whatever you
think about the Korean way of doing things,” says Choi, “still,
you have to ask yourself: ’Why are they so successful?’ It’s the
people. Koreans are hard working, great team players and very
disciplined. They are focused. Once they put their mind to
something, it’s very hard to stop them.”
T HOUGH ONLY A 45-MINUTE FLIGHT FROM
Seoul, and just 150km west of Pusan, the south-central
port of Kwangyang feels about as remote as is possi-
ble to be in South Korea.
The nearest landing strip is Jinju airport, a facility shared
with the military and a 40-minute drive through rolling green
hills, fruit orchards, rice paddies and raging white-river valleys.
Along the coast, mangrove swamps pad out swathes of unde-
veloped shoreline.
A new four-lane highway cuts through this idyllic, natural
setting, with its modern bridge-spans and tunnels forming a
swift artery from the isolated southern Korean Peninsula to
the nation’s industrial heartland.
Kwangyang’s only other contact with the outside world is
via the Korea Strait. But it is this prime location – a sheltered,
deep harbour along the world’s major shipping routes – that
is rapidly turning this once quiet fishing village into one of the
world’s biggest and busiest ports.
Industrial giant POSCO was first to move into Kwangyang
in 1987, opening an iron and steel mill that has created more
than 15,000 jobs.The nearbyYocheon Petrochemical Industrial
Complex and Yulchon Industrial Park soon followed, swelling
the city’s population to about 140,000.
However, with the Korean Government’s ambitious plans to
turn Kwangyang into an international logistics centre and
north-east Asian hub, the city is forecast to triple in size over
the next decade.
Phase I of the Kwangyang Container Terminals (KCT) was
officially opened under the government’s “Dual Port” policy in
July 1998. At a public cost of about US$340 million, Phase 1
took 10 years to complete and added four 15m deep-water
berths over a quay area of 1.4km.
In May last year, Korea International Terminals (KIT) was
granted a lease to develop and operate seven berths at Phase
2. Phase 2-1 was officially opened on April 15 this year, with
Phase 2-2 scheduled for completion by the end of next year.
In the meantime, in January this year Hutchison Korea
Terminals (HKT) secured three existing deep-water container
terminals from Hyundai Merchant Marine, including Hutchison
Kwangyang Container Terminal (HKCT), a single 50,000 tonne
berth located at Kwangyang Phase 1.
“As you can see, there’s an incredible development under
way,” says KIT Project Manager Neil Proud of Kwangyang.
“Obviously Korea has invested a lot of money in infrastructure
here since the Asian crisis, so in terms of this terminal,
although there might be only 2.5km of existing berth and
backup area now, you’ll see the hinterland behind us has a lot
of potential.
“The London Metals Exchange has already agreed to build a
storage facility here to cater to the huge demand for Korean
semi-conductors, and other foreign ventures are starting to
show more interest.”
The Korean Government has just announced the com-
THE KWANGYANG ADVANTAGE
By Cortlan Bennett