1. Korea Port Governance System And New Challenge Issues
ICHCA Conference
Korea Port Governance System
And New Challenge Issues
Prof. Hee Seok Bang
Assistant. Jung Ho Na
Dong Joon Kang
Chung Ang University

2. Table of Contents Ⅰ Ⅱ Ⅲ Ⅳ Ⅴ Ⅵ
Review of World Economy & Korea Port Throughput Ⅱ
Factors to be considered for Port Policy & Management Ⅲ
Classification of Korean Port & Governing Body Ⅳ
Container Port Development in Korea Ⅴ
Developing FEZ & FTZ linked with Port Ⅵ
Issues to be Discussed

3. Review of World Economy
Ⅰ. Review of World Economy & Korea Port Throughput 1
Review of World Economy
Trade Scale in Korea
(100million $, %)
2001
2002
2003
2004
2005
2006
2007
Export
1504.4
1624.7
1938.2
2538.5
2844.2
3254.7
3714.9
Import
1411
1521.3
1788.3
2244.6
2612.4
3093.8
3568.5
Trade Cargo Volume in Korea
[ 100millionR/T ]
Year
2000
2001
2002
2003
2004
2005
2006
Total
704
751
776
812
849
874
927

4. World Shipbuilding Country 2005 % 2006 KOREA JAPAN CHINA 9.3 8.0 3.6
(100million CGT, %)
Country
2005 %
2006
KOREA
JAPAN
CHINA
9.3
8.0
3.6
35.5
30.5
13.7
10.6
9.1
4.5
34.6
29.7
14.7
ASIA
21.9
83.6
25.4
83.0
EUROPE
4.0
15.3
4.9
16.0
Total
26.2
100.0
30.6
Resource : Clarkson, World Shipyard Monitor, 2007

5. Foreign Exchange Holding
Economic Indicator of N. E. Asia
Section
Population
(million)
Dimension
(ml.sq.km
GDP
(billion $)
GDP per head ($)
Export
Import
Foreign Exchange Holding
Korea
47.7
99,585
6,807
14,122
257.7
219.5
198.1
Japan
128
378,000
46,639
36,522
540.3
407.3
824.2
China
1,304
9,561,000
16,007
1,217
593.3
538.9
609.9
Hong Kong 7
1,098
1,646
23,349
267.5
279.2
123.5
Taiwan 23
36,000
3,053
13,569
173.1
156.6
241.7
Sub-total
1,510
10,075
7,415
17,755
1,831
1,602
1,997
Total
6,446
133,567
55,500
8,800
8.880
9,215 -
(%)
23.4
7.5
13.3 21
17.4
Source: WTO, World Trade Report(2005), CIA, The World Factbook(2005)

6. Source ; http://www.index.go.kr2
Korea Port Throughput
Unit : R/T
2003
2004
2005
2006
2007
Total
951,133,773
956,149,803
984,534,280
1,036,843,244
1,093,479,551
Busan
187,184,537
215,032,399
217,217,227
229,938,598
243,564,954
Incheon
127,071,396
113,654,061
123,453,366
129,566,335
138,139,357
Pyeongtaek
43,978,940
40,808,436
42,514,023
44,234,861
48,092,932
Donghae
19,948,173
19,897,081
19,923,307
21,353,215
22,168,219
Daesan
41,410,793
41,163,769
44,720,057
52,649,401
53,515,961
Gunsan
15,690,899
16,560,763
17,077,882
17,502,072
17,685,782
Mokpo
6,944,923
6,262,041
7,594,153
8,978,754
14,202,826
Yeosu
3,780,714
1,676,578
2,587,211
2,788,767
8,344,082
Gwangyang
165,027,006
170,486,999
177,482,959
195,069,156
198,189,085
Pohang
54,123,508
56,297,352
54,691,880
54,970,612
61,875,145
Masan
11,484,938
12,490,080
12,997,990
11,907,024
13,193,314
Ulsan
146,141,817
160,214,236
162,413,761
165,717,395
168,651,699
Jeju
2,788,145
2,304,668
2,245,345
2,214,292
2,071,360
Others
125,557,984
99,301,340
99,615,119
99,952,762
103,784,835
Source ;

7. Traffic Forecast Traffic Forecast of Container
Unit : 000 R/T
2007
2011
2015
2020
Annual growth rate
‘07-’11
’11-’15
’15-’20
Import
308,558
371,465
423,499
492,427
4.7
3.3
3.1
Export
168,062
200,359
260,359
332,097
4.5
6.8
5.0
Coastal
148,195
166,873
175,355
184,234
3.0
1.2
1.0
T/S
120,648
159,589
205,929
275,361
7.2
6.6
6.0
Total
745,462
898,287
1,065,142
1,284,119
4.8
4.4
3.8
Source : KMI 2008, Crude Oil Traffic is excluded.
Traffic Forecast of Container
Unit : 000 TEU
2003
2011
2015
2020
Import & Export
8,182
14,933
19,232
24,161
T/S
4,599
11,214
15,090
21,344
Coastal
405
952
1,342
1,906
Total
13,186
27,099
35,664
47,411
Source : MOLTMA, Ocean Shipping Consultant

8. Changes in Container Shipping
Ⅱ. Factors to be Considered for Port Policy & Management 1
Changes in Container Shipping
Main Line / Feeder Service
Changing Client Demands
Alliance, M&A
Increasing Concentration
Emergence of BIG SHIP

9. Proposed Size of Big Ships
Ship Type
Capacity
(TEU)
Length
(m)
Draft
Beam
Rows on
8,800TEU Class
8,800
347
14.0
45.3 17
12,000TEU Class
12,000
350
14.5 57
Suez-Max
400
17.04 50 25
15,000 TEU Class
15,000
14-15 69 28
Malacca-Max
18,154
21.0 60 -
Source : Lloyd List
Note : Han-Jin Shipping Line ordered 13,000TEU Ship
(5 Ships operation in 2010, 4 Ships operation in 2011)

10. Order and Delivery of Super Container Ships –Emma Maersk
Name of Vessel
Capacity(TEU)
Length(m)
Width(m)
Row
Delivery Date
Emma Maersk
11,000
395 56 22
2006
Cosco Ningbo
9,449
349
42.5
2006
CMA CGM Fidelio
9,415
348
42.5
2006
Xin Los Angeles
9,600
335
45.3
2006
Hanjin Shipping
10,000
349
45.6
2008
Samsung Shipbuilding
12,000
383 52
2008
Pyeongtaek University

11. Changing Client Demands2
Changing Client Demands
Diversification/Enhancement of services
Intermodal services
Supply Chain Management
Warehousing and Distribution
Tailored pricing packages
Global service agreements
Advanced cargo care technologies
Container tracking facilities
E-commerce initiatives

12. Integration of the Logistics Providers3
Integration of the Logistics Providers
1) Expend 3PL Business(Lead Logistics Providers : LLPs)
2) 4PL’s Structure
4PL
3PL
3PL
3PL

13. 3) 4PL’s Functions ; - supply-chain engineering
- business process re-engineering
- IT services and systems capable of connecting to customers and other supply-chain partners(including design of an open systems framework, build, implementation and run activities)
- sales and operations planning
- call centres
- distribution management
- procurement
- customer support
- invoice management
- other back office services such as administration, human resource management, finance and legal support

14. 4) Four key components of 4PL
Supply-chain visionary
-Multiple customer relationship
-Supply chain re-engineering
-Project management
-Service integrator
-Continuous innovation
Architect/
integrator F I N A C E
Experienced logisticians
-Optimization engines
-Decision support
-Neutral positioning
-Continuous improvement
Control Room
(intelligence)
4PL
IT system integration
-IT infrastructure provision
-Real-time data tracking
-Convert data to information
-Provide info to point of need
-Technical support
Supply-Chain
Info-mediary
Transportation
-Warehousing
-Manufacturing(Outsourcing)
-Procurement Service
Resource
Providers

15. 5) Suggested 4PL Model Responsibilities 4PL Model Traditional
Supply-chain management layers
Key components
Consultants/
Business
Strategy setting & planning
Direction, business model, objectives
Tactical planning
Demand, supply & inventory planning
Operational scheduling
Customer order mgnt, distribution scheduling
3PL
Execution
Inbound, warehousing transportation, shipping

16. Increasing Concentration4
Increasing Concentration
Source: CI Yearbook

17. As of August 2007,
Maersk Lines controls 16.1% of the world’s active container fleet
Top 3 carriers(Maersk Lines, MSC, CMA CGM) control 33.5%
Top 5 carriers control 43.3%
Top 10 carriers control 60.5%
Top 20 carriers control 82.5%

18. Changes in Container Port5
Changes in Container Port
- Competitive Transshipment
- Carrier-driven Port Development
- Privatization & Commercialization
- Mega hub Port
- Emergence of Asian Ports
- International Port Operators ; HPH, PSA, DP world
- Environmental pressure
- New Port Governance Body

19. - Treat Port as a Logistics System
Port Logistics Concept
- Treat Port as a Logistics System
( Cuts Costs, Better Service to Global Client, Wider Global Coverage,
Shorter Transit Time )
- Port Roles Changes in the FEZ, FTZ
- Value-Added activities increasing in Port Area
- Linkage with Global Logistics Provider
( Global Carriers & Terminal Operators, Freight Forwarder )
- Port & Logistics Hub Strategies Launched in the Asia & Europe

20. Classification of Ports in Korea
Ⅲ. Classification of Korean Ports & Governing Body 1
Classification of Ports in Korea
* Fifty one Ports and Harbor exist in Korea under the Jurisdiction of the
Port Act as Following Trade.
<Table> Classification of Ports in Korea
International trade Ports *
Coastal Ports
Western Coast
Incheon, Pyeongtaek, Daesan, Taean, Boryeong, Janghang, Gunsan, Mokpo (8)
Yonggipo, Yeonpyungdo, Daecheon, Bi-in, Deaheuksando, Hongdo, Pengmok (7)
Southern Coast
Wando, Yeosu, Gwangyang, Jeju, Seoguipo, Samcheonpo, Tongyung, Gohyun, Okpo, Jangseungpo, Masan, Jinhae, Busan (13)
Shinma, Nokdongshin, Narodo, Geomundo, Hallim, Whasun, Sungsanpo, Aewol, Chuja, South Busan, Whaheungpo (11)
Eastern Coast
Ulsan, Pohang, Samcheok, Doughae, Mukho, Okgae, Sokcho (7)
Guryongpo, Wolpo, Hupo, Ulreung, Jumunjin (5)
Total 28 23
* The MOLTMA is responsible for the planning, construction, maintenance and management of ports

21. 2 Major Ports in Korea 1) Port of Busan
· The port of Busan is situated on the southeast coast of the Korean peninsula
approximately 400km by expressway from the capital, Seoul.
· Located in a highly industrialized area of Korea, Busan, the 2nd largest city
in Korea with a population of 5 million, is the center for the export of
manufactured goods and is a top ranked port in Korea in terms of traffic
volume and value.
<Table> General Cargo & Container Traffic
Unit : 000 Ton, 000 TEU
2004
2005
2006
2007
General Cargo
215,032
217,217
229,939
230,304
Container
11,491
11,843
12,038
13,261
Source ;

22. largest port next to Gwangyang.
2) Port of Incheon
· The port of Incheon, located on the mid-west coast of Korea, is the third
largest port next to Gwangyang.
· It serves as the gateway to the metropolitan area of Seoul which is only
32km to the east along a highway.
· The inner harbor of the port is controlled by a lock gate because of its
location within 9m tidal wave range.
<Table> General Cargo & Container Traffic
Unit : 1,000 Ton·1,000 TEU
2004
2005
2006
2007
General Cargo
113,654
123,453
129,566
136,475
Container
934
1,148
1,373
1,664
Source ;

23. 3) Port of Ulsan
· The port of Ulsan, located in the South-eastern coast Korea peninsula
at about 40km to the north of Busan, was developed as an industrial
port in the 1960’s and 1970’s.
· Large scale petrochemical industries, a gigantic shipbuilding yard and
an auto mobile factory of the Hyundai Industrial Group Were installed
in this area.
<Table> General Cargo & Container Traffic
Unit : 000 Ton, 000 TEU
2004
2005
2006
2007
General Cargo
160,214
162,414
165,717
168,272
Container
302,870
316,432
331,330
380
Source ;

24. port developed in the 1980’s.
4) Port of Gwangyang
· The port of Gwangyang, located on the mid-southern coast, is a new industrial
port developed in the 1980’s.
· It has become the gateway to the bay area housing the Yeocheon Industrial
Complex of a large oil refinery, petrochemical factories, a gigantic Gwangyang
steel mill (POSCO) and related industries.
· The port of Gwangyang has the distinct advantage of not being surrounded
by the agglomeration area of big cities, thus affording plenty of space for
further expansion.
<Table> General Cargo & Container Traffic
Unit : 000 Ton, 000 TEU
2004
2005
2006
2007
General Cargo
170,487
177,483
195,069
196,433
Container
1,321
1,441
1,751
1,756
Source ;

25. · The port of Pohang, located at the southeastern coast of the Korean
peninsula, has been one of the leading industrial ports.
· It serves the POSCO (Pohang steel Mill Co.) and its related industrial
complex in the hinterland of the port
<Table> General Cargo & Container Traffic
Unit : 000 Ton, 000 TEU
2004
2005
2006
General Cargo
160,214
162,414
165,717
Container
302,870
316,432
331,330
Source ;

26. Port Planning and Developing Body3
Port Planning and Developing Body
* In accordance with the restructuring of the government, the Ministry of Maritime
Affairs and Fisheries (MOMAF) was inaugurated on August , incorporating
all the maritime related affairs into one super-agency including the Korea
Maritime and Port Administration (KMPA), the Maritime Accidents Inquiry Agency
and Hydro graphic Bureau previously under the Ministry of Construction and
Transportation (MOCT), Fisheries Administration previously under the Ministry of
Agriculture and Fisheries, Maritime Police Administration under the Ministry of
Home Affairs and Marine Resources Development previously under the Ministry
of Science and Technology
* At present, MOLTMA(Ministry of Land, Transport & Maritime Affairs) is the
Federal Government to control port plan & development since New Government
was inaugurated in the early of 2008.

27. · MOLTMA is the government Body to serve following port development & management.
- long term and medium term port policy for future development
- establishment of port master plan
- establishment of technical standards for port planning, design and construction
- supervision of feasibility studies, surveys and detail design work for port development
- control of capital investment
- overall planning of port operations
- construction and maintenance of infrastructure (breakwater, seawall, quay-wall, lock gate)
- construction of transportation facilities connecting ports and hinterland
- planning & construction of logistics facilities and ICD
- formulation of basic plan on private investment on port facility project
- construction and installation of superstructure (pavements, operation, building, shed, gantry cranes)
- dredging and maintenance of access channels
- port tariffs
- installation and maintenance of navigation aids’ facilities (lighthouses, beacons)
- control of public water space within the port limits
- licensing port operation related companies (stevedore, tugboat, ship-supply etc)
- compilation, analysis and provision of port statistics

28. Summary of Port Related Organization in Korea
MOLTMA
KL-Net
11 Branches
Port EDI
Invest
Lease
Yeosu, Masan
Donghae
Gunsan, Daesan
Mokpo, Pohang
Pyeongtaek
BPA
IPA
UPA
Busan
Incheon
Ulsan
KCTA
Port Management
Terminal Lease
Terminal
Management
& Lease
Borrow & Lease
Terminal
Public Water
Management
TOC
TOC
Terminal Operator

29. Preview of Korean Port Administration in History
Year
Organization
Main Content
1976
Korea Maritime and Port Administration(KMPA)
Renamed from the Korea Port Authority
Under Central Government
Port Management and Development
1989
Korea Container Terminal Authority(KCTA)
Operating and Managing Container Ports
Management & Development of Container ports for KMPA
1996
Ministry of Maritime Affair and Fisheries(MOMAF)
Port Management and Development
Central Government
Expanded to the Ministry Level(From KMPA to MOMAF)
2003
Busan Port Authority(BPA)
Management & Development of Busan’s Entire Port Facilities
Independent Corporation under the Port Authority Law
Current Busan and New Container Ports
2005
Incheon Port Authority(IPA)
Management & Development of Incheon’s Entire Port Facilities
Current Incheon and Songdo New Ports
2007
Ulsan Port Authority(UPA)
Management & Development of Ulsan’s Entire Port Facilities
2008
MOLTMA
Function is same as MOMAF

30. Port Legislation and Administrators
Classification
Contents
Administrator
Harbour Act
Designation, Development & Management/Operation of Ports
Port Policy Division of MOLTMA
New Port Construction Promotion Law
Formulation of Basic Plan on New Port Construction
Designation & Management of the Area Determined for New Port Construction
Port Development Division of MOLTMA
Law of Private Participation in Infrastructure
Formulation of Basic Plan on Private Investment Facility Project
Conclusion of Concession Agreement & Designation of Concessionaire
Private Investment Division of MOLTMA
Act on Korea Container Terminal Authority
Establishment & Operation of Korea Container Terminal Authority Except for Busan & Incheon
Development & Operation of Container Terminals
Financing of Development Funds, etc.
Korea Container Terminal Authority(KCTA)
Act on Busan Port Authority
Management & Development of Container Port, Facilities & Areas(e.g. distripark, Inland depot) related to Busan Port
Management & Development of Overseas Container Ports
Busan Port Authority(BPA)
Act on Incheon Port Authority
Management & Development of Container Port, Facilities & Areas(e.g. distripark, Inland depot) related to Incheon Port
Incheon Port Authority(BPA)
Act on Ulsan Port Authority
Management & Development of Container Port, Facilities & Areas(e.g. distripark, Inland depot) related to Ulsan Port
Ulsan Port Authority(BPA)
Source ; Complied from MOLTMA Materials

31. Location Map of the Korea Ports
Ⅳ. Container Port Developing in Korea 1
Location Map of the Korea Ports

32. Layout of the Port Busan Container Terminal

33. New Port Development Plan2
New Port Development Plan
Major Port Development Plan
Designated nine Ports as a New Port Development Project
Three National Big Projects
Six New Port Projects

34. Three National Big Projects - Busan New Port

35. Three National Big Projects - Busan New Port

36. Three National Big Projects - Gwangyang New Port

37. Three National Big Projects - Gwangyang New Port

38. Three National Big Projects - Gwangyang New Port

39. Three National Big Projects - Pyeongtaek New Port

40. Six New Port Projects - Gunsan New Port

41. Six New Port Projects - Mokpo New Port

42. Six New Port Projects - Ulsan New Port

43. Six New Port Projects - Pohang New Port

44. 1 Existing FEZ Other Regions Ⅴ. Developing FEZ & FTZ linked with Port
Free Economic Zones
Spearhead
Infrastructure
Strategic
Location
Ideal Business
Environment
Other
Regions
Differentiation
Upscale Living
Conditions
Support &
Incentives

45. Global competition Market competition 21st Century Leader Corporate
Business-
friendly
environment
21st Century
Leader
Free Economic
Zones
Corporate
mobility

46. Why Free Economic Zones in Korea? Northeast Asian Business Hub
Geographic advantage
Sustainable
economic growth
Facilitating foreign
investment

47. Northeast Asian Business Hub Strategy Regional Economic Cooperation
Foreign Investment
Openness
Regional Economic Cooperation

48. Korea’s FEZs Why Incheon, Busan-Jinhae and Gwangyang?
Logistical advantage
Excellent infrastructure
Incheon
FEZ
Busan-Jinhae
FEZ
Gwangyang
FEZ

49. FEZ Benefits Optimal Business Environment Superb Living Conditions
One-Stop Administrative Services

50. Optimal Business Environment
Tax reductions
Deregulation
Labor flexibility

51. Superb Living Conditions
International schools
Theme parks
Parks and golf courses
World-class medical care

52. One-Stop Administrative Services
Free Economic Zone Authorities
One-Stop Administrative Services
Foreign Investment Ombudsman’s Office

53. 2 New FEZ Three New Projects in Korea Yellow Sea FEZ
Daegu-Gyeongbuk FEZ
Saemangeum-Gunsan FEZ

54. Three New Projects : Yellow Sea FEZ
- Location
Chung-Nam & Gyeong-Gi nearby PyeongTaek∙DangJin Port
- Dimension : acre
- Development Period :
1st Phase : , 2nd Phase : , 3rd Phase :
- Development Plans
- To constitute world class High-Tech industry cluster
- To establish the Northeast Asian trade & value-added logistics base

55. Three New Projects : Daegu-Gyeongbuk FEZ
- Location
Dauge, Gyeongsan, Yeongcheon, Gumi etc
- Dimension : acre
- Development Period :
1st Phase : , 2nd Phase :
- Development Plans
- To develop the Northeast Asian knowledge-based industry center
- To Establish global industry cluster with fostering regionally specialized knowledge-based industry

56. Three New Projects : Saemangeum-Gunsan FEZ
- Location
Gunsan, Buan, Saemangeum reclaimed land, etc
- Dimension : acre
- Development Period :
1st Phase : , 2nd Phase :
- Development Plans
- To develop the core manufacturing base of future new industry
- To foster the best international tourist & leisure industry hub in East Asian

57. Ⅵ. Issues to be Discussed
Reducing Public Functions
Encouraging Active Privatization
Port Co-opetition Strategies among the regions will be needed
Deregulation will be improved
Observing Liners Centralization
Accurate Traffic Technology Forecasting
T/S Cargo pattern will be Changed
Over Capacity Issues
Governance Bodies of FEZ
Improved Foreign Investment Fund
China’s Economic and Traffic Growth
Improved Port Governance System
Observing Ship’s Size to be called

58. Thank you for your attention!