Contents

Forewords

Features

Countries

Products & Services

Credits

Site Map

Kim Ho-Shik former Minister, Ministry of Maritime Affairs and Fisheries, Republic of Korea

A Shipping Power

As the world shipping industry continues to evolve, Korea is positioned to become a key maritime hub and logistics centre

The global shipping industry has witnessed tremendous changes over the past decades, with the freer movement of capital, the development of shipbuilding technology and the advancement of information and communication technology. Shipping has played a major role in speeding up globalisation – by providing low-cost maritime transport services, shipping has facilitated the expansion of world trade and thereby the rise in multinational enterprises. At the same time, the industry faces various challenges under globalisation, and constantly seeks ways to adapt to worldwide trends.

Korea’s shipping industry has made remarkable progress. Starting from about 120,000 gt of fleet in the early 1960s, Korea has grown to become one of the world’s leading shipping countries, and now operates some 14 million gt. The achievements can be attributed to Korea’s rapid industrialisation in the 1970s and 1980s, which prompted big increases in cargo volume. But they can also be seen as a natural resumption of Korea’s past tradition as a shipping power – Korea built a maritime kingdom in East Asia some 1200 years ago – as well as its geographical advantage in the centre of North-East Asia, and its shipping policies focusing on gaining efficiencies through continued deregulation.

To faithfully fulfil its roles in the world shipping market and make further progress, the Korean shipping industry should properly respond to the major changes that global shipping is undergoing today. In this context, I would like to discuss the trends of world shipping, and the direction of Korean shipping policy.

Daewoo’s shipyard at Kojedo Island: Korea has resumed its historic position as a shipping power

Ensuring fair competition
In the field of shipbuilding, technology has made vessels larger, faster and better able to accommodate cargo. In line with these trends, many large shipping companies are gearing themselves to develop multinational or supranational management systems in order to provide worldwide services, including the establishment of overland transport as well as maritime networks.

Mega-carriers
Mega-carriers, which have appeared as a result of strategic alliances, mergers and acquisitions among shipping companies, are expected to lead and shake up the liner shipping market with their absolute competitive advantage. The rise of these mega-carriers presents a danger of unfair competition.

In response, the Korean government will focus on maintaining fair trade conditions for our domestic market by preventing over-competition and undue consultations among carriers when large carriers set up global management systems. In other words, the Korean government will make every effort to ensure fair and competitive conditions between carriers and shippers, as well as among carriers in the shipping business both at home and abroad.

Liberalisation of domestic shipping regulations and support for international standards
The shipping industry these days is exposed to extreme international competition. To survive, shipping and trading powers throughout the world have needed to deregulate and liberalise their regulations, and tremendous progress has been made in these areas. Also, the advent of newly independent countries born since World War II has made competition fiercer, and compelled many shipping companies to utilise a Flag of Convenience (FOC). Today, more than 60% of ships worldwide are registered in FOC countries.

Such an emphasis on efficiency, while enabling low-cost shipping services, has brought problems regarding safety, environmental and working conditions. As a result, uniform standards need to be set by such international organisations as the World Trade Organization (WTO), International Maritime Organization (IMO) and International Labor Organization (ILO). The standards have become necessary to successfully deal with maritime safety, the environmental and security issues (the 11 September terrorist attack in particular has heightened worldwide awareness of security in maritime transport) that are likely to be neglected because of deregulation and liberalisation measures. They will help to more effectively regulate multinational shipping companies as well.

Samsung’s Geoye shipyard: developing super-large container vessels, superspeed liners and high-quality eco

Korea has worked tirelessly to relax regulations in its shipping sector over the decades. The Korean government now fully supports the implementation of multilateral standards by the WTO, which calls for countries to jointly pursue deregulation of their shipping sectors. Korea will strengthen its safety and environmental standards for ships as a council member under Category A of the IMO, while actively participating in efforts to set multilateral standards proposed by such organisations as the IMO and the ILO in order to eliminate substandard ships.

Establishment of Korean Peninsula as a logistics hub
The development of information technology has highlighted the importance of supply chain management, controlling the manufacturing, circulation, sales and returns of products. It has also highlighted the necessity of maintaining an integrated transportation network including shipping, air, road and rail. Under the hub and spoke system established with the advent of the latest large and fast ships, ports are expected to undergo a functional reorganisation – only container ‘mother ships’ will call at hub ports, whereas the other ports will be used by feeder ships.

These changes are expected to compel shipping companies to become full logistics companies rather than mere mari-time transporters. Modern ports, as ‘fourth generation ports’, will also add functions; instead of providing simple stevedoring, they will become comprehensive logistics management areas, encompassing production, distribution, processing and circulation.

Hyundai Mipo shipyard in Ulsan, aiming to the world’s best builder of medium-sized, specialised and high-value-added vessels

New terminals in Busan and Gwangyang
To appropriately respond to these changes, the Korean government will keep its ports modern and efficient. We will upgrade the Busan and Gwangyang ports so they will be world-class logistics complexes with comprehensive production, distribution, processing and circulation functions. To this end, Korea plans to complete 63 berth container terminals in Busan and Gwangyang by 2011 that will be able to handle 17m TEUs of containers per year. It will also induce the port authority regime to enhance the efficiency of port operations and encourage stevedoring companies to hire their own dock workers in order to promote a more flexible labour force.

Shipping’s pivotal role
Korea’s shipping industry has played a pivotal role in the nation’s growth. The nation is highly dependent on external trade: imports and exports amounted to 70% of GDP in 2001, and 99.8% of them were transported by sea. Also, Korea is well positioned geographically to become a centre of East Asian logistics, by being connected with North Korea, China, Japan, South-East Asia and America, and even Europe if the Trans-Korean Railroad is reconnected to the Trans-Siberian Railroad (TSR), and the Trans-Chinese Railroad (TCR) is promoted.

This is an exciting time in the development of the global shipping industry, with many challenges and opportunities. We in Korea look forward to implementing our new policies, and contending to become the logistics centre of North-East Asia.

Author: Kim Ho-Shik,
former Minister,
Ministry of Maritime Affairs and Fisheries,
Republic of Korea.
Website: www.momaf.go.kr

Geo-Economic and Port Data

Ministry of Maritime Affairs and Fisheries