Hopes pinned on Panama Canal as box volume at Korean ports falls

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Busan portThe volume of cargo processed at South Korea’s seaports increased almost 2% year-on-year in the first half of 2016, but container throughput fell, recent government data showed.

Cargo handled at the country’s seaports totaled 739.77 million tons during the six months, up 1.9% from a year earlier, according to the Ministry of Oceans and Fisheries.

Trade cargo totaled 608.96 million tons, while domestic shipments came to 130.81 million tons.

The increase came from the larger amount of non-container cargo, which climbed 3% year-on-year. But container cargo volume fell 0.4% year-on-year to some 12.8 million twenty foot equivalent units (TEUs).

By port, the country’s largest port in Busan handled 9.62 million TEUs, down 1.5% from the first half of last year.

Incheon Port, on the other hand, posted an 8.2% rise to 1.23 million TEUs.

“In the first half, cargo volume stood at the level of the previous year,” a ministry official said. “In the second half, a positive factor is expected from improved global economic and trade situations and the expansion of Panama Canal.”

As this developed, the Busan Port Authority (BPA), which oversees Busan Port, said it expects to see an increase in cargo volume and a rise in transshipment cargo volume at its port, thanks to the Panama Canal expansion.

Situated in the isthmus connecting North and South America, the Panama Canal is the shortest watercourse linking the Atlantic and the Pacific and is witness to the passage through its waters of some 6% of global sea trade, said BPA.

Expansion of the canal was initiated in 2007 when the waterway approached its maximum capacity due to lifting restrictions for night operations. It was also meant to accommodate growing vessel sizes. The US$5.25-billion widening project was completed in June 2016.

With the canal enlarged, a 14,000-TEU container vessel can now travel through the Panama Canal and 10 to 15 vessels can pass through the third set of locks. At the same time, major ports in the eastern part of the United States are planning to invest $8.5 billion in port infrastructure development.

With these changes, shipping companies in turn are expected to deploy larger vessels on the Asia-U.S. East Coast lane in order to achieve economies of scale. This is expected to bring significant changes to the shipping industry including giving rise to severe competition among ports to attract the large vessels.

“The Panama Canal expansion will revolutionize the global port logistics market and it will have a positive effect on T/S volume at Busan Port as well,” BPA said.

The authority’s president Woo Ye-jong said international shipping and the port environment are “deteriorating due to the long term recession of global and shipping economies.” He added that Busan will strive to forge a closer cooperation with Panama “for mutual growth in both regions.”