To carriers it is of the utmost importance to accomplish transportational contract with their clients safely and quickly. However with the enlargement of the vessel size and subsequent reduction in number of calling ports largely therefrom, shipping companies can not avoid the operation entailing transshipment of the cargo. Drewry’s transshipment handling estimate(full and empty) for 2019 totals 206.0 million TEU, representing a rise of 3.4% compared to 2018 and accounted for 25.7% of total worldwide container volume¹⁾. To operate optimally within such an environment, carriers strategically opt to utilize transshipment hub ports which may alleviate additional cost and time pressures.

As shown on Table 1, almost all the global hub ports are located at the center of the global trade routes. For instances, Singapore is located on the Asia-EU trade lines which has the largest trade volume in the world. Busan also is the nearest Asian port crossing the Pacific ocean from America who is the country of G1 and centered between China and Japan who are the countries of G2, G3 while connecting them with highly developed feeder networks. From the perspective of locational point of view, the existence of competing port also matters. Tanjung Pelepes and Port Klang in Malaysia fastly grown up with the strength in the cost competitiveness to compete with Singapore who has long enjoyed the status of unrivaled hub port in SE Asia. Busan port also has long maintained the status of gateway port in NE Asia, however, may have chances to lose exclusive status if Shanghai, Ningbo and Qingdao change the direction to T/S cargo from gateway cargo because of the proximity to those potential ports.

Transshipment of cargo occurs mostly when no direct service between origin and destination of the shipment is available. It may also occur when a carrier provides a contractor with a faster transit time, however, this is rare, and usually not preferred by both the carrier and consignor (consignee) due to extra expenses. Shipping companies are implementing many possible strategies in order to save on costs and time when transshipping, however, ‘connectivity’ is one of the most imperative factors to consider.

To become a global port, as aforementioned, the locational condition should be satisfied by connecting origin and destination cheaply and rapidly. If closely check the background how Busan port emerged as global hub port, sophisticated connectivity with most of the local ports in China and Japan is found to be most powerful contributor.

Above Table 3 shows PLSCI of the top 10 ports as of 2019 annually released by UNCTAD since 2006 targeting 900 ports in the world. These statistics are mainly based on the data from 6 items which cover comprehensive operational situation of the ports. According to the data, as shown above, Busan port is investigated to position at the 3rd followed by Shanghai and Singapore although total handling volume is not reaching that position. In the mean time, with the research for the Container Liner service Routes pattern, Ryu et al.(2018) put Busan as a few port having higher ‘centrality’ together with Singapore²⁾ among major global ports.

The level of Port productivity and infrastructure play very important role in ensuring minimized port time of the vessels. For efficient fleet operation which are tightly interconnected, shipping companies are highly evaluating level of port productivity when fixing the itinerary of the service because it affects direct cost control in many ways.

To assess the productivity of the port, Gross Berth Productivity is widely used which counts the numbers of container box handled at the berth for an hour. In fact, the authentic way to achieve higher productivity is to increase resources of laborer and cargo handling equipment. Fig. 1 contrasts portwise productivity of the ports, however, PNIT, HJNC in Busan New port are positioned only at the middle range among global ports.

Port service level is assessed by various factors mainly such as weather condition, operation interruption by port workers’ strike and availability of various attached services. Port service level is as important as port productivity when shipping companies choose T/S port because it also directly affects shipping companies’ cost control and may interrupt scheduled vessel operation. Shipping companies want ports to be always ready even when vessel arrives later than fixed schedule although the late arrival should be attributed to themselves. In case of Busan port, vessel’s arrival is severely concentrated on the weekends, hence, there are many cases of berth congestion during weekends. In the mean time, Government’s stance about T/S cargo is important factor in choosing T/S port. If tough regulation for handling T/S cargo exists or when strong customs surveillance on the T/S shipment is assessed, shipping companies may find easier port for smoother cargo handling. When Port Authorities have clear objectives to develop ports as T/S port, they have to show appropriate signals to shipping companies.

There are various expenses that shipping companies must pay when handling transshipment cargo at the port. In order to make precise cost comparisons to accurately establish a port’s profitability, shipping companies operate a cost control system which calculates unit costs per TEU. Among the expenses, cargo handling charges at the terminal are the biggest burden, and rates are largely fixed via negotiations between the carrier and terminal operator. The factors most affecting Terminal Handling Charges (THC) are the structure of the port’s berthing facilities, and the cargo demand at the port, in commercial ways, only if Port Authority does not fix and assess the unified tariff applicable to all players disregarding the negotiation between vessel operator and terminal operator.

Fig. 2 shows THC level comparison among ports in Japan, China and Busan. This indicates, in comparison only between Busan and Chinese ports, THC level of gateway cargo(Export & Import cargo) in Busan is much cheaper than that of Chinese ports, whereas, T/S cargo is vise versa implicating cost competitiveness in T/S cargo of Busan port is much weaker than Chinese ports.

The main reason for this situation can be explained by the type of cargo in the ports. The proportion of T/S cargo in Chinese ports falls short of 5% of entire volume, in average, hence, terminal operators may have high flexibility when they make rate contract with carriers by often giving big discounts and this rarely influences on terminal operator’s revenue scale. On the other hand, T/S proportion, particularly T/S between the different terminals, in Busan is around 53% of total volume of port and this high proportion restricts flexibility in rate contract for T/S cargo. The more threatening thing is Chinese ports’ bigger rooms for attracting more T/S cargo by using higher cost competitiveness in T/S cargo than Busan port. Shipping companies consider many factors including cost level of port when fixing T/S port, however, cost in the port can have the biggest weight especially when shipping industry is under depression. The fundamental background, if deeply checked, of weaker competitiveness than Chinese ports relates to two factors, by and large, from multiple terminal operator system and absence of Global carrier owned terminal in Busan.

Busan port consists of two ports complex, Old port and New port, of which New port is steadily increasing proportion of volume, as of 2020 by having around 70% of Busan port, with high speed since opened in 2006.

In future concentration into the New port will be fastly strengthened supported by its capability to accommodate developed infrastructure matching upsizing trend of container ships. However, current two port operational system gives rise to problems weakening T/S competitiveness by increased costs for ITT(Inter-Terminal-Transportation) between Old port and New port. Busan port has large portion of T/S cargo with Japan, China and the ships covering these nations are mainly calling at Old port, then, connecting freights with ocean-going ships calling New Port. To alleviate carriers’ cost burden for ITT between two ports, Old port has to be shut down and all the logistics functions in Busan port should be integrated into New port from the long term perspective.

Ocean going shipping companies are now endeavoring to reduce ITT volume as much as they can do through rationalization of fleet operation, however, terminals in New port barely reserves ample capacity to feeder carriers using Old port, whilst if then, Chinese and Japanese T/S cargo will be well connected inside New port efficiently. According to the rate guideline published by the government³⁾, the truckage between Old port and New port is around KRW114,000(USD100), which is almost equivalent to the expense for cargo handling inside terminal. What this two port system implicates in the T/S competitiveness of Busan is its severely negative impact on cost competitiveness of Busan when connecting T/S cargo between two ports. As shown below Table 5, the general trend of ITT volume is not remarkably reduced for the last several years in spite of carrier’s rationalization of fleet operation by integrating service into New port.

Dedicated container terminal operation in Busan port started since 1978 with opening of HBCT which is now operated by Hutchison Korean Terminals. Through the partial integration most of which was done among domestic stevedoring companies, Old port having 17 berths are being operated by 3 operators(HBCT, BPT, DPCT)⁴⁾ and handling about 30% of entire container volume of Busan port. Before starting integration of terminal operator, 8 companies were engaged in the terminal operation in Old port only. The integration initiated from the plan to discourage immoderate rate-cutting competition among terminal operators rather than operation rationalization to improve efficiency of terminal operation. New port, whereas, has 5 dedicated container terminals since 2006 when the first terminal PNIT⁵⁾ started operation together with 1 multi-purposed terminal (BNMT). Now BPA is constructing 5 berths(Phase 2-5 & 2-6) aiming to open from 2023 and BCT whose major shareholder is Korean construction company starts operation with 3 berths from 2nd half of 2022. If current construction is finished, there will be two more operators added, then, 7 operators become to operate 29 berths only in New port. If adding up with Old port, Busan port has 10 operators. This multiple terminal operator system will apparently show non-negligible operational inefficiencies in handling T/S cargo reaching 70% of New port volume. Two important inefficiencies are coming first from added ITT cost by which carriers should take for T/S between different terminals because of failure to handle T/S cargo by ship to ship within the same terminal. Secondly, with the trends of alliances restructuring and vessel up-sizing, terminal has to facilitate longer quay walls and more cranes to improve productivity for which sharing quay and equipment between operators can be very effective method to maximize the utilization of the resources. However, multiple operators who only operate terminal with owned resources, though it is general practice seen at the industry, have to put up with the loss of opportunity to increase utilization of resources. Shin et al.(2020) showed, through the simulation, that only sharing Quay wall and Quay crane among terminal operators may give similar effect of operational integration in reducing waiting time of vessel and cost saving effect in ITT also can be achieved when Y/T sharing is available⁶⁾. Old port may not have the benefit from integration, in operation at least, because of scattered locations of the terminals, however, New port may have remarkable benefit, by sharing berth and cranes, from the integration or from the joint operation at least.

In spite of several benefits gainable from the integration and urgency of its necessity in order to enhance the T/S competitiveness in front of strengthening challenges from neighboring countries, also fully common sensed as so among terminal operators, complicated structure of terminal shareholders interrupts timely behavior and decision makings. Whereas,, Singapore who is similar to Busan by having high portion of T/S cargo has single operator system, PSA, while HongKong achieved operational integration among HIT·MTL·ACT in an effort to recover top ranked position in the past. If check the correct reason why Busan became to have multiple operator system, it should be attributed to several reasons comprising phased port development and concession contract with different operators after construction first, secondly absence of national GTO, thirdly Government’s misdirection of strategies in building Busan port in NorthEast Asia central port⁷⁾.

Recently, global shipping alliances have been restructured into three groups, and this change has resulted in increased power for carriers when dealing with terminal operators. With individual alliances now having higher number of fleets, terminals must ensure that they are readily able to accommodate all or most of an alliance’s fleets, or else risk the alliance taking their cargo elsewhere for transshipment. Accommodating all of a single alliance’s fleets at one terminal requires six berths handling at least 5 million TEU per year.

However, in Busan port, only PNC operates 6 berths and the other operators have 3 to 4 berths only⁸⁾. This situation made by aforementioned reasons is giving cost disadvantage to carriers who have to move their T/S cargo from one terminal to the other paying truckage for ITT. According to recent data, T/S cargo volume in Busan, as of 2020, is 53% of total volume and about 35% of it is known to need ITT for T/S. As shown on Fig. 4, 2M consisted of global number 1(Maersk) and 2(MSC) made contract with two terminals(PNIT & HJNC) and their T/S volume was sharply decreased in 2019 and this affected dull growth rate of 1.8% in T/S cargo which is far below than annual average in Busan. In case of Singapore and Hongkong having high T/S volume as Busan, it is known that terminal operators are offering free ITT service to carriers in order to ease carriers’ additional cost burden and take fundamental measurement through operational integration by giving one-stopped service. Busan, however, is only subsidizing carrier with some portion of actual cost incurred from ITT at the pretext of incentive.

To settle down ITT issue in Busan fundamentally there is no other way but integrating terminals and shifting operation in Old port to New port in short period. When integrating terminals, type of One operator, like Hongkong, than One company, if hard to make it soon, should be proceeded first with urgent priority.

In major ports of the world, almost all the global carriers are operating their own terminals by either receiving concession from Port Authorities, which is typical type in terminal operation, or developing for themselves by having PPP(Public-Private-Partnership) contract with government. Global carriers utilize the terminals as their ‘Cost center’⁹⁾ together with ensuring punctuality in vessel operation. Under Alliance system, from the point of volume of the terminal, the effect of volume concentration appears high because all the member carriers belong to identical alliance group use the same terminal when they fix the contract.

HMM purchased 40% of HPNT from financial investor and started co-operation with PSA since 2018, however, Global mega carriers did not have chance to receive concession from Port Authority. Global carriers may not have sensed to operate own terminal in Busan because of stable rate structure which is favorable to them and sufficient berth supply enough to guarantee market structure at which carriers could stand higher than terminal operator.

However, considering that carriers always give higher priority to owned terminal port in fixing the T/S port, Port Authority has to take more strategic decision when developing terminal and choose operator of it. PSA, for instances, attracted Global carriers, such as CMA-CGM, MSC, as responsible shareholder in PSA terminals and extended such efforts to attract more carriers by making Joint Venture in order to make them bring more T/S cargo in front of competition with PTP in Malaysia located very close from Singapore.

On the contrary, Busan Port recently failed to attract Global carrier as operator for phase 2-5 tendering which will be opened in 2023 losing the justification to develop Busan as competitive Global T/S Hub port.

Singapore has been long maintaining the title as unrivaled global No. 1 T/S port. If analyzing the backgrounds for that, several factors appear to contribute for the position of Singapore. First, Singapore has very strong Locational merit being located at the main Trunk route connecting Asia-Europe. Second, Singapore retains excellent network power connecting South East Asian ports with global main ports. In almost all the researches regarding Connectivity, Singapore always stands No. 1 or No. 2 competing with Shanghai only. Third, more importantly, Singapore is exclusively managed by single GTO, PSA, which enables terminal operator to provide customers with one-stop tailor-made service. Within the core terminal business PSA was early to recognize the importance of securing volumes from Key carriers, especially in Singapore where it faces stiff competition from nearby Tanjung Pelepes. It has established JVs for terminal operationss with COSCO, CMA CGM, MSC, PIL and in may 2019 signed a new JV with ONE¹⁰⁾. Carriers also show very proactive stance on PSA’s offer because they can receive virtual dedicated berth guarantee from PSA and this is very useful for their smooth fleet operation at all times. Meanwhile MPA(Maritime Port Authority of Singapore) shuts down terminals, Keppel, Brani, Tanjung Pagar, Pasir Panjang which all locate within urban boundary by stages and newly opens TUAS having full automation system from 2022. If compare Singapore from the point of competitiveness as T/S port with Busan, Locational merit, Overseas Networks assume to be almost equal, however, very noticeable difference is the level of Port service: One single GTO vs Multiple terminal operators system which means Singapore’s high cost advantage in handling T/S cargo handled at the scattered terminals.

Hongkong once enjoyed the title of global No. 1 port, however, is now suffering very sharp volume decline with the rapid development of neighboring ports, Guangzhou, Shenzhen, in Guangdong province of mainland China. Overall Pearl River Delta area which is known as global manufacturing base will not provide Hongkong with sustainable growth power as before because of global supply chain relocation to South East and South West Asian countries. If look closely the basic reasons explaining the crisis of Hongkong, more expensive cost level which is higher than adjacent Chinese Ports can be important reason. In addition, not officially confirmed, Chinese government’s easing the Cabotage rule by making Chinese ports take domestic cargo which once only handled in Hongkong because of Cabotage rule which allows no foreign flagged carriers to transport within national ports. With the change of policy, many of the carriers changed the T/S port from Hongkong to Guangzhou, Shenzhen because of the difference in T/S cost level. In spite of weakened competitiveness, Hongkong still has outstanding port operation capabilities supported by Hutchison Port Holding who is the 2nd Global Terminal Operator in the world. As to Locational strength, as same as Singapore, Hongkong retains high competitiveness as T/S port well located at the center of entire Asian regions.

In the mean time, Government of Hongkong announces ports performances counting midstream¹¹⁾ T/S volume as international T/S cargo, however, Drewry publishes ports performance excluding midstream volume as international T/S volume, hence, Busan is published as the world 2nd T/S port and Hongkong, once midstream volume excluded as Drewry’s announcement, is to be 6th T/S port after Dubai.

If compare T/S competitiveness of Hongkong with Busan, Location, Network power and Port service are evaluated to be almost equal level, however, Hongkong, in 2018, has achieved operational integration among 5 operators, from which Busan port has to benchmark in the examples of Hongkong in order to accomplish integration smoothly and enhance T/S competitiveness thereupon.

Dubai is the globally 5th busiest T/S port and has long been fulfilling the role of central port in Middle East. Undoubtedly there will not be any change of Dubai’s status in playing the role as central port in the region very long because of geopolitical reasons.

As shown above Table 10 whole Dubai port is managed and operated by single GTO, Dubai Port World(DPW), as Singapore. The full-fledged growth of Dubai port much owes to very creative policy initiative represented by Jebel Ali Free Zone first developed since 1985 and JAFZ is globally benchmarked as the good model how well Free Trade Zone and Ports coexists for achieving common goals. PNC in Busan New port is the DPW’s heaviest investment business unit as the first shareholder. If compare Dubai with Busan as the T/S port, both the ports share very similar strengths in the Location, Network power, however, one difference, as the case of Singapore, is seen at the structure of port operators: Single operator system(Dubai) vs Multiple operator system(Busan).

PTP is the 3rd busiest T/S port globally and has developed as representing port with Port Klang in Malaysia. In total port’s volume of PTP, T/S cargo volume reaches overwhelmingly up to 95%. The answer to the question how PTP has achieved such a surprising growth in short period while having Singapore just around corner can be found from the strategy to attract Maersk into the operator and investor of PTP. Before investing PTP, Maersk used Singapore as the key hub port in South East Asia, but, since relocation of major T/S hub in South East Asia from Singapore to PTP, Maersk is steadily increasing the portion here. In the industry, Maersk’s investment in PTP was perceived nsidered as the strange case because Singapore was the only choice to carriers operating strong network laying Singapore at the central position.

Maersk’s successful anchoring at PTP is a good example of a transshipment port joining with a competitive carrier to achieve success.. For close proximity, Singapore having higher advantage in network and port operation skills and PTP having cost advantage have to continue the competition without no choice. In an effort to frustrate PTP’s strategy to attract more T/S cargo from Singapore, PSA is reacting with expanding collaboration with carriers by inducing them into the terminal operation through the Joint Venture formation.

If compare PTP with Busan again, two ports share similar strength level in Location, but, one thing differentiated point is seen clearly: One single Global carrier operator(PTP) vs Multiple operator(Busan)

To confirm the seven factors’ influence in deciding the competitiveness of T/S port, survey has been done and the results of it is indicated on Table 14

After the analysis for factors to confirm the influence in deciding the competitiveness of T/S port, Analysis, again, how Busan port, then, conforms to those factor is carried out. The results of analysis is indicated at below Table 15.

According to the results of analysis samples appeared to recognize that all the factors affect on the competitiveness of T/S port and this means Ports have to take those factors into high consideration if they have plan to develop their ports as T/S oriented ports.

For the analysis about the factors’ value in deciding the T/S competitiveness, paired comparison among the factors is matrixed and weights of each factors are explained as Table 16.

Each factors’ degree of importance average is calculated by the geometric average through AHP and to evaluate the credibility of response when CR(Credibility Ratio) value is higher than 0.1, response has been excluded to ensure credible value of response for precise analysis.

Whereas, in comparative importance evaluation among factors, results of evaluation is indicated as Table 17. According to the results of analysis, Cost competitiveness has the highest value(0.1988) and thereafter, Location(0.1868), Port Productivity(0.1531), Network with overseas ports(0.1378), Port Infrastructure(0.1262), Port Service(0.1144), Port Authority’s Policy(0.0829) are followed. The CR value of this analysis is 0.0015 which is lower than 0.1,hence, the results of analysis has high credibility.