| Foreign ships` coastal water international transshipment will be partially allowed at the free trade pilot zone in Shanghai, China, raising concerns of negative impact on Busan Port.
Restriction on coastal water international transshipment is a regulation that bans sales by foreign ships while leaving and returning their home ports. The purpose is to protect home ship-owners. For example, if a U.S. cargo ship heading for New York loaded a container in Qingdao, Shandong Province, the ship cannot unload cargo in other cities of China. It has to go directly to a foreign country.
Going forward, ships of a domestic ship owner that are located in a foreign country due to tax problems, etc, will be allowed for international coastal water transshipment. To this end, some of cargos worth 70,000 TEUs (20-foot equivalent container units) annually that had to come from Northeast costal ports including Tianjin to Busan will likely head for Shanghai.
Last year, a total 17.4 million TEUs of containers were handled at Busan Port, and transshipment cargo accounted for 48 percent (8.15 million TEUs). Among transshipment cargo, Chinese cargo was 31 percent at 2.56 million. With the share of transshipment cargo of Europe and North America decreasing, the share of China has increased by 4 percentage points from 2004, rising as the largest trade country. Over this period, all transshipped cargos at Busan annually has increased 6.9 percent on average, but cargos traveling between Busan and Chinese ports have increased 8.6 percent. Busan Port remains as the world`s top five trade ports largely because of China`s transshipment cargo.
Meanwhile, Shanghai ranks No. 1 in the world in container treatment volume, but accounts for just 5 percent in international transshipment. The city has been focusing on independent export and import cargo. As international coastal transshipment range expands, however, Busan Port can suffer a blow. Kim Myeong-shin, an official at KOTRA Shanghai, said, "If Shanghai eases all related regulations, new annual transshipment cargo will increase to 900,000 TEUs." However, Kim In-yeong, a manager at Busan Port Authority, had different view, saying, "China`s transshipment cargo is just 70,000 TEUs, meaning no immediate impact.